De Barreto vs Villanueva G.R. No. L-14938 [Case Digest]

 

De Barreto vs Villanueva

G.R. No. L-14938

 

Facts:

                On May 10, 1948, Rosario Cruzado, for herself and as administratix 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 (the RFC a loan in the amount of P 11,000.00); to secure payment thereof, she mortgaged the land then covered by TCT 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 re-purchase 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 CFI 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 and over the herein described parcel of land together with the existing improvements thereon, including one use and an annex thereon; free from all charges and encumbrances, , with the exception of the sum of P11,009.52, is 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."  She (Villanueva) was, subsequently, able to secure in her name TCT 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 the amount of P30,000.00.

                Villanueva had failed to pay the remaining installments on the unpaid balance of P12,000.00 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, 1963 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.

                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. 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 line, 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 provision of articles 2248 and 2249 of the new Civil Code in relation to Article 2242, paragraph 2 of the same Code."

 

Issue:

                Whether or not the vendor’s lien and the Bareto’s mortgage credit shall be prorated from the proceeds of the foreclosure sale.

 

Held:

                NO. 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 vendor's 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.

                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 an insolvency.