Atty. LEO V.

CAINTO
Being an overseas worker, Salvador issued to Ronaldo a
duly notarized Special Power of Attorney (SPA)
authorizing the latter to enter into a contract of lease over
Salvador's property covered by TCT No. 122433 for a
period of three years with SISI Corp. Salvador entrusted
to Ronaldo the owner's duplicate of the TCT in case SISI
Corp. needed to verify the same.
Hearing rumors that the subject property was sold,
Salvador went to the Register of Deeds and was shocked
to find out that TCT No. 122433 had been cancelled and
TCT No. 334388 had been issued in Eduardo’s name.
To vindicate his property rights, Salvador filed a
complaint for cancellation of title and reconveyance.
Salvador was able to prove that he was out of the country
when the purported sale was executed.

On the other hand, Eduardo claims to be an innocent

purchase for value, stating that he paid the fair market
value to Ronaldo and that he relied on the fact that
Ronaldo presented the original owner’s duplicate of
Salvador’s TCT. He likewise inspected the property and
determined that Salvador was indeed the owner.
 This case involves two competing titles: TCT No.
23456 in the name of Flor and TCT No. 65432 in
the name of de Luna. Flor’s title was derived from
Rodrigo. Rodrigo’s title was originally obtained
through a judicial confirmation of title in 1950
based on a survey plan approved in 1931. On the
other hand, de Luna derived her TCT No. 65432
from Diaz who obtained an original title through
judicial confirmation of title at a much later date, in
1970, on the basis of a survey plan approved in
1921.
 It turned out that Flor’s TCT No. 23456, although titled
prior in time, was based on a survey plan that was
marred with numerous blatant, obvious and serious
defects, to the point that the trial court found it dubious,
irregularly approved and was therefore fake.
 (a) Discuss the principle of “qui prior est tempore, potior
est jure” in the torrens system of land registration. (b)
As between Flor and de Luna, whose title should be
declared valid and whose title should be voided?
Explain briefly.
 Atoy is one of the five children of Jawo. Jawo was the
registered owner of a fourhectare parcel of land in
Sta. Cruz, Laguna covered by TCT No. 77347. When
Jawo died, the owner’s duplicate of the TCT was kept
by Jawo’s daughter, Akiko (sister of Atoy), who resided
in the said property. Wanting to have the said four-
hectare property registered under his name, Atoy got in
touch with Franz who had special connections with the
Register of Deeds of Sta. Cruz, Laguna. TCT No. 77347
was then cancelled and TCT No. 84660 was issued in
Atoy’s name on January 29, 2013.
Atoy immediately mortgaged the property to the
Rural Bank of Sta. Cruz (RBSC). Upon default and
after being declared the winning bidder in the
extrajudicial foreclosure sale, RBSC consolidated
ownership with the issuance of TCT No. 94477 in its
name.
How will Akiko and the other heirs of Jawo be able to
successfully argue that RBSC is not an innocent
purchaser for value? Explain briefly. (5 points)
PNB vs Mercedes Corpuz GR 180945 Feb. 12, 2010

 Banks are expected to be more cautious than

ordinary individuals in dealing with lands, even
registered ones, since the business of banks is
imbued with public interest. It is of judicial notice
that the standard practice for banks before
approving a loan is to send a staff to the property
offered as collateral and verify the genuineness of
the title to determine the real owner or owners.
Metrobank v Antonio Tobias
GR177780 Jan 25, 2012
 METROBANK, a commercial bank dealing in real
property, had the duty to observe due diligence to
ascertain the existence and condition of the realty
as well as the validity and integrity of the
documents bearing on the realty.
 Its duty included the responsibility of dispatching
its competent and experience representatives to
the realty to assess its actual location and
condition, and of investigating who was its real
owner.
 Mortgage is a contract whereby property is given as
a collateral to secure the performance or fulfillment
of a principal obligation (Art. 295, New Civil Code)
 1. Constituted to secure a principal obligation
 2. Mortgagor be the absolute owner
 3. Must have free disposal or legally authorized
 4. Registered to bind third parties
 5. foreclosed property must be sold in a public
auction and may not just be appropriated
Section 61. Registration

 Upon presentation for registration of the deed of

mortgage or lease together with the owner's
duplicate, the Register of Deeds shall enter upon the
original of the certificate of title and also upon the
owner's duplicate certificate a memorandum
thereof, the date and time of filing and the file
number assigned to the deed, and shall sign the
said memorandum.
Section 62. Discharge or cancellation

 A mortgage or lease on registered land may be

discharge or canceled by means of an instrument
executed by the mortgage or lessee in a form
sufficient in law, which shall be filed with the
Register of Deeds who shall make the appropriate
memorandum upon the certificate of title.
 REAL ESTATE CHATTEL
MORTGAGE MORTGAGE

COVERAGE REAL PROPERTY OR REAL CHATTEL OR PERSONAL

RIGHTS PROPERTY

FORMALITY CONSTITUTED BY A MAY BE CONSTITUTED IN

PUBLIC INSTRUMENT A PRIVATE DOCUMENT

FORECLOSURE RIGHT OF REDEMPTION NO RIGHT OF

IS AVAILABLE REDEMPTION
 REPUBLIC ACT No. 11057
 “Personal Property Security Act“ Aug. 17, 2018.

