[G.R. No. 143297. February 11, 2003] SPOUSES VIRGILIO and MICHELLE CASTRO, MOISES B.

MIAT and ALEXANDER V. MIAT, petitioners, vs. ROMEO V. MIAT, respondent.

PUNO, J.: FACTS: Father of two children, Moises, widower (wife died in 1978), originally 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 death bed 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 December 14, 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 downpayment was made by godmother to Moises for her son. April 1988, Alexander agrees to sell his share of the Paco property for P42,750.00; 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. Downpayment information corroborated by Virgilio Miat (brother of Moises) and Pedro Miranda (who worked with Moises in two hotels: Bayview Hotel and Hotel Filipinas) but Alexander later said that he did not consider the money to be a downpayment 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 16 , 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 counterclaim 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)
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for defendants to pay cost of suit (as applied for by the petitioner). VC subsequently brings the action to the SC.

ISSUES/HELD/RATIO: (1) WON Paco property is conjugal or capital. Although petitioners allege that property was paid for by Moises and at the time it was paid, his wife had long been dead, the SC disagrees on the grounds of the new Civil Code (which was applicable because marriage was celebrated before FC):

Art 153 (1) The following are conjugal partnership property: (1) Those acquired by onerous title during the marriage at the expense of the common fund, whether the acquisition be for the partnership, or for only one of the spouses; x x x.
Records show that property was acquired by onerous title during the marriage out of the common fund. It is clearly conjugal property. Petitioners also overlook Article 160 of the New Civil Code. It provides that all property of the marriage is presumed to belong to the conjugal partnership, unless it be proved that it pertains exclusively to the husband or to the wife. This article does not require proof that the prop erty was acquired with funds of the partnership. The presumption applies even when the manner in which the property was acquired does not appear. In the case at bar (as opposed to petitioners reliance on Lorenzo v. Nicolas), Moises and Concordia bought the Paco property during their marriage Moises did not bring it into their marriage, hence it has to be considered as conjugal. (2) WON valid oral partition between Moises and his sons involving the said property is valid. Yes. The validity of the agreement is apparent in (a) latter of the father to his sons (the one which stated that he didnt favor any of his sons), (b) the testimony (see above) of Moises brother, Ceferino, and the oral agreement between the brothers to divide the property between themselves (attested to by extended Family members). We also hold that the oral partition between Romeo and Alexander is not covered by the Statute of Frauds. It is enforceable for two reasons. Firstly, Alexander accepted the six thousand (P6,000.00) pesos given by Romeo as downpayment for the purchase of his share in the Paco property. Secondly, Romeo and his witnesses, Ceferino Miat and Pedro Miranda, who testified regarding the sale of Alexanders share to Romeo, were intensely questioned by petitioners counsel. (3) WON Castro spouses were buyers in good faith. Ruling of the CA which was affirmed by the SC: In the case at bench, the said spouses have actual knowledge of the adverse claim of plaintiff -appellant. The most protuberant index that they are not buyers in good faith is that before the sale, Virgilio Castro

talked with Romeo Miat on the supposed sale. Virgilio testified that together with Romeo, Alexander and Moses Miat, they went to Judge Anunciacion of Manila in order to find out if Romeo has a right over the property. Romeo told Virgilio in that meeting that Romeo has a right over the Paco property by virtue of an oral partition and assignment. Virgilio even admitted that he knew Romeo was in possession of the title and Romeo then insisted that he is the owner of the property. Virgilio Castro is further aware that plaintiff is in possession of the property, they being neighbors. A purchaser who was fully aware of another persons possession of the lot he purchased cannot successfully pretend to be an innocent purchaser for value.