GANZON VS.

JUDGE SANCHO

FACTS:
Petitioners version.
Rodolfo Ganzon loaned Php 40,000 to the respondents Randolph Tajanlangit and Esteban
Tajanlangit. The loan was evidenced by a promissory note (PN). The respondent-borrowers executed
a deed of real estate mortgage over their land in favor of the Ganzon as a security to the above loan.

Respondents version.
Ganzon sold them a land evidenced by a deed of sale. They executed a PN for the balance of the
purchase price. They will pay such balance once the land is cleared of its current occupants. Ganzon
made them execute the deed of mortgage as security of the PN.

Petitioners answer.
Yes, there is a deed of sale but it covers a separate property. (i.e., not the same one covered by the
mortgage contract)

CFI Ilo-ilo.
Ganzon initiated a proceeding to extra-judicially foreclose the mortgaged land. The Tajanlangits on
the other hand, filed an action for specific performance, damages, prohibition w/ PI. They also filed a
“Motion For Release of Real Estate and for the Clerk of Court to Accept Bond or Cash In Lieu
Thereof”. The lower court granted the motion. It ordered the Register of Deeds of Iloilo City to
cancel the mortgage lien on the mortgaged land upon showing by the plaintiffs that they have put up
the surety bond in the sum of P80,000.00.

Hence, Ganzon filed this petition questioning the validity of the CFI’s order.

ISSUE:
Whether or not the CFI – Ilo-ilo CAN order that a mortgage on real property be substituted by a
surety bond?

RULING: NO
The mortgage lien in favor of petitioner Rodolfo Ganzon is inseparable from the mortgaged property.
It is a right in rem, a lien on the property. To substitute the mortgage with a surety bond would
convert such lien from a right in rem, to a right in personam. This conversion cannot be ordered for it
would abridge the rights of the mortgagee under the mortgage contract.

Moreover, the questioned orders violate the non-impairment of contracts clause guaranteed under the
Constitution. Substitution of the mortgage with a surety bond to secure the payment of the
P40,000.00 note would in effect change the terms and conditions of the mortgage contract. Even
before trial on the very issues affecting the contract, the respondent court has directed a deviation
from its terms, diminished its efficiency, and dispensed with a primary condition.

DISPOSITIVE:
Petition granted.