G.R. No. L-27234 May 30, 1969
LEONORA T. ROXAS, plaintiff-appellee, vs. PEDRO DINGLASAN, defendant, FRANCISCA MOJICA and VICTORIA DINGLASAN, intervenors-appellants.

FACTS

Felisa Kalaw was the registered owner of a lot in Lipa City under Certificate of Title No. 9125. In June 1959, she sold an undivided portion to Francisca Mojica via a public instrument and the remaining portion to Victoria Dinglasan via a private instrument. The vendees were in possession of the lot, but the vendor’s duplicate certificate of title was not delivered to them as it was held by a prior mortgagee. Subsequently, Pedro Dinglasan, by falsifying a public document, succeeded in having Kalaw’s title canceled and a new Transfer Certificate of Title No. T-10392 issued in his name. On December 29, 1961, Dinglasan mortgaged the lot to Leonora T. Roxas to secure a P7,000 loan. The mortgage was registered. After Dinglasan defaulted, Roxas filed a foreclosure suit. Dinglasan was declared in default. Francisca Mojica and Victoria Dinglasan moved to intervene, claiming ownership of the lot by virtue of their prior purchases from Kalaw and alleging that Dinglasan’s title was fraudulently obtained. The trial court granted the motion to intervene but, after trial, ruled in favor of Roxas, ordering the foreclosure of the mortgage. The intervenors appealed.

ISSUE

The primary issue is whether the mortgage constituted by Pedro Dinglasan in favor of Leonora T. Roxas is valid and subject to foreclosure, notwithstanding the intervenors’ claim of prior ownership based on unregistered deeds of sale from the original registered owner.

RULING

The Supreme Court affirmed the trial court’s judgment ordering foreclosure. The Court held:
1. The intervenors’ complaint in intervention was appropriate as they had a direct interest in the litigation.
2. However, the intervenors did not acquire ownership of the land because their deeds of sale from Felisa Kalaw were not registered. Under the Torrens System, registration is the operative act that transfers ownership of registered land, not mere tradition or execution of a deed.
3. The mortgage was valid. Although Pedro Dinglasan was not the true owner, having secured title through fraud, Leonora T. Roxas was an innocent mortgagee for value. She had the right to rely on Dinglasan’s transfer certificate of title, which appeared genuine and free from any encumbrance on its face. A mortgagee in good faith is not obligated to look beyond the certificate of title.
4. The intervenors were negligent. Since the vendor did not deliver her duplicate certificate of title to them, they should have protected their rights by filing an adverse claim with the Register of Deeds under Section 110 of Act No. 496 (Land Registration Act). Their failure to do so was the proximate cause of their loss, enabling Dinglasan to obtain a clean title fraudulently.
The judgment was affirmed without prejudice to the intervenors making the deposit required for redemption within ninety days from the finality of the judgment and without prejudice to their bringing an action against Felisa Kalaw for enforcement of the vendor’s warranty against eviction.