FORECLOSURE SUPERIOR LIEN IN FAVOR OF GOVERNMENT COMPLEMENTARY TO THE

Process by which a mortgagee acquires an absolute title to the, property of which DISTRAINT OF PERSONAL PROPERTY AND INTEREST AND RIGHTS
he had previously been the conditional owner, or upon which he had previously a THEREIN AND JUDICIAL ACTION
mere lien or encumbrance.

ENCUMBERANCES

Burden upon land, depreciative of its value, such as lien, easement, or We will have problems in action re-conveyance and quieting of the title (No
servitude, which though adverse to the interest of the landowner, doesn't recording) ? Its in the book.
conflict with his conveyance of the land in fee
CONVEYANCES AND TRANSFERS
LIEN Section 57. Procedure in registration of conveyances. An
owner
Charge on the property Qualified right or a proprietary interest which may be desiring to convey his registered land in fee simple shall
exercised over the property of another execute
and register a deed of conveyance in a form sufficient in
law. The
MEMORANDUM OF ENCUMBERANCES Register of Deeds shall thereafter make out in the
Dorsal side of the certificate of title registration book
All interests in the registered land less than ownership which shall serve as a new certificate of title to the grantee and shall prepare
a notice to third persons of the instrument affecting the property A similar and
entry shall be made on the owners duplicate certificate of title. deliver to him an owner's duplicate certificate. The Register
of
Deeds shall note upon the original and duplicate certificate
PRIMARY ENTRY BOOK OR DAY BOOK the date
The primary entry book or day book is a record of all instruments, including copies of transfer, the volume and page of the registration book in
of writs and processes, affecting registered lands, which are entered by the RD in which
the order of their filing, upon payment of the proper fees, The recording is a the new certificate is registered and a reference by number
preliminary process in registration and shall, note the date, hour, and minute of to the
receipt of said instruments, An instrument shall be regarded as registered only last preceding certificate. The original and the owner's
from the time, it is noted, Every deed of instrument shall be numbered and duplicate of
endorsed by the, RD with proper reference to the certificate of title, All records the grantor's certificate shall be stamped "canceled". The
and papers relative to registered land shall be open for examination by the public, deed of
subject to such reasonable regulations as the RD may prescribe All deeds and conveyance shall be filled and indorsed with the number
voluntary instruments and copies thereof shall be and the
place of registration of the certificate of title of the land
conveyed.

REMEMBER THE GENERAL RULE THAT THE PURCHASER NEED NOT GO PROCEDURE IN REGISTERING A DEED OF CONVEYANCE
BEYOND THE REGISTRY TO DETERMINE CONDITIONS OF PROPERTY An owner who desires to convey the land covered by his title to another shall
execute the proper deed of conveyance, in proper form, and present the same,
together with the owners duplicate certificate to the RD from entry and
registration The RD shall enter in the registration book the fact of conveyance and mortgagor. If the property is not redeemed, the final
prepare a new certificate of title in the name of the grantee, the owners duplicate deed of sale executed by the sheriff in favor of the
of which shall be delivered to him The RD shall note the date of conveyance, purchaser at a foreclosure sale shall be registered with
volume and page of the registration book in which the certificate is registered, and the Register of Deeds; whereupon the title of the
a reference by number to the last preceding certificates mortgagor shall be canceled, and a new certificate issued
in the name of the purchaser.
PROCEDURE WHERE ONLY PORTIONS OF LAND ARE CONVEYED (b) If the mortgage was foreclosed extrajudicially, a
The RD shall not issue any TCT to the grantee until a plan of such land showing certificate of sale executed by the officer who conducted
the portion or portions into which it has been subdivided and the corresponding the sale shall be filed with the Register of Deeds who
technical descriptions shall have been verified and approved The deed of shall make a brief memorandum thereof on the certificate
conveyance may in the meanwhile be annotated by way of memorandum on the of title.
