G.R. No. L-4133; May 13, 1952
AGUSTINA DE GUZMAN VDA. DE CARRILLO, (deceased) substituted by PRIMA CARRILLO, plaintiff-appellant, vs. FRANCISCA SALAK DE PAZ, ET ALS., defendants-appellees.

FACTS

Lot No. 221 was originally owned by spouses Severino Salak and Petra Garcia under Original Certificate of Title No. 41453. On December 20, 1939, they mortgaged the lot to spouses Pedro Magat and Filomena Silva. On May 22, 1943, the mortgagees assigned their rights to Honaria Salak with the consent of Severino Salak (Petra Garcia having predeceased). On August 16, 1943, Severino Salak transferred his one-half (½) interest in the property to Honaria Salak. These transactions were never registered or annotated on the certificate of title. Severino Salak died on December 5, 1944, and Honaria Salak died on January 13, 1945. Intestate proceedings were instituted for the estate of Severino Salak and Petra Garcia. Lot No. 221 was adjudicated to their heirs: Ernesto Bautista, Aurea Sahagun, Rita Sahagun, and Francisca Salak, each with a ¼ interest. Francisca Salak later acquired the shares of the other heirs, and Transfer Certificate of Title No. 970 was issued in her name. Honoria Salak died single, leaving as her sole heir Agustina de Guzman Vda. de Carrillo, the plaintiff. The plaintiff filed an action seeking reconveyance of the one-half portion of the lot allegedly acquired by Honoria Salak, cancellation of a lease and mortgage executed on the lot by the defendants, and payment of damages. The defendants filed a motion to dismiss on the ground that the complaint did not state a cause of action. The lower court granted the motion, reasoning that the property had been duly adjudicated in the closed intestate proceedings, free from all claims, and that the plaintiff’s claim should have been presented in those proceedings. The plaintiff appealed.

ISSUE

Whether the lower court erred in dismissing the complaint on the grounds that the plaintiff’s claim over the one-half portion of Lot No. 221 was barred due to its adjudication in the intestate proceedings and the plaintiff’s failure to present her claim therein.

RULING

Yes, the lower court erred. The Supreme Court reversed the order of dismissal and remanded the case for further proceedings. The Court held that although the sale of Severino Salak’s one-half interest to Honoria Salak was unregistered, it was valid and binding between the parties and their privies. The lack of registration only meant the transaction was not binding against third parties, but it did not convert it into a mere monetary obligation. Consequently, the plaintiff, as Honoria Salak’s heir, could still press her claim against the heirs of Severino Salak, as they inherited the property subject to the liability affecting their ancestor. The fact that the property was adjudicated in the intestate proceedings did not bar the claim, as the heirs could not escape the legal consequences of the transaction binding their predecessor. The Court noted that issues regarding Francisca Salak’s acquisition of her co-heirs’ shares could be resolved when the case is decided on the merits.