G.R. No. 165300 - Ferrer vs. Spouses Diaz

Case Summary (G.R. No. 165300)

Factual Background

Atty. Pedro M. Ferrer alleged that on May 7, 1999 he extended a loan of P1,118,228.00 to Spouses Alfredo and Imelda Diaz, as represented by their daughter Reina Comandante by Special Power of Attorney, and that the loan was secured by a promissory note and a Real Estate Mortgage over the land covered by Transfer Certificate of Title No. RT-6604. Prior to that transaction, petitioner averred that Reina Comandante executed on or about May 29, 1998 an instrument entitled Waiver of Hereditary Rights and Interests Over a Real Property (Still Undivided) in favor of petitioner for a consideration of P600,000.00. On May 26, 1999 petitioner caused an Affidavit of Adverse Claim to be annotated on the back of TCT No. RT-6604.

Petitioner's Claim and Reliefs Sought

Atty. Pedro M. Ferrer filed a Complaint for Collection of Sum of Money Secured by Real Estate Mortgage and later amended to pray alternatively for Judicial Foreclosure and to implead subsequent purchasers. He sought judgment for P1,118,228.00, interests, costs and the annotation and recognition of his adverse claim and mortgage over the property, asserting that his rights derived from both the waiver of hereditary rights executed by Reina Comandante and the mortgage allegedly executed by her as attorney-in-fact of her parents.

Respondents' Allegations

Reina Comandante admitted borrowing money from petitioner but alleged that the advances were personal loans secured by chattel mortgages on her taxi units and postdated checks; she denied validly executing the mortgage in behalf of her parents and later executed an Affidavit of Repudiation/Revocation of Waiver which she promptly caused to be annotated on the registered title and filed a petition for cancellation of petitioner’s adverse claim. Spouses Alfredo and Imelda Diaz denied executing the alleged SPA and denied any obligation to petitioner. Spouses Bienvenido and Elizabeth Pangan averred that they purchased the subject property in good faith and for value for P3,000,000.00 on November 11, 1999 and obtained TCT No. N-209049, and that the waiver upon which petitioner relied was void under Article 1347 and that any mortgage was not registrable against them.

Procedural History in the Trial Court

After pleadings, the Diazes moved for summary judgment and petitioner later filed his own motion for summary judgment. The trial court deemed the motions submitted and, on June 14, 2001, rendered summary judgment in favor of Atty. Pedro M. Ferrer, ordering all defendants jointly and solidarily to pay P1,118,228.00, directing annotation of petitioner’s rights on TCT No. N-209049, and awarding P10,000.00 for plaintiff’s expenses plus costs.

Appeal to the Court of Appeals

Spouses Bienvenido and Elizabeth Pangan, Spouses Diaz, and Reina Comandante appealed to the Court of Appeals. The appellate court declared the waiver executed by Reina Comandante null and void but upheld that the mortgage executed by her was binding between the parties who were privy to it. The CA found that Spouses Pangan were purchasers in good faith and that the property was free from petitioner’s encumbrance at the time of their acquisition because their knowledge of the adverse claim arose only after purchase. The CA modified the RTC judgment by excluding the Pangans from joint and several liability but otherwise affirmed liability of Reina Comandante and Spouses Diaz. Petitioner’s motion for reconsideration before the CA was denied.

Issues Presented to the Supreme Court

The petition raised two principal legal questions: whether a future heir may validly waive hereditary rights in favor of another while the ascendants are still living; and whether an adverse claim annotated on a title predicated on such waiver is valid and effective against subsequent owners and thereby binds them to satisfy the claimant.

Supreme Court's Analysis on the Waiver of Hereditary Rights

The Court examined Article 1347, Civil Code, and reaffirmed the principle that no contract may be entered into upon a future inheritance except as expressly authorized by law. The Court found that at the time Reina Comandante executed the waiver both parents were alive and succession had not been opened; the subject property formed part of the expected inheritance; and the promisor’s expectancy was purely hereditary. The Court applied its prior jurisprudence, including Tanedo v. Court of Appeals, to conclude that the waiver executed by Reina Comandante constituted a prohibited contract upon future inheritance and was therefore void. Consequently, the waiver could not be the source of any right or obligation in petitioner’s favor.

