Beruflich Dokumente
Kultur Dokumente
STANDBY
Involves
non-sale
transactions
Payable upon certification by
the beneficiary of the
applicants non-performance
of the agreement.
2.
3.
4.
reimburse the issuing bank any and all amount should be paid
under the letter of credit once the issuing bank is compelled
to pay because the beneficiary is able to submit the
document stipulated.
CONFIRMED LETTER OF
CREDIT
The correspondent bank
gives an absolute assurance
to the beneficiary that it will
undertake the issuing banks
obligation as its own
according to the terms and
conditions of the credit
He agrees to pay the bank that issued the letter of credit. The
applicant has no obligation to reimburse the issuing bank if
the latter pays without the stipulated amounts duly paid
under the letter of credit.
Q: Who is the beneficiary?
A: The one entitled to payment from the issuing bank upon
his submission of the document stipulated and compliance
with the terms of the credit.
Q: What is the effect of the failure of the beneficiary to
fulfill his obligation under the main contract?
A: It does not negate his right to payment from the issuing
bank as long as he is able to submit the required documents
and comply with the terms of the credit, without prejudice to
his liability against the account party under the law on
contract and damages
Q: Who is the issuing bank?
A: The one that undertakes to pay the beneficiary upon
submission of the beneficiary of these stipulated documents
and compliance with the terms of the credit.
Q: Enumerate the other parties.
A:
Advising
or
Notifying bank
Applicant
Beneficiary
Issuing bank
Paying bank
Confirming bank
Negotiating
bank
26
Correspondent
bank of issuing
bank
GR: No
XPN: When the advising bank is also the confirming or
paying bank
A: Once the issuing bank shall have paid the beneficiary after
the latters compliance with the terms of the LC. Presentment
for acceptance to the customer/applicant is not a condition
sine qua non for reimbursement.
Q: Is presentment a condition prior to reimbursement?
A: Presentment for acceptance to the customer or applicant
of the drafts drawn by the beneficiary is not a condition sine
qua non for reimbursement (Prudential Bank & Trust Co. v.
IAC, 216 SCRA 257, 1992)
Q: What is the consequence of payment upon an expired
LC?
A: An issuing bank which paid the beneficiary of an expired
letter of credit can recover the payment from the applicant
which obtained the goods from the beneficiary to prevent
unjust enrichment.
Q: Should the marginal deposit made by the customer, in
possession of the bank be first deducted from the principal
indebtedness before computing the interest?
2.
3.
27
The SC held that banks deals with documents, they dont deal
with goods. The issuing bank has no obligation to check the
object, the quantity or quality of the goods. The bank needs
not to verify or go beyond the four corners of the document.
The issuing bank will determine the documents to be
submitted, where the stipulated documents tendered
faithfully. If the documents were submitted, the issuing pays
the seller.
TRUST RECEIPT
Definition
Q: What is a trust receipt transaction?
A: It is any transaction between the entruster and entrustee
whereby the entruster who owns or holds absolute title or
security interests over certain specified goods, documents or
instrument, releases the same to the possession of entrustee
upon the latters execution of a TR agreement.
Entruster
Entrustee
28
Estafa
Loan feature
Security feature
29
2.
3.
4.
5.
6.
30
A:
GR: No, the law warrants the validity of entrusters security
interest as against creditors of the trust receipt agreement
during the duration of the trust receipt agreement.
2.
3.
31
Q: Who shall bear the loss of goods which are the subject of
TR?
CHATTEL MORTGAGE
A: The entrustee. Loss of goods, documents or instruments
which are the subject of a TR, pending their disposition,
irrespective of whether or not it was due to the fault or
negligence of the entrustee, shall not extinguish his obligation
to the entruster for the value thereof. (Sec. 10, P.D. 115)
NOTE: The principle of res perit domino will not apply against
the entruster
Remedies
Q: What are the remedies available to the entruster?
A:
1.
CRIMINAL ACTION
Based on ex-delicto
2.
3.
4.
CIVIL ACTION
Based on ex-contracto
3.
4.
32
2.
3.
a.
b.
a.
b.
RULES:
Private
vehicle
Public
vehicle
Vessels
Aircrafts
motor
motor
A:
CHATTEL MORTGAGE
PLEDGE
Delivery
Delivery is necessary
Registration
Registration in the Chattel Registration in the Registry
Mortgage
register
is Property is not necessary.
necessary
for
its
enforceability
Security
Cannot
secure
future Can secure future obligations
obligations
Law governing the sale
Procedure for the sale of the Art. 2112, NCC
thing given as security is
governed by Sec. 14, Act No.
