IN RE PETITION FOR CANCELLATION OF ENCUMBRANCE ANNOTATED ON TCT NOS. 22120 AND 22121, REGISTRY OF DEEDS OF NUEVA ECIJA, NICANOR T. SANTOS, PETITIONER-APPELLANT.

Santos versus Rizal Surety and Insurance Company

The Case

This is a summary proceeding under Section 112 of Act Number 496, the old Land Registration Act, brought by Nicanor T. Santos as registered co-owner of two Torrens titles in Cuyapo, Nueva Ecija. He asked the land registration court to cancel six encumbrances annotated on the back of those titles, including an adverse claim, a notice of lis pendens, two attachments, a mortgage in favor of Rizal Surety and Insurance Company, and an acknowledgment of that mortgage. The case matters because it draws the boundary between the summary jurisdiction of a land registration court and the plenary jurisdiction of a court acting in an ordinary civil action. It teaches that a Torrens title annotation cannot be erased by a mere petition, however stale the lien may appear, without the lienholder being properly summoned.

Procedural History

Nicanor T. Santos filed his petition in the Court of First Instance of Nueva Ecija, Guimba Branch Four, sitting as a land registration court. He treated the petition as a motion and had it set for hearing. At the hearing, the presiding judge denied the petition in open court on the ground that the encumbrances could not be cancelled by means of a mere petition in the land registration case. Santos then wrote the register of deeds asking for cancellation on the ground of prescription, but the register of deeds replied that as a ministerial officer he could not cancel the annotations without a court order. Santos appealed the order of dismissal directly to the Supreme Court.

Facts

Lots 1921 and 1956 of the Cuyapo, Nueva Ecija cadastre, with areas of fifteen and sixteen hectares, were covered by Transfer Certificates of Title Numbers 22121 and 22120 in the names of the brothers Nicanor T. Santos and Reynaldo T. Santos as co-owners. On the back of those titles appeared six annotations. The first was an adverse claim executed in favor of the two brothers. The second was a notice of lis pendens dated February 25, 1946, referring to a petition to secure the owner's duplicate certificates. The third and fourth were attachments dated February 26, 1946, levied on the rights of Dionisio C. Bautista, one in favor of Remedios T. Santos and the other in favor of Manuel Borja. The fifth was a first mortgage in favor of Rizal Surety and Insurance Company for three thousand pesos, and the sixth was an acknowledgment of that mortgage executed by the Santos brothers. The mortgagee's copies of the two titles were issued to the surety company.

On March 2, 1966, Reynaldo sold his undivided one-half share in the two lots to his brother Nicanor, making Nicanor the sole owner. On September 26, 1966, Nicanor filed his petition asking that the surety company be ordered to surrender the mortgagee's copies of the titles, that those copies be cancelled or declared void if not surrendered, and that the register of deeds cancel the encumbrances. He attached the conformity of Remedios T. Santos to the cancellation of the attachment in her favor, and he sent copies of his petition to Manuel Borja and to the surety company by registered mail.

Santos argued that the first two entries should be cancelled because he and his brother were the interested parties, that the third should be cancelled because his sister consented, and that the 1945 and 1946 entries in favor of Borja and the surety company had already prescribed. The trial court denied the petition, and the register of deeds refused to act without a court order.

Issues

• Whether or not a land registration court, in a summary proceeding under Section 112 of Act Number 496, may cancel annotations of attachment and mortgage on Torrens titles on the ground that the liens have prescribed.
• Whether or not service of copies of the petition by registered mail confers jurisdiction over the persons of the lienholders.
• Whether or not the alleged prescription of the liens justifies dispensing with an adversary proceeding.

