G.R. No. L-1438. August 11, 1949
SOCORRO C. VDA. DE ARANETA, PETITIONER AND APPELLEE, VS. REHABILITATION FINANCE CORPORATION, OPPOSITOR AND APPELLANT.
BENGZON, J.:
deceased Ramon S. Araneta requested the Court of First Instance of Occidental
Negros to order the register of deeds of said province to cancel the mortgage
and incidental assignment of sugar annotated on the back of transfer Certificate
of Title No. 31593 in the name of Ramon S. Araneta. She alleged in substance
that said annotation had been made in March 1940 when said property was
mortgaged to the Agricultural and Industrial Bank as security for the payment of
a loan in the principal sum of P125,000; that said loan has been fully
discharged in August 1944, as shown by the supporting papers; and that the
corresponding deed of cancellation which had been executed could not be
presented to the court because it was lost in the office of the deceased in
Manila during the liberation.
The Agricultural and Industrial Bank replied that the
indebtedness had been paid in Japanese military notes on the date mentioned. It
prayed, however, that the cancellation be made subject to the provisions of
paragraph 1 of Circular No. 14, dated August 25, 1945 of the’Secretary of
Justice, which reads as follows:
“1. Deeds, documents and other papers executed and/or
acknowledged during the Japanese occupation, and filed for registration during
or after said occupation, may be registered, if found to comply with the
formalities prescribed in the existing laws and regulations; but, as a
precautionary measure, the certificates to be issued and or the memoranda to be
made on the proper certificates of title, in pursuance of such deeds, documents
or papers, shall bear an annotation to the effect that the transaction involved
is subject to such further dispositions as may be made by the Commonwealth
Government with respect thereto.”
The Honorable Buenaventura Cordova, Judge, ordered the
cancellation of the mortgage annotation without subjecting the cancellation to
the provisions of the aforesaid circular. The Rehabilitation Finance Corporation
as successor to the Agricultural and Industrial Bank, after submitting a
petition for reconsideration which was denied, appealed to this Court. It
insists that the cancellation should be made “subject to such further
disposition as may be made by the Commonwealth Government with respect” to
transactions made during the Japanese occupation in compliance with the
aforesaid departmental circular.
In Lim v. Register of Deeds, G. R. No. L-1739, February 3,
1949,[1] we passed upon a similar
situation. We upheld the intention that cancellation of mortgages paid during
the Japanese occupation need not be subject to the conditions stated in the
circular herein mentioned. We said:
“There is no doubt that the above-quoted annotation in the deed
of cancellation of the mortgage would be an incumbrance on the title or a charge
on.the property of the petitioners, because it would make the title to the
property subject to any action which the government may take on the validity of
the payments made with Japanese War Notes, so that in case the Government,
through Congress or the Supreme Court of the Philippines, declares those
payments invalid the property would have to continue as a security for the
payment of the mortgage obligation.“According to Sec. 39 of Act No. 496, as amended, every
subsequent purchaser of a registered land under the Torrens System who takes a
transfer certificate of title for value in good faith, shall hold the same free
of all incumbrance, except those noted on the certificate and any of the legal
incumbrances enumerated in said section. It is obvious, and of judicial notice,
that such incumbrance was not and could not have been noted on the transfer
certificate of title No. 21783 nor on the deed of cancellation of the mortgage
executed by the Agricultural and Industrial Bank on June 5, 1944, and filed for
registration on October 3, 1944, which were lost or destroyed during the
liberation according to Annex A, above quoted. Therefore, the Secretary of
Justice had no power or authority to order or direct, by Circular No. 14, series
of 1945, the respondent Register of Deeds to insert such annotation, and
reciprocally the latter is not bound to comply with such instruction.“Under Sec. 79 (B) of the Administrative Code the Secretary of
Justice is only empowered to promulgate rules, regulations, orders, circulars
and other instructions not contrary to law, to all offices and
dependencies of his department; and compliance with the instruction in question
would be contrary to the Constitution, for it would impair the obligations ox
contract or deprive a person of his property without due process of law. it can
not be contended that the Secretary of Justice issued said circular in the
exercise of the police power of the State, because Congress has not delegated
such power to the Secretary of Justice. The sovereign police power is exercised
by the State through its legislative branch; and its valid exercise may be and
are, generally, delegated to towns, municipalities, and cities, and sometimes
also to the Chief Executive in case of national emergency. (Primicias v. Fugoso,
G. R. No. L-1800, promulgated January 27, 1948.)[1] But is it a well settled rule that a
legislative power delegated to a body or person cannot be delegated by the
latter to another.“But even if the annotation in question were not an
incumbrance, and the Secretary of Justice had power to issue the aforesaid
circular No. 14, such annotation would have no longer any effect and, therefore,
the insertion thereof in documents relating to transactions consummated during
the Japanese occupation would not serve any purpose, in view of the ruling laid
down by this Supreme Court in the case of Haw Pia vs. China Banking Corporation,
G. R. No. L-554;[2] Hongkong and Shanghai
Banking Corporation vs. Luis Perez Samanillo, G. R. No. L-1345,[3] in which it was held that payments made
with Japanese war notes during the occupation of obligations contracted before
the war to the creditor or his legal representative, and accepted by the latter,
are valid and release the said obligations. Philippine Congress having not
enacted any act on the matter, the ruling of this Court in the cases
aforementioned is the disposition adopted by our government regarding
transactions consummated during the Japanese occupation, to which said
annotation refers.”
