Laws & Jurisprudence
Mortgage Without Consent Of Children Of Unliquidated Conjugal Property
8:33 PM
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, 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
toP220,000.00
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
Garcia 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.
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.
ISSUE:
Is
the Real Estate Mortgage (REM) constituted by Jose Garcia Sr. without
the consent of his children binding on the said property?
RULING:
The
Real Estate Mortgage constituted by Jose Garcia Sr. without the
consent of his children is NOT
binding on the said property. Upon the death of Ligaya on January 21,
1987, the conjugal partnership was automatically dissolved and
terminated pursuant to Article 175(1) of the Civil Code,
and
the successional rights of her heirs vest, as provided under Article
777 of the Civil Code, which states that"[t]he rights to the
succession are transmitted from the moment of the death of the
decedent."
Consequently,
the conjugal partnership was converted into an implied ordinary
co-ownership between the surviving spouse, on the one hand, and the
heirs of the deceased, on the other.
This
resulting ordinary co-ownership among the heirs is governed by
Article 493 of the Civil Code which reads:
Art.
493. Each co-owner shall have the full ownership of his part and of
the fruits and benefits pertaining thereto, and he may therefore
alienate, assign or mortgage it, and even substitute another person
in its enjoyment, except when personal rights are involved. But the
effect of the alienation of the mortgage, with respect to the
co-owners shall be limited to the portion which may be allotted to
him in the division upon the termination of the co-ownership."
In
the present case, Jose Sr. constituted the mortgage over the entire
subject property after the death of Ligaya, but before the
liquidation of the conjugal partnership. While under Article 493 of
the Civil Code, even if he had the right to freely mortgage or even
sell his undivided interest in the disputed property, he could not
dispose of or mortgage the entire property without his children’s
consent. As correctly emphasized by the trial court, Jose Sr.’s
right in the subject property is limited only to his share in the
conjugal partnership as well as his share as an heir on the other
half of the estate which is his deceased spouse’s share.
Accordingly, the mortgage contract is void insofar as it extends to
the undivided shares of his children (Nora, Jose Jr., Bobby and
Jimmy) because they did not give their consent to the transaction.
Accordingly,
the Amendment of Real Estate Mortgage constituted by Jose Sr. over
the entire property without his co-owners' consent is not necessarily
void in its entirety. The right of the petitioner bank as mortgagee
is limited though only to the portion which may be allotted to Jose
Sr. in the event of a division and liquidation of the subject
property.
G.R.
No. 182839, June 2, 2014
PHILIPPINE
NATIONAL BANK, Petitioner,
vs. 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, Respondents.
BRION,
J.:
The author takes no responsibility for the validity, correctness and result of this work. The information provided is not a legal advice and it should not be used as a substitute for a competent legal advice from a licensed lawyer. See the disclaimer
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