gaboogle.com

by Atty. Gabriel Ablola 🇵🇭

Category: Real Estate Law

  • Can a Bank Foreclose on My Condo if the Developer Mortgaged it Without HLURB Approval?

    Dear Atty. Gab,

    Good day po, Atty. Gab. My name is Maria Hizon. I hope you can shed some light on my very stressful situation. Back in 2018, I excitedly purchased a pre-selling condominium unit in Tagaytay from Vista Land Development Inc. at their project called “Solara Residences”. I diligently paid my monthly amortizations and have now paid close to PHP 4.5 million out of the total price of PHP 5 million. I was looking forward to finally having the title transferred to my name soon.

    However, I recently discovered through the grapevine (and later confirmed by checking records) that Vista Land Development Inc. had actually mortgaged the entire Solara Residences project, including the land where my unit stands, to Metro Credit Bank way back in 2017, even before they started selling the units! What’s worse, it seems they never got the required approval or clearance from the Housing and Land Use Regulatory Board (HLURB) for this mortgage.

    Now, I heard that Vista Land is having financial problems and might default on their loan with Metro Credit Bank. I am extremely worried that the bank might foreclose on the mortgage, and I could lose my unit and all the money I’ve painstakingly paid over the years. Was it legal for them to mortgage the property without HLURB approval after getting a license to sell? Does the mortgage affect my rights as a buyer who has paid almost in full? What can I do to protect my investment? I feel lost and anxious about this. Any guidance would be greatly appreciated po.

    Salamat po,
    Maria Hizon

    Dear Maria,

    Thank you for reaching out. I understand how distressing and concerning this situation must be for you, especially after diligently paying for your condominium unit for several years. It’s natural to feel anxious about the security of your investment when issues like undisclosed mortgages arise.

    The core issue here revolves around Presidential Decree No. 957, also known as “The Subdivision and Condominium Buyers’ Protective Decree.” This law was specifically enacted to protect buyers like you from unscrupulous practices by developers. A key protection involves mortgages obtained by developers. The law requires developers to secure prior written approval from the HLURB before mortgaging any part of a condominium project for which a license to sell has been issued. Failure to comply with this requirement has significant legal consequences, particularly concerning the validity of that mortgage against innocent buyers.

    Navigating Developer Mortgages: Your Rights as a Condo Buyer

    The situation you described, where a developer mortgages a condominium project without the necessary HLURB clearance, directly contravenes the safeguards established under P.D. 957. The primary purpose of this law is to shield buyers from potential fraud and ensure that they acquire clean title to the properties they purchase upon full payment.

    Section 18 of P.D. 957 is explicit about the requirement for prior HLURB approval. It states:

    “No mortgage on any unit or lot shall be made by the owner or developer without prior written approval of the Authority [HLURB]. Such approval shall not be granted unless it is shown that the proceeds of the mortgage loan shall be used for the development of the condominium or subdivision project and effective measures have been provided to ensure such utilization.” (Section 18, P.D. No. 957)

    This provision is not merely suggestive; it is a mandatory requirement. The law intends to ensure that any loan proceeds are used for the project’s development and that buyers’ interests are protected. When a developer bypasses this requirement, they engage in what the HLURB considers an unsound real estate business practice.

    What happens when a developer violates this provision? Philippine law generally holds that acts executed against the provisions of mandatory or prohibitory laws are void. In the context of P.D. 957, jurisprudence clarifies that a mortgage constituted by a developer without HLURB approval is void and unenforceable as against the buyer of a unit within that project. This means that while the mortgage contract might still hold some validity between the developer (Vista Land) and the lender (Metro Credit Bank), it cannot prejudice your rights as a buyer who entered into a contract to purchase a specific unit.

    The HLURB has the specific authority to hear complaints related to such violations. Its jurisdiction is quite broad when it comes to protecting buyers and regulating the real estate industry.

    “The jurisdiction of the HLURB to regulate the real estate trade is broad enough to include jurisdiction over complaints for annulment of the mortgage with damages…”

    This means you have the right to file a complaint directly with the HLURB seeking to declare the mortgage unenforceable specifically against your Unit 48C. It’s important to note, however, that your standing is generally limited to protecting your specific interest in your unit. While the HLURB can declare the mortgage void as it affects you and your property, it typically cannot invalidate the entire mortgage covering the whole project based solely on your individual complaint, as you only have a direct legal interest in the unit you purchased.

    “The HLURB, however, went overboard in its disposition… which pertained not only to the lot but to the entire parcel of land mortgaged. Such ruling was improper. The subject of this litigation is limited only to the lot that respondent is buying… He has no personality or standing to bring suit on the whole property…”

    Even with the mortgage issue, P.D. 957 provides mechanisms for buyers. Section 18 itself allows buyers the option to pay installments directly to the mortgagee (the bank) to be applied to the loan portion corresponding to their specific unit, eventually allowing them to obtain a clean title. While the primary argument is the mortgage’s voidness against you due to lack of HLURB approval, understanding this alternative protection under the law is also useful. In situations where the specifics aren’t clearly laid out, fairness dictates the path forward.

    “Since there is no law stating the specifics of what should be done under the circumstances, that which is in accord with equity should be ordered. The remedy granted by the HLURB… insofar as it referred to respondent’s lot is in accord with equity.”

    Furthermore, banks are expected to exercise a higher degree of diligence compared to ordinary individuals when dealing with real estate mortgages, especially those involving condominium or subdivision projects governed by P.D. 957. Their failure to verify HLURB approval for the mortgage could weaken any claim they might have to being an innocent mortgagee in good faith, especially concerning the rights of buyers like yourself.

    Practical Advice for Your Situation

    • File a Complaint with HLURB: Your primary recourse is to file a verified complaint against Vista Land Development Inc. and Metro Credit Bank with the HLURB. Seek the declaration that the mortgage is null and void or unenforceable as against your specific condominium unit due to the lack of prior HLURB approval.
    • Gather All Documentation: Collect all relevant documents, including your Contract to Sell, proofs of payment (receipts, bank statements), the Condominium Certificate of Title (if available, showing the mortgage annotation), and any evidence confirming the lack of HLURB mortgage clearance.
    • Seek Specific Relief from HLURB: Request the HLURB to order the cancellation of the mortgage annotation on the title corresponding to your unit, or issue an order preventing the bank from foreclosing on your specific unit.
    • Address Remaining Balance Carefully: Since you have already paid a significant portion, consult with a lawyer or the HLURB on the best approach for the remaining balance (approx. PHP 500,000). Options might include depositing it in escrow or seeking HLURB guidance on potential direct payment to the bank (only for the portion attributable to your unit) upon favorable ruling.
    • Demand Delivery of Title: Upon demonstrating full payment (or readiness to pay the balance under protected terms), request the HLURB to compel the developer and/or bank to deliver the title to your unit, free from the illegal mortgage lien.
    • Coordinate with Other Buyers: If possible, connect with other buyers in Solara Residences who might be facing the same issue. Collective action can sometimes strengthen your position and share legal costs.
    • Consult a Lawyer: While this information provides guidance, navigating the HLURB process and dealing with the developer and bank can be complex. It is highly advisable to consult with a lawyer specializing in real estate law to represent your specific interests effectively.

    Your situation is precisely why P.D. 957 exists. The law provides strong protections for buyers against developers who mortgage projects without proper authorization. By taking proactive steps through the HLURB, you stand a very good chance of securing your rights to your condominium unit despite the developer’s non-compliance.

    Hope this helps!

    Sincerely,
    Atty. Gabriel Ablola

    For more specific legal assistance related to your situation, please contact me through gaboogle.com or via email at connect@gaboogle.com.

    Disclaimer: This correspondence is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please schedule a formal consultation.

