[ G.R. No. L-14938. January 28, 1961 ] 110 Phil. 896
[ G.R. No. L-14938. January 28, 1961 ]
[WITH RESOLUTION OF DECEMBER 29, 1962] MAGDALENA C. DE BARRETTO, ET AL., PLAINTIFFS AND APPELLANTS, VS. JOSE G. VILLANUEVA, ET AL., DEFENDANTS AND APPELLEES. D E C I S I O N
GUTIERREZ DAVID, J.:
On May 10, 1948, Rosario Cruzado, for herself and as administratrix of the intestate estate of her deceased husband Pedro Cruzado in Special Proceedings No. 4959 of the Court of First Instance of Manila, obtained from the defunct Rehabilitation Finance Corporation (hereinafter referred to as the RFC) a loan in the amount of P11,000.00. To secure payment thereof, she mortgaged the land then covered by Transfer Certificate of Title No. 61358 issued in her name and that of her deceased husband. As she failed to pay certain installments on the loan, the mortgage was foreclosed and the RFC acquired the property for P11,000.00, subject to her rights as mortgagor to repurchase the same. On July 26, 1951, upon her application, the land was sold back to her conditionally for the amount of P14,269.03, payable in seven years.
About two years thereafter, or on February 13, 1953, Rosario Cruzado, as guardian of her minor children in Special Proceedings No. 14198 of the Court of First Instance of Manila, was authorized by the court to sell with the previous consent of the RFC the land in question together with the improvements thereon for a sum not less than P19,000. Pursuant to such authority and with the consent of the RFC, she sold to Pura L. Villanueva for P19,000.00 “all their rights, interest, title and dominion on and over the herein described parcel of land together with the existing improvements thereon, including one house and an annex thereon; free from all charges and encumbrances, with the exception of the sum of P11,009.52, plus stipulated interest thereon which the vendor is still presently obligated to the RFC and which the vendee herein now assumes to pay to the RFC under the same terms and conditions specified in that deed of sale dated July 26, 1951.” Having paid in advance the sum of P1,500.00, Pura L. Villanueva, the vendee, in consideration of the aforesaid sale, executed in favor of the vendor Rosario Cruzado a promissory note dated March 9, 1953, undertaking to pay the balance of P17,500.00 in monthly installments. On April 22, 1953, she made an additional payment of P5,500.00 on the promissory note. She was, subsequently, able to secure in her name Transfer Certificate of Title No. 32526 covering the house and lot above referred to, and on July 10, 1953, she mortgaged the said property to Magdalena C. Barretto as security for a loan in the amount of P30,000.00.
As said Pura L. Villanueva had failed to pay the remaining installments on the unpaid balance of P12,000.00 on her promissory note for the sale of the property in question, a complaint for the recovery of the same from her and her husband was filed on September 21, 1953 by Rosario Cruzado in her own right and in her capacity as judicial guardian of her minor children. Pending trial of the case, a lien was constituted upon the property in the nature of a levy in attachment in favor of the Cruzados, said lien being annotated at the back of Transfer Certificate of Title No. 32526. After trial, decision was rendered ordering Pura Villanueva and her husband, jointly and severally, to pay Rosario Cruzado the sum of P12,000.00, with legal interest thereon from the date of the filing of the complaint until fully paid plus the sum of P1,500.00 as attorney’s fees.
Pura Villanueva having, likewise, failed to pay her indebtedness of P30,000.00 to Magdalena C. Barretto, the latter, jointly with her husband, instituted against the Villanueva spouses an action for foreclosure of mortgage, impleading Rosario Cruzado and her children as parties defendants. On November 11, 1956, decision was rendered in the case absolving the Cruzados from the complaint and sentencing the Villanuevas to pay the Barrettos, jointly and severally, the sum of P30,000.00, with interest thereon at the rate of 12% per annum from January 11, 1954, plus the sum of P4,000.00 as attorney’s fees. Upon the finality of this decision, the Barrettos filed a motion for the issuance of a writ of execution which was granted by the lower court on July 31, 1958. On August 14, 1958, the Cruzados filed their “Vendor’s Lien” in the amount of P12,000.00, plus legal interest, over the real property subject of the foreclosure suit, the said amount representing the unpaid balance of the purchase price of the said property. Giving due course to the lien, the court on August 18, 1958 ordered the same annotated in Transfer Certificate of Title No. 32526 of the Registry of Deeds of Manila, decreeing that should the realty in question be sold at public auction in the foreclosure proceedings, the Cruzados shall be credited with their pro-rata share in the proceeds thereof “pursuant to the provisions of Articles 2248 and 2249 of the new Civil Code in relation to Article 2242, paragraph 2 of the same Code.” The Barrettos filed a motion for reconsideration on September 12, 1958, but on that same date, the sheriff of the City of Manila, acting in pursuance of the order of the court granting the writ of execution, sold at public auction the property in question. As highest bidder, the Barrettos themselves acquired the properties for the sum of P49,000.00.
