MORTGAGE

ART. 2124. Only the following property may be the object

of a contract of mortgage:
(1) Immovables;
(2) Alienable real rights in accordance with the laws,
imposed upon immovables.
Nevertheless, movables may be the object of a chattel
mortgage. (1874a)
- Definition of mortgage.
a. otherwise known as “real estate mortgage”
b. a contract whereby the debtor secures to
the creditor the fulfillment of a principal obligation, specially
subjecting to such security immovable property or real rights
over immovable property which obligation shall be satisfi ed
with the proceeds of the sale of said property or rights in case the
said obligation is not complied with at the time stipulated.

- Characteristics of mortgage.
It is a real, accessory, and subsidiary contract. It is also unilateral
because it creates only an obligation on the part of the creditor
who must free the property from the encumbrance once the
obligation is fulfi lled.

- essence of a contract of mortgage

a property has been identified or set apart from the mass of the property of the
debtor-mortgagor as security for the fulfi llment of his obligation,
in case of default of payment
(see example on page 371)

- Possession of property mortgaged.

General Rule: the mortgagor-debtor retains possession of the property mortgaged as security
for the payment of the sum borrowed from the mortgagee-creditor.
Reason: the debtor merely subjects the property
to a lien but ownership thereof is not parted with.

It is not, however, an essential requisite of the contract of

mortgage that the property mortgaged remains in the possession
of the mortgagor. (see Art. 2085.) Hence, the mortgagor may
deliver said property to the mortgagee, without thereby altering
the nature of the contract.

- Payment of interest on mortgage credit.

It is not also an essential requisite of the contract of mortgage that the principal of the
mortgage credit bears interest, or thatthe interest as compensation for the use of the principal and
enjoyment of its fruits be in the form of a certain percent thereof.
being a mere mortgagee, private respondent has no right to eject petitioner.

- As creditor or mortgagee, private respondent “x x x cannot appropriate the

things given by way of pledge or mortgage or dispose of them.
Any stipulation to the contrary is null and void.’’ (Art. 2088.)

Kinds of mortgage. (p. 373)

Subject matter of mortgage.
The objects of contract of mortgage are immovables (Art.
415.3) and alienable real rights imposed upon immovables.

Future property cannot be object

of mortgage.
However, a stipulation subjecting to the mortgage lien, properties
(improvements) which the mortgagor may subsequently
acquire, install, or use in connection with real property already
mortgaged belonging to the mortgagor is valid.

ART. 2125. In addition to the requisites stated in Article

2085, it is indispensable, in order that a mortgage may be
validly constituted, that the document in which it appears
be recorded in the Registry of Property. If the instrument
is not recorded, the mortgage is nevertheless binding
between the parties.
The persons in whose favor the law establishes a
mortgage have no other right than to demand the execution
and the recording of the document in which the mortgage
is formalized. (1875a)

-Essential requisites of mortgage. (p. 377)

(1) Where mortgage in a private document.
(2) Where mortgage not registered. (p.378)
(3) Where mortgage registered under Act No. 3344. (p. 378)

-Doctrine of mortgagee in good faith.

(1) Reliance in good faith on certifi cate of title of mortgagor. (p. 378)
(2) Title in name of mortgagor, not of rightful owner. (p. 379)
(3) Duty of mortgagee to look beyond certifi cate of title. (p. 379
(4) Greater care and diligence required of mortgagee-bank. (380)

-Right in case of legal mortgages. (p. 381)

-Registration of mortgage. . (p. 381)

(1) Mortgagee entitled to registration of mortgage as a matter
of right.
(2) Proceedings for registration do not determine validity of mortgage
or its effect.
(3) Registration without prejudice to better right of third parties. (p. 382)
(4) Registrability of encumbrance acquired subsequent to the
mortgage. . (p. 382)
(5) Registrability of mortgage by surviving spouse of his/her
undivided share of conjugal property. . (p. 383)
(6) Subsequent registration of an adverse claim. (p. 383)

Effect of invalidity of mortgage (p. 384)

on principal obligation.
(1) Principal obligation remains valid.
(2) (2) Mortgage deed remains as evidence of a personal obligation.

