PHILIPPINE NATIONAL BANK, PETITIONER, VS. INTERNATIONAL CORPORATE BANK AND COURT OF APPEALS, RESPONDENTS.

Challenged in this petition for review on certiorari is
the decision of the Court of Appeals, dated January 31, 1989, in CA-G.R. CV No.
12342 affirming the decision of the Regional Trial Court of Alaminos,
Pangasinan, acting as a land registration court, which dismissed petitioner’s
application for the cancellation of annotations of an encumbrance on its
transfer certificates of title.^[1]

As found by respondent court and sustained by the record, on May
7, 1985, petitioner filed with the Regional Trial Court of Alaminos, Pangasinan
and docketed therein as LRC No. A-229, Record No. N-33399, a petition for the
cancellation of a memorandum of encumbrance annotated upon its sixteen (16)
transfer certificates of title. As a
backdrop, petitioner alleged that spouses Archimedes J. Balingit and Ely Suntay
executed in its favor the following real estate mortgages, to wit:

“2. On December 16, 1966, a real estate mort­gage
was executed and registered on December 19, 1966 with the Register of Deeds of
Alaminos, Pangasinan. The corresponding
annotations were made on Transfer Certificates of Title Nos. 49020 and 49021
covering the mortgaged parcels of land as entry no. 264514 therein.

“3. On September 14, 1967, an amendment of
mortgage was executed in favor of the petitioner and registered on September
15, 1967 with the Register of Deeds of Alaminos, Pangasinan. The corresponding annotations were made on
the aforesaid Transfer Certificates of Title Nos. 49020 and 49021 as entry no.
282423 therein.

“4. On August 1, 1968, another real estate
mortgage was executed and registered on August 2, 1968 with the Register of
Deeds of Alaminos, Pangasinan. The
corresponding annotations were made on Original Certificates of Title Nos.
18988, 18987, 19020, 19021, 19017, 19015, 18989, 19018, 19019, 19016, 18983,
18984, 18985 and 18986 covering the
mortgaged parcels of land as entry no. 302341 therein.

“5. On October 31, 1968, a real estate mort­gage
was executed in favor of the petitioner and registered on November 4, 1968 with
the Register of Deeds of Alaminos, Pangasinan. The corresponding annotations were made on the Original Certificates of
Title with numbers as enumerated in the immediately preceding paragraph as
entry no. 306445 therein.”^[2]

Annotated subsequent to the foregoing memoranda of the mortgage
lien of petitioner on the above-mentioned properties is a “Notice of Levy
re Civil Case No. 69035, CFI-Manila, Continental Bank vs. Archimedes J.
Balingit and Ely Suntay Balingit” for a total sum of P96,636.10, as entry
No. 285511 at the back of the titles enumerated in paragraph 2 and as entry No.
308262 in the titles enumerated in paragraph 4 of said petition.^[3]

For failure of the Balingit spouses to settle their loan
obligation with petitioner, the latter extrajudicially foreclosed under Act
3135, as amended, the sixteen (16) parcels of land covered by the real estate
mortgages executed by the said spouses in favor of petitioner. The sheriff’s certificate of sale was
registered on April 3, 1972 with the Register of Deeds, with a memorandum
thereof duly annotated at the back of the aforesaid certificates of title of
the foreclosed properties.

Upon the expiration of the one-year legal redemption period,
petitioner consolidated in its name the ownership of all the foregoing
mortgaged properties for which new transfer certificates of title were issued
in its name. However, the annotation of
the notice of levy in favor of private respondent was carried over to and now
appears as the sole annotated encumbrance in the new titles of petitioner, that
is, Transfer Certificates of Title Nos. 1228, 1229, 1230, 1231, 1232, 1236,
1237, 1238, 1239, 1240, 1242, 1243, 1244, 1216, 1217 and 1218.^[4]

On May 28, 1986, private respondent International Corporate Bank,
as successor in interest of the defunct Continental Bank, filed an opposition
to the petition contending that, since it was not informed of the extrajudicial
foreclosure proceedings, the new and consolidated titles over the foreclosed
properties issued in favor of herein petitioner are null and void.^[5]

On August 28, 1986, the lower court rendered a decision, denying
the petition for lack of jurisdiction, the pertinent part whereof reads:

“Section 108 of Presidential Decree No. 1529 (Section 112 of
Act 496) under which the petitioner seeks remedy has been interpreted by the
Supreme Court that the relief therein can only be granted if there is no
adverse claim or serious objection on the part of any party in interest
otherwise the case becomes controversial and should be threshed out in an
ordinary case or in the case where the incident properly belongs. Accordingly, an annotation of an adverse
claim may be ordered cancelled only where the issue involved is not
controversial or so disputed as to warrant that it be litigated in an ordinary
action. (Tangunan and Tangunan vs.
Republic of the Philippines, 94 Phil. 171; Asturias Sugar Central vs. Segovia,
190 Phil. 383; RP vs. Laperal, 108 Phil. 860; Abustan vs. Ferrer and Golez, 63
O.G. 34, August 21, 1967 and Cheng vs. Lim (Second Division), L-27614 jointly
decided with L-27148, June 29, 1977).

