CHAPTER 3- MORTGAGE (REAL ESTATE) dragnet clause but which secures the particular obligation in the
promissory note 2.
Articles 2124 2131
I. Concept (characteristics)
A. As a right
It is a real right over immovables constituted by the owner to
guarantee an obligation which if not paid is to be satisfied from
the proceeds of the sale of such property.
B. As a contract
It is a contract whereby the debtor guarantees the performance
of a principal obligation subjecting as security therefor real
properties or real rights in case such obligation is not complied
with, within the time stipulated. It is a real, accessory and
subsidiary contract. It is likewise unilateral: only on the part of
the creditor who must first free the property from the
encumbrance once the obligation is fulfilled.
Judge:
Can all kinds of obligations be secured by Real Estate Mortgage?
YES
Can a recissible obligation be secured by mortgage?
YES
What about your voidable contract?
YES
What about your void contract?
NO
Can past obligations be secured by a Real Estate Mortgage? (a previously
incurred obligation)
Can I secure by a real estate mortgage obligation that I incurred now? Of
course, in many of the instances mortgages secures a presently incurred
obligation.
Can real estate mortgage secure a future obligation? YES
How do you know that a real estate mortgage secures a future obligation?
Whats a dragnet clause? Is it similar to your continuing guaranty?
YES, similar but guaranty is a personal security while real estate mortgage is
a real security.
Where do you usually find a dragnet clause? Is it in the document evidencing
the principal obligation?
No, it is in the MORTGAGE CONTRACT.
What is the other name for the dragnet clause?
Blanket Mortgage Clause (So, in the BAR it might be asked whether the
dragnet clause or the blanket mortgage clause)
Situation:
To secure his obligation to B, A constituted a REM over a certain
property; and this mortgage contains a dragnet clause that a
mortgage likewise secures future advancements by the debtor.
Subsequently, A again borrowed money from B, evidenced by
another promissory note and he secured it with another REM.
Judge: By the way, if you have a REM with a dragnet clause and subsequently
the debtor obtains another loan or incur a subsequent obligation owing to the
creditor/mortgagee, is it required that the mortgagor again executes a new
contract? NO. Just like in guaranty there is no requirement.
But in this case A executed another REM and defaults in the payment
of this first obligation. Remember they have a dragnet clause already
under the first REM and on the second REM which does not have a
Can B foreclose the mortgage considering that this is a dragnet clause?
Does this second REM secures also the first obligation?
YES. Because of the dragnet clause.
So, If REM 1 also secures promissory note2, can B foreclose the first
mortgage without first foreclosing the second mortgage?
According to Reliance on Security Test, even if you have this
dragnet clause, if an obligation secures specifically a particular
security, then this particular security will answer for the default in
this particular obligation. It is only foreclosed if the specific REM is
insufficient to satisfy the obligation. Hence, it can still answer but it is
not the primary security for that specific obligation because the
primary security is the second REM. (thats the reliance for security
test and I have been waiting for that principle to be asked in the BAR
for the longest time so take note of that.)
II. Elements
A. Parties
a. The mortgagor (who need not be the principal debtor)
must have free disposal and be the absolute owner of
the security; otherwise he must be properly
authorized.
1. Where a mortgage is a nullity, having been
executed by an unauthorized person, registration
under the Land Registration Act will not validate
it (how about the mortgagee in good faith
doctrine bullshit chuva? I think depende ra sa
situation and sa parties involved on the fucking
degree of diligence required. Alien? ALIEN!)
b. The mortgagee must have capacity to contract.
Note: As a general rule, mortgagor retains possession
because debtor merely subjects the property to a lien
but ownership is not parted with. However,
compliance with such rule is not an essential requisite
of the contract
It is not also an essential requisite of the contract of
mortgage that the principal of the mortgage credit
bears interest, or that the interest as compensation
for the use of the principal enjoyment of its fruits be in
the form of a certain percent thereof.
c. Registration of mortgage to the registry of deeds (look
at discussion in form)
COMMENTS:
Now, if the mortgage can secure future obligations through that
dragnet clause, can a mortgagor constitute a mortgage over
properties that he may acquire in the future?
Definitely NOT. Because he is not the absolute owner of the
constituted mortgage. If there is that particular stipulation in the
mortgage contract then that stipulation shall be declared VOID. It
has no effect. In other words, if the mortgagor subsequently
acquires properties, these properties will not be included in the
foreclosure sale because again the second requirement is that the
mortgagor must be the absolute owner of the property subject of
the mortgage. ABSOLUTE OWNER OF THOSE PROPERTIES LISTED ON
THE MORTGAGE CONTRACT.
 For subsequently acquired properties the mortgagor is not yet the
owner of the property , so the rule is Real Estate Mortgage can
secure future obligations but cannot include future properties that
may be acquired by the mortgagor.
SITUATION: (example given by judge on the board)
A executed a Deed of Absolute Sale in favor of B, absolutely
simulated because there was NO consideration paid. There was no
intention to pay. On the day that A executed to B the Deed of Sale. B
executed another Deed of Sale in favor of C, again no consideration
was given by C to B (so again, it is an absolutely simulated contract).
Because of that Deed of Sale, C was able to transfer the title in her
name and obtain a loan from D and then defaulted on payment on
the loan.
Can D validly foreclose the mortgage?
No. When A executed that Deed of Sale to B, B did not acquire
ownership because one essential requisite of contract is missing
which is CONSIDERATION, so there is no valid contract. (TN:
Consent, Consideration & Cause are the requisites for a valid
contract)
When B executed the Deed of Sale to C again absolutely simulated, no
consideration was paid. Did B transfer any right to C?
No, because he did not have any right at all, even if C was able to
cause the transfer of transfer certificate of title to his name. So, if C
did not acquire any title to the property, he could not constitute a
valid mortgage in favor of D. Therefore, D cannot validly foreclose the
mortgage. If D forecloses the mortgage, then the higher bidder
acquires NO VALID TITLE AT ALL over the property. If the second
requisite states that the mortgagor must be the absolute owner of
the property. We also learn before that even if the property is subject
of a contract to sell, the seller can sill constitute a mortgage on the
property. In fact in SALES (which was discussed by your professor
before :D) the seller under a contract to sell can sell the property to
another person.
B. Object (Art. 2124)
Which may only be:
a. Immovables
b. Alienable real rights imposed upon immovables in
accordance with the law (real property)
Right of possession can be mortgaged
Note: a building by itself may be mortgaged apart from the
land on which it is built
A mortgage may secure future obligation, BUT a future
property cannot be object of a contract of mortgage. A
mortgagor could not legally mortgage any property he did
not yet own. 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.
C. Consideration same as of the principal contract, without
which it cannot exist as an independent contract
- Valid if the principal obligation is valid,
and cannot be avoided on the ground
of lack of consideration
Note: mortgage must sufficiently describe the
debt sought to be secured
Case: PNB vs. RDA Ent.
- there was lack of consideration but mortgage deal was
already executed (before application, mortgage deal
was already signed)
- 50T was released by the bank but the mortgage was
for 100T
- Q: is the mortgage valid?
A: Valid but unenforceable to the extent of the failure
of consideration. During the foreclosure sale, you can
only sell 50% of the property
COMMENTS:
What is the consideration of the mortgage? Is it required that if the
mortgagor is a third party mortgagor that he or she be paid a valuable
consideration for subjecting his property as security for the payment
of another persons obligation?
No.
So, what is that consideration because mortgage has to have a
consideration as a requisite of a contract?
Consideration for the Principal Obligation
Situation: Partial Consideration (example given by judge)
A applied for a 1 Million loan from B. So, when you apply for a loan,
the lender does not release the money first before asking you to put
up security diba? When you go to the Bank, the bank will require you
to submit the mortgage document before it approves your
application for a loan.
So, A constituted a mortgage over certain real property to secure the
1 Million. The bank approved only 600k. The reason why A
constituted a mortgage over this particular property is to secure the
1 million obligation. But the loan approved is only 600k. So, there is
partial failure of the consideration of the mortgage, because while it
is constituted to secure the 1 million, the actual obligation is actually
just 600k.
If A defaults in the payment of the obligation, can B foreclose the
mortgage?
YES.
Can B sell the entire property?
No. only 60% because of the partial failure of consideration. If B sells
the entire property that sale is void to the extent of 40%.
D. Form for validity
 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.
a. Between the parties
COMMENTS:
We said that pledge is a real contract because by the contract of
pledge, the pledgor delivers a movable to the creditor or to a third
person. We said that Real Estate Mortgage is not a real contract
because real property is merely subjected as a SECURITY. It is not
delivered to the creditor or to a third person.
Is it then a consensual contract? Or is it a formal contract? Because
definitely it is not a real contract (we only have three kinds of contract
as to perfection consensual, real and formal.)
Real mortgage is formal. So, a document is required.
What kind of formal document? Can a private document validly BIND
the parties in a mortgage? Or must it be a public document to BIND
THE PARTIES?
So even if to bind the parties it must be in a public document. But
what does the law say? It is essential that in order that a mortgage
be valid it must be recorded. But you read the next sentence: Binding
between the parties but it presupposes that the document is a public
document.
Mobil Oil Phils. vs. Diocares
Re: Effect of unregistered mortgage between the parties
Facts: Diocares spouses constituted a loan with Mobil Oil Phils. and in
order to secure payment of the loan, they mortgage their property.
On top of that, they promised to buy on cash basis their petroleum
requirements in an amount not less than 50,000 L per month. Upon
failure to pay, Mobil instituted the foreclosure proceedings. The
Diocares spouses objected to the foreclosure saying that the
mortgage was not registered.
SC: The lower court predicated its inability to order the foreclosure in
view of the categorical nature of the opening sentence of the
governing article 10 that 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." Note that it ignored the
succeeding sentence: "If the instrument is not recorded, the mortgage
is nevertheless binding between the parties." Its conclusion, however,
is that what was thus created was merely "a personal obligation but
did not establish a real estate mortgage."
Even if the instrument were not recorded, "the mortgage is
nevertheless binding between the parties." The law cannot be any
clearer. Effect must be given to it as written. The mortgage subsists;
the parties are bound. As between them, the mere fact that there is
as yet no compliance with the requirement that it be recorded
cannot be a bar to foreclosure. An order for foreclosure cannot be
refused on the ground that the mortgage had not been registered
provided no innocent third parties are involved.
b. As to strangers the document in which the mortgage
appears must be recorded in the Registry of Property
of the province where the land is located.
Hechanova vs. Adil
Re: Validity of private document evidencing mortgage
Facts: A private document, not registered, was constituted as a
mortgage. Thereafter, the property was sold to the Hechanova
spouses under a Deed of Sale. The purported mortgagee objected to
the sale, saying that the seller, Jose Servando, could not possibly sell
because the property was mortgaged to him.
rd
SC: The mortgage is not binding against 3 persons (the vendee
Hechanova spouses), as it was embodied in a private document and
unregistered. It is clear from the records of this case that the
plaintiff, Servando, has no cause of action. Plaintiff has no standing to
question the validity of the deed of sale executed by the deceased
defendant Jose Servando in favor of his co-defendants Hechanova
and Masa. No valid mortgage has been constituted plaintiff's favor,
the alleged deed of mortgage being a mere private document and
not registered; moreover, it contains a stipulation (pacto comisorio)
which is null and void under Article 2088 of the Civil Code. Even
assuming that the property was validly mortgaged to the plaintiff, his
recourse was to foreclose the mortgage, not to seek annulment of
the sale.
COMMENT:
So its still binding between the parties even if not registered. The
mortgagee can still foreclose the mortgage for as long as no rights of
rd
third persons are affected. Cause its not binding against 3 persons.
In Hechanova vs. Adille, the court said no valid mortgage constituting
if the deed of mortgage is in a private document and not registered
(of course you cannot register a private document).
By the way, does the register of deeds has discretion whether to
accept a document for inscription or recording?
No. It is a purely ministerial job of the Office of the Register of Deeds
to inscribe document presented to it for as long as youre willing to
pay the fees.
So, the mortgage I have constituted over property not owned by me is
duly registered in the office of the register of deeds. Does that
registration validates the mortgage?
A: No. Registration does not validate a Void Mortgage. In fact you
have also learned another principle in Obligations and Contract that
you cannot ratify a void contract.
III. Classes
A. Voluntary one which is agreed to between the parties or
constituted by the will of the owner of the property on
which it is created. (Contractual Mortgage)
B. Legal one required by law to be executed in favor of
certain persons.
C. Equitable Mortgage one which, although it lacks the
proper formalities of a mortgage required by law
nevertheless shows the intention of the parties to burden
the property as a security for a debt. --- (pacto de retro
sale)
COMMENTS:
What kind of document are we looking at in an equitable mortgage?
1602, you are looking at a pacto de retro sale or even an absolute sale
but one of the circumstances is present first is, unusual inadequacy of
the price of gross inadequacy of the price because mere inadequacy
does not invalidate the sale. So any of those circumstances present
will give rise to a disputable presumption that the contract really is a
mortgage, meaning there is really no intention to transfer ownership
to the purported buyer because that property is merely offered as a
security for the fulfillment of an obligation.
So thats equitable mortgage and we know that if the intention of the
parties is really just to subject the property as security and not for the
buyer a retro to acquire ownership then the remedy of the vendor a
retro or the vendor in an absolute sale is to ask for the reformation
of the document not contract, because you do not reform a contract
because the contract is a mortgage and the document is a sale.
IV. Effects
A. As to the property mortgaged
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.
a. Creation of real right (Article 2126)
- A registered mortgage creates right in rem, a real
right, a lien inseparable from the property
mortgaged, which is enforceable against the
whole world, affording specific security for the
satisfaction of a debt. The personality of the
owner is disregarded. Until discharged upon
payment of the obligation, it follows the property
wherever it goes and subsists notwithstanding
changes of ownership.
COMMENT:
What do you mean by a real right is created by a mortgage? (ay kog
ingnag binding against the whole world)
Situation: (example given by judge)
A mortgaged his property to B, when he mortgaged his property to B,
does he remain to be the owner of the property?
YES
Is he prohibited from alienating the property?
NO.
So, he sells the property to C. Does C acquire ownership over the
property?
YES. C is the owner, yet his ownership is subject to the superior right
of B to foreclose the mortgage and sell the property in a public sale if
A defaults in the payment of his obligation. That is what is meant by a
real right created by the mortgage. It follows the property whoever
the owner or the possessor is. Of course, for as long as it is registered
because if it not registered but in a public document then it is binding
only between the parties. In fact, the law says that the creditor may
demand from the possessor of the mortgage property payment of
the obligation. may demand. B may demand payment from C. If
you are C would you pay? Yes I would because risk closing the entire
property and even if I pay, it doesnt mean that I paid twice for the
property because I can still recover what I paid from A.
Going back to ObliCon, can a third party pay the obligation of the
debtor?
YES, and in fact, a third party can seek reimbursement from the
debtor and if he pays with the consent or with the knowledge of the
debtor, then he is subrogated with the rights of the creditor.
Otherwise, he can only seek beneficial reimbursement. Just like here.
If B forecloses the mortgage, can C oppose the foreclosure and claim
that he is a buyer in good faith?
No. he cannot be a buyer in good faith because the mortgage is
registered.
Situation:
REM with a dragnet clause, sa dragnet clause these secured the 3
obligations, 1 REM securing obligation 1.
Can be assign his rights as a mortgagee?
YES.
Can he assign his rights without the consent of A?
YES. (assignment of credits)
Can A assign whatever rights he has under the mortgage/property?
YES. He has the right to redeem if the mortgage is foreclosed.
Lets say whatever right he has, he assigned this right to C, so this 1
defaulted. B foreclosed the mortgage, when you foreclose you have
to sell in a foreclosure sale. Lets just say that b is the highest bidder
(Usually in a foreclosure sale the creditor is the only bidder, nobody is
interested to bid in a foreclosure sale because of the right of
redemption, ngano gud mupalit kag property subject to a resolutory
condition). So, B is the highest bidder, remember gi assign na ni A
iyang rights over the property. C redeemed the property. Then the
second loan also defaulted.
Can B foreclose again the mortgage and sell again the property to C in
a foreclosure sale?
YES. For as long as the obligations are secured and not paid, pwede ra
syag sigeg foreclosed-redeem-foreclose-redeem. Balik-balik.
In the case of Tiongco vs. Metrobank, the court said, the redemption
by C shall be without prejudice to the subsequent foreclosure of the
same properties by B in order to satisfy other obligations covered by
the real estate mortgage.
Cancellation of mortgage in lieu of surety bond (Q: can a mortgagor
compel the mortgagee to accept in lieu of the mortgage of the
security bond?
A: Case: Ganzon vs Inserto
- Mortgagor cannot compel because mortgage has of greater
value than that of a surety.
- Applying the principles underlying the nature of a mortgage,
the real estate mortgage can not be substituted by a
surety bond as ordered by the trial court. The mortgage
lien in favor of Petitioner Rodolfo Ganzon is inseparable
from the mortgaged property. It is a right in rem, a lien on
the property. To substitute the mortgage with a surety
bond would convert such lien from a right in rem, to a
right in personam. This conversion cannot be ordered for
it would abridge the rights of the mortgagee under the
mortgage contract.
Effect of sale of mortgaged property
A mortgage is merely a security for a debt, an encumbrance upon the
property and does not extinguish the title of the debtor who does not
lose his principal attribute as owner, that is, the right to dispose.
Indeed, the law considers void any stipulation forbidding the owner
from alienating the immovable mortgaged.
What is divested from the mortgagor is only his full right as owner
thereof to dispose of and sell the property, that is, the mortgagor
does not have the unconditional power to absolutely sell the
property since the same is encumbered by a lien of a third person.
Bonnevie v. CA
Re: Effect of sale of mortgaged property
This argument failed to consider the provision of the contract of
mortgage which prohibits the sale, disposition of, mortgage and
encumbrance of the mortgaged properties, without the written
consent of the mortgagee, as well as the additional proviso that if in
spite of said stipulation, the mortgaged property is sold, the vendee
shall assume the mortgage in the terms and conditions under which
it is constituted. These provisions are expressly made part and parcel
of the Deed of Sale with Assumption of Mortgage.
Another argument for the respondent Bank is that a mortgage
follows the property whoever the possessor may be and subjects the
fulfillment of the obligation for whose security it was constituted
Finally, it can also be said that petitioners voluntarily assumed the
mortgage when they entered into the Deed of Sale with Assumption
of Mortgage. They are, therefore, estopped from impugning its
validity whether on the original loan or renewals thereof.
Paredes v. CA
Re: Right to foreclose when land was sold after the mortgage
Facts: At the time of the constitution of the mortgage, the land is
bare. After the mortgage, the mortgagor constructed a house and
sells the house & lot to another person under a contract to sell. Then
the mortgagor defaults in the payment of the obligation. Can both
the house and the lot be subject to foreclosure sale? Spouses
Paderes objected to the inclusion of the house in the foreclosure as it
was constructed after the constitution of the mortgage.
Ruling: A purchaser is necessarily bound to acknowledge and respect
the encumbrance to which is subjected the purchased thing and
which is at the disposal of the creditor in order that he, under the
terms of the contract, may recover the amount of his credit
therefrom. For, a recorded real estate mortgage is a right in rem, a
lien on the property whoever its owner may be. Because the
personality of the owner is disregarded; the mortgage subsists
notwithstanding changes of ownership; the last transferee is just as
much of a debtor as the first one; and this, independent of whether
the transferee knows or not the person of the mortgagee. So it is,
that a mortgage lien is inseperable from the property mortgaged. All
subsequent purchasers thereof must respect the mortgage, whether
the transfer to them be with or without the consent of the
mortgagee. For, the mortgage, until discharge, follows the property.
Jacob v. CA
Re: Effect of death of mortgagor
The power of the mortgage survives the death of the mortgagor. It
attaches to the property and not to the person. All claims should be
filed in the settlement of the estate. In this case the mortgagee, has
three options: abandon the mortgage and file a claim in the
settlement of the estate, judicially foreclose the mortgage and
recover deficiencies from the estate or rely solely on the mortgage.
Q: After the constitution of the mortgage, A dies and the obligation
remains unpaid. Can be foreclose the mortgage considering that A has
died?
A: YES, mortgage survives the death of the parties. In fact there are
THREE REMEDIES available to the creditor (we will take that up later,
but for now he can claim it in the estate proceeding, he can foreclose
the mortgage and claim the deficiency on the estate proceeding or
he can rely solely on the mortgage and waive whatever deficiencies.
b. Extension to accessions and accessories (Article 2127)
GR: 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 as well as to the
proceeds of insurance should the property be destroyed, or the
expropriation value of the property should it be expropriated.
EXC: Unless there is an express stipulation to the effect of excluding
them.
Situation:
A constituted a property in favor B over a parcel of land after
that A constructed a house. After A constructed a house. A
sold the land to C and A defaults in the payment of the
obligation.
If B forecloses the mortgage, can he also sell the house which was
constructed AFTER the mortgage?
YES. Because all accessions and accessories are deemed included in
the mortgage unless expressly excluded even if the house was
constructed after the constitution of the mortgage.
After the constitution of the mortgage, A sells the land to C and C
constructs a house on the property and A defaults in the payment of
the loan. Can B foreclose the mortgage?
YES. Real Right created under the mortgage. (and mortgage which is
the real estate property)
In the foreclosure sale, can B include in the foreclosure sale the
house?
NO. Not anymore, because it was not introduced by the mortgagor.
It was introduced by the buyer already after the mortgage. So,
different kadto ganina because the house was constructed by the
mortgagor, here it was constructed by the buyer already. So, thats
not included in the mortgage.
Can the party stipulate that the mortgagor cannot alienate the
property? Or cannot subject the property to a second mortgage in
favor of another creditor?
No. The court said, If the mortgagee cannot prohibit the mortgagor
from alienating the property the more reason that the mortgagee
cannot prohibit the mortgagor from constituting another mortgage
which is less onerous than alienating the property.
If the mortgagor owner is allowed to convey the entirety of this
interest in the mortgage property, reasons dictates that a lesser right
to encumber his property with other (leads?) must also be recognized.
But of course the right of the subsequent mortgagee is subordinate
to the right of the first.
We said earlier that it is not required that the mortgagee be in the
possession of the property because there is no requirement of
transfer of possession. What is required is that; it is essential that it
be recorded, registered nevertheless if not recorded still binding
between the parties. So theres no need for transfer of possession.
But can the parties stipulate that for as long as the mortgage is in
effect the creditor shall have the possession of the property? Is that
prohibited?
NO, its not prohibited but if thats the agreement of the parties then
the mortgagee shall be called now a mortgagee in possession. If he
is a mortgagee in possession, he is subject to the rules on antichresis.
Bischoff v. Pomar
Re: Effect of mortgage of hacienda on improvements thereon
Issue: WON the machineries and tramway are included in the
mortgage
SC: It is a rule that in a mortgage of real estate, the improvements on
the same are included; therefore, all objects permanently attached to
a mortgaged building or land, although they may have been placed
there after the mortgaged was constituted, are also included.
Therefore, the PRESUMPTION is that accessories are included in the
foreclosure. In foreclosure, the fruits NOT GATHERED AND NOT
COLLECTED are what are included in the foreclosure. Thus, you can
