88.

CONJUGAL PROPERTY INVOLVED IN NULL MARRIAGE

Metropolitan Bank and Trust Co. vs. Nicholson Pascual

G.R. No. 163744 February 29, 2008

Velasco, Jr., J.:

Doctrine:

While the declared nullity of marriage of Nicholson and Florencia

severed their marital bond and dissolved the conjugal partnership, the
character of the properties acquired before such declaration continues to
subsist as conjugal properties until and after the liquidation and partition of
the partnership

Facts:

Nicholson Pascual and Florencia Nevalga were married for nine years but
their marriage was declared null and void in 1994 on the ground of
psychological incapacity on the part of Nicholson. The dissolution of marriage
included the order of liquidation of their conjugal partnership of gains.
During their marriage, Florencia bought a lot from Sps. Clarito and Belen
Sering in Makati. In the year of 1997 Florencia obtained a loan of P58 million
from Metrobank alongside Sps. Norberto and Elvira Oliveros which was set to
be paid in 1999. They secured the obligation by executing several real estate
mortgages on their properties, including the property purchased from Sps.
Sering; among the documents submitted by Florencia in procuring the loan
was a waiver that covers her conjugal properties with Nicholson which the
latter purportedly executed in her favor in 1995. Florencia and Sps. Oliveros
failed to pay their loan obligation, causing Metrobank to initiate foreclosure
proceedings and publish a notice of sale. When the news reached, Nicholson
filed with the trial court a complaint to declare the nullity of the mortgage of
the property in question, alleging that the property is still a conjugal
property mortgaged is without his consent. Metrobank averred that said
property was paraphernal as it was registered in Florencia’s name.

The Trial court ruled in favor of Nicholson, invalidating the mortgage and
finding said property to be conjugal because it was acquired during the
existence of the marriage of Nicholson and Florencia. Metrobank elevated
the case to the Court of Appeals, invoking Art. 160 of the Family Code by
saying that for the presumption of conjugal ownership to operate, evidence
must be adduced to prove that not only was the property acquired during
the marriage but that conjugal funds were used for the acquisition and the
burden of proof is assigned to them, Nicholson allegedly failed to discharge.
The Court of Appeals, notwithstanding, affirmed the trial court’s decision,
stating that Metrobank was not able to overthrow the presumptive conjugal
nature of said property.

Issue:

Is Metrobank's contention that before conjugal ownership could be legally

presumed, there must be a showing that the property was acquired during
marriage using conjugal funds?

No, in the case of Castro v. Miat, the court held that the article does not
require proof that the property was acquired with funds of the partnership.

Article 160 of the New Civil Code provides that "all property of the marriage
is presumed to be conjugal partnership, unless it be proven” this is proviso
does not absolutely require proof that the property was acquired with funds
of the partnership. The presumption applies even when the manner in which
the property was acquired does not appear.

More so in this case, the declared nullity of marriage of Nicholson and

Florencia severed their marital bond and dissolved the conjugal partnership,
the character of the properties acquired before such declaration continues to
subsist as conjugal properties until and after the liquidation and partition of
the partnership (Section 7, Chapter 4, Title IV, Book I (Arts. 179 to 185) of
the Civil Code).