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The interest may be in the form of fruits of the mortgaged An obligation is not secured by a mortgage unless it comes fairly
property, without the contracts losing thereby its character of a within its terms. (Viola vs. Equitable PCI Bank, Inc., 572 SCRA 245 [2008].)
mortgage contract.
Kinds of mortgage.
In such case, the mortgagee shall be subject to the obligation of an A mortgage may be:
antichresis creditor.
(1) Voluntary.
But if it is expressly agreed that the creditor shall apply the fruits one which is agreed to between the parties or constituted by
of the property, to the payment of interest, if owing, and the will of the owner of the property on which it is created (Art. 138,
thereafter to the principal of his credit, the contract is a true Spanish Mortgage Law.); or
antichresis as defined in Art 2132.
Cause or consideration in mortgage. (2) Legal. one required by law to be executed in favor of certain
persons (see Art. 2125, par. 2; Arts. 2082, 2083.); or
As mortgage is an accessory contract,
- its consideration is the same as of the principal
contract from which it receives its life,
An equitable mortgage is not different from a real estate the purchase price;
mortgage, and the lien created thereby ought not to be defeated
by requiring compliance with the formalities necessary to the
validity of a voluntary real estate mortgage. (Rosales vs. Suba, 408 SCRA (5) When the vendor binds himself to pay the taxes
664 [2003].) on the thing sold;
MEMORIZE:
In any of the foregoing cases, any money, fruits, or other benefit
to be received by the vendee as rent or otherwise shall be
Art. 1602. The contract shall be presumed to be an equitable
considered as interest which shall be subject to the usury laws.
mortgage, in any of the following cases:
(3) When upon or after the expiration It has been held that an arrangement where the ownership of the
of the right to repurchase land is supposedly transferred to the buyer who provides for the
funds to redeem the property from the bank but nonetheless
another instrument extending allows the seller to later on buy back the property is in the nature
the period of redemption or granting a new period of an equitable mortgage governed by Arts 1602 and 1604.
(Bacugan vs. Court of Appeals, 574 SCRA 642 [2008].)
is executed;
(4) When the purchaser retains for himself a part of
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it shall order the mortgagor to pay the amount due upon either granting or withholding confirmation
the mortgage debt or obligation with interest and other charges as the rights and interests of the parties
and the ends of justice may require.
within a period of not less than 90 days nor more than 120 days
from the entry of judgment. (Sec. 2, Rule 68, Ibid.) From this standpoint, any order which neither sets aside nor
confirms the foreclosure is merely interlocutory in character. (Salazar
vs. De Torres, 108 Phil. 209 [1960].)
judgment in an action for foreclosure of real estate mortgage is Therefore, the mortgagor is liable for additional interests properly
not a petition for annulment of judgment but an appeal from the chargeable on the balance of the mortgage indebtedness during
judgment itself or from the order confirming the sale of the the period from the notice of sale to actual sale. This principle is
foreclosed real estate. After failing to avail of appeal without applicable to extrajudicial foreclosures. (Development Bank of the
sufficient justification, the mortgagor cannot conveniently resort Phils. vs. Zaragoza, 84 SCRA 668 [1978].)
to the action for annulment for otherwise he would benefit from A sheriffs report on the auction sale is clothed with the
his own inaction and negligence. (Agbada vs. Inter-Urban Developers, Inc., 389 presumption of regularity especially where no objection has been
SCRA 430 [2002].) raised against it. (Sayson vs. Luna, 433 SCRA 502 [2004].)
(6) Application of proceeds of sale. The proceeds of the sale shall
be applied to the payment of the:
(a) costs of the sale;
(b) the amount due the mortgagee;
(c) claims of junior encumbrancers or persons holding subsequent
mortgages in the order of their priority; and
(d) the balance if any, shall be paid to the mortgagor or his duly
authorized agent, or to the person entitled to it. (Sec. 4, Rule 68,
Rules of Court.)
If the mortgagee is retaining more of the proceeds of the sale than
he is entitled to, this fact alone will not affect the validity of the
foreclosure sale but simply gives the mortgagor a cause of action
to recover such surplus. The mortgagee who has been ordered by
the court to return the surplus, but fails to do so, may be cited for
contempt. (Sulit vs. Court of Appeals, 268 SCRA 441 [1997].)