MORTGAGE the registration fees.

  Before you pay the registration fees,

Art. 2124. Only the following property may be the object the government  will  require  you  to  update  payment  of 
of a contract of mortgage:  realty taxes  on  the  property.    After  payment  of  the 
       (1) Immovables;  registration fees, the mortgage will be annotated on the title. 
       (2)  Alienable  real  rights  in  accordance  with  the   
laws, imposed upon immovables.  EFFECT   OF   INVALIDITY   OF   MORTGAGE   ON  
  PRINCIPAL OBLIGATION
Nevertheless, movables may be the object of a chattel 1.   The principal obligation remains valid 
mortgage. (1874a)  2.   Mortgage deed remains as evidence of principal
  obligation 
MORTGAGE Art. 2126. The mortgage directly and immediately
> Contract  whereby  the  debtor  secures  to  the  creditor  subjects the   property   upon   which   it   is   imposed,  
the fulfillment of a principal obligation, specially substituting whoever   the possessor  may  be,  to  the  fulfillment  of 
to such  security  immovable  property  or  real  rights  over the  obligation  for whose security it was constituted.
immovable property which obligation shall be satisfied with (1876) 
the proceeds of sale of said property or rights in case the  
said obligation is not complied with at the time stipulated EFFECTS OF MORTGAGE
> Real, accessory, unilateral and subsidiary contract  1.   Creates a real right 
  a.    If  the  mortgagor  sells  the  encumbered  property, the 
POSSESSION OF PROPERTY MORTGAGED property  remains  subject  to  the  fulfillment  of the principal
> As a general rule, it is retained by the mortgagor  obligation secured by it
> The mortgaged property is only subjected to a lien by the b.   The mortgagee has a right to rely in good faith on what 
mortgagee but ownership is retained by the mortgagor  appears  on  the  certificate  of  title  of  the 
  mortgagor of the property given as security and in the 
PAYMENT OF INTEREST ON MORTGAGE CREDIT absence  of  anything  to  excite  suspicion,  he  is 
> With  regard  to  fruits  or  interest,  the  mortgagee  shall  under no obligation to look beyond the certificate 
be subject to the obligation of an antichresis creditor c.    Until   the   action   for   expropriation   has   been
completed,  ownership  over  the  property  remains 
SUBJECT MATTER OF MORTGAGE with the registered owner
> Immovables and alienable real rights over immovables  d.   Banking  institution  must  exercise  due  diligence before
  entering contract of mortgage
FUTURE PROPERTY CANNOT BE OBJECT OF e.    If a person is the first mortgagee over a property which 
MORTGAGE was  sold  in  an  auction  by  the  second 
mortgagee,  the  only  right  left  to  him  is  to  collect  his 
> Future  property  cannot  be  the  object  of  a  contract  of mortgage  credit  from  the  purchaser  thereof 
mortgage during the sale conducted
> A   stipulation   however   subjecting   the   mortgage   lien, f.    In  a  suit  to  nullify  a  certificate  of  title,  the mortgagee
properties which the mortgagor may subsequently acquire, is an indispensable party
install,  or  use  in  connection  with  real  property  already 2.   Creates merely an encumbrance 
mortgaged belonging to the mortgagor is valid   
  Art. 2127. The mortgage extends to the natural
Art.  2125.  In  addition  to  the  requisites  stated  in  accessions, to  the  improvements,  growing  fruits, 
Article 2085, it is indispensable, in  order that a and  the  rents  or income not yet received when the
mortgage may be validly  constituted,  that  the  obligation becomes due, and to the amount of the
document  in  which  it  appears be recorded in the indemnity granted or owing to the proprietor from the
Registry of Property. If the instrument is not   recorded,   insurers of the property mortgaged, or in   virtue   of  
the   mortgage   is   nevertheless   binding  expropriation   for   public   use,   with   the
between the parties.  declarations,  amplifications  and  limitations 
  established  by law,  whether  the  estate  remains  in 
The persons in whose favor the law establishes a the  possession  of  the mortgagor,  or  it  passes  into 
mortgage have  no  other  right than to demand the the  hands  of  a  third  person. (1877) 
execution and the recording   of   the   document   in    
which   the   mortgage   is formalized. (1875a)  EXTENT OF MORTGAGE
  > A REM constituted on an immovable property is not limited
ESSENTIAL REQUISITES OF A MORTGAGE to the property itself but also extends to all its accessions,
1.   To secure the fulfillment of a principal obligation  improvements, growing fruits, and rents 
2.   The  mortgagor  should  be  the  absolute  owner  of  > To exclude them, it is necessary that there be an express
thing mortgaged  stipulation to that effect
3.   The mortgagor should have free disposal of the thing  Art.   2128.   The   mortgage   credit   may   be  
4.   When  the  principal  obligation  becomes  due,  the  alienated   or assigned  to  a  third  person,  in  whole 
thing mortgaged may be alienated to secure payment  or  in  part,  with  the formalities required by law. (1878) 
5.   For a mortgage to  be validly  constituted  and to  
prejudice third  persons,  the  mortgage  should  be  Art.  2129.  The  creditor  may  claim  from  a  third 
recorded  with  the Registry of Property  person  in possession  of the  mortgaged property, the
  payment of the part of the credit secured by the property
NO  VALIDLY  CONSTITUTED  MORTGAGE  IF  THE  which said third person  possesses,  in  the  terms  and 
DEED  OF MORTGAGE IS A MERE PRIVATE with  the  formalities which the law establishes. (1879) 
DOCUMENT  RIGHT     OF     CREDITOR     AGAINST    
  TRANSFEREE     OF MORTGAGED PROPERTY
MORTGAGE   IS   NEVERTHELESS   BINDING   > The fact that the mortgagor has transferred the mortgaged
BETWEEN   THE PARTIES EVEN IF UNREGISTERED property  to  a  third  person  doesn't  relieve  him  from  his
> Actual knowledge on the part of the buyer  obligation to pay the debt to the mortgage creditor in the
> Actual knowledge=registration  absence of Novation
  > A recorded REM is merely an accessory contract
PROCEDURE:  WHAT  HAPPENS  WHEN  YOU  ENTER  > The  creditor  may  only  demand  from  any  possessor 
INTO  A CONTRACT OF MORTGAGE?  the payment  only  of  the  part  of  the  credit  secured  by 
1.   Execute the document of mortgage   said property
2.   Go to a notary public, who will notarize the document.   > Necessary  that  there  be  prior  demand  for  payment  be
3.   Pay the documentary stamp tax within the first five days made on the debtor and the latter failed to pay
of the succeeding month.  The doc stamp tax is a > Does not really  apply to all third persons in possession of
percentage of the value of the property mortgaged.   the property
4.   Go  to  the  Office  of  the  Register  of  Deeds  and  pay 
> It  only  applies  to  those  in  possession  of  the  mortgagee or successor in interest may take possession of
mortgaged property in the  concept of  owner.  If the said   property   after   default   in   accordance   with   the
possession by a third person is only as lessee, the creditor prescribed    judicial    procedures    for    foreclosure    and
may not collect the credit from that third person.  receivership  and  in  no  case  exceeding  5  years  from 
  actual
Art.   2130.   A   stipulation   forbidding   the   owner   possession.
from alienating the immovable mortgaged shall be void.
(n) Section 2. All laws,  orders, or regulations,  or parts thereof
  inconsistent with the provisions of this Act, are repealed or
STIPULATION  FORBIDDING  ALIENATION  OF  modified accordingly.
MORTGAGED PROPERTY
> Such   stipulation   would   be   contrary   to   public   good Section 3. This Act shall take effect upon its approval.
inasmuch  as  the  transmission  of  property  should  not  be NOTES ON RA 133:
unduly impeded 
  1.   You can mortgage to a foreigner.   RA 133  sanctions
CAN  MORTGAGEE  PROHIBIT  ENCUMBERANCES  this.  Ownership is not equivalent to mortgage.  Nonetheless,
WITHOUT PRIOR CONSENT? he can    only    institute    judicial    proceedings    and    not
> Yes, regulation is not the same as prohibition  extrajudicially  foreclose  the  mortgage.    Furthermore,  he
> The mortgagee may even add a standard.  This is for good cannot bid or take part in the sale of the real property.
measure on the part of the mortgagee which is allowed by 2.   The  foreigner  may  not  take  possession  of  the 
law.    property during the mortgage.  He could only possess the
  same as a lessee.
IN  THE  FIRST  PLACE,  WHY  WOULD  YOU  BE  3.   The foreigner may only take possession of the
CONCERNED WITH  THE  DISPOSITION  OF  THE  mortgaged property   after   default,   and   for   the   sole  
PROPERTY  IF  YOU  ARE THE MORTGAGEE? purpose   of foreclosure,  enforcement  or   other 
> You don't want the property to be in the hands of someone proceedings.     This should  not  exceed  the  period  of  5 
who is litigious   years  from  actual possession.
> As  a  means  of  monitoring  the  financial  condition  of 
the mortgagor 
 