1508
Excess
If the property is foreclosed, If the property is sold, the
the excess goes to the debtor debtor is not entitled to the
excess unless otherwise
agreed.
Recovery of deficiency
The creditor is entitled to The creditor is not entitled to
recover the deficiency from recover
the
deficiency
the debtor except if the notwithstanding
any
Delivery is not necessary
33
Possession
Possession remains with the Possession is vested in the
debtor
creditor
Contract
Formal contract
Real contract
Recording in a public instrument
Must be recorded in a public Must be in a public
instrument to bind third instrument
containing
persons
description of the thing
pledged and the date thereof
to bind third persons
SUBJECT MATTER OF CHATTEL MORTGAGE
1.
2.
2.
3.
4.
5.
6.
7.
8.
9.
A:
1.
34
A:
GR: No, because Section 7 of Act 1508 provides: A chattel
mortgage shall be deemed to cover only the property
described therein and not like or substituted property
thereafter acquired by the mortgagor and placed in the same
depository as the property originally mortgage.
XPN: Where the afteracquired property is in renewal of, or in
substitution for, goods on hand when the mortgage was
executed, or is purchased with the proceeds of the sale of
such goods.
NOTE: While pledge, real estate mortgage, or anti-chresis
may secure after-incurred obligations so long as these future
debts are accurately described, a chattel mortgage can only
cover obligations existing at the time the mortgage is
constituted.
Although the promise expressed in the chattel mortgage to
include debts that are yet to be contracted can be a binding
commitment that can be compelled upon, the security itself,
however, does not come into existence or arise until after a
chattel mortgage agreement covering the newly contracted
debt is executed either by:
a. concluding a fresh chattel mortgage or
b. by amending the old contract conformably with the
form prescribed by the Chattel Mortgage Law
Q: Does the law require a minute and specific description of
every chattel mortgage in the deed of mortgage?
Dragnet clause
Q: What is a dragnet clause?
A: It is a clause which operates as a convenience and
accommodation to the barrowers as it makes available
additional funds without their having to execute additional
security documents, thereby saving time, travel, loan closing
costs, costs of extra legal services, recording fees etc.
It subsumes all debts of past or future origin.
Q: How do you construe such clause?
A: It must be carefully scrutinized and strictly construed
particularly where the mortgage contract is one of adhesion.
NOTE: A mortgage given to secure future advancements is a
continuing security and is not discharged by the repayment of
the amount named in the mortgage, until the full amount of
the advancements is paid. It permitted the mortgagor to take
the money as it is needed and thus avoid the necessity of
paying interest until the necessity for its use actually arises.
Remedies available in case of simple loan
Q: What does the word default cover?
A:
1.
2.
non-payment
violation of the terms of the agreement
After-Incurred Obligation
Q: Can the CM cover afterincurred obligations?
A: No, the affidavit of good faith in a CM makes it obvious
that the debt referred to in the law is current, not an
obligation that is yet merely contemplated. (Acme Shoe v. CA,
G.R. No. 103576, Aug. 22, 1996)
Q: What then is the consequence of a CM covering
afterincurred obligations?
A: A promise expressed in a CM to include debts that are yet
to be contracted can be a binding commitment that can be
compelled upon. The security itself, however, does not come
into existence or arise until after a CM agreement covering
newly contracted debt is executed either by concluding a
fresh CM or by amending the old contract conformably with
the form prescribed by the CM law. The remedy of
35
Foreclosure
Q: What is foreclosure?
A: It 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 through
the sale of the property at public auction and the application
of the proceeds thereof to the payment of his claim.
A:
1.
2.
judicial foreclosure
extra-judicial foreclosure
Judicial foreclosure
Claim of deficiency
Q: Can the mortgagee claim in case of deficiency?
A:
GR: Yes, mortgagee is entitled to recover deficiency.
XPNS:
1.
2.
Contrary stipulation
Transactions covered by Recto Law (Art. 1484, NCC)
36
3.
4.
3.
2.
2.
37
INVOLUNTARY
Akin to foreclosure; a bar to
other remedies which are
alternative
Q: What is replevin?
