Spouses Castro v. Miat
REITERATIONFacts
The Antecedents: Spouses Moises and Concordia Miat acquired two parcels of land during their marriage: one in Parañaque (TCT No. S-33535) and another in Paco, Manila (TCT No. 163863). Concordia died on April 30, 1978. Moises and Concordia had two sons, Romeo and Alexander. Moises initially agreed that the Parañaque and Paco properties would be given to Romeo and Alexander. Upon his return in 1984, Moises renegotiated, wanting the Parañaque property for himself and leaving the Paco property to his sons. The Paco property was bought on installment, with the balance paid by Moises in 1984 after Concordia's death, and the title was registered in his name as a widower. Romeo alleged Moises violated their agreement by not registering their names on the title. Romeo and Alexander lived on the Paco property and paid its taxes and insurance. Alexander agreed to sell his share to Romeo for ₱42,750.00, receiving a ₱6,000.00 partial payment, but never executed a deed of assignment. Romeo learned that Moises was selling the Paco property to petitioner Virgilio Castro, who had given Moises a ₱30,000.00 downpayment. Moises sold the Paco property to Spouses Castro for ₱95,000.00 via a deed of sale dated December 5, 1988. Ceferino Miat, Moises' brother, testified that there was an agreement for the Paco property to go to Romeo and Alexander, reiterated at Concordia's deathbed and upon Moises' return. Alexander testified that after the sale to Castro, Moises received one-third of the proceeds and he received two-thirds, while Romeo received nothing but the right to till their Nueva Ecija property. Virgilio Castro testified he informed Romeo of the sale, to which Romeo responded, "Bahala siya." Castro also admitted knowing Romeo was in possession of the title and that Romeo claimed ownership. Procedural History: Romeo Miat filed an action to nullify the sale between Moises and the Castro spouses, compel Moises and Alexander to execute a deed of conveyance, and claim damages. The Regional Trial Court (RTC) ordered Alexander to execute a deed of sale for his share upon Romeo's payment of the balance (₱36,750.00), recognized the validity of Moises' sale of his share to the Castros, and dismissed the counter-claim. Both parties appealed. The Court of Appeals (CA) modified the RTC decision, nullifying the deed of sale between Moises Miat and Spouses Castro, ordering Moises and Alexander to execute a deed of conveyance over the Paco property in favor of Romeo upon payment of the balance (₱36,750.00), and jointly and severally ordering Moises and Alexander to pay attorney's fees and costs. The Petition: Petitioners Spouses Castro and Moises Miat filed a petition for review on certiorari, assigning errors concerning the CA's nullification of the sale to them, the order to execute a deed of conveyance in favor of Romeo, and the award of attorney's fees and costs.
Issue(s)
Whether the Paco property is conjugal or capital property. Whether there was a valid oral partition covering the Paco property. Whether the Spouses Castro were buyers in good faith.
Ruling
The Court of Appeals' decision in CA-G.R. CV No. 43053 is affirmed. The deed of sale between Moises Miat and Spouses Virgilio and Michelle Castro is nullified. Moises Miat and Alexander Miat are ordered to execute a deed of conveyance over the Paco property in favor of Romeo Miat upon payment by Romeo Miat of the balance of the purchase price in the sum of ₱36,750.00. Moises Miat and Alexander Miat are ordered, jointly and severally, to pay Romeo Miat attorney's fees in the amount of ₱30,000.00 and to pay the costs of suit.
Ratio Decidendi
On the nature of the Paco property: The Court affirmed the appellate court's finding that the Paco property is conjugal. Applying Article 153(1) of the New Civil Code, property acquired by onerous title during the marriage at the expense of the common fund is conjugal. The records show the property was acquired during the marriage. Furthermore, Article 160 of the New Civil Code presumes all property of the marriage to be conjugal unless proven otherwise, a presumption not overcome by the petitioners. The cases cited by petitioners, Lorenzo vs. Nicolas and Jovellanos vs. Court of Appeals, were distinguished as they involved different factual circumstances regarding the acquisition and payment of the properties in question, particularly concerning the timing of payments relative to the marital status and the registration of titles. On the validity of the oral partition: The Court upheld the validity of the oral partition between Moises and his sons, Romeo and Alexander, concerning the Paco property. This agreement was supported by Moises' letter to Romeo expressing his intent for the property to be for both sons, the testimony of Moises' brother Ceferino Miat, and a sworn statement (Exhibit "D") signed by extended family members attesting to the agreement. The oral partition between Romeo and Alexander was also deemed valid and enforceable, not being covered by the Statute of Frauds, because Alexander accepted Romeo's partial payment of ₱6,000.00 for his share, constituting partial execution of the agreement. The Court reiterated the principle that partition among heirs need not be in writing to be valid as among themselves, citing Pada-Kilario vs. Court of Appeals, as it is not a conveyance of property but a confirmation of title, especially when no creditors are prejudiced. On whether the Spouses Castro were buyers in good faith: The Court affirmed the appellate court's finding that the Spouses Castro were not buyers in good faith. Virgilio Castro admitted that Romeo informed him about Moises selling the property and that they consulted Judge Anunciacion to determine who had the right to the property. Romeo explicitly told Virgilio that the Paco property had been given to him (Romeo). Virgilio Castro was aware that Romeo was in possession of the title and insisted on his ownership. The Court emphasized that a buyer of real property in possession of persons other than the seller must investigate the rights of those in possession; failure to do so, as in this case where Castro had actual knowledge of Romeo's adverse claim and possession, prevents him from claiming the status of a buyer in good faith.
Main Doctrine
A property acquired during the marriage through onerous title is presumed conjugal, and an oral partition among heirs is valid and enforceable among themselves, especially when partially executed and corroborated by witnesses, even if not in a public document, provided no creditors are prejudiced. A buyer with actual knowledge of another's adverse claim or possession cannot be considered a buyer in good faith.