grantors certificate of title, which shall serve as notice to third persons on the fact
of conveyance to show and recognize the grantees title to the portion thus
conveyed pending actual issuance to him of the corresponding transfer certificate In the event of redemption by the mortgagor, the same
of title rule provided for in the second paragraph of this section
Upon approval of the plan and technical descriptions of the specific portions into shall apply. In case of non-redemption, the purchaser at
which the land has been subdivided, the same shall be filed with the office of foreclosure sale shall
the RD for annotation on the corresponding certificate of title The RD shall file with the Register of Deeds, either a final deed of sale
issue a new TCT to the grantee for the portion conveyed to him upon cancellation executed by the person authorized
of the grantors certificate as to said portion But if the grantor so desires, his by virtue embodied in the deed of mortgage, attesting
certificate of title may be totally cancelled and a new one issued to him for the to the fact of non-redemption; whereupon, the Register
remaining portion of the land Pending approval of the plan, no further registration of Deeds shall issue a new certificate in favor of the
or any annotation of any deed or voluntary instrument affecting the purchaser after
unsegregated portion shall be made by the RD except where such portion was the owner's duplicate of the certificate has been
purchased from the government or any of its instrumentalities. previously delivered and canceled.

Section 63.
Foreclosure of Mortgage. (a) If the The lecture in the registration is the operative act? In relation to primary
mortgage was foreclosed judicially, a certified copy of the entry and annotation and recording the MOE of the title.
final order of the court If no right of redemption exists, OCT 21, 2017
the certificate of title of the mortgagor shall be canceled, So this afternoon we take up an important subject matter in land titles, take note
and a new certificate issued in the name of the of this. The basic principle in land registration is Registration is the operative act
purchaser. Where the right of redemption exists, the . We will explain the meaning of the phrase , you know under the torrens system,
certificate of title of the mortgagor shall not be canceled, you already know that priority in rights over registered land is the registration of
but the certificate of sale and the the title, or transactions pertaining in the hands of the registry of deeds. For
order confirming the sale shall be registered by a example there is an owner of the land a titled property he sold his land twice or
brief memorandum thereof made by the Register of even thrice and the buyers are not so knowledgeable, he then executed 3 deeds of
Deeds upon the certificate of title. In the event the absolute sale in favor of 3 buyers not on the same dates, different dates not on
property is redeemed, the certificate or deed of the same time, that could happened and there are a lot of cases like that, the
redemption shall be filed with the Register of Deeds, and owners duplicate title was not delivered to the 1 st buyer and 2nd buyer it was
a brief memorandum thereof shall be made by the delivered to the 3rd buyer, assuming that the 1st buyer in the absolute sale brought
Register of Deeds on the certificate of title of the the land on Jan 2017 . on February same year 2017 the seller sold it to the 2 nd
buyer and executed another deed of sale same land the owners duplicate copy was buyer of the fact that the 1st buyer had already brought it. Theoretically under the
not delivered, on the 3rd march 2017 he executed another deed of absolute sale law the act is tantamount to registration of title the 1st buyer. The effect would be
this time he delivered the owners duplicate copy to the third buyer. The 2nd buyer like the 1st buyer had already registered it, when the 3rd buyer already register it
as well as the 3rd buyer was not aware that there was a previous deed of sale to a under his name. The law considers that the knowledge of the third buyer and
first buyer so the third buyer kasi nasa kanya ang owners duplicate copy, this upon his registration is considered registration on the part of the 1st buyer.
requires payment of taxes he registered it to the registry of deeds the deed of Constructive knowledge of the Flaw is tantamount to registration of the title of the
absolute sale and everything there. Title was issued to him. buyer who brought it in good faith, pero If his knowledge is after the registration
he is consider in good faith because he registered it in good faith before he
Now question did the third buyer validly acquire a title over the land ? acquired the knowledge of ithe flaw.
YES! Because of the Doctrine of Registration is the Operative Act. The 1 st and 2nd There is such thing as constructive registration.
buyer brought the property however they failed to register it. So the first to The other kind of knowledge is the actual knowledge of the records of the registry
register has the valid title. of deeds. Once it recorded to the RD that serves as a notice to the whole world, so
when you know it or not that is consider binding upon you.
What then is the recourse of the 1st and 2nd buyer? Q from the class: What if the buyer know of the flaw he already paid everything
when he went to the RD he acquired the of the knowledge of the Flaw.
Now because the 3rd buyer has a valid title, the 1st and 2nd buyer not pray for
annulment of the sale the course of action is they will go against the owner of the Answer: if he can prove that he can acquired knowledge after he brought the
land for reimbursement and damages. Although they were the 1 st to acquire the land, because the torrens system will operate on the 1st buyer. Registration is the
land they did not register it they cannot register it they could not recover it. operative act because, because the law in torrens system is base on public policy.