On October 4, 1958, the Court of First Instance issued an order confirming the aforesaid sale and directing the Register of Deeds of the City of Manila to issue to the Barrettos the corresponding certificate of title, subject, however, to the order of August 18, 1958 concerning the vendor’s lien. On the same date, the motion of the Barrettos seeking reconsideration of the order of the court giving due course to the said vendor’s lien was denied. From this last order, the Barrettos spouses interposed the present appeal.
The appeal is devoid of merit.
In claiming that the decision of the Court of First Instance of Manila in Civil Case No. 20675—awarding the amount of P12,000.00 in favor of Rosario Cruzado and her minor children—cannot constitute a basis for the vendor’s lien filed by the appellee Rosario Cruzado, appellants allege that the action in said civil case was merely to recover the balance of a promissory note. But while, apparently, the action was to recover the remaining obligation of promissor Pura Villanueva on the note, the fact remains that Rosario P. Cruzado as guardian of her minor children was an unpaid vendor of the realty in question, and the promissory note was, precisely, for the unpaid balance of the purchase price of the property bought by said Pura Villanueva.
Article 2242 of the new Civil Code enumerates the claims, mortgages and liens that constitute an encumbrance on specific immovable property, and among them are:
“(2) For the unpaid price of real property sold, upon the immovable sold”; and “(5) Mortgage credits recorded in the Registry of Property.”
Article 2249 of the same Code provides that “if there are two or more credits with respect to the same specific real property or real rights, they shall be satisfied pro-rata, after the payment of the taxes and assessments upon the immovable property of real rights.
Application of the above-quoted provisions to the case at bar would mean that the herein appellee Rosario Cruzado as an unpaid vendor of the property in question has the right to share pro-rata with the appellants the proceeds of the foreclosure sale.
The appellants, however, argue that inasmuch as the unpaid vendor’s lien in this case was not registered, it should not prejudice the said appellants’ registered rights over the property. There is nothing to this argument. Note must be taken of the fact that article 2242 of the new Civil Code enumerating the preferred claims, mortgages and liens on immovables, specifically requires that—unlike the unpaid price of real property sold—mortgage credits, in order to be given preference, should be recorded in the Registry of Property. If the legislative intent was to impose the same requirement in the case of the vendors lien, or the unpaid price of real property sold, the lawmakers could have easily inserted the same qualification which now modifies the mortgage credits. The law, however, does not make any distinction between registered and unregistered vendor’s lien, which only goes to show that any lien of that kind enjoys the preferred credit status.
Appellants also argue that to give the unrecorded vendor’s lien the same standing as the registered mortgage credit would be to nullify the principle in land registration system that prior unrecorded interests cannot prejudice persons who subsequently acquire interests over the same property. The Land Registration Act itself, however, respects without reserve or qualification the paramount rights of alien holders on real property. Thus, section 70 of that Act provides that:
“Registered land, and ownership therein shall in all respects be subject to the same burdens and incidents attached by law to unregistered land. Nothing contained in this Act shall in any way be construed to relieve registered land or the owners thereof from any rights incident to the relation of husband and wife, or from liability to attachment on mesne process or levy on execution, or from liability to any lien of any description established by law on land and the buildings thereon, or the interest of the owners of such land or buildings, or to change the laws of descent, or the rights of partition between co-owners, joint tenants and other co-tenants, or the right to take the same by eminent domain, or to relieve such land from liability to be appropriated in any lawful manner for the payment of debts, or to change or affect in any other way any other rights or liabilities created by law and applicable to unregistered land, except as otherwise expressly provided in this Act or in the amendments thereof.” (Italics supplied)
As to the point made that the articles of the Civil Code on concurrence and preference of credits are applicable only to the insolvent debtor, suffice it to say that nothing in the law shows any such limitation. If we are to interpret this portion of the Code as intended only for insolvency cases, then other creditor-debtor relationships where there are concurrence of credits would be left without any rules to govern them, and it would render purposeless the special laws on insolvency.
Premises considered, the order appealed from is hereby affirmed. Costs against the appellants.
Bengzon, Padilla, Bautista Angelo, Labrador, Paredes, and Dizon JJ., concur. Concepcion, Reyes, J. B. L., and Barrera, JJ., concur in the result.