“Considering that the issue of whether the notice of levy
should be cancelled as sought by the petitioner becomes controversial in view
of the opposition and adverse claim of the oppositor Interbank, this Court, as
land registration court and in accordance with the jurisprudence above cited,
has no jurisdiction to entertain and act on the contested petition. The cancellation prayed for should be
threshed out in an ordinary case.

“WHEREFORE, the petition is hereby DENIED, without prejudice
to the filing of an ordinary case by the petitioner.

“SO ORDERED.”^[6]

Not satisfied therewith, petitioner
appealed to respondent Court of Appeals, asserting that the lower court erred
in ruling that (1) there is an adverse claim or serious objection on the part
of oppositor rendering the case controversial and therefore should be threshed
out in an ordinary case; and (2) it has no jurisdiction to entertain and act on
the contested petition.^[7]

On January 13, 1989, respondent court rendered judgment affirming
the appealed decision,^[8] as a
consequence of which petitioner is now before us contending that:

“I

REGIONAL TRIAL COURTS (RTCs) HAVE JURISDICTION
TO ACT UPON PETITIONS FILED UNDER SEC. 108 OF ‘THE PROPERTY REGISTRATION
DECREE’ (P.D. 1529), WHETHER THEY ARE ACTING AS A LAND REGISTRATION COURT OR A
COURT OF GENERAL JURISDICTION.

“II

PURCHASER OF REAL PROPERTY AT AN EXTRAJUDICIAL
FORECLOSURE SALE ACQUIRES SUCH PROPERTY FREE FROM ALL LIENS AND
ENCUMBRANCES. THE ACTION OF REGISTER OF
DEEDS IN CARRYING THE ANNOTATION OF THE NOTICES OF LEVY OVER TO THE NEW TITLE
CERTIFICATES ISSUED IN PURCHASER’S FAVOR IS VOID AND ILLEGAL.

“III

SECTION 108 OF ‘PROPERTY REGISTRATION
DECREE’ EXPRESSLY ALLOWS THE SUMMARY AMENDMENT OF CERTIFICATES OF TITLE
WHENEVER INTEREST ANNOTATED THEREIN HAS ‘TERMINATED AND CEASED.’

“IV

REMAND OF PROCEEDINGS TO TRIAL COURT TO
DETERMINE PRIORITY OF LIENS BETWEEN PETITIONER AND RESPONDENT MAY BE
UNNECESSARY AS FACTUAL BASIS OF PNB’S SUPERIOR LIEN IS BORNE OUT AND DISCLOSED
BY THE RECORDS OF CASE BEFORE THIS TRIBUNAL”^[9]

We find the foregoing contentions meritorious.

The rule that was adopted by respondent Court of Appeals in its
decision to the effect that a regional trial court sitting as a land
registration court has limited jurisdiction and has no authority to resolve
controversial issues, which should accordingly be litigated in a court of
general jurisdiction, no longer holds.

We have held that
under Section 2 of Presidential Decree No.1529 (The Property Registration
Decree) which took effect on June 11, 1979, regional trial courts acting as
land registration courts now have
exclusive jurisdiction not only over applications for original registration of
title to lands, including improvements and interests therein, but also over petitions filed after
original registration of title, with power to hear and determine all questions
arising upon such applications or petitions.^[10] That
definitive ruling was precisely to correct the position taken therein by the
Court of Appeals that the court a quo has limited
jurisdiction and has no authority to resolve controversial issues which should
be litigated before a court of general jurisdiction.

In the same case, the Court further noted that even under Act 496 (Land Registration Act),
specifically Section 110 thereof, the court of first instance, sitting as a
land registration court, has the authority to conduct a hearing, receive
evidence, and decide controversial matters with a view to determining whether
or not the filed notice of adverse claim is valid.

The said doctrine was a reiteration of our earlier ruling in Averia,
Jr. vs. Caguioa, etc., et al.,^[11]
as follows:

“In Section 2 of the said P.D. No. 1529, it is clearly
provided that:

‘SEC. 2. Nature of registration proceedings;
jurisdiction of courts. – Judicial proceedings for the registration of
lands throughout the Philippines shall be in rem and shall be
based on the generally accepted principles underlying the Torrens system.

‘Courts of First Instance shall have exclusive jurisdiction over
all applica­tions for original registration of titles to lands, including
improvements and interest therein, and over all petitions filed after original
registration of title, with power to hear and determine all questions arising
upon such applications or petitions. x
x x.’

“The above provision has eliminated the distinction between
the general jurisdiction vested in the
regional trial court and the limited jurisdiction conferred upon it by the
former law when acting merely as a cadastral court. Aimed at avoiding multiplicity of suits, the change has
simplified registration proceedings by conferring upon the regional trial
courts the authority to act not only on applications for ‘original
registration’ but also ‘over all petitions
filed after original registration of title, with power to hear and determine
all questions arising upon such applications or petitions.’

