G.R. No. 126254 - People vs. Ponce

The case arose from a petition filed by petitioner and appellee Paz Samanilla in a Land Registration Case (No. 210, G.L.R.O. rec. No. N-6010).
Samanilla alleged that on December 20, 1955, respondents Cenen A. Cajucom and Jose A. Cajucom executed a real estate mortgage in her favor to secure a loan of P10,000.00.
The petition asserted that respondents had borrowed the Original Certificate of Title No. 0-966 from Samanilla in February 1956, purportedly for segregating a portion of the property claimed by others.
Upon petitioner’s request for the return of the title so she could register her mortgage, respondents refused to comply.

Attached to the petition were the deed of mortgage and affidavits from both petitioner Samanilla and Antonio G. Javier, who purportedly acted on behalf of the respondents by borrowing the title.
Respondents opposed the petition by contending that the mortgage was void ab initio for want of consideration.
They argued that the issues concerning the validity of the mortgage should be litigated in an ordinary civil action instead of through registration proceedings.

The lower court (Court of First Instance of Nueva Ecija) found the petition well-taken and issued an order on June 12, 1956, directing respondents to surrender the title within ten days either to the Register of Deeds or to the Court for annotation of the mortgage.
Respondents appealed the order, and the case was then forwarded by the Court of Appeals to the Supreme Court on a purely question of law.

Whether the registration of the mortgage should proceed despite the respondents’ contention that it was executed without sufficient consideration.
Whether the legal presumption of sufficient cause or consideration (as provided by Art. 1354 of the New Civil Code and Rule 123, sec. 69 of the Rules of Court) should automatically validate the mortgage in the face of allegations of its invalidity.

Whether respondents could insist on challenging the validity of the mortgage in an ordinary civil action prior to or instead of complying with the registration order.
Whether the registration process, intended to serve as notice to third parties, should be deferred until the validity of the mortgage is determined.

Whether, having been executed in due form with all formalities and a stated consideration, the mortgage must be registered as a binding contract between the parties even if its validity is questioned.