A: Having opted to foreclose the chattel mortgage, GAMI can
no longer cancel the sale. The three remedies of the vendor
in case the vendee defaults, in a contract of sale of personal
38
Principal
Interest
Cost of collection
SIMPLE LOAN
RECTO LAW
Taking of property through replevin
The taking of possession by The taking of possession by
replevin is not equivalent to replevin is tantamount to
foreclosure
foreclosure which bars the
action
for
specific
performance
Remedies
1. Foreclosure
1. Action for specific
2. Action for specific
performance;
performance
2. Cancellation
or
rescission; or
3. Foreclose
the
chattel mortgage on
the thing sold
Suggested remedy
Foreclose! Dont even think Weigh the options
about it because you have a
lien in such case
Recovery of deficiency
You
can
recover
for Precludes the mortgagee to
deficiency. And the right to recover the deficiency
recover deficiency may be
enforced against any one of
the solidary co-debtors, if
any, and is not limited to the
mortgagor for the reason
that the chattel mortgage is
just a security, not a mode of
payment.
Effect of election of action for collection
Election of action for If it is a transaction falling
collection is a bar to the under the Recto Law, its only
other remedy
when the mortgagee actually
forecloses or elects the
39
BANKING LAWS:
GENERAL BANKING ACT
BANK
Equity of redemption
Q: Is there a right of redemption in case of personal
properties?
A: None.
Q: When is equity of redemption may be exercised?
A: Equity of redemption may be exercised by the mortgagor
after his default in the performance of his obligation but
before the sale of the mortgaged property or confirmation of
sale.
40
Deposit substitutes
Q: What are deposit substitutes?
A: It is an alternative form of obtaining funds from the public,
other than deposits, through the issuance, endorsement, or
acceptance of debt instruments, for the borrower's own
account, for the purpose of relending or purchasing of
receivables and other obligations. These instruments may
include, but need not be limited to, bankers acceptances,
promissory notes, participations, certificates of assignment
and similar instruments with recourse, and repurchase
agreements.
Quasi-banks
Q: What are quasi-banks?
A: These are entities engaged in the borrowing of funds
through the issuance, endorsement or assignment with
recourse or acceptance of deposit substitutes for purposes of
re-lending or purchasing of receivables and other obligations.
NOTE: Quasi-banks are also under BSP. They have to secure a
license from the BSP.
1.
Rural banks
Cooperative banks
Islamic banks
Other classification of banks as determined by the
Monetary Board of the Bangko Sentral ng Pilipinas.
QUASI-BANKS
Refer to entities engaged in
the borrowing of funds
through
the
issuance,
endorsement or assignment
with recourse or acceptance
of deposit substitutes for
purposes of relending or
purchasing of receivables and
other obligations
Not insured with PDIC
a.
b.
c.
d.
Commercial
bank
a.
b.
41
6.
c.
Justice Edgardo Paras was of the opinion that the contract for
the use of safety deposit box is governed by the law on lease.
The Supreme Court did not agree with him and said that
contract for the use of safety deposit box is a special kind of
deposit. In other words the bank must exercise the due
diligence required of depository in safekeeping or preserving
of the object inside the safety deposit box.
The basis for this is that under the Old General Banking Act, it
provided that in renting out safety deposit boxes the bank
shall act as a depositary. Because the law itself provides for
this SC concluded that the contract for the use of safety
deposit box is governed by deposits.
A:
FIRM COMMITMENT
Those which are considered
as sold
The underwriter purchases
outright the securities and
then resells the same
BEST EFFORTS
underwriter
does
not
guarantee that it will sell the
entire
The underwriter merely sells
for commission
42
43
Stipulation of interest
NOTE: Circular 905 suspended the Usury Law, but it has
not been repealed.
Circular 905 lifted the ceiling on the interest rate. The
bank and its depositors are therefore free to stipulate
on the rate of interest for loans. Nevertheless, if the
interest is unconscionable, it may be nullified on the
grounds of equity.
44
others:
a.
b.
c.
d.
e.
f.
2.
3.
4.
5.
Parents-in-law
Children
Children-in-law
Spouse
Procedural requirements
a.
b.
c.
5.
A:
a.
b.
c.
d.
Parents
45
3.
4.
5.
Structure of bank
A:
Q: What is the nature of a bank?
FILIPINO
Individual
FOREIGNER
Aggregate which means that
shares held by foreigners and
corporations
owned
by
foreigners shall not exceed 40%
of the banks capital stocks.
Natural persons
a. Filipino
b. Foreigner
2.
Juridical persons
a. corporation or
i. may be owned by a Filipino (domestic
corporations)
46
2.
