2. Involuntary Dealings

System of Registration for Unregistered Lands

Before, the system for recording instruments affecting unregistered land under Act No. 3344 only covered voluntary dealings. Now, it includes involuntary dealings.

Effect: If prospective, it binds 3rd persons after registration but yields to better rights of 3rd person prior to registration (limited effect to 3rd parties)

It thus appears that the “better right” referred to in Act No. 3344 is much more than the mere prior deed of sale in favor of the first vendee. In the Lichauco case, it was the prescriptive right that had supervened. Or, as also suggested in that case, other facts and circumstances exist which, in addition to his deed of sale, the first vendee can be said to have better right than the second purchaser. (Hanopol v. Pilapil, G.R. No. L-19248, Feb. 28, 1963)

Reason: No strict investigation involved

Subsequent dealings are also valid if recorded. ROD keeps a daybook and a register, and an index system is also kept.

Rule on Carry-Over of Encumbrances

Mortgage lien is a right in rem which follows the property. If, at the time of any transfer, subsisting encumbrances or annotations appear in the registration book, they shall be carried over and stated in the new certificate or certificates; except so far as they may be simultaneously released or discharged. (Sec. 59, P.D. 1529)

It is inseparable from the property mortgaged as it is a right in rem — a lien on the property whoever its owner may be. It subsists notwithstanding a change in ownership; in short, the personality of the owner is disregarded. (Ligon v. CA, GR No. 107751, 01 June 1995)

Q: If the property that was the subject of mortgage was subsequently foreclosed, must a new certificate of title be automatically issued in favor of the purchaser?

A: The answer must be qualified.

• No Right of Redemption – The certificate of title of the mortgagor shall be canceled, and a new certificate issued in the name of the purchaser; and
• There is Right of Redemption – The certificate of title of the mortgagor shall NOT be cancelled, but the certificate of sale and the order confirming the sale shall be registered by a brief memorandum thereof made by the Register of Deeds upon the certificate of title.

In the event the property is redeemed, the certificate or deed of redemption shall be filed with the Register of Deeds, and a brief memorandum thereof shall be made by the Register of Deeds on the certificate of title of the mortgagor.

If the property is not redeemed, the final deed of sale executed by the sheriff in favor of the purchaser at a foreclosure sale shall be registered with the Register of Deeds; whereupon the title of the mortgagor shall be canceled, and a new certificate issued in the name of the purchaser. (Sec. 63, P.D. 1529)

Q: Does non-registration of property after judicial foreclosure and sale have the effect of invalidating the foreclosure proceedings, such that ownership reverts to the original owner?

A: NO. The effect of the failure to obtain the judicial confirmation was only to prevent the title to the property from being transferred. For sure, such failure did not give rise to any right in favor of the mortgagor or the respondents as his successors-in- interest to take back the property already validly sold through public auction. Nor did such failure invalidate the foreclosure proceedings. To maintain otherwise would render nugatory the judicial foreclosure and foreclosure sale, thus unduly disturbing judicial stability. After all, under the applicable rule earlier cited, the judicial confirmation operated only “to divest the rights of all the parties to the action and to vest their rights in the purchaser, subject to such rights of redemption as may be allowed by law.” (Robles v. Yapcinco et al., G.R. No. 169569 169568, 22 Oct. 2014)

Involuntary Dealings – P.D. No. 1529, secs. 69, 74 and 76

SEC. 69. Attachments.—An attachment, or a copy of any writ, order or process issued by a court of record, intended to create or preserve any lien, status, right, or attachment upon registered land, shall be filed and registered in the Registry of Deeds for the province or city in which the land lies, and, in addition to the particulars required in such papers for registration, shall contain a reference to the number of the certificate of title to be affected and the registered owner or owners thereof, and also if the attachment, order, process or lien is not claimed on all the land in any certificate of title a description sufficiently accurate for identification of the land or interest intended to be affected. A restraining order, injunction or mandamus issued by the court shall be entered and registered on the certificate of title affected, free of charge.

SEC. 74. Enforcement of liens on registered land.—Whenever registered land is sold on execution, or taken or sold for taxes or for any assessment or to enforce a lien of any character, or for any costs and charges incident to such liens, any execution or copy of execution, any officer's return, or any deed, demand, certificate, or affidavit, or other instrument made in the course of the proceedings to enforce such liens and required by law to be recorded, shall be filed with the Register of Deeds of the province or city where the land lies and registered in the registration book, and a memorandum made upon the proper certificate of title in each case as lien or encumbrance.

SEC. 76. Notice of lis pendens.—No action to recover possession of real estate, or to quiet title thereto, or to remove clouds upon the title thereof, or for partition, or other proceedings of any kind in court directly affecting the title to land or the use or occupation thereof or the buildings thereon, and no judgment, and no proceeding to vacate or reverse any judgment, shall have any effect upon registered land as against persons other than the parties thereto, unless a memorandum or notice stating the institution of such action or proceeding and the court wherein the same is pending, as well as the date of the institution thereof, together with a reference to the number of the certificate of title, and an adequate description of the land affected and the registered owner thereof, shall have been filed and registered.

Necessity of Registration of Involuntary Dealings

Registration is required for involuntary dealings to affect registered land as against third persons. Registration is likewise the operative act by which voluntary instruments affect registered land as to third persons, although an unregistered voluntary instrument may bind the parties. Registration gives constructive notice and makes the involuntary lien, writ, or proceeding effective against third persons as provided by law; it does not, by itself, convey ownership. (Saberon v. Ventanilla, Jr. G.R. No. 192669, 21 Apr. 2014)