Mortgages and Leases

Section 60.  Mortgage or lease of registered land.  Mortgage and leases shall be registered in
the manner provided in Section 54 of this Decree. The owner of registered land may mortgage
or lease it by executing the deed in a form sufficient in law. Such deed of mortgage or lease and
all instruments which assign, extend, discharge or otherwise deal with the mortgage or lease
shall be registered, and shall take effect upon the title only from time of registration.

No mortgagee’s or lessee’s duplicate certificate of title shall hereafter be issued by the Registers
of Deeds, and those issued prior to the effectivity of this Decree are hereby deemed canceled
and the holders thereof shall immediately surrender the same to the Register of Deeds
concerned.

Section 54. Dealings less than ownership, how registered. No new certificate shall be entered or issued pursuant to
any instrument which does not divest the ownership or title from the owner or from the transferee of the registered
owners. All interests in registered land less than ownership shall be registered by filing with the Register of Deeds the
instrument which creates or transfers or claims such interests and by a brief memorandum thereof made by the
Register of Deeds upon the certificate of title, and signed by him. A similar memorandum shall also be made on the
owner’s duplicate. The cancellation or extinguishment of such interests shall be registered in the same manner.

Section 61.  Registration.  Upon presentation for registration of the deed of mortgage or lease
together with the owner’s duplicate, the Register of Deeds shall enter upon the original of the
certificate of title and also upon the owner’s duplicate certificate a memorandum thereof, the
date and time of filing and the file number assigned to the deed, and shall sign the said
memorandum. He shall also note on the deed the date and time of filing and a reference to the
volume and page of the registration book in which it is registered.

Section 62.  Discharge or cancellation.  A mortgage or lease on registered land may be

discharge or canceled by means of an instrument executed by the mortgage or lessee in a form
sufficient in law, which shall be filed with the Register of Deeds who shall make the appropriate
memorandum upon the certificate of title.

Section 63.  Foreclosure of Mortgage.  (a) If the mortgage was foreclosed judicially, a certified
copy of the final order of the court confirming the sale shall be registered with the Register of
Deeds. If no right of redemption exists, the certificate of title of the mortgagor shall be canceled,
and a new certificate issued in the name of the purchaser.

Where the right of redemption exists, the certificate of title of the mortgagor shall not be
canceled, but the certificate of sale and the order confirming the sale shall be registered by a
brief memorandum thereof made by the Register of Deeds upon the certificate of title. In the
event the property is redeemed, the certificate or deed of redemption shall be filed with the
Register of Deeds, and a brief memorandum thereof shall be made by the Register of Deeds on
the certificate of title of the mortgagor.

If the property is not redeemed, the final deed of sale executed by the sheriff in favor of the
purchaser at a foreclosure sale shall be registered with the Register of Deeds; whereupon the
title of the mortgagor shall be canceled, and a new certificate issued in the name of the
purchaser.
(b) If the mortgage was foreclosed extrajudicially, a certificate of sale executed by the officer
who conducted the sale shall be filed with the Register of Deeds who shall make a brief
memorandum thereof on the certificate of title.

In the event of redemption by the mortgagor, the same rule provided for in the second
paragraph of this section shall apply.

In case of non-redemption, the purchaser at foreclosure sale shall file with the Register of
Deeds, either a final deed of sale executed by the person authorized by virtue of the power of
attorney embodied in the deed of mortgage, or his sworn statement attesting to the fact of non-
redemption; whereupon, the Register of Deeds shall issue a new certificate in favor of the
purchaser after the owner’s duplicate of the certificate has been previously delivered and
canceled.

Article 2085. The following requisites are essential to the contracts of pledge and mortgage:

(1) That they be constituted to secure the fulfilment of a principal obligation;

(2) That the pledgor or mortgagor be the absolute owner of the thing pledged or mortgaged;

(3) That the persons constituting the pledge or mortgage have the free disposal of their property,
and in the absence thereof, that they be legally authorized for the purpose.

Third persons who are not parties to the principal obligation may secure the latter by pledging or
mortgaging their own property. (1857)

Article 2086. The provisions of article 2052 are applicable to a pledge or mortgage. (n)

Article 2052. A guaranty cannot exist without a valid obligation.

Nevertheless, a guaranty may be constituted to guarantee the performance of a voidable or an unenforceable
contract. It may also guarantee a natural obligation. (1824a)

Article 2087. It is also of the essence of these contracts that when the principal obligation
becomes due, the things in which the pledge or mortgage consists may be alienated for the
payment to the creditor. (1858)

Article 2088. The creditor cannot appropriate the things given by way of pledge or mortgage, or
dispose of them. Any stipulation to the contrary is null and void. (1859a)

Article 2089. A pledge or mortgage is indivisible, even though the debt may be divided among
the successors in interest of the debtor or of the creditor.

Therefore, the debtor's heir who has paid a part of the debt cannot ask for the proportionate
extinguishment of the pledge or mortgage as long as the debt is not completely satisfied.

Neither can the creditor's heir who received his share of the debt return the pledge or cancel the
mortgage, to the prejudice of the other heirs who have not been paid.

From these provisions is excepted the case in which, there being several things given in
mortgage or pledge, each one of them guarantees only a determinate portion of the credit.
The debtor, in this case, shall have a right to the extinguishment of the pledge or mortgage as
the portion of the debt for which each thing is specially answerable is satisfied. (1860)

Article 2090. The indivisibility of a pledge or mortgage is not affected by the fact that the
debtors are not solidarily liable. (n)

Article 2091. The contract of pledge or mortgage may secure all kinds of obligations, be they
pure or subject to a suspensive or resolutory condition. (1861)

Article 2092. A promise to constitute a pledge or mortgage gives rise only to a personal action
between the contracting parties, without prejudice to the criminal responsibility incurred by him
who defrauds another, by offering in pledge or mortgage as unencumbered, things which he
knew were subject to some burden, or by misrepresenting himself to be the owner of the same.
(1862)

Article 2124. Only the following property may be the object of a contract of mortgage:
(1) Immovables;
(2) Alienable real rights in accordance with the laws, imposed upon immovables.

Nevertheless, movables may be the object of a chattel mortgage. (1874a)

Article 2125. In addition to the requisites stated in article 2085, it is indispensable, in order that
a mortgage may be validly constituted, that the document in which it appears be recorded in the
Registry of Property. If the instrument is not recorded, the mortgage is nevertheless binding
between the parties.

The persons in whose favor the law establishes a mortgage have no other right than to demand
the execution and the recording of the document in which the mortgage is formalized. (1875a)

Article 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. (1876)

Article 2127. The mortgage extends to the natural accessions, to the improvements,
growing fruits, and the rents or income not yet received when the obligation becomes
due, and to the amount of the indemnity granted or owing to the proprietor from the
insurers of the property mortgaged, or in virtue of expropriation for public use, with the
declarations, amplifications and limitations established by law, whether the estate
remains in the possession of the mortgagor, or it passes into the hands of a third person.
(1877)

Article 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)

Article 2129. The creditor may claim from a third person in possession of the mortgaged
property, the payment of the part of the credit secured by the property which said third
person possesses, in the terms and with the formalities which the law establishes. (1879)

Article 2130. A stipulation forbidding the owner from alienating the immovable mortgaged
shall be void. (n)

Article 2131. The form, extent and consequences of a mortgage, both as to its constitution,
modification and extinguishment, and as to other matters not included in this Chapter, shall be
governed by the provisions of the Mortgage Law and of the Land Registration Law. (1880a)