3.
3.
4.
A: All notes and coins issued by the Bangko Sentral are fully
guaranteed by the Republic and shall be legal tender in the
Philippines for all debts, both public and private (Sec. 52)
A:
1.
47
2.
A:
1.
2.
3.
Cash
Properties (real or personal)
Receivables
Collectibles
Deposits
Deposit Substitutes
Standing Letter of Credits
Obligations Due to Credits
1.
2.
3.
4.
Q: What is conservatorship?
A: Whenever on the basis of the report of appropriate
supervising and examining department, the Monetary Board
finds that a bank or quasi-bank is in a state of continuing
inability or unwillingness to maintain a condition of liquidity
deemed adequate to protect its depositors and creditors, the
Monetary Board may appoint a conservator to take charge of
the assets, liabilities and management thereof.
Q: Who is a conservator?
A:
1.
2.
48
Receivership
Q: What is receivership?
A: The Monetary Board may appoint a receiver if the MB
finds that a bank or quasi-bank:
a. is unable to pay its liabilities as they come due in the
ordinary course of business provided that this sahll
not include inability to pay caused by extra-ordinary
demands induced by financial panic in the banking
community
b. has insufficient realizable assets, as determined by
the BSP, to meet its liabilities; or
c. cannot continue in business without involving
probable loss to its depositors and creditors; or
d. has willfully violated a cease and desist order that
has become final involving transactions which
amount to fraud or dissipation of bank assets, the
Monetary Board may summarily and without need
for prior hearing forbid the institution from doing
business in the Philippines and designate the PDIC as
the receiver of the bank
Q: Who is a receiver?
A: One appointed if bank is already insolvent which means
that its liabilities are greater than its assets.
Q: Is the receiver authorized to transact business in
connection with the banks assets and property?
Closure
Q: Can the BSP close a bank without prior hearing?
A: Yes, because if prior hearing is required then bank run will
be the order of the day. The power of BSP to close a bank is a
valid exercise of police power. If there is showing of bad faith
or grave abuse of discretion, it can be set aside and subject to
judicial scrutiny.
Q: Can BSP close a bank on the strength of a report by the
supervising and examining department without complete
notice of such bank?
A: Yes
CLOSE NOWHEAR LATER DOCTRINE
Q: What is the close nowhear later doctrine?
A: The law does not contemplate prior notice and hearing
before the bank may be directed to stop operations and
placed under receivership. The purpose is to prevent
unwarranted dissipation of the banks assets and as a valid
49
3.
50
CONSERVATORSHIP
1.
2.
Continuing inability
Unwillingness to maintain condition
of liquidity
RECEIVERSHIP
1.
2.
3.
4.
5.
6.
1.
2.
1.
2.
3.
LIQUIDATION
Grounds
Inability to pay liabilities as they fall
due
2.
e.g: bank run, rumors, etc.
Assets are less than its liabilities
Cannot continue business
without causing damage;
Violation of a cease and desist
Bank holiday for more than 30
days.
Effects
Juridical personality is retained
Suspension of operation /stoppage
of business
Assets deemed in custodia legis
1.
Insolvency
Bank cannot be rehabilitated
be
Liquidation
Claims against the insolvent bank
Q: When can there be liquidation?
Q: Where should the claims against insolvent bank be filed?
A: If the bank cannot be restored to its financial health upon
the recommendation of the conservator or receiver or head
of the supervising and examining department, BSP shall file
the petition with the RTC for assistance in liquidation.
NOTE: Once the liquidation proceedings have been initiated,
the majority stockholders of the bank can no longer file a
separate action or petition to assail the order of closure.
Instead, issues on validity of closure should be raised as
affirmative defenses in the liquidation proceeding. This is
necessary to prevent multiplicity of suits or conflicting
resolutions.
Lack of tax clearance; effect
Q: Can the liquidation of bank be carried out despite lack of
tax clearance?
A:
GR: Dissolution of a CORPORATION cannot be approved
unless there is payment of taxes
XPN: Closure and liquidation of banks which is governed by a
special law. The authority of the BSP to close cannot be
impaired.
NOTEl Unlike in the voluntary dissolution of a corporation
under the Corporation Code. There are substantial
differences in the procedure for involuntary dissolution and
liquidation of a corporation under the Corporation Code and
that of a bank under the New Central Bank Act so that the
requirements in one cannot simply be imposed in the other
(In Re: Petition for Assistance in the Liquidation in the Rural
Bank of Bokod (Benguet), PDIC v. Bureau of Internal Revenue,
511 SCRA 123, 2006).
51
Prohibited acts
Q: What are the prohibited acts?
