METROBANK VS PASCUAL

Facts:

Respondent Nicholson Pascual and Florencia Nevalga were married on Januay 19, 1985. During the union, Florencia bought a lot
located in Makati City. Subsequently, Transfer Certificate of Title was issued in the name of Florencia, married to Nicholson
Pascual.

In 1994, their marriage were annulled on the ground of psychological incapacity on the part of Nicholson, and they went on
their separate ways without liquidating their properties.

In 1997, Florencio, together with spouses Oliveros, obtained a Php 58 million load from petitioner Metrobank and mortgaged
the aforesaid property.

Due to the failure of Florencia and the sps Oliveros to pay their loan obligation when it fell due, Metrobank initiated foreclosure
proceedings. Metrobank published a notice of sale. At the auction, it emerged as the highest bidder.

Nicholson filed a complaint to declare the nullity of the mortgage of the disputed property, alleging that the property, which is
still conjugal property, was mortgaged without his consent.

Metrobank, in its Answer, alleged that the disputed lot, being registered in Florencia's name, was paraphernal; and thst they
approved the mortgage in good faith.

The RTC ruled that the mortgage is invalid. The said lot is a conjugal property having been acquired during the existence of the
marriage of Nicholson and Florencia. Invoking Art. 116 of the Family Code, Metrobank had not overcome the presumptive
nature of the lot. And being conjugal, the RTC concluded that the disputed property may not be validly encumbered by Florencia
without Nicholsons consent. The CA affirmed RTC's decision.

Issue/s:

1. WON the subject property is a conjugal property.

2. WON the declaration of nullity of marriage between respondent Nicholson and Florencia iposo facto dissolved the regime of
community of property of the spouses.

Ruling:

1. Yes. The property relations of the former spouses are governed by Art. 160 of the Civil Code (since the marriage of Nicholson
and Florencia was contracted prior to the effectivity of the Family Code) which provides that all property of the marriage is
presumed to belong to the conjugal partnership, unless it be proven that it pertains exclusively to the husband or to the wife,
applies. This article does not require proof that the property was acquired wih funds of the partnership. The presumption
applies even when the manner in which the property was acquired does not appear.

2. No. 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.

In this pre-liquidation scenario, Art. 493 of the Civil Code shall govern the property relationship between the former spouses.
Under this provision, the effect of the alienation or the mortgage, with respect to the co-owners, shall be limited to the portion
which may be alloted to him in the division upon the termination of the co-ownership. Under it, Florencia has the right to only
1/2 and can mortgage/sell it even without the consent of Nicholson. Hence, Metrobank, as mortgagee, are limited only to the
1/2 undivided portion that Florencia owned; the remaining half covered is null and void as Nicholson did not consent to the
mortgage of his undivided half.