Dear PAO,

My mother pawned our land title for P60,000 back in 2018. She did this without the consent of my father or us, their children. The property is conjugal, so both spouses should have agreed to the mortgage. We only discovered the transaction about four years ago. I offered to pay the balance, but the lender refused. He demanded a huge amount of interest. Can my father question the contract, especially since the property is conjugal, and he never consented to the mortgage? Can I also contest the huge interest being charged by the lender?

Mr. Client

Dear Mr. Client,

Conjugal property mortgaged by a spouse without the knowledge of or written consent of the other spouse is void. Article 124 of the Family Code expressly states:

“Art. 124. The administration and enjoyment of the conjugal partnership shall belong to both spouses jointly. In case of disagreement, the husband’s decision shall prevail, subject to recourse to the court by the wife for proper remedy, which must be availed of within five years from the date of the contract implementing such decision.

“In the event that one spouse is incapacitated or otherwise unable to participate in the administration of the conjugal properties, the other spouse may assume sole powers of administration. These powers do not include disposition or encumbrance without authority of the court or the written consent of the other spouse. In the absence of such authority or consent, the disposition or encumbrance shall be void. However, the transaction shall be construed as a continuing offer on the part of the consenting spouse and the third person, and may be perfected as a binding contract upon the acceptance by the other spouse or authorization by the court before the offer is withdrawn by either or both offerors.” (Emphasis supplied)

This was the issue in the case of Homeowners Savings and Loan Bank vs. Dalilo (GR 153802, March 11, 2005, Ponente: Associate Justice Dante Tiñga). In said case, a real estate mortgage was constituted or made, upon a conjugal property by a spouse without the knowledge of the other spouse. Citing the earlier case of Guiang vs. Court of Appeals (GR 125172 June 26, 1998), the Supreme Court observed:

“In Guiang v. Court of Appeals, it was held that the sale of a conjugal property requires the consent of both the husband and wife. In applying Article 124 of the Family Code, this Court declared that the absence of the consent of one renders the entire sale null and void, including the portion of the conjugal property pertaining to the husband who contracted the sale. The same principle in Guiang squarely applies to the instant case.”

In your case, you may elect to ignore the mortgage, as it is void to begin with. You may insist that the title be returned to your father.

As to the claim for interest, Article 1956 of the New Civil Code is clear that “[n]o interest shall be due unless it has been expressly stipulated in writing.” Hence, the lender may not demand interest for the loan contracted by your mother, unless the same was expressly provided in their contract.

Please note that this piece of advice was based only on the facts you have given and our appreciation of the same. Our opinion may change given more details.

We appreciate your trust and support.