  • What Happens If My Land Title Is Lost in the Philippines?

    Dear Atty. Gab,

    Musta Atty! I’m writing to you because I’m in a terrible situation and I don’t know where to turn. My family has owned a piece of land in Nueva Ecija for generations. The original title was under my grandfather’s name, and when he passed away, we didn’t immediately transfer it. Now, we want to finally settle the estate and transfer the title to my name, but we can’t find the original owner’s copy. We’ve searched everywhere, but it seems to be lost. I am very worried because I don’t know what will happen to the land if the title cant be found.

    I’ve heard horror stories about land grabbing and fake titles, and I’m afraid that without the original title, we might lose our land. I’ve talked to some people, and they say we need to ‘reconstitute’ the title, but I don’t even know what that means or where to begin. I am completely confused. What do I need to do? Is it even possible to get a new title? What are the requirements? I’m so stressed out about this; any advice you can give would be greatly appreciated.

    Thank you so much, Atty. Gab.

    Sincerely,
    Maria Hizon

    Dear Maria,

    Thank you for reaching out to me, Maria. I understand your distress regarding the lost land title. The process of reconstituting a lost or destroyed land title can seem daunting, but it is definitely possible to restore your ownership rights. The key lies in following the correct legal procedures.

    In essence, reconstitution involves restoring the original certificate of title with the Registry of Deeds, using valid sources and following specific steps outlined by law. This ensures that your rights to the property are recognized and protected, even without the original document. It involves a petition in court, notice to concerned parties, and presentation of evidence to prove the loss and the authenticity of the title.

    Protecting Your Property: Understanding Title Reconstitution

    When an original certificate of title is lost or destroyed, Philippine law provides a mechanism for its restoration, known as reconstitution. This process aims to recreate an official copy of the title based on available sources and evidence. Understanding the legal basis for reconstitution is crucial in safeguarding your property rights. The requirements differ depending on which document is available for its use.

    Republic Act No. 26 (RA 26) outlines the procedures for reconstituting lost or destroyed Torrens certificates of title. This law distinguishes between different sources of reconstitution and prescribes specific requirements for each. It is critical to determine which specific source is available to you, as this dictates the process to be followed. Here is an example:

    Section 2. Original certificates of title shall be reconstituted from such of the sources hereunder enumerated as may be available, in the following order:

    (a) The owner’s duplicate of the certificate of title;

    (b) The co-owner’s, mortgagee’s, or lessee’s duplicate of the certificate of title;

    (c) A certified copy of the certificate of title, previously issued by the register of deeds or by a legal custodian thereof;

    (d) An authenticated copy of the decree of registration or patent, as the case may be, pursuant to which the original certificate of title was issued;

    (e) A document, on file in the registry of deeds, by which the property, the description of which is given in said document, is mortgaged, leased or encumbered, or an authenticated copy of said document showing that its original had been registered; and

    (f) Any other document which, in the judgment of the court, is sufficient and proper basis for reconstituting the lost or destroyed certificate of title.

    In cases where the owner’s duplicate copy of the certificate of title is available, the process is generally simpler, as it is considered a primary source for reconstitution. If the owner’s duplicate is not available, you can use other sources. This may include a certified copy of the title, a deed of transfer, or other relevant documents on file with the Registry of Deeds.

    RA 26 specifies two different sets of requirements depending on the available sources. If you have the owner’s duplicate, the requirements are specified under Section 10 in relation to Section 9 of RA 26. However, if you are using other documents, then Sections 12 and 13 will apply. The difference is stated in this citation:

    RA No. 26 provides two procedures and sets of requirements in the reconstitution of lost or destroyed certificates of title depending on the source of the petition for reconstitution. Section 10 in relation to Section 9 provides the procedure and requirements for sources falling under Sections 2(a), 2(b), 3(a), 3(b) and 4(a). Sections 12 and 13 provide the procedure and requirements for sources falling under Sections 2(c), 2(d), 2(e) 2(f), 3(c), 3(d), 3(e), and 3(f).

    The Court has emphasized that the procedure under Sections 12 and 13 does not apply when the reconstitution is based on the owner’s duplicate. This means that if you can prove the existence and authenticity of the owner’s duplicate, the requirements for notice to certain parties may be less stringent.

    If you can use the owner’s duplicate, you still need to go to court. Section 10 of RA 26 states that you must file a petition with the proper court. Here is the provision:

    Section 10. Nothing hereinbefore provided shall prevent any registered owner or person in interest from filing the petition mentioned in section five of this Act directly with the proper Court of First Instance, based on sources enumerated in Sections 2(a), 2(b), 3(a), 3(b), and/or 4(a) of this Act: Provided, however, That the Court shall cause a notice of the petition, before hearing and granting the same, to be published in the manner stated in section nine hereof: and, provided, further, That certificates of title reconstituted pursuant to this section shall not be subject to the encumbrance referred to in section seven of this Act.

    This means that the court will order that a notice of the petition be published in the Official Gazette and posted in conspicuous places, such as the provincial building and the municipal hall. The notice must contain specific information about the title, including the title number, the registered owner’s name, the names of interested parties, the property’s location, and the date for filing claims. These requirements are stated here:

    x x x [F]or the trial court to validly acquire jurisdiction to hear and decide a petition for reconstitution filed under Section 10, in relation to Section 9 of Republic Act No. 26, it is required that thirty days before the date of hearing, (1) a notice be published in two successive issues of the Official Gazette at the expense of the petitioner, and that (2) such notice be posted at the main entrances of the provincial building and of the municipal hall where the property is located. The notice shall state the following: (1) the number of the certificate of title, (2) the name of the registered owner, (3) the names of the interested parties appearing in the reconstituted certificate of title, (4) the location of the property, and (5) the date on which all persons having an interest in the property must appear and file such claim as they may have.

    Once these steps are complete, the court will hear the petition and, if satisfied with the evidence presented, will order the Land Registration Authority (LRA) to reconstitute the original certificate of title. The reconstituted title will then serve as proof of your ownership, just like the original.

    Practical Advice for Your Situation

    • Search Diligently: Conduct another thorough search for the owner’s duplicate, even in less obvious places.
    • Gather Evidence: Collect any documents related to the land, such as tax declarations, deeds of sale, or old photos, which may help establish your claim.
    • Consult a Lawyer: Engage a lawyer experienced in land registration and reconstitution cases to guide you through the legal process.
    • File a Petition: Prepare and file a petition for reconstitution with the appropriate Regional Trial Court, following the requirements of RA 26.
    • Notify Interested Parties: Ensure that all interested parties, such as adjoining landowners and heirs of the original owner, are properly notified of the petition.
    • Present Evidence: Present credible evidence to the court to support your claim, including testimony from witnesses who can attest to the loss of the title and your family’s ownership of the land.
    • Monitor Publication: Ensure that the notice of the petition is published in the Official Gazette and posted in the required locations, as ordered by the court.

    I hope this helps you understand the steps involved in reconstituting your lost land title. Remember that this process can be complex, so seeking professional legal assistance is essential to ensure a successful outcome.

    Hope this helps!

    Sincerely,
    Atty. Gabriel Ablola

    For more specific legal assistance related to your situation, please contact me through gaboogle.com or via email at connect@gaboogle.com.

    Disclaimer: This correspondence is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please schedule a formal consultation.

  • Musta Atty! Can I Still Sell My Land After Agreeing to Sell It to My Neighbor?

