Ganzon v Inserto; G.R. No. L-56450; 25 Jul 1983; 123 SCRA 713

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Petitioner Rodolfo Ganzon executed a deed of absolute sale of a parcel of land in favor of private respondents. Several months later, a deed of real estate mortgage was executed between the same parties to secure the payment by the private respondents of a promissory not in favor of petitioner. Private respondents filed a civil action against petitioners after Ganzon initiated extrajudicial foreclosure proceedings in accordance with the terms and conditions of the said mortgage. Respondent judge ordered the substitution of the mortgage lien with a surety bond.

Whether or not the order of respondent judge violates the non-impairment clause of the Constitution.

YES. Substitution of the mortgage with a surety bond to ensure the payment of a loan 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.

Instant petition si GRANTED. Orders of the trial court are SET ASIDE.

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