Legal Forms

Special Class
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A and B are debtor and creditor respectively. A
borrowed P1m from B. The creditor demands for a
collateral to secure the payment of the loan. A offers his
commercial lot located in Davao City as a collateral.
 
Further, B demands that the document to be
executed is a DEED OF SALE WITH RIGHT OF
REPURCHASE. He wants that A will be given only 1 year
to repurchase the property.
a) If you were the lawyer of A, what advice will
you give A in relation to the document that B
wants to be executed? What provisions of the
Civil Code will you cite to convince A and B to
follow your advice.

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 Answer:
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I would advise A not to execute the Deed of Sale with Right of Repurchase
as demanded by B.
Article 1458 of the New Civil Code provides that “In a contract of sale one
of the contracting parties obligates himself to transfer the ownership of and to
deliver a determinate thing, and the other to pay therefor a price certain in money
or its equivalent. A contract of sale may be absolute or conditional.” There is a
conditional sale when the sale is with a right to repurchase. The essence of a
deed of Sale with Right of Repurchase is that title and ownership of the property
is immediately vested in the vendee a retro, subject to the restrictive condition of
repurchase by the vendor a retro within the period provided in Article 1606 of
the New Civil Code.
 Cont… a)
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In the case at hand, the relationship between A and B are debtor and
creditor and not that of a vendor and vendee. Hence, A should not agree to
execute a Deed of Sale with Right of Repurchase.
 “
b) As a lawyer of A what document
will you prepare to reflect the true
intention of the parties?
CITE ALL THE APPLICABLE
PROVISIONS IN SUPPORT OF
YOUR ANSWER.

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 Answer:
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b) Contract of Mortgage, particularly Real Estate Mortgage.

A mortgage is a contract whereby the debtor secures to the creditor
the fulfillment of a principal obligation, specially substituting to such
security immovable property or real rights over immovable property
which obligation shall be satisfied with the proceeds of sale of said
property or rights in case the said obligation is not complied with at the
time stipulated.
 Cont… b)
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Immovable and alienable real rights over immovable can be the
subject of a contract of mortgage as provided under Article 2124 of the
New Civil Code.

In addition to the requisites stated as common to pledge and

mortgage under Articles 2085 and 2087, it is indispensable in order that a
mortgage may be validly constituted that it appears in a public document
duly recorded in the Registry of Property as provided under Article 2125.
However, an additional provision is made also under Article 2125, that if
the instrument of mortgage is not recorded, the mortgage is nevertheless
binding between the parties.”
 Cont… b)
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Further, Article 2131 provides that “The form, extent and

consequences of a mortgage, both as to its constitution, modification
and extinguishment, and as to other matters not included in this
Chapter, shall be governed by the provisions of the Mortgage Law
and of the Land Registration Law.
c) Draft that document. This is in
relation to the question in letter B.

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 REAL ESTATE MORTGAGE AGREEMENT  
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KNOW ALL MEN BY THESE PRESENTS: 
 
This Real Estate Mortgage Agreement executed by and between:
 
[NAME], Filipino, of legal age, married and with address at
_____________, hereafter called the Debtor/Mortgagor;
 – and –
[NAME], Filipino, of legal age, married, and a resident of
_____________, hereafter called the Creditor/Mortgagee;
 
W I T N E S S E T H : That – 
 1. The Property. – The Property subject of this contract is a parcel of land, more particularly
described as follows:
 
12 Transfer Certificate Of Title No. __________
Registry Of Deeds For _________ City
[COPY TECHNICAL DESCRIPTION FROM THE TITLE]
together with all the improvements thereon, herein collectively referred to as the Property.
 
2.  The Loan. – Debtor/Mortgagor has obtained a loan from the Mortgagee in the sum
of _____________ Pesos (P__________) subject to the terms and conditions hereunder
prescribed, to wit:
2.1.   The loan shall be payable on or before __________
2.2.  It shall bear interest at the rate of ___ percent (__%) per annum payable every
__day of the month corresponding to the month for which interest is due.
2.3.  The amounts due by way of interest payments shall be covered by [number] (__)
postdated checks of P__________ each and the principal loan of P_____________
shall also be covered by a postdated check dated ___.
2.4.  Failure and/or refusal or the Debtor/Mortgagor to pay two (2) consecutive
monthly interests (or when the checks are dishonored) shall automatically make the
principal loan of P________________ due and demandable, together with the unpaid
interest, if any.
 
 3.  The Mortgage. – For and in consideration of the loan stated in paragraph 2 hereof and
by way of a security therefor, the Debtor/Mortgagor hereby constitutes a real estate
mortgage on the Property in favor of Creditor/Mortgagee, under the following terms and
13 conditions:
3.1.  The mortgage shall secure the payment of the loan, together with the unpaid
interest, if any.
3.2.  In case the maturity of the loan is extended, upon mutual agreement in writing
of the Parties, this mortgage shall be a continuing security for the obligation/s of
the Debtor/Mortgagor to the Creditor/Mortgagee without the necessity of executing
a new contract of real estate mortgage.
3.3.  If the Debtor/Mortgagor shall well pay and/or comply with his all and every
obligation under this Deed, then this mortgage shall cease to have any force and
effect. However, if the Debtor/Mortgagor shall fail and/or refuse, for any reason
whatsoever, to fully pay and/or comply with all or any of his said obligations, then
the Creditor/Mortgagee may judicially or extrajudicially, at his option, foreclose the
mortgage on the property in accordance with law.
3.4.  In case collection of any amount due under this mortgage agreement is referred
to a lawyer by the Creditor/Mortgagor, the Debtor/Mortgagor is under obligation to
pay the former ___ percent (__%) of the amount due.
 
