Source: http://lawlibrary.chanrobles.com/index.php?option=com_content&view=article&id=83077:57059&catid=1584&Itemid=566
Timestamp: 2019-04-24 16:41:59+00:00

Document:
G.R. No. 182839, June 02, 2014 - PHILIPPINE NATIONAL BANK, Petitioner, v. JOSE GARCIA AND CHILDREN NORA GARCIA, JOSE GARCIA, JR., BOBBY GARCIA AND JIMMY GARCIA AND HEIRS OF ROGELIO GARCIA NAMELY: CELEDONIO GARCIA, DANILO GARCIA, ELSA GARCIA, FERMIN GARCIA, HEHERSON GARCIA, GREGORIO GARCIA, IMELDA GARCIA AND JANE GARCIA, Respondent.
PHILIPPINE NATIONAL BANK, Petitioner, v. JOSE GARCIA AND CHILDREN NORA GARCIA, JOSE GARCIA, JR., BOBBY GARCIA AND JIMMY GARCIA AND HEIRS OF ROGELIO GARCIA NAMELY: CELEDONIO GARCIA, DANILO GARCIA, ELSA GARCIA, FERMIN GARCIA, HEHERSON GARCIA, GREGORIO GARCIA, IMELDA GARCIA AND JANE GARCIA, Respondent.
We resolve this petition for review on certiorari1 assailing the decision2 dated September 26, 2007 and the resolution3 dated May 6, 2008 of the Court of Appeals (CA) in CA-G.R. CV No. 71356.
These challenged CA rulings reversed and set aside the decision of the Regional Trial Court (RTC), Branch 23, Roxas, Isabela, dismissing Civil Case No. Branch 23-500-96 for lack of cause of action.
The facts of the case, gathered from the records, are briefly summarized below.
The subject of the present case is a parcel of residential land with all its improvements (subject property) located in Barrio Olango, Mallig, Isabela. The land is covered by Transfer Certificate of Title (TCT) No. T-44422 under the name of Jose Garcia Sr. (Jose Sr.) who acquired the subject property during his marriage with Ligaya Garcia. Ligaya died on January 21, 1987.
The marriage of Jose Sr. and Ligaya produced the following children: Nora, Jose Jr., Bobby and Jimmy, all surnamed Garcia, who are the respondents in the present case.
Sometime in 1989, the spouses Rogelio and Celedonia Garcia (Spouses Garcia) obtained a loan facility from the petitioner, Philippine National Bank (petitioner bank), initially for P150,000.00. The loan was secured by a Real Estate Mortgage over their property covered by TCT No. 177585. The spouses Garcia increased their loan to P220,000.00 and eventually to P600,000.00. As security for the increased loan, they offered their property covered by TCT No. 75324 and the subject property covered by TCT No. T-44422.
Jose Sr. agreed to accommodate the spouses Garcia by offering the subject property as additional collateral security for the latter’s increased loan. For this purpose, Jose Sr. executed Special Powers of Attorney (SPAs) dated April 14, 1992 and October 6, 1993, respectively, expressly authorizing the Spouses Garcia to apply for, borrow, or secure any loan from the petitioner bank, and to convey and transfer the subject property by way of mortgage. Jose Sr. also executed an Amendment of Real Estate Mortgage in favor of the petitioner bank. The SPAs and the Amendment of Real Estate Mortgage are both inscribed on TCT No. T-44422. All of these transactions, however, were without the knowledge and consent of Jose Sr.’s children.
On maturity of the loan on April 20, 1994, the spouses Garcia failed to pay their loan to the petitioner bank despite repeated demands.
On January 12, 1996, the respondents filed before the RTC a Complaint for Nullity of the Amendment of Real Estate Mortgage, Damages with Preliminary Injunction against the spouses Garcia and the petitioner bank. They claimed that the Amendment of Real Estate Mortgage was null and void as to respondents Nora, Jose Jr., Bobby and Jimmy as they were not parties to the contract.
The respondents alleged that the subject property was a conjugal property of Jose Sr. and his deceased spouse, Ligaya, as they acquired the subject property during their marriage; that upon Ligaya’s death, Jose Sr., together with his children Nora, Jose Jr., Bobby and Jimmy, by law, became owners pro indiviso of the subject property; that the petitioner bank was at fault for not including Jose Sr. as payee to the check representing the loan despite its knowledge that Jose Sr. was a signatory to the real estate mortgage; that the real estate mortgage executed by Jose Sr. could not bind his children as they did not give their consent or approval to the encumbrance; and that the real estate mortgage was also void as to Jose Sr. since he never benefitted from the loan.
In their answer, the Spouses Garcia alleged that Jose Sr. was indebted to them in the amount of P133,800.00. To settle this indebtedness, Jose Sr. volunteered to give the subject property as additional security for their (the Garcias’) loan to the petitioner bank.
The petitioner bank, on the other hand, claimed that the mortgage was made in good faith and for value, and maintained that the respondents’ complaint stated no cause of action against it. It alleged that the real estate mortgage over the properties was duly registered and inscribed on their titles and was thus binding on the whole world.
In the course of the proceedings, Nora, Jose Jr., Bobby and Jimmy executed an SPA dated May 31, 1996 authorizing Jose Sr. to act as their attorney-in-fact during the pretrial of the case.
The RTC dismissed the complaint for lack of cause of action. The court held that the subject property was a conjugal property since it was acquired by Jose Sr. during his marriage with his now deceased wife. As a conjugal property, it is presumed that upon the death of his spouse, one-half of the property passed on to Jose Sr., while the other half went to Jose and his children as co-owners and as forced heirs of his deceased spouse. Without the consent of the children, the trial court ruled that the conjugal property could only be transferred or encumbered to the extent of Jose Sr.’s share in the conjugal partnership, plus his share as an heir in the other half pertaining to the estate of his deceased spouse.
