G.R. No. L-5798. February 26, 1954
DEMETRIA FLORES, PLAINTIFF AND APPELLANT, VS. REHABILITATION FINANCE CORPORATION, DEFENDANT AND APPELLEE.
BENGZON, J.:
complaint in the Court of First Instance of Negros Occidental to annul
the mortgage executed in September, 1938 by K. Ishiwata (then
appellant’s common-law husband) in favor of the National Investment
Board, and also to cancel the certificate of sale subsequently made on
foreclosure, to the Agricultural and Industrial Bank. She prayed either
for the return of the land or the payment of P250,000 plus interest and
other items of indemnity.
After due hearing, the court absolved the defendant (successor to
the Agricultural and Industrial Bank), sustaining the validity of the
mortgage and foreclosure proceedings. The plaintiff appealed.
The facts. On August 31, 1928, the Roman Catholic Bishop of
Jaro sold lot No. 379 to K. Ishiwata, by a deed of sale showing that
the vendee was “single”. The document having been registered, the
Register of Deeds of Negros Occidental issued Transfer Certificate of
Title No. T-10022 in the name of “K. Ishiwata, single, Japanese
citizen.”
On March 4, 1932, K. Ishiwata bought from Jose de la Rama lot No.
169. The deed of sale was duly filed and the Register of Deeds of
Negros Occidental issued, for the lot, Transfer Certificate of Title
No. 14275 in the name of “K. Ishiwata, single, Japanese citizen.”
On September 1, 1938, K. Ishiwata applied for a mortgage loan of
P120,000 to the National Investment Board (later Agricultural and
Industrial Bank). The application, stated he was single and a Japanese
citizen. The next day, K. Ishiwata submitted to the said Board a sworn
statement of his financial condition, admitting that he had outstanding
obligations with the Philippine National Bank, Bacolod branch, and with
the La Urbana in Manila. Later, the National Investment Board sent a
committee of three employees to Bacolod city to appraise the properties
offered as security. This committee was not informed of any other
persons interested in the property. His application was approved for a
loan of P70,000 only, and on September 29,1938 Ishiwata received that
amount from the National Investment Board, signing the corresponding
promisory note, and mortgaging the lots 169 and 379 covered by Transfer
Certificates of Title Nos. 14275 and 10022 herein-above mentioned. The
mortgage was duly registered.
Upon the failure of K. Ishiwata to pay some amortizations,
foreclosure proceedings were had in accordance with Act 3135, and the
property was auctioned off, in 1940, to the highest bidder, the
Agricultural and Industrial Bank. And as the mortgagor failed to
exercise his right of redemption, the said bank became the absolute
owner, and took possession of the mortgaged property in 1941.
Subsequently, the Rehabilitation Finance Corporation-legal successor of
the Agricultural and Industrial Bank, obtained the corresponding
certificates of title in its name.
The issue. Six errors are assigned revolving around one
vital question: Is the mortgage executed by K. Ishiwata valid as to the
whole property, or is it good only for one-half?
Discussion, The plaintiff-appellant maintains she has a
right to one-half of lots Nos. 169 and 379 because she and Ishiwata
acquired such lots during the period when they were living together as
husband and wife, although not married. Explaining why the titles
covering these lots were registered solely in the name of K. Ishiwata,
she alleges that it was due to her husband’s bona fide belief he was
representing the family.
She declared in open court that since the year 1922 she lived with
Ishiwata as his wife, without benefit of marriage; that in 1923 she
delivered to him P50,000 as contribution to his business as building
contractor; that she looked for customers of the construction business,
acting furthermore as cashier and paymaster; that these two lots were
acquired during their marital life; that she knew nothing about the
mortgage until the year 1946 when Ishiwata, then a prisoner, informed
her about it.
The tendency of her assertions was obviously to lay the groundwork
of her claim to one-half in accordance with the doctrines laid down in
De Leon vs. Villanueva, 51 Phil., 677 and Marata vs. Dionio, G. R. No.
2449. (Partnership during cohabitation of a man with woman.)
However the trouble with her position is the absence of proof or
allegation that the property was acquired “thru their joint efforts or
labor”. And while it may be true that she assisted in the construction
business, there is no evidence that the lots were bought in connection
with such business. Her burden of overcoming the strong evidentiary
value of the documents in the sole name of “K. Ishiwata, single”,
proved to be all the more difficult, what with the weakness of her
moral character, and the improbability of her total ignorance of the
transaction, she being, according to her own testimony, cashier and
paymaster. And as the property was in the poblacion itself, in a
prominent place, the foreclosure proceedings could not have escaped her
notice or that of her friends, relatives or acquaintances. Such
proceedings occurred in 1940 and her silence until 1948[1] is incompatible with the asserted co-ownership.[2]
At any rate, in the absence of any showing that the National
Investment Board and the Agricultural and Industrial Bank were
cognizant of her rights as co-owner, such purchaser and/or mortgagee in
good faith that relied on the certificates of title in the name of “K.
Ishiwata, single”, must be afforded the full protection of the Torrena
system, as correctly observed by his honor, the trial judge.[3]
“A mortgagee who, in good faith, advances money on land covered by a
Torrens title, without notice of any defect in the title of the
mortgagor, will obtain a good title as mortgagee, although in the hands
of the mortgagor, the title may have been defeasible for fraud.”
(Gabriel vs. Baens, 56 Phil., 314.)
“A person who in good faith acquires any right or title to land
registered under the provisions of Act No. 496 would not need to go
behind the certificate of title if the register of deeds of the
province in which such land is situated performs his legal duty. If a
certificate of title cannot be taken at its face value the owner of
land registered under the Torrens system will be greatly handicapped in
making sales thereof or borrowing money thereon”. (Director of Lands
vs. Abad, 61 Phil., 480.)
Judgment. It follows from the foregoing that the mortgage
of the lots by K. Ishiwata must be held valid. And as there is no claim
of irregularity in the foreclosure proceeding, it must also be
sustained.
The appealed decision is, therefore, affirmed, with costs.
Paras, C, J., Pablo, Padilla, Montemayor, Reyes, Jugo, Bautista Angelo, Labrador, Concepcion, and Diokno, JJ., concur.
[1] Action filed August 1948.
[2] It couldn’t be true that she become aware of it only in 1946. The property was taken in 1941 by reason of foreclosure.
[3] See Castillo vs. Valdes, 53 Phil., 123; Anderson vs. Garcia, 64 Phil., 506.