    Dear Atty. Gab,

    Musta Atty? My neighbor, Ricardo, and I signed a document two months ago where I agreed to sell him my vacant lot in Batangas for PHP 500,000. We both signed, and he gave me PHP 50,000 as initial payment. However, another person, Mr. Lim, is now offering me PHP 800,000 for the same lot! Ricardo hasn’t paid me anything beyond the initial PHP 50,000. Can I legally back out of my agreement with Ricardo and sell to Mr. Lim instead? I really need the extra money, but I don’t want to get into legal trouble. I’m so confused about my rights and obligations here. I heard that contracts are hard to get out of but I’m hoping that since Ricardo hasn’t paid the rest yet, maybe I have a chance. I hope you can help Atty. Gab!

    Thank you very much!

    Sincerely,
    Ana Ibarra

    Dear Ana,

    Hello Ana, I understand your dilemma. You’re facing a situation where you’ve agreed to sell your land but now have a better offer. In essence, your question is: are you legally bound to your initial agreement, or can you pursue the new, more lucrative offer? Let’s look at the legal principles involved.

    Is the Agreement to Sell Your Land a Done Deal?

    The key issue revolves around whether your agreement with Ricardo constitutes a perfected contract of sale. A contract of sale is perfected when there is consent, a determinate subject matter, and a price certain. However, even if these elements are present, specific conditions may affect its enforceability.

    To analyze your situation, we must determine if the signed document with Ricardo is a perfected contract of sale or merely an option contract. An option contract gives a person the privilege to buy a certain piece of property within a specified period at an agreed price. If the agreement is only an option contract, then Ricardo needs to exercise that option by paying you the purchase price for it to be considered a perfected contract. The initial payment of PHP 50,000 might be considered as option money, the amount paid for the privilege of buying or not buying your land. It is separate and distinct from the purchase price.

    However, if the agreement with Ricardo is a perfected contract of sale, you may have breached your obligations if you sold it to another party. A contract of sale requires both parties to fulfill their respective duties. For you as the seller, this means transferring ownership of the property. For Ricardo, as the buyer, this means paying the agreed-upon price. Before you can sell the property to another buyer, you have to make sure that there is a valid ground to rescind or cancel the contract. If Ricardo fails to pay the purchase price, you may have grounds to rescind the contract, as provided in Article 1191 of the Civil Code. As the Supreme Court has said:

    “The injured party may choose between the fulfillment and the rescission of the obligation, with the payment of damages in either case. He may also seek rescission, even after he has chosen fulfillment, if the latter should become impossible.” (Article 1191, New Civil Code)

    However, this rescission is not automatic. You must either file a case in court or make a demand, usually through a lawyer, for Ricardo to fulfill his obligations. You can only sell to another buyer once the contract with Ricardo has been legally rescinded. It would be best to also note that:

    “The amendment of a previously bidded contract is not per se invalid. For it to be nullified, the amendment must be substantial such that the other bidders were deprived of the terms and opportunities granted to the winning bidder after it won the same and that it is prejudicial to public interest. In our assailed decision, we found the amendment not substantial because no additional right was made available to Smartmatic-TIM that was not previously available to the other bidders; except for the extension of the option period, the exercise of the option was still subject to same terms and conditions such as the purchase price and the warranty provisions; and the amendment is more advantageous to the Comelec and the public.”

    Without a legal rescission, selling the land to Mr. Lim would be a breach of contract. Ricardo could sue you for damages, or even seek specific performance, asking the court to compel you to sell the land to him. If you sold it to Mr. Lim and he knew of the first contract with Ricardo, Ricardo can ask the court to award damages. Keep in mind:

    “What are prohibited are modifications or amendments which give the winning bidder an edge or advantage over the other bidders who took part in the bidding, or which make the signed contract unfavorable to the government. In this case, as thoroughly discussed in our June 13, 2012 Decision, the extension of the option period and the eventual purchase of the subject goods resulted in more benefits and advantages to the government and to the public in general.”

    As you can see, the interpretation of the contract and applicable remedies are highly dependent on specific details and can be confusing. The court will consider everything surrounding your transaction in evaluating the contracts.

    Practical Advice for Your Situation

    • Review the signed document: Carefully examine the agreement with Ricardo to determine if it’s a contract of sale or an option contract. Look for clauses that specify the payment terms, transfer of ownership, and whether the PHP 50,000 is considered part of the purchase price or option money.
    • Communicate with Ricardo: Talk to Ricardo about the new offer. It may be possible to negotiate a mutual release from your agreement.
    • Seek legal advice: Consult with an attorney to review the document and advise you on the best course of action. They can help you understand the legal implications of your situation and draft the necessary legal documents.
    • Send a demand letter: If the agreement is a perfected contract of sale, send Ricardo a demand letter through a lawyer, giving him a reasonable timeframe to pay the balance. If he fails to comply, you can proceed with rescinding the contract.
    • File a case for rescission: If Ricardo does not pay and refuses to release you from the agreement, file a case in court to formally rescind the contract.
    • Exercise due diligence: Make sure that if you sell to Mr. Lim, make sure to let him know of the other contract.

    Ultimately, acting decisively and legally is of paramount importance. Understand that government contracts are taken with utmost responsibility, so your actions should be viewed with greater scrutiny. Pursuing the best course of action would be in everyone’s best interest.

    Hope this helps!

    Sincerely,
    Atty. Gabriel Ablola

    For more specific legal assistance related to your situation, please contact me through gaboogle.com or via email at connect@gaboogle.com.

    Disclaimer: This correspondence is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please schedule a formal consultation.

  • Can I Lose My Home Over Late Payments? Understanding Contract to Sell Rights

    Dear Atty. Gab

    Musta Atty! I’m writing to you because I’m really stressed about our house. Back in 2015, my husband and I entered into an agreement to purchase a small house and lot in Quezon City through a developer’s installment plan. We’ve been paying religiously for years, but recently, my husband lost his job, and we’ve fallen behind on three monthly payments. The developer sent us a letter saying they’re canceling our contract and evicting us. They are saying that all the prior payments we have made will be considered rentals already. Is that even allowed? Can they just take our house like that after all these years and all the money we’ve put in? We’re scared of losing everything. Any advice you can give would be a huge help.

    Sincerely,
    Maria Hizon

    Dear Maria Hizon

    Magandang araw, Maria! I understand your anxiety regarding the possibility of losing your home due to late payments. It’s a stressful situation, but Philippine law provides certain protections for installment buyers like you. Generally, if you have a contract to sell and have been making payments, the seller can’t just cancel the contract without following certain legal procedures.

    Safeguarding Your Investment: The Maceda Law and Installment Purchases

    The key here is understanding your rights under the Realty Installment Buyer Protection Act, also known as the Maceda Law. This law protects buyers who purchase real estate on installment plans. If you’ve paid at least two years’ worth of installments, you’re entitled to certain rights in case you default on payments. One of those rights is to be given a grace period to catch up on missed payments.

    Now, let’s discuss the cancellation of the contract. The seller cannot simply cancel the contract and evict you without proper notice and, potentially, compensation. The law specifies certain requirements that the seller must follow. One of these involves a formal notification process, while another protects the installments you have already paid:

    SEC. 3. In all transactions or contracts involving the sale or financing of real estate on installment payments, including residential condominium apartments but excluding industrial lots, commercial buildings and sales to tenants under Republic Act Numbered Thirty-eight hundred forty-four, as amended by Republic Act Numbered Sixty-three hundred eighty-nine, where the buyer has paid at least two years of installments, the buyer is entitled to the following rights in case he defaults in the payment of succeeding installments:

    x x x

    (b) If the contract is canceled, the seller shall refund to the buyer the cash surrender value of the payments on the property equivalent to fifty per cent of the total payments made, and, after five years of installments, an additional five per cent every year but not to exceed ninety per cent of the total payments made: Provided, That the actual cancellation of the contract shall take place after thirty days from receipt by the buyer of the notice of cancellation or the demand for rescission of the contract by a notarial act and upon full payment of the cash surrender value to the buyer. (Emphasis supplied)

    This means that if the seller intends to cancel the contract, they must send you a notice of cancellation via a notarial act. This is a formal notice, usually prepared and acknowledged by a notary public. Furthermore, they must refund you the cash surrender value of your payments. If you’ve been paying for at least two years, you’re entitled to at least 50% of the total payments you’ve made. This percentage increases the longer you’ve been paying.