Art.   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
> 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
> Denotes a procedure adopted by the mortgagee to
terminate the rights of the mortgagor on the property and
includes the sale itself

VALIDITY AND EFFECT OF FORECLOSURE

> The  right  to  foreclose  the  mortgage  and  to  have  the
property  seized  and  sold  with  a  view  to  applying  the
proceeds to the payment of the principal obligation
>  A mortgage contract may contain an acceleration clause
—on  occasion  of  the  mortgagor’s  default,  the  whole 
sum remaining unpaid automatically becomes due and
payable
> Essence    of    mortgage    contract—property    has   
been identified  and  separated  from  a  mass  of  the 
property  of the  mortgagor  to  secure  the  payment  of  a 
principal obligation
> Once  the  proceeds  have  been  applied  to  the 
payment  of the  principal  obligation,  the  debtor  cannot 
anymore  be asked to pay unless there is deficiency  

KINDS OF FORECLOSURE

1.   Judicial  
2.   Extrajudicial
AN  ACT  TO  AUTHORIZE  THE  MORTGAGE  OF 
PRIVATE  REAL PROPERTY IN FAVOR OF ANY
INDIVIDUAL, CORPORATION, OR ASSOCIATION
SUBJECT TO CERTAIN CONDITIONS

Section    1.    Any    provision    of    law    to    the    contrary

notwithstanding, private real property may be mortgaged in
favor of any individual, corporation, or association, but the
mortgagee  or  his  successor  in  interest,  if  disqualified  to
acquire   or   hold   lands   of   the   public   domain   in   the
Philippines,  shall  not  take  possession  of  the  mortgaged
property during the existence of the mortgage and shall not
take  possession  of  the  mortgaged  property  except  after
default    and    for    the    sole    purpose    of    foreclosure,
receivership,  enforcement  or  other  proceedings  and  in 
no case  for  a  period  of  more  than   5  years   from  actual
possession and shall not bid or take part in any sale of such
real  property  in  case  of  foreclosure:  Provided,  that  said