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REGISTRATION OF LAND TITLES AND DEEDS

SUBSEQUENT REGISTRATION: INVOLUNTARY DEALINGS WITH REGISTERED


LAND
PP 451-457

A. Right to notice before cancellation of entry


Ayson vs Republic of the Philippines, Nov 29 1954
B. Rights vested in a Homesteader before issuance of patent
Balboa vs Farrales, 61 phil 498, 1928
C. Rights Vested in a Homesteader Before Issuance of Patent
Quinsay vs. Intermediate Appellate Court, 1991, 195 SCRA 268
Balboa vs. Farrales, 1928, 51 Phil. 948
Davao Grains, Inc. vs. Intermediate Appellate Court, 1989, 171
SCRA 612
D. Review of Certificate of Title Issued Pursuant to Patent on Ground
of Fraud
Pinero vs. Director of Lands, 57 SCRA 386

G.R. No. L-6614, November 29, 1954


BENITO AYSON, vs. REPUBLICA DE FILIPINAS
Facts:

The land in question is lot No. 4025 of the Expediente No. 6, Record 483, situated
in Labuan, Zamboanga City. Lorenzo Ayzon, several years before 1924, had
acquired by purchase from some Subanos small parcels of land in Labuan,
Zamboanga City, with the improvements existing thereon. Those parcels of land
were surveyed by the surveyors of the Government and were applied for by
Lorenzo Ayzon in the Bureau of Lands as homestead (Homestead Application No.
31690).Before the filing of the homestad application, Lorenzo Ayzon was already
in possession and occupation of this lot, planting it to coconuts and other fruit-
bearing trees.

In August, 1927, Lorenzo Ayzon transferred his rights and interests and
participation over lot No. 4025 and its improvements in favor of his son,
defendant Benito Ayzon, who in turn continued possession and occupation
thereof, benefitting out of the existing improvements. Benito Ayzon on September
2, 1941, had leased a portion of lot No. 4025 and its improvements to defendant
Pura Enriquez (Exhibit "B") who since then occupied and worked on said portion
up to the time when the Director of Lands thru his representative entered into
possesion and ordered Pura Enriquez to vacate said portion.

On December 11, 1946, after the liberation of Zamboanga by the American


Forces, defendant Benito Ayzon again filed his homestead application with respect
to Lot No. 4025 (Exhibit "E"), but said application also was not acted upon. The
previous application of Lorenzo Ayzon had been cancelled by the Director of Lands
by virtue of an order upon recommendation of the delegate inspector of public
lands on the ground that after investigation it was proven that Lorenzo Ayzon was
not directly interested in Lot No. 4025, but the same was occupied by one Lee
Sah, a Chinese citizen, who was the one benefitting of the improvements with the
consent of Lorenzo Ayzon.

Issue:
Whether or Not the cancellation by the Director of the Land was valid.

Law/s:
Article 16 of Commonwealth Act 141

Ruling:
The ex-parte investigation made by the Land Inspector at the back of Lorenzo
Ayzon contravenes the express provision of the law. The basis upon which the
requirement of prior notification by the law is the well-established principle that
no one shall be deprived of his rights without due process of the law or without
being heard first. The investigation irregularly followed by the Director of land
undermines the trust of the public in the Land Office. The ex-parte investigations
frustrate the good intentions of the law hence, the order of cancellation of the
homestead request is declared null and void.

Doctrine:
No one shall be deprived of his rights without due process of law.
G.R. No. L-27059, February 14, 1928
BUENAVENTURA BALBOA, plaintiff-appellant,vs.CECILIO L. FARRALES,
defendant-appellant.

Facts:

Sometime in the year 1913, the plaintiff Buenaventura Balboa filled with the
Bureau of Lands an application for homestead, No. 10619, under the provisions of
Act No. 926, covering a tract of land situated in the barrio of Culis, municipality of
Hermosa, Province of Bataan, containing 14 hectares, 49 ares and 77 centares.

Five years thereafter, or in 1918, Balboa submitted proof, showing his residence
upon, and cultivation of said land, as well as his compliance with all of the other
requirements of section 3 of said Act No. 926, which final proof was approved by
the Director of Lands. On July 1, 1919, said Act No. 926 was repealed by Act No.
2874.On September 10, 1920, or over a year after Act No. 2874 had gone into
effect, the homestead patent for said land, otherwise known as certificate of title
No. 91 was issued in favor of Buenventura Balboa by the Governor-General of the
Philippine Islands.
On August 11, 1924, said Buenaventura Balboa, for and in consideration of the
sum of P950, sold said land to the defendant Cecilio L. Farrales; and on October
16, 1924, the latter secured in his name transfer certificate of title No. 650 of said
land. On March 6, 1926, the plaintiff commenced the present action for the
purpose of having said sale declared null and void on the ground of lack of
consent on his part and fraud on the part of the defendant, and on the further
ground that said sale was contrary to, and in violation of the provisions of section
116 of Act No. 2874.

After a careful consideration of the evidence adduced during the trial of the cause
the Honorable Leopoldo Rovira, judge, arrived at the conclusion that the deed of
sale in question had been duly executed by the plaintiff. He held, however, that
said deed was null and void, in view of the fact that it was executed before the
lapse of five years from the date of the issuance of the certificate of title in favor
of Buenventura Balboa, in violation of the prohibition contained in section 116 of
Act No. 2874.

