LEGAL FORMS
Makel Deric M. Maabo
REAL ESTATE MORTGAGE:
A Mortgage is the conveyance of an estate of
pledge of property as security for the payment of
money or the performance of some other act, and
conditioned to become void upon such payment
of performance. A mortgage is an interest in land
created by a written instrument providing security
for the performance of a duty or the payment of a
debt.
Although a stipulation in the mortgage contract
requiring the mortgagor to secure the mortgagees
consent before selling is valid and binding, in the
sense that the latter cannot be compelled while the
loan is unpaid to recognize the sale, it cannot be
interpreted as absolutely forbidding the mortgagor,
as owner of the mortgaged property, from selling the
same while the loan remained unpaid - such
stipulation contravenes public policy, being an
undue impediment or interference on the
transmission of property.
Mortgagor - That party to a mortgage contract who gives
legal title to the mortgagee to secure the mortgage loan.
Mortgagee - A person that takes, holds or receives a
mortgage.
Mortgage Lien - An encumbrance on property of
mortgagor which secures debt obligation. A mortgage lien
is INSEPARABLE from the mortgaged property because it
is a right IN REM, a lien on the property. Thus, to
substitute the mortgage with a surety bond would convert
such lien from right IN REM, to a right IN PERSONAM.
This conversion cannot be ordered for it would abridged
the rights of the mortgagee under the mortgage contract.
Mortgage Loan - A loan secured by a mortgage on
real estate in which the borrower is the mortgagor
and the lender the mortgagee.
Accommodation party - A person who has
signed the instrument as maker, drawer, acceptor
or indorser without receiving value therefor and
for the purpose of lending his name to some other
person.
REQUISITES:
ART 2085. The following requisites are essential to the contracts of
pledge and mortgage:
That they be constituted to secure the fulfillment of a principal
obligation;
That the pledgor or mortgagor be the absolute owner of the thing
pledged or mortgaged;
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.
FORM NO. 343. Real estate mortgage
with JUDICIAL AND EXTRA-
JUDICIAL FORECLOSURE:
In the absence of power of attorney, authorizing
the mortgagee to sell the property to answer for
the obligations of the mortgagor, in case of
default, the mortgagee cannot have the property
extra-judicially foreclosed. The above-cited form
does not contain any such provision. Hence, only
judicial foreclosure may be resorted to. He has to
file a complaint for judicial foreclosure and follow
the procedure outline in Rule 68 of ROC.
Foreclosure of Mortgage:
Foreclosure of mortgage means the termination of
all rights of the mortgagor in the property covered
by the mortgage. It denotes the procedure
adopted by the mortgagee to terminate the rights
of the mortgagor on the property and includes the
sale itself. It is only when the foreclosure
proceedings are completed and the mortgaged
property sold to the purchaser that all interest of
the mortgagor are cut off from the property.
ANNOTATION
The process by which a mortgagee acquires an
absolute title to the property of which he had
previously been only the conditional owner, or upon
which he had previously a mere lien or
encumbrance.
Foreclosure is but a necessary consequence of non-
payment of mortgage indebtedness. The creditor-
mortgagee has the right to foreclose the mortgage,
sell the property, and apply the proceeds of the sale
to the satisfaction of the unpaid loan.
FORM NO. 345. Application for extra-
judicial foreclosure filed with the
Office of the Sheriff due to
mortgagors default.
Rules governing extra-judicial foreclosures:
Extra-judicial foreclosure of mortgage is governed by
Act No. 3135, as amended and undertaken by the
sheriff pursuant to the special power of attorney
inserted in the mortgage document. The guiding
principles in extra-judicial foreclosure are;
The statutory provisions governing publication
and notice of mortgage foreclosure sale must be
strictly complied with, and even the slightest
deviations therein will invalidate the sale.
In extra-judicial foreclosure of mortgage, the law requires
that there be posting of the notice of sale in 3 public places
and the publication of that notice in newspaper of general
circulation. Personal notice to the mortgagor is not
necessary. Proof of posting shall be the affidavit of the
sheriff who conducted the auction sale.
The general rule is that a bidder in an auction sale for the
foreclosure of mortgage must pay in cash to the sheriff. The
rule does not apply where the bidder is the mortgage
creditor who bids for the total amount of the debt for it
would serve no purpose for the sheriff to go through the
ceremony of receiving the money and paying it back to the
creditor.
The purchaser in an extra-judicial foreclosure sale has a right
to the possession of the property even during the one-year
period of redemption provided he files and indemnity bond.
After the lapse of the said period with no redemption having
been made, that right becomes absolute and may be
demanded by the buyer even without the posting of bond.
Possession may then be obtained under a writ which may be
applied for ex parte pursuant to Section 7 of Act No. 3135, as
amended.
With respect to foreclosures by banks and other financial
institutions, Sec. 47 of R.A No. 8791.
Right of redemption exists in extra-judicial foreclosure.
FORM NO. 346. Release or
discharge of mortgage.
FORM NO. 348. Assignment of
real estate mortgage.
Dacion en pago is the delivery and transmission of
ownership of a thing by the debtor to the creditor
as an accepted equivalent of performance of
obligation, thus it is a special mode of payment
where the debtor offers anotehr thing to the
creditor, who accepts it as equivalent of payment
of an outstanding debt, which undertaking, in one
sense, amounts to a sale. It is in essence a form of
sale, which basically involves a disposition of a
property.
Lease of Realty:
FORM NO. 347. Lease of
realty.
TRUST:
The right, enforceable solely in equity, to the
beneficial enjoyment of property to which another
person holds the legal title; a property interest
held by one person (the trustee) at the request of
another (the settlor) for the benefit of a third party
(the beneficiary).
FORM NO. 349. Trust on
realty.
FORM NO. 350. Extra-
judicial settlement of realty
with sale.
