Agricultural Credit Cooperative Association of Hinigaran vs. Estanislao Yulo Yusay

Registration of a mortgage or lease is a mere ministerial act; it is not a declaration by the State that the instrument is a valid and subsisting interest in land, but merely a declaration that the record of title appears to be burdened with the encumbrance described. A registration court has no jurisdiction to pass upon the validity or effect of the mortgage — those questions must be resolved in an ordinary action.

Rafaela Yulo was a part owner of Lot No. 855 of the Cadastral Survey of Pontevedra, covered by Original Certificate of Title No. 4979, along with Estanislao Yusay and Margarita, Maria, Elena, and Pilar, all surnamed Yulo. The Agricultural Credit Cooperative Association of Hinigaran was a creditor to whom Rafaela Yulo had executed a mortgage securing a debt of ₱33,626.29 — an amount she assumed to pay on behalf of herself, her mother, sisters, brothers, and others. The property was held under a single common certificate of title, so any annotation of encumbrance necessarily affected the face of the certificate shared by all co-owners.

On July 20, 1952, Rafaela Yulo executed in favor of the Agricultural Credit Cooperative Association of Hinigaran a mortgage for ₱33,626.29, an amount due from her, her mother, sisters, brothers, and others, which she assumed to pay. The mortgage covered Lot No. 855 of the Pontevedra Cadastre, held under Original Certificate of Title No. 4979. Rafaela was a part owner of the lot, a fact not disputed by the other co-owners — Estanislao Yusay, and Margarita, Maria, Elena, and Pilar, all surnamed Yulo.

The movant filed a motion before the Court of First Instance of Negros Occidental demanding the surrender of the owner's duplicate certificate of title so that the mortgage could be annotated at the back of the certificate. Estanislao Yusay opposed the petition, asserting that he was owner of a part of the property and had not participated in the mortgage; that annotation would prejudice his rights; that Rafaela Yulo was already dead; that the motion was not verified; and that movant's rights had lapsed by prescription. He further argued that his opposition raised a controversial matter beyond the jurisdiction of the court to resolve. Margarita, Maria, Elena, and Pilar Yulo joined Yusay's opposition, raising the same objections.

The existence of the mortgage was not disputed, nor was Rafaela Yulo's status as a part owner of the lot. The oppositors' principal objection was that, as co-owners, the annotation of the mortgage on the common title would affect their rights. On appeal, counsel for the appellants additionally argued that the mortgage was not recorded before the closing of the intestate proceedings of the deceased mortgagor, but only four months after the termination of those proceedings, reducing the claim to a mere money claim rather than a mortgage — hence the mortgage could not be registered.

The trial court found that even if the ownership of the deceased Rafaela Yulo and the validity of the mortgage were disputed, such invalidity was no proof of the non-existence of the mortgage and no ground for objecting to its registration. The court ordered the registration and annotation of the mortgage without passing upon its validity or effect.

• Ministerial Nature of Registration: The movant sought registration and annotation of the mortgage on the certificate of title, the mortgage being admittedly an act of the registered owner, Rafaela Yulo.

• Non-Participation in the Mortgage: Oppositors argued that as part owners of the property, they had not participated in the mortgage and that annotation on the common title would prejudice their rights.
• Death of the Mortgagor: Oppositors contended that Rafaela Yulo was already dead.
• Defective Motion: Oppositors asserted that the motion was not verified.
• Prescription: Oppositors claimed that movant's rights had lapsed by prescription.
• Lack of Jurisdiction over Controversial Matter: Oppositors argued that the opposition raised a controversial matter which the court had no jurisdiction to pass upon.
• Late Recording Reducing Claim to Money Claim: On appeal, appellants argued that the mortgage was not recorded before the closing of the intestate proceedings of the deceased mortgagor but only four months after their termination, reducing the claim to a mere money claim rather than a mortgage, so that the mortgage could not be registered.

• Nature of Registration: Whether registration of a mortgage is a ministerial act that does not adjudicate the validity or effect of the instrument, such that a registration court lacks jurisdiction to pass upon questions of validity or prejudicial effect on non-consenting co-owners.
• Effect of Late Recording: Whether the failure to record the mortgage before the closing of the intestate proceedings of the deceased mortgagor reduces the claim to a mere money claim, precluding registration of the mortgage.

• Nature of Registration: Yes. Registration is a mere ministerial act; it is not a declaration that the mortgage is a valid and subsisting interest in land, but merely that the record of title appears to be burdened with the encumbrance described. A registration court cannot pass upon the validity or effect of the mortgage.
• Effect of Late Recording: No. The belated recording of the mortgage after the termination of intestate proceedings does not preclude its registration, because registration does not determine the mortgage's validity or its character as a subsisting interest — those questions belong to an ordinary action.