    The Supreme Court has emphasized the importance of following these procedures, pointing out that:

    “R.A. No. 6552, otherwise known as the Realty Installment Buyer Protection Act, recognizes in conditional sales of all kinds of real estate (industrial, commercial, residential) the right of the seller to cancel the contract upon non-payment of an installment by the buyer, which is simply an event that prevents the obligation of the vendor to convey title from acquiring binding force.”

    However, the court has made it clear that the cancellation must be done properly. A notice of termination is required to inform the buyer of cancellation of the agreement.

    While we agreed that the cancellation of a contract to sell may be done outside of court, however, “the cancellation by the seller must be in accordance with Sec. 3(b) of R.A. No. 6552, which requires a notarial act of rescission and the refund to the buyer of the full payment of the cash surrender value of the payments on the property.”

    If the developer in your case hasn’t complied with these requirements, the cancellation may not be valid. Their claim that your previous payments will be treated as rentals could also be challenged, especially considering the protections afforded to you under the Maceda Law.

    Moreover, take note that under the law, you may also have the right to reinstate the contract by updating your account during the grace period:

    (a) To pay, without additional interest, the unpaid installments due within the total grace period earned by him, which is hereby fixed at the rate of one month grace period for every one year of installments payments made: Provided, That the buyer shall exercise this right only once in every five years of the life of the contract and its extensions, if any.

    This means, you have a one month grace period for every year you have been paying the installments.

    Practical Advice for Your Situation

    • Review Your Contract: Carefully examine the terms of your contract to sell, particularly the provisions related to default and cancellation.
    • Document Everything: Keep records of all payments you’ve made, notices you’ve received, and any communication with the developer.
    • Send a Formal Response: Respond to the developer’s notice in writing, asserting your rights under the Maceda Law and requesting clarification on how they calculated the cash surrender value (if any).
    • Explore Negotiation: Attempt to negotiate a payment plan or restructuring of your loan to make it more manageable.
    • Seek Legal Representation: Consult with a real estate lawyer who can assess your situation, advise you on your legal options, and represent you in negotiations or legal proceedings if necessary.
    • File a Complaint: Consider filing a complaint with the Housing and Land Use Regulatory Board (HLURB) if the developer fails to comply with the Maceda Law.

    Losing your home is a very serious matter, Maria, and it’s important to take immediate action to protect your rights. I hope this information gives you a clearer understanding of your situation and empowers you to take the necessary steps.

    Hope this helps!

    Sincerely,
    Atty. Gabriel Ablola

    For more specific legal assistance related to your situation, please contact me through gaboogle.com or via email at connect@gaboogle.com.

    Disclaimer: This correspondence is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please schedule a formal consultation.

  • Can a Bank Foreclose on a Property After the Owner Dies?

    Dear Atty. Gab,

    Musta Atty! I’m writing to you because I’m facing a really confusing situation regarding a property my parents mortgaged years ago. My father passed away several years ago, and my mother is now struggling with the remaining debt secured by their land. She acted as an attorney-in-fact for my deceased father. The bank is now threatening to foreclose on the property because of missed payments, but my siblings and I believe that the bank cannot go ahead with the foreclosure because my father already died.

    My parents secured a loan using their land as collateral, giving the bank a mortgage on the property. My mother was authorized to act on behalf of my father. Now that my father has passed away, we’re unsure if the original agreement is still legally binding. We are also not sure if the SPA is extinguished. We’re worried that we might lose our family home if we are unable to find proper legal assistance.

    We’ve already made some payments, but the bank insists that a significant amount is still outstanding. Is the bank legally allowed to foreclose on the property, even though my father, one of the original mortgagors, has already died? What rights do we, as his heirs, have in this situation? Any advice you can give would be greatly appreciated.

    Sincerely,
    Isabel Padilla

    Dear Isabel,

    Hello Isabel! I understand your concern about the potential foreclosure of your family’s mortgaged property. It’s certainly stressful to face such a situation, especially after the loss of a loved one. I’ll help clarify the legal aspects involved, particularly regarding the bank’s rights and your options as your father’s heirs.

    Understanding the Implications of Death on a Power of Attorney

    The primary concern here revolves around the legal principle of agency and how it’s affected by the death of the principal. In your case, your father granted your mother a Special Power of Attorney (SPA) to mortgage the property. Now that your father has passed away, the crucial question is whether that SPA is still valid. Philippine law is clear on this matter: the death of the principal generally terminates the agency.

    This principle is anchored in Article 1919 of the Civil Code, which explicitly states that an agency is extinguished by the death of the principal. When your father died, the SPA he had given to your mother was generally revoked by operation of law. This means that, legally, she could no longer act as his agent.

    Civil Code, Article 1919.  Agency is extinguished:

    x x x x

    (3) By the death, civil interdiction, insanity or insolvency of the principal or of the agent[.] (Emphases supplied.)

    However, the complexities arise when considering mortgages already in place and obligations already incurred before the principal’s death. The crucial question hinges on whether the mortgage was fully executed during your father’s lifetime and whether the proceeds of the loan benefited the family. If the mortgage was validly constituted while the SPA was still in effect, the bank generally retains its rights to enforce the mortgage agreement. If no proceeds was given, the mortgage can be deemed invalid.

    It’s important to consider the concept of res judicata, which dictates that a final judgment on the merits by a court of competent jurisdiction is conclusive upon the parties and their successors in interest. In simpler terms, if there has been a prior decision regarding the validity of the mortgage or the amount of the debt, that decision could be binding on you and your siblings as your father’s heirs. If the foreclosure is valid by operation of law, there is nothing to stop the bank.

    In this instance, an examination of the pleadings establishes that there was an identity of parties in Civil Case No. C-17332 and Civil Case No. Q-91-10079… It may reasonably be concluded therefore, that respondents herein, Yolanda and Edmund, with respect to the Caloocan property, all represent substantially the same interest against RCBC.

    The principle of substantial identity of parties becomes relevant. Although you and your siblings weren’t directly involved in the original mortgage agreement, as heirs, you are considered to represent the same interest as your father. Thus, any prior judgments affecting the mortgage may apply to you.

    “[o]nly substantial identity is necessary to warrant the application of res judicata.  The addition or elimination of some parties does not alter the situation.  There is substantial identity of parties when there is a community of interest between a party in the first case and a party in the second case albeit the latter was not impleaded in the first case.”

    As the heirs, the validity of the mortgage and the enforceability of the bank’s rights under it were already determined and the foreclosure proceedings can continue. If this is the case, the bank is allowed to foreclose the property.

    A settlement agreement can be valid if entered into correctly, but a compromise agreement is binding on the parties. Settled is the rule that “a judicial compromise has the effect of res judicata.  A judgment based on a compromise agreement is a judgment on the merits.”

    Practical Advice for Your Situation

    • Review all relevant documents: Gather and thoroughly review the original mortgage agreement, the Special Power of Attorney granted to your mother, any payment records, and correspondence with the bank.
    • Negotiate with the bank: Attempt to negotiate a payment plan or restructuring of the debt to avoid foreclosure. Banks are often willing to work with borrowers to find a solution.
    • Explore legal options: Consult with a real estate attorney to explore potential legal challenges to the foreclosure, such as questioning the validity of the debt or the bank’s compliance with foreclosure procedures.
    • Consider redemption rights: Understand your rights of redemption, which allow you to reclaim the property within a certain period after the foreclosure sale by paying the outstanding debt and associated costs.
    • Document everything: Keep detailed records of all communications, payments, and legal proceedings related to the mortgage and foreclosure.

