G.R. No. 212483 . October 05, 2016
PHILIPPINE NATIONAL BANK, PETITIONER, VS. VENANCIO C. REYES, JR., RESPONDENT.

FACTS

Respondent Venancio C. Reyes, Jr. is married to Lilia Reyes. During their marriage, they acquired three parcels of land in Malolos, Bulacan. The titles were registered under “Lilia C. Reyes, married to Venancio Reyes” or similar formulations. In 1994, these properties were mortgaged to petitioner Philippine National Bank (PNB) to secure a loan, which was later increased to ₱3,000,000.00. PNB claimed both spouses consented to the loan and mortgage. Upon the spouses’ failure to pay, PNB extrajudicially foreclosed the properties in 1997 and was the highest bidder at the auction sale.
Venancio filed a complaint for annulment of the certificate of sale and the real estate mortgage. He alleged that his wife contracted the loan and executed the mortgage without his knowledge or consent, and that his signatures on the promissory notes and mortgage documents were forged. He argued that since the properties were conjugal, the mortgage was void absent his consent. The Regional Trial Court ruled in his favor, annulling the mortgage and foreclosure proceedings, and ordering Lilia alone to reimburse PNB for the loan amount. The Court of Appeals affirmed this decision.

ISSUE

The issues were: (1) whether the real estate mortgage was void; (2) whether the conjugal partnership could be held liable for the loan; and (3) whether Venancio’s action was barred by laches.

RULING

The Supreme Court denied PNB’s petition and affirmed the Court of Appeals with modification. On the first issue, the mortgage was declared void. Under Article 124 of the Family Code, the disposition or encumbrance of conjugal property requires the written consent of both spouses. The Court upheld the concurrent factual findings of the lower courts that Venancio’s consent was absent and his signature was forged. PNB’s argument on laches failed because Venancio filed his complaint within the prescriptive period for the annulment of a void contract, and mere delay, without proof of intent to abandon his right, does not constitute laches.
On the second issue, the Court modified the ruling regarding liability. While the mortgage itself was void for lack of consent, the loan obligation may still be enforced against the conjugal partnership if it redounded to the benefit of the family. The case was remanded to the trial court to determine if the loan proceeds were used for the benefit of the conjugal partnership. If so, the conjugal assets would be liable. Furthermore, applying Article 121 of the Family Code, if the conjugal partnership is insufficient to cover such a liability, the spouses become solidarily liable with their separate properties. Therefore, the Court declared that spouses Venancio and Lilia Reyes are jointly and solidarily liable with their separate properties should the conjugal partnership be inadequate to pay the valid loan obligation.