Esperanza v. Buhat vs. Rosario Besana, etc.

Registration of a real estate mortgage does not render the mortgage lien or the action to foreclose it imprescriptible; Section 46 of the Land Registration Act protects the registered owner’s title against prescription or adverse possession, not a registered encumbrance or the right of action to enforce it.

Jose M. Besana and Rosario Besana were siblings and co-owners of lot No. 1406 of the cadastral survey of Panay in undivided equal shares. Section 46 of the Land Registration Act No. 496 provides that no title to registered land in derogation to that of the registered owner shall be acquired by prescription or adverse possession.

On May 31, 1924, Jose M. Besana mortgaged his undivided one-half share in lot No. 1406 of the cadastral survey of Panay in favor of Luis Bernales to secure an indebtedness of P900, payable within six years from that date. On October 27, 1926, original certificate of title No. RO-1364 (10255) was issued in the name of Jose M. Besana and Rosario Besana, brother and sister, covering lot No. 1406 in undivided equal shares, and the mortgage in favor of Luis Bernales was noted on that certificate.

Jose M. Besana died, and his portion passed to his surviving sister, Rosario Besana. Luis Bernales also died, and his mortgage credit against Jose M. Besana was inherited by Antonio Bernales, who in turn transferred it to the plaintiffs, Esperanza V. Buhat and Mauro A. Buhat. Rosario Besana sold her portion to Manuel B. Bernales, who, on June 30, 1950, conveyed it to the plaintiffs.

The indebtedness remained unpaid. On December 6, 1952, the plaintiffs instituted an action in the Court of First Instance of Capiz against Rosario Besana and her husband Lorenzo Contreras for the foreclosure of the mortgage of May 31, 1924. The defendants Rosario Besana and Lorenzo Contreras filed a motion to dismiss the complaint on the ground that the plaintiffs’ cause of action had prescribed, the complaint having been filed more than ten years from May 31, 1930, in fact some 22 years after the obligation had become due and demandable.

On May 6, 1953, the Court of First Instance of Capiz issued an order dismissing the case without costs, on the ground that the plaintiffs’ cause of action had prescribed. The plaintiffs appealed.

• Prescription of Foreclosure Action: Appellants contended that, because the mortgage was registered, the action to foreclose did not prescribe. They invoked Section 46 of the Land Registration Act No. 496, which provides that no title to registered land in derogation to that of the registered owner shall be acquired by prescription or adverse possession.

• Prescription: Defendants moved to dismiss the complaint on the ground that the plaintiffs’ cause of action had prescribed, the complaint having been filed more than ten years from May 31, 1930, some 22 years after the obligation became due and demandable.

• Prescription: Whether the action to foreclose the mortgage had prescribed when filed on December 6, 1952, more than ten years after May 31, 1930.
• Effect of Registration: Whether Section 46 of the Land Registration Act No. 496 rendered the registered mortgage and the action to foreclose it imprescriptible.

• Prescription: Yes. The action had prescribed; the complaint was filed more than ten years from May 31, 1930, and the dismissal was affirmed.
• Effect of Registration: No. Section 46 protects the registered owner’s title against prescription or adverse possession; it does not make a registered mortgage lien or the right of action to enforce it imprescriptible. Registration of a mortgage binds third parties.

• Prescription: The mortgage secured an indebtedness payable within six years from May 31, 1924. The complaint for foreclosure was filed only on December 6, 1952, more than ten years from May 31, 1930, and some 22 years after the obligation became due and demandable. The Court of First Instance dismissed the case on that ground, and the Supreme Court affirmed.
• Effect of Registration: Appellants argued that registration made the foreclosure action imprescriptible under Section 46 of Act No. 496. The Court rejected the argument. The provision speaks of the title of the “registered owner” and refers to prescription or adverse possession as a mode of acquiring ownership. Its philosophy is merely to make a Torrens title indefeasible and, without more, does not cause a registered lien or encumbrance such as a mortgage — and the right of action to enforce it — to be imprescriptible as against the registered owner. The important effect of registering a mortgage is to bind third parties. Thus, registration did not prevent prescription of the foreclosure action.

• Registration of a mortgage does not make the foreclosure action imprescriptible — Under the Torrens system, the registration of a real estate mortgage does not render the mortgage lien or the action to foreclose it imprescriptible. Section 46 of the Land Registration Act No. 496 protects the registered owner’s title from prescription or adverse possession; it does not protect a registered encumbrance or the right of action to enforce it. The Court applied this by affirming the dismissal of a foreclosure suit filed more than ten years after the obligation matured, notwithstanding that the mortgage was annotated on the certificate of title.
• Torrens title indefeasibility — Section 46 of the Land Registration Act No. 496 makes a Torrens title indefeasible against prescription or adverse possession. The provision’s purpose is to protect the registered owner’s title, not to make every registered lien or encumbrance imprescriptible. Registration of a mortgage, in particular, binds third parties but does not indefinitely preserve the mortgagee’s right of action against the registered owner.
• Prescription of mortgage foreclosure — An action to foreclose a mortgage may prescribe. The Court affirmed the dismissal of the foreclosure complaint because it was filed more than ten years from May 31, 1930, when the obligation became due and demandable, and some 22 years after maturity. Registration of the mortgage did not toll or remove the prescriptive period.

• "No title to registered land in derogation to that of the registered owner shall be acquired by prescription or adverse possession." — This is the text of Section 46 of the Land Registration Act No. 496 as invoked by appellants; the Court construed it as protecting the registered owner’s title, not as making a registered mortgage or the foreclosure action imprescriptible.
• "The citation speaks of the title of the "registered owner" and refers to prescription or adverse possession as a mode of acquiring ownership, the whole philosophy of the law being merely to make a Torrens title indefeasible and, without more, surely not to cause a registered lien or encumbrance such as a mortgage — and the right of action to enforce it — imprescriptible as against the registered owner." — This passage states the ratio decidendi: Section 46 does not exempt a registered mortgage or the action to enforce it from prescription.
• "The important effect of the registration of a mortgage is obviously to bind third parties." — This passage clarifies the limited effect of mortgage registration, which the Court used to reject the claim that registration made the foreclosure action imprescriptible.

• Section 46, Land Registration Act No. 496 — Provides that no title to registered land in derogation to that of the registered owner shall be acquired by prescription or adverse possession. Appellants invoked it to argue that the registered mortgage and the action to foreclose it were imprescriptible. The Court held that the provision protects the registered owner’s title and does not make a registered mortgage lien or the right of action to enforce it imprescriptible; registration of a mortgage binds third parties.

Pablo, Bengzon, Padilla, Montemayor, Reyes, A., Jugo, Bautista Angelo, Labrador, Concepcion, and Reyes, J.B.L., JJ., concur.