still collect previous rents.
Paderes v. CA
Re: Effect of mortgage of lot on houses built thereon
Facts: Mortgage was constituted over 21 parcels of land. After the
constitution, houses were constructed and sold to several buyers.
There was a default payment thus foreclosure was filed. Buyers
objected to the foreclosure and argued that what was mortgaged are
the lands and not the houses
Issue: Can you foreclose the houses constructed after the
constitution of the mortgage?
Ruling: Yes, you can foreclose They are included unless expressly
prohibited. A purchaser is necessarily bound to acknowledge and
respect the encumbrance to which is subjected the purchased thing
and which is at the disposal of the creditor in order that he, under
the terms of the contract, may recover the amount of his credit
therefrom. For, a recorded real estate mortgage is a right in rem, a
lien on the property whoever its owner may be. Because the
personality of the owner is disregarded; the mortgage subsists
notwithstanding changes of ownership; the last transferee is just as
much of a debtor as the first one; and this, independent of whether
the transferee knows or not the person of the mortgagee. So it is,
that a mortgage lien is inseparable from the property mortgaged. All
subsequent purchasers thereof must respect the mortgage, whether
the transfer to them be with or without the consent of the
mortgagee. For, the mortgage, until discharge, follows the property.
Note: when a mortgage is made to include new or future
improvements on registered land, said lien attaches and vests not at
the time said improvements are constructed but on the date of the
recording and registration of the deed of mortgage.
A Mortgage with DRAGNET clauses to secure future advancements
(subsume all debts of past or future origin) is valid and binding
between the parties. The purpose of such clause is that it enables the
parties to provide continuous dealings, the nature or extent of which
may not be know or anticipated at the time, and they avoid the
expense and inconvenience of executing a new security on each new
transaction.
c. Pactum de non alienando
Art. 2130. A stipulation forbidding the owner from alienating the immovable
mortgaged shall be void. (n)
The mortgagee can simply withhold his consent thereby prevent the
mortgagor from selling the property. This creates an unconscionable
advantage for the mortgagee and amounts to a virtual prohibition on
the owner to sell his mortgaged property.
Note: there is nothing wrong in a stipulation granting the mortgagee
the right of first refusal over the mortgaged property in the even the
mortgagor decides to sell the same. The consideration for the loan-
mortgage may be said to include the consideration for the right of
first refusal. A sale made in violation of the mortgagees contractual
right of first refusal is rescissible.
B. Effects as to the Mortgagee
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)
A mortgagee in possession is subject to the rules of antichresis in
that he assumes the obligations of an antichretic creditor.
Since the mortgaged credit is a real right such right may be alienated
or assigned to a third person, in whole or in part, by the mortgagee
who is the owner of said right and assignee may foreclose the
mortgage in case of nonpayment of the mortgage indebtedness
Does mortgagee need the consent of mortgagor?
No. Mortgagee only needs to notify the mortgagor who the
transferee is in case the debtor opts to pay. Informing the mortgagor
is not the obligation of the transferee.
Note: the alienation or assignment is valid even if it is not registered.
Registration is necessary only to affect third persons.
Bischoff v. Pomar
Re: Where mortgagee transferred his credit
A purchaser is necessarily bound to acknowledge and respect the
encumbrance to which is subject the purchased thing and which is at
the disposal of the creditor in order that he, under the terms of the
contract, may recover the amount of his credit therefrom.
V. Foreclosure
Foreclosure is the remedy made available by law to the mortgagee by
which he subjects the mortgaged property to the satisfaction of the
obligation for which the mortgage was given.
Judge: Upon default, the creditor may opt to foreclose. But this is not
the only remedy. He may also sue for specific performance. In fact,
he can sue for specific performance and ask for a writ of preliminary
attachment and attach this property. But in this case, he abandons
his right to foreclose the mortgage.
Modes:
A. Judicial
B. Extrajudicial
a. Taken by the sheriff
b. Taken by the notarial sheriff
A. Judicial
Rule 68, Rules of Court
Take note that the mortgagee does not have the right to
extrajudicially foreclose a real estate mortgage. Meaning,
every time a real estate mortgage is constituted. The right
to extrajudicially foreclose is not always available. This right
is available only if provided in the mortgage contract. This
 may also be implied in a provision giving the mortgagee the
authority to sell at a public auction. Without this provision,
the only recourse is to judicially foreclose the mortgage.
Rule 68, Rules of Court
Section 1. Complaint in action for foreclosure.
In an action for the foreclosure of a mortgage or other encumbrance
upon real estate, the complaint shall set forth the date and due
execution of the mortgage; its assignments, if any; the names and
residences of the mortgagor and the mortgagee; a description of the
mortgaged property; a statement of the date of the note or other
documentary evidence of the obligation secured by the mortgage, the
amount claimed to be unpaid thereon; and the names and residences of
all persons having or claiming an interest in the property subordinate in
right to that of the holder of the mortgage, all of whom shall be made
defendants in the action.
Sec. 2. Judgment on foreclosure for payment or sale.
If upon the trial in such action the court shall find the facts set forth in
the complaint to be true, it shall ascertain the amount due to the plaintiff
upon the mortgage debt or obligation, including interest and other
charges as approved by the court, and costs, and shall render judgment
for the sum so found due and order that the same be paid to the court or
to the judgment obligee within a period of not less than ninety (90) days
nor more than one hundred twenty (120) days from the entry of
judgment, and that in default of such payment the property shall be sold
at public auction to satisfy the judgment.
Sec. 3. Sale of mortgaged property; effect.
When the defendant, after being directed to do so as provided in the
next preceding section, fails to pay the amount of the judgment within
the period specified therein, the court, upon motion, shall order the
property to be sold in the manner and under the provisions of Rule 39
and other regulations governing sales of real estate under execution.
Such sale shall not affect the rights of persons holding prior
encumbrances upon the property or a part thereof, and when confirmed
by an order of the court, also upon motion, it shall operate to divest the
rights in the property of all the parties to the action and to vest their
rights in the purchaser, subject to such rights of redemption as may be
allowed by law.
Upon the finality of the order of confirmation or upon the
expiration of the period of redemption when allowed by law, the
purchaser at the auction sale or last redemptioner, if any, shall be
entitled to the possession of the property unless a third party is actually
holding the same adversely to the judgment obligor. The said purchaser
or last redemptioner may secure a writ of possession, upon motion, from
the court which ordered the foreclosure.
Sec. 4. Disposition of proceeds of sale.
The amount realized from the foreclosure sale of the mortgaged
property shall, after deducting the costs of the sale, be paid to the person
foreclosing the mortgage, and when there shall be any balance or
residue, after paying off the mortgage debt due, the same shall be paid
to junior encumbrancers in the order of their priority, to be ascertained
by the court, or if there be no such encumbrancers or there be a balance
or residue after payment to them, then to the mortgagor or his duly
authorized agent, or to the person entitled to it.
Sec. 5. How sale to proceed in case the debt is not all due.
If the debt for which the mortgage or encumbrance was held is not all
due as provided in the judgment, as soon as a sufficient portion of the
property has been sold to pay the total amount and the costs due, the
sale shall terminate; and afterwards, as often as more becomes due for
principal or interest and other valid charges, the court may, on motion,
order more to be sold. But if the property cannot be sold in portions
without prejudice to the parties, the whole shall be ordered to be sold in
the first instance, and the entire debt and costs shall be paid, if the
proceeds of the sale be sufficient therefor, there being a rebate of
interest where such rebate is proper.
Sec. 6. Deficiency judgment.
If upon the sale of any real property as provided in the next preceding
section there be a balance due to the plaintiff after applying the
proceeds of the sale, the court, upon motion, shall render judgment
against the defendant for any such balance for which, by the record of
the case, he may be personally liable to the plaintiff, upon which
execution may issue immediately if the balance is all due at the time of
the rendition of the judgment; otherwise, the plaintiff shall be entitled to
execution at such time as the balance remaining becomes due under the
terms of the original contract, which time shall be stated in the
judgment.
Sec. 7. Registration.
A certified copy of the final order of the court confirming the sale shall be
registered in the registry of deeds. If no right of redemption exists, the
certificate of title in the name of the mortgagor shall be cancelled, and a
new one issued in the name of the purchaser.
Where a right of redemption exists, the certificate of title in the name of
the mortgagor shall not be cancelled, but the certificate of sale and the
order confirming the sale shall be registered and a brief memorandum
thereof made by the registrar of deeds upon the certificate of title. In the
event the property is redeemed, the deed of redemption shall be
registered with the registry of deeds, and a brief memorandum thereof
shall be made by the registrar of deeds on said certificate of title.
If the property is not redeemed, the final deed of sale executed by
the sheriff in favor of the purchaser at the foreclosure sale shall be
registered with the registry of deeds; whereupon the certificate of title in
the name of the mortgagor shall be cancelled and a new one issued in
the name of the purchaser.
Q: You said that sale will be made by the judgment of the court,
specifically, what is the judgement for?
A: The judgment is for the payment of obligation and not for the
payment of the property. The payment is within this period. This is
not the period of the sale. It is only after default of the judgment
debtor (principal debtor).
The mortgagee now is the judgment creditor because he is the one
who won the case, to whom the payment is due the judgment debtor
is the part directed by the court to pay. The judgment is for the
payment of the debt which is determined not less than 90 days nor
more than 120 days from the entry of judgment from the date of
finality.
When does it become final and executory?
Rule 39. If the judgment debtor does not pay, the rule is the property
will be sold in a public sale. It is the not the immediate sale of the
property is the payment of the debt. This period of not less than 90
days nor more than 120 days.
The debtor or any person who has interest in the property has the
chance to redeem the property by paying the judgment debt
How are the proceeds disposed?
If the proceeds are enough to be applied for the payment of the loan
and including the interest and the cost, then it should be applied to
the judgment creditor. BUT if there are encumbrances and excesses,
then proceeds will be paid to the junior encumbrancers. Take note: it
is only in judicial foreclosure that the excess is paid to the junior
encumbrancers. For extrajudicial foreclosure, there is no such thing
under Act 3135. So the court is clear on that, JUNIOR
ENCUMBRANCERS have no right to receive the excess. Its right is only
to redeem the property mortgaged, and not receive the excess.
What if there is deficiency?
The judgment debtor will have the deficiency and upon motion of the
judgment creditor, and the judgment debtor may be compelled by
the court to pay for the deficiency.
Why is it that only a motion is required and not a complaint to recover
a deficiency?
Only motion is required because there is already a pending action for
foreclosure. So in the same foreclosure proceeding where the court
will render judgment directing the debtor to pay if the proceeds from
the sale of the mortgage property is not sufficient to pay off, then the
judgment creditor can just file motion to recover the deficient, NOT A
NEW COMPLAINT OR A NEW AND FRESH ACTION, because there is
already a pending case.
Is it possible for a junior encumbrancer to file a judicial foreclosure of
mortgage? Will it not prejudice the first mortgagee considering that
the right of the junior encumbrancer is subordinate to the right of the
first mortgagee?
A: Although junior encumbrancers may redeem, the prior
encumbrancer has no obligation to redeem, because he can always
foreclose the mortgage. So under section 3, it seems that the junior
encumbrancer can foreclose the mortgage judicially but SUBJECT to
SUPERIOR RIGHT OF THE PRIOR MORTGAGEE.
TN: The notarial commission of a lawyer is only good for the
territorial jurisdiction of the RTC that issued his license.
B. Extrajudicial
2 Types of Extrajudicial Foreclosure
1. Taken by the sheriff
2. Taken by the notarial sheriff
Procedure:
A.M. No. 99-10-05-0, August 7, 2001: Procedure in Extra-Judicial
Foreclosure of Mortgage
1. FILE A PETITION TO THE OFFICE OF THE EXECUTIVE JUDGE
AND PAY THE FILING FEE
All applications for extra-judicial foreclosure of
mortgage whether under the direction of the sheriff
or a notary public shall be filed with the Executive
Judge, through the clerk of court who is also the Ex-
Officio Sheriff.
You dont go to the sala to file the petition. You file it
in the office of the clerk of court where the office of
the executive judge is located.
You will be then assessed the correct filing fee and
YOU MUST PAY the filing fee.
2. POST NOTICES OF THE FORECLOSURE SALE AT LEAST 3
PUBLIC PLACES 20 DAYS PRIOR TO THE SALE. (3-20)
3. PUBLISH THE NOTICE OF EXTRAJUDICIAL FORECLOSURE IN A
NEWSPAPER OF GENERAL CIRCULATION WHERE THE
PROPERTY IS LOCATED if THE VALUE IS 400 pesos
personal notice to mortgagor is not required: there is
no requirement to notify the mortgagor of the
extrajudicial sale. Lack of notification to the mortgagor
will not nullify the extrajudicial foreclosure sale. BUT
failure to comply with the strict notice requirement
will nullify the extrajudicial sale.
4. PUBLIC SALE
a. WHO CONDUCTS THE SALE:
i. Sheriff
ii. Notary public can only conduct
extrajudicial sale within the jurisdiction
of his notarial commission.
Example if your commission is only
for Cebu City by the RTC Cebu City
you can conduct an Extra Judicial
Foreclosure in Cebu City, Talisay,
Minglanilla, Naga, San Fernando and
Carcar. Mao na territorial jurisdiction
sa RTC Cebu City.
b. WHEN
On the date set. 9 am to 4 pm.
c. WHERE
i. Property located
Q. The problem is if the properties are in different
locations. How do you conduct it? How many
obligations will you file? Where do you file it? Do
you file 3 if the real property is located in Cebu,
Mandaue and Lapulapu? Three distinct
jurisdictions? Do you file 3 separate actions and
pay 3 separate filing fees? Do you conduct 3
auctions?
Judge: No. However, the law provides:
Where the application concerns the extrajudicial
foreclosure of mortgages of real estates and/or
chattels in different locations covering one
indebtedness, only one filing fee corresponding to
such indebtedness shall be collected. The collecting
Clerk of Court shall, apart from the official receipt
of the fees, issue a certificate of payment indicating
the amount of indebtedness, the filing fees
collected, the mortgages sought to be foreclosed,
the real estates and/or chattels mortgaged and
their respective locations, which certificate shall
serve the purpose of having the application
docketed with the Clerks of Court of the places
where the other properties are located and of
allowing the extrajudicial foreclosures to proceed
thereat
 ii. Unlike Pledge here in REM, there is a valid
foreclosure sale even if the only one bidder is the
mortgagee.
5. CERTIFICATE OF SALE IS ISSUED
o this is what is registered in the office of
the Registry of Deeds.
o If there is a right of redemption, the 1yr
period starts to run from the date of
registration of the certificate of sale.
o During the period of redemption and if
the property is in the possession of the
MORTGAGOR. Not the possession of a
third person like an informal settler. The
highest bidder may file a PETITION FOR
WRIT OF POSSESSION.
o Take note that if the property is in the
possession of a third person who is not an
agent of the mortgagor, you cannot file
an action for writ of possession. Even
after the lapse of the redemption period.
So you have title you have no possession,
you cannot acquire possession by mere
writ of possession because the court said
you are circumventing the rules on
ejectment. So file paka ug ejectment.
o Even prior to the expiration of the period
of redemption. The mortgagor may also
file an ACTION TO NULLIFY THE
FORECLOSURE SALE in the same
proceeding by way of counterclaim. On
the grounds of:
o Mortgage was not violated or
there was no default.
o Foreclosure sale was not
made in accordance with the
law. There might have been a
defect in the notice.
o What is commonly practiced is that an
action to nullify the sale is filed after the
expiration of the period of redemption. So
labi na dili maka redeem ang mortgagor
so yang action nlng is to Annul the
Foreclosure Sale or pwede pud if the odds
are in his favor an ACTION TO ANNUL the
MORTGAGE on the ground of usurious
interest or unconscionable interest.
6. CONFIRMATORY DEED OF SALE
After the lapse of the redemption period, the buyer is
now entitled to a CONFIRMATORY DEED OF SALE. This
is the basis for the payment of the taxes (documentary
stamp tax & capital gains tax).
This is when the title is consolidated in the buyer,
because after the foreclosure sale in the certificate of
sale the title of the buyer is subject to the positive
resolutory condition of redemption.
What if your notarial commission is for Cebu City and the property to
be foreclosed is located in Mandaue? Can the foreclosure sale
proceed?
NO. It must be by a notary public commission in Mandaue City or
which areas is within the territorial jurisdiction of Mandaue City.
What about extrajudicial foreclosure, when is it initiated?
It is initiated by filing to the executive judge of the Central Office
through officer the clerk of court (it is the ex officio office of the RTC)
Gravina v. CA
Re: Procedure
The finding of the trial court, which was sustained by the Court of
Appeals, was that the DLSA did send a letter to the petitioners
informing them of the foreclosure of the mortgage but the
petitioners failed to claim the letter. The Court also found that said
notice was published in the Evening News, a newspaper of general
circulation in the City of Manila. We are bound by those factual
findings of the Court of Appeals (Leuterio vs. CA, 197 SCRA 369).
Moreover, Section 3 of Act No. 3135 (Mortgage Law) requires only
the posting of the notices of sale in three public places and the
publication of the same in a newspaper of general circulation.
Personal notice is not required.
Benguet Management Corporation v. CA
Re: Procedure
Under the Procedure for Extra-Judicial Foreclosure of Mortgage, an
extra-judicial foreclosure covering several properties located in
different provinces but covering only one indebtedness requires the
applicant to pay only one filing fee. This is regardless of the number
of properties to be foreclosed. However, the venue of the extra-
judicial foreclosure proceedings is the place where each of the
mortgaged property is located. The rationale of this rule is that an
injunction order of the court is enforceable only within its territorial
limits. Therefore, those properties subject to the same mortgage but
are located in different provinces are outside the jurisdiction of the
trial court. The remedy of the law is to allow the applicant to file
separate injunction suits with another court which has jurisdiction
over the latter properties. BMC is not guilty of forum-shopping
because the remedy provided by law is precisely to file separate
injunction suits.
Deficiency Rule
In case of deficiency, you can recover from the debtor any
deficiency of the obligation, unlike pledge.
You can do this by ORDINARY ACTION, not a motion to recover
deficiency because there is no pending action. Unlike in a
judicial foreclosure there is a pending action, so kung kuwang pa
sa judicial foreclosure the mortgagee only files a motion to
recover the deficiency in the same action. But in case of
extrajudicial, you have to file a separate ordinary action to
recover the deficiency.
What about notice to the mortgagor, principal debtor and to other
persons who have interest to the mortgaged property?
General Rule: Personal notice is not required. Only the posting of the
notice to 3 public places is required.
XCP: It is required if there is a contractual stipulation for notice.
If in pledge, extra judicial foreclosure through sale by a notary public
is a matter of right provided in the law. Is extra judicial foreclosure
also a matter of right of the parties of the mortgagee if there is a Usually, a summary action for a writ of possession is filed
violation of the conditions of the mortgage contract yet the after the expiration of the period of redemption and after
mortgagee proceeds for extra judicial foreclosure? the purchaser has transferred the title in its name.
No. It is not a vested right on the part of the Mortgagee to extra Also, usually, in a foreclosure sale, even if the certificate of
judicially foreclose unlike in pledge. The mortgagee can only extra title is already transferred in the name of the purchaser,
judicially foreclose if it is provided in the mortgage contract. If it is the mortgagor remains in possession. So that is why a
not provided, the recourse of the mortgagee is to judicially file a summary action for the issuance of a writ of possession is
special civil action for the judicial foreclosure of the mortgage. filed for as long as the property is in the possession of the
mortgagor and not of a third person.
If under the redemption period, no redemption is made
What is contained in the notice?
either by the mortgagor or debtor or any person having
(1) The correct certificate number and correct technical description
interest in the property (junior encumbrancers). A
of the real property to be sold;
confirmatory deed of sale will be issued. And this
(2) time, place and date of public sale and the terms of the sale.
confirmatory deed of sale will be the basis in transferring
the registration of the certificate of title from the name of
Do you have a technical description of the building if it is only the
the mortgagor to that of the purchaser.
building that is sold? Does it have a transfer certificate of title?
It does not have a transfer certificate of title. It only has tax
What if there is a deficiency because the proceeds of the foreclosure
declaration. You cannot find the technical description in the tax
sale are not sufficient to satisfy the obligation. Can the mortgagee
declaration. But for as long as the sufficient description of the
recover the deficiency?
property is contained in the notice, it is already enough because the
In pledge, there is no right to recover the deficiency at all although
purpose of the notice is to inform the public of the property that will
there may be an obligation to return the excess if stipulated. But in
be sold in a public sale.
an extra-judicial foreclosure of REM, there is always a right to recover
the deficiency because after all, the mortgage is merely a security
In pledge, if there is foreclosure of sale and the only bidder is the
and not for the payment of the obligation. Otherwise, if it is for the
creditor, what is the effect on the public sale? Can there be a public
payment of the obligation, it could have been dacion en pago.
sale when there is only the creditor who is the bidder? What does the
law require in pledge?
It has been discussed earlier that if there is deficiency from the
Under the law, it provides that if the creditor is the only bidder in a
proceeds of the sale in judicial foreclosure, a motion is filed in the
public sale, another public sale must be scheduled.
same judicial foreclosure proceeding for the recovery of the
deficiency. What about in extra-judicial foreclosure? If the mortgagee
In the foreclosure sale of a real estate mortgage, if it is only the
is entitled to recover the deficiency, how will he be able to recover the
creditor who is the bidder, can there be a valid foreclosure sale?
deficiency? Can the mortgagee levy upon the property of the principal
Yes. There is no requirement as to the number of bidders for a valid
debtor?
foreclosure sale to be conducted. In fact, in most foreclosure sales,
To file a completely new complaint for the recovery of the deficiency.
there is only one bidder who is the creditor/mortgagee.
If he does that, he can pray for writ of preliminary attachment. But
prior to the filing of an action or complaint for the recovery of the
Would you be interested in taking in the extra-judicial foreclosure
deficiency, there is no right to attach properties of the principal
sale? Where the price is usually much lower than the market value but
debtor.
why are you not interested?
No. because it is subject to a positive resolutory condition of
From whom does the mortgagee recover the deficiency? Can he
Redemption.
recover it from a third party mortgagor?
No because the third party mortgagor is not personally liable on the
After there is a valid foreclosure sale, what would be the evidence of
principal obligation. So the mortgagee can only recover the
that extra-judicial foreclosure sale?
deficiency from the principal debtor and not from the third party
Certificate of Sale issued by the Clerk of Court subject to the approval
mortgagor.
of the Executive Judge. The executive judge only approves the
certificate of sale and does not issue it.
Under rule 68, if the proceeds from the sale of the property are more
than sufficient to satisfy the judgment debt, then, the excess will be
If there is a right of redemption and right of redemption is not always
paid to the junior encumbrances. Does it apply also in an extra-judicial
present if there is an extra-judicial foreclosure, of course the property
foreclosure?
is not yet delivered to the purchaser because it is still subject to the
No. In the case of Monzon v Relova (2008), SC ruled that unlike Rule
resolutory condition of redemption. What is the purchasers remedy?
68 which governs judicial foreclosure sales, neither Act no. 3135 was
The purchaser can actually file for a writ of possession to the court
amended nor AM no 99-10-5-0 grants the junior encumbrancers the
and ask that he may be placed in possession during the period of
right to receive the balance of the purchase price. The only right
redemption but only on the condition that the property must be in
given to second mortgagees is the right to redeem the foreclosed
the possession of the mortgagor or any person claiming rights under
property pursuant to sec 6 of act no. 3135 as amended by act no.
the mortgagor.
411.
If the property is in the possession of a third person who is
claiming a right other than that of a mortgagor, there can DBP v. Licuanon
be no writ of possession. Re: Deficiency Rule

