G.R. No. 26640, December 16, 1927
ELEUTERIO L. SANTOS, plaintiff-appellee, vs. MARIA MACAPINLAC, judicial administratrix of the estate of the deceased Fulgencio Jaime, and EMILIO PINLAC, defendants-appellants.

FACTS

On May 30, 1920, Fulgencio Jaime executed a document (Exhibit A) acknowledging a debt of P30,000 to Eleuterio L. Santos, payable in three installments in 1921, 1922, and 1923. To secure the debt, Jaime mortgaged two parcels of his land, and the mortgage was duly registered. Subsequently, Santos authorized Jaime to mortgage the same properties to another person (Exhibit 1). Jaime, in turn, authorized Felix Balingit to mortgage the properties (Exhibit 2). However, on March 26, 1921, Balingit sold the lands to Emilio Pinlac under a pacto de retro for P15,500. Upon Jaime’s death, Santos filed a complaint against Maria Macapinlac (as administratrix of Jaime’s estate) to recover P30,000, and against Pinlac (as possessor of the mortgaged land). The trial court ruled in favor of Santos, ordering Macapinlac to pay the debt with interest and, in default, for the mortgaged property to be sold. The defendants appealed.

ISSUE

1. Whether the authorization given by Santos to Jaime to mortgage the property to another person extinguished the original mortgage debt.
2. Whether Emilio Pinlac’s acquisition of the property made him the sole owner, free from Santos’s mortgage lien.
3. Whether the complaint’s prayer for relief sufficiently included a demand for foreclosure of the mortgage.
4. Whether Santos should reimburse Pinlac for the purchase price paid to Balingit.

RULING

The Supreme Court AFFIRMED the trial court’s decision.

1. On the extinction of the debt and mortgage: The authorization given by Santos to Jaime to mortgage the property to another did not cancel the original mortgage or extinguish the debt. The Court held that such authorization was unnecessary, as the law already allows a subsequent mortgage of the same property, subject to the prior encumbrance. The failure to cancel the registration of the first mortgage further indicated no intent to extinguish it. The debt subsists independently of the mortgage.

2. On Pinlac’s ownership claim: Pinlac could not be considered the sole owner free from the mortgage lien. Balingit, who sold the property to Pinlac, had no authority to sellhis authority was limited to mortgaging it. Even assuming Jaime authorized the sale, Pinlac’s acquired rights would remain subject to Santos’s prior registered mortgage. The mortgage follows the property regardless of transfer.

3. On the sufficiency of the complaint’s prayer: Although the complaint did not explicitly pray for foreclosure, the Court held that the action was clearly one for the collection of a mortgage debt. The allegations, taken together, sufficiently implied a demand for foreclosure, justifying the order for the sale of the property upon non-payment.

4. On reimbursement to Pinlac: Santos has no obligation to reimburse Pinlac for the P15,500 paid to Balingit. Santos was not the seller nor the recipient of the payment. Pinlac’s recourse, if any, is against Balingit or the estate of Jaime, not against Santos, whose mortgage right prevails.

DOCTRINE:
A prior registered mortgage lien is not extinguished by a mere authorization from the mortgagee to the mortgagor to mortgage the same property to another person. Such an authorization is superfluous as the law already permits subsequent mortgages, and the failure to cancel the registration of the first mortgage negates any intent to discharge it. Furthermore, a prior mortgagee’s right follows the mortgaged property and is enforceable against subsequent transferees, regardless of any lack of authority in the chain of transfer, provided the mortgage is duly registered. The mortgagee is not liable to reimburse a subsequent purchaser for the price paid to an unauthorized seller.