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G.R. No. 200468, March 19, 2014 - MACARIA ARGUELLES AND THE HEIRS OF THE DECEASED PETRONIO ARGUELLES, Petitioners, v. MALARAYAT RURAL BANK, INC., Respondent.

G.R. No. 200468, March 19, 2014 - MACARIA ARGUELLES AND THE HEIRS OF THE DECEASED PETRONIO ARGUELLES, Petitioners, v. MALARAYAT RURAL BANK, INC., Respondent.

PHILIPPINE SUPREME COURT DECISIONS

FIRST DIVISION

G.R. No. 200468, March 19, 2014

MACARIA ARGUELLES AND THE HEIRS OF THE DECEASED PETRONIO ARGUELLES, Petitioners, v. MALARAYAT RURAL BANK, INC., Respondent.

D E C I S I O N

VILLARAMA, JR., J.:

Before us is a petition for review on certiorari assailing the Decision1 dated December 19, 2011 and Resolution2 dated February 6, 2012 of the Court of Appeals (CA) in CA–G.R. CV No. 92555.  The CA had reversed and set aside the July 29, 2008 Decision3 of the Regional Trial Court (RTC) Branch 86, of Taal, Batangas, in Civil Case No. 66.

The facts, as culled from the records, follow:

The late Fermina M. Guia was the registered owner of Lot 3, a parcel of agricultural land in Barrio Pinagkurusan, Alitagtag, Batangas, with an area of 4,560 square meters, as evidenced by Original Certificate of Title (OCT) No. P–129304 of the Register of Deeds of Batangas.  On December 1, 1990, Fermina M. Guia sold the south portion of the land with an approximate area of 1,350 square meters to the spouses Petronio and Macaria Arguelles.5  Although the spouses Arguelles immediately acquired possession of the land, the Deed of Sale was neither registered with the Register of Deeds nor annotated on OCT No. P–12930.  At the same time, Fermina M. Guia ordered her son Eddie Guia and the latter’s wife Teresita Guia to subdivide the land covered by OCT No. P–12930 into three lots and to apply for the issuance of separate titles therefor, to wit: Lot 3–A, Lot 3–B, and Lot 3–C.  Thereafter, she directed the delivery of the Transfer Certificate of Title (TCT) corresponding to Lot 3–C to the vendees of the unregistered sale or the spouses Arguelles. However, despite their repeated demands, the spouses Arguelles claimed that they never received the TCT corresponding to Lot 3–C from the spouses Guia.

Nevertheless, in accordance with the instructions of Fermina M. Guia, the spouses Guia succeeded in cancelling OCT No. P–12930 on August 15, 1994 and in subdividing the lot in the following manner:

Lot No.
TCT No.
Registered Owner
3–A
T–83943
Fermina M. Guia
3–B
T–83945
Spouses Datingaling
3–C
T–83944
Fermina M. Guia6

On August 18, 1997, the spouses Guia obtained a loan in the amount of P240,000 from the respondent Malarayat Rural Bank and secured the loan with a Deed of Real Estate Mortgage7 over Lot 3–C.  The loan and Real Estate Mortgage were made pursuant to the Special Power of Attorney8 purportedly executed by the registered owner of Lot 3–C, Fermina M. Guia, in favor of the mortgagors, spouses Guia. Moreover, the Real Estate Mortgage and Special Power of Attorney were duly annotated in the memorandum of encumbrances of TCT No. T–83944 covering Lot 3–C.

The spouses Arguelles alleged that it was only in 1997 or after seven years from the date of the unregistered sale that they discovered from the Register of Deeds of Batangas City the following facts: (1) subdivision of Lot 3 into Lots 3–A, 3–B, and 3–C; (2) issuance of separate TCTs for each lot; and (3) the annotation of the Real Estate Mortgage and Special Power of Attorney over Lot 3–C covered by TCT No. T–83944.  Two years thereafter, or on June 17, 1999, the spouses Arguelles registered their adverse claim9 based on the unregistered sale dated December 1, 1990 over Lot 3–C.

