EQUITABLE MORTGAGE (Art. 1602, in reference to Art.
2124 [relating to the o Reason: contains an odious pactum commissorium
kinds of Real Mortgage
1. ISAGUIRRE vs DE LARA
 Alejandro and Felicitas De Lara: sales application
 2342  1600  1000
 2-storey residential commercial apartment : sons
 PNB Loans: Cornelio Isaguirre
 Deed of Sale and Special Cession of Rights and Interests  250 (Lot
502) with the 2-storey residential apartment  PhP 5, 000
 Sales Application Overlapping of Titles Quieting of Title and
Damages
EQUITABLE MORTGAGE
- No evidence to prove that the real intention of the parties was to allow
him to enjoy possession of the mortgaged property until full payment
of the loan
- Isaguirre is a possessor in bad faith because he knew from the very
beginning that there was really no sale and that he held the
respondent’s property as mere security for the payment of the loan
obligation
- He is entitled only to necessary expenses
2. BALITE vs LIM
 SPS. Aurelio and Esperanza Balite: owners of parcel of land in
Catarman, Northern Samar
 17, 551 square meters
 Aurelio died intestate: Esperanza and 7 children succeeded
 Esperanza  ill  Cristeta (daughter)  Rodrigo Lim  10, 000
square meters for 1M
 DoS: 150, 000 lang nakalagay for tax purposes, but may Affidavit
naman  Rodrigo took actual possession
 Other Children: wrote to RD, saying that they were not informed of
the sale
 Esperanza died  publication at Samar Reporter of the DoS 
Antonio received payment of estate tax from Rodrigo
 Application for title  other children refused to give OCT 
Mandamus
 Petitioners: Annulment of Sale, Quieting of Title, Injunction and
Damages
 Rodrigo: loan from RCBC  2M  security: property
SALE TO RODRIGO WAS VALID
- Parties intended to be bound by the contract despite simulation
- There was intention to transfer ownership of the 10,000 square
meter property
NO EVIDENCE THAT IT WAS A MORTGAGE
- The voluntary, written and unconditional acceptance of
contractual commitments negates the theory of EM
- Joint Affidavit confirmed the transaction between the parties as
sale
- Petitioners did not present witnesses to prove the the GSP was
undervalued
VALID INSOFAR AS TO THE IN PRO DIVISO SHARE OF ESPERANZA
- Rules on CO applies
- Subject to Partition
- 9, 751
- There was a valid transfer also to Rodrigo
3. ZUBIRI vs QUIJANO
 Appeal from the CA decision holding the Contract as as EM
 Feliza Zubiri to Lucio Quijano: Two-Year Pacto De Retro Contract for
the 3 parcels of land Zubiri  alleged purchase price of 700 pesos
 Errors asserted by Zubiri:
1. The CA erred in ordering the sale of the land in case of non-
payment because the contract was not registered
2. CA erred in not finding that she had already paid Quijano
usurious interests of 950 pesos, as determined by CFI Mindoro
PACTO DE RETRO
- The lien created ought not to be defeated by requiring
compliance of the formalities necessary to the validity of a
voluntary real estate mortgage, as long as the lands remained in
the hands of Zubiri and the rights of 3rd parties are not affected
- Unrecorded PDR: Equitable Mortgage
CA DID NOT COMMIT AN ERROR
- Based on equity jurisdiction, and considering that the present
complaint did not originally seek the recovery of debt, SC held
that Zubiri should be sentenced to pay only interests from the
date the decision becomes final
4. LANUZA vs DE LEON
 SPS. Rodolfo and Belen Lanuza: owners of 2-storey house in Tondo
 leased from Consolidated Asiatic Co
 Rodolfo: Deed of Sale with Right to Repurchase  Maria De Reyes
and Aurelia Navarro [including the leasehold rights to the lot, TV and
a ref for 3, 000 pesos]  Belen did not consent
 Extension of the redemption period through annotation Belen signed
 SPS. Lanuza: mortgaged the same to Martin De Leon to secure
payment of 2, 720 within a year  recorded
 De Leon: Petition for EJF
 Reyes and Navarro: Consolidation of Ownership
 De Leon: highest bidder  asked for the dismissal for the case filed
by Navarro and Reyes, stating that his rights should not be affected by
an unrecorded PDRS
EQUITABLE MORTGAGE
- Gross inadequacy of price: 3k lang eh may leashold rights at
appliences