ART. 2126. The mortgage directly and immediately

subjects the property upon which it is imposed, whoever
the possessor may be, to the fulfi llment of the obligation
for whose security it was constituted. (1876)
-Effect of mortgage.
(1) Creates real right (see enumerations on p. 384)
(2) Creates merely on encumbrance. (see eumerations on p. 388)

ART. 2127. The mortgage extends to the natural accessions,

to the improvements, growing fruits, and the rents
or income not yet received when the obligation becomes
due, and to the amount of the indemnity granted or owing
to the proprietor from the insurers of the property mortgaged,
or in virtue of expropriation for public use, with the
declarations, amplifi cations and limitations established by
law, whether the estate remains in the possession of the
mortgagor, or it passes into the hands of a third person.
(1877)

Extent of mortgage.
A real estate mortgage constituted on immovable property
is not limited to the property itself but also extends to all its
accessions, improvements, growing fruits and rents or income
(see Art. 2102.) as well as to the proceeds of insurance should
the property be destroyed, or the expropriation value of the property should it be expropriated

the following are deemed included

in a mortgage of real property: (see p. 391)

- Stipulation in mortgage contract including

after-acquired properties.
(1) Stipulation valid; purpose.
(2) Attachment of lien retroactive.

- Mortgage with “dragnet’’ clauses to secure future

advancements. (see p. 392)

ART. 2128. The mortgage credit may be alienated or

assigned to a third person, in whole or in part, with the
formalities required by law. (1878)

-Alienation or assignment of mortgage

credit. (see p. 395)

ART. 2129. The creditor may claim from a third person

in possession of the mortgaged property, the payment of
the part of the credit secured by the property which said
third person possesses, in the terms and with the formalities
which the law establishes.

-Right of creditor against transferee

of mortgaged property.

ART. 2130. A stipulation forbidding the owner from

alienating the immovable mortgaged shall be void.
ART. 2131. The form, extent and consequences of a mortgage, both as to its constitution, modification
and extinguishment, and as to the other matters not included
in this Chapter, shall be governed by the provisions of the
Mortgage Law and of the Land Registration Law.

-Laws governing mortgage

a. Land Registration Law (Act No. 496, as amended
b. Revised Administrative Code (Section 194, as amended by Act No. 3344)

-As to aliens becoming mortgagees, the pertinent law is Republic Act No. 4882.

-Meaning of foreclosure (of mortgage)

a. 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

b. It denotes the procedure adopted by the mortgagee to terminate the rights of the
mortgagor on the property and includes the sale itself

c. consequence of non-payment of a mortgage indebtedness

-rule:
a. mortgage can be
foreclosed only when the debt remains unpaid at the time it is
due.
b. It is valid only when the debtor is in default in the payment of his obligation
 c. The right of foreclosure cannot be exercised by any person other than the creditor-
mortgagee or his assigns
d. In a real estate mortgage, when the principal obligation
is not paid when due, the mortgagee has 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. As a general rule, a demand
before foreclosure is essential.
e. A mortgage contract may contain an acceleration clause
which is a stipulation stating that, on the occasion of the mortgagor’s
default, the whole sum remaining unpaid automatically
becomes due and payable.
f. The power to foreclose a mortgage or not resides in the
mortgagee
g. Once the proceeds have been applied to the payment of
the obligation, the debtor cannot anymore be required to pay because the obligation
has already been extinguished, UNLESS, of course, there is a deficiency between the amount of
the loan and the foreclosure sale price.
h. The rule is that statutory provisions governing public
notice of foreclosure sales must be strictly complied with, and
even slight deviations therefrom will invalidate the sale or render
it at least voidable.
i. If the mortgagee is unable to obtain possession for its sale on foreclosure:
*he must bring a civil action either to recover such possession as
a preliminary step to the sale, or
* obtain judicial foreclosure.

Kinds of foreclosure (affected by ordinary action by the mortgagee or by foreclosure by

the mortgagee under power of sale contained in the mortgage)
a. Judicial foreclosure
b. Extrajudicial foreclosure

- Judicial foreclosure under the Rules of Court.

