G.R. No. 29168 , December 29, 1928
ADOLFO AENLLE, applicant-appellant, vs. CLEMENTINA MARIA BERTRAND RHEIMS, claimant-appellee. PHILIPPINE GUARANTY CO., INC., defendant-appellant.

FACTS

Adolfo Aenlle and Clementina Maria Bertrand were married in 1886. They acquired Lots Nos. 16 and 17 in Manila as conjugal property. The couple later separated, and Clementina obtained a divorce decree from a Nevada court in 1917. She subsequently remarried in Hong Kong in 1919. In 1922, Adolfo Aenlle executed a mortgage over the entire property in favor of Philippine Guaranty Co., Inc., to secure a loan. In the cadastral proceedings, the trial court declared that the lots belonged to the conjugal estate of Aenlle and Clementina in undivided halves. It also ruled that the mortgage only encumbered Aenlle’s half, as the divorce had dissolved the conjugal partnership and terminated his authority to mortgage Clementina’s share. Both Aenlle and Philippine Guaranty Co., Inc., appealed.

ISSUE

1. Whether Lots Nos. 16 and 17 are conjugal property.
2. Whether the mortgage executed by Adolfo Aenlle in favor of Philippine Guaranty Co., Inc., encumbers only his undivided half or the entire property.

RULING

1. Yes, the lots are conjugal property. The Supreme Court affirmed the trial court’s finding that the lots were acquired during the marriage and thus pertained to the conjugal estate. Aenlle’s claim of exclusive ownership was without merit.
2. The mortgage encumbers the entire property. The Supreme Court reversed the trial court on this point. Even assuming the Nevada divorce was valid, it could not affect the rights of Philippine Guaranty Co., Inc., a bona fide mortgagee for value and without notice. Under the Mortgage Law (Arts. 34 and 389), the divorce decree, to affect third parties in the Philippines concerning property located therein, must be inscribed in the property registry. No such inscription was made. Therefore, the mortgage constituted a valid lien on the whole property, including Clementina’s half.

The Court modified the trial court’s decision, declaring the mortgage a charge upon the entire property. The conjugal estate was converted into a tenancy in common between Aenlle and Clementina due to their separation. The judgment was affirmed as modified.