Boston Equity v. Del Rosario
REITERATIONFacts
The Antecedents: Edgardo Del Rosario (married to Rosie Gonzales Del Rosario) mortgaged six parcels of land to Boston Equity Resources, Inc. (Boston Equity) for P17,000,000.00, representing himself as single. The mortgage was later amended to include an additional loan of P15,000,000.00. Edgardo made payments totaling P3,178,667.00 and P25,000,000.00. Boston Equity issued a cash voucher for P7,257,200.00 representing excess payment. Edgardo obtained further loans totaling P34,400,000.00. Boston Equity sent demand letters for P52,900,000.00 and later P51,400,000.00. Edgardo requested an accurate statement of account and additional time to settle his obligation. Boston Equity proceeded with the extrajudicial foreclosure of the mortgaged properties, publishing the notice of foreclosure in Maharlika Pilipinas. Boston Equity was the sole bidder at the public auction for P75,000,000.00. Procedural History: Edgardo filed a complaint for the nullity of the extrajudicial foreclosure and sheriff's sale. The RTC granted a TRO. Rosie and their children intervened, claiming co-ownership of the mortgaged properties as part of the conjugal partnership. The RTC dismissed Edgardo's complaint. The CA reversed the RTC's decision, declaring the real estate mortgage (REM), its amendment, and all proceedings emanating therefrom null and void. The CA denied the motion for reconsideration. The Petition: Boston Equity and William Hernandez seek the review and reversal of the CA's decision.
Issue(s)
Whether the Court of Appeals erred in ruling that the mortgage executed by Edgardo is null and void due to the alleged lack of consent of Rosie, his wife, and whether the petitioners could raise for the first time on appeal the issue of Rosie's consent to the REM and its amendment by affixing her signature as a witness. Whether the Court of Appeals erred in holding that the extrajudicial foreclosure sale was null and void for failure to comply with A.M. No. 99-10-05-0, which allegedly requires at least two participating bidders, and whether the publication of the notice of foreclosure sale was ineffectual. Whether the Court of Appeals erred in declaring that Edgardo is entitled to a proper accounting of his outstanding obligation before being held in default.
Ruling
The Supreme Court denied the petition for review on certiorari, affirmed the decision of the Court of Appeals, and ordered the petitioners to pay the costs of suit.
Ratio Decidendi
On the issue of the mortgage's nullity due to lack of spousal consent and raising new theories on appeal: The Court affirmed the CA's ruling that the Real Estate Mortgage (REM) and its amendment were null and void for lack of the written consent of Rosie, Edgardo's spouse, as per Article 124 of the Family Code. The Court rejected the petitioners' argument about the loan proceeds benefiting the family, stating the mortgage's nullity rendered the foreclosure proceedings void, though the principal loan obligation subsisted. The Court also upheld that the petitioners could not raise for the first time on appeal the issue of Rosie's consent to the REM and its amendment by affixing her signature as a witness, as it violates due process and fair play. On the issue of the two-bidder rule and publication of the notice of foreclosure sale: The Court ruled that the CA erred in annulling the extrajudicial foreclosure sale for failure to have at least two bidders, clarifying that Act No. 3135 does not require this. The Court found the respondents' submission that the publication in Maharlika Pilipinas was ineffectual to be unpersuasive because the respondents failed to prove that Maharlika Pilipinas was not a newspaper of general circulation in Quezon City. On the issue of accounting and default: The Court held that the CA's conclusion that Edgardo was entitled to a proper accounting before being declared in default was legally and factually unwarranted. Default requires the obligation to be demandable and liquidated, the debtor's delay, and the creditor's demand for performance. The terms and conditions of Edgardo's obligation were ascertainable from the REM and its amendment, rendering the debt liquidated. Thus, his failure to settle the obligation despite demand constituted default, and any discrepancy in the demand letters did not genuinely hinder the recovery of the debt.
Main Doctrine
The extrajudicial foreclosure of a real estate mortgage involving conjugal properties is null and void without the written consent of the non-consenting spouse. The two-bidder rule is not applicable to extrajudicial foreclosure sales under Act No. 3135. A debtor is considered in default if the obligation is demandable and liquidated, and the creditor judicially or extrajudicially requires performance. Issues not raised before the trial court cannot be raised for the first time on appeal.