Real Estate Mortgage (REM)
orally?
 What is an upset price or “tipo”?
- The minimum price at which the property shall
be sold, to become operative in the event of a
foreclosure sale at public auction, is null and
void for the property must be sold the highest
bidder.
 Situational: J showed land title to L named in J’s
name. However, when the property itself was
shown, another person appeared instead of J.
1. Can the foreclosure be validly assailed by
Lea? Yes?
2. Is the mortgage valid? No?
 What is an equitable mortgage?
- This is a mortgage which, although it lacks the
proper formalities, words, or other requisites of
a mortgage required by law, nevertheless
reveals the intention of the parties to burden
real property as a security for an existing debt,
and contains nothing impossible or contrary to
law.
ARTICLE 1602. The contract shall be presumed to be an
equitable mortgage, in any of the following cases:
(1) When the price of a sale with right to repurchase is
unusually inadequate;
(2) When the vendor remains in possession as lessee or
otherwise;
(3) When upon or after the expiration of the right to
repurchase another instrument extending the period of
redemption or granting a new period is executed;
(4) When the purchaser retains for himself a part of the
purchase price;
(5) When the vendor binds himself to pay the taxes on the
thing sold;
(6) In any other case where it may be fairly inferred that
the real intention of the parties is that the transaction shall
secure the payment of a debt or the performance of any
other obligation.
In any of the foregoing cases, any money, fruits, or other
benefit to be received by the vendee as rent or otherwise
shall be considered as interest which shall be subject to
the usury laws. (n)
1
 Can a real estate mortgage be entered into
- Oral form – unenforceable as to third
parties.
- Coca-cola v. Spouses Soriano (2018):
Private document in written form remains
valid.
- Written form merely for convenience of
parties. Mortgage remains enforceable and
valid. Enforceability and validity not
affected.
- Rationale of convenience: Registry of
Deeds requirement in public document.
 Is REM a real contract?
- No, it is a purely accessory contract.
- It cannot exist without a valid obligation.
- It does not require delivery. Mortgagor
retains property.
 Do all security agreements create real right over
personal property?
 REM creates real right since it follows the
property wherever it goes.
 What is an extrajudicial foreclosure?
 The mortgagor can sell property.
 The property must be registered in the Registry
of Deeds. (i.e., annotated)
 REM via private document?
- No.
Article 1358. The following must appear in a public
document:
(1) Acts and contracts which have for their object the
creation, transmission, modification or extinguishment
of real rights over immovable property; sales of real
property or of an interest therein are governed by
articles 1403, No. 2, and 1405;
xxx xxx xxx
 Article 1403. The following contracts
unenforceable, unless they are ratified:
xxx xxx xxx
(2) Those that do not comply with the Statute of
Frauds as set forth in this number. In the following
cases an agreement hereafter made shall be
unenforceable by action, unless the same, or some
note or memorandum, thereof, be in writing, and
subscribed by the party charged, or by his agent;
evidence, therefore, of the agreement cannot be
received without the writing, or a secondary evidence
of its contents:
are
 Mortgagee in good faith not applicable to
banks due to extraordinary diligence
expected from them.
 Foreclosure of mortgage 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 where the
mortgagor is in default in the payment of the
obligation.

(a) An agreement that by its terms is not to be  Kinds of foreclosure:

performed within a year from the making thereof;

(b) A special promise to answer for the debt, default,

1. Judicial
or miscarriage of another; 2. Extrajudicial

(c) An agreement made in consideration of marriage,

other than a mutual promise to marry; Judicial Extrajudicial

(d) An agreement for the sale of goods, chattels or - Case must be - Must still go
things in action, at a price not less than five hundred filed in court. to court to
pesos, unless the buyer accept and receive part of judge but no
such goods and chattels, or the evidences, or some of
them, of such things in action or pay at the time some case to be
part of the purchase money; but when a sale is made filed.
by auction and entry is made by the auctioneer in his
sales book, at the time of the sale, of the amount and - But sale
kind of property sold, terms of sale, price, names of
the purchasers and person on whose account the sale
must still be
is made, it is a sufficient memorandum; posted in 3
public
(e) An agreement for the leasing for a longer period places –
than one year, or for the sale of real property or of an
assessors
interest therein;
office,
(f) A representation as to the credit of a third person. sherriff’s
office and?
xxx xxx xxx

Article 1405. Contracts infringing the Statute of - There is still

Frauds, referred to in No. 2 of article 1403, are ratified publication
by the failure to object to the presentation of oral
evidence to prove the same, or by the acceptance of even absent
benefit under them. certificate of
publication
but there
 Situational: What if REM written on a tissue should be
paper? (i.e., not notarized) affidavit of
- It is still allowed. publication.

 Mortgagor must be owner or someone No right of Equity or

authorized by owner. redemption redemption

Publication
 Mirror doctrine: Indefeasibility of Torrens only for
Title
2
 mere
compliance

 When can we proceed to extrajudicial

foreclosure?

 Extrajudicial foreclosure is faster.

 What happens to Special Power of Attorney

(SPA) if mortgagee dies?
- Mortgage is retained since mortgage is an
agency with an interest. Thus, foreclosure
may still be foreclosed.

 Remedy of mortgagee if there is SPA?

 Mortgagee may file an action to collect sum

of money not as mortgagee but as creditor.

 Mortgagee can foreclose judicially which

renders the SPA nugatory.