Reviewer Sales Pledge Mortgage PDF

Under the Civil Code of 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). It creates a lien or encumbrance on the property, securing the debt....

Under the Civil Code of 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). It creates a lien or encumbrance on the property, securing the debt. The key provisions on mortgage are found in Articles 2085 to 2123 of the Civil Code. Rights and Obligations of the Mortgagor: 1. Right to Possession and Enjoyment of the Property (Art. 2097) The mortgagor retains possession and can enjoy the property, as long as the terms of the mortgage are not breached. The property is merely encumbered, not transferred. 2. Right of Redemption (Art. 2118) If the mortgage is extrajudicial, the mortgagor has the right to redeem the property within a specified period after the foreclosure sale by paying the outstanding debt and any applicable costs. 3. Obligation to Pay the Debt The mortgagor's primary obligation is to fulfill the debt or obligation secured by the mortgage. Failure to do so allows the mortgagee to foreclose on the property. 4. Obligation Not to Impair the Property (Art. 2086) The mortgagor must not perform any act that would diminish the value of the property. If the property is impaired, the mortgagee can demand immediate payment of the obligation. Rights and Obligations of the Mortgagee: 1. Right to Foreclose (Art. 2087) If the mortgagor fails to pay the debt, the mortgagee has the right to foreclose on the property. Foreclosure may be judicial or extrajudicial, depending on the agreement. The sale proceeds from the foreclosure go toward satisfying the debt. 2. Right to Apply for Judicial Possession (Art. 2121) If the mortgage is judicially foreclosed, the mortgagee has the right to possess the property after the sale if no redemption is made.  3. Obligation to Release the Property Once the Debt is Paid (Art. 2105) Upon full payment of the debt, the mortgagee is obligated to return the title or document evidencing the mortgage, and the encumbrance on the property is lifted. 4. Obligation to Account for Foreclosure Proceeds The mortgagee must account for the 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 (Art. 2088) The Civil Code prohibits pactum commissorium, an agreement that would automatically transfer ownership of the mortgaged property to the mortgagee if the mortgagor fails to pay. Such agreements are void, as they are considered oppressive to the debtor.  Deficiency Judgment (Art. 2116) If the proceeds from the foreclosure sale do not cover the total debt, the mortgagee may obtain a deficiency judgment for the remaining balance. In conclusion, the Civil Code provisions on mortgage balance the rights of the creditor to recover the loan while protecting the debtor's rights to redeem and retain the property, provided the debt is settled. Both the mortgagor and mortgagee must act in good faith and fulfill their respective obligations to prevent legal disputes.