Mortgagee: PIO SERVANDO Facts:
On August 20, 1970 Jose Servando, borrowed a sum of money from his cousin Pio Servando. To secure the loan, he mortgaged his 3 parcels of land in a private document, stipulating that in case of default by Jose, Pio the mortgagee, shall be the absolute owner of the mortgaged property.
On March 11, 1978, Jose sold same property to petitioners Hechanova. Pio challenged the validity of the sale contending the same is fraudulent.
Respondent Judge Adil ordered the annulment of the sale and the delivery of the title of said parcel of lands to Pio Servando.
Hence this case.
Contentions:
HECHANOVA:
- the Deed of Mortgage executed between Pio and Jose is invalid on the ground that it was executed in a private document; it was not registered in the Registry of Deeds; and the stipulation that in case of default, Pio shall be the owner of the property mortgaged is a pactum commissorium, which is proscribed by law.
PIO SERVANDO:
- maintained that the Deed of Sale executed by Jose Servando in favor of petitioners Hechanova is fraudulent, claiming that the said parcels of land were previously mortgaged to him.
SC Ruling:
The Court ruled that the Contract ct of Mortgage between Jose and Pio is invalid. The law on mortgage requires that the contract should be in a public document, duly registered in
the Registry of Deed to be validly constituted. In the case at bar, the Contract of Mortgage executed between Pio and Jose was in the form of a private document and not registered in the Registry of Deeds.
Moreover, it contains a stipulation (pacto comisorio) which is null and void under Article 2088 of the Civil Code.
Even if assuming that the property was validly mortgaged to the plaintiff, his recourse was to foreclose the mortgage, not to seek annulment of the sale.
MOBIL OIL PHILIPPINES INC. VS. RUTH DIOCARES et.al 29 SCRA 656
Mortgagee: MOBIL OIL PHILIPPINES INC.
Mortgagor: RUTH DIOCARES and LOPE T. DIOCARES Facts:
Defendants Ruth and Lope Diocares obtained a P45, 000.00 loan from Mobil Oil Phils.
Inc. To secure the loan, they executed a Contract of Real Estate Mortgage in favor of Mobil. Such contract was not registered in the Reg. of Deeds.
Later, defendants failed to fulfill their obligation, therefore a suit was filed against them in the lower court for performance of their obligation, furthermore, should the defendants still fail to perform their obligation, the plaintiff would move for the foreclosure of the mortgaged properties and shall apply the proceeds in the mortgagor’s outstanding balance.
The Trial Court ruled in favor of the plaintiff ordering the defendants to pay the former up to the extent of the outstanding balance, denying however, the plaintiff’s prayer for foreclosure of the mortgaged property on the ground that the mortgage is not valid, it being not registered in the Reg. of Deeds. Hence this appeal.
Contentions:
MOBIL:
- It challenged the decision of the TC and contended that there was a valid mortgage and despite non- registry of said mortgage, it has the right to foreclose the mortgaged property and apply the proceeds thereof for the payment of mortgagor’s obligation.
DIOCARES:
- maintained the decision of the TC.
SC Ruling:
The SC ruled that the lower court erred in relying merely on the opening sentence of the governing article that is indispensable, “in order that a mortgage may be validly constituted, the document in which it appears be recorded in the Registry of Property.” Note that it ignored the succeeding sentence:” if the instrument is not recorded, the mortgage is nevertheless binding between the parties.”
The provision is clear and explicit. Even if the instrument was not recorded, “the mortgage is nevertheless binding between the parties.” The law cannot be any clearer. Effect must be given to it as written. The mortgage subsists; the parties are bound as between them,
the mere fact that there is as yet no compliance with the requirement that it be recorded cannot be a bar to foreclosure.
Purpose of registration: Registration of Mortgage is necessary only to make the same valid against third persons
APOLONIA SANTIAGO VS. ANGELA DIONISIO, ET.AL 92 PHIL 495
Mortgagor: SANTIAGO Mortgagee: RESURRECCION Previous owner: SAN DIEGO Facts:
Apolonia Santiago bought a parcel of land from San Diego. She then applied said land for registration but found out that said land was previously mortgaged by San Diego in favor of Resureccion and such mortgage was duly registered.
San Diego failed to pay his obligation to Resureccion so the latter had the property foreclosed and sold the same in a public auction. Angela Dionesio bought the land being the highest bidder. Santiago then filed a suit for the annulment of the sale.
The TC favored Santiago holding that the foreclosure of the property in dispute is null and void. Therefore, ordered the registration of the land under the Santiago’s name. Hence this appeal.
Contentions:
DIONESIO:
- Claimed that Santiago, having intervened in the action, is bound by the result of the foreclosure proceedings.
SANTIAGO:
- Contended that it is required by rules that all parties having interest in a land subject to foreclosure, including those who are purchasers of a mortgaged land, shall be impleaded for the decision of the foreclosure proceeding to be binding unto them, otherwise, it cannot affect their rights.
SC Ruling:
The Court ruled that while it may be true that the sale in the foreclosure proceeding is valid between the parties therein so as to register the land in question under the name of Dionesio, but subject however to Santiago’s equitable right of redemption which she can exercise within a period of three months.
Furthermore, under the law, all parties having claiming rights over the land subject to foreclosure proceedings should be impleaded for the decision in the case to be binding upon the parties. In the case at bar, Santiago, being the purchaser was not impleaded in the foreclosure proceedings. While it may true that she intervened with the registration of the land under the name of Dionisio, it does not mean that she was made party to the foreclosure proceedings since her intervention is only subject to the opposition in the conformance of the sale to Dionesio.
Judgment in the foreclosure proceeding has already been issued and that the land is only for execution. The decision cannot affect the rights of Santiago.