ABOUT MORTGAGE

IN RELATION TO THE MAIDIN VS CANSECO, CANSECO, TAN CASE

are mortgagors and new registered owner be held solidarily liable or only the
sole liability of the mortgagors?
answer: sole liability of the mortgagors as to the money claim. property shall be
sold if mortgagors cannot pay, even if in the possession of new owner.

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 terms and with the formalities
which the law establishes.
While we agree with Garcia that since the second mortgage, of which he is the
mortgagee, has not yet been discharged, we find that said mortgage subsists
and is still enforceable. However, Villar, in buying the subject property with
notice that it was mortgaged, only undertook to pay such mortgage or allow the
subject property to be sold upon failure of the mortgage creditor to obtain
payment from the principal debtor once the debt matures. Villar did not
obligate herself to replace the debtor in the principal obligation, and could not
do so in law without the creditors consent. Article 1293 of the Civil Code
provides:
Art. 1293. Novation which consists in substituting a new debtor in the place of
the original one, may be made even without the knowledge or against the will of
the latter, but not without the consent of the creditor. Payment by the new
debtor gives him the rights mentioned in articles 1236 and 1237. Art. 1293.
Novation which consists in substituting a new debtor in the place of the
original one, may be made even without the knowledge or against the will of the
latter, but not without the consent of the creditor. Payment by the new debtor
gives him the rights mentioned in articles 1236 and 1237.

Therefore, the obligation to pay the mortgage indebtedness remains with the
original debtors Galas and Pingol.

http://sc.judiciary.gov.ph/juris.../2012/june2012/158891.htm

The effects of a transfer of a mortgaged property to a third person are well

determined by the Civil Code. According to article 1879 of this Code, the
creditor may demand of the third person in possession of the property
mortgaged payment of such part of the debt, as is secured by the property in
his possession, in the manner and form established by the law. The Mortgage
Law in force at the promulgation of the Civil Code and referred to in the latter,
provided, among other things, that the debtor should not pay the debt upon its
maturity after a judicial or notarial demand for payment has been made by the
creditor upon him. (Art. 135 of the Mortgage Law of the Philippines of 1889.)
According to this, the obligation of the new possessor to pay the debt originated
only from the right of the creditor to demand payment of him, it being
necessary that a demand for payment should have previously been made upon
the debtor and the latter should have failed to pay. And even if these
requirements were complied with, still the third possessor might abandon the
property mortgaged, and in that case it is considered to be in the possession of
the debtor.
http://www.lawphil.net/.../apr1924/gr_l-21455_1924.html

the maxim "caveat emptor" applies only to execution sales, and this was not
one such. The mere fact that the purchaser of an immovable has notice that
the required realty is encumbered with a mortgage does not render him liable
for the payment of the debt guaranteed by the mortgage, in the absence of
stipulation or condition that he is to assume payment of the mortgage debt.
The reason is plain: the mortgage is merely an encumbrance on the property,
entitling the mortgagee to have the property foreclosed, i.e., sold, in case the
principal obligor does not pay the mortgage debt, and apply the proceeds of the
sale to the satisfaction of his credit. Mortgage is merely an accessory

