Gonzales-Asdala vs. Metropolitan Bank and Trust Company

A property acquired during the marriage is presumed conjugal under the regime of conjugal partnership of gains, and the party claiming otherwise bears the burden of rebutting that presumption with strong, clear, and convincing evidence; the insured under a Mortgage Redemption Insurance is the person who signed the procurement documents and in whose name the Certificate of Group Life Insurance was issued, and only that person's death activates the insurer's commitment to apply proceeds to the mortgage debt.

Petitioner Fatima B. Gonzales-Asdala and her husband, Wynne B. Asdala, obtained a housing loan from respondent Metropolitan Bank and Trust Company in 2002, secured by a real estate mortgage over a parcel of land covered by TCT No. 377659, registered in the name of "Wynne B. Asdala, married to Fatima G. Asdala." The loan was governed by the Civil Code regime of conjugal partnership of gains, the spouses having married in 1981, before the Family Code took effect. The promissory notes executed in favor of Metrobank required the mortgagors to procure a Mortgage Redemption Insurance at the bank's option, with premiums to be auto-debited from the borrowers' accounts.

In June 2002, petitioner Fatima B. Gonzales-Asdala and her husband, Wynne B. Asdala, applied with Metrobank for a loan amounting to PHP 1,500,000.00 to finance the renovation of their house, built on a parcel of land covered by TCT No. 377659 and registered in the name of "Wynne B. Asdala, married to Fatima G. Asdala." On July 22, 2002, the spouses executed three sets of Promissory Notes in favor of Metrobank, corresponding to the release of loan proceeds in three tranches. All the Promissory Notes contained identical terms and conditions, specifically providing for the procurement of a Mortgage Redemption Insurance by the mortgagor should Metrobank so require. As security for the loan, the spouses constituted a Real Estate Mortgage over the subject land.

On November 26, 2002, Metrobank sent the spouses a letter thanking them for the transaction and informing them that the first annual MRI premium, amounting to PHP 6,884.10, had to be paid on July 24, 2003. In the years that followed, petitioner alleged that she and her husband were periodically billed for MRI premiums, but no receipts were issued and no policy was released in their favor. The only proof of payment of the MRI premiums was a debit memo issued by Metrobank to petitioner's husband.

On March 24, 2008, Wynne died. Petitioner notified Metrobank of his death and requested the immediate discharge of the mortgage, contending that the MRI premiums had been paid by her husband during his lifetime. Metrobank denied the request, asserting that the documents for the procurement of the MRI were signed by petitioner alone and that the insurance was issued only in her name. Metrobank further showed that the payment of the insurance premiums was sourced from a savings account under petitioner's name alone.

On July 1, 2008, petitioner received a letter from Metrobank with an attached Statement of Account demanding payment for two months of unpaid amortization in the amount of PHP 41,315.14, inclusive of penalty charges. Petitioner then filed a Complaint for Specific Performance, Injunction and Damages with Prayer for Temporary Restraining Order and Preliminary Injunction against Metrobank, claiming that the proceeds of the MRI should be applied to the loan since her husband's death activated the insurer's commitment, and that the mortgaged property was her husband's exclusive property, making him the sole mortgagor and consequently the insured under the MRI. Metrobank admitted the material averments regarding the loan application but maintained that the MRI was applied for and taken on the life of petitioner alone, so the death of her husband did not extinguish the loan or the mortgage.

Both the RTC and the CA found that the subject property was acquired during the marriage, as evidenced by TCT No. 377659, which was issued in March 1988, seven years after the spouses' marriage in 1981. Petitioner presented no other evidence — such as a deed of sale — to establish an earlier or different date of acquisition. Both courts likewise found that the MRI procurement documents were signed by petitioner alone, the Certificate of Group Life Insurance was issued only in her name, and the premiums were debited from her personal savings account.

