PHILIPPINE NATIONAL BANK, PETITIONER-APPELLEE, VS. PRIMITIVA MALLORCA, OPPOSITOR-APPELLANT.

Disputed by appellant Primitiva Mallorca is the correctness of the order of the Court of
First Instance of Iloilo, sitting as a Cadastral Court,^[1]directing
her to surrender to the Register of Deeds her co-owner’s copy of Transfer
Certificate of Title No. T-24256.  This
is necessary to enable the Philippine National Bank^[2] to
secure in its name Torrens title to the property
involved which it acquired in a foreclosure sale upon mortgage executed in its
favor.

The background facts may be recited as follows:

Way back in 1950, one Ruperta Lavilles mortgaged a 48,965 square meter-parcel of land
situate in Passi, Iloilo (Lot 1504, Passi Cadastral Survey) to the PNB as security for a loan
of P1,800.00.  The lot was covered by
Transfer Certificate of Title 27070 in the name of Ruperta
Lavilles.  The
mortgage was duly recorded.

On January 12, 1958, while the mortgage above-described was in
full force and effect, and without PNB’s knowledge
and consent, Ruperta Lavilles
sold to appellant Primitiva Mallorca
20,000 square meters of the mortgaged land.

On January 17, 1958,
Mallorca moved the Iloilo
cadastral court to have the sale to her duly annotated on the title,^[3]
and, for the purpose, to require PNB to surrender the owner’s copy of TCT 27070
to the Register of Deeds.

The court order of February 3, 1958 directed PNB to deliver said
TCT 27070 to the Register of Deeds, and warned that “[t]he mortgage in
favor of the Philippine National Bank is duly registered in the Office of the
Register of Deeds and to whomsoever the land is sold the vendee will assume the
responsibility of complying with the provisions of the mortgage.”

The Register of Deeds then cancelled TCT 27070, issued a new one,
TCT 24256, making two co-owner’s
copies of the title – one each for Ruperta Lavilles and for Primitiva Mallorca.  PNB’s mortgage lien
was annotated on both copies.

Ruperta Lavilles
failed to pay her mortgage debt.  PNB, on
April 16, 1958, foreclosed
the mortgage extrajudicially.  On May
12, 1958, a certificate of sale was issued to PNB as the highest
bidder in the foreclosure sale.  This
certificate of sale was registered with the Register of Deeds of Iloilo.

In March, 1959, Mallorca
sued PNB to enforce her right of redemption with damages.^[4]

On February 9, 1960,
judgment was rendered in the case just stated, dismissing the claim for damages
but declaring Mallorca
“entitled to exercise her right of redemption with respect to the 20,000
square meters sold to her by Ruperta Lavilles within the period specified by law.”

Mallorca‘s appeal from this judgment was, on June 18, 1960, denied by the lower court – it was
filed out of time.  Her move to
reconsider was rejected.  She then went
to the Court of Appeals on mandamus.  On January 14, 1961, the appellate court
denied the same for lack of merit.^[5]

Primitiva Mallorca
failed to exercise her right of redemption as decreed by the court.

Thus, the final deed of sale in favor of PNB, dated February 19,
1962, was presented to the Register of Deeds on April 10, 1962 for
registration.  The latter refused to
register without Mallorca’s co-owner’s copy of TCT
24256.  By letter of May 18, 1962, the Register of Deeds required Mallorca to surrender said copy.  She did not comply.

And so, PNB lodged the present petition for consolidation
of title in the cadastral
court.  The bank prayed that Mallorca’s co-owner’s
copy of TCT 24256 be declared null and
void, and that the Register of Deeds be directed to cancel the same and to
issue a new title in the name of PNB, upon payment of the legal fees.

By order of August 18,
1962, the court a quo required Mallorca
“to deliver the co-owner’s
duplicate copy of TCT 24256 to the Register of Deeds within a period of five
(5) days.”

Mallorca appealed this order to the Court of Appeals.^[6] The latter, however, in its resolution of
February 18, 1964, certified the case
to this Court, as the issues
present questions of law.

