G.R. No. 193228 November 27, 2017
BOSTON EQUITY RESOURCES, INC., and WILLIAM HERNANDEZ, Petitioners vs. EDGARDO D. DEL ROSARIO, Respondent

FACTS

Petitioner Boston Equity Resources, Inc. extended loans to respondent Edgardo Del Rosario, secured by a real estate mortgage over six parcels of land registered solely in his name. Del Rosario represented himself as single in the mortgage contract, despite being married to Rosie Gonzales Del Rosario since 1968. Following Del Rosario’s alleged default, Boston Equity extrajudicially foreclosed the mortgage under Act No. 3135 . At the public auction, Boston Equity was the sole bidder and was awarded the properties.
Del Rosario, joined later by his wife and children as intervenors, filed a complaint to annul the mortgage, its amendment, and the foreclosure proceedings. They argued the mortgage was void for lack of the wife’s written consent, as the mortgaged properties were conjugal assets. The Regional Trial Court dismissed the complaint, upholding the validity of the mortgage and foreclosure. The Court of Appeals reversed this decision, declaring the mortgage and all subsequent foreclosure proceedings null and void.

ISSUE

Whether the real estate mortgage and the extrajudicial foreclosure proceedings are valid despite the absence of the spouse’s written consent to the mortgage of conjugal property.

RULING

The Supreme Court denied the petition and affirmed the Court of Appeals. The core legal principle applied is that under the Family Code, the alienation or encumbrance of conjugal property requires the written consent of both spouses. The consent must be expressly stated; it cannot be presumed or inferred. Here, the mortgaged properties, though registered in the husband’s name alone, were acquired during the marriage and were thus conjugal. The mortgage contract contained no written consent from the wife, Rosie Gonzales Del Rosario. Consequently, the real estate mortgage was void from its inception for violating a mandatory legal requirement.
The nullity of the principal contract (the mortgage) necessarily invalidates all accessory contracts and proceedings derived from it. Therefore, the amended mortgage and the entire extrajudicial foreclosure, including the sheriff’s sale, were also void. The Court clarified that the “two-bidder rule” under the rules on execution sales is not applicable to foreclosure sales under Act No. 3135 , but this point became moot given the fundamental nullity of the mortgage itself. The obligation to pay the loan remains, but it is converted into a purely personal obligation of the borrower, collectible through an ordinary action, not through the void foreclosure of the invalid mortgage.