MORTGAGE

MORTGAGE

A contract whereby the debtor secures to the creditor the fulfillment of a

principal obligation,
specially the creditor the fulfillment of a principal obligation, specially
subjecting to such security immovable property rights over immovable property
which obligation shall be satisfied with the proceeds of the sale of said property
or rights in case the said obligation is not complied with at the time stipulated.

OBJECTS OF A CONTRACT OF MORTGAGE

a. Immovables
b. Alienable real rights in accordance with the laws imposed upon immovable.

Article 2130. A stipulation forbidding the owner from alienating the immovable
mortgaged shall be void. (n)

KINDS OF MORTGAGE

a. Voluntary

One which is agreed to between the parties or constituted by the will of the
owner of the property on which it is created.

b. Legal

One required by law to be executed in favor of certain persons.

c. Equitable

One which, although it lacks the proper formalities, words, or other requisites
of a mortgage required by law, nevertheless reveals the intention of the parties
to burden real property as a security for an existing debt, and contains nothing
impossible or contrary to law,

ESSENTIAL REQUISITES OF MORTGAGE

Article 2085. The following requisites are essential to the contracts of pledge
and mortgage:

(1) That they be constituted to secure the fulfillment of a principal obligation;

(2) That the pledgor or mortgagor be the absolute owner of the thing pledged
or mortgaged;

(3) That the persons constituting the pledge or mortgage have the free
disposal of their property, and in the absence thereof, that they be legally
authorized for the purpose.
Third persons who are not parties to the principal obligation may secure the
latter by pledging or mortgaging their own property. (1857)

*** If the instrument is unregistered or mortgaged in a private document it is

nevertheless binding between
the parties.

DOCTRINE OF MORTGAGE IN GOOD FAITH

“The mortgagee has a right to rely in good faith on what appears on the
certificate of title of the mortgagor to the property given”

Remedy: damages

* The doctrine does not apply to a situation where the title is still in the name of
the rightful owner and the mortgagor is a different person pretending to be the
owner,

*While the creditor may be a mortgagee in good faith, the creditor may not be a
purchaser in good faith when the creditor foreclosed the mortgage and later
consolidated the ownership over the mortgaged property in its favor.

REGISTRATION OF MORTGAGE

It is the ministerial act by which a deed, contract or instrument is inscribed in

the records of the Office of the Register of Deeds and annotated on the back of
the Transfer Certificate of title covering the registered land
subject of the deed contract or instrument.

EFFECT OF INVALIDITY OF MORTGAGE IN PRINCIPAL OBLIGATION

a. Principal Obligation Remains Valid
b. Mortgage deed remains as evidence of a personal obligation.

EFFECT OF MORTGAGE
a. Creates Real Rights

-A registered mortgage creates a right in rem, a real right, a lien inseparable

from the property mortgaged, which is enforceable against the whole.

b. Creates merely encumbrance

-It is an accessory undertaking.

RIGHTS OF A MORTGAGOR

a. Right to Sell
b. Right of possession
c. Right to mortgage

EXTENT OF MORTGAGE
a. A real estate mortgage constituted on immovable property is not limited to
the property itself but also extends to all its accessions, improvements, gowing
fruits and rents or income.
b. Rule predicated on ownership of principal

Article 2128. The mortgage credit may be alienated or assigned to a third

person, in whole or in part, with the formalities required by law. (1878)

Article 2131. The form, extent and consequences of a mortgage, both as to its
constitution, modification and extinguishment, and as to other matters not
included in this Chapter, shall be governed by the provisions of the Mortgage
Law and of the Land Registration Law. (1880a)

FORECLOSURE

-Is the remedy available to the mortgagee by which he subjects the mortgaged
property to the satisfaction of the obligation to secure which the mortgage was
given where the mortgagor is in default in the payment of the obligation.

JUDICIAL FORECLOSURE AND EXTRAJDUICIAL FORECLOSURE

PROCESS:

a. The mortgagee should file a petition for judicial foreclosure Where? in the
court which has jurisdiction over the area where the property is situated.

b. The court will conduct a trial.

If With Merit: it will render judgment ordering the mortgagor/debtor to pay the
obligation within a period not less than 90 nor more than 120 days from the
finality of judgment.
If Without Merit: The court will dismiss the case.

*Within this 90 to 120 day period, the mortgagor has the chance to pay the
obligation (Equity of redemption)
*If mortgagor fails to pay- the property shall be sold to the highest bidder at
public auction to satisfy the judgment.

c. There will be a judicial confirmation of the sale. After the confirmation of the
sale.

*After the confirmation of the sale, the mortgagor does not have a right to
redeem the property anymore.
 G.R. No. L-15752 December 29, 1962
RUPERTO SORIANO, ET AL., plaintiffs-appellees,
vs.
BASILIO BAUTISTA, ET AL., defendants.
BASILIO BAUTISTA and SOFIA DE ROSAS, defendants-appellants.

FACTS:
Spouses Basilio Bautista and Sofia de Rosas are the absolute and
registered owners of a parcel of land, situated in the municipality of Teresa,
province of Rizal. That, on May 30, 1956, the said spouses for and in
consideration of the sum of P1,800, signed a document entitled "Kasulatan Ng
Sanglaan" in favor of Ruperto Soriano and Olimpia de Jesus. That in
accordance with the said Kasunduan, Spouses Bautista decided to buy the
land.The spouses inspite of the receipt of the letter refused comply with the
demand contained therein. On May 31, 1958, Ruperto Soriano and Olimpia de
Jesus filed before this Court. Appellants contend that, being mortgagors, they
can not be deprived of the right to redeem the mortgaged property, because
such right is inherent in and inseparable from this kind of contract.

ISSUE:

Whether or not the appellants may redeem the property. (YES)

HELD:

The premise of the contention is not entirely accurate. While the

transaction is undoubtedly a mortgage and contains the customary stipulation
concerning redemption, it carries the added special provision aforequoted,
which renders the mortgagors' right to redeem defeasible at the election of the
mortgagees.

In this case the mortgagor's promise to sell is supported by the same

consideration as that of the mortgage itself, which is distinct from that which
would support the sale, an additional amount having been agreed upon to
make up the entire price of P3,900.00, should the option be exercised. The
mortgagors' promise was in the nature of a continuing offer, non-withdrawable
during a period of two years, which upon acceptance by the mortgagees gave
rise to a perfected contract of purchase and sale.