* A mortgage may be foreclosed judicially by bringing an action for that purpose
* it shall order the mortgagor to pay the amount due upon the mortgage debt or obligation
with interest and other charges within a period of not less than 90 days nor more than 120 days from
the entry of judgment
* If the mortgagor fails to pay at the time directed in the order, the court shall order the
property to be sold to the highest bidder at public auction (Upon Motion)
* Execution of judgment. — No judgment rendered in an action for foreclosure or mortgage
can be executed otherwise than in the manner prescribed by the law on mortgages, because parties to
an action are not authorized to change the procedure which it prescribed.
* the proper remedy to seek reversal of
a judgment in an action for foreclosure of real estate mortgage
is not a petition for annulment of judgment but an appeal from
the judgment itself or from the order confirming the sale of the
foreclosed real estate.
* After failing to avail of appeal without
suffi cient justifi cation, the mortgagor cannot conveniently resort
to the action for annulment for otherwise he would benefi t
from his own inaction and negligence
* If the mortgagee is retaining more of the proceeds of the sale
than he is entitled to, this fact alone will not affect the validity
of the foreclosure sale but simply gives the mortgagor a cause
of action to recover such surplus.
 * The mortgagee who has been
ordered by the court to return the surplus, but fails to do so, may
be cited for contempt.
* Execution of sheriff’s certificate
In judicial foreclosures, the “foreclosure” is not complete until the sheriff’s certifi
cate is executed, acknowledged and recorded.
A sheriff’s report on the auction sale is clothed with the
presumption of regularity especially where no objection has
been raised against it.

-Extrajudicial foreclosure under Act No. 3135.

(1) Express authority to sell given to mortgagee
law covers only real estate mortgages
(2) Authority not extinguished by death of mortgagor or mortgagee.
A mortgage may be foreclosed extrajudicially where there
is inserted in the contract a clause giving the mortgagee the
power, upon default of the debtor, to foreclose the mortgage by
an extrajudicial sale of the mortgaged property

The authority to sell is not

extinguished by the death of the mortgagor (or mortgagee) as
it is an essential and inseparable part of a bilateral agreement

(3) Public sale after proper notice

The sale, which cannot be made legally outside of the province
in which the property is situated (Sec. 2, Act No. 3135.), shall
be made at public auction (Sec. 4, Ibid.; see Langkaan Realty Development
Corporation, Inc. vs. United Coconut Planters Bank,
347 SCRA 542 [2000].) after the giving of proper notice which
consists in the posting of the notice of the sale in at least three (3)
public places at the municipality or city where each mortgaged
property is situated and the publication thereof in a newspaper
of general circulation in said municipality or city.

(4) Public sale at different places/on different dates.

not violated by conducting
two separate foreclosure proceedings on mortgaged properties
located in different cities or municipalities as long as each parcel
of land is answerable for the entire debt

(5) Publication of notice of auction sale

a. Failure to comply with the
statutory requirements as to publication of notice of auction
sale constitutes a jurisdictional defect which invalidates the
sale or at least render the sale voidable. Even slight deviations
therefrom are not allowed.
c. must contain the correct number of the certificate of title and the correct technical
description of the real property to be sold.
d. (d) Personal notice to mortgagor not generally required.
Hence, unless required in the mortgage contract, the
lack of personal notice to the mortgagor is not a ground to
set aside a foreclosure sale. Such notice is not necessary as
publication of notice in a newspaper is more than suffi cient
compliance.
(e) Notice to executing mortgagee-creditor not provided
by law. — There is no provision in the law on extrajudicial
foreclosure of real estate mortgage to the effect that notice be
given to the executing mortgagee-creditor. This is explained
by the fact that it is the creditor who causes the mortgaged
property to be sold and the date of sale is fi xed upon his
instruction because it is he who causes the sale and controls
its details.

(f) Posting of notice on mortgaged property not required.

It merely requires
that the notice of sale be posted in at least three (3) public
places in the city or municipality where the property is
situated, to wit: the Sheriff’s Offi ce, the Assessor’s Offi ce, and
the Register of Deeds which are certainly the public places

(g) Certifi cate of posting not required.