There are may cases like that but its hard to prove such thing.
Why? The 3rd he did not know that it was sold to several persons prior to him, his
a buyer in good faith he did not know about the Flaw and he acquire it for a fair So you know already the principle that the torrens system cannot be used a shield
value (Buyer in good faith and for fair value) to cover a fraud.
There is a cases the laureta Case.
now what if the 3rd is the buyer is a buyer in Bad faith, for example he was aware
that it was sold to other before him? Yet he pursue buying it. Tho he paid it for a This is a case of Coronel Laureta vs Erwin Caram , Caram a very prominent
value still he is consider a buyer in bad faith. So what is the effect? person. After the war he brought property here in Tagum that land in Gaisano is
He has a a bad title did not confer any right over the property. Since the title one. Laureta brought it from a native he did not register it but he was in
did not confer any right to him what is the effect? Although the land is already possession of the land already. Caram was already aware that the properties were
register in his name what is the effect? If the 1 st buyer will file a case against him already brought by Laureta this is according to the facts by the SC. He brought the
for recovery of the property on the ground that he is a buyer in bad faith the case land to the same buyer despite the fact. When laureta brought it he did not
will prosper the property can be recover. Because of knowledge about the flaws of acquire the title because it was still a homestead meaning hindi pa naka abot sa
the sale when you brought the property it cannot be cured by registering the title, DENR. When the title came the name of the native seller was in the title, he sold it
it can be recover from you by the real owner which is the 1st buyer. What is the to Caram. Caram registered the title to the RD, when Laureta Brought the land it
reason? The reason which is the wording of the SC Registration cannot be was still unregistered. So Laureta filed an action to court to annul and cancel the
used as a shield to cover fraudulent acts you cannot use the torrens system title of Caram. That is the leading case on the principle of constructive knowledge,
from concealing your fraudulent act. Contructive knowledge on the part of Caram theortically the knowledge of Caram
Another, when you are consider in bad faith because of your actual knowledge of about the Fact of the sale of land amount s of the registration as if it was already
the flaw, another principle will apply. another principle that is involve there is the in the name of Laureta. Laureta Won.
effect of that. TAKE NOTE OF THIS. From the time the third buyer learned of the
fact that the lot he brought was already brought by the 1st buyer although the 1st READ: LAURETA VS CARAM (Constructive Registration) by fiction law there was
buyer did not register his title with the RD the knowledge or acquisition of the 3 rd already registration of the 1st buyer then the 2nd buyer registered the land.
 The act of registration shall be the operative act to convey or affect the land
Now you have time visit the RD they have this library where the government copy insofar as third persons are concerned It is the act of registration which creates a
of the title, deed of sale extrajudicial sale or etc. constructive notice to the whole world and binds third persons Absent such
The first one who wrote in the primary entry book of the RD will be assume to be registration, a conveyance doesnt affect or bind the land the purchaser has
the 1st to register. Assuming everybody is in good faith. So know the 1 st buyer examined every instrument of record affecting the title He is charged with notice
registered it, the rule is there is a priory right that is the function of the primary of every fact shown by the record and is presumed to know every fact shown
entry book (PEB), the entry in the primary entry book will determine who has the by the record and is presumed to know every fact which an examination of the
1st in right, from the PEB it will be examine by the examiner then if ok will be record would have disclosed Since it is the act of registration which transfers
annotated in the Memorandum of encumbrance af the government copy that is the ownership of the land sold, it has been held that a subsequent claimant cannot
back of the title with date. So 2 primary entry book MOE, it is a need that it wount claim a better right over the land which had been previously registered in the
stop in PEB it should be sangko in the MOE, if ever there is error na una sa PEB name of another. A notice of lis pendens serves as a warniong to a prospective
pero nag sangol-sangol ang papers then naulahi sa sa annotation ng tatak. How purchaser or encumbrancer that the particular property is in litigation and that he
will the the transaction be? What will would prevail the annotation in the MOE or should keep his hands off the same, unless he intends to gamble on the results of
the PEB? the litigation
The rule is basta mu abot sya sa MOE it is deemed registered or complete. Basta
hindi sya mag SANKO it is not register. PURCHASER IS NOT REQUIRED TO EXPLORE FURTHER THAN WHAT TITLE
The one who went to the MOE is registered. What if nahuli sa MOE but na una sa INDICATES FOR HIDDEN DEFECTS
PEB. The ruling of the court is basta mag abot lang sya MOE likod sa titulo basta
na una sya sa PEB. It retroacts back to the primary entry. As long as the When there is nothing in the certificate of title to indicate any cloud or vice
transaction reach the memorandum of encumbrance at the back of the in the ownership of the property, or any encumbrance thereon, the
government copy the date of registration so far as the law is concern dates back purchaser is not required to explore farther than what the Torrens title
from the date of PEB. Later on it has to be annotated in MOE, because the one upon its face indicates in quest for any hidden defect or inchoate right that
who 1st annotated the MOE is the one who is deemed registered. (IMPORTANT) may subsequently defeat his right thereto
There are so many cases on that and that is the doctrine.