A:
1.
2.
3.
2.
3.
A:
1.
2.
3.
4.
5.
52
6.
Trust funds
Q: Are trust funds covered by the term deposit?
A: Yes, the money deposited under the trust agreement is
intended not merely to remain with the bank but to be
invested by it elsewhere. To hold that this type of account is
not protected by R.A. 1405 would encourage private hoarding
of funds that could otherwise be invested by banks in other
ventures, contrary to the policy behind the law. (Ejercito v.
Sandiganbayan, G.R. No. 15729495, Nov. 30, 2006)
NOTE: Despite such pronouncement that trust funds are
considered deposits, trust funds remain not covered by PDIC.
7.
Exceptions
Q: When may deposits be disclosed, examined or looked
into?
A:
1.
2.
3.
4.
5.
53
54
A:
GR: Foreign currency deposits shall be exempt from
attachment, garnishment, or any other order or process of
any court, legislative body, government agency or any
administrative body whatsoever. (Sec 8. R.A. 6426)
XPN: The application of Section 8 of R.A. 6426 depends on
the extent of its justice. The garnishment of a foreign
currency deposit should be allowed to prevent injustice and
for equitable grounds, otherwise, it would negate Article 10
of the New Civil Code which provides that in case of doubt in
the interpretation or application of laws, it is presumed that
the lawmaking body intended right and justice to prevail
1.
2.
3.
4.
5.
6.
7.
9.
8.
55
56
Covered institutions
Suspicious transactions
A:
1.
2.
1.
2.
3.
1.
2.
3.
4.
5.
4.
5.
6.
7.
2.
3.
Customer identification
Record keeping (records should be kept and safely
stored for 5 years from the date of the transaction)
Reporting of covered and suspicious transactions
Covered transactions
57
Bank inquiry
Q: Is there a need for a pre-existing or pending case in court
for violation of the Anti-Money Laundering Law before a
bank inquiry order may be issued by a court?
A: No.
Q: Can a bank inquirty be availed of ex-parte?
A: The AMLC is authorized to inquire into bank deposits or
investments, regardless of currency but it needs a bank
inquiry order. The AMLC shall apply for a bank inquiry order
with any competent court. Such competent court is the
Regional Trial Court. The bank inquiry order cannot be issued
ex parte but under the recent law dated June 2012, bank
inquiry order can now be issued ex parte.
58
Purpose
59
e.
f.
3.
4.
5.
6.
1.
2.
60
3.
4.
5.
ON THE TRANSACTION
ON THE CREDITOR
61
1.
2.
Trust Fund
Money Market Placement - here you buy securities
from the bank there is no creditor debtor
relationship)
2.
62
Joint accounts
2.
Rules:
1.
2.
3.
4.
5.
Illustration:
A:
1.
2.
3.
4.
A:
1.
2.
Cash
Making available to each depositor a transferred
deposit in another insured bank in an amount equal
63
A:
1.
A: The penalty of prison mayor or a fine or not less than
P50,000.00 but not more than P2,000,000.00 or both, at the
discretion of the court.
2.
Prohibition against issuance of TRO
Q: What is rule regarding issuances of TROs, etc. against
PDIC for acts under R.A. 3591, as amended?
3.
A:
GR: No court, except the CA, shall issue any TRO, preliminary
injunction or preliminary mandatory injunction against PDIC
for any action under R.A. 3591, as amended. Such prohibition
applies in all cases disputes or controversies instituted by a
64
A:
1.
2.
A contract
A receipt
Law
from
the
1.
2.
A:
WAREHOUSE RECEIPTS LAW
Warehouse receipts issued
by warehouses, whether
public or private, bonded or
not
DOCUMENTS OF TITLE
UNDER THE CIVIL CODE
Other receipts of documents
issued in bailment contracts
other
than
warehouse
receipts
(Civil
Code
1
15071520)
A:
1.
2.
3.
5.
6.
7.
8.
Q: What is a warehouse?
9.
Article 1507 A document of title in which it is stated that the goods referred
to therein will be delivered to the bearer, or to the order of any person
named in such document is a negotiable document of title. (n)
2.
3.
4.
65
8.
5.
9.
