MARCELO, JR., FELICISIMO, ENCARNACION, AMELIA, JAIME, RONALDO & 1.
1. Under Spanish CC, determining ownership of properties acquired by onerous
VICTORIA CASTILLO; LETICIA, LEVI & DANIEL CINCO, petitioners, vs.
MACARIA PASCO, respondent
Review of CA decision
Facts:
• Oct. 1931 – Marcelo Castillo, Sr., a widower married Macaria Pasco who had
survived 2 previous husbands. Petitioners are the children & grandchildren
(representing their deceased parents) of Castillo, Sr.
• Dec. 1932 – Gabriel & Purificacion Gonzales conveyed their property, a fishpond
in San Roque, Paombong, Bulacan, to Castillo, Sr. & Pasco. Such property was
payable in 3 payments: 1) P1k upon execution of deed; 2) P2k on Jan. 25,
1933 w/o interest; 3) P3k w/in 1 yr thereafter w/11% interest from Feb. 1,
1933, extendible for another year, for a grand total of (kaching-kaching) P6k.
• CA finding of payments:
1. P1k = P600.00 that Gabriel owed Pasco + P400.00 cash from proceeds of
Pasco’s sale of one of her nipa lands
2. P2k = proceeds of loan from Dr. Jacinto to whom fishpond was mortgaged
by both spouses. He later on assigned his interest to Dr. Antonio Pasco.
3. P3k = loan by mortgage of 2 parcels of lands assessed in Pasco’s name.
One she inherited from her former husband, Justo Pascual and the other
assessed in her exclusive name
• April 3, 1933 – Castillo, Sr. died. During his death, loan & mortgage in favor of
Dr. Jacinto was still outstanding thus, he foreclosed the mortgage & fishpond
was sold to him but sale was annulled (CA finding).
• June 8, 1934 – Pasco married 4th husband Luis San Juan
• Sept. 7, 1949 – Pasco judicially consigned P12,300.00 on account of mortgage
debt & its interest.
• April 24, 1950 – payment completed by 2nd consignation of P752.43.
• Petitioners allege that the fishpond is a conjugal property since it was acquired
during the marriage, thus they have right to such property. They filed a
complaint for partition & acctg.
• CFI Bulacan: declared fishpond as Pasco’s exclusive paraphernal prop.
Complaint dismissed.
• CA: affirmed CFI decision. Additional findings aside from aforementioned: Pasco
was a woman of means even prior to her marriage to Castillo. Castillo, a
provincial treasurer, only earned P80.00/month. His only property, 2 small
residential lots & fishponds were encumbered & transferred to his 5 kids by 1st
wife. He supported these kids in med & high school. He died w/o enough assets
to pay his debts, thus amounts consigned by Pasco to pay fishpond belonged to
her exclusively.
ISSUE: WON fishpond is conjugal or paraphernal.
HELD: It’s partly conjugal, partly paraphernal. CA decision revoked & set aside.
Remanded to CFI for further proceedings for partition, taking into account the ff: 1)
widow’s 1/6 direct share, 2) widow’s half of community prop, 3) widow’s
successional rts and 4) widow’s rt to reimbursement for advances made in paying
mortgage debt
RATIO:
consideration during the marriage depends on source of funds used for
acquisition.
a. Separate if bought w/exclusive money. (Spanish CC Art. 1396)
b. Conjugal if bought w/common funds whether for partnership or for one
spouse only. (Spanish CC Art. 1401) Last phrase is immaterial since it’s
been proven that prop was sold to both spouses.
2. First payment: according to CA it came from Pasco’s private funds. Petitioners:
w/o express proof that debt of Gabriel came from Pasco’s private fund, they
should be presumed conjugal (Art. 1407 Spanish CC). However, Art. 1416
provides that wife can’t bind conjugal partnership w/o husband’s consent. Her
private transactions are presumed to be her own. W/o proof that Castillo
authorized Pasco to use community funds to lend money to Gabriel,
presumption that she used her private funds would lie.
3. 2nd & 3rd payments by loans guaranteed by mortgage: since they were made to
both spouses as joint borrowers, loan thus became obligations of conjugal
partnership & loan money became part of conjugal property. Securing mortgage
on wife’s paraphernal prop is mere accessory oblig w/c lenders can waive if
they wish to do so w/o affecting principal debt owed by conjugal partnership &
w/c creditors can enforce against latter if they so desire. If money borrowed by
husband upon credit of wife’s prop became CP & when reinvested in
construction of house, such became CP & was liable for husband’s debt (Palanca
v. Smith Bell & Co.) then all the more that a loan obtained by both spouses
should be conjugal. Court likewise ruled in Lim Queco vs. Cartagena that when
wife borrows money guaranteed w/mortgage on her paraphernal prop, money
loaned & property acquired w/such will still be her exclusive prop even if
husband consented to such. Reason is that she is not the qualified
administrator of CP. Creditor can only demand repayment from her & her
properties. Palanca ruling applies, thus, property is partly paraphernal by virtue
of first payment & partly conjugal by virtue of 2nd & 3rd payments. It belongs to
both patrimonies – 1/6 paraphernal + 5/6 CP of Castillo & Pasco.
4. If Pasco paid mortgages with her private funds, her share is not increased.
Instead, common funds can repay the amount she has advanced.
LORENZO v. NICOLAS
91 Phil. 686
Facts:
Widow Magdalena Clemente and widower Manuel Lorenzo were married in 1910.