• Nature of Registration: The proceeding to register the mortgage does not purport to determine the supposed invalidity of the mortgage or its effect. Registration is a mere ministerial act by which a deed, contract, or instrument is inscribed in the records of the Office of the Register of Deeds and annotated at the back of the certificate of title covering the land subject of the deed. The registration of a mortgage is not a declaration by the State that the instrument is a valid and subsisting interest in land; it is merely a declaration that the record of the title appears to be burdened with the mortgage described, according to the priority set forth in the certificate. The mere fact that a mortgage was registered does not stop any party from setting up that it has no force or effect. Because the mortgage is admittedly an act of the registered owner, all that the registration court could do was order its registration and annotation. By that order, the court did not pass upon the effect or validity of the mortgage — those can only be determined in an ordinary case before the courts, not before a court acting merely as a registration court. The lower court's reliance on Register of Deeds of Manila vs. Maxima Tinoco Vda. de Cruz was correct: the invalidity of a mortgage is no proof of its non-existence and no ground for objecting to its registration.

• Effect of Late Recording: The appellants' argument that late recording after the close of intestate proceedings reduced the claim to a mere money claim was rejected. The Court did not directly address the intestate proceedings argument on its merits, because the dispositive question was not whether the mortgage remained a valid security but whether it could be registered. Since registration is ministerial and does not adjudicate validity, the timing of recording relative to intestate proceedings does not bar the annotation itself. Any reduction of the claim to a money claim — or any other question about the mortgage's enforceability — is a matter for an ordinary action, not a registration proceeding.

• Ministerial Nature of Registration — Registration of a deed, contract, or instrument is a mere ministerial act by which the instrument is inscribed in the records of the Register of Deeds and annotated at the back of the certificate of title. It is not a declaration by the State that the instrument is a valid and subsisting interest in land, but merely a declaration that the record of title appears to be burdened with the encumbrance described, according to the priority set forth in the certificate. The mere fact of registration does not prevent any party from later asserting that the instrument has no force or effect. Applied in this case to affirm that a registration court may order annotation of a mortgage without adjudicating its validity or its prejudicial effect on non-consenting co-owners.

• Limited Jurisdiction of Registration Court — A court acting as a registration court has no jurisdiction to pass upon the validity or effect of a mortgage or other encumbrance presented for registration; such questions can only be determined in an ordinary action. Applied here to reject the oppositors' contention that the controversial nature of the opposition deprived the court of jurisdiction — the court's jurisdiction was confined to ordering the ministerial act of registration, not to resolving the dispute over the mortgage's validity.

• "Registration is a mere ministerial act by which a deed, contract or instrument is sought to be inscribed in the records of the Office of the Register of Deeds and annotated at the back of the certificate of title covering the land subject of the deed, contract or instrument." — This passage defines the essential character of registration under the Torrens system and forms the ratio decidendi for why a registration court cannot adjudicate the validity of the instrument presented.

• "The registration of a lease or mortgage, or the entry of a memorial of a lease or mortgage on the register, is not a declaration by the state that such an instrument is a valid and subsisting interest in land; it is merely a declaration that the record of the title appears to be burdened with the lease or mortgage described, according to the priority set forth in the certificate." — Quoted from Niblack (as cited in Francisco's Land Registration Act), this is the canonical formulation distinguishing registration from validation, and is the most frequently cited proposition from this decision.

• "By said order the court did not pass upon the effect or validity of the mortgage — these can only be determined in an ordinary case before the courts, not before a court acting merely as a registration court, which did not have the jurisdiction to pass upon the alleged effect or validity." — This passage delineates the boundary between a registration court's ministerial function and the adjudicatory function of a court in an ordinary action, confirming that questions of validity and prejudicial effect must be litigated separately.

• Register of Deeds of Manila vs. Maxima Tinoco Vda. de Cruz, et al., 95 Phil. 818; 53 Off. Gaz. 2804 — Followed. Cited by the trial court and affirmed on appeal for the proposition that the invalidity of a mortgage is no proof of its non-existence and no ground for objecting to its registration.

• Niblack on Land Registration (as quoted in Francisco, Land Registration Act, 1950 ed., p. 348) — Cited as persuasive authority for the principle that registration of a lease or mortgage is not a declaration of validity but merely a record of the apparent burden on the title. While not a statutory provision, the Court treated this treatise passage as the authoritative formulation of the doctrine.

Paras, C.J., Bengzon, Padilla, Montemayor, Bautista Angelo, Concepcion, Endencia, and Gutierrez David, JJ., concurred.