undertaking for the convenience and security of the mortgage creditor, and
exists independently of the obligation to pay the debt secured by it. The
mortgagee, if he is so minded, can waive the mortgage security and proceed to
collect the principal debt by personal action against the original mortgagor.
By buying the property covered by TCT No. 48979 with notice that it was
mortgaged, respondent Dualan only undertook either to pay or else allow the
land's being sold if the mortgage creditor could not or did no obtain payment
from the principal debtor when the debt matured. 6 Nothing else. Certainly the
buyer did not obligate himself to replace the debtor in the principal obligation,
and he could not do so in law without the creditor's consent. Our Civil Code,
Article 1293, explicitly provides:
ART. 1293. Novation which consists in substituting a new debtor in the place of
the original one, may be made even with out the knowledge or against the will
of the latter, but not without the consent of the creditor. Payment by the new
debtor gives him the rights mentioned in articles 1236 and 1237.
The obligation to discharge the mortgage indebtedness, therefore, remained on
the shoulders of the original debtors and their heirs, petitioners herein, since
the record is devoid of any evidence of contrary intent.
what is CAVEAT EMPTOR?
e or she is buying are "as is," or subject to all defects.
When a sale is subject to this warning the purchaser assumes the risk that the
product might be either defective or unsuitable to his or her needs.This rule is
not designed to shield sellers who engage in Fraud or bad faith dealing by
making false or misleading representations about the quality or condition of a
particular product. It merely summarizes the concept that a purchaser must
examine, judge, and test a product considered for purchase himself or herself.
The modern trend in laws protecting consumers, however, has minimized the
importance of this rule. Although the buyer is still required to make a
reasonable inspection of goods upon purchase, increased responsibilities have
been placed upon the seller, and the doctrine of caveat venditor (Latin for "let
the seller beware") has become more prevalent. Generally, there is a legal

presumption that a seller makes certain warranties unless the buyer and the
seller agree otherwise. One such Warranty is the Implied Warranty of
merchantability. If a person buys soap, for example, there is an implied
warranty that it will clean; if a person buys skis, there is an implied warranty
that they will be safe to use on the slopes.
A seller who is in the business of regularly selling a particular type of goods
has still greater responsibilities in dealing with an average customer. A person
purchasing antiques from an antique dealer, or jewelry from a jeweler, is
justified in his or her reliance on the expertise of the seller.
If both the buyer and the seller are negotiating from equal bargaining positions,
however, the doctrine of caveat emptor would apply.

Section 7, Rule 141 of the Rules of Court, prior to its amendment by A.M. No.
04-2-04-SC, had a specific paragraph governing the assessment of the docket
fees for real action, to wit:
In a real action, the assessed value of the property, or if there is none, the
estimated value thereof shall be alleged by the claimant and shall be the basis
in computing the fees.
It was in accordance with the afore-quoted provision that the Court, in Gochan
v. Gochan,34 held that although the caption of the complaint filed by therein
respondents Mercedes Gochan, et al. with the RTC was denominated as one for
"specific performance and damages," the relief sought was the conveyance or
transfer of real property, or ultimately, the execution of deeds of conveyance in
their favor of the real properties enumerated in the provisional memorandum of
agreement. Under these circumstances, the case before the RTC was actually a
real action, affecting as it did title to or possession of real property.
Consequently, the basis for determining the correct docket fees shall be the
assessed value of the property, or the estimated value thereof as alleged in the
complaint. But since Mercedes Gochan failed to allege in their complaint the
value of the real properties, the Court found that the RTC did not acquire
jurisdiction over the same for non-payment of the correct docket fees.

WHAT IS JURSIDICTION FOR FORECLOSURE OF MORTGAGE?

n Singsong vs. Isabela Sawmill, 12 we had the occasion to rule that:
[I]n determining whether an action is one the subject matter of which is not
capable of pecuniary estimation this Court has adopted the criterion of first
ascertaining the nature of the principal action or remedy sought. If it is
primarily for the recovery of a sum of money, the claim is considered
capable of pecuniary estimation, and whether jurisdiction is in the
municipal courts or in instance would depend on the amount of the claim.
However, where the basic issue is something other than the right to recover a
sum of money, where the money claim is purely incidental to, or a consequence
of, the principal relief sought, this Court has considered such where the
subject of the litigation may not be estimated in terms of money, and are
cognizable exclusively by courts of first instance (now Regional Trial
Courts). 13
Examples of actions incapable of pecuniary estimation are those for
specific performance, support, or foreclosure of mortgage or annulment of
judgment; 14 also actions questioning the validity of a mortgage, 15
annulling a deed of sale or conveyance and to recover the price paid 16
and for rescession, which is a counterpart of specific performance. 17
http://www.lawphil.net/.../mar1999/gr_119347_1999.html
he RTC has the jurisdiction over these cases as stated in the Sec. 19 par. 1 of
BP 129 as amended by RA 7691
Jurisdiction in civil cases. Regional Trial Courts shall exercise exclusive
original jurisdiction.
"(1) In all civil actions in which the subject of the litigation is incapable of
pecuniary estimation;