• Nature of the Promissory Notes: Petitioner argued that the promissory notes contemplated not only the procurement of property insurance and MRI as securities, but also a separate life insurance on her life to support the loan obligation, citing differences in the wording of paragraphs 4 and 8 of the promissory notes.
• Due Process: Petitioner maintained that the lower courts and the Court of Appeals denied her right to due process.
• Estoppel: Petitioner argued that Metrobank was estopped from denying that Wynne was the registered owner of the subject property and the sole person covered by the MRI, given that Metrobank had repeatedly and unequivocally declared him as such.
• Presumption of Conjugality: Petitioner contended that the CA erred in failing to apply the doctrines laid down in Francisco vs. Court of Appeals and Jorge vs. Marcelo, which ruled that the presumption of conjugality under Article 116 of the Family Code can only be applied after proof has been adduced by the person claiming such presumption, and that Metrobank's prior and contemporaneous actions acknowledging the subject property to be paraphernal negated and barred it from invoking the presumption.

• Identity of the Insured: Respondent countered that the MRI was applied for and taken on the life of petitioner alone, as evidenced by the procurement documents signed solely by her and the Certificate of Group Life Insurance issued only in her name, and that the payment of insurance premiums was sourced from petitioner's personal savings account.
• Effect of Husband's Death: Respondent maintained that the death of petitioner's husband did not operate to extinguish the loan or the mortgage because he was not the borrower insured under the MRI.

• Nature of the Property: Whether the parcel of land subject of the real estate mortgage is conjugal.
• Identity of the Insured: Whether petitioner's husband was the insured under the subject MRI.
• Construction of the Promissory Notes: Whether the promissory notes contemplated a life insurance on petitioner's life separate from and in addition to the MRI.
• Due Process: Whether the lower courts and the Court of Appeals denied petitioner her right to due process.
• Estoppel: Whether Metrobank was estopped from invoking the presumption of conjugality after having acknowledged the subject property as paraphernal.

• Nature of the Property: Yes. The property is conjugal, having been acquired during the marriage as evidenced by TCT No. 377659 issued in 1988, seven years after the 1981 marriage, and petitioner failed to present strong, clear, and convincing evidence to rebut the presumption of conjugality.
• Identity of the Insured: No. Petitioner's husband was not the insured under the MRI; the procurement documents were signed by petitioner alone, the Certificate of Group Life Insurance was issued only in her name, and premiums were debited from her personal savings account.
• Construction of the Promissory Notes: No. Paragraphs 4 and 8 of the promissory notes are correlated — paragraph 4 is an auto-debit clause and paragraph 8 is the security clause specifying acceptable insurance types — and do not contemplate separate and additional life insurance beyond the MRI.
• Due Process: No. No denial of due process was established.
• Estoppel: No. No basis for estoppel was found; Metrobank relied on the TCT presented by petitioner herself, the sole documentary evidence of ownership.

• Nature of the Property: The governing law is the Civil Code, the spouses having married in 1981, before the Family Code took effect. Under the regime of conjugal partnership of gains, properties acquired during the marriage are presumed conjugal, and the party claiming otherwise bears the burden of proving that claim with strong, clear, and convincing evidence. The TCT, issued in March 1988, was the only documentary evidence petitioner presented, and it established that the property was acquired during the marriage. Petitioner alluded to a deed of sale evidencing her husband's acquisition but failed to present it. The question of whether petitioner adduced sufficient proof to overthrow the presumption of conjugality is a factual issue, and factual findings of the trial court, especially when confirmed by the appellate court, are accorded great weight and will not be disturbed on appeal except for compelling reasons. Petitioner's reliance on Francisco vs. Court of Appeals and Jorge vs. Marcelo was misplaced, because the Court itself pronounced in Francisco that the presumption of conjugality is rebuttable, but only with strong, clear, and convincing evidence — which petitioner failed to produce.

