G.R. No. 202820 - Home Guaranty Corp. vs. Manlapaz

On May 10, 1948, Rosario Cruzado, individually and as administratrix of her deceased husband Pedro Cruzado’s estate, obtained an P11,000 loan from the defunct Rehabilitation Finance Corporation (RFC).
To secure the loan, she mortgaged a property covered by Transfer Certificate of Title (TCT) No. 61358, titled in her and her husband's names.
Due to failure to pay certain loan installments, the mortgage was foreclosed, and the RFC acquired the property for P11,000, subject to her rights as mortgagor to repurchase.

On July 26, 1951, the land was conditionally sold back to Rosario for P14,269.03, payable in seven years.
On February 13, 1953, with Court approval and RFC consent, Rosario, as guardian of her minor children, sold all rights, interest, title, and dominion over the property to Pura L. Villanueva for P19,000.
Villanueva assumed payment of P11,009.52, plus interest, owed to the RFC under the same terms.
Villanueva paid a P1,500 down payment and executed a promissory note dated March 9, 1953, for the balance of P17,500, payable monthly. She later paid an additional P5,500 on April 22, 1953.

Villanueva secured TCT No. 32526 in her name and mortgaged the property to Magdalena C. Barretto for a P30,000 loan on July 10, 1953.
Villanueva failed to pay the remaining P12,000 balance to Rosario Cruzado; Cruzado filed suit to recover this on September 21, 1953, leading to a lien annotation on TCT No. 32526.
The trial court ruled that Villanueva and her husband must pay Cruzado P12,000 plus interest and attorney’s fees.

Barretto also foreclosed the mortgage for the P30,000 loan after Villanueva defaulted and secured a favorable decision on November 11, 1956, with interest and attorney’s fees.
Barretto moved for a writ of execution, which was granted July 31, 1958.
Cruzado filed a “vendor’s lien” on August 14, 1958, over the property for the unpaid purchase price, invoking Articles 2248, 2249, and related provisions of the Civil Code.
The court ordered annotation of the vendor’s lien on TCT No. 32526 and directed pro-rata distribution of foreclosure sale proceeds between Cruzado and Barretto.
Barretto moved for reconsideration but the property was sold at public auction on September 12, 1958, with Barretto acquiring it as highest bidder for P49,000.
The Court confirmed the sale but maintained the vendor’s lien annotation and denied Barretto’s motion for reconsideration. Barretto appealed.

Whether Rosario Cruzado’s claim for the unpaid purchase price constitutes a valid vendor’s lien on the property subject to Barretto’s registered mortgage.
Whether Barretto’s registered mortgage has priority over Cruzado’s unrecorded vendor’s lien in the absence of insolvency or liquidation proceedings.
Whether the principles of land registration and priority of liens apply to protect Barretto’s registered rights from unrecorded vendor’s lien claims.
Whether the sale by the Cruzados to Villanueva was a valid sale of the property or only an assignment of rights subject to the prior ownership held by the RFC.