Short answer. Yes, within limits. Article 2124 of the Civil Code allows a mortgage over alienable real rights imposed upon immovables, in accordance with the laws — not only over the land itself. A real right such as a usufruct can be mortgaged, provided it is a real right that the law allows to be alienated.
What the law says
Alienable real rights in accordance with the laws, imposed upon immovables.
Civil Code, Article 2124 — What May Be Mortgaged. Read the full provision →
What may be mortgaged
Article 2124 lists the permissible objects of a mortgage: 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. It then notes that movables may be the object of a chattel mortgage. So the law recognises three tracks — immovables, alienable real rights over immovables, and movables under a chattel mortgage. A real right over land can be the subject of a real estate mortgage under the second category.
The 'alienable' condition
The key qualifier is alienable ... in accordance with the laws. A real right can be mortgaged only if it is one that may be transferred; a right the law or the terms creating it forbid you to alienate cannot be mortgaged either. So whether a particular usufruct, or another real right over an immovable, may be mortgaged depends on whether that right is itself alienable. The article does not throw the door open to every conceivable interest — it admits those real rights the law treats as transferable. Who holds the right also matters: only the person who actually owns the alienable right can mortgage it, and he cannot burden it beyond what he himself holds. If the right is subject to conditions or the consent of another, those constraints follow it into the mortgage.
Practical cautions
Mortgaging a real right rather than the land means the mortgage reaches only that right and is bound by its nature and duration. A usufruct, for example, is temporary and ends in the ways the Civil Code provides, and a mortgage over it cannot outlast the right it burdens. The provision tells you what may be mortgaged; it does not settle the formalities of registration or the effect when the underlying right expires. Before mortgaging a real right, confirm that the right is genuinely alienable and understand how long it will last, because the security is only as durable as the right behind it.
Cases citing this provision
These Supreme Court decisions cite the provision above. We list them so you can read them yourself; the summaries of what each decided are not ours to give.
- Valley Golf & Country Club, Inc. vs. Rosa O. Vda. Caram, G.R. No. 158805, April 16, 2009 — read the decision on LawPhil →