In accordance with the foregoing conclusion the trial judge rendered a judgment
in favor of the plaintiff and against the defendant, ordering the latter to return to
the plaintiff the land in question, and the plaintiff to return to the defendant the
price received for said land, aggregating P652.69, with interest at the rate of 12
per cent. From the judgment both parties appealed.

Issue:

Whether the validity of the sale of the land in question should be determined
under the provisions of Act No. 926 or under those of Act No. 2874. In other
words, which of the two Acts 926 and 2874 shall be applied in determining
whether the sale in question is valid or not?

Law/s:

Section 3, paragragh 1, of the Jones Law provides: "That no law shall be enacted
in said Islands which shall deprive any person of life, liberty, or property without
due process of law, etc." Thus, in this jurisdiction, vested rights are also protected
from impairment by express constitutional provision. Therefore, the right vested in
Buenaventura Balboa by Act No. 926 cannot be divested, impaired or restricted by
section 116 of Act No. 2874. Said right should be governed entirely and
exclusively by the provisions of Act No. 926, which it was acquired.

Section 4 of Act No. 926: "No lands acquired under the provisions of this chapter
shall in any event become liable to the satisfaction of any debt contracted prior to
the issuance of a patent therefor."

Section 116 of Act No. 2874, which prohibits the sale of homestead land during
the period of five years subsequent to the issuance of the patent or certificate of
title upon which rests the decision of the court.

Ruling:

The land in question was acquired by Buenventura Balboa as homestead under


the provisions and pursuant to the requirements of Act No. 926. He filed his
application and complied with all of the requisites to the acquisition of said
homestead, in conformity with the provisions of said Act No. 926. In 1918 and
prior to the repeal of said Act he submitted his final proof, showing his residence
upon, and cultivation of the land, as well as his compliance with all of the other
requirements of the law, and said final proof was approved by the Director of
Lands on February 15, 1918. In other words, Buenaventura Balboa, had shown, to
the satisfaction of the Government, that he had performed all of the acts required
of an applicant for homestead, and, under the provisions of section 3 of Act no.
926, he became entitled to a homestead patent or certificate of title to the land
covered by his application.
Section 3 of Act No. 926 provides, inter alia, that upon the filing of final proof by
the applicant and the approval thereof by the Director of Lands, "he (the
applicant) shall be entitled to a patent" or certificate of title. Therefore, on
February 15, 1918, after Buenaventura Balboa had submitted his final proof and
after the same had been approved by the Government, and while Act No. 926 was
still in force, he became the owner of the land and "entitled to a patent." At least
on that date his right to the land, as owner, ripened into a vested right. It was no
longer expectant as depending on the continuance of existing circumstances or
contingent as depending on some events or the performance of some conditions.

The fact the homestead patent or certificate of title No. 91 was issued on
September 10, 1920, after the repeal of Act No. 926, and under the provisions of
section 116 of the repealing Act No. 2874, cannot prejudice the vested right
acquired by Buenventura Balboa under the provisions of the former Act. The
issuance of the certificate of title was a mere ministerial act, and the certificate,
an outward symbol of his vested right to the land, of which he was virtually
recognized as owner by the Government on February 15, 1918.

The right, title and interest of the appellant having become vested under the
provisions of Act No. 926, his rights cannot be affected by any law passed
subsequent thereto. The provisions of Act No. 2874 cannot be invoked for the
purpose of defeating the vested right acquired by the appellant before its
adoption.
Doctrine/s:

Rights are vested when the right to enjoyment, present or prospective, has
become the property of some particular person or persons as a present interest.
Vested right "is some right or interest in property which has become fixed and
established and is no longer open to doubt or controversy."

A party who was has complied with all the terms and conditions which entitle him
to a patent for a particular tract of public land acquires a vested interest therein,
and is to be regarded as the equitable owner thereof.

Even without a patent, a perfected homestead is a property right in the fullest


sense, unaffected by the fact that the paramount title to the land is in the
Government. Such land may be conveyed or inherited.
G.R. No. L-67935 March 18, 1991
BENITO QUINSAY, MELITON CABERTO and PASTOR OLALAN, petitioners,
vs.
THE INTERMEDIATE APPELLATE COURT, FOURTH CIVIL CASES DIVISION,
and URBANA GUY YOCHE, LETICIA GUY YOCHE, ANITA GUY YOCHE, ADELA
GUY YOCHE, BEATRIZ GUY YOCHE, VIVENCIO GUY YOCHE, NOLASCO GUY
YOCHE (deceased), substituted by his legal heirs URSULA ENRIQUEZ,
NERISSA, NOEL, and NOEMI, all surnamed GUY YOCHE, respondents.

Facts:

Lot No. 1105, Cad. 211, situated at Divisoria, Santiago, Isabela was the subject of
Homestead Application No. V-11083 (E-V-10060) of Beatriz Bayle filed with the
Bureau of Lands. Later, she transferred her rights thereto to Sylverio Valdez who,
on January 2, 1950, in turn transferred his rights to Fermin Guy Yoche. These
transfers were approved by the Undersecretary of Agriculture and Natural
Resources.