IN Cunslta Remember though that a Torrens title doesnt create or vest title. It only
confirms and records title already existing and vested
(assurance Fund)
There are instances where errors are committed by the RD and the error resulted BUT A PURCHASER WHO HAS KNOWLEDGE OF DEFECT OF HIS VENDORS TITLE
from damage from the registered owner, RD Represent the government. Example CANNOT CLAIM GOOD FAITH.
There is a land owner who suffered damages from the negligence of the RD can he
be paid damages? Remember that the employees of national government, the A purchaser cannot close his eyes to facts which should put a reasonable
owner can file an action that he will be paid he can file a claim on the assurance man upon his guard, and then claim that he acted in good faith under the
fund. The fund is intended to answer for damages that owners of property has belief that there was no defect in the title of the vendor
suffered by reason of operation of Torrens system, mostly the cases are
negligence or fault of government functionality, he will file a claim on the His mere refusal to believe that such defect exists or his willful closing of
assurance fund. But mind you in reality,, there is no records of the assurance his eyes to the possibility of the existence of a defect in the vendors title,
fund. But in the law there is , you 1st have to file your Claim SG that will determine will not make him an innocent purchaser for value, if it afterwards
if your claim is valid or not , assuming that you succeeded you file your Claim AF develops that the title was in fact defective, and it appears that he had no
in court with the consent of SG because it is tantamount to a suit against the such notice of the defect as would have led to its discovery had he acted
government that is why consent is need. It is the SG that will give the consent. with that measure of precaution which may reasonably be required of a
prudent man in a like situation
 he will submit a title that he mortgage it, with a value of say 2billions then kukuha
Then judicial and extrajudicial foreclosure of mortgage. sya from that mortgage an amount 10 million on staggered basis or whenever he
wants, it would just be noted or listed. Now the Real estate mortgage it is not
Extrajudicial and judicial foreclosure registered, although he has a contract that has open application of such. It is not
registered because it will be expensive, 2 nd to avoid inconvenience, because of the
Extra- judicial- no case file, registers the real estate mortgage to the RD, when the long process of engaging to mortgage, the effect of this clause is if hindi na maka
obligation is already due and demandable and the mortgagor has not paid the bayad dun na sya e foreclose or register. Pero he already sign an internal
obligation there is a letter of demand and the loan obligation has matured agreement.
pursuant to the provision of the real estate mortgage there is a special power of
Attorney where in the owner of the land the mortgagor appoint the mortgagee to DRAG NET CLAUSE- it is a business practice, usually between banks and their
cause the extrajudicial foreclosure of the mortgage. Assuming that the bank is the borrowers, where in the borrower signs in blank a real estate mortgage contract of
where you mortgage your property, So the bank has the choice to avail the his properties as collateral as security for loans which are not totally withdrawn
remedy of Extra-Judicial Foreclosure, they just have to go to court and file a for upon signing on staggered basis and the real estate mortgage is not registered in
extrajudicial foreclosure, it will apply, it is just a mere letter in the RTC clerk of the RD meantime to avoid payment of registration fees and the inconvenience of
court, the cleark f court is automatically the sheriff, they are lawyers. Try to visit preparing so many mortgage contract.
