G.R. No. 15466 - Fidelity and Surety Company of the Philippines vs. Vda. de Lizarraga

Prior to June 26, 1913, Pastora Conegero was the owner of Torrens certificate of title No. 147 covering a parcel of land in Iloilo.
A cadastral survey led the Government to review the boundaries of properties in Iloilo, prompting the Court to order the cancellation of certificate No. 147.
The cancellation arose because certificate No. 147 was found to include two strips of land belonging to her children, in addition to the land owned by Pastora Conegero.
As a resolution, Pastora Conegero surrendered certificate No. 147 and two new certificates were issued: Certificate No. 194 in her name and Certificate No. 195 in her children’s names.
For the purposes of the case, the land described in Certificate No. 194 is considered the same as that covered by the cancelled Certificate No. 147, although it is possible that the exact lots might not be identical.

While still holding the original Certificate No. 147, Pastora Conegero mortgaged the land to El Hogar Filipino to secure a debt, with the incumbrance noted on her duplicate certificate.
On March 30, 1916, Pastora Conegero executed a deed of sale selling the property described in the now-cancelled Certificate No. 147 to Samuel Thomas for P1,637.49.

At the time of the sale, the physical certificate was not produced or delivered, and in fact, no valid title in the form of Certificate No. 147 existed, as it had been cancelled.
The description of the property in the contract was taken from the mortgage executed in favor of El Hogar Filipino.

Shortly thereafter, Samuel Thomas’s attorney presented the deed of sale to the register of deeds in Iloilo for registration.

The register of deeds, Francisco Enage, returned the document with an explanation that registration could not be effected because Certificate No. 147 had been cancelled and replaced by Certificate No. 194.
A memorandum was noted in the register’s entry book on April 18, 1916, indicating that the deed had been presented, although no effective registration took place.

On October 18, 1916, Pastora Conegero executed a mortgage in favor of the Fidelity and Surety Company of the Philippine Islands, using the property (as described in Certificate No. 194) to secure a credit of P2,000.

This mortgage was duly registered on the original Certificate No. 194 on March 29, 1917.

On November 2, 1917, Samuel Thomas filed an action in the Court of First Instance of Iloilo, seeking to compel Pastora Conegero to produce Certificate No. 194 for cancellation and to have a new certificate issued in his name.

Further complicating the matter, on November 9, 1917, Pastora Conegero executed a third mortgage in favor of Southworth and Goyena to secure a note for P500.
On March 22, 1918, the Fidelity and Surety Company initiated an action to foreclose its mortgage, naming Samuel Thomas and Southworth and Goyena as codefendants along with Pastora Conegero.

The trial court found that the property belonged to Samuel Thomas at the time the Fidelity mortgage was registered and only allowed a judgment in personam against Pastora Conegero for P1,982.50.

Section 56 of Act No. 496 requires that each register of deeds keep an entry book with a precise note of the reception time of all documents and permits the instrument to be regarded as registered from the time of its entry.
Section 50 of Act No. 496 mandates that no deed, mortgage, lease, or voluntary instrument shall effect a conveyance of registered land until the act of registration—specifically, the presentation and cancellation of the grantor’s certificate—is accomplished.
The conveyance to Samuel Thomas was challenged on the ground that it did not comply with the vital registration requirements, whereas the mortgage to the Fidelity and Surety Company was executed in strict conformity with legal prerequisites.

Whether the mere annotation of the deed of sale in the register’s entry book on April 18, 1916, constitutes a constructive registration that transfers title to Samuel Thomas.
Whether the memorandum can place Samuel Thomas in a superior position relative to subsequent properly registered incumbrances.

Whether the absence of the physical production and cancellation of the original certificate (Certificate No. 147) undermines the validity of the deed of sale to Samuel Thomas.
Whether the failure to meet the prerequisites to register the transfer under Section 50 and Section 57 of Act No. 496 affects the legal effect of the instrument executed by Pastora Conegero.

Whether the conveyance by deed of sale executed on March 30, 1916, is superior to the mortgage executed on October 18, 1916, in favor of the Fidelity and Surety Company.
The issue of priority, considering that the mortgage to El Hogar Filipino (and that to Southworth and Goyena) have their own order of chronologies and legal effects, but the principal dispute lies between the respective rights of Samuel Thomas and the Fidelity and Surety Company.