Their union was not blessed with children although Manuel had 3 children from his
first marriage: defendants Agapito and Marcela and deceased Policarpio (Policarpio’s
children were also petitioners: Faustina, Federico, Guillermo and Manuel); while
Magdalena had a son—the deceased Gerardo—from her first marriage (Gerardo’s
children were the respondents Florencio, Elena, Felix, Trinidad, Cecilia and Basilisa).
Manuel died in 1929 while Magdalena died in 1934.
Parcels of land 5 and 6 were purchased by Magdalena from the Bureau of Lands
(BOL) before her marriage to Manuel where balance was payable by installments.
Payments on account of the installment were made by her and the receipts were
issued in her name by the BOL.
While in parcel of land No. 6, the final conveyance was executed in the sole favor
of Magdalena before Manuel died, the final certificate of sale of parcel of land 5 was
executed in Magdalena’s favor and name after the death of Manuel.
After the death of Manuel, Magdalena has conveyed in absolute sale for a valuable
consideration of parcel of land 6 in favor of the defendants (respondents).
The Bulacan CFI had held that parcels of land Nos. 5 and 6 were conjugal.
However, the CA reversed this decision. Thus, in this case, the plaintiffs were
assailing the decision of the CA which declared that the parcels of land Nos. 5 and 6
as paraphernal properties of Magdalena and the appellate court’s order that the
defendant-appellants (herein respondents) pay the conjugal partnership one-half of
the whole amount paid to the bureau of lands, with legal interest thereon, from the
date of the filing of the complaint, after deducting from said amount the initial
payments made on the said lots Nos. 5 and 6.
Issue: WON parcels of land Nos. 5 and 6 are conjugal thus heirs of Manuel
(petitioners) are entitled to one-half of it.
NO. The CA held that the properties were paraphernal upon the presumption that
the parcels of land Nos. 5 and 6 continued to be exclusive properties of Magdalena
Clemente until shown otherwise (the status of the land from the time she acquired
it and before her marriage to Lorenzo, continued until it is otherwise changed) and
because she had paid the initial sums for the parcels of land before her marriage to
the late Manuel.
The fact that all receipts for installments paid even during the lifetime of the late
husband Manuel were issued in the name of Magdalena and that the deed of sale or
conveyance of parcel No. 6 was made in her name in spite of the fact that Manuel
was still alive shows that the two parcels of land belonged to Magdalena.
But the installments paid during coverture are deemed conjugal, there being no
evidence that they were paid out of funds exclusively to the late Magdalena and
thus must be reimbursed.
 DOCTRINE: Property bought on installment by either spouse before the
marriage and was fully paid only after the marriage but ownership had vested
on the buyer-spouse before the marriage, is separate property of the buyer-
spouse, although the installments paid by the conjugal partnership during the
marriage must be reimbursed to it upon liquidation.
CALIMLIM-CANULLAS v. FORTUN
129 SCRA 675 (1984)
Nature: Petition for certiorari to review decision of CFI, Pangasinan
YES. Art. 158 of the CC provides: Improvements, whether for utility or
adornment, made on the separate property of the spouses through
advancements from the partnership or through the industry of either the
husband or the wife, belong to the conjugal partnership. Buildings constructed,
at the expense of the partnership, during the marriage on land belonging to one
of the spouses, also pertain to the partnership, but the value of the land shall be
reimbursed to the spouse who owns the same. (1404a)
Both the land and the building belong to the conjugal partnership but the
conjugal partnership is indebted to the husband for the value of the land.
Padilla vs. Paterno – conversion from paraphernal to conjugal assets should
deemed to retroact to the time the conjugal assets were constructed thereon.
Cannot be considered to become conjugal property only at the time their values
were paid to the estate because by that time the conjugal partnership no longer
existed and it could not acquire the ownership of the properties
Fernando could not alienate the house and lot to Daguines since Mercedes had
not given her consent to the sale.
2. WON the sale of the lot together with the house and improvements
thereon was valid under the circumstances surrounding the transaction
NO. Contract of sale is null and void for being contrary to morals and public
policy. Sale was made by the husband in favour of a concubine after he had
abandoned his family and left the conjugal home where his wife and children
lived and from whence they derived their support. Sale was subversive of the
stability of the family, a basic social institution which public policy cherishes and
protects.
Art 1409 states that: contracts whose cause, object or purpose is contrary to
law, morals, good customs, public order, or public policy are void and inexistent
from the very beginning.
Article 1352 provides that: contracts without cause, or with unlawful cause,
produce no effect whatsoever. The cause is unlawful if it is contrary to law,
morals, good customs, public order or public policy.
Law prohibits the spouses form selling and donating property to each other.
The prohibition also applies to a couple living as husband and wife without the
benefit of marriage, otherwise the condiion of those who incurred guilt would
turn out to be better than those in legal union.

Facts:
Dec. 19, 1962 – Mercedes Calimlim-Canullas and Fernando were married. They
have 5 children. They lived in as small house and residential lot. Fernando
inherited the land during 1965 when his father died.
1978 – Fernando abandoned his family and lived with Corazon Daguines. They
were convicted of concubinage on Oct. 27, ‘81.
April 15, 1980 Fernando sold the property with the house to Daguines for the sum
of P2,000. Daguines was not able to take the possession of the property and she
filed a complaint for quieting of title and damages.
Trial Court awarded the land and ½ of the house to Daguines.

Issues:
1. WON the construction of a conjugal house on the exclusive property of
the husband ipso facto gave the land the character of conjugal
property.