 An Act Strengthening the Secured Transactions Legal

Framework in the Philippines, Which Shall Provide
for the Creation, Perfection, Determination of
Priority, Establishment of a Centralized Notice
Registry, and Enforcement of Security Interests in
Personal Property, and for Other Purposes
 REAL ESTATE PACTO DE RETRO
MORTGAGE

NATURE ACCESSORY CONTRACT PRINCIPAL AND

INDEPENDENT
CONTRACT

TITLE TITLE IS RETAINED BY THE POSSESSION IS

MORTGAGOR DELIVERED TO THE
VENDEE A RETRO

RIGHT TO APPROPRIATE MORTGAGEE CANNOT PURCHASER MAY

APPROPRIATE TO DISPOSE AS SOON AS
HIMSELF RIGHTS OF DOMINION
ARE CONSOLIDATED
 REAL ESTATE ANTICHRESIS
MORTGAGE

POSSESSION MORTGAGOR RETAINS CREDITOR TAKES OVER

POSSESSION POSSESSION

FRUITS MORTGAGOR GATHERS CREDITOR COLLECTS THE

FRUITS OF PROPERTY FRUITS & APPLIES VALUE
AS PAYMENT

REALTY TAX PAYMENT RESPONSIBILITY OF THE CREDITOR

MORTGAGOR
 PACTUM COMMISSORIUM – a stipulation which authorizes the
mortgagee to APPROPRIATE the property as his own
automatically upon default of the mortgagor.
 PACTUM DE NON ALIENDO – a stipulation which PROHIBITS
the mortgagor from ALIENATING or SELLING the property
during the term of the mortgage.
 TIPO or UPSET PRICE - A stipulation in the contract fixing a
tipo or upset price at which the property will be sold at the
foreclosure proceeding is null and void.
FORECLOSURE
 Section 63. Foreclosure of Mortgage. (a) If the
mortgage was foreclosed judicially, a certified copy
of the final order of the court confirming the sale
shall be registered with the Register of Deeds. If no
right of redemption exists, the certificate of title of
the mortgagor shall be canceled, and a new
certificate issued in the name of the purchaser.
 Foreclosure
 Foreclosure of mortgage is the process by which a
property covered may be subjected to sale to pay
demand for which mortgages stand as security (Pacific
Commercial Co. v. Alvarez, 38 OG 758)

Grounds for foreclosure:

 Non-payment of the principal obligation that is due
 Non-compliance or violation of any condition of the mortgage
contract
Note: Demand is necessary to make the obligation due and
demandable
 Kinds of Foreclosure:
 Judicial Foreclosure – Rule 68 Rules of Court

 Extrajudicial Foreclosure – Act 3135 as amended

by Act 4118, Sec 63 PD 1529, SC AM No.99-10-
05-0
Example of power of Attorney inserted in the mortgage
contract..

 … the Pag-IBIG Fund or its assignee/transferee is hereby appointed

as BORROWER/BORROWER and CO-BORROWER’s Attorney-in-
Fact, with full power of substitution and authority to perform such
acts that may be necessary to dispose of Mortgaged Property in
accordance of the provision of Act. 3135, as amended, and
pending such disposition to perform all other acts of administration
and management …Extrajudicial foreclosure may be undertaken by
the Sheriff, Special Sheriff or by Notary Public, at the option of
Pag-IBIG Fund. The latter hereby reserves its right to bid at
appropriate public auction.
• Mortgagee files complaint or petition for foreclosure
• Where: RTC in the city or province where property is located
• Hearing to ascertain the amount due to mortgagee

• RTC orders mortgagor to pay amount due

• When: to pay within 90 days - 120 days

• If mortgagor fails to pay, RTC orders the sale of property

• To whom: highest bidder at public auction
• Mortgagor may exercise equity of redemption
• How: pay the debt within 90 -120 days after the
judgment becomes final, or even after foreclosure sale, but
prior to its confirmation

• Sheriff issues certificate of sale

• RTC issues order confirming the sale

• Purchaser consolidates the ownership in his name

• Mortgagee files petition for extrajudicial foreclosure to
the Executive Judge thru Ex-Officio Sheriff
• Where: RTC which has jurisdiction over the property

• Posting of notice of auction sale

• Where: at least 3 public places of Municipal/City

• Publication of notice of auction sale

• Where: newspaper of general circulation in
city/municipality where property is located
• Sheriff or Notary Public to conduct public auction sale
• Where: RTC/Provincial /Municipal/City Hall

• Sheriff or Notary Public to issue certificate of sale to the

highest bidder
• Registration of cert of sale

• 1 year redemption period is given to the mortgagor

• When: To begin after the certificate is registered with
the Register of Deeds
 Equity of redemption - the right given to the
mortgagor to redeem the mortgage property from
the order of foreclosure up to, but not after, the
confirmation of the sale. (Anderson v Reyes, 54 Phil
944)
 Right of redemption – the period of redemption
shall be at anytime within one (1) year from the
date of registration of the certificate of title. (Rule
39 Sec 28)
 Ely borrows Php 2,000,000.00 from Mia and
mortgages a parcel of land to secure the loan. The
mortgage provides for a 5% monthly interest, a
five-year maturity period, a default provision in
case of non-payment of interest or principal, and
an extrajudicial foreclosure provision. On the fourth
year, Ely fails to pay interest for three consecutive
months.
After sending a demand letter, Mia declares Ely in
default and extrajudicially forecloses the mortgage.
Mia is the highest bidder in the foreclosure sale, and
consolidates ownership upon the lapse of the
redemption period.
Can Ely have the foreclosure annulled and recover the
property? Explain briefly. (5 points)
 Right of redemption 1 year
 Equity of redemption 90-120 days
 General Banking Act RA 8791

(mortgagor is an individual) 1 year

(mortgagor is a juridical person) 3 months
 Rural Bank Act (RA 720)

property is covered by TCT 1year

homestead/agri free patent 2 years
 Thank you