Homeowners Savings & Loan Bank v. Dailo
REITERATIONFacts
The Antecedents: Spouses Marcelino Dailo, Jr. and Miguela C. Dailo purchased a house and lot. The Deed of Absolute Sale was executed only in favor of Marcelino Dailo, Jr. Without the knowledge and consent of his wife, Marcelino Dailo, Jr. executed a Special Power of Attorney (SPA) in favor of Lilibeth Gesmundo, authorizing her to obtain a loan from Homeowners Savings & Loan Bank (HSLB) secured by the said property. Gesmundo obtained a loan of ₱300,000.00 from HSLB, and executed a Real Estate Mortgage on the property. Marcelino Dailo, Jr. died on December 20, 1995. Upon maturity, the loan remained outstanding, leading HSLB to institute extrajudicial foreclosure proceedings. HSLB consolidated ownership after the property was not redeemed. Miguela Dailo discovered the foreclosure and the damage to her car, which was razed within the premises while being cleaned by HSLB's hired personnel. Procedural History: Miguela Dailo filed a case for Nullity of Real Estate Mortgage, Certificate of Sale, Affidavit of Consolidation of Ownership, Deed of Sale, Reconveyance with Prayer for Preliminary Injunction and Damages against HSLB. The Regional Trial Court (RTC) declared the mortgage and subsequent sale documents null and void, ordered reconveyance of the property, and awarded damages and attorney's fees. The Court of Appeals (CA) affirmed the RTC's decision regarding the nullity of the mortgage and reconveyance but deleted the awards for damages and attorney's fees for lack of basis. The CA found the property to be conjugal and the mortgage void for lack of Miguela Dailo's consent, citing Article 124 of the Family Code. The CA also held HSLB liable for the damaged car. The Petition: HSLB filed a petition for review on certiorari, questioning the validity of the mortgage as to Marcelino Dailo, Jr.'s share and the conjugal partnership's liability for the loan.
Issue(s)
Whether the mortgage constituted by the late Marcelino Dailo, Jr. on the subject property as co-owner thereof is valid as to his undivided share. Whether the conjugal partnership is liable for the payment of the loan obtained by the late Marcelino Dailo, Jr., the same having redounded to the benefit of the family.
Ruling
The petition is DENIED. The mortgage constituted on the conjugal property without the consent of Miguela C. Dailo is void. The conjugal partnership is not liable for the loan as there was no sufficient proof that it redounded to the benefit of the family.
Ratio Decidendi
On the validity of the mortgage: The Court reiterated the principle that the administration and enjoyment of conjugal partnership property belong to both spouses jointly. Article 124 of the Family Code explicitly states that disposition or encumbrance of conjugal property without the court's authority or the written consent of the other spouse is void. This provision does not distinguish between the entirety of the property and the share of the spouse who executed the disposition or encumbrance. Therefore, the mortgage executed by Marcelino Dailo, Jr. without his wife's consent is void in its entirety, including his supposed share. The Court clarified that the rules on co-ownership under Article 493 of the Civil Code do not apply suppletorily in a manner that would allow a spouse to mortgage conjugal property without the other's consent, as the regime of conjugal partnership of gains is a special type of partnership governed primarily by the Family Code. On the liability of the conjugal partnership for the loan: Article 121 of the Family Code makes the conjugal partnership liable for debts contracted by either spouse without the other's consent only to the extent that the family may have been benefited. The burden of proof to show such benefit lies with the creditor-party litigant claiming such liability. In this case, HSLB failed to adduce adequate proof that the loan obtained by Marcelino Dailo, Jr. redounded to the benefit of the family. The Court noted that HSLB's argument that the loan financed housing units was a sweeping conclusion without substantiation. Furthermore, HSLB's consistent stance throughout the proceedings was that the property was the exclusive property of Marcelino Dailo, Jr., and it never alleged that the family benefited from the loan proceeds until the appeal. The Court held that a party cannot change its theory of the case on appeal, especially when it would be unfair to the other party and offensive to due process.
Main Doctrine
A real estate mortgage constituted on conjugal property without the written consent of both spouses is void in its entirety, including the share of the spouse who executed the mortgage, pursuant to Article 124 of the Family Code. The conjugal partnership is not liable for a loan contracted by one spouse without the other's consent unless it is proven by the creditor that the loan redounded to the benefit of the family.