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TAN v. BENOLIRAO price considering that respondents would no longer deliver a clean
G.R. No.153820, October 16, 2009 title to him.

TOPIC: Sec. 4 Rule 74 of ROC ISSUE/S:

DOCTRINE: 1. WON the questioned annotation constituted an encumbrance that
Section 4, Rule 74 expressly authorizes the court to give to every heir his justifies the return of the down-payment.
lawful participation in the real estate notwithstanding any transfers of such
real estate and to issue execution thereon. All this implies that, when within HELD:
the amendatory period the realty has been alienated, the court in re- YES, the annotation placed on the new TCT constituted an encumbrance on
dividing it among the heirs has the authority to direct cancellation of such the subject property.
alienation in the same estate proceedings, whenever it becomes necessary An annotation is placed on new certificates of title issued pursuant to the
to do so. distribution and partition of a decedents real properties to warn third
persons on the possible interests of excluded heirs or unpaid creditors in
these properties. The annotation, therefore, creates a legal encumbrance
FACTS: or lien on the real property in favor of the excluded heirs or
 Respondents are owners of subject property, sold it to Petitioner creditors. Where a buyer purchases the real property despite the
under a Contract to Sell annotation, he must be ready for the possibility that the title could be
 Under the provisions of Contract, petitioner is to pay 200k down- subject to the rights of excluded parties. The cancellation of the sale would
payment and would pay the remaining balance within the agreed be the logical consequence where: (a) the annotation clearly appears on the
period. title, warning all would-be buyers; (b) the sale unlawfully interferes with the
 Meanwhile, one of the respondents died- his estate was settled by rights of heirs; and (c) the rightful heirs bring an action to question the
his heirs through an extrajudicial settlement. By virtue of said transfer within the two-year period provided by law.
settlement a new TCT over the property was issued with a Section 4,
Rule 74, viz: In this case, By the time Tans obligation to pay the balance of the purchase
price arose on May 21, 1993 (on account of the extensions granted by the
“any liability to credirots (sic), excluded heirs and other respondents), a new certificate of title covering the property had already
persons having right to the property, for a period of two (2) been issued on March 26, 1993, which contained the encumbrance on the
years, with respect only to the share of Erlinda, Andrew, property; the encumbrance would remain so attached until the expiration of
Romano and Dion, all surnamed Benolirao” the two-year period. Clearly, at this time, the vendors could no longer
compel Tan to pay the balance of the purchase since considering they
 Petitioner failed to pay the remaining balance within the agreed themselves could not fulfill their obligation to transfer a clean title over the
period, which prompted the respondents to send him a demand property to Tan.
 Tan, in blatant refusal of the respondents’ demands, wrote a letter GRANTED, return 200k down-payment.
stating that the annotation constituted an encumbrance on the
property hence he can no longer be required to pay the purchase