REGISTER OF DEEDS AND GONZALO PUYAT, PETITIONERS AND APPELLEES, VS. PHILIPPINE NATIONAL BANK AND PEDRO B. CRUZ, OPPOSITORS AND APPELLANTS.

This is a petition filed by Rodolfo R. Dimzon as register of
deeds of Pampanga, whereby he seeks to correct “the error, omission or mistake
made in transfer certificate of title No. 16342 by transferring on the said
title the liens on the property covered by said certificate, consisting of a
mortgage in favor of Gonzalo Puyat under document No. 262 and the lease
affecting the portion of 1,045,848 square meters under document No. 1149.”

The parcels of land covered by transfer certificate of title
No. 5377 of the Office of the register of deeds of Pampanga were registered in
the name of Martin Gonzales. Among those parcels, there was a lot 1-J which is a
portion of lot No. 1 located in the municipality of Lubao, with an area of
3,045,848 square meters, more or less. All the parcels of land described in the
said certificate No. 5377, as well as those described in certificate No. 5379,
original certificate of title No. 11578 and original certificate of title No.
17261 and other parcels of land located in Bataan, were mortgaged in favor of
Gonzalo Puyat, to guaranty a loan of P250,000. Those parcels of land were,
besides, leased to one Romualdo Rivera for a period of six agricultural years,
which will expire on June 30, 1951, for the amount of P150,000 which was paid in
advance.

The above-mentioned mortgage was on October 23, 1943 registered
in the Office of the register of deeds of Pampanga, and the corresponding
annotation made on the back of the respective certificate of title (5377)
covering the lands affected by that encumbrance.

On September 8, 1944, a portion of lot No. 1-J consisting of
2,000,000 square meters was sold by Jose Gonzales Carrion, as administrator of
the estate of Martin Gonzales, to Pedro B. Cruz for the sum of P60,000. On
October 3, 1945, the remaining portion of said lot No. 1-J, covering an area of
1,045,848 square meters was likewise sold by the administrator to Pedro B. Cruz
for P104,584.80.

On October 17, 1944, Romualdo Rivera sold his rights on the
lease over the 2,000,000 square meters of lot No. 1-J to Pedro B. Cruz for the
sum of P30,000.

By virtue of such sales, transfer certificate of title No. 5377
was partially cancelled as to the whole lot No. 1-J, and transfer certificate of
title No. 16342 was issued on November 26, 1945, in the name of Pedro B. Cruz,
and the only lien appearing thereon is the milling contract executed in favor of
Pampanga Sugar Mills.

On January 4, 1946, Pedro B. Cruz mortgaged the whole of lot
No. 1-J described in transfer certificate of title No. 16342 to the Philippine
National Bank, Manila, for the sum of P50,000. Said mortgage was duly registered
in the office of the register of deeds of Pampanga.

It is contended by the register of deeds that Luis Panaguition,
then acting provincial fiscal and ex-officio register of deeds of
Pampanga, “overlooked or failed to transfer in the new title,” the liens
referring to the mortgage in favor of Gonzalo Puyat (document No. 262).

Gonzalo Puyat joined the register of deeds in his petition.

The above petition was opposed by the Philippine National Bank
on the ground that it will adversely affect the interest of the mortgagee, bank;
it will defeat the primary object of the Torrens system, and it will not be in
accordance with law and the doctrine enunciated by the Supreme Court.

But inasmuch as according to recent developments shown in the
record, the oppositor Philippine National Bank executed in favor of the other
oppositor Pedro B. Cruz, a release of the mortgage for P50,000 annotated on the
back of transfer certificate of title No. 16342, and cancelled said mortgage, by
virtue of the fact that Pedro B. Cruz paid the Philippine National Bank the
amount of his loan, counsel for oppositor-appellant Philippine National Bank in
his “Manifestation” attached to the record on August 24, 1949, stated that “the
questions raised in the case at bar as ventilated by the parties in their
respective briefs are now academical.”

By virtue of the foregoing, in view of the settlement thus
effected between the oppositors Philippine National Bank and Pedro B. Cruz,
resulting from the payment by the latter of his debt to the former and the
release and cancellation of the mortgage annotated on the back of transfer
certificate of title No. 16342, the legal tangle between the register of deeds
of Pampanga and his co-petitioner Gonzalo Puyat, on the one hand, and the
Philippine National Bank, as oppositor, on the other, has now become a moot
question.

