Wednesday, March 14, 2012

Castillo vs. Pasco

Facts: The legitimate children and descendants of the late Marcelo Castillo, Sr. pray for the review and reversal of the decision of the Court of Appeals, in its Case CA G.R. No. 19377-R, that affirmed the decision of the Court of First Instance of Bulacan, declaring that the fishpond in San Roque, Paombong, Bulacan (covered by TCT No. 9928 of the Registry of Deeds of said province), was the exclusive paraphernal property of respondent Macaria Pasco, surviving spouse of the deceased Marcelo Castillo, Sr., and dismissing the complaint for partition and accounting filed by petitioners in said Court of First Instance. 

The Court of Appeals found, and the petitioner-appellants do not dispute, that in October 1931 Marcelo Castillo, Sr., being a widower, married Macaria Pasco, a widow who had survived two previous husbands. Petitioners were children and grandchildren (representing their deceased parents) of Marcelo Castillo, Sr. by his previous marriage. On April 3, 1933, Marcelo Castillo, Sr. died, and his widow married her fourth husband, Luis San Juan, on June 8, 1934. 

On December 22, 1932, Gabriel and Purificacion Gonzales, as co-owners of the litigated fishpond, executed a deed of sale (Exh. 1) conveying said property to the spouses Marcelo Castillo and Macaria Pasco for the sum of P6,000.00 (although the deed recited a higher amount), payable in three installments: P1,000 upon execution of the deed (Exh. 1) ; P2,000 on January 25, 1933 without interest; and P3,000 within one year thereafter, with 11% interest from February 1, 1933, but extendible for another year. 

In point of fact, the Court of Appeals found that the initial payment of P1,000 for the fishpond now in litigation was made up of P600, that one of the vendors (Gabriel Gonzales) owed to appellee Pasco, and P400 in cash, which the latter paid out of the proceeds of the sale of one of her nipa lands. The second installment of P2,000 appears to have been paid with the proceeds of the loan from Dr. Nicanor Jacinto, to whom the fishpond was mortgaged by both spouses. Dr. Jacinto later assigned his interest to Dr. Antonio Pasco. The last payment of P3,000 was derived from a loan secured by a mortgage (Exh. 2) on 2 parcels of land assessed in the name of Macaria Pasco, and one of which she had inherited from a former husband, Justo S. Pascual, while the other lot encumbered was assessed in her exclusive name. 

Issue: Whether or not the litigated fishpond is conjugal or paraphernal property 

Held: The litigated fishpond is both conjugal and paraphernal property. 

As above-noted, the Court of Appeals determined that the initial payment of P1,000 for the fishpond now disputed was made out of private funds of Macaria Pasco. Appellants, however, argue that since there is no express finding that the P600 debt owed by Gabriel Gonzales came exclusively from private funds of Pasco, they should be presumed conjugal funds, in accordance with Article 1407 of the Civil Code of 1889. The argument is untenable. Since the wife, under Article 1418, can not bind the conjugal partnership without the consent of the husband, her private transactions are presumed to be for her own account, and not for the account of the partnership. The finding of the Court of Appeals is that Gabriel Gonzales owed this particular indebtedness to Macaria Pasco alone, and in the absence of proof that the husband authorized her to use community funds therefor, the appellate Court's finding can not be disturbed by us. Whether the evidence adverted to should be credited is for the Court of Appeals to decide. 

Appellants next assail the conclusion of the Court of Appeals that the other two installments of the purchase price should be, like the first one, deemed to have been paid with exclusive funds of the wife because the money was raised by loans guaranteed by mortgage on paraphernalia property of the wife. The position thus taken by appellants is meritorious, for the reason that the deeds show the loans to have been made by Dr. Nicanor Jacinto, and by Gabriel and Purificacion Gonzales, to both spouses Marcelo Castillo and Macaria Pasco, as joint borrowers. The loans thus became obligations of the conjugal partnership of both debtor spouses, and the money loaned is logically conjugal property. While the securing mortgage is on the wife's paraphernalia the mortgage is a purely accessory obligation that the lenders could, waive if they so chose, without affecting the principal debt which was owned by the conjugal partnership, and which the creditors could enforce exclusively against the latter it they so desired. 

As the litigated fishpond was purchased partly with paraphernal funds and partly with money of the conjugal partnership, justice requires that the property be held to belong to both patrimonies in common, in proportion to the contributions of each to the total purchase price of P6,000. An undivided one-sixth (1/6) should be deemed paraphernalia and the remaining five-sixths (5/6) held property of the conjugal partnership of spouses Marcelo Castillo and Macaria Pasco 

It follows from the foregoing that, as the fishpond was undivided property of the widow and the conjugal partnership with her late husband, the heirs of the latter, appellants herein, were entitled to ask for partition thereof and liquidation of its proceeds. The ultimate interest of each party must be resolved after due hearing, taking into account (a) the widow's one-sixth direct share; (b) her half of the community property; (e) her successional rights to a part of the husband's share pursuant to the governing law of succession when the husband died; and (d) the widow's right to reimbursement for any amounts advanced by her in paying the mortgage debt as aforesaid. All these details must be settled after proper trial. 

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