What the law requires is the posting of the notice of sale and
not the execution of the certifi cate of posting.
(i) Publication of notice of sale in newspaper of general circulation
suffi cient compliance. — The statutory requirements
of posting and publication are mandated not for the mortgagor’s
benefi t, but for the public or third persons.
It has been held, however, that the failure to post a
notice is not per se a ground for invalidating a foreclosure
sale provided that the notice thereof is duly published in a
newspaper of general circulation.
(k) Formalities of levy not required. — The formalities of
a levy11 are not required before an extrajudicially foreclosed
property can be sold at public auction
(l) Notice to bidder of all bids offered at auction sale not required.
Section 4 of Act No. 3135 provides that the sale must
take place “between the hours of nine in the morning and
four in the afternoon.’’ A sale at public auction held within
the intervening period provided by the law (i.e., at any time
from 9:00 a.m. until 4:00 p.m.) is valid without regard to the
duration or length of time it took the questioner to conduct
the proceeding.

(6) Payment of cash by highest bidder. — Where the highest

bidder is the mortgagee and the amount of his bid represented
the total mortgage debt, it is not necessary for him to pay cash
although Section 5 of Act No. 3135 requires that the creditor must
bid “under the same condition as any other bidder.” It would
serve no purpose for the sheriff to go through the ceremony of
receiving the money and paying it back to the creditor. (Ruiz vs.
Sheriff of Manila, 34 SCRA 83 [1970].)

(7) Surplus proceeds from foreclosure sale. (see n p. 411)

(8) Redemption of property sold.

a. The debtor (natural person):
has the right to redeem the property sold within the term of
one year from and after the date of the sale.

The reckoning date in cases of registered land is from the

 registration of the certifi cate of sale since it is only from the date
that the sale takes effect as a conveyance.

b. In the case of juridical persons(corporations and partnerships):

they have the right to redeem the property until, but not after the registration of the
certifi cate of foreclosure sale which in no case shall be more than three (3)
months after foreclosure, which ever is earlier

Rule 39 applies only to ordinary execution sale. If at all, Rule

39 applies to extrajudicial foreclosure sale but only on the manner
of redemption and computation of interest.

(9) Remedy of party aggrieved by foreclosure.

the debtor may petition that the sale be set
aside and the writ of possession cancelled, because the mortgage
was not violated or the sale was not made in accordance with the provisions thereof. (Section 8,
of Act No. 3135 (Appendix 2.)
- He may ask for the annulment of the foreclosure sale on
the ground that:
(a) There was fraud, collusion, accident, mutual mistake,
breach of trust or misconduct by the purchaser;
(b) The sale had not been fairly and regularly conducted;
or
(c) The price was inadequate and the inadequacy was so
great as to shock the conscience of the court.

(10) Republication. — Republication in the manner prescribed

by Act No. 3135 is necessary for the validity of a postponed
extrajudicial foreclosure sale.

-Right of mortgagee to recover deficiency.

(1) Mortgage merely a security, not a satisfaction of an obligation.
a. If there be a balance due to the mortgagee after applying the proceeds of the sale, the
mortgagee is entitled to recover the deficiency.

b. In judicial foreclosure, the Rules of Court specifi cally

gives the mortgagee the right to claim for defi ciency in case
defi ciency exists (Sec. 6, Rule 68.) while Act No. 3135 governing
extrajudicial foreclosures of mortgage does not give a mortgagee
the right to recover defi ciency after the public auction sale,
neither does it expressly or impliedly prohibit such recovery.

c. To recover deficiency, the extrajudicial foreclosure must be valid.

d. In both judicial and extrajudicial foreclosures, the principle is

the same, that the mortgage is but a security and not a satisfaction
of the indebtedness. It is of no importance whether the buyer or
the highest bidder in the public auction is the creditor himself

e. Where a third person is the mortgagor, he is not liable for any

deficiency in the absence of a contrary stipulation. The action
for the recovery of such defi ciency must be directed against the debtor.

(2) Action for recovery of deficiency.

a. It is the settled rule that a mortgagee may recover
any deficiency in the mortgage account which is not realized in
a foreclosure sale and that an independent civil action for the
recovery of deficiency may be filed even during the period of
redemption

(3) Prescriptive period of action. —

The action to recover a deficiency after foreclosure prescribes after ten (10) years from the
time the right of action accrues as provided in Article 1144(2) of
the Civil Code.14
Nature of judicial foreclosure
proceeding.

-A proceeding for judicial foreclosure of mortgage 16 is an action quasi in rem. It is based on

a personal claim against a specific property of the defendant.
Purpose: to have the property seized and sold by court order
to the end that the proceeds thereof be applied to the payment of
plaintiff’s claim.
-(2) Result or incident of failure to pay indebtedness.
a. The principal obligation: money indebtedness,
b. the subjection of the property is only resorted to upon failure to pay the debt.