“Consequently, and specifically with reference to Section 112 of
the Land Registration Act (now Section 108 of P.D. No. 1529), the court is no longer fettered by its former limited
jurisdiction which enabled it to grant relief only in cases where there was
‘unanimity among the parties’ or none of them raised any ‘adverse claim or
serious objection.’ Under the amended
law, the court is now authorized to hear and decide not only such
non-controversial case but even the contentious and substantial issues, such as
the question at bar, which were beyond its competence before.”

It is now beyond cavil, therefore, that the court below has ample
jurisdiction to decide the controversy raised by the petition in LRC No. A-229,
Record No. N-33399 initiated therein by petitioner.

However, considering that the issue of whether the adverse claim
of private respondent should be cancelled or allowed to remain as annotations
on the certificates of title involved can be resolved by us in the present
recourse, we agree that the remand of the case to the court of origin is no
longer necessary.

We have time and again laid down the rule that the remand of the
case to the lower court for further reception of evidence is no longer
necessary where this Court is in a position to resolve the dispute based on the
records before it. In a number of
cases, the Court, in the public interest and for the expeditious administration
of justice, has resolved actions on the merits instead of remanding them to the
trial court for further proceedings, such as where the ends of justice would
not be subserved by the remand of the case.^[12]

In the case at bar, the right of petitioner to the relief prayed
for is clear. The facts before us
sufficiently show that the cancellation of the disputed annotation from the
certificates of title of petitioner is justified in law.

It is undisputed that private respondent is a subsequent lien
holder whose rights over the mortgaged property are inferior to that of
petitioner as a mortgagee. Being a
subsequent lien holder, private respondent acquires only the right of
redemption vested in the mortgagor, and his rights are strictly subordinate to
the superior lien of the anterior mortgagee.^[13]
After the foreclosure sale, the remedy of the second mortgagee is limited to
the right to redeem by paying off the debt secured by the first mortgage.^[14]

The rule is that upon a proper foreclosure of a prior mortgage,
all liens subordinate to the mortgage are likewise foreclosed, and the
purchaser at public auction held pursuant thereto acquires title free from the
subordinate liens. Ordinarily,
thereafter the Register of Deeds is authorized to issue the new titles without
carrying over the annotation of subordinate liens.^[15]
In a case with similar features, we had earlier held that the failure of the
subsequent attaching creditor to redeem, within the time allowed by Section 6
of Act 3135, the land which was sold extrajudicially to satisfy the first
mortgage, gives the purchaser a perfect right to secure the cancellation of the
annotation of said creditor’s attachment lien on the certificates of title of
said land.^[16]

It had likewise been declared in Bank of the Philippine Islands,
etc., et al. vs. Noblejas, etc., et
al.,^[17]
that “(a)ny subsequent lien or encumbrance annotated at the back of the
certificates of title cannot in any way prejudice the mortgage previously
registered, and the lots subject thereto pass to the purchaser at the public
auction sale free from any lien or encumbrance. Otherwise, the value of the mortgage could be easily destroyed by
a subsequent record of an adverse claim, for no one would purchase at a
foreclosure sale if bound by the posterior claim. x x x This alone is sufficient justification for the dropping of
the adverse claim from the new certificates of title to be issued to her, as
directed by respondent Commissioner in his opinion subject of this
appeal.”

The contention of private respondent in its opposition that the
extrajudicial foreclosure is null and void for failure of petitioner to inform
them of the said foreclosure and the pertinent dates of redemption so that it
can exercise its prerogatives
under the law^[18]
is untenable. There being obviously no
contractual stipulation therefor, personal notice is not necessary and what
governs is the general rule in Section 3 of Act 3135, as amended, which directs
the posting of notices of the sale in at least three (3) public places of the
municipality where the property is situated, and the publication thereof in a
newspaper of general circulation in said municipality.

Finally, the levy in favor of private respondent’s predecessor in interest arising from the
judgment in Civil Case No. 69035 of the Court of First Instance of Manila,
appearing at the back of petitioner’s certificates of titles, is already
without force and effect considering that the same has been annotated in the
certificates of title for more than ten (10) years without being duly
implemented. Properties levied upon by
execution must be sold at public auction within the period of ten (10) years
during which the judgment can be enforced by action.^[19]

WHEREFORE, the judgment of respondent Court of Appeals is
hereby SET ASIDE. Instead, another
judgment is hereby rendered ordering that the annotations of the notice of levy
in favor of Continental Bank, now substituted by private respondent, on
petitioner’s Transfer Certificates of Title Nos. 1216, 1217, 1218, 1228, 1229,
1230, 1231, 1232, 1236, 1237, 1238, 1239, 1240, 1242, 1243 and 1244 should be,
as they are hereby, CANCELLED.

SO ORDERED.

Melencio-Herrera, (Chairman), Paras, Padilla, and Sarmiento, JJ., concur.

* Deemed impleaded as the public
respondent in this case.