- Non-Transmission of ownership to the vendees: SPS. Lanuza
remained in possession
o Contract is contrary to the nature of PDRS under
which the vendee acquires ownership of the thing sold
immediately upon the execution of the sale
clause
- Delay in the filing of Petition for Consolidation: Lanuzas remained
in possession even long after they had lost their right to redeem
the property
PREFERENCE OFCREDITS IS DETERMINED BY THE PRIORITY OF
REGISTRATION OF THE MORTGAGES
5. BISCHOFF vs POMAR
 Samuel Bischoff: complaint alleging that he is the owner of the
following, which are situated at Hacienda San Jose:
a. Steam sugar mill
b. Portable 8-horse-power boiler with its attachments
c. Complete tramway with rails and other fittings
d. 15 small cars
 Comapania De Tabacos Juan Pomar: obtained the appointment of a
receive of the property mentioned above of Romana Ganzon
- Took said property from Bischoff as receive of the property
- Despite demands, it did not return to Bischoff the property
- ALLEGATIONS:
a. Lazaro Mota gave a loan to Ganzon amounting 11, 209
pesos, payable at the expiration of 2 yrs, and
b. as a security of the debt, Ganzon mortgaged to Mota the
sugar plantation in San Jose
c. Another instrument were further executed to increase the
mortgage credit until it reached 21k
d. Last Instrument: Failure of Ganzon to pay will result to the
disposal of the hacienda in a public auction, together with
its improvements
e. Registered
f. Mota thereafter transferred the said credit to Compania De
Tabacos
g. Ganzon executed a mortgage in favor of Compania
(TOTAL CREDIT: 53k)
h. Above-mentioned things are fixtures at the hacienda and
form an integral part in the mortgage
i. Bischoff knew of the mortgages prior to his purchase of
such
PACTO DE RETRO
- At the time Bischoff purchased the machinery and etc from
Ganzon pacto de retro, these were already affected by and
included in the mortgage of Hacienda San Jose
- He is not entitled to loss and damages because he never
acquired possession of the same because the articles were
already liable to the credit of Ganzon
- The alienation of Ganzon does not release the encumbrance to
which they are subjected until redeemed
- Bischoff as purchaser shall respect the encumbrance to which it
is subjected
6. LORBES vs CA
 Petitioners: 225 square meter property in Antipolo, Rizal
 Mortgaged to Florencio and Nestor Carlos for 150, 000 increased to
500, 000 after a year
 De Los Reyes  Josefina Cruz  Housing loan at Landbank  deed
of sale  500, 000 of the loan will be paid to the Carloses  Balance
will pay for the taxes
 Petitioners notified Delos Reyes that they were ready to redeem the
property  refused  Reformation
EQUITABLE MORTGAGE
- True intention of the parties for executing the DoS was not to
convey ownership of the property in question, but to merely
secure the housing loan of Cruz
- Full amount of proceeds were given to the Petitioners
- Cruz kept none of the proceeds
- Preponderance of evidence shows that petitioners were aware
that when they signed the contract, it did not reflect of their real
intentions
- Petitioners remained in possession of the property
- Payment of taxes: Petitioner
- Inadequacy of price: prevailing market value then was 400, 000
per square meter, but the consideration of the sale was only 600,
000
ARTICLE 2125 (REGISTRATION)
1. MOBIL OIL vs DIOCARES
 Ruth and Lope Diocares: Contract of Loan and REM with Mobil Oil for
45, 000  agreed to buy from Mobil Oil on cash their petroleum
requirements for 50, 000 liters per month
 Monthly installments with interest of 9.5%  5 years
 Security: 2 parcels of lands in Bacolod
 Failure to pay and buy petroleum requirements = foreclosure
 Ruth and Lope: admitted their indebtedness, but alleged that its failure
to pay was due to Mobil Oil’s refusal
 RTC: denied the foreclosure bc there’s nothing on record that shows
that it was registered
LOWER COURT ERRED IN HOLDING THAT THERE WAS NO REM,
AND IN NOT ORDERING FORECLOSURE
- Even if the instrument is not registered, the mortgage is still
binding between the parties
- Absence of compliance with the requirements cannot be a bar to
foreclosure
- Binding effect of a promise must be lived up orherwise the