“Wherefore, the appealed order will be affirmed, with
costs.
Moran, C.J., Paras, Feria, Perfecto, Padilla, and
Reyes, JJ., concur.
Tuason, J., concurs in the result.
[1] 82 Phil., 789.
[1] 80 Phil., 77.
[2] 80 Phil., 604.
[3] Phil., 851, unreported.
CONCURRING AND DISSENTING
OZAETA, J.:
I concur in the affirmance of the order appealed from for the
reason that it has now been definitely decided by this court in Haw Pia vs.
China Banking Corporation, G. R. No. L-554, and other subsequent cases that
payments made with Japanese military notes during the occupation of obligations
contracted before the war to the creditor or his legal representative, and
accepted by the latter, are valid and release the said obligations.
I dissent from the decision of the majority insofar as it
relies upon the opinion, or rather dictum, of this court in Lim vs. Register of
Deeds, G. R. No. L-1739, that the Secretary of Justice had no power or authority
to issue Circular No. 14, dated August 25, 1945, quoted in the majority
decision. That opinion holds in effect that the Secretary of Justice issued the
circular in question without authority of law, and even contrary to law. In
justice to former Secretary of Justice Honorable Ramon Quisumbing who issued
said circular, and in view of the fact that because of my absence from the
Philippines I was not able to participate in the decision of Lim vs. Register of
Deeds, I avail myself of this opportunity to show that said circular was
necessary, proper, and legal.
Before the promulgation of the decision of this court in Haw
Pia vs. China Banking Corporation on April 9, 1948, nobody knew—not even the
members of this Court—whether or not payments made with Japanese war notes
during the occupation of obligations contracted before the war were valid and
released the said obligations. That question was one of the most vexing problems
confronting the Government after the liberation. It could only be resolved
either by the Congress of the Philippines or by the Supreme Court. A bill
defining the policy of the Government on that question was presented in Congress
in one of its postliberation sessions.
In the meantime, mortgagors who had paid their prewar debts
with Japanese military notes during the occupation were demanding of the various
registers of deeds throughout the country the registration of the cancellation
of their mortgages. The mortgagees, on the other hand, were opposing the
registration of the cancellation of the mortgages on the ground that the payment
with Japanese military notes was not valid. If the register of deeds should
cancel outright the annotation of the mortgage before either the Congress or the
Supreme Court should finally determine whether or not such payments were valid,
the mortgage would have suffered injury in case it should be decided that such
payments were invalid, because onee the encumbrance on the mortgaged property
had been cancelled outright the owner could have freely disposed of the
property.
In that situation Secretary Quisumbing, by Circular No. 14,
instructed the registers of deeds to register deeds, documents, and other papers
executed during the Japanese occupation and filed for registration during or
after said occupation, if found to comply with the formalities prescribed by
existing laws and regulations; “but, as a precautionary measure, the
certificates to be issued and/or the memoranda to be made on the proper
certificates of title, in pursuance of such deeds, documents, or papers, shall
bear an annotation to the effect that the transaction involved is subject to
such further dispositions as may be made by the Commonwealth Government with
respect thereto.”
In its decision in Lim vs. Register of Deeds, the Court admits
that under section 79 (B) of the Administrative Code the Secretary of Justice is
empowered to promulgate rules, regulations, orders, circulars, and other
instructions not contrary to law, to all offices and dependencies of his
Department. I know of no law that has been infringed by that circular. On the
contrary I find that such a cautionary notice as that contemplated in the
circular is authorized by article 42 of the Mortgage Law when a question as to
the ownership of real property or the creation, declaration, modification, or
extinction of any property right is sub judice.
The argument of the Court that compliance with the circular
would be contrary to the Constitution, for it would impair the obligation of
contracts or deprive a person of his property without due process of law, is not
only farfetched but begs the very question involved in the issuance of said
circular. The purpose of the cautionary notice required by the circular was to
preserve the rights of the parties until the validity of the document sought to
be registered was finally determined. The argument assumes the validity of the
document or contract sought to be registered and ignores the fact that it was
disputed and that the dispute was precisely what gave rise to the issuance of
the circular. As a matter of fact the dispute was not settled until the
promulgation of the decision of this court in the Haw Pia case three years
later.
In any event, it was not necessary for the Court to pass upon
the validity of the circular of the Secretary of Justice because that circular
had ceased to have any force and effect since the promulgation of the decision
in the Haw Pia case. The Court itself said that “even if … the Secretary of
Justice had power to issue the aforesaid Circular No. 14,” it would no longer
have any effect “in view of the ruling laid down by this Supreme Court in the
case of Haw Pia vs. China Banking Corporation, G. R. No. L-554.[1]“
MONTEMAYOR, J.:
I concur in the foregoing opinion.
[1] 80 Phil., 604.