Validity of Mortgaging Property Without the Owner’s Consent

Query: If a mother mortgages her child’s condo without the child’s knowledge, can the creditor claim the condo? Can the unit owner forcefully reclaim it?

Understanding Unauthorized Mortgage Transactions

In the Philippines, the act of mortgaging a property without the owner's knowledge and consent is considered unlawful. Property ownership grants the owner exclusive rights over their property, including the right to mortgage, sell, or otherwise encumber it. Any attempt to mortgage property without the owner's authorization is invalid and unenforceable under the law.

Legal Framework

1. Civil Code of the Philippines: The Civil Code provides the legal basis for property ownership and the formalities required for creating a mortgage. Under the Civil Code, a mortgage must be created through a public instrument and registered with the Registry of Deeds. For a mortgage to be valid, it must be executed by the owner or a duly authorized representative.

2. Property Registration Decree (Presidential Decree No. 1529): This decree outlines the process of registering real estate transactions. It requires that any transaction involving registered property, including mortgages, must be executed by the registered owner or a person with legal authority to act on behalf of the owner.

Validity of the Mortgage

A mortgage executed without the consent of the property owner is considered null and void. If a mother mortgages her child's condo without the child's knowledge or authorization, the mortgage does not create any legal obligation on the part of the child. The creditor, in this case, cannot claim any rights over the condo based on the unauthorized mortgage.

Recourse for the Property Owner

The property owner has several legal remedies to address an unauthorized mortgage:

1. File a Petition for Annulment of Mortgage: The property owner can file a petition with the court to annul the mortgage on the grounds that it was executed without their consent. The court can declare the mortgage void and order the cancellation of its registration.

2. Reclaiming the Property: Since the mortgage is void, the property owner retains full ownership and can reclaim their property. The creditor has no legal claim over the property and cannot enforce the mortgage.

3. Damages: The property owner may also seek damages from the person who executed the unauthorized mortgage (in this case, the mother) for any harm or losses suffered due to the unlawful act.

Preventive Measures

To prevent unauthorized transactions, property owners should take the following steps:

1. Register Property: Ensure that the property is properly registered with the Registry of Deeds in the owner’s name to protect against fraudulent transactions.

2. Secure Documents: Keep original property titles and important documents in a secure place to prevent unauthorized access.

3. Monitor Property Records: Regularly check the status of the property at the Registry of Deeds to detect any unauthorized transactions.

4. Legal Representation: Consult with a lawyer to understand the legal rights and measures to protect property ownership.

Conclusion

In the Philippines, mortgaging a property without the owner’s consent is illegal and void. The creditor cannot claim the property based on such an unauthorized mortgage. The rightful property owner has the legal right to reclaim their property and seek annulment of the invalid mortgage, as well as any damages incurred from the unauthorized act.