1. Appellant’s stand is that
her undivided interest consisting of 20,000 square meters of the
mortgaged lot, remained unaffected by
the foreclosure and subsequent sale to PNB. 
Because„ so she argues, she was
not a party to the real estate
mortgage in favor of PNB, and she “neither secured nor contracted a
loan” with said bank.  What PNB foreclosed, she maintains; “was that portion belonging to Ruperta Lavilles only”, not the part belonging to her.

Appellant’s position
clashes with precepts well-entrenched in law.  By Article 2126 of the Civil Code,^[7] a
“mortgage directly and immediately subjects
the property upon which it is
imposed, whoever the possessor may be,
to the fulfillment of the obligation
for whose security it was constituted.”
Sale or transfer cannot affect
or release the mortgage.  A purchaser is
necessarily bound to acknowledge and
respect the encumbrance to which is subjected the purchased thing and which is at the disposal of the creditor “in order that he, under the
terms of the contract, may recover the amount of his credit therefrom.”^[8] For,
a recorded real estate mortgage is a right in rem,
a lien on the property whoever its owner may be.^[9] Because the personality of the owner is disregarded; the mortgage subsists
notwithstanding changes of
ownership; the last transferee is just as much of a debtor as the
first one; and this,
independent of whether the transferee knows
or not the person of the mortgagee^[10]
So it is, that a mortgage lien inseparable from the property mortgaged. 
All subsequent purchasers thereof must respect the mortgage, whether the transfer to them be with or
without the consent of the mortgagee.  For, the mortgage, until discharged, follows
the property,^[11]

And then, militating against appellant’s cause is one other
special feature of a real mortgage – its indivisibility.^[12]
This Court has understood mortgage indivisibility in the sense that each and
every parcel under mortgage answers for the totality of the debt.^[13]

It does not really matter that the mortgagee, as in this case,
did not oppose the subsequent sale. 
Naturally, because the sale without PNB’s
knowledge.  Even if such knowledge is
chargeable to PNB, its failure to object to the sale could not have any
impairing effect upon its rights as mortgagee. 
After all, a real mortgage is merely an encumbrance; it does not
extinguish the title of the debtor, whose right to dispose – a principal
attribute of ownership – is not thereby lost.^[14]
And, on the assumption that PNB recognized the efficaciousness of the sale by Ruperta Lavilles of a portion of
the mortgaged land to Primitiva Mallorca,
which Lavilles “had the right to make” and
which anyway PNB “cannot oppose”, PNB cannot be prejudiced thereby, for,
at all events, “such sale could not affect the mortgage, as the latter
follows the property whoever the pos­sessor may be.”^[15]

On Primitiva Mallorca’s
part, she cannot rightfully deny the mortgage lien on the portion of the land
she purchased.  First.  Registration of the mortgage in the Register
of Deeds is notice to all persons of the existence thereof.^[16] Second.  By express provision of Section 39 of the
Land Regis­tration Act, “every subsequent purchaser of registered land who
takes a certificate of title for value in good faith shall hold the same free
of all encumbrance except those noted on said
certificate.”^[17]
Clear implication exists that if an encumbrance is so noted, that purchaser is
bound thereby, Third.  Mallorca herself petitioned the court to order PNB to
deliver the owner’s copy of TCT 27070 to the Register of Deeds for annotation
of Mallorca’s interest, as heretofore adverted
to.  And the court, in giving its stamp
of approval to the petition, expressly directed that “to whomsoever the
land is sold the vendee will assume the responsibility of complying with the
provisions of the mortgage.” Fourth.  Mallorca’s own
co-owner’s copy of the title issued to her carried PNB’s
mortgage lien.  Fifth.  The fact that Mallorca
failed to exercise her right of redemption, which she sought to enforce in a
judicial court, ends her interest to the land she claims, and, doubtless, estops her from denying PNB‘s mortgage lien thereon.