o foreclosure of mortgage is incapable of pecuniary estimation. juris is

with RTC regardless of value involved.

can a prior real estate mortgage annotated as an adverse claim in the title
be foreclosed extrajudicially even if the title has already been transferred
to a new owner?

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. (1879)
RIGHT OF CREDITOR AGAINST TRANSFEREE OF MORTGAGED PROPERTY
> The fact that the mortgagor has transferred the mortgaged property to a third
person doesn't relieve him from his obligation to pay the debt to the mortgage
creditor in the absence of Novation
> A recorded REM is merely an accessory contract
> The creditor may only demand from any possessor the payment only of the
part of the credit secured by said property
> Necessary that there be prior demand for payment be made on the debtor
and the latter failed to pay
> Does not really apply to all third persons in possession of the property
> It only applies to those in possession of the mortgaged property in the
concept of owner. If the possession by a third person is only as lessee, the
creditor may not collect the credit from that third person

Pablo P. Garcia v. Yolanda Valdez Villar

GR No. 158891 June 27,2012

The real nature of a mortgage is described in Article 2126 of the Civil Code, to
wit:
Art. 2126. The mortgage directly and immediately subjects the property upon
which it is imposed, whoever the possessor may be, to the fulfillment of the
obligation for whose security it was constituted.

Simply put, a mortgage is a real right, which follows the property, even after
subsequent transfers by the mortgagor. A registered mortgage lien is
considered inseparable from the property inasmuch as it is a right in rem..
The sale or transfer of the mortgaged property cannot affect or release the
mortgage; thus the purchaser or transferee is necessarily bound to
acknowledge and respect the encumbrance. In fact, under Article 2129 of the
Civil Code, the mortgage on the property may still be foreclosed despite the
transfer.

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 terms and with the formalities
which the law establishes.

Research on Act 3135 Extrajudicial Foreclosure

Case: Emmanuel C. Villanueva v. Cherdan Lending Investors
Corporation
GR #: 177881 source Lawphil.net
*In relation to the case at bar, the issue in this case is the issuance of writ of
possession over the property subject of foreclosure of the real estate mortgage.

Court ruling: It is settled that the buyer in a foreclosure sale

becomes the absolute owner of the property purchased if it is not redeemed
within one year after the registration of the sale. As such, he is entitled to the
possession of the property and can demand that he be placed in possession at
any time following the consolidation of ownership in his name and the issuance
to him of a new TCT. This rule, however, is not without exception. Under
Section 33, Rule 39 of the Rules of Court, which is made to apply suppletorily
to the extrajudicial foreclosure of real estate mortgages by Section 6, Act 3135,
as amended, the possession of the mortgaged property may be awarded to a
purchaser in the extrajudicial foreclosure unless a third party is actually
holding the property adversely to the judgment debtor. Section 33 provides:Sec.
33. Deed and possession to be given at expiration of redemption period; by
whom executed or given. Upon the expiration of the right of redemption, the
purchaser or redemptioner shall be substituted to and acquire all the rights,
title, interest and claim of the judgment obligor to the property as of the time of
the levy. The possession of the property shall be given to the purchaser or last
redemptioner by the same officer unless a third party is actually holding the
property adversely to the judgment obligor. The purchasers right of possession
is recognized only as against the judgment debtor and his successor-in-interest
but not against persons whose right of possession is adverse to the latter. The
third partys possession of the property is legally presumed to be based on a
just title, a presumption which may be overcome by the purchaser in a judicial
proceeding for recovery of the property. Through such a judicial proceeding, the
nature of the adverse possession by the third party may be determined, after
such third party is accorded due process and the opportunity to be heard. The
third party may be ejected from the property only after he has been given an
opportunity to be heard, Unlike a judicial foreclosure of real estate mortgage
under Rule 68 of the Rules of Court where an action for foreclosure is filed
before the RTC where the mortgaged property or any part thereof is situated,
any property brought within the ambit of Act 3135 is foreclosed by the filing of
a petition, not with any court of justice, but with the office of the sheriff of the
province where the sale is to be made. As such, a third person in possession of
an extra judicially foreclosed property, who claims a right superior to that of
the original mortgagor, is given no opportunity to be heard on his claim. It

