In a transaction involving a property owned by married persons, the consent of both spouses is generally required. For instance, if a married Pinoy Entrepreneur signs a real estate mortgage to guarantee a loan application to be used as business capital, the signature of his/her wife/husband is required by the bank or other lending institutions. Why?

 

Because the mortgage over a conjugal property, if executed without the consent of a spouse, is null and void, and the bank or other lending institutions could not foreclose it in case of default.

Take for example the case of a couple married in 1967. The husband executed a real estate mortgage without the knowledge and consent of his wife. The lender sought the foreclosure of the mortgage when the husband defaulted in paying the loan. The court, however, nullified the foreclosure, as well as the mortgage itself. Under Article 124 of the Family Code, in the absence of court authority or written consent of the other spouse, any disposition or encumbrance of the conjugal property is void. 

A system of conjugal partnership of gains is a special type of partnership, where the husband and wife place in a common fund the proceeds, products, fruits and income from their separate properties and those acquired by either or both spouses through their efforts or by chance. The rules under the Family Code applies, and, in the absence thereof, the general rules on partnership under the Civil Code.

The system of conjugal partnership of gains governs the property relations between spouses in the absence of a marriage settlement. While the marriage in the illustration was celebrated before the effectivity of the Family Code in 1988, the existing rules on conjugal partnership of gains in the Family Code are generally applicable to conjugal partnership of gains already established before its effectivity. (Source: Homeowners Savings and Loan Bank vs Dailo, G.R. No. 153802, 11 March 2005)