The RTC nevertheless declared that by virtue of the SPA executed by Nora, Jose Jr., Bobby and Jimmy in this suit, they are already estopped from questioning the mortgage and from alleging lack of consent or knowledge in the transaction. It held Jose Sr. liable as an accommodation party and upheld the petitioner bank’s right to collect the debt.
On September 26, 2007, the CA upheld the trial court’s finding that the subject property was conjugal, but reversed and set aside its ruling in so far as it declared valid and binding the Amendment of Real Estate Mortgage between the petitioner bank, on one hand, and the spouses Garcia and Jose Sr., on the other hand, with respect to respondents Nora, Jose Jr., Bobby and Jimmy. Relying on the Court’s ruling in Nufable v. Nufable,4 the CA ruled that the encumbrance Jose Sr. made over the entire conjugal property, without his children’s conformity, was null and void because a mere part owner could not alienate the shares of the other co-owners.
The petitioner bank disputes the CA’s finding that the subject property was conjugal in nature. It argues that, as can be gleaned from TCT No. T-44422, the subject property was registered in the name of Jose Sr. alone, who was described in the title as “widower” and not “married.” The petitioner bank posits that as a mortgagee in good faith, it had the right to rely on the mortgagor’s certificate of title; in the absence of any indication that could arouse suspicion, it had no obligation to undertake further investigation and verify whether the property was conjugal or was acquired during marriage or thereafter.
Moreover, even if we were to review the factual issues raised by the petitioner bank, we still find no reason to depart from the CA’s ruling.
Upon the death of your wife did you and your wife ever own a piece of land?
Where is that land situated?
In Centro, District 2, Mallig[,] Isabela.
Is that land titled in your names?
You and your wife acquired that piece of land?
May we know from you[,] Mr. Witness, how did you acquire this parcel of land presently embraced and covered by TCT No. T-44422?
I purchased that piece of land from the Baniqued Family during my incumbency as Municipal Mayor, sir.
What was your civil status at the time you purchased that piece of land?
The petitioner bank claims that the CA failed to consider that the subject property was registered in the name of Jose Sr. alone. Likewise, it raises the argument that Jose Sr.’s change of status in the subject property’s title from “married” to “widower” prior to the constitution of the real estate mortgage showed that the property was no longer conjugal.
We do not consider this argument persuasive.
Registration of a property alone in the name of one spouse does not destroy its conjugal nature. What is material is the time when the property was acquired.9 The registration of the property is not conclusive evidence of the exclusive ownership of the husband or the wife. Although the property appears to be registered in the name of the husband, it has the inherent character of conjugal property if it was acquired for valuable consideration during marriage.10 It retains its conjugal nature.
In order to rebut the presumptive conjugal nature of the property, the petitioner must present strong, clear and convincing evidence of exclusive ownership of one of the spouses.11 The burden of proving that the property belongs exclusively to the wife or to the husband rests upon the party asserting it.
While under Article 493 of the New Civil Code, each co-owner shall have the full ownership of his part and of the fruits and benefits pertaining thereto and he may alienate, assign or mortgage it, and even substitute another person in its enjoyment, the effect of the alienation or the mortgage with respect to the co-owners, shall be limited, by mandate of the same article, to the portion which may be allotted to him in the division upon the termination of the co-ownership. He has no right to sell or alienate a concrete, specific, or determinate part of the thing in common to the exclusion of the other co-owners because his right over the thing is represented by an abstract or Ideal portion without any physical adjudication.3 An individual co- owner cannot adjudicate to himself or claim title to any definite portion of the land or thing owned in common until its actual partition by agreement or judicial decree. Prior to that time all that the co-owner has is an Ideal or abstract quota or proportionate share in the entire thing owned in common by all the co-owners.4 What a co owner may dispose of is only his undivided aliquot share, which shall be limited to the portion that may be allotted to him upon partition. [emphasis supplied].
WHEREFORE, in view of the foregoing, we hereby AFFIRM the Decision dated September 26, 2007of the Court of Appeals in CA-G.R. CV No. 71356. Costs against petitioner Philippine National Bank.
1 Under Rule 45 of the Rules of Court, rollo, pp. 36-54.
2 Id. at pp. 10-33; penned by Associate Justice Edgardo F. Sundiam, and concurred in by Presiding Justice Conrado M. Vasquez, Jr., and Associate Justice Monina Arevalo-Zenarosa.
3 Id. at pp. 31-33.
5Century Iron Works, Inc. v. Banas, G.R. No. 184116, June 19, 2013, 699 SCRA 157, 166.
6Fuentes v. Court of Appeals, 335 Phil. 1163, 1168 (1997).
8Go v. Yamane, 522 Phil. 653, 663 (2006).
9Tarrosa v. De Leon, G.R. No. 185063, July 23, 2009, 593 SCRA 768, 779.
10 Bucoy v. Paulino, 131 Phil. 790, 800 (1968).
11Dewara v. Lamela, G.R. No. 179010, April 11, 2011, 647 SCRA 483, 490.
14 Metropolitan Bank and Trust Co. v. Pascual, G.R. No. 163744, February 29, 2008, 547 SCRA 246, 259.
15Aguirre v. CA, G.R. No. 122249, January 29, 2004, 421 SCRA 310, 323-324.
16 197 Phil. 913, 917 (1982).
17 570 Phil. 559, 571 (2008).

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