• Identity of the Insured: Because the property is conjugal, both petitioner and her husband were mortgagors for whose benefit an MRI may be made. As a co-mortgagor, petitioner could secure an MRI on her life alone without a similar action by her husband, pursuant to Section 3 of the Insurance Code, which provides that the consent of the spouse is not necessary for the validity of an insurance policy taken out by a married person on his or her life. The documents for the procurement of the MRI were signed by petitioner alone, the Certificate of Group Life Insurance was issued only in her name, and the premiums were sourced from her personal savings account. These facts sufficiently established that petitioner was the sole named insured. An MRI is a group insurance policy protecting both mortgagee and mortgagor; where the mortgagor pays the premium and makes the loss payable to the mortgagee, the insurance is on the mortgagor's interest, and the mortgagor remains a party to the contract. Since petitioner alone signed the MRI procurement documents, only she is a party to the insurance contract. Her husband's death did not cede any rights or interests to Metrobank under the insurance, because he was not a party to it. The CA correctly held that the MRI proceeds cannot be applied to the loan upon the husband's death because he was not the borrower insured.

• Construction of the Promissory Notes: Paragraphs 4 and 8 of the promissory notes, while separate, are correlated. Paragraph 4 is an auto-debit clause prescribing the mode of paying the loan, including premiums for insurance held as security. Paragraph 8 is the security clause specifying what type of insurance is acceptable to the bank — property insurance and MRI or other similar insurance. Differences in wording between the two paragraphs do not connote different types of insurance. The records show that petitioner only took out an MRI, the Philippine Axa Group Life Insurance, and no other life insurance. Petitioner cannot feign ignorance of the real nature and type of insurance contract, having signed the same and made herself a party thereto.

• Due Process: The Court found no indication that the lower courts or the CA denied petitioner her right to due process. The issue was raised but not substantiated with any specific procedural irregularity or deprivation.

• Estoppel: No basis for estoppel was established. Metrobank relied on the TCT — the sole document presented by petitioner — to determine the nature of the property. Petitioner's claim that Metrobank had acknowledged the property as paraphernal was not supported by sufficient evidence. Without such proof, the presumption of conjugality stands.

• Presumption of Conjugality — Under the regime of conjugal partnership of gains, properties acquired during the marriage are presumed conjugal. The presumption is rebuttable, but only with strong, clear, and convincing evidence. The party claiming that a property is not conjugal bears the burden of proof. The properties must first be proven to have been acquired during the marriage before the presumption applies. In this case, the TCT issued in 1988 — seven years after the 1981 marriage — established acquisition during the marriage, and petitioner failed to present any deed of sale or other evidence to rebut the presumption.

• Insurable Interest of the Mortgagor in MRI — Under Section 8 of the Insurance Code, where a mortgagor effects insurance on his own name providing that the loss shall be payable to the mortgagee, the insurance is deemed to be upon the interest of the mortgagor, who does not cease to be a party to the original contract. The mortgagee is simply an appointee of the insurance fund; the loss-payable clause does not make the mortgagee a party to the contract. In this case, since petitioner alone signed the MRI procurement documents, only she was a party to the insurance contract, and her husband's death did not activate the insurer's commitment.

• Spousal Consent Not Required for Life Insurance — Section 3 of the Insurance Code provides that the consent of the spouse is not necessary for the validity of an insurance policy taken out by a married person on his or her life. Accordingly, petitioner, as a co-mortgagor, could secure an MRI on her life alone without her husband's participation.

• Factual Findings of Trial Courts — Factual determinations of the trial courts, especially when confirmed by the appellate court, are accorded great weight by the Supreme Court and, as a rule, will not be disturbed on appeal except for compelling reasons. A petition for review under Rule 45 should cover only questions of law; questions of fact are not reviewable except in extremely meritorious circumstances.