Guy Yoche's homestead application was opposed by defendant Benito Quinsay


who was occupying the lot. It was not established how or why it came about but in
the course thereof Fermin Guy Yoche and Benito Quinsay entered into an amicable
settlement concerning the land. By virtue of such agreement, Benito Quinsay filed
on January 20, 1950 a Miscellaneous Sales Application over portion B of the lot
while Fermin Guy Yoche filed on January 2, 1950 a Homestead Application over
portion A. The Director of Lands approved the amicable settlement and accepted
both the Miscellaneous Sales (new) Application of Quinsay and the Homestead
Application of Fermin Guy Yoche by decreeing that they shall be "given further
action in accordance with standing rules and regulations on the matter."
In the meantime, Benito Quinsay and his children, intervenor Julio Quinsay and
Florida Quinsay, continued to occupy and possess the whole Lot 1105. Fermin Guy
Yoche or any of his heirs never attempted to take possession thereof. Quinsay and
his children cultivated and converted into riceland portions thereof in which they
planted palay. Then, on March 6, 1972, Benito Quinsay sold to Pastor Olalan 1,250
square meters portion of the land and again sold another portion, with an area of
3,013 square meters, to Meliton Caberto.

After the sales, Olalan and Caberto took actual possession of the portions bought
by them, declared their respective portions in their names for taxation purposes
and paid real estate taxes thereof. Afterwards, they filed their separate free patent
applications and he District Land Officer of Isabela acted favorably on their
applications and in due time issued the corresponding patents thereto.
It is these two titles which are sought to be annulled by the plaintiffs as Heirs of
Fermin Guy Yoche, maintaining that the portions covered thereby was sold by
Benito Quinsay to the titled holders in violation of the amicable settlement
entered into between him and their predecessor-in-interest.

Issue:
Whether or not private respondents have acquired a vested right over the lots in
question.

Law/s:
Section 3 of Act No. 926 which provides that upon the final proof by the applicant
and the approval thereof by the Director of Lands, "he (the applicant) shall be
entitled to patent" or certificate of title.

Ruling:

The approval of the final proof of the homestead application of private


respondents by the Director of Lands is necessary for vested rights to exist in
favor of said respondents over the land in question.
The homestead application and the final proof submitted by the heirs of Fermin
Guy Yoche on May 22, 1951 remain unapproved up to the present. From what has
been said, therefore, vested rights over the land cannot be validly claimed by
private respondents since the approval by the Director of Lands of their final proof
for a homestead patent is now a condition sine qua non for the existence of such
vested right.

Doctrine:

For vested rights to exist the final proof must be not only filed but must be
approved by the Director of Lands.

G.R. No. 78209 March 31, 1989


DAVAO GRAINS INCORPORATED AND LAPANDAY AGRICULTURAL AND
DEVELOPMENT CORPORATION, petitioners, vs. INTERMEDIATE APPELLATE
COURT, PROTACIO ESPINA AND MARCIAL ESPINA, respondents.
Facts:
The parcel of land in question is situated in Asuncion, in the province of Davao.
Protacio Espina and Marcial Espina, cleared and developed the same and built
their houses on the said property and filed a homestead application for the land
and paid the necessary fees. Pending the issuance of a patent, cadastral
proceedings were initiated by the government covering all lands in the said town.
Accordingly, all applicants and claimants were required to file their respective
answers. Private respondents filed their answer in the cadastral proceeding for the
said land. On June 19, 1970, Decree No. N-130436 was issued in their favor.
Thereafter, Original Certificate of Title (OCT) No. 0-2440 covering said property
was issued in their favor.

Private respondents sold said property to petitioner Lapanday Agricultural


Development Co. (Lapanday for short) for a consideration of P 24,520.40. OCT. No.
0-2440 was cancelled and in lieu thereof Transfer Certificate of 'Bile (TCT) No. T-
19171 was issued in the name of petitioner Lapanday. Shortly thereafter,
Lapanday sold the land to Davao Grains, Inc., one of the petitioners herein. TCT
No. T-19171 was cancelled and in lieu thereof TCT No. T-20083 was issued in favor
of petitioner Davao Grains, Inc. on November 10, 1975.

On March 24, 1980, private respondents filed an action to repurchase said


property against the petitioners with the then Court of First Instance (CFI) of
Davao Branch III and alleged that Lot No. 138 is a homestead and is, therefore
subject to repurchase under Sections 118 and 119 of Commonwealth Act No. 141,
otherwise known as the Public Land Act but the trial court rendered a judgment
dismissing the complaint holding that repurchase was not available to private
respondents herein on the ground that Lot No. 138 was not a homestead but a
cadastral lot. For failure of private respondents to appeal the decision within the
reglementary period, the judgment became final and executory.

On August 19, 1983, after the lapse of one year and seven months from the
finality of the decision in Civil Case No. 1235, private respondents filed another
action to recover the same property. This time they filed an action for annulment
of the above mentioned sales in the Regional Trial Court of Davao, Branch I,
docketed as Civil Case No. 1779. Petitioner Lapanday filed an answer to the
complaint while petitioner Davao Grains Inc. was declared in default.

