In transactions involving properties 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. The bank or other lending company could not foreclose on the mortgaged property in case the debtor-spouse defaults or fails to pay the debt.

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 lending company sought the foreclosure of the mortgage when the husband defaulted in paying the loan. The foreclosure and the mortgage itself, however, was later nullified. 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 considered void. The provision reads:

Art. 124. The administration and enjoyment of the conjugal partnership property shall belong to both spouses jointly. . . .

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 the powers of disposition or encumbrance which must have the 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. . .

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 disposition or encumbrance of conjugal properties requires the consent of both spouses, without which the mortgage shall be cosidered void. This is the reason why spouses are usually asked to sign together. (Source: Homeowners Savings and Loan Bank vs. Dailo, G.R. No. 153802, 11 March 2005)