GR 86679; (July, 1991) (Digest)
G.R. No. 86679 ; July 23, 1991
PHILIPPINE NATIONAL BANK, petitioner, vs. INTERNATIONAL CORPORATE BANK and COURT OF APPEALS, respondents.
FACTS
Petitioner Philippine National Bank (PNB) filed a petition under Section 108 of Presidential Decree No. 1529 with the Regional Trial Court of Alaminos, Pangasinan, acting as a land registration court, seeking the cancellation of a notice of levy annotated on its sixteen transfer certificates of title. The levy was in favor of Continental Bank (predecessor of respondent International Corporate Bank) and arose from a judgment in a civil case against the original owners, the Balingit spouses. PNB had earlier acquired the properties through extrajudicial foreclosure of real estate mortgages executed by the spouses. After consolidation of ownership, new titles were issued in PNB’s name, but the Register of Deeds carried over the annotation of the notice of levy.
Private respondent Interbank opposed the petition, contending that the extrajudicial foreclosure was null and void due to lack of notice to it, thereby rendering PNB’s consolidated titles invalid. The trial court, citing jurisprudence that a land registration court cannot act on controversial issues, dismissed the petition for lack of jurisdiction, ruling that the adverse claim rendered the matter contentious and must be threshed out in an ordinary action. The Court of Appeals affirmed this decision.
ISSUE
Whether the trial court, acting as a land registration court, has jurisdiction to order the cancellation of the notice of levy on PNB’s titles, or whether the controversy necessitates an ordinary action.
RULING
The Supreme Court reversed the Court of Appeals and ordered the cancellation of the levy annotations. The Court clarified that under Section 2 of P.D. No. 1529, regional trial courts have exclusive jurisdiction over all applications for original registration and petitions filed after original registration, including petitions for cancellation of encumbrances under Section 108. Crucially, the court exercises this jurisdiction not as a land registration court with limited authority, but as a court of general jurisdiction. Therefore, it can hear and adjudicate all matters, even contentious and disputed issues, arising from such petitions.
On the merits, the Court held that PNB, as the purchaser at the extrajudicial foreclosure sale, acquired the properties free from all liens and encumbrances, including the notice of levy in favor of Interbank. The foreclosure extinguished the mortgage and all subordinate liens. Interbank’s claim of lack of personal notice was untenable, as the statutory requirement under Act No. 3135 is satisfied by posting and publication, which PNB complied with. Furthermore, the judgment levy had become ineffective, as it had not been enforced by execution sale within the ten-year prescriptive period. Thus, the continued annotation on PNB’s titles was improper and should be cancelled.