Facts:
Respondent spouses Licuanan were granted a piggery loan in the
amount of P4,700 by petitioner, evidenced by a promissory note and
secured by a real estate mortgage over a 980-square meter parcel of
land with a two-storey building. Petitioner granted respondents an
additional loan of P12,000 evidenced by a promissory note payable
on or before the year 1980. This was secured by a real estate
mortgage over four parcels of land. On 1975, petitioner granted
respondent spouses another loan of P22,000 evidenced by a
promissory note maturing on 1985. This was secured by a real estate
mortgage executed in favor of petitioner over another three parcels
of land.
insufficient to cover the obligation and the other costs at the time of
the sale. Thus, the amount of the obligation prior to foreclosure and
the proceeds of the foreclosure are material in a claim for deficiency.
Creditors cannot unilaterally increase the interest rates; it is contrary
to the principle of mutuality of contracts. Any increase in the rate of
interest made pursuant to an escalation clause must be the result of
an agreement between the parties. The minds of all the parties must
meet on the proposed modification as this modification affects an
important aspect of the agreement. Thus, any change must be
mutually agreed upon, otherwise, the change carries no binding
effect. For the Court to grant the PNBs deficiency claim would be to
award it for its delay and its undisputed disregard of PD 385.

On 1981, petitioner sent a letter by registered mail to respondents VI. Redemption