    Hope this helps!

    Sincerely,
    Atty. Gabriel Ablola

    For more specific legal assistance related to your situation, please contact me through gaboogle.com or via email at connect@gaboogle.com.

    Disclaimer: This correspondence is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please schedule a formal consultation.

  • Can My Landlord Evict Me Without Proper Notice?

    Dear Atty. Gab,

    Musta Atty! I’m writing to you because I’m really confused about my rights as a tenant. I’ve been renting a small apartment in Manila for the past five years. My lease agreement expired a few months ago, but I continued to pay my rent every month, and my landlord accepted it without saying anything. Now, suddenly, I received a letter from my landlord demanding that I vacate the premises within 15 days because he wants to renovate the place for his family. He claims he doesn’t need to give me any more notice since the original lease expired.

    I’m worried because finding a new place in such a short time is going to be very difficult, especially with my limited budget. I always paid my rent on time and never caused any trouble. Do I have any legal protection in this situation, or can my landlord just kick me out like that? I would really appreciate your advice on what I should do. Salamat po!

    Sincerely,
    Fernando Lopez

    Dear Fernando,

    Kumusta Fernando! I understand your concerns about the sudden notice to vacate your apartment. Based on the details you provided, it seems you might have grounds to contest your landlord’s demand. The key issue here is whether an implied new lease was created when your original lease expired and you continued paying rent, which your landlord accepted.

    Understanding Tacita Reconduccion: An Implied Lease Renewal

    In your situation, the principle of tacita reconduccion, or implied new lease, may apply. This principle, as recognized in Philippine law, suggests that when a lease contract expires, but the tenant continues to occupy the premises and the landlord accepts rent payments, a new lease agreement is created by implication. However, the duration of this implied lease is not necessarily the same as the original contract.

    The Civil Code addresses this situation directly, providing guidelines for determining the duration of the implied lease. It’s crucial to understand that the terms of the original lease are revived in the implied new lease, but the period is determined by law, not by the original contract. This principle is based on the landlord’s acquiescence to the tenant’s continued occupancy.

    According to Article 1670 of the Civil Code:

    Article 1670. If at the end of the contract the lessee should continue enjoying the thing leased for fifteen days with the acquiescence of the lessor, and unless a notice to the contrary by either party has previously been given, it is understood that there is an implied new lease, not for the period of the original contract, but for the time established in Articles 1682 and 1687. The other terms of the original contract shall be revived.

    Further clarification is provided by Article 1687 of the Civil Code:

    Article 1687. If the period for the lease has not been fixed, it is understood to be from year to year, if the rent agreed upon is annual; from month to month, if it is monthly; from week to week, if the rent is weekly; and from day to day, if the rent is to be paid daily. However, even though a monthly rent is paid, and no period for the lease has been set, the courts may fix a longer term for the lease after the lessee has occupied the premises for over one year. If the rent is weekly, the courts may likewise determine a longer period after the lessee has been in possession for over six months. In case of daily rent, the courts may also fix a longer period after the lessee has stayed in the place for over one month.

    Given that you paid your rent on a monthly basis, the implied new lease is generally considered to be on a month-to-month basis. This means that while your landlord cannot simply evict you without any notice, he is only required to give you a notice to vacate that corresponds to the period of the lease, which in your case, appears to be one month.

    This requirement of proper notice is rooted in the concept of due process and fairness, ensuring that tenants are not unfairly displaced from their homes. While the landlord has the right to eventually repossess the property, that right must be exercised in accordance with the law.

    Section 1. Who may institute proceedings, and when. — Subject to the provisions of the next succeeding section, a person deprived of the possession of any land or building by force, intimidation, threat, strategy, or stealth, or a lessor, vendor, vendee, or other person against whom the possession of any land or building is unlawfully withheld after the expiration or termination of the right to hold possession, by virtue of any contract, express or implied, or the legal representatives or assigns of any such lessor, vendor, vendee, or other person, may, at any time within one (1) year after such unlawful deprivation or withholding of possession, bring an action in the proper Municipal Trial Court against the person or persons unlawfully withholding or depriving of possession, or any person or persons claiming under them, for the restitution of such possession, together with damages and costs.

    It’s also important to note that the landlord’s claim of needing the property for renovation does not automatically override your rights as a tenant. The landlord must still comply with the legal requirements for terminating the lease and providing proper notice. Any attempt to forcibly evict you without a court order would be considered unlawful.

    Remember that the burden of proof lies with the landlord to demonstrate that the termination of the lease is justified and that proper notice has been given. You are entitled to assert your rights and defend your possession of the property until a court order is issued.

    Practical Advice for Your Situation

    • Document everything: Keep records of all rent payments, communication with the landlord, and any notices received.
    • Send a formal response: Respond to the landlord’s notice in writing, asserting your rights as a tenant under the principle of implied new lease and requesting clarification on the reasons for eviction.
    • Negotiate with the landlord: Explore the possibility of negotiating a longer period to vacate the premises or compensation for relocation expenses.
    • Seek mediation: Consider seeking assistance from the barangay or a mediation center to facilitate a dialogue with the landlord and reach a mutually agreeable solution.
    • Consult with a lawyer: It’s always advisable to consult with a lawyer to review your specific situation and provide legal advice tailored to your circumstances.
    • Prepare for possible legal action: Be prepared to defend your rights in court if the landlord initiates an eviction case against you.

    I hope this information clarifies your rights and empowers you to take appropriate action. Remember, you are not powerless in this situation. By understanding your rights and seeking legal advice, you can protect yourself from unlawful eviction and ensure a fair resolution to this dispute.

    Hope this helps!

    Sincerely,
    Atty. Gabriel Ablola

    For more specific legal assistance related to your situation, please contact me through gaboogle.com or via email at connect@gaboogle.com.

    Disclaimer: This correspondence is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please schedule a formal consultation.

  • Who Owns the Crops? Landowner vs. Tenant After Lease?

    Dear Atty. Gab,

    Musta Atty! I’m writing to you because I’m in a very confusing situation, and I really need some legal advice. My family owns a piece of agricultural land in Davao. We leased it to a company that planted bananas there for many years. The lease agreement has already expired, but they’re still using the land.

    Now, the government wants to acquire our land for agrarian reform. The Land Bank is offering compensation, but the banana company is also claiming that they should be paid for the value of the banana plants and improvements they made on the land. I don’t understand this. Shouldn’t the banana plants and improvements now belong to us since the lease expired?

    The company is arguing that since they planted the bananas, they own them, regardless of the lease. But we believe that because the lease expired and they didn’t remove the plants, the ownership should revert to us as the landowners. I’m worried that the Land Bank might pay the company instead of us, or worse, split the payment unfairly. What are our rights here? Who is legally entitled to the compensation for the crops and improvements?

    I’m really stressed about this because this land is our family’s only source of income, and we don’t want to lose what is rightfully ours. Any guidance you can provide would be greatly appreciated.

    Thank you so much, Atty. Gab!

    Sincerely,
    Sofia Javier

    Dear Sofia,

    Musta Atty! I understand your concern regarding the compensation for the crops and improvements on your land after the lease expired. You’re right to question who is entitled to that compensation, especially with the government acquiring the land for agrarian reform. In general, the expiration of a lease agreement and the rights of a tenant to improvements are governed by specific legal principles.