the RTC you will see offices labeled: office of the Clerk of court. That is where you
file extrajudicial foreclosure. You have to register it to the RD to foreclose it. Under Will continue on extrajudicial foreclosure; remember that you cannot foreclose the
the to Torrens system. It has to be annotated in the MOE. mortgage if it is not register in the registry of deeds. So it will be annotated in the
There is such thing as 1st mortgage and 2nd mortgage although seldom lang government copy as well as you ODC memorandum of encumbrance, you pay
nangyayari yan, let say the property is a commercial lot with 1000 sq with 10 there then , the sheriff will schedule a public sale it will be sold in a public auction,
stories building located at Davao City dyan sa downtown and it is valuated 500 there are procedure that strictly needs to be followed pero there must be notice by
million assuming kung ang loan nya is 20 million tapos e mortgage sya the publication in Newspaper of general circulation in the province or city where the
encumbrance is worth 20 million then a year later the owner mortgage the same property is located not only that the sheriff if required to post a notice in the
property to another say PNB it depends on the discretion of the bank whether the courts building or bulletin board of the court and the bulletin board of RD and
bank want to accept the mortgage. So the 1st mortgage will reflect the MOE so as Municipal building if this requirement is not followed any aggrieved party can file a
2nd mortgage all the mortgage will reflect the MOE . input na natin to petition in court to declared the foreclosure land null, because this part of due
This came out twice already in the Bar Exam. process, many petitions in court was annulled because of lack of publication. What
We have this thing called DRAG NET CLAUSE In the contract of mortgage, in is the purpose there, the general public should be notified that this property
the previous bar exam this may come out in civil law, commercial law or land title should be sold. to the highest bidder. What is the purpose of the law why it should
and deeds. So take note of this, open your minds to this you will take this up when be sold to the highest bidder and not the lowest bidder? Why? To protect the
you reach mercantile law or special contract. debtor that his property will be able to satisfy this obligation aron ma deduct iyang
What is the nature of this drag net clause? This is of American origin. What is the utang naa pay mabalik sa iya sobra. Because kung lowest lay luoy the creditor will
picture of this? I am a good client of a bank, the bank they have this employees always be in bad terms you know the law is fair, humane and just it protects the
that canvass depositor, actually the essence of banking they collect money from debtor that he will not be taken advantage by the creditor this is the humane side
depositor and which they gave out as loan to the public. of the law that is why there is anti-usury law, to protect because if there is a need
EXAMPLE: to protect this people it must be it the debtor because he will be the one who will
MR. Robinos LYR, he has many property of course it will be known to the bank he cost the property, that is why there is this schedule the sale is important so the
is a depositor, and then he creates a credit line like to the bank. He then say whole world will be notified to acquire the property then pataasan ng bid, that is
pautangin mo ako mo ako ng 1b my property is 2b , kasi ipapautang nya din pero where due process is required through notice. There is now an action sale
yung 1b hindi nya yan kukunin lahat siguro every month he withdraw around 50 assuming maraming nag bid the highest bidder will win, the sheriff will declared
million from the 1 b he intends to borrow. this is where the drag net clause will the highest bidder, what will the sheriff do they will prepared the certificate of
apply, they will make a contract with a bank that consist of a drag net clause, then sale. This time the sheriff will be the one to sign the certificate of sale in favor of
the highest bidder. In real estate mortgage there is this attached a special power Halimbawa na sold ang property it was sold in PA and the price is comparatively
of attorney authorizing the mortgagee to cost the foreclosure, there is now a low, lets say the obligation is 1m but the property is sold 500,000 so lugi ang
certificate of sale in favor of the highest bidder with the registry of deed and shall bangko. This was foreclose extra-judicially, under the law the bank can file an
be annotate in the MOE in the governments copy and ODC sold na sya, but then action for deficiency judgment.
under the mortgage law one yr from the registration it is a mandatory in favor of Action for deficiency judgment is the case where the mortgagee files against the
the mortgagor that the latter will have the right of redemption within one yr form mortgagor when there is a deficiency in the price of the land in the auction sale
registration of the highest bidder . That is the right of redemption, which is a right and the obligation of the borrower has not been satisfied.