informing them that, since the conditions of the mortgage had been
The first thing you should determine if there is a right to redemption
breached, petitioner would have the mortgaged properties sold by
the sheriff under Act 3135. The total amount due from the three is: who is the mortgagee?
loans had by then ballooned to P75,298.32. Petitioner then filed an
MORTGAGEE: NON-BANKING INSTITUTION
application for extrajudicial foreclosure. The mortgaged properties
were sold in a public auction. Petitioner, as the highest bidder, MORTGAGOR
acquired them for a total of P16,340. The certificate of sale was Natural Juridical
registered.
Extrajudicial There is a right of There is NO right of
Foreclosure redemption within redemption but there is
On 1983, petitioner consolidated its ownership over the properties.
After more than a year or on 1984, petitioner wrote respondents by one year from what we call as Equity of
registered mail, informing them that the properties (now acquired registration of the Redemption which the
assets of the bank) would be disposed of by public auction. On 1984, sale. mortgagor or any
petitioner published an advertisement stating that the properties redemptioner can
would be sold by oral bidding. However, there were no bidders. exercise within a period
not more than 90 days
Petitioner sent respondents a letter informing them that the from the sale but not
properties could be reacquired by negotiated sale for cash or later than the
installment. Three days later, however, the properties were sold registration.
through negotiated sale to one Emelita A. Peralta. Petitioner
executed a deed of conditional sale in favor of Peralta. Respondents So if registration happens
offered to repurchase the properties from petitioner but they had one week after the sale,
already been sold to Peralta. Respondents then filed a complaint for
then the redemptioner
recovery of real properties and damages.
cannot inisist on 90 days.
But if the registration
Issue: WON respondents are liable for the deficiency claim of
petitioner. happens one year after
TN: The price in which the mortgaged property was sold was the sale, the
P104,000 which was less than the amount of respondents redemptioner cannot
indebtedness which is P131,642.33. insist on one year
because its limited to 90
Ruling: days. So either 90 days or
No. the respondents are not responsible for the deficiency claim. registration, whichever
While it is true that in extrajudicial foreclosure of mortgage, the comes first.
mortgagee has the right to recover the deficiency from the debtor Judicial There is no right of redemption. There is merely
this presupposes that the foreclosure must first be valid. But in this Foreclosure equity of redemption which the redemptioner can
case, the foreclosure is invalid. If demand was made and duly exercise within a period of not less than 90 days
received by the respondents and the latter still did not pay, then they
nor more than 120 days from the finality of
were already in default and foreclosure was proper. However, if
judgement
demand was not made, then the loans had not yet become due and
demandable. This meant that respondents had not defaulted in their
payments and the foreclosure by petitioner was premature.
Foreclosure is valid only when the debtor is in default in the payment
of his obligation.