    This situation centers on the question of whether the tenant, by planting crops and making improvements, gains a right to compensation distinct from your rights as landowners, especially when agrarian reform is involved. This is not an agrarian dispute, so the DARAB does not have jurisdiction. Your rights as lessors and the tenant’s rights are governed by the Civil Code.

    Navigating Land Rights After a Lease: Who Owns the Improvements?

    The central issue revolves around the rights and obligations established in your lease contract with the banana company and the application of the Civil Code provisions on lease in relation to agrarian reform. You must review your lease contract. The resolution of your predicament lies in understanding that the tenant’s right to compensation for improvements introduced during the lease is subject to the terms agreed upon in the contract and the relevant provisions of the Civil Code.

    It’s important to recognize that the Comprehensive Agrarian Reform Law (CARL) primarily focuses on compensating landowners for the land itself, not necessarily for the improvements made by a lessee. While the value of standing crops and improvements may be considered when determining just compensation, the law doesn’t automatically grant a lessee the right to claim this compensation directly from the government. The Supreme Court has clarified that standing crops and improvements are valued simply because they are attached to the land.

    The Court emphasizes that the CARL does not contain any provision recognizing the rights of a lessee of a private agricultural land to just compensation for the crops it planted and improvements it built. Moreover, the Supreme Court has explained that courts must consider that just compensation for the produce and infrastructure of a private agricultural land logically belongs to the landowner, since the former are part and parcel of the latter.

    [E]ven after an exhaustive scrutiny of the CARL, the Court could not find a provision therein on the right of a lessee of a private agricultural land to just compensation for the crops it planted and improvements it built thereon, which could be recognized separately and distinctly from the right of the landowner to just compensation for his land. The standing crops and improvements are valued simply because they are appurtenant to the land, and must necessarily be included in the final determination of the just compensation for the land to be paid to the landowner. Standing crops and improvements, if they do not come with the land, are totally inconsequential for CARP purposes.[47]

    Further, the Court has stated that AMS had no right to just compensation under the CARL for the standing crops and improvements it introduced as a lessee on the agricultural land of TOTCO. It cannot claim just compensation from the LBP; instead, its remedy is to go after the lessor, TOTCO, pursuant to their lease contract being a lessee deprived of the peaceful and adequate enjoyment of the land during the lease period.

    Ultimately, the Land Bank’s valuation process should prioritize compensating you, the landowner, for the total value of the land, including the standing crops and improvements. However, the company may have recourse against you based on the lease agreement and the Civil Code, particularly if the agreement stipulated certain conditions regarding the improvements upon the lease’s expiration.

    [T]he CARL does not specially govern lease contracts of private agricultural lands. So that for the determination of the rights of AMS as a lessee in a lease contract terminated by the sale of the leased property to a third person (regardless of the fact that the third person was the Republic and the sale was made pursuant to the CARP), the Court resorts to the general provisions of the Civil Code on lease contracts; and not the CARL.[47]

    If the lease agreement contained a provision allowing the lessee to remove the improvements but the lessee failed to do so within a reasonable time after the expiration of the lease, then the ownership of the improvements may have transferred to you. However, if there was no such agreement, the Civil Code provisions on lease may apply, granting the lessee certain rights to reimbursement for the value of the improvements. The Department of Agrarian Reform Adjudication Board (DARAB) has no jurisdiction to pass upon the issue of ownership over standing crops and improvements between a landowner and a lessee.

    The DARAB, therefore, has no jurisdiction to pass upon the issue of ownership over standing crops and improvements between a landowner and a lessee. This is the clear import of the above-stated doctrines declaring that the right of a lessor and lessee over the improvements introduced by the latter is not an agrarian dispute within the meaning of the CARL. Consequently, there is no doubt that the DARAB cannot adjudicate the ownership over standing crops and improvements installed by AMS in the subject agricultural parcels of land and as such, the DARAB Consolidated Decisions dated October 17, 2005 and December 11, 2006 cannot serve as res judicata to Civil Case No. 3867 filed by the petitioners with the RTC.

    It’s crucial to also understand the concept of res judicata, which is the principle that a matter already decided by a court with jurisdiction cannot be relitigated. In this case, if the issue of ownership of the crops and improvements has not been definitively decided by a competent court, you are not barred from asserting your claim. The RTC is the court of general jurisdiction that can resolve with finality the rights of a lessor and a lessee over the improvements built by the latter.

    Practical Advice for Your Situation

    • Review Your Lease Agreement: Scrutinize the terms and conditions regarding improvements, particularly what happens to them upon the lease’s expiration.
    • Gather Evidence: Collect all relevant documents, including the lease agreement, payment receipts, and any correspondence with the banana company.
    • Consult with a Real Estate Lawyer: Discuss the specifics of your situation and obtain advice tailored to your case.
    • Negotiate with the Banana Company: Attempt to reach a mutually acceptable agreement regarding the compensation for the crops and improvements.
    • Coordinate with Land Bank: Communicate your position clearly and provide supporting documentation to ensure your rights as the landowner are protected during the valuation process.
    • Consider Mediation: Explore the possibility of mediating with the banana company to resolve the dispute amicably and efficiently.
    • Be Prepared to Litigate: If necessary, be ready to file a case in court to assert your claim to the compensation for the crops and improvements.

    I hope this clarifies your rights and provides a clearer path forward. Remember, early consultation with a legal professional will be invaluable in protecting your interests and ensuring a fair resolution to this complex situation.

    Hope this helps!

    Sincerely,
    Atty. Gabriel Ablola

    For more specific legal assistance related to your situation, please contact me through gaboogle.com or via email at connect@gaboogle.com.

    Disclaimer: This correspondence is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please schedule a formal consultation.

  • Can I Lose My Land if Someone Else Farms It?

    Dear Atty. Gab,

    Musta Atty! My name is Maria Hizon, and I’m writing to you because I’m incredibly confused and worried about a piece of land my family has owned for generations in the province. For years, we allowed a neighbor to farm a portion of it since we live in the city and couldn’t manage it ourselves. We never had a formal agreement, just a verbal understanding that they could use the land. Now, I’ve heard rumors that this neighbor might be trying to claim ownership of the land, arguing that because they’ve been farming it for so long, they have a right to it. I’m worried that they might be able to take away our family’s land. Do they have any legal basis to claim it? What are my rights as the landowner in this situation, and what steps should I take to protect our property? Any guidance you can provide would be greatly appreciated.

    Thank you for your time and expertise.

    Sincerely,
    Maria Hizon

    Dear Maria,

    Musta Maria! I understand your concern about the rumors of your neighbor’s potential claim to your family’s land. The core issue revolves around agrarian reform laws and whether your neighbor’s long-term cultivation of the land grants them any ownership rights. It’s essential to understand your rights as a landowner and the conditions under which someone else can claim ownership based on cultivation.

    Understanding Land Ownership Rights in the Philippines

    The Philippine Constitution and various agrarian reform laws prioritize the rights of landless farmers to own the land they till. This is enshrined in Article XIII, Section 4 of the Constitution, which states that the State shall “undertake an agrarian reform program founded on the right of farmers and regular farm workers, who are landless, to own directly or collectively the lands they till.” This provision aims to distribute land more equitably and empower those who directly work the land.

    Republic Act No. 6657, also known as the Comprehensive Agrarian Reform Law (CARL), further clarifies who can benefit from this program. Section 22 of CARL specifies that “the lands covered by the CARP shall be distributed as much as possible to landless residents of the same barangay, or in the absence thereof, landless residents of the same municipality in the following order of priority: (a) agricultural lessees and share tenants; (b) regular farmworkers; (c) seasonal farmworkers; (d) other farmworkers; (e) actual tillers or occupants of public lands; (f) collectives or cooperatives of the above beneficiaries; and (g) others directly working on the land.” This prioritizes those who directly cultivate the land and lack other land ownership.

