Ramosvs.

CA
279SCRA118

September15,1997

Facts:
EduardoYuseco(nowdeceased)obtainedaloanofP35,000.00fromtheGovernment
ServiceInsuranceSystem.Toguaranteepaymentoftheloan,Yusecoconstitutedamortgageover
hispropertycoveredbyTCTNo.123161oftheRegisterofDeedsofQuezonCityinfavorof
GSIS.Underthemortgagecontract,Yusecowasprohibitedfromselling,disposingof,
mortgaging,orinanymannerencumberingthemortgagedpropertywithoutthepriorwritten
consentoftheGSIS.

YusecoexecutedaContracttoSell(Exh.A)ofthemortgagedpropertyinfavorof
petitionerFelipeBelmonte,byvirtueofwhichBelmonteagreedtoassumeYusecosobligationto
theGSIS.Theundertakingwastobeperformedwithinoneyearfromtheperfectionofthe
contract.Belmontewas,however,unabletocomplywithhisobligationwithintheperiodagreed
upon,sothatherequestedanextension.HisrequestwasgrantedandhewasgivenuntilJanuary
15,1971tocomplywithhisobligation.AsBelmontewasstillunabletocomplywithhis
obligationnotwithstandingtheextensiongiventohim,heandhiswifeaskedAndresRamosto
shareinthepaymentoftheamortizationstotheGSIS.Thiswasmadewiththeknowledgeand
consentofYusecowhoexecutedaDeedofAbsoluteSalewithAssumptionofMortgage(Exh.D)
infavorofallpetitionersonJanuary21,1971.ItwasagreedthatthespousesBelmonteand
Ramoswouldpayforallexpensesforthepreparationofdocumentsandafterwardssubmitthe
contracttotheGSISforitsapproval.

OnFebruary26,1971,theGSISinformedYusecothathisrequestforauthorityto
executetheDeedofAbsoluteSalewithAssumptionofMortgagecouldnotbeconsidered
pendingthereturnofthecertificateoftitlewhichYusecohadborrowedfromtheGSIS.OnJuly
26,1971,however,theGSISnotifiedYusecothatitsBoardofTrusteeshadapprovedhisrequest
forauthoritytoexecutetheDeedofAbsoluteSalewithAssumptionofMortgageeventhough
Yusecoscertificateoftitlehadnotbeenreturned.

OnFebruary14,1975,petitionersdeliveredtotheGSISaletterfromEduardoYuseco,
informingtheGSISthatthecertificateoftitlehadbeenlostand,forthisreason,requestingthe
GSIStoundertakethereconstitutionofthelosttitleandtochargethecostthereoftopetitioners.
Toprotecttheirinterest,petitionersatthesametimeregisteredanadverseclaimwhichwas
annotatedonTCTNo.123161.SinceDecember9,1969,petitionershadbeenpayingtheGSISthe
monthlyamortizations,butforsomereasontheystoppeddoingsoonOctober1,1981,after
payingatotalofP27,430.16,althoughintheconfirmationofaccountssentbytheGSIS,thetotal
paymentscreditedtothemwasP30,903.52.ThepaymentswereallmadeinthenameofEduardo
Yuseco.(Exhs.E,E1toE51)

OnJuly16,1982,theGSISinformedYusecoandthespousesBelmonteofthearrearages
amountingtoP37,758.84andwarnedthemthatiftheamountwasnotsettledontime,the
mortgagewouldbeforeclosed.Asnosettlementoftheamountwasmade,theGSIS
extrajudiciallyforeclosedthemortgageonSeptember17,1982.TheGSISpurchasedtheproperty
asthehighestbidderattheauctionsale.IttheninformedthespousesBelmonteoftheforeclosure
ofthemortgageanddemandedthepaymentsofrentsfromthemfortheiruseoftheproperty.On
October19,1982,theGSISagainwrotethespousesBelmonteandaskedthemtofilean
applicationfortheleaseofthepropertytoformalizetheirstayontheproperty.
ButtheBelmontesdidnotdoso.OnApril27,1983,thespousesandRamoswrotetheGSISthat,
asvendeesoftheproperty,theywereexercisingtheirrighttoredeemtheproperty(Exh.M).The
GSISrepliedthatitwouldconsideranylegalredemptionerwhofirstexercisedtherightof
redemption(Exh.N).

