Roxas v. Dinglasan
REITERATIONFacts
The Antecedents: Felisa Kalaw, the registered owner of Lot No. 15679, sold portions of it to Francisca Mojica and Victoria Dinglasan in June 1959 through a public and private instrument, respectively. The intervenors took possession of the land but did not receive the owner's duplicate certificate of title as it was with a third party. Prior to December 29, 1961, Pedro Dinglasan falsified a public document to cancel Felisa Kalaw's title and obtain a new transfer certificate of title in his name. On December 29, 1961, Pedro Dinglasan mortgaged the land to Leonora T. Roxas for P7,000.00. Roxas, relying on the transfer certificate of title, registered the mortgage. Procedural History: Leonora T. Roxas filed a foreclosure suit against Pedro Dinglasan, who was declared in default. Francisca Mojica and Victoria Dinglasan intervened, claiming ownership of the land and alleging that Pedro Dinglasan's title was obtained through fraud and falsification, and that he had been convicted for it. The intervenors prayed for the declaration of nullity of Dinglasan's title and for a new title to be issued in their names. The trial court ruled that the mortgage was validly constituted and ordered its foreclosure, stating that the intervenors' claim of ownership was not the proper subject of the foreclosure proceedings. The intervenors appealed. The Petition: The intervenors appealed to the Court of Appeals, which certified the case to the Supreme Court as it involved only questions of law. The appellants contended that the lower court erred in not considering their complaint in intervention as timely and appropriate, and in not declaring the mortgage contract void.
Issue(s)
Whether the intervenors' complaint in intervention was timely and appropriate. Whether the contract of mortgage between the plaintiff and the defendant was null and void.
Ruling
The Supreme Court affirmed the judgment of the lower court ordering the foreclosure of the mortgage. The Court held that while the intervenors' claim of ownership was appropriate, their unregistered deeds of sale did not transfer ownership under the Torrens System. Furthermore, the mortgage was valid because the mortgagee, Leonora T. Roxas, was an innocent mortgagee for value who relied on the transfer certificate of title, and the intervenors' failure to file an adverse claim constituted negligence that proximately caused their loss.
Ratio Decidendi
On the timeliness and appropriateness of the intervention: The Court found the intervenors' contention tenable. The issue of timeliness was rendered moot by the lower court's prior order granting leave to file the complaint in intervention, which was not questioned. The complaint was deemed appropriate because the intervenors, as alleged owners, had a direct and immediate interest in the matter such that they stood to gain or lose by the judgment's legal operation. The Court cited Garcia, etc., et al. vs. David, et al., 67 Phil. 279, to support the principle that an intervener must have an interest in the matter in litigation. On the validity of the mortgage contract: The Court ruled that the mortgage was valid. Firstly, the intervenors did not acquire ownership of the land because their deeds of sale were not registered, and under the Torrens System, registration, not tradition, transfers ownership. The Court cited Agbulos vs. Alberto, G.R. No. L-17483, July 31, 1962, and other cases, emphasizing that unregistered sales do not convey ownership of titled land. Secondly, although Pedro Dinglasan was not the owner due to fraud, the mortgage was valid because Leonora T. Roxas was an innocent mortgagee for value. She relied on the transfer certificate of title, which appeared genuine and free from objection. The Court applied the principle from De Lara, et al. vs. Ayrosa, G.R. No. L-16122, May 31, 1954, and Morales Development Company, Inc. vs. Court of Appeals, et al., G.R. No. L-26572, March 28, 1969, that a purchaser or mortgagee is justified in relying on the certificate of title and is not obligated to investigate beyond it absent any suspicious circumstances. Lastly, the intervenors were negligent for failing to file an adverse claim, which would have prevented Dinglasan from obtaining a new title, and this negligence was the proximate cause of their loss.
Main Doctrine
A mortgage constituted by a person who obtained title to the property through falsification is valid if the mortgagee is an innocent mortgagee for value who relied on the transfer certificate of title, and the unregistered vendees' negligence in failing to file an adverse claim was the proximate cause of their loss.