There remains now for us to consider the merit of the petition
of the register of deeds and his co-petitioner Gonzalo Puyat, who pray that an
error committed by the predecessor of the register of deeds of Pampanga be
corrected. According to the record when transfer certificate of title No. 16342
was issued to Pedro B. Cruz, the former register of deeds did not annotate on
the back of said transfer certificate of title the mortgage in favor of Gonzalo
Puyat for the sum of P250,000, dated October 23, 1943, and the lease over the
portion of 1,045,848 square meters in favor of Romualdo Rivera, notwithstanding
the fact that those liens and encumbrances were duly annotated on the back of
transfer certificate of title No. 5377, which oppositor Pedro B. Cruz
surrendered to the Office of the register of deeds for the issuance in his name
of a new certificate, when he (Pedro B. Cruz), became the owner of the property
covered by said transfer certificate of title No. 5377.

Pedro B. Cruz also filed his opposition to the petition of the
register of deeds. His pleading, among other things, alleges that when on
September 20, 1945, the probate court of Pampanga authorized the sale of 104
additional hectares of the Hacienda of the late Martin Gonzales, over the
objection of Gonzalo Puyat, and notwithstanding a subsequent motion for
reconsideration of the order approving the sale, which was denied, it stated
that the land was free from all liens and encumbrances. Accordingly, the deeds
of sale covering the 200 hectares and the additional 104 hectares show that they
were all free from all liens and encumbrances of whatsoever nature, and,
therefore, the register of deeds of Pampanga acted correctly in registering the
two deeds of sale in the name of Pedro B. Cruz, free from all liens and
encumbrances of whatsoever nature. It is further alleged by Pedro B. Cruz that
Gonzalo Puyat as mortgagee of the remaining portion of the Gonzales Estate and
plaintiff in civil case No. 70 of the Court of First Instance of Pampanga,
entitled “Gonzalo Puyat vs. Jose Gonzales et al.,” did not appeal from the
various orders of the probate court of the sale for the 104 hectares free from
all liens and encumbrances of whatsoever nature; neither had he taken steps, up
to the date of the institution of the present proceedings, to secure the
amendment or the correction of the orders respectively issued and the transfer
certificate of title No. 16342 of the register of deeds of Pampanga.

It is further averred by Cruz that the petition of the register
of deeds of Pampanga is in the nature of a petition for review under section 38
of Act No. 496, which provides that the final decree of registration can not be
reopened or set aside after the expiration of one year from the entry thereof,
and that the register of deeds of Pampanga, not being the owner or person in
interest of the property ifl question, has no legal personality to ask for the
correction of the entry in transfer certificate of title No. 16342 of the
register of deeds of Pampanga.

Pedro B. Cruz has not contested, much less denied, that he had
in his possession or at least must have seen and read the contents of transfer
certificate of title No. 5377, on which it was shown very clearly that the
property described therein, and which he had purchased from the estate of Martin
Gonzales, was encumbered by a mortgage in favor of Gonzalo Puyat and the 6-year
lease of Romualdo Rivera. It is for this reason that counsel for Gonzalo Puyat
accuses him of being guilty of fraud when he secured from the Office of the
register of deeds of Pampanga—in exchange for said transfer certificate of title
No. 5377—transfer certificate of title No. 16342, free from all encumbrances,
that is, without the corresponding annotation of the mortgage of Gonzalo Puyat
and the 6-year lease of Romualdo Rivera. For our part, the least that we can
say, is that when he accepted from the acting register of deeds transfer
certificate of title No. 16342, in lieu of transfer certificate of title No.
5377, without the corresponding annotation of the mortgage of Gonzalo Puyat, and
negotiated a loan of P50,000 to be secured by a mortgage on the land described
in the new transfer certificate of title No. 16342, which, as already stated,
did not contain any annotation on the mortgage existing on transfer certificate
of title No. 5377, the Philippine National Bank was made to believe that his
property was unencumbered and he was guaranteeing the loan of P50,000 he was
seeking from said institution by a first mortgage, when in truth and in fact,
the Philippine National Bank was getting only a second mortgage. To be sure, had
the bank been duly informed of the existence of the prior existing mortgage in
favor of Gonzalo Puyat, that institution would have thought twice before
granting a loan of such amount.

In opposing the petition of the register of deeds of Pampanga
and Gonzalo Puyat, oppositor-appellant Pedro B. Cruz challenges the personality
of the register of deeds to file the same under the provisions of section 112 of
Act No. 496. We believe that such objection is without merit. It can not be
denied that said official is a person in interest” as this phrase is used in
section 112 of Act No. 496. If, upon discovering the anomaly involved in this
litigation, the petitioner register of deeds of Pampanga had kept silent about
it, he would have been liable for damages as provided in Section 102 of said
act. But even assuming arguendo that the register of deeds is not the
“person in interest” referred to in section 112, such defect, if any, has been
cured when the mortgagee Gonzalo Puyat Joined in the petition of the register of
deeds by making it his own. As stated in the case of Alonso vs. Villamor (16
Phil. 315),—”A litigation is not a game of technicalities in which one, more
deeply schooled and skilled in the subtle art of movement and position, entraps
and destroys the other. It is, rather, a contest in which each contending party
fully and fairly lays before the court the facts in issue and then, brushing
aside as wholly trivial and indecisive all imperfections of form and
technicalities of procedure, asks that justice be done upon the merits.
Lawsuits, unlike duels, are not to be won by a rapier’s thrust. * * *.”