PNB v. Rocamora
Re: Deficiency Rule
PNB was not able to prove the basis for the deficiency judgment it MORTGAGEE: BANKING INSTITUTION
seeks. The right of the mortgagee to pursue the debtor arises only
when the proceeds of the foreclosure sale are ascertained to be MORTGAGOR
 Natural Juridical
Extrajudicial Same rules as above. Same rules as above. No
Foreclosure There is a right of right of redemption for
redemption for juridical persons.
natural mortgagors.
Judicial There is a right of redemption. The General Banking
Foreclosure Law did not distinguish whether the mortgagor is a
natural person or juridical person for judicial
foreclosure. So this is the exception to the general
rule that for judicial foreclosure there is no right of
redemption.
What about if there is no redemption exercised?
Remember within the period from the sale and even after
registration, up to one year from the date of registration. The
purchaser in the foreclosure sale is not placed in possession of the
property. The property may still be in the possession of the
mortgagor or of a third person. Whats the right of the purchaser? He
is entitled to a Writ of Possession.
Where does the purchaser go to get the Writ of Possession?
If the mode of foreclosure is judicial foreclosure, by motion
in the same case or in the same judicial proceeding.
If it is extrajudicial foreclosure, then the purchaser has to
file a summary action for the issuance of a writ of
possession. The issuance of the writ is a ministerial duty of
the Court. The Court has no discretion to deny issuance of
a Writ of Possession for as long as the mortgagor is in
possession of the property. If the property is with a third
person who claims a superior right over that of the
mortgagor, then the Writ cannot be issued. Remember this
is a Summary Proceeding. The Supreme Court said there is
no requirement for a hearing, even a summary hearing is
not required. For as long as the Court is satisfied that the
property is in the possession of the mortgagor, then the
Court can immediately issue a Writ of Possession.
Why is Writ of Possession not issued if the property is in the
possession of a third person? What is the remedy of the purchaser if
the property is in the possession of a third person not the mortgagor
nor any person claiming a right under the Mortgage Law?
Remedy of the purchaser: You cannot just summarily deprive the
third-party possessor through an issuance of a writ of possession. The
purchaser has to file a separate civil action for EJECTMENT. Not just a
petition for a writ of possession because the possessor of the
property has to be allowed his day in Court. It is part of due process.
(Why are you not sure of your answers?? Youll be lawyers THREE YEARS
FROM NOW! Youll be calling me Panyera already. *Believe lang mga bes!*)
A. Rules
a. Judicial foreclosure
No right of redemption but only equity of redemption which should
be exercised within a period of not less than 90 days but not more
than 120 days from the entry of judgment (Sec. 2, Rule 68) (But see
the General Banking Act of 2000)
TN: The period will be set by the court depending on its discretion.
The 90 day period is reckoned from foreclosure and not entry of
judgment.
b. Extrajudicial foreclosure
1. For natural debtor within 1 year from date of registration of
certificate of sale
2. For juridical debtor within 3 months from foreclosure but not
after the registration of the certificate of sale except when the
creditor is a bank wherein it has 1 year period from date of
registration of certificate of sale to redeem.
Huerta Alba Resort v. CA
Re: Right of redemption vs. equity of redemption
The right of redemption in relation to a mortgage understood in the
sense of a prerogative to re-acquire mortgaged property after
registration of the foreclosure sale exists only in the case of the
extrajudicial foreclosure of the mortgage. No such right is recognized
in a judicial foreclosure except only where the mortgagee is the
Philippine National Bank or a bank or banking institution. Petitioner
failed to seasonably invoke its purported right under Section 78 of
R.A. No. 337. Indeed, the facts show that it was only on May 2, 1995
when, in opposition to the Motion for Issuance of Writ of Possession,
did petitioner file a Motion to Compel Private Respondent to Accept
Redemption, invoking for the very first time its alleged right to
redeem subject properties under to Section 78 of R.A. No. 337. In
light of the aforestated facts, it was too late in the day for petitioner
to invoke a right to redeem under Section 78 of R.A. No. 337.
Petitioner failed to assert a right to redeem in several crucial stages
of the proceedings.
B. How done
a. Formal offer to redeem
1. To whom notice to redeem is given
aa) Officer who made the sale
bb) Register of Deeds
b. Action together with consignation of redemption price within the
period
TN: The notice must be in writing and must be accompanied by the
tender of the price which must be the full amount. It must be done
within the period to redeem.
Banco Filipino v. CA
Re: How done
Clearly, the right of redemption should be exercised within the
specified time limit, which is one year from the date of registration of
the certificate of sale. The redemptioner should make an actual
tender in good faith of the full amount of the purchase price as
provided above, i.e., the amount fixed by the court in the order of
execution or the amount due under the mortgage deed, as the case
may be, with interest thereon at the rate specified in the mortgage,
and all the costs, and judicial and other expenses incurred by the
bank or institution concerned by reason of the execution and sale
and as a result of the custody of said property less the income
received from the property. In case of disagreement over the
redemption price, the redemptioner may preserve his right of
redemption through judicial action which in every case must be filed
within the one-year period of redemption. The filing of the court
action to enforce redemption, being equivalent to a formal offer to
redeem, would have the effect of preserving his redemptive rights
and "freezing" the expiration of the one-year period. In this case, the
period of redemption expired on January 21, 1992. The complaint
was filed on December 20, 1992. Moreover, while the complaint
alleges that private respondent made an offer to redeem the subject
property on August 6, 1991, which was within the period of
redemption, it is not alleged in the complaint that there was an
actual tender of payment of the redemption price as required by the
rules. It was alleged that private respondent merely made an offer of
P700,000.00 as redemption price, which however, as stated under
paragraph 13 of the same complaint, the redemption money was the
total bank claim of P925,448.17 plus lawful interest and other
allowable expenses incident to the foreclosure proceedings. Thus,
the offer was even very much lower than the price paid by petitioner
as the highest bidder in the auction sale.
C. What is to be paid
a. Purchase price
b. 1% monthly interest
c. Taxes, if any
d. Necessary expenses for preservation
Judge: Generally, the repurchase price or the redemption price
consists of the purchase price, interest which is 1% a month and the
redemptioner cannot invoke Nacar v. Gallery because this is
specifically provided by law so the redemptioner cannot invoke the
6% per annum (legal interest). Taxes, if paid by the purchaser, thats
1% (one percent) a month. And the necessary expenses for the
preservation. But if the mortgagee is a Banking institution, its not
just the purchase price that will be paid BUT the entire debt secured
by the mortgage. The entire debt which is DUE under the mortgage
deal. So it can be more than the purchase price actually. And the
redemptioner cannot insist on redeeming the property and paying
the installment because the offer to pay must be in cash.
China Banking Corp. v. CA
Re: What is to be paid
Expectedly, petitioner refutes these, saying that the amounts paid by
Paulino were grossly disproportionate to the right to redeem the
property, which is a residential house and lot located in North
Greenhills, San Juan, Metro Manila. But as correctly pointed out by
private respondents, the amount of P100,000.00 paid by Paulino to
Alfonso was not for the property itself, but merely for the right to
redeem the same. As a matter of fact, Paulino still had to pay
Metrobank the redemption price of P1,463,375.39. Whether or not
the latter amount was adequate is beyond the scope of this inquiry.
Suffice it to state that Metrobank accepted the same and reconveyed
the property to Paulino. Moreover, only Alfonsos conjugal share in
the property was affected, and the determination of its value was still
subject to liquidation of debts and charges against the conjugal
partnership.
way below the P2,782,554.66 paid by the highest bidder/purchaser
of the properties during the auction sale.
What if the purchaser refuses to allow redemption? What is the
remedy of the redemptioner?
Remedy: Consignation which is preceded by tender of payment of
the FULL purchase price because the purchaser in the foreclosure
sale can refuse if there is no tender of the full purchase price like if
the redemptioner tenders to pay in installments. For example, during
th
the 8 month of the redemption period, the redemptioner sends
notice of his intention to redeem and offers to redeem and pay
within one year. The redemptioner cannot insist on paying on
installments. The paying on installments will in effect extend the
period of redemption.
D. Effect of death of mortgagor
The mortgagee may avail of the following alternative remedies:
a. Waive the mortgage and claim the entire debt from the
estate of the mortgagor as an ordinary claim
b. Foreclose the mortgage judicially and prove the deficiency as
an ordinary claim; and
c. Rely on the mortgage exclusively, or other security and
foreclose the same at anytime, before it is barred by
prescription, without the right to file a claim for any
deficiency
E. Remedies of mortgagor in equitable mortgage
a. Action for reformation of the instrument into a loan with
equitable mortgage
b. Alleging as defense that the real intention of the parties was
a loan with equitable mortgage which, in effect, is an action
for reformation of the instrument
c. Judicial objection or opposition to the registration of the
affidavit of consolidation of ownership on the ground that
the real intention of the parties was a loan with equitable
mortgage