 4.  Expenses. – Expenses for notarial fees shall be for the account of
the Debtor/Mortgagor. All other expenses for the registration with the
appropriate office / the Register of Deeds shall be for the account of
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the Creditor/Mortgagee.
 
5.  If anyone or more of the provisions of this Agreement is declared invalid or
unenforceable, in any respect under any applicable law, the validity, legality or
enforceability of the remaining provisions contained herein shall not in any way
be affected or impaired.
IN WITNESS whereof, the Parties affixed their signatures this ______th day of
________________ ___ in ___________ City.
 
 
Signed:
                               (Mortgagor)                                                       (Mortgagee)
 
 
Signed in the presence of:
_____________________________    ___________________________
 
 
 ACKNOWLEDGMENT
 
REPUBLIC OF THE PHILIPPINES)
) S.S.
15 x––––––––––––––––––––––x
 
BEFORE ME personally appeared:
            PERSONS                                    ID
[NAME]           Driver’s License No. ___________
[NAME]           Driver’s License No. ___________
presenting their competent evidence of identity, known to me and to me known to be the same persons who
executed the foregoing Real Estate Mortgage Agreement and they  acknowledged to me that the same is their
knowing, free and voluntary act and deed.
 
This document relates to the mortgage of a parcel of land registered under TCT No. _______________ of
the Registry of Deeds for ___________ City and consists of ____ (___) pages, including this page, each of
which had been signed by the Parties and their instrumental witnesses.
WITNESS my signature and notarial seal this ___th day of _________ ___.
Doc. No. ____;
Page No. ____;
Book No. ____;
Series of _____.
 
 
d) If instead of a commercial lot, B demands that the
BMW vehicle of A will be used a security for the loan,
what document will you draft? PREPARE THAT
DOCUMENT.

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 Chattel Mortgage Contract.
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"This mortgage made this ____ day of __________ by _______________, a

resident of the municipality of ______________, Province of ____________,
Philippine Islands mortgagor, to ____________, a resident of the
municipality of ___________, Province of ______________, Philippine
Islands, mortgagee, witnesseth:
"That the said mortgagor hereby conveys and mortgages to the said
mortgagee all of the following-described personal property situated in the
municipality of ______________, Province of ____________ and now in the
possession of said mortgagor, to wit:
(Here insert specific description of the property mortgaged.)
 "This mortgage is given as security for the payment to the said ______,
18 mortgagee, of promissory notes for the sum of ____________ pesos, with (or
without, as the case may be) interest thereon at the rate of ___________ per
centum per annum, according to the terms of __________, certain promissory
notes, dated _________, and in the words and figures following (here insert copy
of the note or notes secured).
"(If the mortgage is given for the performance of some other obligation aside
from the payment of promissory notes, describe correctly but concisely the
obligation to be performed.)
"The conditions of this obligation are such that if the mortgagor, his heirs,
executors, or administrators shall well and truly perform the full obligation (or
obligations) above stated according to the terms thereof, then this obligation
shall be null and void.
 "Executed at the municipality of _________, in the Province of ________, this _____
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day of _____

____________________
(Signature of mortgagor.)

"In the presence of

"_________________
"_________________
(Two witnesses sign here.)
20 FORM OF OATH.
"We severally swear that the foregoing mortgage is made for the purpose of securing
the obligation specified in the conditions thereof, and for no other purpose, and that
the same is a just and valid obligation, and one not entered into for the purpose of
fraud."

FORM OF CERTIFICATE OF OATH.

"At ___________, in the Province of _________, personally appeared ____________,
the parties who signed the foregoing affidavit and made oath to the truth thereof
before me.

"_____________________________"
e) What are the applicable provisions of law
that will you apply in drafting the document
referred to in the preceding question? Cite all of
them.

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 Answer:
22 Article 2124. Only the following property may be the object of a contract of
mortgage:
(1) Immovables;
(2) Alienable real rights in accordance with the laws, imposed upon immovables.
Nevertheless, movables may be the object of a chattel mortgage. (1874a)

Article 2140. By a chattel mortgage, personal property is recorded in the Chattel

Mortgage Register as a security for the performance of an obligation. If the
movable, instead of being recorded, is delivered to the creditor or a third person,
the contract is a pledge and not a chattel mortgage. (n)

Article 2141. The provisions of this Code on pledge, insofar as they are not in
conflict with the Chattel Mortgage Law shall be applicable to chattel mortgages.
 II
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A, B, C and D wanted to establish a review center for bar examinees. In
order to start the business, they need a starting capital of P6 million. They agreed
that the following shall be the contribution:

A- P1 m
B- P4m
C- P.5m
D- P.5m

It was further agreed that C shall manage the review center for which she shall
be paid P25,000 a month. B wanted that it shall be stated in the document
evidencing their agreement that co-ownership shall exist for 30 years.
a. What document will you prepare to embody
their agreement to form a co-ownership and
operate their business? What articles of law
will you apply in connection with the
document that you will prepare?

