ADMINISTRATION OF CPG Prepared by: Michael Joseph Nogoy, JD 1 CASE No. 110 [G.R. No. 153802.

March 11, 2005.] HOMEOWNERS SAVINGS & LOAN BANK, petitioner, vs. MIGUELA C. DAILO, respondent.

Whether or not payment of the principal obligation on the mortgage should be made by the conjugal partnership.

HELD: Yes. The Article 124 of the Family Code will apply. Basically, Article 493 provides for the co-owner of a property to have full ownership of his part and therefore he may dispose of it as he wants. Because Marcelino was such co-owner, he can do what he wants with the property, like mortgage it. On the other hand, Article 124 provides for the joint administration of conjugal properties. HSLB says that the framers could not have intended that the co-owner spouse cannot exercise his full rights because of the bar in Article 124. There is no marriage settlement between Miguela and her dead spouse, so their property regime is automatically conjugal partnership of gains or CPG. If there is no consent as to the action of one spouse with regards to the administration of the property, the same is void. In this case, No. The HSLB says payment of the principal obligation on the mortgage should be made by the conjugal partnership because the loan redounded to the benefit of the family under Article 121 of the Family Code. But the burden of proof lies with the HSLB, on the one who alleges that the mortgage benefited the conjugal partnership. HSLB alleges that the loan was used to finance the construction of housing units but it was not adequately proven. Also, since they kept on saying that Marcelino owned the property in his individual capacity, it cannot be admitted that the money was used for his family.

PONENTE: TINGA, J.: FACTS: Miguela and Marcelino Dailo were married in 1967. They bought a house and lot during their marriage in San Pablo City, Laguna but the absolute deed of sale was executed only in favor of Marcelino and excluded his wife. In 1993, Marcelino executed a special power of attorney to authorize a certain Lilibeth Gesmundo to obtain a loan from petitioner bank HSLB with the house and lot as security. The property was mortgaged and the loan was approved in the amount of P300,000. Miguela did not know about this at all When Gesmundo failed to pay the loan in full upon maturity, the spouses' property was extra judicially foreclosed, sold, and bought by petitioner bank. Because it was not redeemed after one year, the bank consolidated their ownership over it. Marcelino died and it was only then that Miguela knew of the mortgage, foreclosure and sale of their conjugal property. The CA ruled that Art 124 of the Family Code is controlling in the case because it provided for the nullity of any encumbrance or disposition without the knowledge and consent of both spouses.

ISSUES: Whether or not the Article 124 of the Family Code is in effect in this case or is it the Article 493 of the Civil Code.