BPI v. Sps. Veloso

Re: Effect of tender of less than the purchase price
In several cases decided by the Court where the right to repurchase
was held to have been properly exercised, there was an unequivocal
tender of payment for the full amount of the repurchase price.
Otherwise, the offer to redeem is ineffectual. Bona fide redemption
necessarily implies a reasonable and valid tender of the entire
repurchase price, otherwise the rule on the redemption period fixed
by law can easily be circumvented. Consequently, in this case, the
offer by respondents on July 24, 1986 to redeem the foreclosed
properties for P1,872,935 and the subsequent consignation in court
of P1,500,000 on August 27, 1986, while made within the period of
redemption, was ineffective since the amount offered and actually
consigned not only did not include the interest but was in fact also
 CHAPTER 4- ANTICHRESIS
Arts. 2132-2139
I. Concept
Antichresis also involves real property but unlike mortgage, the
essence of antichresis is to grant the creditor the right to receive the
fruits from an immovable so the fruits can be applied to the payment
of interest and the excess will be applied to the payment of the
principal.
If REM is a formal contract, is antichresis is a real contract?
NO. Its still a formal contract because the agreement to allow the
creditor to receive the fruits must be in writing. While the creditor
has the right to receive the fruits, it is not required that he must have
possession of the property. So the owner of the property can still
have possession as long as the fruits or the income are delivered to
the creditor.
Can the parties stipulate that the creditor can have possession of the
property?
Yes, that is not prohibited. Just like it is not prohibited in REM that
the mortgagee be placed in possession of the property.
II. Elements
a. Parties: the contract of antichresis may be established by
one having the right to encumber property, either the
debtor or a third person.
b. Object: it may be constituted only on immovables giving
fruits.
c. Causa: same as the other contracts of security.
d. Formalities: Article 2134. The amount of the principal and
of the interest shall be specified in writing; otherwise, the
contract of antichresis shall be void. (n)
TN: It must be in a public instrument to affect third persons or
recorded if the property involved is registered. However, it may only
be in a private instrument to be binding between the parties.
III. Effects
Rights of the antichretic creditor
A. To receive the fruits
B. Right of Foreclosure
A. To receive the fruits
Article 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)
Article 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)
A provision in a contract that the full amount of the indebtedness
must be returned to the lenders, despite their receipt of the fruits,
before the borrowers could demand the return of the property is
contrary to an antichretic contract. Hence, it is void for being
contrary to law, morals, and public policy (Verzosa vs. Bucag, L-8031,
Oct. 29, 1955).
B. Right of foreclosure
Article 2137. The creditor does not acquire the ownership of the real
estate for non-payment 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. (1884a)
Obligations of the antichretic creditor
A. To bear necessary expenses
B. To pay taxes
A. To bear necessary expenses
Article 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. (1882)
B. To pay taxes
Article 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. (1882)
If we have an antichresis contract, it is the right of the creditor to
receive the fruits and apply the fruits to the payment of interest and
apply the excess to the principal, it is likewise his obligation to pay
Real Property or Real Estate Tax.
What is the risk of the creditor not paying the taxes?
The Government will sell the property in a public sale to satisfy the
tax.
If the creditor feels that it is too much of a burden for him to pay
taxes, to shoulder the expenses for the preservation of the property
because he is living in Canada and the property is in Cebu, what must
he do if he refuses to be burdened with these obligations?
Let the debtor re-enter the property. If he (creditor) refuses to
discharge his obligations then he will not be entitled to the fruits
anymore.
TN: The tax that to be paid is real property tax to the LGU, not to the
BIR.
Can the antichretic creditor cause the extrajudicial foreclosure sale of
the property?
No, he cannot. He can only resort to judicial sale of the property. And
by that, he has to go to Court to allow the sale of the property
because he is judicially foreclosing the property.

1. Reason
Otherwise, the debtor could deprive the creditor of the security by
not paying taxes and causing its forfeiture.

2. Exception
Article 2136. The debtor cannot reacquire the enjoyment of the
immovable without first 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. (1883)

TN: Also, when the contrary is stipulated and if he refuses to receive

the fruits.

