G.R. No. L-18238 January 22, 1980
ZENAIDA K. CASTILLO and EMILIO CORDOVA, JR., plaintiffs-appellants, vs. HORACIO K. CASTILLO, BEATRIZ K. CASTILLO, CONRADO VALERA (Formal Party), LOURDES K. CASTILLO, PELAGIO ARAMBULO, JR. (Formal Party), ENRIQUETA LEONOR K. CASTILLO, YSIDRO K. CASTILLO, JR., CRISPIN K. CASTILLO, ALICIA K. CASTILLO, BENJAMIN SORIANO (Formal Party), ERNESTO K. CASTILLO, and ENRIQUETA K. VDA. DE CASTILLO, defendants-appellants.

FACTS

Ysidro C. Castillo died intestate in 1947, survived by his widow, Enriqueta, and their nine children. Enriqueta was appointed administratrix of his estate. In 1948, she submitted a project of partition for the court’s approval. However, the estate was never formally closed, and Enriqueta continued to manage the properties. In 1958, plaintiffs Zenaida Castillo and Emilio Cordova, Jr. filed an action for partition and accounting against Enriqueta and the other heirs, alleging that the administratrix had failed to render a final accounting and had commingled and appropriated estate properties for her own benefit, to the detriment of the other heirs.
The trial court ordered the partition of the estate properties but denied the partition of certain properties registered in the names of the defendant children, ruling they were their exclusive property. It also adjusted the shares in the partition based on its finding that Enriqueta had used P153,591.69 of estate funds for her personal investments. The court computed her liability and, through an amended order, increased plaintiff Zenaida’s share in a specific set of properties from 6/100 to 7/100 as a result. Both plaintiffs and defendants appealed the decision.

ISSUE

The core issue is whether the trial court correctly applied the rules on property relations, particularly the presumption of conjugal partnership, in classifying the properties for partition and in adjudging the liability of the widow-administratrix for funds used.

RULING

The Supreme Court affirmed the trial court’s decision with modification. The Court held that properties acquired during the marriage are presumed to belong to the conjugal partnership unless proven otherwise. The burden of proof lies on the party claiming otherwise. The trial court correctly classified the properties based on this presumption and the evidence presented. Regarding the properties registered in the names of the children, the Court found no sufficient evidence to prove they were purchased with conjugal funds, thus upholding their exclusive ownership.
Crucially, the Court ruled that the widow, Enriqueta, as continuing administratrix of the unsettled estate, occupied a fiduciary position. Her use of estate funds for personal investments constituted a breach of trust. The trial court correctly held her liable for these amounts. However, the Supreme Court found the trial court’s mathematical computation of her liability and the corresponding adjustment of shares to be erroneous. The Court clarified that the proper remedy was not a simple adjustment of fractional shares in the partition but a monetary reimbursement. The amount used for personal investments (P153,591.69) should be returned to the estate coffers first, to be partitioned among all heirs. Consequently, the Supreme Court set aside the amended order granting a 7/100 share and reinstated the original 6/100 share for plaintiff Zenaida, with instructions that Enriqueta must reimburse the estate for the misused funds before final partition.