Practice question
A land mortgage secures a loan and provides that the creditor automatically becomes owner of the land on default, without foreclosure or any later voluntary settlement. Both parties invoke freedom of contract to enforce that precise clause. Which is correct?
- The prohibited automatic appropriation is not validated by autonomy
- Their consent necessarily overrides Article2088
- Default alone transfers ownership under every mortgage
- Notarization necessarily converts the clause into lawful foreclosure
- The creditor’s signature supplies a judicial sale
Legal references
- Civil Code RA386: https://lawphil.net/statutes/repacts/ra1949/ra_386_1949.html Articles1171,1229,1306,1956,2088,2130.
- GR126800 November29,1999 MAIN: https://lawphil.net/judjuris/juri1999/nov1999/gr_126800_1999.html — Article1306 and prohibited automatic appropriation.
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