On February 14, 1984, the court a quo rendered a decision declaring that the
approval of private respondents' homestead application had the effect of
segregating the land from the public domain and of divesting the Bureau of Lands
of the control and possession of the same and declared thus that both sales and
Transfer Certificates of Title Nos. T-19171 and T-20083 in favor of the petitioners
are null and void. The court directed the reinstatement of OCT No. 0-2440 in the
name of private respondents free from all liens and encumbrances and for private
respondents to refund Davao Grains.

Petitioners seasonably appealed to the Court of Appeals, the appellate court


dismissed the appeal and affirmed the decision appealed from in all respects.

Issue/s:

(1) Does a piece of public land which was applied for as a homestead but was
awarded to the applicant in a cadastral proceeding cease to be a homestead?;
and

(2) Is the vendee who purchased such land covered by a cadastral title bound by
the conditions of the purchase of a homestead?

Law/s:
Section 122 of the Land Registration Act provides that the deed, grant or
instrument of conveyance from the government to the grantee shall not take
effect as a conveyance or bind the land, but shall operate only as a contract
between the Government and the grantees and as evidence of authority to the
clerk or register of deeds to make registration. It is the act of registration that
serves as an operative act to convey the land.

Ruling:

Considering that the land in question was originally applied for as homestead by
Gozo, the first occupant, and his homestead application was duly approved on
November 7,1941, the property in question is therefore a homestead Effectively
thereby, the property was segregated from the land of the public domain. The fact
that the original occupant abandoned the same does not divest the land of its
character as a homestead.

Section 122 of the Land Registration Act 10 in relation with Section 38 thereof,
provides that the deed, grant or instrument of conveyance from the government
to the grantee shall not take effect as a conveyance or bind the land, but shall
operate only as a contract between the Government and the grantees and as
evidence of authority to the clerk or register of deeds to make registration. It is
the act of registration that serves as an operative act to convey the land. As ruled
earlier in the case of Republic of the Philippines vs. Heirs of Carle, actual
conveyance of such land is to be effective only upon such registration which shall
be the operative act to convey and affect the land. The main purpose and
intention of the framers of the law is to make such registration as notice to the
whole world that the land is subject to no further conveyance and to bring it
within the ambit of Sections 118, 119 and 121 of the Public Land Act which
protect the right of the homesteader and his heirs over the land. Stated
otherwise, in the absence of such registration, a vendee thereof is not bound by
the restrictions in the purchase of a homestead unless said vendee has actual
knowledge previous to the sale or at the very moment of purchase that the land
indeed is a homestead.

Considering that the subject land was titled by virtue of a cadastral survey and
the fact that it was a homestead does not appear on the face of the title of said
land nor was it established that the petitioners were aware of the true nature of
the land, thus the sale executed by private respondents in favor of Lapanday and
the subsequent sale made by the latter in favor of Davao Grains are therefore
valid and binding.

It is well-settled that where innocent third persons, relying on the correctness of


the certificate of title thus issued, acquire rights over the property, the court
cannot disregard such rights and order the cancellation of the certificate. Every
person dealing with registered lands may safely rely on the correctness of the
certificate of title issued therefor and the law will in no way oblige him to go
behind the certificate to determine the condition of the property.

Doctrine:

The approval of the application for the homestead has the effect of segregating
the land from the public domain and divesting the Bureau of Lands of the control
and possession of the same.
G.R. No. L-36507 June 14, 1974
ANTONIO PIERO, JR., EMMA BERNAD (assisted by her husband Norberto
Bernad) and FORTUNATO PIERO, petitioners-appellees,
vs.
THE DIRECTOR OF LANDS, SEGUNDO M. REYES, in his capacity as the
Provincial Land Officer of Zamboanga del Norte, MARIANO D. PALERMO,
in his capacity as Deputy Public Lands Inspector, NICANOR ALASAAS,
EUSEBIO CAMANSI and TOMAS SUMALPONG, respondents. THE
DIRECTOR OF LANDS, SEGUNDO M. REYES, in his capacity as the
Provincial Land Officer of Zamboanga del Norte and MARIANO D.
PALERMO, in his capacity as Deputy Public Lands Inspector, respondents-
appellants.

Facts:

On August 8, 1958, the Director of Lands issued an order directing the


investigation of the protest of Eusebio Camansi, against the patented application
of Antonio Piero Jr and directed the Director of Lands thru the Chief Legal
Division, to investigate the protest of Nicanor Alasaas against the patented
application of Emma Piero Bernad. The investigation of alleged fraud claimed
have led to the issuance of the Free Patents and corresponding Certificates of Title
to the said appellees.
The Solicitor General filed this appeal from the decision of the Court of First
Instance of Zamboanga del Norte in its Civil Case No. 1128, granting the writ of
prohibition prayed for by appellees against the appellant Director of Lands, the
Provincial Land Officer of the same province and other subordinate officials.

Issue:

Whether or Not the Director of Lands may be enjoined to conduct the


investigation of any alleged fraud in securing a free patent and the corresponding
title to a public land and to file the corresponding court action for the reversion of
the same to the State.