stands to reason, therefore, that such third person may not be dispossessed on
the strength of a mere ex parte possessory writ, since to do so would be
tantamount to his summary ejectment, in violation of the basic tenets of due
process.
Related cases: Ancheta v. Metropolitan Bank and Trust Company, Inc GR

No. 163410
PNB v. Sanao Marketing Corporation GR No. 153951
MADZ- July 23, 2012
Effects of Real Estate Mortgage
1. Creates a real right a.

If the mortgagor sells the encumbered

property, the property remains subject to the fulfillment of the principal

obligation secured by it.
b. The mortgagee has a right to rely in good faith on what appears on the
certificate of title of the mortgagor of the property given as security and in
the absence of anything to excite suspicion, he is under no obligation to
look beyond the certificate
-In the case at bar, Josephine Maidin as mortgagee holds a legal right
to enforce by way of foreclosure irrespective of the defect of title as it has been
transferred to certain person.
c.

Until the action for expropriation has been completed, ownership

over the property remains with the registered owner

d. Banking institution must exercise due diligence before entering contract
of mortgage
e.

If a person is the first mortgagee over a property which was sold in an

auction by the second mortgagee, the only right left to him is to collect
his mortgage credit from the purchaser thereof during the sale conducted
f.

In a suit to nullify a certificate of title, the mortgagee is an

indispensable party
2. Creates merely an encumbrance

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. (1879)
RIGHT

OF

CREDITOR

AGAINST

TRANSFEREE

OF

MORTGAGED PROPERTY
> The fact that the mortgagor has transferred the mortgaged property to a
third person doesn't relieve him from his obligation to pay the debt to the
mortgage creditor in the absence of Novation
> A recorded REM is merely an accessory contract
> The creditor may only demand from any possessor the payment only
of the part of the credit secured by said property
> Necessary that there be prior demand for payment be made on the
debtor and the latter failed to pay
> Does not really apply to all third persons in possession of the property
> It only applies to those in possession of the mortgaged property in the
concept of owner. If the possession by a third person is only as lessee, the
creditor may not collect the credit from that third person.

The Court held in Equitable PCI Bank, Inc. v. OJ-Mark Trading,

Inc. (G.R. No. 165950, August 11, 2010.) that 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.

1. Was the property transferred already to the name of the new owner?

Yes. Already in the name of Nelida Liberato. (Per latest copy of the TCT
[February 13, 2012])
1. Is our adverse claim still annotated on the new title? Yes. The CA also
found that a Notice of Adverse Claim remains valid even after the lapse of
30 days, as provided for in Sec. 70 of Presidential Decree No. (PD) 1529
pursuant to our ruling in Sajonas v. CA; that since no petition was filed
by petitioner for the cancellation of respondent Garcia's Notice of
Adverse Claim, the adverse claim subsisted and his rights over the
subject property must consequently be upheld. (Martinez vs. Garcia,
G.R. No. 166536)

1. Can we foreclose extrajudicially under act 3135? Or do we have to do this

judicially? Procedure?

