Fidelity & Surety Co. v. Conegero
REITERATIONFacts
The Antecedents: Pastora Conegero held Torrens certificate of title No. 147. After a cadastral survey, this title was cancelled, and new certificates were issued: No. 194 to Pastora Conegero and No. 195 to her children. Prior to the cancellation, Pastora Conegero mortgaged the land under certificate No. 147 to El Hogar Filipino. On March 30, 1916, Pastora Conegero sold the property described in the cancelled certificate No. 147 to Samuel Thomas for P1,637.49. The sale contract was made in Manila, and the Torrens certificate was not produced or delivered. The description in the contract was taken from the El Hogar Filipino mortgage. Procedural History: Samuel Thomas's attorney attempted to register the deed of sale with the Register of Deeds in Iloilo. The Register of Deeds returned the document, stating that certificate No. 147 had been cancelled and replaced by certificate No. 194. However, the Register of Deeds made a notation in his entry book on April 18, 1916, indicating the presentation of the deed. On October 18, 1916, Pastora Conegero mortgaged the property covered by certificate No. 194 to the Fidelity and Surety Company of the Philippine Islands (Fidelity) for P2,000. This mortgage was registered and noted on certificate No. 194 on March 29, 1917. Samuel Thomas filed an action on November 2, 1917, to compel Pastora Conegero to produce certificate No. 194 for cancellation and to issue a new title in his name, filing a notice of lis pendens on November 5, 1917. On November 9, 1917, Pastora Conegero executed a third mortgage to Southworth and Goyena. Fidelity filed the present action on March 22, 1918, to foreclose its mortgage, impleading Thomas and Southworth and Goyena as defendants. The Appeal: The trial court ruled that the property belonged to Samuel Thomas when Fidelity's mortgage was registered, limiting Fidelity's remedy to a personal judgment against Pastora Conegero for P1,982.50. Fidelity and Surety Company appealed this decision to the Supreme Court, arguing that its mortgage, being properly registered, should have priority over Samuel Thomas's deed, which was allegedly not effectively registered.
Issue(s)
Whether the notation of a deed of sale in the Register of Deeds' entry book, without the cancellation of the original Torrens title and issuance of a new one, constitutes effective registration under Act No. 496. Whether Samuel Thomas's deed of sale, executed while the Torrens title it purported to convey was already cancelled, could effectively transfer title to the property. Whether the mortgage executed by Pastora Conegero in favor of the Fidelity and Surety Company, which was duly registered on the existing Torrens title, has superior rights over Samuel Thomas's prior but allegedly unregistered deed.
Ruling
The Supreme Court reversed the decision of the trial court. It held that the mortgage in favor of the Fidelity and Surety Company is superior to the deed of sale in favor of Samuel Thomas. The Court remanded the case to the court of origin with directions to proceed with the foreclosure of the plaintiff's mortgage.
Ratio Decidendi
On Issue 1: The Court held that the notation in the entry book by the Register of Deeds does not constitute effective registration under Section 56 of Act No. 496. The statute requires that the instrument must be competent to transfer or affect the Torrens title and that a new certificate must be issued in due course. The Court clarified that the registration is retroactive only when actual registration is effected and a new certificate is issued. Therefore, a mere annotation without subsequent actual registration is without significance regarding its effect on the title. On Issue 2: The Court found that the deed of sale to Samuel Thomas could not effectively transfer title because the Torrens title it purported to convey (certificate No. 147) had already been judicially cancelled. Section 50 of Act No. 496 states that a deed affecting registered land operates only as a contract between the parties and as authority to the Register of Deeds to make registration; the act of registration is the operative act to convey and affect the land. Since actual registration was impossible due to the cancellation of the title, the deed to Thomas could not be registered, and thus, it operated only as a contract between the parties and did not bind the land. On Issue 3: The Court ruled that the mortgage in favor of the Fidelity and Surety Company is superior to the deed of sale in favor of Samuel Thomas. The conveyance to Fidelity was effected in compliance with all legal requirements, including the production of the grantor's duplicate certificate for cancellation and the presentation of the original certificate. In contrast, the deed to Thomas was presented when the Torrens title it was supposed to operate on was non-existent. Therefore, the properly registered mortgage of Fidelity takes precedence over the unregistered deed of Thomas.
Main Doctrine
The Court held that the mere annotation of a deed in the entry book by the Register of Deeds, without the actual cancellation of the existing Torrens title and the issuance of a new one, does not constitute effective registration. Registration, as the operative act to convey and affect registered land, requires compliance with all statutory prerequisites, including the presentation and cancellation of the grantor's duplicate certificate of title. Consequently, a subsequent mortgage that complies with all legal requirements for registration is superior to a prior deed that was not effectively registered.