On July 22, 1999, the spouses Arguelles filed a complaint10 for Annulment of Mortgage and Cancellation of Mortgage Lien with Damages against the respondent Malarayat Rural Bank with the RTC, Branch 86, of Taal, Batangas.  In asserting the nullity of the mortgage lien, the spouses Arguelles alleged ownership over the land that had been mortgaged in favor of the respondent Malarayat Rural Bank.  On August 16, 1999, the respondent Malarayat Rural Bank filed an Answer with Counterclaim and Cross–claim11 against cross–claim–defendant spouses Guia wherein it argued that the failure of the spouses Arguelles to register the Deed of Sale dated December 1, 1990 was fatal to their claim of ownership.

On July 29, 2008, the RTC rendered a Decision, the dispositive portion of which reads as follows:

WHEREFORE, premises considered judgment is hereby rendered:

1)
declaring the mortgage made by the defendants spouses Eddie Guia and Teresita Guia in favor of defendant Malarayat Rural Bank null and void;
2)
setting aside the foreclosure sale had on December 6, 1999 and the corresponding certificate of sale issued by this Court dated May 12, 2000;
3)
ordering the Register of Deeds of the Province of Batangas to cancel the annotation pertaining to the memorandum of encumbrances (entries no. 155686 and 155688) appearing in TCT No. T–839[4]4;
4)
ordering cross defendants spouses Eddie and Teresita Guia to pay the amount of Php240,000.00 to cross claimant Malarayat Rural [B]ank corresponding to the total amount of the loan obligation, with interest herein modified at 12% per annum computed from default;
5)

Endnotes:


1Rollo, pp. 52–71.  Penned by Associate Justice Franchito N. Diamante, with Presiding Justice Andres B. Reyes, Jr. and Associate Justice Mariflor P. Punzalan Castillo, concurring.

2 Id. at 72–74.

3 Records, pp. 368–378.  Penned by Judge Juanita G. Areta.

4 Rollo, pp. 75–77.

5 Deed of Sale of A Parcel of Land, id. at 78–79.

6 Records, pp. 3, 264–265.

7Rollo, p. 82.

8 Id. at 83.

9 Records, pp. 266–267.

10 Id. at 1–7.

11 Id. at 27–33.

12 Id. at 377–378.

13Rollo, pp. 70–71.

14 Id. at 19–20.

15 See PNB v. Heirs of Militar, 504 Phil. 634, 643 (2005), citing Sps. Uy v. Court of Appeals, 411 Phil. 788, 798 (2001).

16 See PNB v. Heirs of Estanislao and Deogracias Militar, 526 Phil. 788, 799–800 (2006).

17 See Canadian Opportunities Unlimited, Inc. v. Dalangin, Jr., G.R. No. 172223, February 6, 2012, 665 SCRA 21, 31.

18 381 Phil. 355, 368 (2000) as cited in Ereña v. Querrer–Kauffman, 525 Phil. 381, 401–402 (2006).

19 550 Phil. 805, 821 (2007).

20 Id.

21 503 Phil. 321, 331–332 (2005).

22 Bank of Commerce v. Spouses San Pablo, Jr., supra note 19.

23 G.R. No. 196577, February 25, 2013, 691 SCRA 613, 626–627.

24 429 Phil. 225, 239 (2002).

25 509 Phil. 628, 642 (2005).

26 Heirs of Manlapat v. Court of Appeals, 498 Phil. 453, 473 (2005).

27Philippine Banking Corporation v. Dy, G.R. No. 183774, November 14, 2012, 685 SCRA 565, 575.

28 539 Phil. 316, 329 (2006).

29 Records, p. 34.

30 Rollo, p. 145.

31 Supra note 23, at 628, citing San Pedro v. Ong, G.R. No. 177598, October 17, 2008, 569 SCRA 767, 786 and Instrade, Inc. v. Court of Appeals, 395 Phil. 791, 802 (2000)
 
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