August 05, 2020

The Registrar
Register of Deeds for
Quezon City

Re: Registration of Second Amendment to the Real Estate Mortgage of

Sps. Lilian B. and Filamer Amado P. Bulao
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Dear Sir,

This concerns an issue in our registration of the Second Amendment to the

Real Estate Mortgage (REM) Contract of Sps. Lilian B. and Filamer Amado P.
Bulao (Sps. Bulao) in favor of Land Bank of the Philippines (Land Bank).

As a background, Sps. Bulao are the registered owners of a parcel of land

covered by TCT Nos. 004-2010000982 and 004-2010000823. On 2 February
2012, Sps. Bulao executed a Deed of Joint Mortgage in favor of Land Bank and
Land Bank Provident Fund in order to secure the payment of a loan granted by
Land Bank in the aggregate amount of Php 5,562,400.00 which the document
was registered in both TCT Nos. 004-2010000982 and 004-2010000823.

Sps. Bulao then paid a portion of its loan thereby decreasing their outstanding
obligation to Php 3,100,000.00.

Thereafter, Blokie Builders and Trading Corporation (Blokie Builders) applied

for and was granted a loan by Land Bank in the amount of Php 5,000,000.00,
for which Sps. Bulao has agreed to secure by the same collaterals, i.e. TCT Nos.
004-2010000982 and 004-2010000823, mortgaged with Land Bank.

A First Amendment to the Real Estate Mortgage Contract was then executed
increasing the secured obligation from Php 3,100,000.00 to Php 8,100,000.00.
However, the Frist Amendment inadvertently states that the Php 5,000,000.00
increase in the secured obligation pertains to the loan of Sps. Bulao when the
said increase is, in fact, for and in consideration of the loan obtained by Blokie
Builders from Land Bank.

To correct the foregoing, a Second Amendment to the Real Estate Mortgage

Contract (Second Amendment) was executed whereby it states that the Php
5,000,000.00 increase in the secured obligation by virtue of the First
Amendment to the Real Estate Mortgage Contract is in consideration of, and is
intended to secure, the Short-Term Loan Line obtained by Blokie Builders.
However, upon registration of the Second Amendment with your office, the
examiner noted that Blokie Builders should also be made as co-mortgagor to
the Second Amendment. Hence this issue.

With due respect, the finding of the examiner is incorrect. We note that, it has
been consistently held by countless jurisprudence that only the registered
owner of the real estate property can validly constitute a real estate mortgage
contract. Under TCT Nos. 004-2010000982 and 004-2010000823, it is only
the Sps. Bulao who are the registered owners of the property and does not
include Blokie Builders as co-owner of the property.

It is also important to note that a corporation has a separate juridical

personality with its directors and shareholders. Therefore, although Sps. Bulao
are directors of Blokie Builders, this does not imply that Blokie Builders is also
the owner of the properties of Sps. Bulao.

We trust that the foregoing explanation will allow your office to the register the
Second Amendment without requiring Blokie Builders to sign as co-mortgagor
to the said agreement.

Thank you.

Very truly yours,

CESAR S. CABAÑES
Vice President
Banking Legal Services Department

cc: MBD 2