    However, the mere fact that someone has been farming a piece of land for a long time does not automatically grant them ownership. Several factors need to be considered, including whether a tenancy relationship exists and whether the landowner has violated any agrarian reform laws. It’s important to understand the concept of tenancy. A tenant is someone who cultivates the land with the owner’s consent, sharing the harvest or paying rent.

    If your neighbor is considered a tenant, their rights are protected by law. However, even if a tenancy relationship exists, it doesn’t automatically mean they can claim full ownership. The key factor is whether you, as the landowner, have violated any conditions or laws that would warrant transferring ownership to the actual tiller. According to DAR Administrative Order No. 3, Series of 1990, “Land has a social function, hence, there is a concomitant social responsibility in its ownership and should, therefore, be distributed to the actual tillers/occupants.” This highlights the importance of actual cultivation in determining land ownership.

    Furthermore, consider this undertaking from a previous court decision:

    “2.that I vvill not 1 subdivide, sold (sic) or in any manner transfer or encumber said land without the proper consent of the DAR subject further to the terms and conditions provided for under Republic Act No. 6657 and other Operating laws not inconsistent thereon; 3.That I shall not employ or use tenants whatever form in the occupation or cultivation of the land or shall not be subject of share tenancy pursuant to the provision of PD No. 132 dated March 13, 1973, x x x.” (Emphasis supplied)

    This implies that engaging a tenant without proper consent or violating agrarian laws can jeopardize your ownership rights. A critical aspect to examine is whether you have received any notice of cancellation or violations from the Department of Agrarian Reform (DAR). The DAR is the government agency responsible for implementing agrarian reform laws, and any actions they take regarding your land could significantly impact your ownership rights. Thus, if you have not received any formal notice, it strengthens your position as the rightful owner.

    However, you may have abandoned your rights to the land by not following up with land titles or any administrative procedure.

    “Upon full payment of the purchase price as herein stipulated including all interest thereon and the performance by the PROMISSEE of all the conditions herein required, the Administration shall execute a Deed of Sale conveying the property subject of this Agreement to the PROMISSEE.” (Underscoring supplied)

    Consider also Article II Section 21 from our constitution:

    SEC.21. The State shall promote comprehensive rural development and agrarian reform.

    This emphasizes the State’s commitment to agrarian reform and rural development. This commitment influences how courts interpret agrarian laws, often favoring the landless tiller.

    In your situation, it’s crucial to gather all relevant documents, including any proof of ownership, tax declarations, and records of your verbal agreement with your neighbor. If there’s evidence that your neighbor was merely allowed to farm the land without any formal tenancy agreement, and you haven’t violated any agrarian laws, your claim to the land is likely stronger. However, if a tenancy relationship exists, or if the DAR has taken any action against you, the situation becomes more complex. You must also consider if you filed the necessary paper work to secure your rights to the property.

    Practical Advice for Your Situation

    • Consult with an Agrarian Law Expert: Given the complexities of agrarian laws, seek legal advice from a lawyer specializing in this area. They can assess your specific situation and provide tailored guidance.
    • Gather Evidence of Ownership: Compile all documents proving your family’s ownership of the land, such as land titles, tax declarations, and any other relevant records.
    • Document Your Agreement with the Neighbor: If possible, gather evidence showing the nature of your agreement with the neighbor, emphasizing that it was merely a permissive arrangement.
    • Check with the Department of Agrarian Reform (DAR): Inquire with the DAR to determine if any claims or proceedings have been initiated regarding your land.
    • Consider Mediation: Attempt to resolve the issue amicably through mediation with your neighbor. This can potentially lead to a mutually agreeable solution without resorting to lengthy legal battles.
    • Prepare for Potential Legal Action: Be prepared to defend your ownership rights in court if necessary. Your lawyer can help you prepare the necessary legal documents and represent you in any legal proceedings.

    Navigating agrarian reform laws can be challenging, but understanding your rights and taking proactive steps can significantly protect your family’s land. By seeking expert legal advice and gathering the necessary evidence, you can effectively address this issue and safeguard your property.

    Hope this helps!

    Sincerely,
    Atty. Gabriel Ablola

    For more specific legal assistance related to your situation, please contact me through gaboogle.com or via email at connect@gaboogle.com.

    Disclaimer: This correspondence is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please schedule a formal consultation.

  • Can a Mortgage Be Valid if I Wasn’t the Owner Yet?

    Dear Atty. Gab,

    Musta Atty! I’m writing to you because I’m in a bit of a bind and really need some legal advice. Back in 2010, my husband and I took out a loan to expand our small business. The bank required us to put up our house as collateral. At that time, we were still paying for the land through an installment plan with the local government. We had been living there for years and had every intention of fully owning it, but the title wasn’t officially in our name yet.

    Now, we’ve fallen behind on our payments due to some tough economic times. The bank is threatening to foreclose on our house. A lawyer friend mentioned something about the mortgage possibly being invalid since we didn’t technically own the land when we signed the loan agreement. This has given me a little hope, but I’m not sure if it’s wishful thinking. Is it true that a mortgage can be challenged if the borrower wasn’t the registered owner at the time of the agreement? What are my rights in this situation?

    I’m really worried about losing our home. Any guidance you can provide would be a huge help. Salamat po!

    Sincerely,
    Maria Hizon

    Dear Maria,

    Magandang araw, Maria! I understand your distress regarding the potential foreclosure of your home. It’s certainly a stressful situation when your family’s residence is at risk. You’re right to question the validity of the mortgage given that you were still in the process of acquiring ownership of the land at the time the loan agreement was made.

    The key legal principle here revolves around whether you had sufficient ownership rights to mortgage the property, even if the title wasn’t fully transferred to you yet. There are arguments on both sides, and it is important to consider factors such as possession, tax declarations, and any agreements you had with the local government regarding your property.

    Possession and Rights: What Kind of Ownership Do You Need to Mortgage?

    Under Philippine law, the validity of a mortgage hinges on whether the mortgagor (the borrower) has the authority to mortgage the property. This authority is generally derived from ownership, but the specific requirements can be complex.

    As a general rule, Article 2085 of the Civil Code provides the essential requisites for a valid mortgage. One of the requisites is that the mortgagor must be the absolute owner of the property mortgaged. This appears to be a very high bar to clear, but as we go on, there are other ways in Philippine Jurisprudence to fulfill this requirement.

    However, the concept of ownership isn’t always straightforward, especially when installment plans or other purchase agreements are involved. Even if you didn’t have a formal title, you might have had sufficient ownership rights to create a valid mortgage, especially if you had already declared the land under your name.

    Tax declarations, although not conclusive evidence of ownership, can serve as strong proof of possession and claim of ownership. This is especially true if they are coupled with continuous possession of the property.

    The courts look at who has actual control of the property, who has declared it under his name, and who has been paying real property taxes. The more of these you can tick, the stronger your claim to the property becomes.

    The concept of estoppel might also apply. This legal principle prevents someone from denying something that they previously asserted, especially if another party acted upon that assertion to their detriment. If you presented yourself as the owner and the bank relied on that representation, you might be prevented from later claiming that the mortgage is invalid because you weren’t the owner. As mentioned in the case provided:

    “Respondents’ act of entering into the mortgage contract with petitioner, benefiting through the receipt of the loaned amount, defaulting in payment of the loan, letting the property be foreclosed, failing to redeem the property within the redemption period, and thereafter insisting that the mortgage is void, cannot be countenanced. We agree with PNB that respondents are estopped from contesting the validity of the mortgage, absent any proof that PNB coerced or fraudulently induced respondents into posting Lot No. 10 as collateral.”