Law/s:
Section 91 of the Public Land Act leaves no other alternative to the Director of
Lands. The provision reads thus:
SEC. 91. The statements made in the application shall be considered as essential
conditions and parts of any concession, title, or permit issued on the basis of such
application, and any false statement therein or omission of facts altering,
changing, or modifying the consideration of the facts set forth in such statements,
and any subsequent modification, alteration, or change of the material facts set
forth in the application shall ipso facto produce the cancellation of the concession,
title, or permit granted. It shall be the duty of the Director of Lands, from time to
time and whenever he may deem it advisable, to make the necessary
investigations for the purpose of ascertaining whether the material facts set out in
the application are true, or whether they continue to exist and are maintained and
preserved in good faith, and for the purpose of such investigation, the Director of
Lands is hereby empowered to issue subpoenas and subpoenas duces tecum and,
if necessary, to obtain compulsory process from the courts. In every investigation
made in accordance with this section, the existence of bad faith, fraud,
concealment, or fraudulent and illegal modification of essential facts shall be
presumed if the grantee or possessor of the land shall refuse or fail to obey a
subpoenas or subpoenas duces tecum lawfully issued by the Director of Lands or
his authorized delegates or agents, or shall refuse or fail to give direct and
specific answers to pertinent questions, and on the basis of such presumption, an
order of cancellation may issue without further proceedings.

Ruling:

It is not only the right but the duty of the Director of Lands to conduct the
investigation of any alleged fraud in securing a free patent and the corresponding
title to a public land and to file the corresponding court action for the reversion of
the same to the State, if the facts disclosed in the course of such investigation
should so warrant. Consequently, prohibition cannot be issued to enjoin such an
investigation despite the existence of a Torrens title.

It is true that under Section 122 of the Land Registration Act, a Torrens title issued
on the basis of a free patent or a homestead patent is as indefeasible as one
judicially secured. And in repeated previous decisions of this Court that
indefeasibility has been emphasized by our holding that not even the Government
can file an action for annulment, but at the same time, it has been made clear
that an action for reversion may be instituted by the Solicitor General, in the
name of the Republic of the Philippines. It is to the public interest that one who
succeeds in fraudulently acquiring title to a public land should not be allowed to
benefit therefrom, and the State should, therefore, have an ever existing
authority, thru its duly authorized officers, to inquire into the circumstances
surrounding the issuance of any such title, to the end that the Republic, thru the
Solicitor General or any other officer who may be authorized by law, may file the
corresponding action for the reversion of the land involved to the public domain,
subject thereafter to disposal to other qualified persons in accordance with law. In
other words, the indefeasibility of a title over land previously public is not a bar to
an investigation by the Director of Lands as to how such title has been acquired, if
the purpose of such investigation is to determine whether or not fraud had been
committed in securing such title in order that the appropriate action for reversion
may be filed by the Government.

Doctrine:

A Torrens title issued on the basis of a free patent or a homestead patent is as


indefeasible as one judicially secured but the indefeasibility of a title over land
previously public is not a bar to an investigation by the Director of Lands as to
how such title has been acquired.
REGISTRATION OF LAND TITLES AND DEEDS
SUBSEQUENT REGISTRATION: INVOLUNTARY DEALINGS WITH REGISTERED
LAND
PP 641 645

Institution of Foreclosure Suit: Contents of Complaint: Parties Defendant

(Rule 68, Sec. 1, Rules of Court)


(De la Paz, et al. vs. Macondray & Co., Inc. 66 Phil. 402)
(Sun Life Assn. Co. of Canada vs. Gonzales Diez, 52 Phil. 27).

Action to Foreclose a Mortgage Affecting Registered Lands Under the


Torrens System Subject to Prescription Section 46, Act No. 496
Construed.

(Buhat, et al. vs. Besana, et al., 95 Phil. 721)

Attachment of Unmortgaged Property

(De los Reyes vs. Court of First Instance of Batangas, 55 Phil. 408)

Judgment on Foreclosure

(Sec. 2, Rule 68, Rules of Court.)

Sale of Property.

(Government Service Insurance System vs. CFI of Iloilo, Branch III, 1989,
175 SCRA 19, 24-25)

G.R. No. L-44072 October 28, 1938


GREGORIO DE LA PAZ and GUADALUPE SANTIESTEBAN, applicants-
appellants, vs. MACONDRAY AND CO., INC., oppositor-appellee.
Facts:

The appellants applied, under Act No. 496, for the registration in their favor of
eleven parcels of land situated in the municipality of Pasig, Province of Rizal. The
registration of some portions was opposed by the Province of Rizal and by the
Manila Railroad Company, but as the appellants abided by the oppositions and as
the portions claimed by the oppositors were segregated from the plans, the latter
eventually abandoned their intervention.

As there was no longer any controversy, the court, after going over the evidence
adduced by the appellants, ordered the registration of the lands in their favor.
Before the decision thus rendered became final, the appellee appeared and asked
for the setting aside thereof, for permission to file its written opposition, and for
the reopening of the case on the ground that the eleven lots adjudicated to the
appellants originally belonged to the spouses Baltazar Raymundo and Agapita San
Juan; that the latter mortgaged the same to the appellee to secure the loan of five
thousand pesos and the interest thereon at 12 per cent per annum which the
appellee granted to them; that the mortgage deed executed for that purpose was
registered in the register of deeds; that for failure of the debtors to pay their
indebtedness after its maturity, the appellee brought foreclosure suit against
them in the Court of First Instance of Rizal; that the latter were ordered to pay
their indebtedness with interest, amounting to P5,389.51 plus interest and penalty
at 20 per cent; that these amounts were thereafter reduced to P2,389.65 because
of the partial execution of the judgment; that under a writ of execution
subsequently issued, the sheriff sold the mortgaged properties at public auction,
adjudicating the same to the appellee, as the highest bidder, for P1,100; and,
finally, the court ordered the approval of the said sale. After hearing the parties,
the court granted the petition, reversed its decision and allowed the appellee to
file its opposition.

