FRANCISCO LIM vs EQUITABLE PCI BANK

G.R. No. 183918; January 15, 2014; Del Castillo; Second Division

DOCTRINE:

Marriage; Property Relations; Conjugal Property – All property of the marriage is presumed to be conjugal, unless it is shown that it is owned exclusively by the husband or the wife; that this presumption is not overcome by the fact that the property is registered in the name of the husband or the wife alone; and that the consent of both spouses is required before a conjugal property may be mortgaged.  [T]his presumption under Article 160 of the Civil Code cannot prevail when the title is in the name of only one spouse and the rights of innocent third parties are involved.

FACTS:

Petitioner Francisco Lim executed an SPA in favor of his brother Franco to mortgage his share in a property in order to secure a loan. This first loan extended by BDO in 1989 was fully paid by Franco in 1992. However in 1996, Franco and their mother obtained another loan over the same property which they failed to pay.

Respondent Bank tried to foreclose the property due to the non-payment of the loan. Petitioner thus tried to get a TRO and for the foreclosure and to secure a cancellation of the SPA executed in favor of his brother. Petitioner alleged that he did not authorize Franco to mortgage the subject property to respondent and that his signatures in the Real Estate Mortgage and the Surety Agreement were forged.

the RTC rendered a Decision in favor of petitioner. It ruled that petitioner was able to prove by preponderance of evidence that he did not participate in the execution of the mortgage contract giving rise to the presumption that his signature was forged.

The CA reversed the RTC Decision. It ruled that petitioner’s mere allegation that his signature in the mortgage contract was forged is not sufficient to overcome the presumption of regularity of the notarized document.

ISSUE:

1. Whether or not Petitioner was able to prove that the SPA was forged.

2. Whether or not Respondent Bank was failed to exercise due diligence when granting the loan without the signature of Petitioner's wife in the mortgage contract.

HELD:

1. NO. Petitioner was not able to prove that his signature was forged. No evidence was ever presented to prove the allegation: the alleged forged signature was never compared with the genuine signatures of petitioner as no sample signatures were submitted.

2. NO. Respondent exercised due diligence. The nature of the property was never raised as an issue. Hence, the absence of his wife’s signature on the mortgage contract also has no bearing in this case.

All property of the marriage is presumed to be conjugal, unless it is shown that it is owned exclusively by the husband or the wife; that this presumption is not overcome by the fact that the property is registered in the name of the husband or the wife alone; and that the consent of both spouses is required before a conjugal property may be mortgaged.  However, we find it iniquitous to apply the foregoing presumption especially since the nature of the mortgaged property was never raised as an issue before the RTC, the CA, and even before this Court. In fact, petitioner never alleged in his Complaint that the said property was conjugal in nature. Hence, respondent had no opportunity to rebut the said presumption.

Article 160 of the Civil Code provides as follows:

"Art. 160. All property of the marriage is presumed to belong to the conjugal partnership, unless it be proved that it pertains exclusively to the husband or to the wife."

The presumption applies to property acquired during the lifetime of the husband and wife. In this case, it appears on the face of the title that the properties were acquired by [one spouse]. When the property is registered in the name of a spouse only and there is no showing as to when the property was acquired by said spouse, this is an indication that the property belongs exclusively to said spouse. And this presumption under Article 160 of the Civil Code cannot prevail when the title is in the name of only one spouse and the rights of innocent third parties are involved.