Castro v.

Miat
2003, Puno, J.
Facts:
Father of two children, Moises, widower (wife died in 1978), originall y intended his two properties, one
in Paco and the other in Paranaque for his offspring but reverted to keeping the latter for himself while
in Dubai,UAE. He modified the original agreement upon return to the Philippines in 1984.
Proof of this was given by Moises brother, Cerefino Miat, who said testified the original agreement that
Paco would go to Moises sons.This was reiterated at the deathbed of Moises wife and affirmed upon
Moises return to the Philippines. The Paco property, being the land in dispute, was paid for on an
installment basis from May 17, 1977 to December14, 1984. Full payment was made on the latter date
and title was secured under Moises name as widower. Romeo and Alexander, sons of Moises , lived on
the property with their wives and paid its realty taxes and fire insurance premiums. Alexander and his
wife, however, left the property in August 1985 for personal reasons. February 1988, Romeo learns from
godmother of his wedding that son of godmother, Virgilio Castro (VC,petitioner), who happens to be
Romeos neighbor, that the Paco property was being sold to VC. A thirty thousand peso down payment
was made by godmother to Moises for herson .April 1988, Alexander agrees to sell his share of the Paco
property forP42,750.00; a partial payment was made in the sum of P6,000 by Romeo but Alexander did
not execute a deed of assignment in favor of his brother because he had lots of work to do and the title
was already in Romeos possession.
Down payment information corroborated by Virgilio Miat (brother of Moises) and Pedro Miranda (who
worked with Moises in two hotels: Bay view Hotel and Hotel Filipinas) but Alexander later said that he
did not consider the money to be a down payment but a personal debt due to Romeo.
Romeo had possession of the title because he borrowed it from his father when he mortgaged the land
to his friend Lorenzo. But when Moises ran into financial difficulties, he mortgaged for P30,000.00 the
Paco property to parents of petitioner VC. December 1, 1988, Romeo and VC met in MTC Manila to
discuss status of Paco property. On the 16th, a letter from petitioners lawyer informed Romeo that the
Paco property had been sold to VC by Moises by virtue of a deed of sale dated Dec. 5, 1988 for
P95,000.00. Buyer, petitioner, VC admitted that the title of the property was with Romeo but bought it
anyway on the assurance of Moises that hed be able to retrieve it from his son. Romeo files in the RTC
action to nullify sale and compel Moises and Alexander to execute deed of conveyance/assignment.
RTC ordered (1) Alexander to pay the remaining balance due his brother, (2) Romeo to recognize sale
made by Moises, (3)dismissal of defendants counter claim and (4) defendants to pay the costs of suit.
Both parties appealed to the CA which modified the decision by saying that: (1) the deed of sale was
nullified,(2) Moises and Alexander had to execute a deed of conveyance, and (3)for defendants to pay
cost of suit (applied for by the petitioner). VC subsequently brings the action to the SC.

Issues/Held/Ratio:
(1) WON Paco property is conjugal orcapital.Although petitioners allege thatproperty was paid for by
Moises and atthe time it was paid, his wife had longbeen dead, the SC disagrees on thegrounds of the
new Civil Code (whichwas applicable because marriage wascelebrated before FC):
Art 153 (1) -The following are conjugal partnershipproperty:(1) Those acquired by onerous titleduring
the marriage at the expense of the common fund, whether theacquisition be for the partnership, or
foronly one of the spouses; x x x.
Records show that property wasacquired by onerous title during themarriage out of the common fund.
It isclearly conjugal property.Petitioners also overlook Article 160 of the New Civil Code. It
provides thatall property of the marriage ispresumed to belong to the conjugalpartnership, unless it be
proved that itpertains exclusively to the husband orto the wife. This article does notrequire proof that
the property wasacquired with funds of the partnership. The presumption applies even whenthe
manner in which the property wasacquired does not appear.In the case at bar (as opposed
topetitioners reliance on Lorenzo v.Nicolas), Moises and Concordia boughtthe Paco property during
theirmarriage Moises did not bring it intotheir marriage, hence it has to beconsidered as conjugal.(2)
WON valid oral partition betweenMoises and his sons involving the saidproperty is valid. Yes. The
validity of the agreement isapparent in (a) latter of the father tohis sons (the one which stated that
hedidnt favor any of his sons), (b) thetestimony (see above) of Moisesbrother, Ceferino, and the
oralagreement between the brothers todivide the property betweenthemselves (attested to
by extendedFamily members).We also hold that the oral partitionbetween Romeo and Alexander is
notcovered by the Statute of Frauds. It isenforceable for two reasons. Firstly,Alexander accepted the six
thousand(P6,000.00) pesos given by Romeo asdownpayment for the purchase of hisshare in the
Paco property. Secondly,Romeo and his witnesses, CeferinoMiat and Pedro Miranda, who
testifiedregarding the sale of Alexanders shareto Romeo, were intensely questionedby petitioners
counsel.(3) WON Castro spouses were buyersin good faith.Ruling of the CA which was affirmed bythe
SC:In the case at bench, the said spouseshave actual knowledge of the adverseclaim of plaintiff-
appellant. The most protuberant index that they are notbuyers in good faith is that before thesale,
Virgilio Castro talked with RomeoMiat on the supposed sale. Virgiliotestified that together with
Romeo,Alexander and Moses Miat, they wentto Judge Anunciacion of Manila in orderto find out if
Romeo has a right overthe property. Romeo told Virgilio inthat meeting that Romeo has a rightover the
Paco property by virtue of anoral partition and assignment. Virgilioeven admitted that he knew
Romeowas in possession of the title andRomeo then insisted that he is theowner of the property.