Issue:

Whether or Not the foreclosure suit was without effect and the court should have
decreed the registration of all the lands in their favor, subject only to the
mortgage lien in favor of the appellee.

Law/s:

Section 255 of the Code of civil Procedure, the English text of which reads:
SEC. 255. The complaint in an action for foreclosure of a real estate mortgage.
In an action for foreclosure of a real estate mortgage, or other incumbrance upon
real estate, the complaint shall set forth the date and due execution of the
mortgage, its assignments, if any, the names and residences of the mortgagor
and mortgagee, a description of the mortgaged premises, a statement of the date
of the note or other obligation secured by the mortgage, and the amount claimed
to be unpaid thereon, and the names and residences of all persons having or
claiming an interest in the premises subordinate in right to that of the holder of
the mortgage, all of whom shall be made defendants in the action.

Ruling:

A second mortgagee acquires only a mortgage lien upon what is called the equity
of redemption vested in the mortgagor, and his rights are strictly subordinate to
the superior lien of the first mortgagee. Having acquired this right the second
mortgagee is a proper and in a sense even a necessary party to a foreclosure
proceeding brought by the first mortgagee; for, in the closing words of section 255
of our Code Of Civil Procedure, it is expressly provided that all persons having or
claiming an interest in the mortgaged premises subordinate in right to that of the
holder of the foreclosing mortgage creditor shall be made defendants in the
foreclosure proceeding. Accordingly, if in the original foreclosure proceeding the
attention of the court had been directed to the fact that a second mortgage had
been executed in favor of Gonzalez Diez, it would have been peremptorily
required that the second mortgagees should be made a party.

But the second mortgagee was not an indespensable party to the proceeding to
foreclose the first mortgage, because appropriate relief could be granted by the
court to the first mortgagee, in the rights of the second mortgagee. But the failure
on the part of the first mortgagee to make the second mortgagee a defendant
was that the decrees entered in the original foreclosure proceeding did not have
the effect of depriving the second mortgagee of his right of redemption. It is well
recognized doctrine that a decree of foreclosure in a suit to which the holders of
the second lien are not parties leaves the equity of redemption in favor of such
lien holders unforeclosed and unaffected.

While the subordinate lienholder is a proper party defendant in order to make a


decree of foreclosure completely binding on all interest, he is not an absolutely
indespensable party in the foreclosure proceeding.

Applying this view which was adopted to the case under consideration, it results
that the eight lots which are the subject matter of this appeal may be registered
in the name of the appellee, subject, however, to the appellants equitable right of
redemption, which right should be exercised within the period of three months
from the date this decision becomes final.

Doctrine:

The failure to make a subordinate lien holder a party defendant in a mortgage


foreclosure does not nullify the proceeding as among the actual parties thereto,
but at most leaves the right of redemption unforeclosed as against such
lienholder.

G.R. No. L-29027, October 25, 1928


SUN LIFE ASSURANCE COMPANY OF CANADA, plaintiff-appellee, vs.
FLORENCIO GONZALEZ DIEZ, defendant-appellant

Facts:

Joaquin Serna mortgaged the property which is the subject of this action to the
Shanghai Life Insurance Company, Ltd., to secure a promissory note payable to
said corporation in the amount of P20,000. On the same day Serna executed a
second mortgage on the same property in favor of the herein defendant, Florencio
Gonzalez Diez, to secure a debt in the amount of P6,000. The promissory note
secured by the first mortgage, together with the rights of the original first
mortgagee, was afterwards transferred to the Sun Life Assurance Company of
Canada, the plaintiff in this case.
The note secured by the first mortgage was not paid at maturity; and the holder,
the Sun Life Assurance Company of Canada, therefore instituted a proceeding (No.
28009 in the Court of First Instance of Manila) to foreclose said first mortgage. In
this proceeding only Joaquin Serna and Paulino Francisco were named as
defendants, no account being taken of Gonzalez Diez, the holder of the second
mortgage. The action proceeded, however, to finality, and the property was
ultimately sold in regular course and bought in by the plaintiff, the mortgage
creditor.

After foreclosure had been effected, as above stated, the present proceeding was
instituted by the plaintiff against Gonzalez Diez for the purpose of foreclosing the
mortgage as against him in his character as second mortgagee.

Upon hearing the cause the trial gave judgment in favor of the plaintiff, requiring
second mortgage to pay the entire mortgage debt, with costs, otherwise to be
debarred from any right as second mortgagee, with appropriate provision for the
cancellation of the second mortgage. From this judgment the defendant appealed.

Issue:

Whether or not the second mortgage creditor has the right to maintain this action
of foreclosure.

Law/s:

Section 225 of our Code of Civil Procedure, provided that all persons having or
claiming an interest in the mortgaged premises subordinate in right to that of the
holder of the foreclosing mortgage creditor shall be made defendants in the
foreclosure proceeding.

