RODOLFO LANUZA, vendor, vs. MARTIN DE LEON, intervenor-appellant.

GR#L-22331 June 6, 1967

Facts: Issue: Who has a better right?

Rodolfo Lanuza and his wife Belen sold their Held:

house, leasehold rights to the lot, television set
De Leon has a better right.
and a refrigerator to Reyes and Navarro in
consideration of a sum of P3,000. It was executed Art 2088 of the New Civil Code states that the
under a “Deed of Sale with Right to Repurchase.” creditor cannot appropriate the things given by
The parties extended the term for the way of pledge or mortgage, or dispose of them.
redemption when the original expired. Any stipulation to the contrary is null and void.
There were no transmission of ownership
Subsequently, the Lanuzas mortgaged the
between the Lanuzas and Reyes and Navarro. In
property to the intervenor, De Leon recorded in
truth, there was a provision regarding automatic
the Register of Deeds in Manila. And upon failure
transfer of ownership which was a Pactum
to pay of the former, the latter filed in the
Commisorium and it is prohibited under the law.
sheriff’s office petition for extrajudicial
Hnece, the intention of the parties was deemed
foreclosure. De Leon then won as the sole bidder.
as a mortgage rather than of a sale.
On the other hand, the petitioners Reyes and
The court held that it was in reality an equitable
Navarro filed a petition for consolidation of
mortgage and the claims of De Leon is preferred
ownership of the house on the ground that the
because his mortgage was registered under art.
vendees failed to redeem their property upon
2125 of the New Civil Code - In addition to the
the expiration of the redemption period.
requisites stated in article 2085, it is
Consequently, De Leon argued that the pacto de
indispensable, in order that a mortgage may be
retro sale could not affect his right as a third
validly constituted, that the document in which it
party.
appears be recorded in the Registry of Property. If
The lower court decided the case in favor of the instrument is not recorded, the mortgage is
Reyes and Navarro on the ground that the nevertheless binding between the parties.
Lanuzas lose the right to mortgage their
property because they were not the absolute
owners of the property that time.