Negotiable warehouse
receipt
May be acquired through
negotiation
Rights of the holder of the
receipt:
Non-negotiable warehouse
receipt
May be acquired through
transfer or assignment
Rights of transferee:
Specific situations
1. If indorsed:
4.
5.
1.
Acquires title to the
goods subject to the terms
of any agreement with the
transferor. (Sec. 42)
2.
Acquires the right to
notify the warehouseman of
66
2.
obligation
of
the
warehouseman
to
hold
possession of the goods for
him as if the warehouseman
directly contracted with him.
(Ibid.)
a.
b.
c.
instrument
and
A:
NEGOTIABLE INSTRUMENT
The obligation is to pay
money while in a warehouse
receipt, the obligation is to
deliver goods.
3.
The
general
endorsers
warrant that the instrument,
after due presentment, shall
be paid and in that case of
dishonor and notice of
dishonor is duly given, the
endorser shall pay the holder
NEGOTIABLE WAREHOUSE
RECEIPT
In a warehouse receipt, the
endorsers or immediate
parties are not liable for any
failure on the part of the
warehouseman or previous
endorsers of the receipt to
fulfill their obligations.
The
endorsers
of
a
negotiable
warehouse
receipt may however be held
liable
for
breach
of
warranties, such as:
1. The
receipt
is
genuine and in
respects what it
purports to be;
2. They have legal title
to the instrument;
3. The goods are fit for
consumption
and
merchantable;
4. They are not aware
67
of any information
that would render
the
instrument
valueless
or
worthless
A:
1.
2.
3.
A:
1.
2.
3.
A:
1.
2.
3.
4.
68
1.
2.
A: Ryan has better right to the goods. The goods are covered
by a negotiable warehouse receipt which was indorsed to
Ryan for value. The negotiation to Ryan was not impaired by
the fact that Bon took the goods without the consent of
Angela, as Ryan had no notice of such fact. Moreover, Ryan is
in possession of the warehouse receipt and only he can
surrender it to the warehouseman. (Sec. 8, WRL)
Q: What is the proper recourse of the warehouseman if he is
uncertain as to who is entitled to the goods? Explain.
A: Since there is a conflicting claim of ownership or title, the
warehouseman should file a complaint in interpleader
requiring Ryan and Angela to interplead. The matter involves
a judicial question as to whose claim is valid.
Q: What is the rule where a warehouse receipt is transferred
to secure payment of a loan by way of pledge or mortgage?
A: The pledgee or mortgagee does not automatically become
the owner of the goods but merely retains the right to keep
and with the consent of the owner to sell them so as to
satisfy the obligation from the proceeds for the simple reason
that the transaction is not a sale but only a mortgage or
pledge. Likewise, if the property is lost without the fault or
negligence of the mortgagee or pledgee, then said goods are
to be regarded as lost on account of the real owner,
mortgagor or pledgor.
Q: Does the nonpayment by the original depositors of the
purchase price render the further negotiation of the receipt
invalid?
A: No, the negotiation of the warehouse receipt by the buyer
of goods purchased from and deposited to the
warehouseman is valid even if the warehouseman who issued
the negotiable warehouse receipt was not paid by the buyer.
The validity of the negotiation cannot be impaired by the fact
that the owner/warehouseman was deprived of the
possession of the same by fraud, mistake or conversion.
DUTIES OF WAREHOUSEMAN
69
7.
8.
A:
A:
1.
2.
1.
2.
3.
4.
5.
6.
7.
A:
1.
2.
3.
4.
A:
A:
1.
2.
3.
4.
5.
6.
1.
2.
3.
4.
70
A:
1.
2.
3.
4.
5.
6.
New plantings;
Fruits, except those collected before the obligation
falls due, and those removed and stored when it falls
due;
Accrued and unpaid rents as well as those which
should have to be paid while certain credits remains
wholly unsatisfied;
Buildings, machinery and accessories belonging to
the mortgage debtor
All objects permanently attached to a mortgaged
land or building although they may have been placed
there after the execution of the mortgage are also
included;
A more costly building erected in place of the
mortgaged building which was torn down by the
debtor unless the mortgaged estate passes to the
hands of a third person, the mortgage does not
extend to any machinery, object or construction
which he may have brought or placed there and
which such third person may remove whenever it is
convenient for him to do so.
After-acquired properties
71
Dragnet clause
1.
Q: What is a dragnet clause?
A: It is a clause which operates as a convenience and
accommodation to the barrowers as it makes available
additional funds without their having to execute additional
security documents, thereby saving time, travel, loan closing
costs, costs of extra legal services, recording fees etc. It
subsumes all debts of past or future origin.
