Case Summary (G.R. No. 153802)
Facts of the Case
Miguela C. Dailo and her late husband Marcelino Dailo, Jr. were married in 1967 and acquired a house and lot during their marriage, declared under ARP No. 94-051-2802. The title, however, was only in Marcelino's name. In 1993, Marcelino, without Miguela’s knowledge or consent, executed a Special Power of Attorney (SPA) authorizing Lilibeth Gesmundo to obtain a loan of ₱300,000 from petitioner Homeowners Savings & Loan Bank, secured by a real estate mortgage on the conjugal property. Marcelino died in 1995, and petitioner foreclosed extrajudicially on the property for the unpaid loan, eventually consolidating ownership through a Deed of Sale. Miguela discovered these actions only after learning that petitioner had hired someone to clean the property and that her car was destroyed therein. She filed a suit to nullify the mortgage, certificate of sale, affidavit of consolidation, and deed of sale, and for damages.
Trial Court’s Decision
The Regional Trial Court (RTC) found that the mortgage and subsequent foreclosure were invalid due to lack of respondent's consent. It declared null and void the mortgage, certificate of sale, affidavit of consolidation, and related documents. The RTC ordered petitioner to reconvey the property to respondent and awarded damages for the burned car, attorney’s fees, moral and exemplary damages, and costs of suit. The petitioner's counterclaim was dismissed.
Court of Appeals Ruling
The Court of Appeals affirmed the trial court’s findings that the property was conjugal and that the mortgage was invalid for lack of Miguela’s consent, in accordance with Article 124 of the Family Code. The court held petitioner liable for damages based on its responsibility for the acts of the person it hired on the property. However, the CA deleted the award of damages and attorney’s fees for lack of basis.
Issues for the Supreme Court
- Whether the mortgage constituted by Marcelino Dailo, Jr. is valid as to his undivided share under co-ownership principles.
- Whether the conjugal partnership is liable for the loan obtained by Marcelino, on the basis that it benefited the family.
Legal Analysis on Co-Ownership and Conjugal Partnership
Petitioner argued for applying Article 493 of the Civil Code, which allows a co-owner to alienate or mortgage his share of co-owned property, as a limitation on Article 124 of the Family Code requiring spousal consent. Article 493 states that each co-owner has full ownership of his share and may dispose of it except where personal rights are involved, and that such acts affect only the disposing co-owner’s share.
However, under the 1987 Family Code, specifically Article 124, the administration and enjoyment of conjugal partnership property belong jointly to both spouses. The power to dispose of property, including encumbrance, requires prior written consent of the other spouse or court authority; otherwise, such acts are void. This provision applies to the entire property and is not qualified by the concept of individual co-ownership. The conjugal partnership regime, unlike absolute community property, is governed primarily by rules on partnership and specific Family Code provisions, not the co-ownership rules of the Civil Code. In case of conflict, Family Code provisions prevail.
The Supreme Court held that the mortgage constituted by Marcelino without Miguela’s consent was void in its entirety and refused to bifurcate the validity of the mortgage over Marcelino’s assumed undivided share. The rule that one co-owner may dispose of his undivided portion cannot override the specific protective provisions of Article 124 guarding conjugal property.
Liability of the Conjugal Partnership for the Loan
Petitioner contended that the conjugal partnership should be liable on the loan because it benefited from the debt incurred by Marcelino. Under Article 121(3) of the Family Code, the conjugal partnership is liable for debts contracted by either spouse without the other's consent only to the extent that they benefited the family. Benefit must be clearly established.
The burden of proof is on the creditor seeking to hold the conjugal partnership liable. The petitioner failed to provide sufficient evidence showing the loan benefited the conjugal partnership or family. The Court observed that petitioner’s position was inconsistent during trial and appeals regarding the nature of the property and benefit of the loan proceeds.
Thus, the Court ruled that the conjugal partnership could not be held liable for the loan obligation.
Final Ruling and Pronouncement
The Supreme Court denied th
Case Syllabus (G.R. No. 153802)
Background and Factual Antecedents
- The parties involved are Miguela C. Dailo (respondent) and Homeowners Savings & Loan Bank (petitioner).
- Miguela C. Dailo and Marcelino Dailo, Jr. were married on August 8, 1967.
- During their marriage, the spouses jointly purchased a house and lot located in Barangay San Francisco, San Pablo City, Laguna, from Sandra Dalida.
- The property was declared for tax assessment purposes under Assessment of Real Property No. 94-051-2802.
- The Deed of Absolute Sale was solely in the name of Marcelino Dailo, Jr., excluding Miguela C. Dailo.
- On December 1, 1993, Marcelino executed a Special Power of Attorney (SPA) in favor of Lilibeth Gesmundo, authorizing her to secure a loan from petitioner using the conjugal property as mortgage.
- Without the knowledge or consent of Miguela C. Dailo, Gesmundo obtained a loan of ₱300,000.00 from petitioner, secured by a real estate mortgage on the property.
- The loan remained unpaid at maturity, prompting petitioner to institute extrajudicial foreclosure proceedings, resulting in issuance of Certificate of Sale to petitioner.
- On June 6, 1996, petitioner consolidated ownership through an Affidavit of Consolidation of Ownership and a Deed of Absolute Sale.
- Marcelino Dailo, Jr. died on December 20, 1995.
- Respondent discovered petitioner had employed a caretaker for the property, resulting in damage to her car due to negligence.
Trial Court Proceedings and Decision
- Respondent filed Civil Case No. SP-2222 (97) seeking nullity of the mortgage, certificate of sale, affidavit of ownership consolidation, and other related documents.
- She prayed for reconveyance of the property, preliminary injunction, and damages.
- Petitioner counterclaimed, asserting the property was the exclusive property of Marcelino Dailo, Jr.
- The Regional Trial Court ruled in favor of respondent, declaring null and void the mortgage, the certificate of sale, the affidavit of consolidation, and related documents due to the absence of respondent’s consent.
- The trial court ordered reconveyance of the property to respondent.
- Damages awarded included ₱40,000.00 for the burnt car, ₱25,000.00 attorney’s fees, ₱25,000.00 moral damages, and ₱10,000.00 exemplary damages.
- The counterclaim of petitioner was dismissed.
Court of Appeals Decision
- The Court of Appeals affirmed with modification the trial court's decision.
- It confirmed that the property was conjugal in nature, as petitioner failed to rebut the presumption of conjugal ownership.
- The mortgage was declared void for lack of respondent’s knowledge and consent, consistent with Article 124 of the Family Code.
- The trial court’s order for reconveyance was upheld.
- On the damage to respondent's car, the appellate court held petitioner liable for the acts of the person it employed.
- However, the appellate court deleted the