IN RE: PETITION FOR CANCELLATION OF ADVERSE CLAIM. ANANIAS ABUSTAN, PETITIONER AND APPELLEE, VS. RUPERTO FERRER AND CONSUELO V. GOLEZ (SPOUSES), OPPOSITORS AND APPELLANTS.

CONCEPCION, J.:

The spouses Ruperto Ferrer and Consuelo V. Golez, hereinafter referred to as
the Ferrers, seek the review of an order of the Court of First Instance of Rizal
directing the cancellation of an annotation of their adverse claim to a parcel
of land situated in the Municipality of Makati Province of Rizal, and covered by
Transfer Certificate of Title No. 76141 of the Office of the Register of Deeds
of said province, issued in the name of appellee Ananias Abustan on May 4, 1960,
upon cancellation of Transfer Certificate of Title No. 30520 in the name of
Vicente C. Gomez, married to Cirila Sulingco Manuel, of the same province.

The record shows that on April 6, 1955, Gomez had executed the document
Exhibit E, constituting a mortgage on said land in favor of the Ferrers, to
guarantee the payment of P2,500, within one (1) year from said date; that
Exhibit E provided that, if Gomez failed to redeem the property within the
aforementioned period, the Ferrers could, “at their election”, assume an
obligation of Gomez in favor of the Meralco Loan and Savings Association
hereinafter referred to as the Meralco Association — which had a first mortgage
on said property, and Gomez would execute the corresponding deed of sale thereof
in favor of the Ferrers; and that Exhibit E was neither registered nor annotated
on Transfer Certificate of Title No. 3052O, because the former state erroneously
that said property was covered by Transfer Certificate of Title No. 16488 of the
City of Manila.

Subsequently, or on May 9, 1956, the mortgage in favor of the Meralco
Association was cancelled in pursuance of a deed to this effect. On the same
date, a deed of real estate mortgage, executed by Gomez in favor of the spouses
Brigido Campita and Fausta Domingo, for the sum of P3,000, was duly registered,
but the annotation thereof was duly cancelled on June 8, 1957, oh which date
another deed of mortgage on the same property, for the sum of P6,000, in favor
of the Manila Building and Loan Association — hereinafter referred to as the
Manila Association — was duly registered. On March 4, 1959, the Ferrers
instituted, against Gomez, Civil Case No. 4820 of the Court of First Instance of
Rizal, for the recovery of the sum of money referred to in Exhibit E, but this
case was later dismissed for non-appearance of the parties on the date set for
the hearing thereof. Instead of seeking a revocation of the order of dismissal,
the Ferrers commenced, on August 14, 1959, Civil Case No. 5726 of the same
Court, against Gomez and the Manila Association. In the complaint therein: the
Ferrers alleged, inter alia, the execution by Gomez of said deed Exhibit
E, the failure of Gomez to pay the debt guaranteed thereby, the reason why
Exhibit E was not registered, and the execution of the deed of first mortgage in
favor of the Manila Association. The Ferrers alleged further that the Manila
Association had been guilty of laches in failing to require Gomez, before
lending him P6,000, to submit an affidavit stating that the property
aforementioned was unencumbered and prayed that judgment be rendered sentencing
Gomez to convey said property to them (the Ferrers), as well as to pay damages,
and the Manila Association to cancel the mortgage in their favor, upon payment
by the Ferrers of the amount representing the balance of the obligation of Gomez
in favor of the Meralco Association, outstanding on April 6, 1956 (it should be
1955), when Exhibit E was executed.

Gomez and the Manila Association moved to dismiss the complaint in Case No.
5726, upon the ground that the same is barred by the order of dismissal of Case
No. 4820. On December 10, 1959, this motion was granted and the complaint in
said Case No. 5726 was, accordingly, dismissed. No appeal was taken from the
order of dismissal, which, accordingly, became final and executory.
Subsequently, or on March 14, 1960, Mrs. Ferrer filed with the office of the
Register of Deeds of Rizal an affidavit of adverse claim to the property above
referred to, based upon Exhibit E. Soon thereafter, or on May 4, 1960, Transfer
Certificate of Title No. 76141 was issued in the name of Ananias D. Abustan,
married to Librada Buan. This Transfer Certificate of Title No. 76141 carried
thereon two (2) memoranda of “encumbrances”, namely, the annotation of the first
mortgage in favor of the Manila Association and that of the adverse claim of the
Ferrers.

