Register of Deeds of Iloilo v. Hodges
REITERATIONFacts
1. The Antecedents: Fermin Jalover owned Lot No. 986, covered by Transfer Certificate of Title No. T-2125. On March 25, 1953, Jalover mortgaged this lot to the Rehabilitation Finance Corporation (RFC) to secure a P6,500.00 loan, which was duly registered. Subsequently, the lot was sold at public auction by the sheriff in connection with two civil cases, Civil Case No. 3316 and Civil Case No. 3520, in favor of C. N. Hodges as the highest bidder. Two certificates of sale were issued to Hodges and registered, annotated as entries Nos. 15102 and 15104 on Jalover's title. 2. Procedural History: On March 14, 1960, Jalover requested the Register of Deeds of Iloilo to cancel entries Nos. 15102 and 15104, asserting their nullity under Section 26 of Commonwealth Act 459. The Register of Deeds denied this, citing lack of authority without a court order. Jalover then elevated the matter en consulta to the Land Registration Commissioner, who directed the Register of Deeds to file a petition with the proper court for cancellation. Consequently, the Register of Deeds filed a petition with the Court of First Instance of Iloilo on June 28, 1960, seeking the cancellation of the aforementioned entries. 3. The Petition: C. N. Hodges opposed the petition, arguing that the court lacked jurisdiction as a land registration court and that Jalover could not invoke Section 26 of Commonwealth Act 459, as it applied only to loans from the Agricultural and Industrial Bank, not the RFC. The Court of First Instance, after hearing, issued an order on September 10, 1960, assuming jurisdiction and ordering the cancellation of the entries. Oppositor Hodges interposed the present appeal, arguing that the lower court erred in assuming jurisdiction and in ordering the cancellation, particularly given the serious legal issue regarding the applicability of the exemption provision to RFC loans and the adverse claim of Hodges.
Issue(s)
Whether the Court of First Instance, acting as a court of land registration, has jurisdiction to entertain a petition for cancellation of annotations on a certificate of title when there is a serious objection or adverse claim. Whether the lot in question, mortgaged to the Rehabilitation Finance Corporation, is exempt from subsequent attachment in the same manner as properties mortgaged to the Agricultural and Industrial Bank, pursuant to Section 26 of Commonwealth Act 459.
Ruling
The order appealed from is reversed. No costs.
Ratio Decidendi
On the issue of jurisdiction under Section 112 of Act 496: The Supreme Court held that while Section 112 of Act 496 authorizes a person in interest to ask the court for the erasure, alteration, or amendment of a certificate of title under certain conditions, such relief can only be granted if there is unanimity between the parties, or if there is no adverse claim or serious objection from any party in interest. The Court emphasized that if the case becomes controversial due to an adverse claim or serious objection, it should be threshed out in an ordinary civil action or in the case where the incident properly belongs. In this case, C. N. Hodges, who purchased the lot at a public auction and in whose favor the annotations were made, seriously opposed the petition. His objection raised the validity of the claim that properties encumbered in favor of the RFC enjoy the same privilege of exemption from subsequent attachment as those encumbered with the defunct AIB. This significant legal issue could not be determined under the limited jurisdiction provided by Section 112 of Act 496. Therefore, the contention that the court a quo could not act on the petition in its capacity as a court of land registration was found to have merit. On the issue of exemption from attachment: Even assuming that the court a quo could act on the matter, the Supreme Court found its conclusion that the lot was exempt from additional encumbrance, similar to properties mortgaged to the AIB, to be untenable. The Court clarified that the lot was encumbered to guarantee a loan obtained from the Rehabilitation Finance Corporation (RFC). It stated that being a security created for a loan not originally obtained from the Agricultural and Industrial Bank (AIB), the same does not enjoy the privilege of exemption from subsequent attachment as provided in Section 26 of Commonwealth Act 459. The Court further noted that Republic Act No. 85, which created the RFC as successor to the AIB, does not contain a similar provision regarding loans obtained from the RFC. The transitory provisions of Section 9 of Republic Act 85, which transferred powers and duties from the AIB to the RFC, only pertained to transactions contracted with the former, with the latter merely tasked to deal with them as trustee until liquidation. The Court pointed out that Section 9 explicitly states that the AIB shall stand abolished on the date the RFC begins to operate, indicating a clear distinction in the legal framework governing loans from the two institutions.
Main Doctrine
A petition for cancellation of annotations on a certificate of title under Section 112 of Act 496 can only be granted if there is unanimity among the parties or no adverse claim or serious objection; otherwise, the matter becomes controversial and must be resolved in an ordinary civil action. Furthermore, properties mortgaged to the Rehabilitation Finance Corporation do not enjoy the same exemption from subsequent attachment as those mortgaged to the defunct Agricultural and Industrial Bank, as such exemption is not provided for in Republic Act No. 85.