2.
3.
4.
Q: What is foreclosure?
A: It 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 through
the sale of the property at public auction and the application
of the proceeds thereof to the payment of his claim.
NOTE: Foreclosure denotes the procedure adopted by the
mortgagee to terminate the rights of the mortgagor on the
property and includes the sale itself.
Q: What is the remedy of a party aggrieved by the
foreclosure?
A: He may petition that the sale be set aside and the writ of
possession be canceled because the mortgage was not
violated or the sale was not made in accordance with the
72
b.
c.
1.
2.
3.
4.
5.
Posting requirement
Sheriffs Office;
Assessors Office; and
Register of Deed
73
A:
GR: No because publication amounts to notice to the whole
world
XPN: Personal amounts to notice to the whole worls unless
personal notice is required by:
1. Stipulation, in which case, it must be complied with
in addition to publication, otherwise, the foreclosure
is void.
A:
GR: No. During the period of redemption, the mortgagee is
not entitled to possession as a matter of right. It is
discretionary to the court and subject to bond requirement.
74
3.
75
REDEMPTION
Q: What is redemption?
A: It is the transaction by which the mortgagor reacquires or
buys back the property which may have passed under the
mortgage or divests the property of the lien which the
mortgage may have created.
Q: What is the purpose of redemption?
A: The concept of redemption is to allow the owner to
repurchase or buy back, within a certain period and for a
certain amount, a property that has been sold due to debt,
tax, or encumbrance.
EQUITY OF REDEMPTION
Exercised before confirmation of sale
Q: When can the mortgagor exercise the equity of
redemption?
A: The mortgagor must exercise his equity of redemption
before but not after the sale is confirmed by the court. It is
simply the right of the defendant mortgagor to extinguish the
mortgage and retain ownership of the property by paying the
secured debt within the 90-day period after the judgment
becomes final in accordance with Rule 68, or even after the
foreclosure sale but prior to its confirmation.
Q: What if the case is one of judicial foreclosure?
1.
2.
3.
NOTE: The one year redemption period rule still applies if the
mortgagor is a natural person and/or the mortgagee is not a
bank, quasi-bank or trust entity and/or the mode of foreclose
is judicial (but in the latter case, only if the mortgagee is a
bank or a credit institution because if the mortgagee is
different, there is no right of redemption in judicial
foreclosure but only equity of redemption).
Kinds of redemption
RIGHT OF REDEMPTION
Q: What are the kinds of redemption?
Q: What is the period to exercise the right of redemption?
A:
1.
2.
76
1.
2.
3.
4.
A:
1.
2.
77
2.
The mortgagor
His successors
Assign
Junior encumbrancer
A:
Amount of redemption price
Nature of the mortgagors right of redemption
Q: What is the amount of the redemption price?
1.
A:
1.
78
b.
2.
3.
2.
3.
rd
Writ of possession
ACT 3135
1.
2.
Non-payment; or
Violation of the terms of the loan or REM
agreement.
79
3.
What the law requires is the posting of the notice of sale and
not the certificate of posting.
5.
8.
4.
b.
80
2.
3.
A: No.
Two-bidder rule not applicable
Publication requirement
Q: Is there a need for personal notice?
A: No. The publication takes the place of the notice.
XPN:
1.
2.
Foreclosure sale
Republication
b.
Q: What is the rule in case of republication?
A:
Failure to implead subordinate lien holders
GR: Republication is absolute
Q: What is the effect of failure to implead subordinate lien
holders to the mortgage as defendants in foreclosure
proceedings? Would that render the proceedings not valid?
XPNs:
1.
81
A:
a.
Right of redemption
b.
Q: When must the buyer exercise the right of redemption?
A: 1 year from the date of registration of the certificate of
sale.
bank
quasi-bank
trust entity
REPURCHASE
The exercise of the right
of redemption after the
period is not really one
of
redemption
but
repurchase
No such obligation; the
law will not compel the
purchaser to resell
Redemption Price
A:
1.
2.
3.
82
Banks
Quasi-banks
Trust entity
Non-banks
AMOUNT
Outstanding obligation
+
Interest stipulated under
the agreement
Bid price
+
Interest of 12% per annum
Remedies of 3 parties
Mortgagee is a bank but
mortgagor
is
an
accommodation mortgagor
rd
A: No.
XPN: Grossly inadequate/shocking to the conscience
2.
