GR L 1739; (February, 1949) (Digest)
G.R. No. L-1739; February 3, 1949
MANUEL LIM and EMILIA QUINTOS DE LIM, petitioners-appellants, vs. THE REGISTER OF DEEDS OF RIZAL, oppositor-appellee.
FACTS
Petitioners mortgaged their land to the Agricultural and Industrial Bank in 1940. They fully paid the obligation on June 5, 1944, and the bank executed a deed of cancellation. This deed, together with the owner’s duplicate certificate of title, was presented for registration on October 3, 1944, in Manila. An entry was made in the Day Book, but the documents were lost or destroyed before the cancellation could be annotated on the title. After the war, petitioners obtained a new deed of cancellation from the Rehabilitation Finance Corporation (RFC), the bank’s successor. This new deed contained an annotation making it “subject to such further disposition as the Government may adopt regarding transactions consummated during the Japanese occupation.” Petitioners demanded the Register of Deeds of Rizal to register the cancellation without this annotation. The Register refused, citing Department of Justice Circular No. 14, which required such annotation. Petitioners filed an action to compel registration without the annotation.
ISSUE
Whether the Register of Deeds can be compelled to register the deed of cancellation of mortgage without the annotation required by Department of Justice Circular No. 14.
RULING
Yes. The Supreme Court ruled in favor of the petitioners. The annotation required by Circular No. 14 constitutes an encumbrance or charge on the property that was not part of the original mortgage agreement or the deed of cancellation executed by the bank. Under the Torrens system ( Act No. 496 ), a registered owner’s title is free from all encumbrances except those noted on the certificate. The Secretary of Justice’s power to issue circulars under the Administrative Code is limited to those “not contrary to law.” Since the annotation imposes a new condition not based on any law and not agreed upon by the parties, Circular No. 14, insofar as it requires such annotation, is contrary to law and beyond the Secretary’s authority. The Register of Deeds, therefore, has no legal duty to insert the annotation and must register the deed of cancellation as originally executed by the parties.
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