Hence, the money indebtedness is the principal thing, not the

foreclosure of the property which is only the result or an incident
of the failure to pay the indebtedness. Therefore, the fact that the property mortgaged is destroyed is
not a ground to reduce the indebtedness secured

(3) Survives death of mortgagor.

-An action for the foreclosure of a mortgage is an action which survives the death of the
mortgagor because the claim against him is not a pure money
claim but an action to enforce a mortgage lien.

Nature of power of foreclosure

by extrajudicial sale. (see on p. 417)

(1) Conferred for mortgagee’s protection

(2) An ancillary stipulation.
(3) A prerogative of the mortgagee.
-The power to decide to foreclose or not is the prerogative of the mortgagee.
-After this, the act of the auctioning sheriff is governed by the provisions of Act No. 3135, as
amended, and not by the instructions of the mortgagee.
(see examples on p. 417)

Rule 39 of the Rules of Court- governs ordinary execution sale is

Rule 68 of the Rulesof Court- applies in cases of judicial foreclosure sale.
Act No. 3135, as amended by Act No. 4118, applies in cases of extrajudicial foreclosure.’’

Stipulation of upset price in mortgage

contract void.
A stipulation in a mortgage of real property fi xing a “tipo” or
upset price to become operative in the event of a foreclosure sale at
public auction, is null and void.
Reason: the property must be sold to the highest bidder.

Effect of inadequacy of price

in foreclosure sale.
 (1) General rule; exception.
a. Where there is a right to redeem: inadequacy of price is not material
Reason: the judgment debtor may reacquire the property or else sell his right
to redeem and thus recover any loss he claims to have suffered by reason of
the price obtained at the auction sale.
-Mere inadequacy of the price obtained at the sheriff’s sale will not be sufficient to annul or
set aside the foreclosure sale unless “the price is so inadequate as to shock the
conscience of the court” taking into consideration the peculiar
circumstances attendant thereto.

(2) At a nominal cost. (see p. 422)

(3) Less than its fair market value.
the property may be sold for less than its fair market value upon the theory that the
lesser the price the easier for the owner to effect the redemption
so that the low price even works to his advantage.

Section 29 of Rule 39 of the Rules of Court provides that the

redemption price should be equivalent to “the amount of the
purchase price, with 1% interest per month up to the time of
redemption x x x.’’

(4) Bid price at the public auction. has no bearing on the bid price at the public auction
PROVIDED that the public auction was regularly and honestly conducted.

In the absence of any irregularity in the foreclosure proceeding, the sale cannot
be nullifi ed on the mere allegation of a disparity in the bid price
and the property’s fair market value.

-The fact that the mortgagee eventually acquired the mortgaged

property and that the bid price was low is not a valid
reason for the mortgagor to refuse to pay the remaining balance
of the obligation.
Reason: for settled is the rule that a mortgage is simply
a surety and not a satisfaction of indebtedness.

Waiver of security by mortgagee.

- The mortgagee may institute either a personal action for debt or a real action to foreclose the
mortgage.

He may waive the right to foreclose his mortgage and maintain a personal action for recovery
of the indebtedness.

There is no statutory provision in our jurisdiction prohibiting a personal action to

recover a sum of money even though a mortgage has been given as security for the payment
of the same.

(2) Remedy alternative, not cumulative or successive. The

mortgagee cannot have both remedies. He has only one cause of
action, i.e., non-payment of the mortgage debt; hence, he cannot
split up his cause of action by fi ling a complaint for payment of
the debt, and another complaint for foreclosure.

(3) Options in case of death of debtor (REMEDIES)

(a) to waive the mortgage and claim the entire debt from
 the estate of the mortgagor as an ordinary claim;

(b) to foreclose the mortgage judicially and prove any

deficiency as an ordinary claim; and

(c) to rely on the mortgage exclusively, foreclosing the

same at any time before it is barred by prescription without right
to file a claim for any deficiency.
The third option includes extrajudicial foreclosure which
bars any subsequent deficiency claim against the estate of the
deceased.

-A mortgagee-creditor is not synonymous to a judgment creditor.

