CONCEPT OF MORTGAGE

Section 60. Mortgage or lease of registered land. Mortgage and leases shall be
registered in the manner provided in Section 54 of this Decree. The owner of
registered land may mortgage or lease it by executing the deed in a form sufficient
in law. Such deed of mortgage or lease and all instruments which assign, extend,
discharge or otherwise deal with the mortgage or lease shall be registered, and
shall take effect upon the title only from time of registration.

No mortgagee's or lessee's duplicate certificate of title shall hereafter be

issued by the Registers of Deeds, and those issued prior to the effectivity of this
Decree are hereby deemed canceled and the holders thereof shall immediately
surrender the same to the Register of Deeds concerned.

What is a Real Estate Mortgage

Real Estate Mortgage is a contract in which the debtor subjects the real
property, whoever the possessor may be, as a security to guarantee to the
creditor the fulfillment of a principal obligation at the time stipulated (Emmanuel
and Maruijita Palabrica, 2017).
The object of mortgage may be any of the following:
Immovable or alienable real rights in accordance with the laws imposed
upon immovable.
Requisites of mortgae
Article 2085 of the New Civil Code enumerates the legal requisites of a
mortgage to be valid. It provides that 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 pledger 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.
If the above requisites do not concur, the mortgage is void.
Requisites for the registration of mortgage
 That the mortgage agreement or deed must be in a public document not in
a private document to be considered a legal mortgage; following Article 1358 of
the new Civil Code which states that acts and contracts which have for their object
the creation of real rights over immovable property must appear in a public
document.
If the mortgage agreement or deed appears to be in private document, it
cannot be registered. If it is not registered, it follows that it cannot bind third
persons but nonetheless binds the parties of the principal contract in accordance
with the provisions of Article 2125 of the new Civil Code which provides that, “If
the instrument is not recorded, the mortgage is nevertheless valid between the
parties.”
Characteristics of real estate mortgage
As to subject matter, only real property or alienable rights and interests.
A mortgage lien is a real right. It may be enforced against all persons who
have existing rights or interests in the same property.
It is an accessory contract, it is dependent on the principal contract. Its
validity and enforceability depend on the validity of the principal. Thus, if the
principal contract is void, it logically follows that the accessory contract is also
void. But if the accessory contract is void, the principal contract may still be valid
however the obligation is unsecured by mortgage.
A mortgage is indivisible, it cannot be divided.
It is inseparable, it remains even if the ownership of the subject property is
transferred from one person to another and whether the transfer is with or
without the consent of the mortgagee because it is a right in rem.
Mortgagor retains possession.
Kinds of mortgage
1. Conventional or voluntary mortgages – It is created by the agreement of the
parties.
2. Legal mortgage – It is one created by operations of law.
3. Equitable mortgage – It is one that resulted from a judgment by a
competent court.

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. He shall
also note on the deed the date and time of filing and a reference to the volume
and page of the registration book in which it is registered.

How mortgage is registered

First, the mortgage deed is filed together with the owner’s certificate of title
with the Register of Deeds of the city or province where the land is situated.

Second, the Register of Deeds official enters upon the original and owner’s
certificates of title, a memorandum regarding the mortgage deed, the time of
filing and the file number of the deed, signing the memorandum after the entry.

Third, the Register of Deeds also notes down upon the mortgage deed the
time of filing and a reference to the volume and page of the registration book.

The act of registration shall be the operative act to convey or affect the land
insofar as third persons are concerned (P.D. No. 1529, Section 51).

The mortgage shall be registered in each of the places where the land is
situated.

Effect of lis pendens on a previously registered mortgage

A notice of lis pendens is an announcement to the whole world that a

particular real property is in litigation and serves as a warning that one who
acquires an interest over said property does so at his own risk, so that he gambles
on the results of the litigation over said property.
It has been held that any subsequent lien or annotation at the back of the
certificate of title cannot in any way prejudice the mortgage previously registered,
and the lots subject thereto pass to the purchaser at a public auction sale free
from any lien or encumbrance (Malayan Bank v. Lagrama, G.R. No. 144884, April
27, 2001).
Unrecorded sale of a prior date is preferred over recorded mortgage on a later
date
In Reyes v. De Leon, the Supreme Court held that an unrecorded sale of a
prior date is preferred for the reason that if the original owner had parted with his
ownership and free disposal of that thing so as to be able to mortgage it again.

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.

Upon full payment of the indebtedness or expiration of the lease

agreement, a mortgage or lease on registered land may be discharged or
cancelled by means of an instrument executed by the mortgagee or lessee is a
public instrument which shall be filed with the Register of Deeds who shall make
the appropriate memorandum upon the certificate of title (Agcaoili, 2016).
Pactum Commissorium
A stipulation in a contract of mortgage that the ownership of the property
would automatically pass to the mortgagee in case no redemption was effected
within the stipulated period is void for being a pactum commissorium which
enables the mortgagee to acquire ownership of the mortgaged property without
need of foreclosure (Olea v. CA, GR No. 109696, Aug. 14, 1995).
Any agreement in the nature of pactum commissorium is void ab initio, it
being contrary to public policy (PNB v. Acero, GR. No. 69255, Feb. 27, 1987).