Mobil Oil Philippines, Inc. v.

Diocares (Fernando, 1969)

[See doctrine underlined below]
In February 1965, Mobil Oil Philippines, Inc. (Mobil Oil) extended a PhP 45 000
loan to Ruth Diocares and Lope Diocares (Diocares) in a condition that Diocares
would buy on cash basis from Mobil Oil a minimum of 50 000 liters of petroleum
per month.
o Payment of the loan would be in monthly installments of PhP 950 per
month for a period of five years.
o As security, Diocares executed a mortgage on two parcels of land.
o In case of non-payment of any installment or/and non-performance of the
condition (to buy petroleum), Mobil Oil had the right to foreclose.
Diocares defaulted when the third installment was due.
o Only PhP 1900 was paid, leaving a balance of PhP 43 000.
o Diocares also failed to buy the minimum amount of petroleum per month.
Mobil Oil filed a complaint and prayed that they be paid PhP 43 000 with interest
or, in default of payment, they be allowed to sell the mortgaged properties.
o Defense: There was no refusal of payment. They only sought for an
extension of time.
LC: The loan agreement created a personal obligation but it did not establish a
real estate mortgage because the mortgage was not registered. Hence,
foreclosure cannot be ordered by the LC.
Issue/Held: W/N the mortgage contract, although unregistered, is binding between the
same parties who created it. Yes.
Ratio:
1. Article 21251 is clear and explicit. Even if the instrument were not recorded, the
mortgage is nevertheless binding between the parties. As between them, the
mere fact that there is as yet no compliance with the requirement that it be
recorded cannot be a bar to foreclosure.
2. To hold otherwise would defeat the clear codal provision that the mortgage
subsists despite lack of registration insofar as the parties thereto are concerned,
and that the mortgagor is still liable thereon. Furthermore, while the law says that
registration is indispensable in order that the mortgage be validly constituted,
yet, what is indispensable may be dispensed with.

Dispositive: GRANTED.

Case brief by Pepe General

1 Article 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.