While the law expects a mortgagee-creditor to inquire as a
reasonably prudent man would regarding the encumbrances
on the property in question, no such knowledge is imputed to a
judgment creditor who merely seeks the satisfaction of the judgment
awarded in his favor.

Foreclosure retroacts to date of registration

of mortgage.
The character of being an innocent mortgagee continues
up to the date of actual foreclosure and sale at public auction.

-a notice of adverse claim by a third party

annotated after the registration of the mortgage but before the
foreclosure and sale at public auction of the property subject
thereto cannot affect the rights of the mortgagee.

Meaning of redemption (of foreclosed

property).
a transaction by which the mortgagor reacquires or buys back the property which may have
passed under the mortgage or divests the property of the lien which the mortgage may have created.
In general, the concept of redemption is to allow the owner
to repurchase or buy back, within a certain period and for a
certain amount, a property that has been sold due to debt, tax, or
encumbrance.
It is allowed in cases of foreclosures in favor of banking and
credit institutions and in extrajudicial foreclosures.

Kinds of redemption.

(1) Equity of redemption (see on p. 427)

- the right of the mortgagor in case of judicial foreclosure to redeem the mortgaged -property
after his default in the performance of the conditions of the mortgage but
before the confirmation of the sale of the mortgaged property
- In judicial foreclosure, the mortgagor may exercise his equity of redemption before but
not after the sale is confirmed by the court.
- It is simply the right of the defendant mortgagor to extinguish the mortgage and retain
ownership of the property by paying the secured debt within the
90-day period after the judgment becomes fi nal in accordance
with Rule 68, or even after the foreclosure sale but prior to its confi rmation.
- Where the foreclosure is judicially effected, no equivalent right of redemption exists.
- A second mortgagee acquires only the equity of redemption vested in the mortgagor, and his
rights are strictly subordinate to the superior lien of the first mortgagee.
 (2) Right of redemption (see on p. 428)
a. (1) Period within which to exercise right.
b. (2) Effect of failure to exercise right. (p 430)
c. (3) Effect of exercise of right. (p. 431)
d. (4) Where mortgaged property sold to a third party.
e. (5) Where sale not registered and made without consent of mortgagee.
f. (6) Where extrajudicial foreclosure effected with fraud.
- the right of the mortgagor in case
of extrajudicial foreclosure to redeem the mortgaged property
within a certain period from and after it was sold for the
satisfaction of the mortgage debt.

- In all cases of extrajudicial sale, the (individual) mortgagor may redeem the
property at any time within the term of one year from and after
the date of the sale (Sec. 6, Act No. 3135.),

Confirmation by court of auction sale

in judicial foreclosure. (see on p. 433)
(1) Equity of redemption.
(2) Procedure.
(3) (3) Effect and nature. (p.434)
(4) (4) Control of court over proceedings before confi rmation.
(5) (5) Requirement of notice and hearing.

Nature of mortgagor’s right

of redemption.
After foreclosure and sale of the mortgaged property, the
mortgage indebtedness is extinguished except to the extent
that there is a defi ciency. What remains is the right vested by
law in favor of the mortgagor to redeem the property within the
prescribed period.
(1) An absolute privilege.( p. 435)This right of redemption is an
absolute privilege, the exercise of which is entirely dependent
upon the will and discretion of the redemptioner.
There is, thus, no legal obligation to exercise the right
of redemption. Should the mortgagor choose not to exercise
it, nobody can compel him to do so nor will such choice give
rise to a cause in favor of the purchaser at the auction sale.
In fact, the relationship between the said purchaser and the
redemptioner is not even that of creditor and debtor.

(3) A mere statutory privilege. (p. 436)

Requisites for valid redemption. (p. 438)

Payment of redemption money. (p. 440)

(1) To whom it may be made.
(2) (2) Medium of payment.

Amount payable. (441)

(1) Purchase price.
(2) Amount fixed by the court.
(3) One percent (1%) interest per month.
 (4) Necessary expenses incurred by the purchaser/taxes.
(5) Rentals received by purchaser.
(6) In case of surplus in the purchase price.

