Exclusively the man’s
Laarni and Steph began living together as husband and wife in 1975. In 1978, they bought a property in flood-prone Quezon City.
Laarni claimed that they acquired the property through their joint efforts. However, the title was registered under the name of Steph, “of legal age, Filipino, single.” In July 1983, Laarni and Steph got married.
In 2004, Laarni learned that the property was mortgaged to and foreclosed by the bank. Upon further verification, Laarni discovered that spouses Uy mortgaged their family home in favor of the bank. Spouses Uy used it as collateral for their loan by way of credit accommodation. This arrangement happened because the husband-mortgagor, Crom, is Steph’s nephew.
When spouses Uy failed to pay their loan, the bank foreclosed the mortgage. The property was sold at a public auction.
Later, Laarni learned that in executing the loan agreement and mortgage, spouses Uy submitted a Special Power of Attorney (SPA) indicating that she and Steph granted them the authority to mortgage the property.
However, Laarni denied affixing her name and signature on the SPA, claiming forgery. She maintained that she did not consent to the mortgage.
The bank countered that since Laarni and Steph were married in 1983, their property regime under the Civil Code was conjugal partnership of gains. The property was Steph’s exclusive property because it was acquired before their marriage, and the title covering the property indicates that the registered owner is “Steph, of legal age, Filipino, single[.]” Consequently, Laarni has no cause of action against it.
Q: Is the Quezon City conjugal property or a property exclusively owned by Steph?
A: It is a property exclusively owned by Steph. The mortgaged property was acquired in 1978, under the name of “Steph, of legal age, Filipino, single,” when Laarni and Steph were cohabiting without the benefit of marriage.
When Laarni and Steph married in 1983, the Civil Code provides that their property relations shall be governed by the rules on conjugal partnership of gains, absent any proof showing that the spouses entered into a marriage settlement. Under this property arrangement, all property of the conjugal partnership of gains is owned in common by the husband and wife.
Under the law, property acquired during the marriage is presumed to be conjugal, and it is unnecessary to prove that the money used to purchase a property came from the conjugal fund. What must be established is that the property was acquired during the marriage.
Since Laarni admitted that the property was acquired before her marriage to Steph in 1983, the presumption that the property is conjugal shall not apply, especially since the property is under Steph’s name alone. Laarni bears a heavier onus to prove that the property is indeed conjugal.
Q: What are the pieces of documentary evidence that showed that the property is the exclusive property of Steph?
A: The property in question was acquired by Steph using his personal funds, not from the conjugal wealth. The relevant sale contracts reveal this fact.
The March 1978 Conditional Contract of Sale and the July 1979 Deed of Absolute Sale between the previous owner and Steph indicate that the property consisted of a parcel of land with a two-story residential home.
Therefore, when Steph purchased the property in 1978, the residential building was already existing and included in his sole acquisition. There is no showing that the property was constructed at the expense of the conjugal partnership.
Consequently, its character as Steph’s separate property under the conjugal partnership of gains remains unchanged.
Q: Is the consent of Laarni necessary to mortgage the property?
A: No, since Steph is the sole owner of the property, the bank was not required to verify Laarni’s signature in the SPA.
Q: Did the Bank exercise the diligence required when it approved and extended the loan and mortgage agreement with spouses Uy?
A: Yes. The records show that the bank appraised the subject property before approving spouses Uy’s loan. The bank surveyed the property to properly and completely assess its market value in relation to the credit line of spouses Uy.
The bank official corroborated that based on their records, there was a complete appraisal of the collateral property. This means that the entirety of the collateral, i.e., the lot, as well as the building constructed thereon, including the foundation, roofing, walls, flooring finishes, ceilings, windows, doors, and number of rooms, were reported and noted.
More importantly, the records showed that no objection or refusal by the owner and/or occupant of the subject property was made as to the fair market value was recorded on the lot and improvement. (Source: Pua vs. Union Bank of the Philippines, G.R. No. 253450, January 22, 2024, Lopez, J. Second Division)
The author is the Dean, College of Law at the Lyceum of the Philippines University, and founder of Mawis Law Office
