Government of the Philippine Islands v. Pampanga Sugar Mills
REITERATIONFacts
The Antecedents: The Insular Government filed an action against Pampanga Sugar Mills, Inc. to recover P233.55, representing proportionate costs of a cadastral survey for lot No. 702. Original Certificate of Title No. 1441 was issued to Martina Martin, with a noted first lien in favor of the Insular Government for cadastral survey fees and special taxes, and a promise of sale to Thomas J. Piffard. Procedural History: Martina Martin sold lot No. 702 to Thomas J. Piffard without paying the cadastral survey costs. The registrar of deeds erroneously issued Transfer Certificate of Title No. 249 to Piffard, omitting the lien. Piffard then sold the lot to Pampanga Sugar Mills, Inc., who received Transfer Certificate of Title No. 2177, also omitting the lien. The Government demanded payment from Martina Martin, who failed to pay. Subsequently, the Government demanded payment from Pampanga Sugar Mills, Inc., which refused. The Court of First Instance of Pampanga absolved Pampanga Sugar Mills, Inc. The Petition: The Government appealed the decision of the Court of First Instance, contending that the lien for cadastral survey costs is demandable against the land regardless of its owner, based on Act No. 2558.
Issue(s)
Whether the lien for cadastral survey costs noted on the original certificate of title is enforceable against a subsequent purchaser when not annotated on the transfer certificate of title. Whether the Government's claim for cadastral survey costs is barred by prescription.
Ruling
The Supreme Court affirmed the decision of the Court of First Instance, absolving Pampanga Sugar Mills, Inc. from the complaint. The Court held that the lien for cadastral survey costs was not enforceable against the defendant.
Ratio Decidendi
On the enforceability of the lien against a subsequent purchaser: The Court held that under Act No. 3081, which was in force when Pampanga Sugar Mills purchased the lot, the registrar of deeds was duty-bound to demand proof of payment of the lien before registering the deed of sale. If the apportionment of costs had not yet been decreed, the registrar should have endorsed the encumbrance on the transfer certificate. In this case, the original certificate of title noted a lien, but this was omitted in the transfer certificates issued to Piffard and subsequently to Pampanga Sugar Mills. Pursuant to Section 39 of Act No. 496, as amended, an assignee of a title is not responsible for obligations not appearing on the Torrens title transferred to them. The general purpose of the Land Registration Act is to create an indefeasible title free from all charges, liens, and encumbrances except those preserved by specific mention or by provision of law. The title created is not subject to hidden defects or claims unless noted on the certificate. On the prescription of the claim: The Court noted that the apportionment of cadastral survey costs was ordered on February 26, 1923. Under Section 39 of Act No. 496, as amended by Act No. 2011, payment of such special assessments could be demanded within two years from the date they became due and payable. The demand for payment was made on September 19, 1933, more than ten years after the apportionment. Therefore, the Government's claim was barred by prescription.
Main Doctrine
A lien for cadastral survey costs, even if noted on the original title, cannot be enforced against a subsequent purchaser of the property if such lien is not annotated on the transfer certificate of title presented by the subsequent purchaser, especially when the demand for payment is made beyond the prescriptive period provided by law.