Lanuza v De Leon

Art 2088 of the New Civil Code states that the creditor cannot appropriate the things given by way of pledge or
mortgage, or dispose of them. Any stipulation to the contrary is null and void. There were no transmission of
ownership between the Lanuzas and Reyes and Navarro. In truth, there was a provision regarding automatic
transfer of ownership which was a Pactum Commisorium and it is prohibited under the law. Hence, the intention
of the parties was deemed as an equitable mortgage rather than of a sale.

In addition to the requisites stated in article 2085, it is indispensable, in order that a mortgage may be validly
constituted, that the document in which it appears be recorded in the Registry of Property. If the instrument is not
recorded, the mortgage is nevertheless binding between the parties.

Homeowners Savings and Loan Bank v. Asuncion P. Felonia and Lydia C. De Guzman

That the mortgagor be the absolute owner of the thing mortgaged is an essential requisite of a contract
of mortgage. Article 2085 (2) of the Civil Code specifically says so: Art. 2085. The following requisites are
essential to the contracts of pledge and mortgage: x x x x (2) That the pledgor or mortagagor be the
absolute owner of the thing pledged or mortgaged. Succinctly, for a valid mortgage to exist, ownership
of the property is an essential requisite. Reyes v. De Leon cited the case of Philippine National Bank v.
Rocha where it was pronounced that a mortgage of real property executed by one who is not an owner
thereof at the time of the execution of the mortgage is without legal existence. Such that, according to
DBP v. Prudential Bank, there being no valid mortgage, there could also be no valid foreclosure or valid
auction sale.

BIENVENIDO C. TEOCO and JUAN C. TEOCO, JR., petitioners, vs. METROPOLITAN BANK AND TRUST
COMPANY

A mortgage directly and immediately subjects the property upon which it is imposed, whoever the
possessor may be to the fulfillment of the obligation for whose security it was constituted.The
mortgage directly and immediately subjects the property upon which it is imposed, whoever the
possessor may be to the fulfillment of the obligation for whose security it was constituted. Otherwise
stated, a mortgage creates a real right which is enforceable against the whole world. Hence, even if the
mortgage property is sold or its possession transferred to another, the property remains subject to the
fulfillment of the obligation for whose security it was constituted

In the case at bar, Metrobank would not be prejudiced by the assignment by the spouses Co of their
right of redemption in favor of the brothers Teoco. As conceded by Metrobank, the assignees, the
brothers Teoco, would merely step into the shoes of the assignors, the spouses Co. .
SPS. ANTONIO & LETICIA VEGA

Was Reyes disposal of the property in favor of the Vegas(mortgagor) valid given a provision in the mortgage
agreement that she could not do so without the written consent of the SSS(mortgagee)?

Although such a stipulation is valid and binding, in the sense that the SSS cannot be compelled while the loan was
unpaid to recognize the sale, it cannot be interpreted as absolutely forbidding her, as owner of the mortgaged
property, from selling the same while her loan remained unpaid. Such stipulation contravenes public policy, being an
undue impediment or interference on the transmission of property.

Besides, when a mortgagor sells the mortgaged property to a third person, the creditor may demand from
such third person the payment of the principal obligation. The reason for this is that the mortgage credit is a real right,
which follows the property wherever it goes, even if its ownership changes. Article 2129 of the Civil Code gives the
mortgagee, here the SSS, the option of collecting from the third person in possession of the mortgaged property in
the concept of owner. More, the mortgagor-owners sale of the property does not affect the right of the registered
mortgagee to foreclose on the same even if its ownership had been transferred to another person. The latter is bound
by the registered mortgage on the title he acquired.