In the Philippines, the integrity of the Torrens system of land registration is protected by law to ensure that a person dealing with registered land can rely on the face of the Transfer Certificate of Title (TCT). However, instances of "unauthorized mortgaging"—where a person mortgages a property without the owner's consent or through fraudulent means—present complex legal challenges.

Below is a comprehensive guide to the legal remedies and principles applicable when a land title is mortgaged without the owner's authority.

1. The Principle of "Nemo Dat Quod Non Habet"

The fundamental principle governing these cases is nemo dat quod non habet—no one can give what he does not have. If a person is not the owner and lacks a valid Power of Attorney (GPA or SPA) from the owner, they cannot validly encumber the property. Under Article 2085 of the Civil Code, it is an essential requisition of a mortgage that the mortgagor be the absolute owner of the thing mortgaged.

2. Primary Legal Remedies

A. Action for Nullification of Mortgage and Foreclosure

If the mortgage has already been executed or foreclosed, the real owner should file a Petition for Annulment of Mortgage and Foreclosure Sale.

Grounds: The primary ground is the lack of consent from the true owner and the falsity of the mortgagor's authority.
Effect: Once the mortgage is declared null and void, any subsequent foreclosure proceedings and the certificate of sale issued to the highest bidder are likewise voided.

B. Action for Quieting of Title

Under Article 476 of the Civil Code, an action may be brought to remove a "cloud" on a title. An unauthorized mortgage constitutes such a cloud, as it appears valid on its face but is actually invalid or unenforceable.

Purpose: To declare the mortgage ineffective and clear the owner’s TCT of the unauthorized encumbrance.

C. Cancellation of Encumbrance/Entry

If the mortgage has been annotated on the TCT at the Register of Deeds, the owner can move for the cancellation of the entry under Section 108 of Presidential Decree No. 1529 (The Property Registration Decree), provided there is a court order declaring the mortgage void.

3. The "Mortgagee in Good Faith" Doctrine

The most significant hurdle for an owner is the Mortgagee in Good Faith doctrine.

The Rule: A mortgagee (usually a bank or financial institution) has the right to rely on what appears on the face of the certificate of title. If the title is in the name of the mortgagor and there are no entries that would pique suspicion, the mortgage may be upheld even if the mortgagor obtained the title through fraud.
The Exception: This doctrine generally does not apply to:

Banks and Financial Institutions: The Supreme Court imposes a higher standard of diligence on banks. They are expected to look beyond the title, conduct an on-site inspection, and verify the actual possession of the property.
Forged Powers of Attorney: If the mortgagor used a forged Special Power of Attorney (SPA) while the title remained in the name of the true owner, the mortgage is generally void because a forged document is a nullity and conveys no title.

4. Criminal Liabilities

The unauthorized mortgagor may be held liable under the Revised Penal Code for:

Estafa (Article 315): Defrauding the owner or the mortgagee through deceit.
Falsification of Public Documents (Article 172): Specifically if a forged SPA or a fake TCT was used to secure the loan.
Other Deceits (Article 316): Specifically paragraph 1, which penalizes anyone who, pretending to be the owner of any real property, shall convey, sell, encumber, or mortgage the same.

5. Recovery from the Assurance Fund

If the owner loses the property because it was subsequently sold to an innocent purchaser for value (after a void foreclosure) and the owner can no longer recover the land, they may file a claim against the Assurance Fund under Sections 93 to 102 of P.D. 1529.

Requirement: The owner must prove they were deprived of the land through the operation of the Torrens system without negligence on their part.

6. Summary of Procedural Steps

Verify the Status: Obtain a Certified True Copy of the TCT from the Register of Deeds to see the specific entry of the mortgage.
Adverse Claim: Immediately file an Affidavit of Adverse Claim under Section 70 of P.D. 1529 to warn third parties about the fraud.
Formal Demand: Send a demand letter to the mortgagee (bank/lender) notifying them of the unauthorized nature of the mortgage.
Litigation: File the appropriate civil action (Annulment of Mortgage) in the Regional Trial Court where the property is located.