Mobil Oil Philippines, Inc.

v Ruth Diocares
Defendants Ruth R. Diocares and Lope T. Diocares (Diocares) entered into a contract of loan
and real estate mortgage wherein plaintiff Mobil Oil Philippines, Inc. extended to the said
defendants a loan of P45,000.00.
In a condition that Diocares would buy from plaintiff a minimum of 50,000 liters of petroleum per
month.
Defendants will repay the said loan in monthly installments of P950.88 for a period of 5 years.
To secure the performance of their obligation, defendants executed a first mortgage on 2 parcels
of land.
In case of failure of the defendants to pay any of the installments due and non-fulfilment of their
obligation (to buy petroleum), plaintiff had the right to foreclose.
Defendants defaulted when the third installment was due.
Mobil Oil filed a complaint.
Lower court held: The loan agreement created a personal obligation but it did not establish a real
estate mortgage because the mortgage was not registered. Hence, the foreclosure cannot be
ordered.
WON the unregistered mortgage contract is binding between the parties.
YES
Art. 2125. 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.
The codal provision is clear and explicit.
Even if the instrument were not recorded, "the mortgage is nevertheless binding between the
parties."
The law cannot be any clearer. Effect must be given to it as written.
DOCTRINE:
Art. 2125. 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.
The codal provision is clear and explicit.
Even if the instrument were not recorded, "the mortgage is nevertheless binding between the
parties."