Statement of facts:

A certain Catabona mortgage or sold the land to the defendant, Serapion Ynigo and his wife for the sum of 5,000 stipulating that, (1) should he fail to redeem the property after a period of 5 years by paying back and returning the above mentioned and (2), failure to do so, title thereto shall pass to and become vested absolutely in the said spouses. The instrument used the words mortgage with conditional sale Thereafter, mr. Catabona sold one-half of the same land and executed a deed of absolute sale in favor of my client, Pedro L. Guerrero for the sum of P90,000. My client testified that Catabona offered to sell one-half of the land to him with the information that one-half of the land was mortgaged in favor of Atty. Yigo and that he offered to sell the land to the mortgagees but the latter could not afford to pay the price he was asking for it. Issues: 1: is the 2nd stipulation a mortgage or a sale with pacto de retro? 2: is the sale of catabona to Guerrero legal and valid? Ruling: 1. If the stipulation be construed as giving B the right to own the property upon failure of mr. Catabona to pay the loan on the stipulated timewhich is not providedthat would pactum commisorium which is unlawful and void, as stated in article 2088 of the civil code. The clause is conclusive proof that it is a mortgage and not a sale with pacto de retro because if it were the latter, title to the parcel of land would pass unto the vende upon the execution of the sale and not latter as stipulated as also stressed in the case of De Guzman Vs. CA.

2. The fact that in the instruments the mortgagor undertook, bound and promised to sell the parcel of land to the mortgagees, such undertaking, obligation or promise to sell the parcel of land to the mortgagees does not bind the land. It is just a personal obligation of the mortgagor. So that when Mr. Catabona sold one-half of the parcel of land to my client, the sale was legal and valid. If there should be any action accruing to Yigo it would be a personal action for damages against Catabona.

Prayer:
Wherefore, in view of the foregoing, we earnestly pray to this honourable court to render decision in favour of my client, Pedro Guerrero, to be declared the lawful owner of the said parcel of land. We also pray for such other relief and remedies that are just and equitable under the premises.