Mortgaging land after valid sale by owner is void

Persida Acosta

Persida Acosta

Dear PAO,
My father bought a 500-square meter lot from Morris last month. The transaction was covered by a notarized Deed of Absolute Sale. My father, however, has not yet registered the same before the Registry of Deeds. Recently, my father discovered that Morris obtained a loan from Anton, and mortgaged the same property to him just after he sold the same to my father. Was the mortgage executed between Morris and Anton valid?     

Dear Victor,
Pursuant to Article 2085 of the New Civil Code of the Philippines, the following requisites are essential to contracts of pledge and mortgage:

(1) That they be constituted to secure the fulfillment 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.

Xxx xxx xxx”.

In your case, it is clear that Morris is no longer the absolute owner. He does not have, anymore, the free disposal of the lot mortgaged to Anton because he previously sold the same to your father. Thus, the mortgage constituted on the subject property is void for failure to comply with the requisites enumerated in the above-stated provision of law. This also finds support in the decision of the Supreme Court in Galido vs. Magrare et al. (G. R. No. 206584, January 11, 2016), where the Associate Justice Antonio Carpio said:

“Petitioner derives her title from Andigan, as mortgagor. However, at the time Andigan mortgaged the lots to petitioner, he had already sold the same to Magrare, Palcat and Bayombong. Indeed, petitioner’s case is negated by Civil Case No. 2001-2-3230. There, Andigan admitted that Lot Nos. 1052-A-1, 1052-A-2 and 1052-A-3 were the parcels of land he sold to Magrare, Palcat and Bayombong, respectively, on 28 December 1998. Hence, when Andigan mortgaged the lots to petitioner on 8 May 2000, he no longer had any right to do so. We quote with approval the discussion of the trial court:

“Finally, when the spouses Andigan mortgaged to the herein petitioner Galido Lot Nos. 1052-A-1 and 1052-A-2, the said lots were already sold to the respondents Palcat and Magrare. It is therefore as if nothing was mortgaged to her because Isagani Andigan was no longer the owner of the mortgaged real property. Under Art. 2085 of the Civil Code, two of the prescribed requisites for a valid mortgage are, that, the mortgagor be the absolute owner of the thing mortgaged and, that, he has the free disposal thereof. These requisites are absent when Isagani Andigan and his wife mortgaged the lots alluded to above to the herein petitioner.

“A spring cannot rise higher than its source. Since Andigan no longer had any interest in the subject properties at the time he mortgaged them to her, petitioner had nothing to foreclose.”

Since the mortgage is void, it follows that Morris cannot exercise the right of a mortagee over the property sold to your father.

We hope that we were able to answer your queries. Please be reminded that this advice is based solely on the facts you have narrated and our appreciation of the same. Our opinion may vary when other facts are changed or elaborated.

Editor’s note: Dear PAO is a daily column of the Public Attorney’s Office. Questions for Chief Acosta may be sent to


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1 Comment

  1. I emphasize in my real estate seminar that the problem in buying real estate such as vacant land or lot in the Philippines is there is no title insurance company where the purchaser will require the seller to provide title insurance when the title is transferred to insure against liens and encumbrances. It is not uncommon that “Double Titling” on a piece of real estate happens in the Philippines. Occasionally, the are real estate representatives coming into the USA to sell properties located in the Philippines. The thing is, why not invest real estate here in the USA if you have the chance to do so.