freedom of a contracting party is meaningless
 ARTICLE 2127 (EXTENT)
1. PEOPLE’S BANK vs DAHICAN
 Atlantic Gulf and Pacific Company: sold and assigned its rights in the
Dalhican lumber concession to DALCO  500, 000  only 50, 000
was paid
 To develop the concessions: (with DAMCO)
a. loan from PB: 200, 000
b. Export-Import Bank: $50, 000
- Security for both: (FIRST MORTGAGE)
o 5 parcels of lands in Camarines Norte, with all the
buildings and other improvements
o All personal properties in its place of business
 SECOND MORTGAGE: in favor of Atlantic same properties
 BOTH DEEDS: “xxx other property which the Mortgagor may hereafter
acquire, construct, install, attach or use in connection with the
premises, shall immediately be and become subject to the lien of this
mortgage.”  registered
 DATE OF EXECUTION OF MORTGAGES:
a. DALCO purchased from CONNELL various machineries,
equipment, spare parts and supplies in addition to or in
replacement of some of those which they already owned and use
 DALCO AND DAMCO: further pledged shares of stocks
 Failed to pay  PTB paid Import-Export bank  subrogation  failed
 Atlantic and Bank  foreclosure  175, 000
AFTER ACQUIRED PROPERTIES ARE COVERED BY THE DEED OF
MORTAGE
- Language of the contract leaves no doubt for its interpretation
VALID MORTAGE AS TO THE AFTER ACQUIRED PROPERTIES
ABSENCE REGISTRATION UNDER THE CHATTEL MORTGAGE LAW
- Registration under CML does not apply in this case because the
mortagages in question were executed on July 13, 1950 with the
Old Civil Code still in force, so eto yung governing law
- Article 415 enumerates IMs which included machineries,
receptacles, instruments or replacements intended by the owner
of the tenement for an industry or works which may be carried on
in a building or in a piece of land, and shall directly meet the
needs of said industry
- Chattels were IMs under Art. 415
- Properties were acquired in connection with the use and
development of the lumber concession; hence, were
immobilized, and does not need second registration
PROCEEDS OF THE SALE
- Proceeds from the after acquired properties and undebated
properties should be exclusively awarded to the bank
- DALCO and DAMCO conspired jointly kasi with CONNELL to
violate the provisions of the mortgage by attempting to defeat the
mortgage lien unto the after acquired properties
ARTICLE 2128 (ALIENATION IN FAVOR OF 3RD PERSONS)
1. REHABILITATION FINANCE CORP vs ALTO
 Eusteqio Palma: parcel of land in Camarines Sur
 FIRST MORTGAGE: RFC  20, 000
 SECOND MORTGAGE, with the consent of RFC: Alto Surety and
Insurance Company
 BOTH MORTGAGES: registered
 Upon failure to settle the 20, 000 loan, RFC foreclosed the mortgage
extrajudicially under Art. 3135  public auction  RFC as the highest
bidder
 6 months later, Palma conveyed his rights to SPS. Trinidad, assuming
the obligation of paying the repurchase price
 SPS. Trinidad and RFC: Deed of Resale  but, SPS paid only 5, 500
of 21, 505
 Alto (junior encumbrancer)  wrote to RFC inquiring as to the actual
status of the property
 RFC: Consolidation of Ownership bc of non-redemption  sought the
cancellation of the annotation of Alto as junior encumbrancer bc its lien
on the property now ceased  denied by the court
ANNOTATION OF THE SECOND MORTGAGE IN FAVOR OF ALTO WAS
MADE IN ACCORDANCE WITH THE LAW
- Junior encumbrancer was not notified of the foreclosure of the
first mortgage; hence, the rights of Alto were not terminated or
extinguished
- Junior encumbrancer is not a necessary party to the suit to
foreclose by a senior mortagagee, but is always proper and
prudent to join him as defendant, both to give an opportunity to
defend himself and to extinguish the right of redemption
REDEMPTION
1. BPI vs VELOSO
 SPS. Veloso: 1.3M loan from Family Bank and Trust Company (BPI’s
predecessor)  Security: 3 parcels of land with improvements 
Deed of Mortgage
 Defaulted in monthly installments  extrajudicial foreclosure  public
auction  Family Bank as highest bidder for 2.7M  assigned its
rights to BPI  certificate of Sale
 SPS. Veloso offered to redeem the property for 1.8M  rejected 
Annulment of Foreclosure
 Deposit of 1.5M with OCC  redemption
