Legal Opinion

Re: Cancellation of Mortgage entered by XXXXXXXXXXXX over TCT

NoXXXXXXXXXXXXXX

A contract of mortgage to be valid, must comply with the following

essential requisites:

1) It is constituted to secure the fulfillment of a principal

obligation;
2) The mortgagor is the absolute owner of the thing
mortgaged; and
3) The persons constituting the mortgage has the free
disposal of his property or he is legally authorized for
that purpose

This is based on Article 2085 of the Civil Code of the Philippines. In

addition, the law also requires the parties to have the document
evidencing their mortgage recorded in the Registry of Property.

The registration of the deed of mortgage in the transfer certificate of

title of the land will serve as a notice to the whole world that the
land is subject of a mortgage and that whoever enters into a
transaction involving the said land shall respect the deed of
mortgage. If the instrument is not recorded, however, the mortgage
is nevertheless binding between the parties (Article 2125, CCP).

The issue we are currently addressing is the 2nd requisite which is

the mortgagors, the Spouses XXXXXXXXX, are NOT the absolute
owners of the thing mortgaged (the property). This is the premise
and the crux of the current reconveyance case (Civ. Case No.
XXXXXXXXXX).

It appears on the title (TCT No. XXXXXXX) that a memorandum of

encumbrance entered on February 24, 2015, that there is a Notice
of Lis Pendens stating that the property is the subject of the case
for Revocation of Donation (Civ Case No. XXXXXXXXXXX).
Strikingly, a subsequent encumbrance, a real estate mortgage was
entered on March 18, 2015, in favour of XXXXXXXXXXXXXXXXX
for the sum of Three Hundred Thousand Pesos. It must be noted
that the said encumbrance was entered twenty two (22) days after
the Notice of Lis Pendens was entered.

Based from the records on hand, which is an electronic copy of the

title obtained in 2016, there are no subsequent entries in the
memorandum of encumbrance. The undersigned has no knowledge
if the mortgage has already been paid to XXXXXXXXXXXXXXXXX,
or the latter has already foreclosed the mortgage.

If the mortgage has already been paid, then a subsequent

annotation from the Spouses XXXXXXXXXXX SHOULD be present
as to clear up the title. The annotation in title shall remain unless
the mortgagors have fully satisfied the obligation guaranteed by the
property. If not, there it is a possibility too that the bank has
already foreclosed the mortgage and most likely too, the period of
redemption (1 year) has already lapsed.

It is at this conjuncture that the opinion of the undersigned that a

case of cancellation of mortgage could prosper. Based from the
records on hand, the bank accepted the mortgage over the property
despite having an annotation of a Notice of Lis Pendens. This notice
pre-supposes that the mortgagors, XXXXXXXXXXXX, is NOT the
absolute owner of the property since the true ownership is in
question and being resolved by the court. Basically, this puts the
bank in a situation that it appears it did not exert due diligence
before accepting and entering the real estate mortgage with the
XXXXXXX.

The annotation of the Notice of Lis Pendens at the back of the Title
serves as a warning to the mortgagee (Inter-Asia Development
Bank) that there is a pending litigation involving that property. It
will be bound by whatever decision of the court involving the said
property. The Notice of Lis Pendens is superior to the subsequent
liens over the property.

What bothers me however, is the Notice of Lis Pendens on the title

pertains to the Revocation of Donation Case. Said case was already
withdrawn. Despite the Order of Withdrawal however, the case has
not yet been considered close and the proceedings terminated as
there is a pending motion for reconsideration filed by the
defendants (XXXXXXXXXXXXX) for their compulsory
counterclaims.

I am not particularly sure if the Notice of Lis Pendens will redound

to the benefit of the Revocation Case. I submit in the negative, being
a different case with a different cause of action despite similar facts.

In sum, the undersigned is proposing that it is imperative to obtain

an updated copy of the title as to keep ourselves abreast of the real
status of the title. We would know by then if the mortgage has been
foreclosed or not. From there, we would be able to assess the
circumstances and decide if filing a case for Cancellation of Real
Estate Mortgage is the best course of action for the moment.