Dear PAO,
My father passed away last year, leaving behind a P1,000,000 bank loan secured by a single parcel of land. My brother and I inherited his estate, and, to be responsible heirs, we formally agreed to split the debt equally at P500,000 each. Through hard work, I painstakingly raised my share of the obligation and paid the bank.
I then asked the bank to release half of the mortgaged land so I could start building a home for my family. To my frustration, the bank refused, insisting that not a single square inch of the property will be released until my brother pays off his remaining P500,000. Is this legal, considering that I have already paid half of the loan?
Liliana
Dear Liliana,
To answer your question, we turn to Article 2089 of the New Civil Code of the Philippines, which sets forth the rule on the indivisibility of a pledge or mortgage.
The said provision explicitly states: “A pledge or mortgage is indivisible, even though the debt may be divided among the successors in interest of the debtor or of the creditor.
“Therefore, the debtor’s heir who has paid a part of the debt cannot ask for the proportionate extinguishment of the pledge or mortgage as long as the debt is not completely satisfied.
“Neither can the creditor’s heir who received his share of the debt return the pledge or cancel the mortgage, to the prejudice of the other heirs who have not been paid...”
Under the law, a mortgage is considered indivisible. This means that the entire mortgaged property serves as security for the entire obligation. Even if the debt is divided among the heirs upon the debtor’s death, the mortgage itself cannot be divided or partially released as partial payments are made.
Citing a number of jurisprudence, the Supreme Court in Goldwell Properties, Nova Northstar Realty Corporation, and NS Nova Star Company, Inc. vs. Metropolitan Bank (G.R. No. 209837, May 12, 2021, Associate Justice Ramon Paul L. Hernando), emphasized that “[u]nder this provision, the ‘debtor cannot ask for the release of any portion of the mortgaged property or of one or some of the several lots mortgaged unless and until the loan thus secured has been fully paid, notwithstanding the fact that there has been a partial fulfillment of the obligation. Hence, it is provided that the debtor who has paid a part of the debt cannot ask for the proportionate extinguishment of the mortgage as long as the debt is not completely satisfied.’”
In your situation, although you have already paid your P500,000 share of the obligation, the bank is legally justified in refusing to release any portion of the mortgaged property. As long as your brother’s remaining P500,000 balance remains unpaid, the mortgage continues to encumber the entire property.
The only exception allowed under Article 2089 is when multiple properties are given as collateral, and the contract specifically stipulates that each property guarantees only a specific portion of the debt. In that scenario, paying off the assigned amount for a particular property gives you the right to have that specific property released.
Because your father’s loan was backed by a single property without any special terms, the general rule of indivisibility applies. Consequently, you cannot compel the bank to cancel or diminish the mortgage until the debt is completely satisfied.
We hope that we were able to answer your queries. This advice was solely based on the facts you have narrated and our appreciation of the same. Our opinion may vary when other facts are changed or elaborated.
Thank you for your continued trust and support.
Editor’s note: Dear PAO is a daily column of the Public Attorney’s Office. Questions for Chief Acosta may be sent to dearpao@manilatimes.net