Applicable Provisions

Section 112 of Act Number 496, the provision under which the petition was filed, is the procedural anchor of the case:

Section 112. A registered owner or other person in interest may at any time apply by petition to the court, upon the ground that registered interests of any description, whether vested, contingent, expectant, or inchoate, have terminated and ceased; or that new interests have arisen or been created which do not appear upon the certificate; or that any error, omission, or mistake was made in entering a certificate or any memorandum thereon, or on any duplicate certificate; or that the name of any person on the certificate has been changed; or that the registered owner has been married, or if registered as married, that the marriage has been terminated and no right or interest of the spouse has been registered; or that a corporation which owned registered land and has been dissolved has not conveyed the same within three years after its dissolution; or upon any other reasonable ground; and the court shall have jurisdiction to hear and determine the petition after notice to all parties in interest, and may order the entry or cancellation of a new certificate, the entry or cancellation of a memorandum upon a certificate, or grant any other relief upon such terms and conditions, requiring security if necessary, as it may deem proper. This section shall not be construed to give the court authority to open the original decree of registration, and nothing shall be done or ordered by the court which shall impair the title or other interest of a purchaser holding a certificate for value and in good faith, or his heirs or assigns, without his or their written consent.

The provision is summary in nature and requires notice to all parties in interest, which is why the Court held that it cannot be used to adjudicate the validity or prescription of a mortgage without the mortgagee being summoned.

Ruling

On the first issue, the Court held that the appeal was devoid of merit. The remedy of the petitioner was to file an ordinary action against Borja, against the surety company as mortgagee, and against the register of deeds, so that they may be duly summoned and the lower court can acquire jurisdiction over them. The Court explained that the remedy under Section 112 of Act Number 496 is summary in nature and is not adequate for the litigation of issues pertaining to an ordinary civil action. The continuing, special and limited jurisdiction of the Court of First Instance as a land registration court does not empower it to adjudicate questions relating to the validity, cancellation, or discharge of a mortgage. That issue should be ventilated in an ordinary civil action.

On the second issue, the Court held that service of copies of the petition by registered mail is not the means for acquiring jurisdiction over the persons of the lienholders. Notice by mail does not substitute for summons in a proceeding that has become adversary in character.

On the third issue, the Court held that even if the attachment lien of Borja and the mortgage lien of the surety company might have already prescribed due to the long lapse of time, this was not a justification for resorting to a shortcut or for dispensing with the requirements of due process. An adversary proceeding, even if it would turn out to be a mere formality or simply ceremonial and ritualistic in character, is the proper procedure. A court, to avoid injustice or interminable litigations, should act with caution and circumspection in cancelling liens on real property. The Court noted that the petitioner had presented no release or cancellation of the mortgage, and that the mortgagee should be heard or given a chance to be heard. It also observed that where a prior case had already adjudged that the foreclosure of certain mortgages had prescribed, the land registration court could then order cancellation, which implies that the question of prescription must first be determined in a separate action.

Doctrine

A land registration court acting under Section 112 of Act Number 496 exercises only a special, limited, and summary jurisdiction. It cannot adjudicate issues that properly belong to an ordinary civil action, such as the validity, cancellation, or discharge of a mortgage, or the prescription of a lien annotated on a Torrens title. The registered owner who seeks cancellation of such an encumbrance must file an ordinary action against the lienholder and the register of deeds, so that jurisdiction over their persons is acquired by summons. Service of copies of a petition by registered mail does not confer jurisdiction over the persons of adverse parties. The fact that a lien may already have prescribed does not excuse compliance with due process, because an adversary proceeding, however ceremonial it may seem, remains the proper procedure. A court must act with caution and circumspection before cancelling liens on real property.

Disposition

The Supreme Court affirmed the order of dismissal of the lower court, without costs. Nicanor T. Santos lost his petition, and the encumbrances remained annotated on the titles.

Remember This

Memorize the line that a land registration court under Section 112 cannot cancel a mortgage annotation without the mortgagee's consent, and that prescription of a lien must first be established in an ordinary action. Examiners use this case to test the limits of summary jurisdiction and the requirement of summons over lienholders in land registration proceedings.