under the law. So if youre an owner of a property by means of public auction, you Judicial
are not yet an owner in fee simple title. Your ownership is inchoate because the Judicial through the court, the bank has a choice whether it avails judicial or
original owner has the right to exercise this Redemption, this being a right the extrajudicial. Ang judiciacial naman may arise from bridge from loan agreement or
owner may transfer it to any person for consideration. you fail to pay the obligation. The creditor can go to court to collect since there is
Q: after 1 yr na expire na sya? a mortgage . for example the loan collateral is a rice field may dryer may makina
A: pag nag expire na sya wala na talaga. now the borrower as if there is fraud so say there is a breach of contract even if
When the one year period has expired and the mortgagor failed to redeem the the obligation is not due and demandable and there is this breach then on that on
property the buyer in auction sale will petition the RD to consolidate the property that fault alone on the debtor has the right now to go to court because of the
in his name. what does consolidate mean, cancel na yung name ng pervious breach and the action now is judicial foreclosure of mortgage, there is factual
owner and will be changed to the new owner that one who brought it on auction issue, is it true that borrower removed the machineries so the bank needs to go to
sale, there are provision on Public land act if the property is homestead in addition court, or there is a breach or failure to fulfill the obligation. That is why the bank
to the one year redemption period the mortgagor has another 1 yr under public use judicial foreclosure as a remedy there is a case file to the court, there is a
land act to redeem the property so favored yung original patentee, remember he complaint the borrower the debtor shall file differences to be determined by the
must be an original patentee meaning maging 2 yrs sya and not only that in the court. They will prove it there whether recession is proper , it is an ordinary case
case of government banks i dunno if its been amended parang may another 1 yr the disadvantage is it could be appealed, unlike extrajudicial mablis basta
pa syang redemption period, so I think the additional 1 yr is still there. Pero kng complete ang papers and publication. This is seldom use by bank, kasi masyadong
private banks wala kang matakbohan nyan. mahal. The judgment becomes final the mortgagee after the finality will file a
Q: usually kasi most buyer in PA are bankers? motion for reissuance for order of auction sale it will go to the same process of
A: in the auction if there is no buyer so the mortgagee is the buyer palitun na sya extrajudicial e.g positing of notice then the sheriff will conduct the auction sale.
withstand the utang minus expenses. But under the banking laws it will be register next there is an auction sale then the sheriff will make a report in the auction sale
in their name, but there is this law that banks cannot hold real property within 5 ,then the mortgagee will file a motion for approval of the auction sale, the judge
years they have to dispose it after 5 yrs because the private purpose why they are will issue an order for approval, wbakit e heararing pa kasi baka may protesta
established under the corporation code is not their porpose to acquire real yung nag participate nag reklamo sya or due process then the court will conduct
properties, because if there is no such provisions under the banking law ma ubus the hearing to hear the motion of approval of the sale, the court will then issue a
lahat ng lupa, ang kanila na mang purpose if the purpose of funds and just to an order for the registration of the Certificate of sale now take note of this
engage in private business not in agriculture. That is why marunong may pera According to jurisprudence for as long as the Certificate of sale is not yet register
saan sila ppumupnta dun sa banko na foreclose na land. Chances are hindi mataas in the RD even upon the hearing of motion of approval of auction sale, the
they are require to dispose it within 5 years, dun ka makaka bili ng lupa na mura. borrower if he wants to redeem the property he can still redeem until it is not
register, hangat hindi pa sya na register yan pwd ma nyang bayaran, pag na
The bank in actual practice they will circumvent the law, they dont avail the register na he has 3 months to redeem the property. So anong difference nya sa
remedy of foreclosure ano ginagawa nila matured na ang gagawin nila they will extrajudicial 1 yr from the registration nang redemption period sa judicial 90 days
avail Dacion in Pago. Parang pinag bili ng may utang ang kanyang property sa another difference take note of this if there is a difference in the auction sale what
banko he cannot pay he will sell it to the bank with the provision to buy back the is require for the mortgagee is not an action for deficiency judgment but he will
property so the owner still remain the owner of the property. file motion for deficiency judgment after the expiration of the period of
redemption. Bakit SA extrajudicial diffiency judgement talaga pero SA judicial
Motion nalang? Sinong magaling dyan?

A form the student: because the case is already filed.

Homework agad. Together with sample Petition for issuance of title.