Ruling:

A second mortgage acquires only a mortgag e lien upon what is called the equity
of redemption vested in the mortgagor, and his rights are strictly subordinate to
the superior lien on the first mortgagee. Having acquired this right the second
mortgagee is a proper and in a sense even a necessary party to a foreclosure
proceeding brought by the first mortgagee; for, in the closing words of section 225
of our Code of Civil Procedure, it is expressly provided that all persons having or
claiming an interest in the mortgaged premises subordinate in right to that of the
holder of the foreclosing mortgage creditor shall be made defendants in the
foreclosure proceeding. Accordingly, if in the original foreclosure proceeding the
attention of the court had been directed to the fact that a second mortgage had
been executed in favor of Gonzalez Diez, it would have been peremptorily
required that the second mortgagee should be made a party.

The second mortgagee was not an indespensable party to the proceeding to


foreclosure the first mortgage, because appropriate relief could be granted by the
court to the first mortgagee, in the original foreclosure proceeding, without
affecting the rights of the second mortgagee. But the failure on the part of the
first mortgagee to make the second mortgagee a defendant was that the decree
entered in the original foreclosure proceeding did not have the effect of depriving
the second mortgagee of his right of redemption.

Doctrine:

A decree of foreclosure in a suit to which the holders of a second lien are not
parties leaves the equity of redemption in favor of such lien holders unforeclosed
and unaffected.
G.R. No. L-6746 , August 31, 1954
ESPERANZA V. BUHAT, ET AL., plaintiffs-appellants, vs. ROSARIO BESANA,
ETC., ET AL., defendants-appellees.

Facts:

On May 31, 1924, Jose M. Besana mortgaged his undivided one-half share in lot
No. 1406 of the cadastral survey of Panay in favor of Luis Bernales, to secure an
indebtedness of P900, payable within six years from said date. On October 27,
1926, original certificate of title No. RO-1364 (10255) was issued in the name of
Jose M. Besana and Rosario Besana, brother and sister, covering lot No. 1406 in
undivided equal shares; and on said certificate the mortgage in favor of Luis
Bernales was noted. Jose M. Besana died and his portion passed to his surviving
sister, Rosario Besana. Luis Bernales also died and his mortgage credit against
Jose M. Besana was inherited by Antonio Bernales, who in turn transferred the
same to the herein plaintiffs, Esperanza V. Buhat and Mauro A. Buhat. Rosario
Besana sold her portion to Manuel B. Bernales who, on June 30, 1950, conveyed it
to the plaintiffs.

As the indebtedness above referred to remained unpaid, the present action was
instituted in the Court of First Instance of Capiz by the plaintiffs against Rosario
Besana and her husband Lorenzo Contreras on December 6, 1952, for the
foreclosure of the mortgage of May 31, 1924. The defendants Rosario Besana and
Lorenzo Contreras filed a motion to dismiss the complaint, on the ground that
plaintiffs' cause of action had prescribed, the complaint having been filed more
than ten years from May 31, 1930 (in fact some 22 years after the obligation has
become due and demandable). On May 6, 1953, the Court of First Instance of
Capiz issued an order dismissing the case without costs. The plaintiffs have
appealed.

Issue:

Whether or Not the action to foreclose did not prescribe

Law/s:

Section 46 of the Land Registration Act, No. 496, provides that "No title to
registered land in derogation to that of the registered owner shall be acquired by
prescription or adverse possession."
Ruling:

Section 46 of the Land Registration Act, No. 496, provides that "No title to
registered land in derogation to that of the registered owner shall be acquired by
prescription or adverse possession." The citation speaks of the title of the
"registered owner" and refers to prescription or adverse possession as a mode of
acquiring ownership, the whole philosophy of the law being merely to make a
Torrens title indefeasible and, without more, surely not to cause a registered lien
or encumbrance such as a mortgage and the right of action to enforce it
imprescriptible as against the registered owner. The important effect of the
registration of a mortgage is obviously to bind third parties.

Doctrine:

Torrens title is indefeasible but does not to cause a registered lien or


encumbrance such as a mortgage and the right of action to enforce it
imprescriptible as against the registered owner.

G.R. No. L-34450, December 13, 1930


BENITO DE LOS REYES, ET AL., petitioners, vs. COURT OF FIRST
INSTANCE OF BATANGAS and CHUA PUA HERMANOS, respondents.

Facts:

Benito de los Reyes and wife filed an original petition for the writ of certiorari, for
the purpose of quashing an order of the Court of First Instance of Batangas
granting an attachment of property belonging to the plaintiffs, in an action
instituted in the Court of First Instance of the Province of Batangas, wherein the
respondents Chua Pua Hermanos are plaintiffs and the petitioners defendants.

Issue:

Whether in a proceeding to foreclose a mortgage upon land, the court


entertaining such proceeding can issue an attachment against other property of
the defendants than such as is included in the mortgage, upon a showing, by
affidavit, that the mortgage property is in sufficient to pay the mortgage debt and
that the defendants are attempting to alienate their unmortgaged property to
other persons with intent to defraud the plaintiff.