JUDICIAL FORECLOSURE
83
2.
3.
4.
5.
6.
7.
8.
Hearing
Judgment
Entry judgment- this is the reckoning point whereby
the period of equity of redemption is computed
90-120 days from the entry of judgment for the
mortgagor to pay his debt, as determined by the
court
Upon failure to pay, the mortgagee must file a
Motion for Execution foreclosing the mortgage
Execution sale
Mortgagee to file Motion for Confirmation of Sale
Bank
Credit institution, the mortgagor has 1 year from the
registration of order confirming the sale and the
certificate of sale to redeem the property
EQUITY OF REDEMPTION
RIGHT OF REDEMPTION
GR: There is no right of
redemption in juridical
foreclosure, only equity
in redemption
XPN: If the mortgagee or
bidder is:
a. Bank
c. Credit
institution, the
mortgagor has
1 year from the
registration of
order
confirming the
sale and the
certificate
of
sale to redeem
the property
To whom conferred
May be acquired by a To the
second mortgagee in
a. mortgagor,
case of sale of property
b. successors-ininterest
c. or
any
judgment
creditor of the
mortgagor
Period
In judicial foreclosure: GR:
Extra-judicial
90-120 days from entry foreclosure under Act
of judgment or until 3135-1 year from the
finality
of
order date of registration of
confirming sale
certificate of sale
XPN: in banks, 3 months
from the date of actual
sale
or
registration
whichever is earlier
When exercised
After the entry of Only after foreclosure
judgment but before sale
foreclosure sale;
After foreclosure sale
but before confirmation
sale
84
ACT 3135
2
RULE 68
FORECLOSURE OF REAL ESTATE MORTGAGE
There should be a
special
power
of
attorney
If not registered, the
only remedy is the
judicial foreclosure
Process:
1.
2.
3.
RULE 68 of Rules of
Court
No special power of
attorney is required
Can
extra-judicially
foreclose even if not
registered
File a complaint
for
judicial
foreclosure
Implead
the
junior
mortgagors,
otherwise, the
equity
of
redemption is
reserved
to
them
Order
confirming the
sale
ACTION FOR FORECLOSURE
defendant for any such balance for which, by the record of the case, he may
be personally liable to the plaintiff, upon which execution may issue
immediately if the balance is all due at the time of the rendition of the
judgment; otherwise, the plaintiff shall be entitled to execution at such time
as the balance remaining becomes due under the terms of the original
contract, which time shall be stated in the judgment.
Sec. 7. Registration.
A certified copy of the final order of the court confirming the sale shall be
registered in the registry of deeds. If no right of redemption exists, the
certificate of title in the name of the mortgagor shall be cancelled, and a new
one issued in the name of the purchaser.
Where a right of redemption exists, the certificate of title in the name of the
mortgagor shall not be cancelled, but the certificate of sale and the order
confirming the sale shall be registered and a brief memorandum thereof
made by the registrar of deeds upon the certificate of title. In the event the
property is redeemed, the deed of redemption shall be registered with the
registry of deeds, and a brief memorandum thereof shall be made by the
registrar of deeds on said certificate of title.
If the property is not redeemed, the final deed of sale executed by the sheriff
in favor of the purchaser at the foreclosure sale shall be registered with the
registry of deeds; whereupon the certificate of title in the name of the
mortgagor shall be cancelled and a new one issued in the name of the
purchaser.
Sec. 8. Applicability of other provisions.
The provisions of sections 31, 32 and 34 of Rule 39 shall be applicable to the
judicial foreclosure of real estate mortgages under this Rule insofar as the
former are not inconsistent with or may serve to supplement the provisions
of the latter.
85
A:
GR: It bars the action for collection
XPN: In case of deficiency
Mortgage by spouses
Q: What if the mortgage was entered into by the spouses?
A: The surviving spouse should also be impleaded. The
surviving spouse is an indispensable party
DRAGNET CLAUSE
Q: What is a dragnet clause?
A: Such agreement that covers future debts without
executing another fresh agreement or amendment.
NOTE: An agreement with a dragnet clause is valid. In case of
chattel mortgage, there is a need to execute a fresh
agreement or an agreement which modifies the previous
ones.
Currency
Q: What if the agreement provides that the loan should be
in peso but the actual payment was made in dollars? What
should be the currency of the redemption price?
A: It is the currency stipulated, thus, the payment should be
in the currency stipulated.
REFERENCES
NOTES
86