On July 13, 1960, Abustan filed in Land Registration Case No. 3861, G.L.R.O.
Cadastral Record No. 2029, under which the property in question is registered, a
petition for cancellation of said annotation of adverse claim, upon the ground
that the same had been “improperly registered in violation of Section 112 of Act
496, because the right or interest sought to be enforced by the spouses, Ruperto
Ferrer and Consuelo Golez, had become unenforceable by virtue of a final
decision rendered by the Court of First Instance of Rizal on December 10, 1959,
in Civil Case No. 5726”, referring to the aforementioned order of dismissal
thereof. After due hearing, this petition was granted and, a reconsideration of
the action thus .taken by the lower court having been denied, the Ferrers have
interposed the present appeal by writ of error.

The Ferrers maintain that the lower court erred (a) in holding that the deed
of mortgage constituted in their favor had became unenforceable owing to the
dismissal of Civil Cases Nos. 4820 and 5726 of Rizal; (b) in not holding that
the registration of the adverse claim in question operated as a registration of
the deed of real estate mortgage in their favor; (c) in not holding that Civil
Case No. 5726 operated as a reopening of Civil Case No. 4820; and (d) in giving
due course to appellee’s petition instead of requiring them to file an ordinary
action.

This appeal is clearly devoid of merit. Indeed, the dismissal of Case No.
4820 had the effect of extinguishing the debt of Gomez in favor of the Ferrers.
As a consequence, the latter lost the right to demand the conveyance in their
favor of the lot in dispute, such right being predicated upon the default of
Gomez in the payment of said debt. The extinction thereof necessarily operated
to wipe out the default, if any, and, as a consequence, the relief stipulated
for such event, namely, the conveyance of the property to the Ferrers.
Regardless of the foregoing, the dismissal of Case No. 5726 extinguished the
right, if it still existed, to said conveyance, which was sought to be enforced
in that case.

Even if the annotation of the adverse claim amounted to the registration of a
deed of real estate mortgage and it did not have such effect the dismissal of
Case No. 4820 had extinguished the debt secured by the mortgage, and,
accordingly, of the latter. Being merely an accessory contract, a mortgage
cannot exist without the principal obligation it seeks to guarantee (Article
2085, Civil Code of the Philippines). So, too, even if Case No. 5726 had
amounted to a reopening of Case No. 4820, which is not a fact, the dismissal of
Case No. 5726 wiped out the right of the Ferrers under Exhibit E to the
conveyance in their favor of the property in question regardless of its nullity
under Article 2088 of the Civil Code of the Philippines no appeal having been
taken from the order of dismissal of said Case No. 5726.

As regards the theory that the lower court should have required Abustan to
litigate in an ordinary action, instead of allowing him to secure the
cancellation of the annotation of the adverse claim under Section 112 of the
Land Registration Act, suffice it to say that the case of Tangunan vs. Republic
(94 Phil., 171; 50 Off. Gaz., 1) relied upon by the Ferrers is not in point, for
the issue therein was controversial, whereas in the case at bar, there is no
dispute about the issue in Cases Nos. 4820 and 5726, about the dismissal of both
and the grounds for dismissal, and about the fact that no appeal had been taken
from the orders of dismissal and that the same had, accordingly, become final
and executory. Neither can there be any controversy about the effect of said
orders of dismissal. That of Case No. 4820, for non-appearance of the parties,
was, pursuant to Section 3 of Rule 17 of the Rules of Court, “an adjudication
upon the merits, unless otherwise provided by the court”, and the court did not
provide otherwise. Upon the other hand, the dismissal of Cage No. 5726 was based
upon the ground that the cause of action therein is barred by a prior judgment —
namely the dismissal of Case No. 4820. ”

Wherefore, the order appealed from is hereby affirmed with costs against
herein appellants Ruperto Ferrer and Consuelo V. Golez. It is so ordered.

Bautista Angelo, Reyes, J. B. L., Barrera, Paredes, Dizon, Regala,
Makalintal, Bengzon, J. P. and Zaldivar, JJ. concur.