The debtor, his successors-in-interest, or any judicial creditor or

judgment creditor of said debtor, or any person having a lien on the property
subsequent to the mortgage or deed of trust under which the property is
sold, may redeem the same at any time WITHIN THE TERM OF 1 YEAR
FROM AND AFTER THE DATE OF THE SALE and such will be governed by the
Rules of Court

For judicial foreclosure, the redemption period is within one year.

For extrajudicial, its 90 days from sale or registration.

http://sc.judiciary.gov.ph/jurisprudence/2010/february2010/166536.h
tm Martinez vs Garcia (GR 166536) As in that case, the adverse claim of
respondent Garcia based on the Deed of Mortgage executed by respondent
Brua over the subject land in the formers favor was existing when the Notice of
Levy on Execution was inscribed in favor of petitioner. Although the deed of
sale between respondents Brua and Garcia was done after the notice of levy on

execution and certificate of sale were inscribed on the title, it was clearly
stated in the deed that the subject property was only a partial payment for
respondent Brua's mortgage indebtedness to respondent Garcia, which the
former could no longer redeem from the latter. Thus, the sale of the subject
property by respondent Brua to respondent Garcia was by reason of
respondent Brua's prior loan from respondent Garcia, which was secured by a
mortgage on the subject property; and this mortgage was registered and
already existing on the title of the subject property when the Notice of Levy on
Execution and Certificate of Sale in favor of petitioner were inscribed thereon.
Thus, petitioner's claim over the subject property must yield to the earlier
encumbrance registered by respondent Garcia.

In the case above, REM was first registered, then very same propert was
levied on execution, then Deed of Sale based on the first REM (not totally
applicable, but a useful guide)

http://www.chanrobles.com/cralaw19967.htm (Garbin vs CA) GR 107653

double sale (1st sale annotated as adverse claim)-then subsequent sale
Court ruled thatHowever, what was registered was merely the adverse claim and not the Deed of
Sale which supposedly conveyed the northern half portion of the subject
property. Therefore, there is still need to resolve the validity of the adverse
claim in separate proceedings, as there is an absence of registration of the
actual conveyance of the portion of land herein claimed by private respondents.
From the provisions of the law, it is clear that mere registration of an adverse
claim does not make such claim valid, nor is it permanent in character. More
importantly, such registration does not confer instant title of ownership since
judicial determination on the issue of the ownership is still necessary.[2]
Regarding the alleged Deed of Sale by Pablo Garbin in favor of private
respondents, the trial court correctly observed:

On the assumption that the deed in favor of the plaintiffs was presented for
registration as claimed, it should, however, be underscored that the entry in
the day book is but a preliminary step of registration, the actual annotation of
the memorandum or the issuance of a new certificate of title being the final
step to accomplish registration.
[G.R. No. 170528, August 26, 2008]
HEIRS OF JULIAN TIRO, PETITIONERS, VS. PHILIPPINE ESTATES
CORPORATION, RESPONDENTS.
A person is considered in law as an innocent purchaser for value when he buys
the property of another, without notice that some other person has a right or
an interest in such property, and pays a full price for the same at the time of
such purchase, or before he has notice of the claims or interest of some other
person in the property. A person dealing with registered land may safely rely
on the correctness of the certificate of title of the vendor/transferor, and the
law will in no way oblige him to go behind the certificate to determine the
condition of the property. The courts cannot disregard the rights of innocent
third persons, for that would impair or erode public confidence in the torrens
system of land registration. Thus, a title procured by fraud or
misrepresentation can still be the source of a completely legal and valid title if
the same is in the hands of an innocent purchaser for value.
If purchaser bought in bad faith, the proper remedy is to have the certificate of
title cancelled, and the sale annulled.. (mea dictum J)
SEC. 26. Certificate of sale where property claimed by third person.When a
property sold by virtue of a writ of execution has been claimed by a third
person, the certificate of sale to be issued by the sheriff pursuant to sections
23, 24 and 25 of this Rule shall make express mention of the existence of such
third-party claim. (28a)