    Related to the idea of estopping a mortgagor from claiming their property from a mortgage is the principle of clean hands. This equitable principle holds that a party cannot seek relief in court if they themselves have acted unfairly or dishonestly. In your case, this may mean that the courts will not give you relief in case you used the funds from the loan, and only questioned its validity when foreclosure came. As cited in the case:

    “[A] party may be estopped to deny representations made when he had no knowledge of their falsity, or which he made without any intent to deceive the party now setting up the estoppel· [T]he fraud consists in the inconsistent position subsequently taken, rather than in the original conduct. It is the subsequent inconsistent position, and not the original conduct that operates to the injury of the other party.”

    Also important to the discussion of your case, it is crucial to consider if there are other real rights you have in the property. Even if you do not yet have the title, if you have rights to the property, that may be enough to validly mortgage the property. A related citation may help in considering this angle:

    “[I]n failing to recognize that the mortgagors also mortgaged all other real rights belonging to them attached to property or may thereafter be vested in them.”

    When tax declarations and possession are shown, the scales may tip toward having enough ownership to constitute a mortgage. As the court mentioned:

    Tax receipts and declarations are prima facie proofs of ownership or possession of the property for which such taxes have been paid. Coupled with proof of actual possession of the property, they may become the basis of a claim for ownership. x x x

    In summary, your situation needs to be carefully reviewed considering your specific documentation and circumstance. As we can see, there are many possible arguments depending on the details surrounding your property claim.

    Practical Advice for Your Situation

    • Review Your Loan Documents: Examine the mortgage agreement and any related documents to understand the exact terms and conditions. Pay attention to how ownership was represented and what warranties you made.
    • Gather Evidence of Ownership: Compile all documents that support your claim to the property, including installment payment receipts, tax declarations, utility bills, and any agreements with the local government.
    • Consult a Real Estate Attorney: Seek advice from a lawyer specializing in real estate and mortgage law. They can assess the strength of your case and advise you on the best course of action.
    • Negotiate with the Bank: Explore the possibility of restructuring your loan or negotiating a payment plan with the bank to avoid foreclosure. Banks are sometimes open to finding solutions that allow borrowers to keep their homes.
    • Consider Legal Action: If negotiation fails, consider filing a lawsuit to challenge the validity of the mortgage. A lawyer can help you determine if you have a strong legal basis for such a claim.

    Hope this helps!

    Sincerely,
    Atty. Gabriel Ablola

    For more specific legal assistance related to your situation, please contact me through gaboogle.com or via email at connect@gaboogle.com.

    Disclaimer: This correspondence is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please schedule a formal consultation.

  • Can a Seller Cancel a Real Estate Contract Without Full Refund?

    Dear Atty. Gab,

    Musta Atty! I’m writing to you because I’m in a bit of a bind. Back in 2015, I started buying a small condo unit through an installment plan from a developer. I religiously paid my monthly dues for almost six years, racking up a significant amount. Unfortunately, due to a series of unfortunate events – job loss and unexpected medical bills – I defaulted on my payments for a few months. The developer sent me a notice saying they were cancelling the contract and that I would only get a small fraction of what I paid back. They said it was based on some law. I’m confused because it feels unfair to lose so much money after paying for so long. Can they legally do that? What are my rights in this situation? I would really appreciate your advice.

    Thank you very much,

    Miguel Torres

    Dear Miguel,

    Musta Miguel! I understand your concern about the cancellation of your condo contract and the refund amount. It’s definitely a stressful situation when you’ve invested a significant amount of money. The key legal principle here is that while a seller can cancel a real estate contract due to non-payment, the law provides certain protections for buyers, especially concerning the refund of payments made.

    Protecting Your Investment: Understanding the Maceda Law

    Your situation falls under the protection of Republic Act No. 6552, also known as the Realty Installment Buyer Protection Act, or more commonly, the Maceda Law. This law governs the rights of buyers of real estate on installment plans. It specifically addresses situations where buyers default on their payments and the seller seeks to cancel the contract. The law aims to protect buyers from losing the entire value of their investment due to unforeseen circumstances. A critical aspect of the Maceda Law is the requirement for the seller to refund a certain percentage of the payments made, known as the cash surrender value.

    The Maceda Law outlines specific rules regarding the cancellation process and the refund amount. If you have paid installments for at least two years, you are entitled to certain rights, which include a grace period to catch up on missed payments and the right to receive a cash surrender value if the contract is canceled. The law stipulates the amount of the cash surrender value, and the process the seller must follow for a valid cancellation.

    To better understand your rights, let’s look at key provisions of the Maceda Law:

    “If the contract is cancelled, the seller shall refund to the buyer the cash surrender value of the payments on the property equivalent to fifty percent of the total payments made and, after five years of installments, an additional five percent every year but not to exceed ninety percent of the total payments made: Provided, That the actual cancellation of the contract shall take place after thirty days from receipt by the buyer of the notice of cancellation or the demand for rescission of the contract by a notarial act and upon full payment of the cash surrender value to the buyer.”

    This provision means that since you paid for almost six years, you are entitled to a cash surrender value equivalent to at least 55% of your total payments. Furthermore, the cancellation is only effective 30 days after you receive a notice of cancellation and upon full payment of the cash surrender value.

    It’s important to note that the seller cannot simply cancel the contract without following the proper procedure. They must provide you with a notice of cancellation or demand for rescission via notarial act, and they must also fully pay you the correct cash surrender value. The seller’s failure to fully comply with these requirements renders the cancellation invalid.

    “R.A. No. 6552 recognizes the right of the seller to cancel the contract but any such cancellation must be done in conformity with the requirements therein prescribed. In addition to the notarial act of rescission, the seller is required to refund to the buyer the cash surrender value of the payments on the property. The actual cancellation of the contract can only be deemed to take place upon the expiry of a thirty (30)-day period following the receipt by the buyer of the notice of cancellation or demand for rescission by a notarial act and the full payment of the cash surrender value.”

    This emphasizes that the seller must strictly adhere to the Maceda Law to legally cancel the contract and failure to follow procedure can be ground to deem cancellation invalid. The notice and cash surrender value are mandatory.

    Also, if the seller does not offer or is only offering a small fraction of what you should be receiving then you have to consider also that:

    “The allegation that Chandumal made herself unavailable for payment is not an excuse as the twin requirements for a valid and effective cancellation under the law, i.e., notice of cancellation or demand for rescission by a notarial act and the full payment of the cash surrender value, is mandatory.”

    Making yourself unavailable to receiving the cash surrender value is not a valid excuse for non-payment and that is why the payment and the process is mandatory.

    Practical Advice for Your Situation

    • Review Your Contract: Carefully examine your contract to sell and any related documents to understand the specific terms and conditions.
    • Calculate the Correct Cash Surrender Value: Determine the total amount you’ve paid and calculate the cash surrender value you are entitled to under the Maceda Law (at least 55% of your total payments since you paid for almost six years).
    • Document Everything: Keep records of all payments made, notices received, and communication with the developer.
    • Send a Formal Demand Letter: Send a formal letter to the developer, asserting your rights under the Maceda Law and demanding the correct cash surrender value.
    • Seek Mediation: If the developer refuses to cooperate, consider mediation to reach a mutually agreeable solution.
    • Consult with a Real Estate Lawyer: If mediation fails or the stakes are high, consult with a real estate lawyer to explore your legal options, including filing a lawsuit.
    • File a Complaint: You may file a complaint before the Housing and Land Use Regulatory Board (HLURB) to question the rescission made by the developer.

    Hope this helps!

    Sincerely,
    Atty. Gabriel Ablola

    For more specific legal assistance related to your situation, please contact me through gaboogle.com or via email at connect@gaboogle.com.

    Disclaimer: This correspondence is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please schedule a formal consultation.