Rights of persons with subordinate

interest. (p. 444)
(1) Mortgagor’s equity of redemption before foreclosure
(2) Mortgagor’s right of redemption after foreclosure.
(3) Payment of his credit from excess of proceeds of auction sale.
(4) Where persons with subordinate interest not made defendants. (p. 445)
(5) Where irregularities attended foreclosure.
(6) Unpaid seller of property.

Equity of redemption in judicial

foreclosure. (p. 447)
(1) Period for exercise.
(2) Reckoning of ninety-day period.
(3) Where period never began to run.
(4) Period given, a substantive right.

Persons entitled to exercise right

of redemption. (p. 449)
(1) Mortgagor or one in privity of title with mortgagor.
(2) Successor-in-interest (p. 449)
The term “successor-in-interest” includes:
(a) one to whom the debtor has transferred his right of
redemption; or
(b) one to whom the debtor has conveyed his interest in
the property for the purpose of redemption; or
(c) one who succeeds to the interest of the debtor by
operation of law; or
(d) one or more joint debtors who were joint owners of
the property sold; or
(e) one with a joint interest in the property, or his spouse,
or heirs.
(3) Under the Rules of Court. — When real property is sold
on execution of a judgment, the same may be redeemed by the
following persons: (see n p. 450)

Registration of transfer of right

of redemption. (p.450)
The transfer of the right of redemption from the original
debtor-mortgagor need not be registered with the Register of
Deeds to enable the transferee or assignee to exercise the same.
(1) Where redemption is proper, the purchaser at the
foreclosure sale cannot refuse to allow the same, considering
that his right over the property is purely inchoate until after
the period of redemption has elapsed without the right being
exercised by those allowed by law.
(2) Besides, public policy demands that the original debtor-mortgagor
or his successor-in-interest should, as much aspossible, be allowed to redeem a foreclosed property.
(Ibid.)

Rights and obligations of mortgagee

in possession. (p. 451)
 (1) Similar to those of an antichresis creditor.
(2) Without right to reimbursement for useful expenses.
“mortgagee in possession”
“one who has lawfully acquired actual
or constructive possession of the premises mortgaged to him,
standing upon his rights as mortgagee and not claiming under another title, for the purpose of
enforcing his security upon such
property or making its income help to pay his debt.’’

Vendee’s right to possession of mortgaged

property sold (p. 453)
(1) Contingent. — Before the expiration date of the redemption
period, the vendee’s right to possession (or continued possession)
of the property sold is contingent upon the failure of the
mortgagor to redeem.
(2) Final. — After the redemption period is terminated,
the right to redeem is barred, the mortgagor is divested of his
rights to the mortgaged property sold, and the vendee’s right of
possession of the property becomes fi nal.

Right of purchaser to writ of possession. (p. 454)

writ of possession
an order by a court whereby the sheriff is commanded to place in possession
of real or personal property the person entitled thereto such as when a property is extrajudicially
foreclosed.

Right before lapse of redemption period. (p. 455)

Right after lapse of redemption period. (p. 456)

(1) Nature of petition/motion for issuance of writ.

(2) Right of purchaser to a conveyance and to possession. (P. 457)
(3) Right of purchaser to aid of court. (p. 458)
(4) Right of purchaser to aid of court. (p. 459)
(5) Where mortgaged property under lease. (p. 459)
(6) (6) Where mortgagor refuses to surrender property sold. (p. 460)
(7) (7) Where third party in actual possession. (p. 460)

Issuance of writ before lapse

of redemption period. (p. 461)
(1) Where bond fi led by purchaser
(2) (2) Remedy of mortgagor [see eumerations on p. 462]

Where rights of third persons involved. (p.464)

(1) Claimants with interest adverse to mortgagor. See eumerations on p. 464
(2) Successor-in-interest of mortgagor. (p. 468)
(3) Lessee of agricultural land.
(4) Buyer of condominium unit.

ANTICHRESIS**(p. 473)
ART. 2132. By the contract of antichresis the creditor
acquires the right to receive the fruits of an immovable of
his debtor, with the obligation to apply them to the payment
of the interest, if owing, and thereafter to the principal
of his credit. (1881)

-Characteristics of the contract Antichresis:

(1) an accessory contract because it secures the performance
of a principal obligation. Manresa, however, believes that it is an
independent contract (see 12 Manresa 547.); and
(2) a formal contract because it must be in a specifi ed form to
be valid, i.e., “in writing.”