Ataboutthesametimethatpetitionerssignifiedtheirintentiontoredeemtheproperty,
YuseconegotiatedforthesaleoftheforeclosedpropertytoprivaterespondentDionisioPalla,
showingthelatteraphotocopyofhistitletotheproperty.Pallaandhislawyer,Atty.MarteSta.
Elena,wenttoverifytheauthenticityofYusecostitleintheRegisterofDeedsofQuezonCity
wheretheylearnedoftheadverseclaimofpetitioners.Uponassurancebyhislawyerthatthe
adverseclaimwasnotanimpedimenttothepurchaseofthepropertyanddespiteadvicefrom
Yusecothatthereweretenants(thepetitionerswereactuallytheoccupants)ontheproperty,Palla
purchasedthepropertyfromYusecoforP92,000.00onMay20,1983(Exh.Q).Pallasoughtto
redeemthepropertyfromtheGSISbuthewasnotallowedtodosoinhisownname.
Consequently,headvancedtheredemptionprice,intheamountofP53,000.00,toYusecowho
redeemedthepropertyfromtheGSISonJune14,1983.

Issue:
THERESPONDENTCOURTOFAPPEALSSERIOUSLYERREDINNOTHOLDINGTHAT
THEPETITIONERSHAVETHEBETTERANDSUPERIORRIGHTOVERTHEPRIVATE
RESPONDENTDIONISIOPALLAASREGARDSTHEMORTGAGEDPROPERTYIN
QUESTION.

Ruling:
No,theCAdidnoterrinnotholdingthatpetitionerhavethebetterandsuperiorright
overprivaterespondentPallaasregardsthemortgagedpropertyinquestion.

Becauseofpetitionersfailuretoupdatetheiraccountandexecuteapromissorynote,
GSISconditionalapprovalofthesaleofthepropertyandassumptionofmortgageneverbecame
effective.TheDeedofAbsoluteSalewithAssumptionofMortgageitselfwasnotperfectedsince
assumptionofthemortgagebypetitionerswasaconditionprecedentforthesaleoftheproperty
tothem.Art.1181oftheCivilCodeprovidesthatInconditionalobligations,theacquisitionof
rights,aswellastheextinguishmentorlossofthosealreadyacquired,shalldependuponthe
happeningoftheeventwhichconstitutesthecondition.Accordingly,insaleswithassumptionof
mortgage,theassumptionofmortgageisaconditiontothesellersconsentsothatwithout
approvalbythemortgagee,nosaleisperfected.Indeed,noonecanplausiblyassertthatwithonly
P15,000.00paidtoYusecoandaboutP30,903.52paidtotheGSIS,petitionersbecamethe
ownersofthepropertywhentheconsiderationforthesaleofthelandanditsimprovementswas
notonlytheamountpaidtothesellerbutthepaymentofhisindebtednesstotheGSISaswell.
SincetheDeedofAbsoluteSalewithAssumptionofMortgageexecutedbyYusecoinfavorof
thepetitionerswasineffective,Yusecolegallyremainedastheownerandmortgagorofthe
subjectpropertyandthedebtoroftheGSIS.Infact,thetitletotheproperty(TCTNo.123161)
remainedinhisname.Assuch,Yusecohadtherighttoredeem,ashedidinfactredeem,the
propertyonJune14,1983,beforetheexpirationonOctober11,1983oftheoneyearperiodof
redemption.Norcanpetitionersassailthesaleofthepropertyafteritsredemptiontorespondent
Palla.