🎧 Case Brief Lecture

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

G.R. No. L-1781. September 27, 1949 September 27, 1949

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Register of Deeds and Puyat versus Philippine National Bank and Cruz

The Case

This is a petition brought by the Register of Deeds of Pampanga, joined by the mortgagee Gonzalo Puyat, against Pedro B. Cruz and the Philippine National Bank, to correct an error in a transfer certificate of title. When a new title was issued to Cruz in exchange for the old one, the acting registrar failed to carry over two encumbrances that had been duly annotated on the prior title: a mortgage in favor of Gonzalo Puyat and a lease in favor of Romualdo Rivera. The case matters because it tests the power of a register of deeds to correct his own omission, the effect of a probate court's order declaring land free from liens, and the enduring force of a prior registered mortgage against a later innocent mortgagee.

Procedural History

The Register of Deeds of Pampanga filed a petition in the Court of First Instance of Pampanga seeking to correct the omission in transfer certificate of title No. 16342 by annotating the liens on the property. Gonzalo Puyat joined the petition. Pedro B. Cruz and the Philippine National Bank opposed it. The Court of First Instance of Pampanga issued an order dated July 1, 1947, granting the petition. Pedro B. Cruz appealed to the Supreme Court, which decided the case on September 27, 1949.

Facts

The parcels of land covered by transfer certificate of title No. 5377 of the Register of Deeds of Pampanga were registered in the name of Martin Gonzales. Among them was lot 1-J, a portion of lot No. 1 in Lubao with an area of 3,045,848 square meters. All the parcels, together with others, were mortgaged in favor of Gonzalo Puyat to guarantee a loan of 250,000 pesos. They were also leased to Romualdo Rivera for six agricultural years, expiring on June 30, 1951, for 150,000 pesos paid in advance. The mortgage was registered on October 23, 1943, and annotated on the back of certificate of title No. 5377.

On September 8, 1944, a portion of lot 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 60,000 pesos. On October 3, 1945, the remaining portion of 1,045,848 square meters was likewise sold to Cruz for 104,584.80 pesos. On October 17, 1944, Romualdo Rivera sold his lease rights over the 2,000,000 square meters to Cruz for 30,000 pesos. By virtue of these sales, certificate of title No. 5377 was partially cancelled as to lot 1-J, and transfer certificate of title No. 16342 was issued on November 26, 1945, in the name of Pedro B. Cruz. The only lien appearing on the new title was a milling contract in favor of Pampanga Sugar Mills.

On January 4, 1946, Cruz mortgaged the whole of lot 1-J to the Philippine National Bank for 50,000 pesos, and the mortgage was duly registered. The Register of Deeds contended that the acting registrar overlooked or failed to transfer the liens, particularly the mortgage in favor of Gonzalo Puyat, to the new title. The bank opposed the petition, but later released and cancelled its mortgage after Cruz paid his loan, and its counsel manifested that the questions raised had become academic. Cruz opposed the petition, arguing that the probate court's order approving the sale declared the land free from all liens and encumbrances, that the petition was in the nature of a review under section 38 of Act No. 496, and that the register of deeds had no legal personality to seek the correction.

Issues

  • Whether or not the register of deeds is a person in interest who may petition for the correction of the entry in transfer certificate of title No. 16342 under section 112 of Act No. 496.
  • Whether or not Gonzalo Puyat is guilty of laches in failing to bring the anomaly to the attention of the court.
  • Whether or not the order of the probate court approving the sale of the land, declaring it free from all liens and encumbrances, is res judicata and binding in the present case.
  • Whether or not the mortgage in favor of Gonzalo Puyat must be annotated on transfer certificate of title No. 16342.

Applicable Provisions

Section 112 of Act No. 496, the Land Registration Act, provides:

Section 112. The register of deeds shall have authority to make a memorandum of any instrument or deed affecting the land, which is presented for registration, and to correct any error, omission or mistake made in the entry of any instrument or deed in the registry, or in the issuance of any certificate of title, upon the order of the court.

This provision is the source of the authority invoked by the register of deeds to correct the omission in the new title.

Section 102 of Act No. 496 provides:

Section 102. The register of deeds shall be liable to the injured party for damages sustained by reason of any error, omission or mistake made by him in the performance of his official duties.

This provision explains why the register of deeds had an interest in correcting the anomaly, since silence would have exposed him to liability.

Paragraph (e) of section 44 of the Judiciary Act of 1948, Republic Act No. 296, provides:

Section 44. Courts of First Instance shall have original jurisdiction: (e) In all matters of probate, both testate and intestate estates, and all such special cases and proceedings as are not otherwise provided for.

This provision defines the limits of the probate court's jurisdiction, which the Court held did not extend to adjudicating the existence of encumbrances on the land.

Ruling

On the first issue, the Court held that the register of deeds is a person in interest under section 112 of Act No. 496. Had he kept silent upon discovering the anomaly, he would have been liable for damages under section 102. Even assuming he were not a person in interest, the defect was cured when Gonzalo Puyat joined the petition and made it his own. The Court quoted Alonso versus Villamor:

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.

On the second issue, the Court held that Puyat was not guilty of laches. He had brought suit for foreclosure of his mortgage on February 24, 1947, and upon discovering that Cruz had obtained a title free from the encumbrance, he took the necessary steps to have his mortgage annotated and joined the register of deeds in the petition.

On the third issue, the Court held that the probate court's order was not res judicata. When the Court of First Instance of Pampanga sat as a probate court, it could not adjudicate a matter with no bearing on the estate. Its pronouncement on the existence or non-existence of encumbrances was beyond its jurisdiction. Since the probate court had no jurisdiction to cancel the mortgage, its order did not affect the existence of the mortgage in favor of Gonzalo Puyat.

On the fourth issue, the Court held that the mortgage in favor of Gonzalo Puyat was still in force when Cruz purchased the property. Being prior in date to the mortgage in favor of the Philippine National Bank, its existence could not be questioned, and it was the duty of the register of deeds to annotate it on transfer certificate of title No. 16342. The Court stated:

Potior est in tempore, potior est in jure.

He who is first in time is preferred in right.

Doctrine

A register of deeds is a person in interest who may petition for the correction of an error, omission, or mistake in a certificate of title under section 112 of Act No. 496, and his failure to act would expose him to liability for damages under section 102. A probate court, sitting in the settlement of an estate, has no jurisdiction to adjudicate the existence or non-existence of encumbrances on land, and its order declaring the land free from liens does not bind a mortgagee who was not a party to the proceedings. A prior registered mortgage remains in force and must be annotated on a new certificate of title issued in lieu of the old one, and it prevails over a later mortgage under the principle that he who is first in time is preferred in right.

Disposition

The Supreme Court affirmed the order of the Court of First Instance of Pampanga, granting the petition for correction, and ordered Pedro B. Cruz to pay the costs.

Remember This

The single line worth memorizing is that a prior registered mortgage survives the issuance of a new certificate of title and must be annotated, for he who is first in time is preferred in right. Examiners use this case to test the power of the register of deeds to correct errors under section 112 of Act No. 496 and the limits of a probate court's jurisdiction over encumbrances.