Law/s:

Section 426 of the Code of Civil Procedure


Section 424 of the Code of Civil Procedure
Subsection 5 of section 412 of the Code of Civil Procedure

Ruling:

Under section 424 of the Code of Civil Procedure, an attachment may be obtained
at or after the commencement of the plaintiff's "action." The word "action," as
used in this provision, includes in our opinion a proceeding for the foreclose of a
mortgage. But under section 260 of the Code of Civil Procedure, the mortgage
creditor is entitled to judgment for any excess remaining due upon the mortgage
debt after the mortgaged property shall have been sold; and this judgment for the
balance due is entered upon motion in the foreclosure proceeding itself. This fact,
taken in connection with the statement of the affidavit to the effect that the
mortgaged property was insufficient in value to cover the indebtedness due to the
plaintiff, made a case where it was proper to grant an attachment upon the facts
stated.

Doctrine:

An attachment may be obtained at or after the commencement of the plaintiff's


"action against other property of the defendants than such as is included in the
mortgage, upon a showing, by affidavit, that the mortgage property is in sufficient
to pay the mortgage debt and that the defendants are attempting to alienate their
unmortgaged property to other persons with intent to defraud the plaintiff.
[G.R. No. 45322. July 5, 1989.]
GOVERNMENT SERVICE INSURANCE SYSTEM (GSIS), Petitioner, v. THE
COURT OF FIRST INSTANCE OF ILOILO BRANCH III, ILOILO CITY and NELITA
M. VDA. DE BACALING & MARIA TERESA INTEGRATED DEVELOPMENT
CORPORATION, Respondents.

Facts:

In 1957, a real estate loan of P600,000 payable in monthly installments within a


period of ten (10) years with 7% interest per annum, was granted to the spouses
Ramon and Nelita Bacaling by the petitioner, Government Service Insurance
System for the development of the Bacaling-Moreno subdivision. To secure the
repayment of the loan, the Bacalings executed in favor of the GSIS a real estate
mortgage on four (4) lots owned by them.

The Bacalings failed to finish the subdivision project and pay the amortizations on
the loan so the GSIS, on May 22, 1959, filed in the Court of First Instance of Iloilo a
complaint for judicial foreclosure of the mortgage (Civil Case No. 5233).

Mrs. Bacaling failed to pay the judgment debt, consequently, the mortgaged lots
were sold at public auction on February 28, 1961. The GSIS was the highest bidder
at the sale.

On December 18, 1972, respondent Maria Teresa Integrated Development


Corporation (MTIDC), assignee of the mortgagors "right of redemption," filed a
"Motion to Exercise the Right of Redemption. The motion was granted by the trial
court. On motion of the GSIS the court issued on February 3, 1973 an order
declaring null and void the redemption of the property by respondent MTIDC.

The court, over the strong opposition of the GSIS, reconsidered on January 19,
1976 its order of December 8, 1975 and granted MTIDC a period of one year after
the finality of its order of January 19, 1976 to redeem the Bacaling properties.

The GSIS sought a reconsideration of that order on the ground that the court may
not extend the period for the redemption of the property (p. 95, Record on
Appeal). The court modified its order of January 19, 1976 by giving MTIDC one (1)
year from January 19, 1976 within which to redeem the Bacaling property, instead
of one year from the finality of the January 19, 1976 orders. GSIS appealed by
certiorari to this Court raising purely legal questions.

Issue:
Whether, after the judicial foreclosure of a real estate mortgage and the
confirmation of the sale, the trial court may grant or fix another period for the
redemption of the foreclosed property by the assignee of the mortgagors equity
of redemption.

Law/s:

Sections 2 and 3, Rule 68 of the Rules of Court:

"SEC. 2.Judgment on foreclosure for payment or sale. If upon the trial in such
action the court shall find the facts set forth in the complaint to be true, it shall
ascertain the amount due to the plaintiff upon the mortgage debt or obligation,
including interest and costs, and shall render judgment for the sum so found due
and order that the same be paid into court within a period of not less than ninety
(90) days from the date of the service of such order, and that in default of such
payment the property be sold to realize the mortgage debt and costs.

"SEC. 3.Sale of mortgaged property; effect. When the defendant, after being
directed to do so as provided in the last preceding section, fails to pay the
principal, interest, and costs at the time directed in the order, the court shall order
the property to be sold in the manner and under the regulations that govern sales
of real estate under execution. Such sale shall not affect the rights of persons
holding prior encumbrances upon the property or a part thereof, and when
confirmed by an order of the court, it shall operate to divest the rights of all the
parties to the action and to vest their rights in the purchaser, subject to such
rights of redemption as may be allowed by law."

Ruling:

The GSIS is not a bank or banking institution, its mortgage is covered by the
general rule that there is no right of redemption after the judicial foreclosure sale
has been confirmed. Hence, Judge Numeriano Estenzo exceeded his jurisdiction
and acted with grave abuse of discretion in granting the respondent, MTIDC,
another one-year period to redeem the Bacaling properties over the opposition of
petitioner GSIS as mortgagee-purchaser thereof at the public sale. His orders
dated January 19, 1976 and February 12, 1976 are null and void.

Doctrine:

There is no right of redemption from a judicial foreclosure sale after the


confirmation of the sale, except those granted by banks or banking institutions as
provided by the General Banking Act.

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