Samanilla vs Cajucom et.al. (CREDIT TRANSACTIONS- mortgage)

 

Paz Samanilla vs. Cenen A. Cajucom, et al., 

G.R. No. L-13683, March 28, 1960 

(107  Phil 432)

 

Facts: 

The Cajucoms had executed in Samanilla’s favor, on December 20, 1955, a real estate mortgage over their rights and participation on the parcel of land covered by Original Certificate of Title No. O-966 to secure a loan of P10,000. Sometime in February, 1956, the Cajucoms borrowed the title from her on the excuse that  they needed it to segregate from the land the portion claimed by other persons. Thereafter, Samanilla asked for the return of the title so that she could register her mortgage, but the Cajucoms refused.

Samanilla filed a petition against the Cajucoms. They opposed the petition, claiming that the mortgage in question was void ab initio for want of consideration, and that the issues should be litigated in an ordinary civil action. The court found the petition well-taken and ordered the Cajucoms to surrender their title  either  to  the Register of Deeds or to the Court. From this order, the Cajucoms appealed.

 

Issue: 

Whether a mortgage which has not been registered is valid.

 

Held: 

Yes. Affirmed.

 

Ratio: 

The appeal has no merit. Appellants' sole objection to the registration of the deed of mortgage is that the same was executed without any consideration. But there is a legal presumption of sufficient cause or consideration supporting a contract, even if such cause is not stated therein. This presumption appellants cannot overcome by a simple assertion of lack of consideration. Especially may not the presumption be so lightly set aside when the contract itself states that consideration was given, and the same has been reduced into a public instrument with all due formalities and solemnities as in this case. Appellants assert that they cannot be compelled  to surrender their title for registration of the mortgage in question until they are given an opportunity to show its invalidity in an ordinary civil action, because registration is an essential element of a real estate mortgage and the surrender of their title would complete this  requirement of registration. The argument is fallacious, for a mortgage, whether registered or not, is binding between the parties, registration being necessary  only  to  make  the  same valid against third persons (Art. 2125, New Civil Code). In other words, registration only operates as a notice of the mortgage to others, but neither adds to its validity nor convert an invalid mortgage into a valid one between the parties. Appellants still have the right to show that the mortgage in question is invalid for lack  of  consideration in an ordinary action and there ask for the  avoidance of the deed and the cancellation of its registration. But until such action is filed and decided, it would be too dangerous to the rights of the mortgagee to deny registration of her mortgage, because her rights can so easily be defeated by  a transfer or conveyance of the mortgaged property to an innocent third person.

If the purpose of registration is merely to give notice, the questions regarding the effect or invalidity of instruments are expected  to  be  decided  after,  not  before, registration. It must follow as a necessary consequence that registration must first be allowed and validity or effect litigated afterwards.