Case Summary (G.R. No. L-50261)
Petitioner and Respondent
PNB seeks to enforce a mortgage and certificate of sale following extrajudicial foreclosure for unpaid loans. Reyes challenges the mortgage’s validity for lack of his consent and alleges forgery of his signature on the loan documents.
Key Dates
– Marriage of Venancio and Lilia Reyes: 1973
– Mortgage executed: August 25, 1994 (P1.1 M), increased October 6, 1994 (P3 M)
– Extrajudicial foreclosure and auction: September 19, 1997
– Complaint filed for annulment of mortgage and certificate of sale: September 22, 1998
– RTC Decision annulling mortgage: May 27, 2009
– Court of Appeals Decision affirming RTC: August 22, 2013
– Supreme Court Decision: October 5, 2016
Applicable Law
– 1987 Philippine Constitution
– Family Code of 1987, Articles 121 (liability of conjugal partnership and spouses), 122 (debts redounding to benefit of family), 124 (spousal consent for disposition or encumbrance of conjugal property)
– Civil Code provisions on conjugal property regime
– Jurisprudence: Manotok Realty, Ayala Investment, Philippine National Bank v. Banatao, Torbela v. Rosario
Validity of Encumbrance on Conjugal Property
Under Article 124 of the Family Code, any disposition or encumbrance of conjugal property without the written consent of the non-contracting spouse is void. Reyes did not consent to the mortgage; therefore, it is void ab initio.
Evidentiary Finding of Forgery
Reyes presented clear and convincing expert testimony from the National Bureau of Investigation’s handwriting examiner, who established that his signature on the promissory notes and mortgage did not match his standard signature. Both the RTC and the CA upheld this factual finding, entitled to finality under established rules.
Principal Obligation and Liability of Conjugal Partnership
The accessory real estate mortgage’s void status does not affect the underlying loan agreement. Article 122 of the Family Code presumes that a spouse’s loan for use in the family business redounds to the benefit of the conjugal partnership. The loan served as additional working capital for the Reyes printing business; thus, the partnership is liable for the principal obligation.
Accessory Nature of Real Estate Mortgage
A real estate mortgage is merely accessory to the principal loan. Its invalidity does not extinguish the indebtedness it secured. PNB may still enforce the loan against the partnership despite the mortgage’s nullity (Phil. Nat’l Bank v. Banatao).
Laches and Redemption Period
Reyes filed his annulment action within the statutory period for redemption of foreclosed property and promptly notified the bank upon discovering the alleged forgery. His delay does not constitute laches, as the action was brought within applicable prescrip
...continue readingCase Syllabus (G.R. No. L-50261)
Facts
- Spouses Venancio C. Reyes, Jr. and Lilia C. Reyes were married in 1973 and governed by the Conjugal Partnership of Gains regime under the Family Code.
- During their marriage, they acquired three parcels of land in Malolos, Bulacan, covered by Transfer Certificates of Title Nos. T-52812, T-52813 (registered in the names of “Felicidad Pascual and Lilia C. Reyes, married to Venancio Reyes”) and T-53994 (registered in the name of “Lilia C. Reyes, married to Venancio Reyes”).
- On August 25, 1994, the three lots were encumbered by a real estate mortgage to secure a P1,100,000.00 loan from Philippine National Bank (PNB), later increased to P3,000,000.00 on October 6, 1994.
- The Reyes spouses allegedly contracted and consented to the mortgage. Upon default, PNB extrajudicially foreclosed the properties, held an auction on September 19, 1997, emerged as highest bidder, and received a certificate of sale.
- On September 22, 1998, Venancio filed a complaint for annulment of the mortgage and certificate of sale, alleging Lilia acted without his consent, and his signature on the loan documents was forged.
Procedural History
- Regional Trial Court (Branch 81, Malolos, Bulacan) rendered judgment on May 27, 2009:
- Annulled the real estate mortgage, its amendment, the foreclosure proceedings, and the certificate of sale for lack of Venancio’s consent.
- Ordered Lilia to reimburse PNB the total loan account of ₱3,324,771.18 with 6% interest per annum from foreclosure sale date until finality, thereafter 12% per annum until full payment.
- PNB appealed to the Court of Appeals (CA).
- CA Decision dated August 22, 2013 denied the appeal and affirmed the trial court’s ruling.
- CA denied PNB’s motion for reconsideration on May 5, 2014.
- PNB filed a Petition for Review on Certiorari before the Supreme Court (G.R. No.