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Questions and Answers
What is a mortgage under the Civil Code of the Philippines?
A contract where the debtor guarantees the fulfillment of an obligation with real or personal property, without delivering the property to the creditor.
Which articles of the Civil Code provide key provisions on mortgage?
The mortgagor is required to deliver the property to the mortgagee when a mortgage is created.
False
What is the mortgagor's right to redemption?
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What is one obligation of the mortgagor?
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Pactum commissorium is an agreement permitted under the Civil Code.
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What does the mortgagee have the right to do if the mortgagor fails to pay the debt?
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What must the mortgagee do once the debt is paid in full?
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What may the mortgagee obtain if the proceeds from the foreclosure sale do not cover the total debt?
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The mortgagor has the right to __________ and enjoy the property as long as mortgage terms are met.
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Study Notes
Mortgage in the Philippines
- A mortgage is a contract where the debtor (mortgagor) guarantees the fulfillment of an obligation with real or personal property, without delivering the property to the creditor (mortgagee).
- The mortgage creates a lien or encumbrance on the property, securing the debt.
- Key provisions on mortgage are found in Articles 2085 to 2123 of the Civil Code of the Philippines.
Rights of the Mortgagor
- Right to Possession and Enjoyment: The mortgagor maintains possession and can enjoy the property, provided they adhere to the mortgage terms. The property is encumbered but not transferred.
- Right of Redemption: If the mortgage is extrajudicial, the mortgagor has the right to redeem the property within a defined period, after a foreclosure sale, by paying the outstanding debt and related costs.
Obligations of the Mortgagor
- Pay the Debt: The mortgagor’s primary responsibility is to fulfill the debt or obligation secured by the mortgage.
- Not to Impair the Property: The mortgagor must refrain from actions that diminish the property's value. Failure to do so may lead to the mortgagee demanding immediate payment.
Rights of the Mortgagee
- Right to Foreclosure: If the mortgagor fails to pay the debt, the mortgagee can foreclose on the property. This can be judicial or extrajudicial, depending on the agreement.
- Right to Apply for Judicial Possession: If foreclosure is judicial, the mortgagee can possess the property after the sale if no redemption occurs.
Obligations of the Mortgagee
- Release the Property upon Debt Payment: Upon full payment of the debt, the mortgagee must return the documents evidencing the mortgage, and the encumbrance on the property is removed.
- Account for Foreclosure Proceeds: The mortgagee must account for foreclosure proceeds and apply them to the outstanding debt. Any surplus must be returned to the mortgagor, and any deficit remains the mortgagor's responsibility.
Other Important Provisions
- Pactum Commissorium: The Civil Code prohibits this agreement which would automatically transfer ownership of the mortgaged property to the mortgagee if the mortgagor fails to pay, as it is considered oppressive to the debtor.
- Deficiency Judgment: If foreclosure sale proceeds do not cover the total debt, the mortgagee can obtain a deficiency judgment for the remaining balance.
Conclusion
- The Civil Code provisions on mortgage aim to balance the creditor's right to recover the loan while protecting the debtor's right to redeem and retain the property by settling the debt.
- Both parties must act in good faith and fulfill their obligations to prevent legal disputes.
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Description
Explore the essentials of mortgage contracts in the Philippines, including the rights and obligations of the mortgagor as outlined in the Civil Code. This quiz covers Articles 2085 to 2123, focusing on possession rights and redemption options. Test your knowledge on this important legal topic!