It is charged that Gonzalo Puyat is guilty of laches in not
having brought the anomaly under consideration to the attention of the proper
court of justice. It appears, however, that on February 24, 1947, Gonzalo Puyat
brought suit for the foreclosure of the mortgage executed in his favor against
Jose Gonzales et al., in civil case No. 70 still pending in the Court of First
Instance of Pampanga. But at that time, the Philippine National Bank was not
included as defendant because Gonzalo Puyat had no knowledge that Pedro B. Cruz
had mortgaged the same property in favor of said bank. Upon discovering that
Pedro B. Cruz had obtained transfer certificate of title No. 16342 free from the
encumbrance in favor of Gonzalo Puyat, this petitioner took the necessary steps
to have his first mortgage annotated on the back of said title, and inasmuch as
the register of deeds had already filed his petition, Gonzalo Puyat joined the
register of deeds in his petition. Consequently, upon discovery of the existence
of the other mortgage in favor of the Philippine National Bank, petitioners
amended their complaint by making said banking institution an additional
defendant as a second mortgagee of the portion of the land mortgaged in favor of
Gonzalo Puyat.

It is further contended by appellant Pedro B. Cruz that the
order of the probate court in approving the sale of the land is res
judicata in the present case. We don’t believe that such contention is
tenable.

The jurisdiction of the Court of First Instance, whether
original or appellate, is provided in the Organic Law of the Judiciary.
Formerly, it was the Court of Land Registration that had exclusive jurisdiction
over land matters and proceedings. That court was, however, abolished, and its
jurisdiction and functions were transferred to the Court of First Instance. At
the present time, the Judiciary Act of 1948 (Republic Act No. 296), which is a
compilation of all the previous enactments concerning the various courts of
justice, in its Chapter IV, sections 43 and 44, provides for the original
jurisdiction of the Courts of First Instance established in the Philippine
Islands. Paragraph (e) of section 44, which, we repeat, embodies previous
statutory provisions on the subject, refers to jurisdiction of the Courts of
First Instance on probate matters, “both of testate and intestate estates, * *
*, and all such special cases and proceedings as are not otherwise provided
for.” The special mention made therein of the original jurisdiction given the
Court of First Instance in “all matters of probate, both testate and intestate
estates,” is a clear expression of the legislative intent that when a Court of
First Instance is sitting as a probate court it can not in the same proceeding
deal with or adjudicate a matter which has no reference or bearing on the case
under its consideration.

Gonzalo Puyat was not a party in the proceedings of the Estate
of Martin Gonzales, and when the Court of First Instance of Pampanga, as probate
court—not as land registration court—authorized the sale to appellant Pedro B.
Cruz of a lot belonging to the estate of Martin Gonzales, it acted as such
probate court, in accordance with paragraph (e) of Section 44 of the
Judiciary Act, but its pronouncement regarding the existence or non-existence of
encumbrances on the lot it authorized to be sold to Pedro B. Cruz, was beyond
its jurisdiction as probate court.

It is, therefore, undeniable that since the probate court had
no jurisdiction to cancel the mortgage, the order given by it approving the
sales of the properties of the estate of Martin Gonzales to appellant Pedro B.
Cruz did not and does not, in any manner, affect the existence of the mortgage
executed by Gonzales in favor of Gonzalo Puyat. And inasmuch as said mortgage
was still in force when Pedro B. Cruz purchased from the estate of Martin
Gonzales the property covered by transfer certificate of title No. 5377, which
was subsequently replaced by Transfer certificate No. 16342, the conclusion is
inevitable that the mortgage in favor of Gonzalo Puyat being prior in date than
the date of the mortgage executed by Pedro B. Cruz in favor of the Philippine
National Bank, in the absence of any showing that the former mortgage of Gonzalo
Puyat had been cancelled, the existence thereof cannot be questioned, and it
becomes the duty of the register of deeds to annotate that mortgage on transfer
certificate of title No. 16342 when the same was issued to Pedro B. Cruz, in
lieu of transfer certificate of title No. 5377. Potior est in tempore, potior
est in jure. (He who is first in time, is preferred in right.)

In the light of all the above, we have come to the conclusion
that under the provisions of section 112 of Act No. 496, the petition made
herein by the register of deeds of Pampanga and Gonzalo Puyat should be
granted.

The order of July 1, 1947, issued in this case by the Court of
First Instance of Pampanga, is affirmed. The appellant Pedro B. Cruz shall pay
the costs.

Moran, C.J., Ozaeta, Feria, Bengzon, Tuason, and
Montemayor, JJ., concur.
Paras, J., concurs in the result.