Partially correct

This is another case of a property acquired during the marriage which, under the law, is presumed conjugal unless rebutted by proof to the contrary.

The property here is a duly titled residential lot covered by Transfer Certificate of Title No. 1427 in the name of “Minda married to Mando.” It was inherited by Minda from her father when she was already married to Mando who was a BIR employee.

In order to construct their residential house over the lot, Mando mortgaged said lot to GSIS with Minda’s consent as security for a housing loan of P136,500 payable in 20 years through a monthly salary deduction of P1,687.66.

Three years later when Mando has only paid P60,765.77 on the GSIS loan, Minda executed a Deed of Absolute Sale in favor of their friend Frank covering the house and lot for a stated consideration of P602,000. The Deed was signed by Minda for herself and as Attorney-in-Fact of Mando as evidenced by a Special Power of Attorney (SPA). Of the total price, Frank initially paid P200,000 to be used for paying the GSIS loan, with the balance of P402,000 payable when Minda surrenders the title cleared of the GSIS mortgage, as well as an Affidavit of Waiver signed by Mando.

So with the P200,000, Minda was able to pay the P176,445.77 outstanding balance of the GSIS loan. Thereafter she surrendered the clean title to Frank. But Frank refused to give the P402,000 balance of the purchase price because Mando’s Affidavit of Waiver of Rights was unsigned. Nevertheless, Frank was able to subsequently obtain a new Title in his name. And with this new title, he filed an ejectment suit against Minda and Mando before the Municipal Trial Court (MTC).

Minda and Mando on the other hand also sued Frank before the Regional Trial Court (RTC) for the nullification of the Deed of Sale.  They claimed that Mando’s signatures in the SPA and the Affidavit of Waiver of Rights were forgeries. Hence they contended that the Deed of Absolute Sale of the property was null and void for lack of Mando’s consent.

For his defense, Frank countered that there was a valid sale even if Mando’s signatures in the SPA and the Affidavit of Waiver were forgeries because the property was inherited by Minda from her father and therefore her separate paraphernal property that she could dispose off without Mando’s consent

After due trial, the RTC rendered a decision dismissing the couple’s complaint. It found that the property was Minda’s exclusive property that was inherited from her father and that therefore the Deed of Sale signed by her was valid even if Mando’s signatures in the SPA and Affidavit were forged. Was the RTC correct?

The RTC is partly correct. The presumption that all properties acquired during the marriage are conjugal, has been sufficiently rebutted by the clear evidence that Minda inherited it from her father because under Article 92 and 109 of the Family Code (FC), properties acquired during the marriage by either spouse, through gratuitous title shall be excluded from the community property and be the exclusive property of each spouse. Hence the residential lot is really Minda’s exclusive property which she can dispose of without Mando’s consent.

With respect to the improvement or house constructed thereon, Article 120 of the FC provides that when the cost of the improvement and any resulting increase in value are more than the value of the exclusive property, the entire property shall belong to the conjugal partnership subject to the reimbursement of the value of the property of the owner spouse at the time of the improvement; otherwise the property shall be retained by the owner spouse subject to the reimbursement of the cost of the improvement.

In this case, the improvement can be valued as equivalent to the GSIS loan of P136,500 for which Mando has paid only P60, 755.76. Frank advanced the P176,445.27 outstanding balance paid by Minda out of the P200,000 he initially gave her. Considering the P136,500 amount of loan by GSIS, it is fairly reasonable to assume that the residential lot is considerably more than what Mando paid. Hence the subject property remained the exclusive property of Minda.

But the contract here is not however a sale. It was only an equitable mortgage especially because the couple remained in possession and Frank retained a portion of the purchase price (P402,000). Hence Frank should re-convey the property to Minda upon payment by the latter of the P200,000 with 12% interest from the time he gave it to her within 90 days from finality of the decision (Munoz Jr. vs. Ramirez, G.R. 156125, August 25, 2010, 629, SCRA 38).

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