Case Digest (G.R. No. L-14303)
Facts:
Rehabilitation Finance Corporation v. Alto Surety & Insurance Company, Inc., G.R. No. L-14303. March 24, 1960, the Supreme Court En Banc, Barrera, J., writing for the Court.The plaintiff-appellant Rehabilitation Finance Corporation (RFC) held a registered first mortgage over land of Eustaquio Palma (T.C.T. No. 12, Register of Deeds of Camarines Sur) to secure a P20,000 loan. With RFC's consent, Palma later executed a second mortgage in favor of Alto Surety & Insurance Company, Inc. (Alto); both mortgages were duly registered and annotated on the title.
Upon Palma's failure to pay at maturity, RFC exercised the power of extrajudicial foreclosure under Act No. 3135, and the provincial sheriff sold the property at public auction on April 17, 1951, RFC becoming purchaser for P11,211.68. On October 15, 1951 Palma assigned his rights to spouses Anacleto and Rosa S. de Trinidad, who assumed the obligation of paying the repurchase price. On December 29, 1951 the Trinidads and RFC executed a "Deed of Resale" by which RFC resold and reconveyed the property to the Trinidads as redemptioners; only P5,500 was paid then, the balance (P21,505.11) to be amortized over ten years.
Alto, as junior encumbrancer, inquired on April 3, 1952 about the redemption status; RFC replied April 9, 1952 that the property had been sold to the Trinidads under a deed of redemption on an installment plan. RFC later (October 2, 1952) executed an affidavit consolidating ownership averring that the redemption period expired April 18, 1952 without exercise of redemption, and on December 16, 1953 RFC registered the affidavit and deed of sale, secured cancellation of Palma's T.C.T. No. 12 and obtained a new certificate (T.C.T. No. 1155) in RFC's name; Alto's second mortgage was nevertheless carried and annotated at the back of the new title.
RFC filed a petition under Section 112 of Act No. 496 (Land Registration Act) in the original registration case (Special Proceeding No. 781 G.L.R.O. Rec. No. 14837) to cancel the annotation of Alto's second mortgage on T.C.T. No. 1155, alleging that the junior lien had ceased upon consolidation and transfer to it as first mortgagee. Alto opposed, asserting that the Deed of Resale was a valid exercise of redemption by the mortgagor's assignees and that the second...(Subscriber-Only)
Issues:
- Under Section 112 of Act No. 496, may a land registration court cancel an annotation (here, a second mortgage) on a certificate of title when an adverse claim or serious objection is asserted by a party in interest?
- Did the extrajudicial foreclosure and subsequent transactions (including the Deed of Resale) extinguish Alto’s junior mortgage or otherwise convert it into a first lien despite Alto not being made a part...(Subscriber-Only)
Ruling:
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Ratio:
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Doctrine:
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