SEC. 27. Who may redeem real property so sold.Real property sold as
provided in the last preceding section, or any part thereof sold separately, may
be redeemed in the manner hereinafter provided, by the following persons:
(a)

The judgment obligor, or his successor in interest in the whole or any

part of the property;

(b)

A creditor having a lien by virtue of an attachment, judgment or

mortgage on the property sold, or on some part thereof, subsequent to the lien
under which the property was sold. Such redeeming creditor is termed a
redemptioner. (29a)
SEC. 28. Time and manner of and amounts payable on, successive redemptions;
notice to be given and filed.The judgment obligor, or redemptioner, may
redeem the property from the purchaser, at any time within one (1) year from
the date of the registration of the certificate of sale, by paying the purchaser
the amount of his purchase, with one per centum per month interest thereon in
addition, up to the time of redemption, together with the amount of any
assessments or taxes which the purchaser may have paid thereon after
purchase, and interest on such last named amount at the same rate; and if the
purchaser be also a creditor having a prior lien that of the redemptioner, other
than the judgment under which such purchase was made, the amount of such
other lien, with interest.
Property so redeemed may again be redeemed within sixty (60) days after the
last redemption upon payment of the sum paid on the last redemption, with
two per centum thereon in addition, and the amount of any assessments or
taxes which the last redemptioner may have paid thereon after redemption by
him, with interest on such last-named amount, and in addition, the amount of
any liens held by said last redemptioner prior to his own, with interest. The
property may be again, and as often as a redemptioner is so disposed,
redeemed from any previous redemptioner within sixty (60) days after the last
redemption, on paying the sum paid on the last previous redemption, with
two per centum thereon in addition, and the amounts of any assessments or
taxes which the last previous redemptioner paid after the redemption thereon,
with interest thereon, and the amount of any liens held by the last
redemptioner prior to his own, with interest.

Written notice of any redemption must be given to the officer who made the
sale and a duplicate filed with the registry of deeds of the place, and if any
assessments or taxes are paid by the redemptioner or if he has or acquires any
lien other than that upon which the redemption was made, notice thereof must
in like manner be given to the officer and filed with the registry of deeds; if
such notice be not filed, the property may be redeemed without paying such
assessments, taxes, or liens. (30a)
SEC. 29. Effect of redemption by judgment obligor, and a certificate to be
delivered and recorded thereupon; to whom payments on redemption made.If
the judgment obligor redeems, he must make the same payments as are
required to effect a redemption by a redemptioner, whereupon, no further
redemption shall, be allowed and he is restored to his estate. The person to
whom the redemption payment is made must execute and deliver to him a
certificate of redemption acknowledged before a notary public or other officer
authorized to take acknowledgments of conveyances of real property. Such
certificate must be filed and recorded in the registry of deeds of the place in
which the property is situated, and the registrar of deeds must note the record
thereof on the margin of the record of the certificate of sale. The payments
mentioned in this and the last preceding sections may be made to the
purchaser or redemptioner, or for him to the officer who made the sale (13a)
SEC. 30. Proof required of redemptioner.A redemptioner must produce to the
officer, or person from whom he seeks to redeem, and serve with his notice to
the officer a copy of the judgment or final order under which he claims the
right to redeem, certified by the clerk of the court wherein the judgment or
final order is entered; or, if he redeems upon a mortgage or other lien, a
memorandum of the record thereof, certified by the registrar of deeds; or an
original or certified copy of any assignment necessary to establish his claim;
and an affidavit executed by him or his agent, showing the amount then
actually due on the lien. (32a)
Hence, if the adverse claim is registered only after the annotation of the
mortgage at the back of the certificate of title, the adverse claim could not effect
the rights of the mortgagee; and the fact that the foreclosure of the mortgage