3. Effect of non-fulfillment
The creditor is liable for damages.

Diego v. Fernando
Re: Antichresis
In the present case, the parties having agreed that the loan was to be
without interest, and the appellant not having expressly waived his
right to the fruits of the properties mortgaged during the time they
were in appellee's possession, the latter, like an antichretic creditor,
must account for the value of the fruits received by him, and deduct
it from the loan obtained by appellant. As such mortgagee in
possession, his rights and obligations are, as pointed out by this Court
in Macapinlac vs. Gutierrez Repide (43 Phil., 770), similar to those of
an antichretic creditor.
 CHAPTER 5- CHATTEL MORTGAGE
Arts. 2140-2141
I. Concept (Art. 2140 and Act. 1508)
Article 2140. By a chattel mortgage, personal property is recorded in
the Chattel Mortgage Register as a security for the performance of an
obligation. If the movable, instead of being recorded, is delivered to
the creditor or a third person, the contract is a pledge and not a
chattel mortgage. (n)
Judge: According to Act 1508, its a conditional sale of personal
property. The condition being that the sale should be voided if the
principal obligation is vague (?). But what does the civil code say? It is
the recording of the personal property in the chattel mortgage
register as the security of the performance of an obligation. Now just
like pledge and real estate mortgage, it is constituted to secure a
principal obligation.
II. Nature and characteristics
A. Obligations that may be secured
Cannot secure future obligations. The oath there, under Sec. 5 of Act
1508, states that the mortgage secures the obligation stated herein.
Meaning that only present obligations can be secured by chattel
mortgage. While pledge and REM can secure future obligations,
chattel mortgage cannot secure future obligations.
Acme Shoe, Rubber & Plastic Corp. v. CA
Re: Obligations that may be secured
While a pledge, real estate mortgage, or antichresis may
exceptionally secure after-incurred obligations so long as these
future debts are accurately described, a chattel mortgage, however,
can only cover obligations existing at the time the mortgage is
constituted. Although a promise expressed in a chattel mortgage to
include debts that are yet to be contracted can be a binding
commitment that can be compelled upon, the security itself,
however, does not come into existence or arise until after a chattel
mortgage agreement covering the newly contracted debt is executed
either by concluding a fresh chattel mortgage or by amending the old
contract conformably with the form prescribed by
the Chattel Mortgage Law.
Judge: While pledge, REM and antichresis, may exceptionally secure
after incurred obligations so long as these debts are accurately
described, a chattel mortgage obligations existing at the time the
mortgage is constituted. That the statute has provided that the
parties to the contract must execute an oath that . . . (the)
mortgage is made for the purpose of securing the obligation specified
in the conditions thereof, and for no other purpose, and that the
same is a just and valid obligation, and one not entered into for the
purpose of fraud. makes it obvious that the debt referred to in the
law is a current, not an obligation that is yet merely contemplated.
III. Elements
A. Parties: the personal property mortgaged must be owned by the
mortgagor at the time of its constitution. The exception is with
regard to revolving stocks.
Judge: Mortgagor must be the absolute owner of the property and
must have free disposal of such. Why? Because of the probability that
the property may be sold in a public sale to satisfy the principal
obligation.
B. Object: must be personal properties which may include:
(1) interest in a business, (2) ungathered crops, (3) vessels but
subject to special rules, (4) certificates of stock, (5) large cattle, and
(6) stock in trade.
A chattel mortgage over immovables is generally void. The exception
is when the parties are in estoppel because of their prior agreement.
However, such is only binding between the parties and cannot prevail
over a subsequent REM over such real property.
Manarang v. Ofilada
Re: Object of antichresis
We, therefore, hold that the mere fact that a house was the subject
of a chattel mortgage and was considered as personal property by
the parties does not make said house personal property for purposes
of the notice to be given for its sale at public auction. This ruling is
demanded by the need for a definite, orderly and well- defined
regulation for official and public guidance and which would prevent
confusion and misunderstanding. We, therefore, declare that the
house of mixed materials levied upon on execution, although subject
of a contract of chattel mortgage between the owner and a third
person, is real property within the purview of Rule 39, section 16, of
the Rules of Court as it has become a permanent fixture on the land,
which is real property.
Tumalad v. Vicencio
Re: Object of Antichresis
Certain deviations have been allowed from the general doctrine
that buildings are immovable property such as when through
stipulation, parties may agree to treat as personal property
those by their nature would be real property. This is partly based on
the principle of estoppel wherein the principle is predicated on
statements by the owner declaring his house as chattel, a conduct
that may conceivably stop him from subsequently claiming
otherwise. In the case at bar, though there be no specific statement
referring to the subject house as personal property, yet by ceding,
selling or transferring a property through chattel mortgage could only
have meant that defendant conveys the house as chattel, or at least,
intended to treat the same as such, so that they should not now be
allowed to make an inconsistent stand by claiming otherwise.
Makati Leasing and Finance Corp. v. Wearever Textile Mills, Inc.
Re: Object of Antichresis
If a house of strong materials, like what was involved in Tumald vs.
Vicencio 41 SCRA 143, may be considered as personal property for
purposes of executing a chattel mortgage thereon as long as the
parties to the contract so agree and no innocent third party will be
prejudiced thereby there is absolutely no reason why a machinery,
which is movable in its nature and becomes immobilized only by
destination or purpose, may not be likewise treated as such. This is
really because one who has agreed is stopped from denying the
existence of the chattel mortgage.
Jaca v. Davao Lumber Co.
Re: Object of Antichresis
The defendants proof of interest in the property is the deed of
chattel mortgage executed by the plaintiff in its favor on January 24,
1964. This deed of chattel mortgage is void because it provides
that the security stated therein is for the payment of any and all
obligations herein before contracted and which may hereafter be
contracted by the mortgagor in favor of the mortgagee.
Judge: This deed of chattel mortgage is void because it provides that the
security stated therein is for the payment of any and all obligations herein
before contracted and which may hereafter be contracted by the Mortgagor
in favor of the Mortgagee.
C. Causa: same as the other contracts of security.
D. Form
a. To bind the parties: it must be in a public document
because of the requirement in Art. 2140 that it must be
registered in the Chattel Mortgage Register.
b. To bind third persons
additional requirements:
1. Affidavit of good faith
2. Description of the property
3. Registration
1. Affidavit of good faith
According to Section 5, of Act No. 1508, the oath is actually your
affidavit of good faith. Specifically the part there that states,
We severally swear that the foregoing mortgage is made for
the purpose of securing the obligations specified in the
conditions thereof and for no other purpose and that is made
just for a valid application and not entered into for the purpose
of fraud.
What does the SC has to say about this requirement for an
oath? Is it required for validity?
In the old case of Giberson, 44 Phil Reports, it has been held that
the absence of an affidavit vitiates the mortgage as against the
creditors and any subsequent encumbrances. Creditors here do
not refer to mortgagee. And in the more recent case of CIFC,
suspension of affidavit is required only for the purpose of
transforming an already valid mortgage into a preferred
mortgage. It is not necessary for the validity of the chattel
mortgage.
So take away the oath, what do you have there in section 5? Do
you still have a public document if you take away the oath?
It would seem that the private document would be sufficient to
bind the parties but I have not yet seen a chattel mortgage
which is only in a private document and I have not also seen
jurisprudence yet specifically addressing this issue.
2. Description of the property
Judge: The law says there is no requirement for a detailed
description for as long as the description must be such as to
enable the parties to the mortgage as well as other/third person
after reasonable inquiry and investigation, so to identify the
same.
3. Registration
GR: Registration is at the Register of Deeds where the property
is located and where the mortgagor resides.
XC:
Vessels - office of the Coast Guard of the port of documentation
(PD 1512 Ship Mortgage Decree)
Motor vehicles register of deeds where the property is located
and where the mortgagor resides and also in the Land
Transportation Office
Shares of stocks register of deeds where the principal office of
the corporation is located
Judge: Registration is only required to bind third persons even if
the law says that in chattel mortgage, personal properties is
recorded in the chattel mortgage register as a security to the
payment of principal obligation. Again, jurisprudence states that
registration is only required to bind third person just like real
estate mortgage.
Now if the law says that by chattel mortgage, personal property
is recorded in the chattel mortgage register where must the
registration or recording be made? Because when you talk of a
real estate mortgage it is recorded or registered where the
property is located right? But how about movable?
In the place where the mortgagor resides and where the
property is located. If the mortgagor resides in Cebu City and
the property is located in Cebu City, then you go to the Registry
of Deeds in Cebu City.
If the property is located in Cebu City and the mortgagor is
residing in San Fernando Cebu, where must the mortgage be
registered?
Office of the Registy of Deeds of the Province of Cebu because
the mortgagor resides in San Fernando and also in the Registry
of Deeds of City of Cebu where the property is located.
Can share of stocks be a subject of chattel mortgage?
Yes. Then where do you register the mortgage? In the principal
place/office of business as registered in the SEC, thats where
the records of the corporation the stock transfer books,
minutes of the meetings, are kept.
Then how about in SEC? Are you required to also register the
mortgage of stock in SEC?
No, there is no requirement for the registration of the mortgage
to the Securities and Exchange Commission. In fact, if you
personally bring your document, di na nila dawaton, nag daghan
daghan rana sa ilang papel.
Now what about vessels, where do you register the mortgage of
vessel?
The place where the mortgagor resides and the office of the
Philippine Coast Guard and the port of documentation.
What about motor vehicles?
In the Land Transportation Office (LTO) where the vehicle is
registered.
Giberson v. Jureidini Bros.
Re: Affidavit of good faith
The trial court held, and properly, that Exhibit 1 was invalid because
the oath required by law did not appear therein, and because the
subject-matter was not described therein with sufficient particularity.
The Chattel Mortgage Law, in its section 5, in describing what shall be
deemed sufficient to constitute a good chattel mortgage, includes
the requirement of an affidavit of good faith appended to the
mortgage and recorded therewith. It has been held by reputable
courts that the absence of the affidavit vitiates a mortgage as against
creditors and subsequent encumbrancers.
Jaca v. Davao Lumber Co.
Re: Affidavit of good faith
The defendants proof of interest in the property is the deed of
chattel mortgage executed by the plaintiff in its favor on January 24,
1964. This deed of chattel mortgage is void because it provides
that the security stated therein is for the payment of any and all
obligations herein before contracted and which may hereafter be
contracted by the mortgagor in favor of the mortgagee.
Cebu Intl Finance Corp. v. CA
Re: Affidavit of good faith
The prevailing jurisprudence is that a mortgagee has a right to rely in
good faith on the certificate of title of the mortgagor to the property
given as security and in the absence of any sign that might arouse
suspicion, has no obligation to undertake further investigation.
Hence, even if the mortgagor is not the rightful owner of or does not
have a valid title to the mortgaged property, the mortgagee or
transferee in good faith is nonetheless entitled to protection.
Although this rule generally pertains to real property, particularly
registered land, it may also be applied by analogy to personal
property, in this case specifically, since ship owners are, likewise,
required by law to register their vessels with the Philippine Coast
Guard. The chattel mortgage constituted on a vessel by the buyer
who was able to register the vessel in his name despite the
agreement with the seller that the vessel would not be so registered
until after full payment of the price which do not appear in the
buyers copy of the deed of sale is VALID, for the mortgagee has the
right to rely in good faith on the certificate of registration. The special
affidavit of good faith, on the other hand, is required only for the
purpose of transforming an already valid mortgage into a "preferred
mortgage.'' Thus, the abovementioned affidavit it is not necessary for
the validity of the chattel mortgage itself but only to give it a
preferred status.
Saldana v. Phil. Guaranty Co.
Re: Description of the property
Section 7 of the Chattel Mortgage Law does not demand a minute
and specific description of every chattel mortgaged in the deed of
mortgage but only requires that the description of the properties be
such as to enable the parties in the mortgage or any other person,
after reasonable inquiry and investigation to identify the same.
Gauged by this standard, general descriptions have been held valid
by this court. The specification in the last paragraph of the deed in
the instant case is in substantial compliance with the reasonable
description rule fixed by the Chattel Mortgage Law.
Judge: Supposing last Jan. 1, 2016, A constituted a chattel mortgage
over a real property to B, duly registered. A year after, A constituted
a real estate mortgage over the same real property in favor C,
another creditor, duly registered.
Does the Register of Deeds have the discretion to reject the
registration of this second mortgage? No, because recoding is a
purely ministerial duty of the Register of Deeds.
When the obligation secured by the REM fell due, C foreclosed the
mortgage. Remember that C is a subsequent mortgagee. Of course, B
opposes the foreclosure because B is the first mortgagee.
Who has a better right to foreclose the mortgage? B or C?
C has a better right.
General rule: REM over movable property is void. BUT if the parties
intended or agreed or consented to constitute a chattel mortgage
over a real property then it is binding between the parties. They are
estopped from questioning the validity of the mortgage. However,
that mortgage will not prejudice third persons. Is C a third person?
Yes. Is he considered a mortgagee in bad faith considering that he is
aware of the previous mortgage? No, because the chattel mortgage
does not bind him even if he is duly notified or charged with notice
because it is registered. There is no problem if there is no other lien
on the property. B can foreclose the mortgage because in this case,
no third person/party is affected. But if a third party is affected, then
the third party will not be prejudiced with the chattel mortgage.
Judge: Now we said earlier that interest in business can also be the
object of chattel mortgage and stock and trade can also be the object
of mortgage. Supposing I own a school supplies store just across USC,
and I owe you PhP100,000 to so it would look like a mortgage on the
stock and trade inside my store, what is required again? There must
be description of the property. Because the property describe will be
the property to be sold in the public sale, right? Now what about
stock and trade? If I constitute a chattel mortgage over stock and
trade, found now, currently existing inside of office supplies store,
does it mean to say I can no longer sell my inventory stocks? So if I
default after say 6 months, are the stock still the very same stocks at
the time of the chattel mortgage? How can you foreclose if its no
longer the same stocks described in the chattel mortgage?
This is the exception. We call this a revolving stocks, so there can be a
valid mortgage over a stock and trade even if at the time of the
foreclosure is that is not the very same stock at the time of the
constitution of the mortgage.
IV. Effect of mortgage
A. What it covers
GR: The mortgage covers only the property described in the contract
and excludes like or substituted property thereafter acquired,
anything in the contract to the contrary notwithstanding.
XCP: In case of stock contained in stores, drugstores, or similar
business of a revolving or floating nature
V. Discharge of mortgage (Sec. 8, Act. 1508)
Requisites
a. That there has been a performance or tender of
performance of the condition
b. That there has been a request (for the discharge) made by
the person entitled to redeem
Upon compliance of which, the mortgagee must give a written
discharge.
Effect of failure to discharge
The mortgagee is liable to pay twenty pesos (P20.00) and all damages
occasioned thereby
Act. 1508, Sec. 8. Failure of mortgagee to discharge the mortgage. If the
mortgagee, assign, administrator, executor, or either of them, after
performance of the condition before or after the breach thereof, or after
tender of the performance of the condition, at or after the time fixed for the
performance, does not within ten days after being requested thereto by any
person entitled to redeem, discharge the mortgage in the manner provided by
law, the person entitled to redeem may recover of the person whose duty it is
to discharge the same twenty pesos for his neglect and all damages
occasioned thereby in an action in any court having jurisdiction of the subject-
matter thereof.
Judge: I constituted a chattel mortgage over my vehicle duly
registered in the Local Registry and in the LTO, as stamped in the
Certificate of Registration. When I pay my obligation to you, I
received a receipt (O.R.) as full payment of the obligation. And then I
go to LTO to cancel the encumbrance upon presentation of the
Receipt, do you think the LTO will do that? Or I go to the Office of the
Registry of Deeds and I showed the receipt to cancel the same. Will
they accept that?
No. They will require me to present an affidavit of discharge. So in
short, I am entitled to an affidavit of discharge so that I can use this
document to cancel the mortgage in the Office of the Registry and in
the LTO. So, I demand from you issuance of the Affidavit of
Discharge, and you did not timely provide. Whats the consequence?
You are liable to pay the fine of PhP20.00 (twenty pesos) plus
damages. Remember this is Act 1508. Twenty pesos in the early 1900
is already a huge amount.
VI. Redemption (before foreclosure) (Sec.13, Act. 1508)
A. Who may redeem
a. The mortgagor
b. Subsequent mortgagees
c. Subsequent attaching creditors
B and C will then be subrogate into the rights of the mortgagee.
B. What must be paid
a. The principal obligation and interests thereon
b. Costs and expenses incurred by any breach, before the sale
C. Effects of redemption
The redemptioner is subrogated to the rights of the mortgagee. He
may, therefore, foreclose the mortgage in the same manner.
Judge: Suppose I failed to pay my obligation to you as secured by X
through a chattel mortgage, and you have not yet started foreclosure
proceedings. X can redeem the property by paying the unpaid
obligation. So thats redemption prior to foreclosure. I want you to
take note of this because this is the only instance where there is
redemption of the property. So after default before foreclosure, the
third party mortgagor or any person who has interest in the
mortgaged property may redeem the property by paying the
mortgage debt. So if the third party mortgagor or a subsequent
encumbrancer pays the obligation to you, is my obligation to you
extinguished?
Ans: No, my obligation is not extinguished because I have not paid it
yet. Go back to Oblicon.
Question: Granting that this third party mortgagor paid with my full
knowledge and consent because there is danger of the property
being sold in a public sale and Mr. X would tend to lose the property,
so he (X, as a third party mortgagor) pays the mortgage debt , Can he
now foreclosed the mortgage in case of your nonpayment?
Ans: No, how can he (X) foreclose his own property. So the mortgage
is extinguished but the principal obligation, subsist. However if its a
subsequent encumbrancer who redeems then the subsequent
encumbrance can foreclose the mortgage. In the case of X as a third
party mortgagor, there is already a merger or confusion, go back to
oblicon.
Q: What if no redemption made prior to foreclosure so you proceed
to the foreclosure of the mortgage. Remember, the
creditor/mortgagee cannot foreclose the mortgage unless he has
possession of the thing mortgaged, because unlike in the foreclosure
of the real estate mortgage, in foreclosure of a chattel mortgage,
immediately after the conclusion of the foreclosure share, the
movable is immediately delivered to the buyer. So if the property is in
the possession of the mortgagor/debtor, before initiating the
foreclosure proceedings, the creditor has to take possession of the
property. So like what vehicle assignees are doing, such as banks, if
the buyer does not voluntarily surrender the vehicle then the bank
will file for an action of repliven, recovery of possession of a personal
property as a prelude to foreclosure.
Q: Is an extra-judicial foreclosure a right granted to the creditor?
A: Unlike in real state mortgage where it is not a right but can only be
availed of if it is provided in the mortgage contract, in chattel
mortgage, even if it not stipulated in the mortgage deal, the creditor
can still avail of extra-judicial foreclosure as it is so provided for by
law.
So we still follow the procedure laid down by the administrative
matter. But the auction sale shall be conducted after 30 days.
VII. Foreclosure
Since possession of the personal property is in the mortgagor, the
mortgagee may institute a case for replevin against the mortgagor.
A. Kinds
a. Judicial
b. Extra-judicial
This is a matter of right unlike in REM where only if it is stipulated.
1) Procedure (See A.M. No. 99-10-05-0, Aug. 7, 2001)
Only a notice is required which must not be less than 10 days in 2
public places. The public sale is conducted 30 days from default. The
notice must not only be given to the mortgagor but also to the
subsequent encumbrancers and subsequent attaching creditors
unlike in REM where only if it is stipulated. This is in order to give
them a second chance to redeem by participating in the public sale.
Ownership is transferred upon delivery to the purchaser.
2) Disposition of proceeds
i) Application
a) Costs and expenses of the sale
b) The principal obligation and interests
c) Claims of subsequent mortgagees
d) The balance, if any, to the mortgagor. The
excess must be returned
ii) In case of deficiency
Deficiencies may be recovered by ordinary action.
However, when the chattel mortgage is constituted on
the thing very sold, the deficiency cannot be recovered
pursuant to the Recto Law.
Pameca Wood Treatment Plant, Inc. v. CA
Re: In case of deficiency
It is clear from the above provision that the effects of foreclosure
under the Chattel Mortgage Law run inconsistent with those of
pledge under Article 2115. Whereas, in pledge, the sale of the thing
pledged extinguishes the entire principal obligation, such that the
pledgor may no longer recover proceeds of the sale in excess of the
amount of the principal obligation, Section 14 of the Chattel
Mortgage Law (Act. 1508) expressly entitles the mortgagor to the
balance of the proceeds, upon satisfaction of the principal obligation
and costs. Since the Chattel Mortgage Law bars the creditor-
mortgagee from retaining the excess of the sale proceeds there is a
corollary obligation on the part of the debtor-mortgagee to pay the
deficiency in case of a reduction in the price at public auction.

PNB v. Rocamora
Re: In case of deficiency
PNB was not able to prove the basis for the deficiency judgment it
seeks. The right of the mortgagee to pursue the debtor arises only
when the proceeds of the foreclosure sale are ascertained to be
insufficient to cover the obligation and the other costs at the time of
the sale. Thus, the amount of the obligation prior to foreclosure and
the proceeds of the foreclosure are material in a claim for deficiency.
Creditors cannot unilaterally increase the interest rates; it is contrary
to the principle of mutuality of contracts. Any increase in the rate of
interest made pursuant to an escalation clause must be the result of
an agreement between the parties. The minds of all the parties must
meet on the proposed modification as this modification affects an
important aspect of the agreement. Thus, any change must be
mutually agreed upon, otherwise, the change carries no binding
effect. For the Court to grant the PNBs deficiency claim would be to
award it for its delay and its undisputed disregard of PD 385.

iii) In case of sale of personal property on installment (Art.