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 Answer:
25

◈ The document applicable in this case, in order to embody their agreement to

form a co-ownership and to operate their business, is the Articles of
Partnership vis-a-vis General Partnership.
What articles of law will you apply
in connection with the document
that you will prepare?

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 Answer
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Art. 1767. By the contract of partnership two or more persons bind themselves to
contribute money, property, or industry to a common fund, with the intention of
dividing the profits among themselves.
Two or more persons may also form a partnership for the exercise of a
profession. (1665a)

Art. 1768. The partnership has a judicial personality separate and distinct from
that of each of the partners, even in case of failure to comply with the
requirements of Article 1772, first paragraph. (n)
 Answer
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Art. 1772. Every contract of partnership having a capital of three thousand pesos
or more, in money or property, shall appear in a public instrument, which must
be recorded in the Office of the Securities and Exchange Commission.

Failure to comply with the requirements of the preceding paragraph shall not
affect the liability of the partnership and the members thereof to third persons.
(n)

Art. 1773. A contract of partnership is void, whenever immovable property is

contributed thereto, if an inventory of said property is not made, signed by the
parties, and attached to the public instrument. (1668a)
b. PREPARE THE DOCUMENT

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 III
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Anne and Sam are siblings. Ann, a Filipino citizen is a nurse in Australia and
she wants to invest in real estate in the Philippines.
 
But because she could not come home due to the pandemic she suggested
to Sam that she will just send him the money to purchase the property. She also
suggested to Sam that in the Deed of Sale, Sam will appear as the buyer.
 
However, Anne also wants that a legal document be executed by Sam
through which Sam will acknowledge that the real owner of the property is Anne
and that the money used in purchasing the property is Anne’s.

Draft the legal document that Sam has to sign so that Anne’s proprietary
interests will be protected.
 Answer:
Republic of the Philippines)
35 Province of Davao del Sur.) s.s.
City of Digos ……………..)

ACKNOWLEDGEMENT OF OWNERSHIP  

KNOW ALL MEN BY THESE PRESENTS:

 
I, SAM DELA CRUZ, Filipino, of legal age, single and a resident of San Jose, Digos City, Davao del Sur, Philippines,
after having been sworn to in accordance with law do hereby depose and say:
 
1. That I am the vendee in the Deed of Sale executed last January 12, 2021 for a parcel of land known as Lot No.
2397, covered by Tax Declaration No. 12-00210-0602, located at Barangay Tiguman, Digos City, Davao del Sur, and more
particularly described as:

Tax Declaration No. 12-00210-0602

 Answer:
Lot No. 2397, located at Barangay Tiguman, Digos City, Davao del Sur, Philippines, with boundaries:
36  
North: Lot No. 2192 South: Lot No. 2899
East: Lot No: 1666 West: Lot No. 1820
With an area of Twenty Thousand square meters, more or less;

2. That notwithstanding having been named the vendee in the aforementioned sale, the money used to purchase the
abovestated property is owned and provided for by my sister, ANN DELA CRUZ, Filipino, of legal age, single, a resident of
San Jose, Digos City and currently employed in Perth, Australia.

3. Thus, I hereby declare and acknowledge that I am only holding the property in trust for her.

4. Accordingly, I unqualifiedly declare and acknowledge that the true, absolute and beneficial ownership of the `
property actually pertains to my sister, Ana Dela Cruz, and not to me.

5. I am executing this Deed of Acknowledgement of Ownership to attest to the truth of the foregoing and agree to the
recording of all necessary entry in the appropriate government agencies to reflect the true ownership over the Property.
 Answer:
IN WITNESS WHEREOF I have affixed my signature hereto this ____ day of ______ at _____________.
37

  SAM DELA CRUZ

Community Tax Certificate No. 23327052           

BEFORE ME, a Notary Public for and in Digos City this ____ day of ______, personally appeared Affiant, whom I have
identified through his competent evidence of identity and who represented to me that he voluntarily affixed his signature on the
foregoing instrument for the purposes stated therein and who declared that she has executed the foregoing instrument as her free
and voluntary act and deed.

IN WITNESS WHEREOF, I have hereunto set my hand and affixed my notarial seal on the day, year and place first
above-written.
 Answer:
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ATTY. JUANA SANTOS
Notary Public for Digos City, Davao del Sur
Commission Serial No. 1221-9201
Until 12-31-21
Ladera Bldg. Digos City, Davao del Sur
Roll No. 122397
PTR No. 7310943, 01-08-21, Digos City
IBP No, 112738, 01-08-21, Digos City

Doc. No. ___;

Page No. ___;
Book No. ___;
Series of 2021.
 Thanks!
Any questions?
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