We, accordingly,
rule that PNB has the right to consolidate its title on the entire lot mortgaged
by Ruperta LaviIles in its
favor, including the 20,000 square meter-undivided interest of Primitiva Mallorca.  And this, by virtue of the foreclosure sale and the expiry of Mallorca’s
right of redemption.

2. In a final effort to overturn the order under review, appellant
espouses the thesis that the lower court, acting as a cadastral court, is without jurisdiction in the premises.  Her syllogism is this: she is questioning the
right of PNB to declare TCT 24256 as null and void insofar as the 20,000 square meter-undivided
portion is concerned; the issue is thus raised to the level of “contentious
litigation”; and, going by jurisprudence,^[18]
a cadastral court is devoid of power to act thereon.

The precedents appellant depends on cannot serve as authority, in
her case.  For, those cases involved unresolved
issues.  Here, the question she presents
– whether her undivided share in the lot is encumbered or unencumbered – has
been definitely passed upon in the redemption case she brought against PNB
(Civil Case 5149, Court of First Instance of Iloilo).  Mallorca herself
acknowledged the validity of that encumbrance when she commenced said civil
case.  Given the facts, PNB’s petition to consolidate title falls under the rule
that a cadastral court has jurisdiction to entertain a petition for the
cancellation of an outstanding certificate of title where the registered owner
has been lawfully divested of his title thereof.^[19]
For, the truth is that this case presents no substantial controversy.  As held in the case of Castillo vs.
Ramos, supra, pp. 814-815 –

“where a petition concerning the cancellation of any encumbrance
noted on a Torrens certificate of title is filed within the record of the land
registration case in which the basic decree was entered and there is no substantial
controversy in regard thereto between the
petitioner and any other interested party, such petition may be considered as a
mere incidental matter in such land registration case and may therein be acted
upon by the proper court.”^[20]

Upon the record as it stands, the lower court order of
August 18, 1962 is, as it is hereby, affirmed.

Costs against oppositor-appellant.

SO ORDERED.

Concepcion, C.J., Reyes, Dizon, Makalintal, Bengzon, J.P., Zaldivar, Castro,
Angeles, and Fernando, JJ., concur.

^[1]
Cadastral Case 30, GLRO Record 487, Lot 1504, Passi Cadastre, Court of First Instance of Iloilo.

^[2]
Hereinafter referred to simply as PNB.

^[3]
Cadastral Case 29, GLRO Record 487, Lot 1504, Passi Cadastre, Court of First Instance of Iloilo.

^[4]
Civil Case 5149, Court of First Instance of Iloilo.

^[5]
CA-G. R. 28505-R.

^[6] CA-G. R. 31487-R.

^[7] Formerly Article 1876 of the Civil Code of Spain of 1889.

^[8] Bischoff vs. Pomar,
12 Phil. 690, 700.

^[9] Altavas, The Law of Mortgages in the Philippine Islands, 1924 ed., p. 2.

^[10] Id.,
at p. 5.

^[11] Peña, Registration
of Land Titles and Deeds, 1961 ed., p. 225; emphasis supplied. See
also V Tolentino, Civil Code of the Philippines, 1962 ed., p. 477.

^[12]
Article 2089, Civil Code.

^[13] Goquiolay vs. Sycip,
L-11840, December 10, 1963.

^[14] E.
C. McCullough, & Co. vs. Veloso, 46 Phil.
1, 4.

^[15] Id.

^[16]
Section 51, Land Registration Act.

^[17]
Emphasis supplied. See De Barreto vs.
Villanueva, L-14938, December 29,
1962.

^[18]
Castillo vs. Ramos, 78 Phil. 809. 813, and Garcia vs. Belzunce, 84 Phil. 802, 804.

^[19] Secs. 111 and 112, Land Registration Act, Cavan vs. Wislezenus, 48
Phil. 632, 635-636; Alto Surety & Insurance Co., Inc. vs. Limcaco, 58 O.G. No. 21, pp. 3746, 3747.

^[20]
Emphasis supplied.