1484)

Article 1484. In a contract of sale of personal property the price of which is

payable in installments, the vendor may exercise any of the following
remedies:
(1) Exact fulfillment of the obligation, should the vendee fail to
pay;
(2) Cancel the sale, should the vendee's failure to pay cover two or
more installments;
(3) Foreclose the chattel mortgage on the thing sold, if one has
been constituted, should the vendee's failure to pay cover two or more
installments. In this case, he shall have no further action against the purchaser
to recover any unpaid balance of the price. Any agreement to the contrary
shall be void. (1454-A-a)

B. Right of Redemption
There is no right of redemption.

Paray v. Rodriguez
Re: Right of Redemption
The right of redemption over mortgaged real property sold
extrajudicially is established by Act No. 3135, as amended. The said
law does not extend the same benefit to personal property. In fact,
there is no law in our statute books which vests the right of
redemption over personal property. Act No. 1508, or the Chattel
Mortgage Law, ostensibly could have served as the vehicle for any
legislative intent to bestow a right of redemption over personal
property, since that law governs the extrajudicial sale of mortgaged
personal property, but the statute is definitely silent on the point.
And Section 39 of the 1997 Rules of Civil Procedure, extensively
relied upon by the Court of Appeals, starkly utters that the right of
redemption applies to real properties, not personal properties, sold
on execution. Tellingly, this Court, as early as 1927, rejected the
proposition that personal property may be covered by the right of
redemption. In Sibal v. Valdez, the Court ruled that sugar cane crops
are personal property, and thus, not subject to the right of
redemption. No countervailing statute has been enacted since then
that would accord the right of redemption over personal property,
hence the Court can affirm this decades-old ruling as effective to
date.
As to Pledge Chattel Mortgage Real Mortgage Antichresis VIII.
Object On movables On movables On immovables On immovables Distinctio
ns
Possession By the creditor By the debtor By the debtor By the debtor
Perfection Real contract Formal contract Formal contract Formal contract
Form to bind Public instrument Recorded public Recorded public Recorded public instrument
containing description of instrument instrument
the thing pledged and the
date thereof

a. An oral mortgage (chattel or real) is invalid ab initio; an oral pledge is valid inter parte
b. Pledge is perfected by delivery (real contract); mortgage (chattel or real) is perfected by execution of the writing
 TITLE XIX-
CONCURRENCE AND PREFERENCE OF CREDITS
CHAPTER 1- GENERAL PROVISIONS
Chapter 1 General Provisions
Articles 2236 2240
I. Concept and General Theory
A. Concurrence
- Possession by two or more creditors of equal rights
or privileges over the same property or all of the
property of the debtor.
B. Preference
- Right held by a creditor to be preferred in the
payment of his claim above others out of the
debtors assets.
- The rules apply when two or more creditors have
separate and distinct claims against the same
debtor who has insufficient property.
Judge: So when we talk about concurrence and preference of
credit, were actually talking about a scenario where we have
an insolvent debtor. And who is an insolvent as described or
defined in the FRIA?
One who is generally unable to pay his liability as they fall due.
Now a person is unable to pay his liabilities as they fall due not
because he has insufficient assets but may because his assets
contains only fixed assets. So he is suffering only from liquidity
problems, but under FRIA hes considered insolvent already.
The other kind of insolvent is one whose liabilities are greater
than his assets. Now this is the kind of debtor that were
looking at when were talking about concurrence and
preference of credit because theres no point in discussing
about concurrence and preference of credit if the debtor has
enough assets to pay off his obligation.
Now what is concurrence of credits?
Possession by two or more creditors of equal rights or
privileges over the same property or all of the property of the
debtor
Now what is preference of credits?
Right held by a creditor to be preferred in the payment of his
claim above others out of the debtors assets.
So not all creditors are preferred creditors. In fact there are
four types of creditors, or four kinds of credits.
a. Absolutely preferred credit
b. Specially preferred credit
c. Ordinary preferred credit
d. Common creditor or the unsecured credits
Are absolutely preferred credit always paid first because they
are absolutely preferred? What are examples of absolutely
preferred credit? There are only three actually: claims payable
to the state on taxes and duties (Art. 2241), taxes on the
property (Art. 2242) and unpaid wages (Art. 2244). All these
three must be paid first, but not all the time, because under
Art 2241, the duties and taxes are absolutely preferred only
with respect to the specific movable property.
Art. 2241. With reference to specific movable property of the debtor,
the following claims or liens shall be preferred:
(1) Duties, taxes and fees due thereon to the State or any subdivision
thereof;
(2) Claims arising from misappropriation, breach of trust, or
malfeasance by public officials committed in the performance of their
duties, on the movables, money or securities obtained by them;
(3) Claims for the unpaid price of movables sold, on said movables, so
long as they are in the possession of the debtor, up to the value of
the same; and if the movable has been resold by the debtor and the
price is still unpaid, the lien may be enforced on the price; this right is
not lost by the immobilization of the thing by destination, provided it
has not lost its form, substance and identity; neither is the right lost
by the sale of the thing together with other property for a lump sum,
when the price thereof can be determined proportionally;
(4) Credits guaranteed with a pledge so long as the things pledged
are in the hands of the creditor, or those guaranteed by a chattel
mortgage, upon the things pledged or mortgaged, up to the value
thereof;
(5) Credits for the making, repair, safekeeping or preservation of
personal property, on the movable thus made, repaired, kept or
possessed;
(6) Claims for laborers' wages, on the goods manufactured or the
work done;
(7) For expenses of salvage, upon the goods salvaged;
(8) Credits between the landlord and the tenant, arising from the
contract of tenancy on shares, on the share of each in the fruits or
harvest;
(9) Credits for transportation, upon the goods carried, for the price of
the contract and incidental expenses, until their delivery and for
thirty days thereafter;
(10) Credits for lodging and supplies usually furnished to travellers by
hotel keepers, on the movables belonging to the guest as long as
such movables are in the hotel, but not for money loaned to the
guests;
(11) Credits for seeds and expenses for cultivation and harvest
advanced to the debtor, upon the fruits harvested;
(12) Credits for rent for one year, upon the personal property of the
lessee existing on the immovable leased and on the fruits of the
same, but not on money or instruments of credit;

(13) Claims in favor of the depositor if the depositary has wrongfully
sold the thing deposited, upon the price of the sale.
In the foregoing cases, if the movables to which the lien or
preference attaches have been wrongfully taken, the creditor may
demand them from any possessor, within thirty days from the
unlawful seizure. (1922a)
Art. 2242. With reference to specific immovable property and real
rights of the debtor, the following claims, mortgages and liens shall
be preferred, and shall constitute an encumbrance on the immovable
or real right:
(1) Taxes due upon the land or building;
(2) For the unpaid price of real property sold, upon the immovable
sold;
(3) Claims of laborers, masons, mechanics and other workmen, as
well as of architects, engineers and contractors, engaged in the
construction, reconstruction or repair of buildings, canals or other
works, upon said buildings, canals or other works;
(4) Claims of furnishers of materials used in the construction,
reconstruction, or repair of buildings, canals or other works, upon
said buildings, canals or other works;
(5) Mortgage credits recorded in the Registry of Property, upon the
real estate mortgaged;
(6) Expenses for the preservation or improvement of real property
when the law authorizes reimbursement, upon the immovable
preserved or improved;
(7) Credits annotated in the Registry of Property, in virtue of a judicial
order, by attachments or executions, upon the property affected, and
only as to later credits;
(8) Claims of co-heirs for warranty in the partition of an immovable
among them, upon the real property thus divided;
(9) Claims of donors or real property for pecuniary charges or other
conditions imposed upon the donee, upon the immovable donated;
(10) Credits of insurers, upon the property insured, for the insurance
premium for two years. (1923a)
Art. 2244. With reference to other property, real and personal, of the
debtor, the following claims or credits shall be preferred in the order
named:
(1) Proper funeral expenses for the debtor, or children under his or
her parental authority who have no property of their own, when
approved by the court;
(2) Credits for services rendered the insolvent by employees,
laborers, or household helpers for one year preceding the
commencement of the proceedings in insolvency;
(3) Expenses during the last illness of the debtor or of his or her
spouse and children under his or her parental authority, if they have
no property of their own;
(4) Compensation due the laborers or their dependents under laws
providing for indemnity for damages in cases of labor accident, or
illness resulting from the nature of the employment;
(5) Credits and advancements made to the debtor for support of
himself or herself, and family, during the last year preceding the
insolvency;
(6) Support during the insolvency proceedings, and for three months
thereafter;
(7) Fines and civil indemnification arising from a criminal offense;
(8) Legal expenses, and expenses incurred in the administration of
the insolvent's estate for the common interest of the creditors, when
properly authorized and approved by the court;
(9) Taxes and assessments due the national government, other than
those mentioned in Articles 2241, No. 1, and 2242, No. 1;
(10) Taxes and assessments due any province, other than those
referred to in Articles 2241, No. 1, and 2242, No. 1;
(11) Taxes and assessments due any city or municipality, other than
those indicated in Articles 2241, No. 1, and 2242, No. 1;
(12) Damages for death or personal injuries caused by a quasi-delict;
(13) Gifts due to public and private institutions of charity or
beneficence;
(14) Credits which, without special privilege, appear in (a) a public
instrument; or (b) in a final judgment, if they have been the subject
of litigation. These credits shall have preference among themselves in
the order of priority of the dates of the instruments and of the
judgments, respectively. (1924a)
EXAMPLE 1: Granting this is a movable and you own it. This is
a car, and you have an insolvent debtor here (A) who is placed
under liquidation, and he has a car imported which has unpaid
duties 100K, so the government has a claim has of unpaid
duties of As car.
A has not paid the purchase price. He still owes the seller
500K. He also secured an obligation thru a mortgage over his
car for 500K. This credits concur over this particular.
All credit here is preferred credits. But one is absolutely
preferred.
So this car is sold for 1M. is this distributed proportionately or
equally among the preferred credits? How will this be
distributed or disposed of?
How much is the balance 900?
How will the 900 be distributed.
Will the unpaid seller be paid first or the balance be paid to
the mortgagee? Or are they paid proportionately or equally?
If the car sold was sold for 3M, are all the preferred creditors
who have preferred credit over the car paid? YES.
Is there balance? Yes.
instances there is not enough left to satisfy all the common
creditors and the common credits are paid proportionately
because there is no order anymore to common creditors if we
talk about liquidation of an insolvent debtor, common
creditors are not paid in full.
Judge: Excess are used to pay the ordinary preference. And
the unpaid portion goes to the common credit.

EXAMPLE 2: You have an immovable, there are paid taxes-
realty taxes. And mortgage also. 2M. This is sold for 1M. Is 1M
paid proportionately to the government and the mortgagee?
So they are not proportionately. Tax will be paid first because
it enjoys absolute preference. How much is the balance for
1M? 950,000. 2M? Balance?
Article 2244 specifically stated that wages which are not
otherwise.
Note: If there is no insolvency, these articles under preference
of credits are irrelevant.

How will it be treated? -FIN-

The preference of the mortgagee is only with respsect to this God bless!
particular problem. So the unpaid portion here goes to
Exam: March 19, 2017, Sunday
common credit.

EXAMPLE 3: These are other claims by the government not

claims over specific property of the insolvent. This is number 9
actually, and in fact when you remember when we discussed
deposit, the uninsured portion of the bank deposits also is
considered ordinary preferred under number 9 together with
the claims by the (PDIC?) against the insolvent.

Do they concur? No. They DO NOT.

These Creditors concur (points to board). When you say

concurs credit. How would you describe the equal claims over
specific property. They do not have equal claims over this
(points to board) plus other assets if there are other assets of
the insolvent. The excess form the sale of the specific property
over this plus the other assets will be used to pay the ordinary
preferred credits. Again they do not concur they are paid in
the order that they listed in the article.

Except that, whats the exception in your labor?

But this unpaid pages must not be for work done here,
because if its work done here then its paid from this specific
property and the unpaid portion or the unpaid balance be
considered common credit not ordinary preferred credit.

So, the unpaid credits that concur here will be treated as

common credits. If not fully satisfied they do not go to the
ordinary preferred credit. So kung unpaid wages, wages paid,
funeral expenses, take note of number 9 etc. cause those are
claims by the national government these includes claims by
PDIC against the insolvent bank as well as claims by the
depositors for the uninsured portion of the deposit.

If theres a balance, then that common creditor are paid. If

theres no balance then they will not be paid and in most