G.R. No. 89620. July 13, 1990.
PRUDENCIO S. PENTICOSTES, SR. and PRUDENCIO S. PENTICOSTES, JR., petitioners, vs. DEVELOPMENT BANK OF THE PHILIPPINES, SPOUSES ALEXANDER DE GUZMAN AND NATIVIDAD MABALOT AND REGISTER OF DEEDS OF TARLAC, respondents.

FACTS

Respondents-spouses Alexander de Guzman and Natividad Mabalot obtained a mortgage loan from the Development Bank of the Philippines (DBP), using two Transfer Certificates of Title (TCTs) as collateral. Subsequently, the spouses leased one lot to petitioner Prudencio S. Penticostes, Sr. and sold the other lot to petitioner Prudencio Penticostes, Jr. After the enactment of the Comprehensive Agrarian Reform Law (R.A. No. 6657 or CARP Law), which required the registration of transactions involving agricultural lands within three months for validity, petitioners sought to register their lease and sale deeds with the Register of Deeds of Tarlac.
The Register of Deeds refused the annotation, citing the requirement under the Property Registration Decree (P.D. No. 1529) that the owner’s duplicate certificates of title must be presented. Petitioners then requested DBP, which held the duplicate titles as mortgagee, to surrender them. DBP refused because the mortgage obligation remained unpaid. Petitioners expressed willingness to assume the loan but did not actually pay or assume it. Consequently, petitioners filed a complaint in the Regional Trial Court to compel the surrender of the titles for registration.

ISSUE

Whether a mortgagee bank (DBP) can be compelled to surrender the owner’s duplicate certificates of title to the petitioners for the registration of their deeds of sale and lease under the CARP Law, despite the mortgagor’s unpaid loan obligation.

RULING

No, the mortgagee bank cannot be compelled to surrender the titles. The Supreme Court affirmed the trial court’s dismissal of the complaint. The legal logic is anchored on the hierarchy of rights and specific statutory requirements. Under Section 6 of R.A. No. 6657, the registration of deeds within the prescribed period is necessary to prevent nullity. However, such registration must comply with the foundational requirements of the property registration system.
Specifically, Section 53 of P.D. No. 1529 mandates the presentation of the owner’s duplicate certificate of title for the entry of any voluntary instrument. DBP, as the mortgagee in possession of the duplicates, holds a prior and superior lien over the properties. The petitioners’ right to seek registration under the CARP Law does not supersede or extinguish DBP’s vested contractual and security rights as a creditor. The Court emphasized that the law does not require compliance under impossible conditions, nor does it authorize the disturbance of a mortgagee’s rights to accommodate a subsequent transaction.
Since the mortgage debt was unpaid and petitioners did not actually satisfy the obligation, DBP’s refusal was legally justified. Petitioners’ remedy was not a suit to compel surrender but to pay the loan or seek registration through other lawful means, such as the notice of lis pendens one petitioner had already utilized. Therefore, the Register of Deeds correctly refused registration without the duplicate titles, and the petitioners had no cause of action to compel DBP to release them.