GR L 6080; (October, 1910) (Digest)
G.R. No. L-6080, MARCELO SUSARA, plaintiff-appellant, vs. MARIANO MARTINEZ, defendant-appellee., October 18, 1910
FACTS:
On March 30, 1906, Marcelo Susara (plaintiff-appellant) entered into a loan and acknowledgment of debt contract with Vicente Ilustre, guardian of Francisco Martinez (who was declared incapacitated), for the sum of P4,125. The debt was secured by Martinez’s property located at Nos. 93, 95, and 97 Calle Sevilla, Manila. This contract was embodied in a public instrument and was approved by the court on April 3, 1906. The P4,125 comprised P2,000 newly advanced by Susara and P2,125 from an existing credit based on an earlier promissory note from Martinez to Susara. The loan had a term of three years, expiring on March 30, 1909.
Francisco Martinez died on January 21, 1909, and Mariano Martinez (defendant-appellee) was appointed administrator of his intestate estate. Upon the maturity of the loan, Susara filed a complaint on October 28, 1909, seeking payment of the principal, interest, and damages, totaling P4,494.50. He further prayed that, in case of insolvency, the mortgaged property be sold at public auction.
Crucially, the mortgage instrument was not registered in the registry of property. The defendant argued that the matter was a claim against a deceased person’s estate and should have been presented to commissioners of appraisal, not pursued as a mortgage action. The Court of First Instance dismissed the complaint, holding that no valid mortgage credit legally existed due to the lack of registration, and thus no mortgage action could be maintained.
ISSUE:
Is the registration of a mortgage instrument in the registry of property an indispensable requisite for the valid constitution of a mortgage and the subsequent prosecution of a mortgage action?
RULING:
Yes. The Supreme Court affirmed the judgment of the Court of First Instance, dismissing the complaint.
The Court held that, in accordance with Article 1875 of the Civil Code, it is an indispensable requisite for a mortgage to be validly constituted that the instrument by which it is created be entered in the registry of property. Since the instrument creating the mortgage upon the property in question was not registered, the mortgage was not validly constituted under the law.
Consequently, Marcelo Susara could not legally prosecute a mortgage action. The proper course of action for the creditor, in this case, would have been to present his claim to the commissioners of appraisal appointed for the deceased’s estate, as provided by the Code of Civil Procedure. The Supreme Court therefore affirmed the dismissal of the complaint, with costs against the appellant.