Supreme Court's Analysis on the Adverse Claim and Registration

Turning to Section 70, PD No. 1529, the Court observed that an adverse claim is registrable only if the claimant has a right or interest in registered land adverse to the registered owner and such right arises after registration. Because the waiver was void, the Court held that petitioner had no subsisting right or interest to support the annotation, and his Affidavit of Adverse Claim was therefore unfounded. The Supreme Court ordered the cancellation of petitioner’s inscription on TCT No. N-209049.

Supreme Court's Analysis on the Propriety of Summary Judgment

The Court addressed the collateral procedural error that the trial court treated the validity of the adverse

Case Syllabus (G.R. No. 165300)

Parties and Procedural Posture

Atty. Pedro M. Ferrer was the petitioner before the Supreme Court and the plaintiff in the trial court action.
Spouses Alfredo Diaz and Imelda Diaz, Reina Comandante, and Spouses Bienvenido and Elizabeth Pangan were the respondents in the case.
Petitioner filed a civil action for collection of a sum secured by a real estate mortgage and for judicial foreclosure in Civil Case No. Q-99-38876 in the Regional Trial Court, Quezon City, Branch 224.
Comandante filed a Petition for Cancellation of Adverse Claim docketed as LRC Case No. Q-12009 (99) in Branch 220, which was later consolidated with Civil Case No. Q-99-38876.
The RTC rendered summary judgment in favor of petitioner on June 14, 2001 ordering joint and several liability of all defendants and directing annotation of petitioner’s interest on TCT No. N-209049.
The Court of Appeals issued a Decision on December 12, 2003 which modified the RTC judgment by excluding the Pangans from the group held solidarily liable and declaring Comandante’s waiver null and void in part.
Petitioner filed a Petition for Review on Certiorari under Rule 45, Rules of Court which the Supreme Court resolved by its decision that denied the petition in part, cancelled the adverse claim inscription, set aside other aspects of the CA decision, and remanded the case to the RTC.

Key Factual Allegations

Petitioner alleged that on May 7, 1999 the Diazes, through Comandante under a Special Power of Attorney, obtained from him a loan of P1,118,228.00 secured by a second real estate mortgage over TCT No. RT-6604 and by a promissory note and postdated checks.
Petitioner alleged that on or about May 29, 1998 Comandante executed in his favor a Waiver of Hereditary Rights and Interests Over a Real Property (Still Undivided) for P600,000.00.
Petitioner executed an Affidavit of Adverse Claim and caused its annotation on the back of TCT No. RT-6604 on May 26, 1999.
The postdated checks were dishonored and petitioner filed suit on September 29, 1999 for collection and/or judicial foreclosure.
Comandante later executed an Affidavit of Repudiation/Revocation of the waiver and caused its annotation on the same title on September 29, 1999, and filed a Petition for Cancellation of Adverse Claim on October 4, 1999.
Spouses Pangan acquired the subject property by a purported sale from the Diazes on November 11, 1999 for P3,000,000.00 and were issued TCT No. N-209049 in lieu of TCT No. RT-6604.

Issues Presented

Whether a waiver of hereditary rights executed by a future heir while the parents were still living is valid and effective as a source of rights.
Whether an adverse claim annotated on the certificate of title based on such waiver is valid, registrable, and effective to bind subsequent purchasers.
Whether the RTC properly rendered summary judgment in favor of petitioner given the factual disputes concerning the SPA, mortgage, promissory note, and amounts claimed.
Whether the Real Estate Mortgage executed by Comandante on behalf of her parents, if valid, bound purchasers in good faith such as the Pangans.

Contentions of the Parties

Petitioner contended that his adverse claim was based not only on Comandante’s waiver but also on the Real Estate Mortgage executed by her as attorney-in-fact for her parents and that the adverse claim was registrable under Section 70, PD No. 1529.
Comandante contended that the waiver and the mortgage were not validly or knowingly executed, that the waiver was prohibited by Article 1347 of the Civil Code, that her obligation was personal and limited to P500,000.00–P600,000.00, and that petitioner prepared the documents while acting as her lawyer and creditor.
Spouses Diaz denied execution of the SPA, denied knowledge of the loan, and asserted that they did not authorize any mortgage to petitioner.
Spouses Pangan claimed to be purchasers in good faith for value who acquired the property before any valid adverse claim could bind them and asserted that the waiver could not create any right