222 - GANZON vs. INSERTO G.R. No.

L-56450 (1983)

Topic: Non-Impairment of Contracts

PARTIES:

Petitioners: Rodolfo Ganzon, Gregorio Lira (in his capacity as Ex-Oficio Provincial Sheriff of
Iloilo

Respondents: Judge Sancho Inserto (CFI-Iloilo), Randolph Tajanlangit, Esteban Tajanlangit

SUMMARY:

Petitioner Ganzon loaned 40k to the Tajanlangits. The latter then executed a deed of mortgage to
secure the loan. CFI-Ilo-ilo granted the Tajanlangits’ motion to cancel the mortgage in exchange of a
surety bond they will put up. (e.g., surety bond will now secure the loan not the mortgage land)

DOCTRINES:

The SC held that 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 hence
violate the non-impairment of contracts clause guaranteed under the Constitution.

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:

WON the CFI – Ilo-ilo CAN order that a mortgage on real property be substituted by a surety
bond?

HELD: NO

RATIO:

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.