G.R. No. 122904 - Cruz vs. Court of Appeals

ADORACION E. CRUZ, THELMA DEBBIE E. CRUZ, GERRY E. CRUZ AND NERISSA CRUZ-TAMAYO were petitioners before the Supreme Court and plaintiffs in RTC Civil Case No. 49466.
Arnel E. Cruz was a co-owner of the contested property and a defendant in Civil Case No. 49466.
Summit Financing Corporation, Victor S. Sta. Ana, Maximo C. Contreras, and Ramon G. Manalastas were defendants in Civil Case No. 49466 and respondents in the appeal to the Court of Appeals.
The RTC, Branch CLXIII, Pasig rendered a Decision dated June 4, 1992 in favor of the plaintiffs and declared several acts null and void; the Court of Appeals reversed in CA-G.R. CV No. 41298; the Court of Appeals denied reconsideration by Resolution dated November 21, 1995; petitioners filed a Rule 45 petition in the Supreme Court (G.R. No. 122904).

The parcel of land in Taytay, Rizal was then covered by Transfer Certificate of Title No. 495225, registered in the name of Arnel E. Cruz.
Petitioners alleged the parcel formed part of properties inherited from Delfin Cruz, husband of ADORACION E. CRUZ, and that petitioners and Arnel E. Cruz were co-owners.
On August 22, 1977 the parties executed a Deed of Partial Partition (Exhibit 25), which adjudicated specific lots to each co-heir and identified the disputed lot as adjudicated to Arnel E. Cruz.
On August 23, 1977 the parties executed a Memorandum of Agreement providing that, despite partition and individual titling, they would share equally in the proceeds from sale of the partitioned lots; the Memorandum was annotated on the back of TCT No. 495225 on September 1, 1977.

Arnel E. Cruz executed a Special Power of Attorney on May 16, 1980 in favor of Nelson Tamayo, authorizing him to obtain a loan of PHP 104,000 from Summit Financing Corporation.
On June 4, 1980 a Real Estate Mortgage (Exhibit 6) was constituted on the property then covered by TCT No. 495225 to secure the loan.
The loan remained outstanding at maturity; Summit Financing Corporation instituted extrajudicial foreclosure; Sheriff Victor S. Sta. Ana issued a Certificate of Sale (Exhibit 12) to Summit Financing Corporation as highest bidder.
Upon consolidation of ownership and presentation of an affidavit of consolidation, Acting Register of Deeds Ramon G. Manalastas cancelled TCT No. 495225 and issued TCT No. 514477 in the name of Summit Financing Corporation (TCT issued October 18, 1982).

Petitioners filed the complaint on February 11, 1983 seeking annulment of the Special Power of Attorney, the Real Estate Mortgage, the public auction sale, the Certificate of Sale, the affidavit of consolidation, consolidation of ownership, and cancellation of TCT No. 514477.
The RTC found that the Memorandum of Agreement established an intention to keep the inherited properties in a state of co-ownership and that Summit Financing Corporation was negligent in assuming ...(Subscriber-Only)

Whether the real estate mortgage on the property then covered by TCT No. 495225 is valid.

Whether the mortgaged property was the exclusive property of Arnel E. Cruz at the time of the mortgage.
Whether the Deed of Partial Partition terminated co-ownership and vested exclusive ownership in Arnel E. Cruz over the adjudicated lot.
Whether the Memorandum of Agreement created a continuing *pro-indiviso* co-ownership or otherwise restricted the right of Arnel E. Cruz to alienate or encumber his adjudicated lot.

(Subscriber-Only)