• "Article 105 of the Family Code explicitly mandates that the Family Code shall apply to conjugal partnerships established before the said law took effect without prejudice to vested rights already acquired under the Civil Code or other laws. Consequently, under the regime of conjugal partnership of gains, if the properties are acquired during the marriage, the presumption is that they are conjugal; the party claiming that they are not conjugal has the burden of proving his claim." — This passage, quoted from the CA's decision, articulates the governing legal framework for the presumption of conjugality and the allocation of the burden of proof, which the Supreme Court adopted as its own.

• "Unless the policy provides, where a mortgagor of property effects insurance in his own name providing that the loss shall be payable to the mortgagee, or assigns a policy of insurance to a mortgagee, the insurance is deemed to be upon the interest of the mortgagor, who does not cease to be a party to the original contract." — This is the Court's quotation of Section 8 of the Insurance Code, central to its determination that only the petitioner — who alone signed the MRI documents — was a party to the insurance contract, and that her husband's death did not trigger the insurer's commitment.

• "Being the sole mortgagor in the MRI, only the petitioner is a party to the contract. Thus, the death of petitioner's husband did not cede to Metrobank the rights or interests in the insurance contract for the reason that petitioner's husband was not a party to the contract." — This is the ratio decidendi on the insurance issue: the decisive link between the identity of the insured and the non-activation of MRI proceeds upon the husband's death.

• Francisco vs. Court of Appeals, 359 Phil. 519 (1998) — Cited by petitioner for the proposition that the presumption of conjugality requires prior proof of acquisition during the marriage. The Court found petitioner's reliance misplaced, noting that Francisco itself held the presumption is rebuttable only with strong, clear, and convincing evidence, which petitioner failed to produce.

• Jorge vs. Marcelo, 849 Phil. 707 (2019) — Cited by petitioner alongside Francisco on the presumption of conjugality. The Court found no merit in petitioner's invocation of this case for the same reasons.

• Great Pacific Life Assurance Corp. vs. Court of Appeals, 375 Phil. 142 (1999) — Cited for the doctrine on the nature of MRI as a group insurance policy of mortgagors, and for the principle that where the mortgagor pays the premium and makes the loss payable to the mortgagee, the insurance is on the mortgagor's interest and the mortgagor remains a party to the contract.

• Villanueva vs. Court of Appeals, 471 Phil. 394 (2004) — Cited for the rule that questions of fact are not reviewable in a petition for review under Rule 45 except in extremely meritorious circumstances.

• Ko vs. Aramburo, 816 Phil. 121 (2017) — Cited for the doctrine that factual findings of trial courts, especially when confirmed by the appellate court, are accorded great weight and will not be disturbed on appeal except for compelling reasons.

• Section 1, Rule 45, Rules of Court — Governs petitions for review on certiorari, limiting review to questions of law. Applied to hold that the issue of whether the property was acquired during the marriage is a factual question not reviewable on appeal.

• Article 105, Family Code — Mandates that the Family Code applies to conjugal partnerships established before its effectivity without prejudice to vested rights already acquired under the Civil Code. Applied to determine that the Civil Code regime of conjugal partnership of gains governed the spouses' property relations, they having married in 1981.

• Article 116, Family Code — Provides the presumption that all properties acquired during the marriage are presumed conjugal. Petitioner cited this provision in arguing that the presumption applies only after proof of acquisition during marriage has been adduced.

• Section 3, The Insurance Code — Provides that the consent of the spouse is not necessary for the validity of an insurance policy taken out by a married person on his or her life. Applied to uphold the validity of the MRI taken out solely by petitioner on her own life.

• Section 8, The Insurance Code — Provides that where a mortgagor effects insurance in his own name with loss payable to the mortgagee, the insurance is upon the mortgagor's interest and the mortgagor does not cease to be a party to the contract. Applied to determine that only petitioner, who alone signed the MRI procurement documents, was a party to the insurance contract.

Gesmundo, C.J. (Chairperson), Zalameda, Rosario, and Marquez, JJ., concurred.