 BPI: Writ of Possession
 SPS: Injunction
SPS. VELOSO DID NOT COMPLY WITH THE PROPER REDEMPTION
OF THE PROPERTY
- No reason to rule otherwise the validity of the EJF because of the
default of SPS. Veloso
- Bona fide redemption necessarily implies a reasonable and valid
tender of the entire repurchase price, otherwise the rule on
redemption period fixed by law can be easily circumvented
- Ineffective offer because kulang
- Vendor cannot avail of himself of the right to repurchase without
returning to the vendee the price of the sale
- Requisites of Redemption Price:
a. Price
b. Interests of 1% on the purchase price
c. Amount of assessment and taxes
d. 1% of such assessment and taxes
- Offer of SPS. Veloso was not legal and ineffective; hence, the
refusal of BPI was justified
2. ROSARIO vs TAYUG
 Romeo Ramirez: borrowed 440 from Tayug Bank
 Security: 15, 000 square meter property of Melecio Rosario
 Ramirez made payments  remaining: 170  failed to settle 
foreclosure  public auction
 Bank  highest bidder for 208.53  Certificate of Sale on same day
 5 days after  sold to Nenita Vergara for 1600
 Ramirez: remitted 100 to the bank as deposit for redemption
thereafter offered to redeem  enclosure of 108. 53  bank
refused  redemption began to run on the day of the auction sale
 Action to Redeem the Property
REDEMPTION PERIOD SHOULD BE RECKONED FROM THE DATE OF
THE SALE, AND NOT FROM THE DATE OF THE AUCTION SALE
- Certificate of sale was not registered because RD refused as the
redemption period has not yet expired
- Failure to register shall not take effect as conveyance or bind the
land covered by a torrens title because the act of registration is
the operative act that affect the land
- Act 3135 should be applied in this case with RoC and Act No.
496
SHALL BE ALLOWED TO REDEEM
- Considering that the sum tendered was the purchase price paid
at the auction sale, and that the tender was made in good faith,
the SC believes that the ends of justice would be best served by
affording Tayug to redeem the property by paying the bank the
auction purchase price plus 1% interests per month up to the time
of redemption
3. BONNEVIE vs CA
 SPS. Jose and Josefa Lozano: loan from PH Banking Corporation 
75, 000  secured by a parcel of land  executed a Deed of Sale
with Mortage in favour of Honesto Bonnevie for 100, 000
 25,000 to be paid to SPS. Lozano; 75, 000 payable to the bank
 Lozano did not receive 75, 000 loan Bonnevie thereafter made
payments to the bank assigned all his rights to his brother, Raul
 Bank applied for foreclosure  notice of sale was published  auction
sale  property was sold to the bank  offers of raul and Honesto
failed  Adverse claim on the title  Annulment of Deed of Mortgage
and EJF
MORTGAGE DEED WAS VALID
- Lozano’s non receipt of 75, 000 is immaterial
- Contract of loan being a consensual contact
MORTGAGE FOLLOWS THE PROPERTY
- Honesto voluntarily assumed the mortgage, and is estopped
from attacking its validity
BANK IS NOT OBLIGED TO GIVE NOTICE TO HONESTO
- Transferred his rights to Raul – bank was not informed even also
of the transfer of SPS Lozano to Bonnevie
- Constructive Notice: publication, posting of notices of sale
HONESTO HAS NO RIGHT TO REDEEM
- No consent from the bank as to the assumption of mortgage
- No valid substitution of debtors
- Bank is bound to recognize only the right of redemption of SPS.
Lozano – However, the period has already lapsed
EXTINGUISHMENT OF A MORTGAGE
1. MOVIDO VS REHABILITATION FINANCE CORP
 Vet Bros and Company: mortgaged to Jose Movido its rights, title and
interests and participation in a complete sawmill in Samar  including
all its machineries, tools, and equipment in good running condition
 Loan of 15, 000 with 12% interests
 Movido  Recovery of Sum of Money
 Compromise Agreement
 Vet Bros and SPS. Toribio  mortgaged such again to Rehabilitation
Finance Corporation  46, 000
 Action against RFC
A MORTAGEE WHO SUES AND OBTAINS A PERSONAL JUDGMENT
AGAINST A MORTGAGOR UPON HIS CREDIT WAIVES THEREBY HIS
RIGHT TO ENFORE THE MORTGAGE SECURING IT
- Compromise Agreement: abandonment of his mortgage liens in
the chattels
- Movido no longer has a claim over such chattels