Lanuza v De Leon IN RE: PETITION FOR CONSOLIDATION OF TITLE IN THE VENDEES OF A HOUSE AND THE RIGHTS TO A
LOT. MARIA BAUTISTA VDA. DE REYES, ET AL., vendeespetitioners-appellees.  RODOLFO LANUZA, vendor, vs. MARTIN DE
LEON, intervenor-appellant.
GR#L-22331 June 6, 1967
Facts:
Rodolfo Lanuza and his wife Belen sold their house, leasehold
rights to the lot, television set and a refrigerator to Reyes and
Navarro in consideration of a sum of P3,000. It was executed
under a “Deed of Sale with Right to Repurchase.” The parties
extended the term for the redemption when the original
expired.
Subsequently, the Lanuzas mortgaged the property to the
intervenor, De Leon recorded in the Register of Deeds in
Manila. And upon failure to pay of the former, the latter filed
in the sheriff’s office petition for extrajudicial foreclosure. De
Leon then won as the sole bidder.
On the other hand, the petitioners Reyes and Navarro filed a
petition for consolidation of ownership of the house on the
ground that the vendees failed to redeem their property
upon the expiration of the redemption period. Consequently,
De Leon argued that the pacto de retro sale could not affect
his right as a third party.
The lower court decided the case in favor of Reyes and
Navarro on the ground that the Lanuzas lose the right to
mortgage their property because they were not the absolute
owners of the property that time.
Issue: Who has a better right?
Held:
De Leon has a better right.
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. Hnece, the intention of the parties was deemed as a
mortgage rather than of a sale.
The court held that it was in reality an equitable mortgage
and the claims of De Leon is preferred because his mortgage
was registered under art. 2125 of the New Civil Code - 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.
JOSE MOVIDO, plaintiff-appellant, vs.REHABILITATION FINANCE CORPORATION and THEPROVINCIAL SHERIFF OF
SAMAR, defendants-appellees. GR#L-11990 May 29, 1959

FACT:
the Vet. Bros. & Company, Inc. mortgaged to Jose S. Movido
its rights, title, interest and participation "in a complete
sawmill in barrio Mauo, Allen, Samar, with all its machineries,
tools and equipment in good running condition" to secure the
payment of a loan of P15,000 and interest at the rate of 12%
per annum. On 28 February 1947 the chattel mortgage was
registered in the Office of the Registrar of Deeds. On 28 July
1948 Jose S. Movido brought an action against Vet. Bros. &
Company, Inc. in the Court of First Instance of Leyte to
recover the sum of P13,494.35 with the interest at the rate of
12% per annum from 1 July 1948 until the principal is fully
paid and P2,000 by way of damages and expenses of
litigation. In which the parties entered into a compromise
agreement.
Subsequently on 3 March 1949, by an instrument duly
executed, Vet Bros. & Company, Inc. and the spouses Simeon
G. Toribio and Maximiana Escobar de Toribio mortgaged the
real estate and chattels therein enumerated and described in
favor of the Rehabilitation finance Corporation to secure the
payment of a loan of P46,000. It was sold at the public
auction in favor of RFC.
of Leyte in civil case No. 441. Nonetheless, the sheriff still
proceeded to the sale.
Movido filed an action to the CFI Leyte charging them with
having unlawfully, fraudulently and maliciously disregarded
his third party claim on the chattels and sold them at public
auction on 11 June 1953, upon the request and for the
benefit of the former, thereby causing him actual damages in
the sum of P5,000 in addition to the expense of P2,000 for
attorney's fee.
Issue: Who has a better right?
Held:
RFC has a better right. Due to the compromise agreement
executed by Movido and the Vet brothers as regards the first
suit, the chattel that was mortgaged was released. The
contract between them was deemed novated. The lien no
longer exist. Therefore A mortgage who sues and obtains a
personal judgment against a mortgagor upon his credit
waives thereby his right to enforce the mortgage securing it.
The judgment appealed from is affirmed, with cost against
the appellant.

On 24 April 1953 Jose S. Movido filed with the Sheriff a third

party claim on the chattels advertised for sale at public
auction asserting a prior and superior right in them because
of his chattel mortgage recorded before that of the
Rehabilitation Finance Corporation and by virtue of a
judgment in his favor rendered by the Court of First Instance