Atty. Julius Gregory Delgado

FATIMA GONZALES-ASDALA VS. METROPOLITAN BANK AND TRUST COMPANY, G.R. NO. 257982 (FEBRUARY 22, 2023): MORTGAGE REDEMPTION INSURANCE TAKEN BY WIFE ALONE DOES NOT EXTINGUISH THE LOAN OBLIGATION AND DOES NOT RELEASE THE MORTGAGE OVER A PRESUMED CONJUGAL PROPERTY UPON THE DEATH OF HER HUSBAND

Sometime in June 2022, petitioner Fatima Gonzales-Asdala and her husband, Wynne B. Asdala, applied for a loan with Metrobank in the amount of Php1,500,000.00 to finance the renovation of their house built on a parcel of land covered by Transfer Certificate of Title No. (TCT) 3777659 and registered in the name of “Wynne B. Asdala, married to Fatima G. Asdala”. On July 22, 2002, petitioner and her husband executed three (3) sets of Promissory Notes in favor of the bank, corresponding to the release of the proceeds of their loan in three (3) tranches. All Promissory Notes contained the same terms and conditions, including procurement of a Mortgage Redemption Insurance (MRI) by the mortgagor, in case the bank would so require. As security of the loan, petitioner and her husband were required to constitute a Real Estate Mortgage on the subject land.

On November 26, 2002, the bank sent the Spouses a Letter thanking them for their transaction and informing them that the first annual MRI premium, amounting to Php6,884.10, 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 neither was a policy 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, petitioner’s husband, Wynne, died. Petitioner notified Metrobank of his death and requested for immediate discharge of the mortgage on account of the fact that the MRI premiums were paid by her husband during his lifetime. However, Metrobank denied the request and averred that the documents for the procurement of the MRI were signed by petitioner only, thus, was issued only in her name. The bank also showed that the payment of the insurance premiums was sourced from the savings account under the name of petitioner alone. On July 1, 2008, petitioner received a letter with an attached Statement of Account, demanding payment for two months unpaid amortization in the amount of Php41,315.14, 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 the bank claiming, in essence, 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 property offered as security for the loan was her husband’s exclusive property, thus, he alone was the mortgagor in the Real Estate Mortgage and consequently, the insured under the MRI. Metrobank’s position is that the MRI was applied for and taken on the life of petitioner, therefore, the death of her husband did not operate to extinguish the loan or the mortgage. The trial court dismissed petitioner’s Complaint which was affirmed by the Court of Appeals.

The Supreme Court held that there is a presumption that the property mortgaged by the spouses as a security of their loan is presumed conjugal property considering that the only evidence adduce is the TCT, which showed that the same was issued in 1988, seven years after petitioner and her husband’s marriage in 1981. No other evidence was presented to prove that the same is a paraphernal property of the husband. The Court held:

“Since petitioner failed to present strict proof of her husband’s exclusive ownership over the property, Metrobank, the lower courts, and this Court, cannot be faulted for relying on the TCT, the sole document presented by petitioner. After all, the question on whether petitioner was able to adduce proof to overthrow the presumption of conjugality is a factual issue best addressed by the trial court. It cannot be over-emphasized that factual determinations of the trial courts, especially when confirmed by the appellate court, are accorded great weight by the Court and, as a rule, will not be disturbed on appeal, except for the most compelling reasons.”

On the main issue, the Supreme Court that the property over which the mortgage was constituted being presumed as conjugal, both the petitioner and her husband were mortgagors for whose benefit an MRI can be made. The Court held that the trial court and the appellate court were correct in finding that petitioner, as co-mortgagor, could secure an MRI on her life alone without a similar action by her husband, her co-mortgagor. The Court held that being the sole mortgagor in the MRI, she is the only party to the contract and the death of her husband did not cede to Metrobank the rights and interests in the insurance contract for the reason that her husband was not a party to the contract. Thus, the appellate court correctly held that the proceeds under the MRI cannot be applied to the loan upon the death of petitioner’s husband because he was not the borrower insured under the MRI.