-Delivery of property.
a. Antichresis requires the delivery by the debtor of the property
given as security to the creditor.
But such delivery is required only in order that the creditor may receive the fruits and not that
the contract shall be binding.
b. The contract does not cover the immovable but only its fruits.

Right of creditor to the fruits.

-Antichresis normally covers all the fruits of the encumbered
property, but the law gives the parties the freedom to stipulate
otherwise. (see Art. 1306.)
-The reduction of the amount of fruits
available to the creditor does not vary the nature of the contract.

Obligation to pay interest not essential.

-The obligation to pay interest is not of the essence of the
contract of antichresis, any more than it is indispensable in a
contract of loan. (see illustrative cases)
Antichresis and pledge compared. (p. 475)

Antichresis and real mortgage compared. (p. 475)

Application of the fruits to interest

and then to principal. (p. 476)

ART. 2133. The actual market value of the fruits at the

time of the application thereof to the interest and principal
shall be the measure of such application. (n)

Measure of application of fruits

to interest and principal.
The contract does not cover the immovable but only its fruits.
The fruits of the immovable which is the object of the antichresis
must be appraised at their actual market value at the time of the
application. (see Art. 2138.) “The foregoing rule will forestall the
use of antichresis for purposes of usury.” (Report of the Code
Commission, p. 158.)

ART. 2134. The amount of the principal and of the interest

shall be specifi ed in writing; otherwise, the contract of
antichresis shall be void. (n)

-Article 2134 is an instance when the law requires that a

contract be in some form in order that it may be valid (Art. 1356.)
and not only to affect third persons.
- Even if the antichresis is
void, the principal obligation, however, is still valid.

ART. 2135. The creditor, unless there is a stipulation to

the contrary, is obliged to pay the taxes and charges upon
the estate.
He is also bound to bear the expenses necessary for
its preservation and repair.
The sums spent for the purposes stated in this article
shall be deducted from the fruits.

Obligations of the antichretic creditor. (p.478)

(1) Payment of taxes and charges upon the estate.
(2) Application of the fruits of the estate.

ART. 2136. The debtor cannot reacquire the enjoyment

of the immovable without fi rst having totally paid what he
owes the creditor.
But the latter, in order to exempt himself from the obligations
imposed upon him by the preceding article, may always compel the debtor to enter again upon the
enjoyment
of the property, except when there is a stipulation to
the contrary.

-Right of antichretic debtor to reacquire

enjoyment of property. (p. 479)

ART. 2137. The creditor does not acquire the ownership

of the real estate for nonpayment of the debt within
the period agreed upon.
Every stipulation to the contrary shall be void. But the
creditor may petition the court for the payment of the debt
or the sale of the real property. In this case, the Rules of
Court on the foreclosure of mortgages shall apply.

-Remedy of creditor in case of nonpayment

of debt. (see comments on p. 479)
(1) to bring an action for specific performance
(2) to petition for the sale of the real property as
in a foreclosure of mortgages

The parties, however, may agree on an extrajudicial foreclosure

in the same manner as they are allowed in contracts of mortgage and pledge
If the debt is not paid, it is clear enough that the creditor
does not acquire ownership of the real estate since what was
transferred is not the ownership but merely the right to receive
its fruits.
A stipulation authorizing the antichretic
creditor to appropriate the property upon the nonpayment of the
debt within the period agreed upon is void.

-Acquisition by creditor of property

by prescription.
The creditor in antichresis and his successors-in-interest
cannot ordinarily acquire by prescription the land given to him,
any agreement to the contrary being void.

Possession, for the purpose of acquisitive prescription, must

be in the concept of an owner. (Art. 1118.) The possession of
an antichretic creditor is not in the concept of an owner. He is a mere holder placed in possession of
the land by the
debtor, the owner
He cannot acquire the ownership of the real
estate subject of the antichresis unless he repudiates his status as
an antichretic creditor.

ART. 2138. The contracting parties may stipulate that

the interest upon the debt be compensated with the fruits
of the property which is the object of the antichresis,
provided that if the value of the fruits should exceed the
amount of interest allowed by the laws against usury, the
excess shall be applied to the principal.

ART. 2139. The last paragraph of Article 2085, and Articles

2089 to 2091 are applicable to this contract. (1886a)