REGISTER OF DEEDS OF COTABATO, PETITIONER AND APPELLEE, VS. PHILIPPINE NATIONAL BANK, OPPOSITOR AND APPELLANT.

This appeal originated from a petition filed by the Register of Deeds of
Cotabato in Cadastral Case No. 24, L. R. C. (CRLO) Cadastral Record No. 599 of
said province. He prayed that original certificates of titles Nos. V-21, V-20,
V-18 and V-19 corresponding to lots Nos. 3358, 3359, 3360 and 3361,
respectively, in the name of Datu Sinarimbo Binasing, be ordered cancelled on
the ground that they had been issued erroneously; that Datu Binasing had secured
the said titles upon false representations in an affidavit wherein he alleged
that he had never, to his knowledge, secured titles for said lands.

The Philippine National Bank opposed the petition because it was the
mortgagee of said lots, which were later extrajudicially foreclosed, with the
Philippine National Bank itself as the highest bidder at the foreclosure
sale.

The facts are not disputed. Datu Binasing was the owner of the said four lots
in accordance with the decrees in Cases GLRO Nos. 552410, 552411, 552412 and
552413 pursuant to which four original certificates of titles Nos. 1606, 1607,
1608 and 1609 were issued on July 24, 1935 in his name. On July 23, 1938, he
sold said lots to Soledad C. de Teruel. The deed of sale was registered in the
office of the Register of Deeds and the corresponding Transfer Certificates of
Title Nos. T-1253, 1254, 1245 and 1256 were accordingly issued in her name.

The Office of the said Register of Deeds was burned during the Pacific War
and the records, among them, the original certificates of title in the name of
Datu Binasing covering said four lots were destroyed.

In 1947, Datu Binasing secured certified copies of the aforesaid decrees Nos.
552410, 552411, 552412 and 552413 from the General Land Registration Office. And
on the strength of these copies and an affidavit stating that he had not at any
time secured certificates of titles for said four lots, the said Register of
Deeds on August 8, 1947, issued in the name of Datu Binasing, original
certificates of title Nos V-18, V-19, V-20 and V-21. Thereafter, said Datu
obtained from the Philippine National Bank, a loan of P10,000.00, and he gave as
security the said lots (covered by said titles) and some other properties. On
March 20, 1954, the mortgage was extrajudicially foreclosed with the Philippine
National Bank as the highest bidder at the foreclosure sale.

Soledad C. de Teruel, on the other and on March 8, 1948, procured a
reconstitution of her transfer certificates of title namely, T-1253, T-1254,
T-1255 and T-1256: in lieu thereof, Transfer Certificates of Title Nos. RT-127,
RT-128, RT-129 and RT-130 were issued in her name.

Having discovered this state of affairs, (two different certificates of title
for each of said four lots, and in the name of two different persons), the
Register of Deeds filed the petition that gave rise to this appeal.

On the basis of these facts, the lower court directed the said Register of
Deeds to cancel original certificates of title Nos. V-18 to V-21 issued in the
name of said Datu in 1947, and declared valid and subsisting the Transfer
Certificates of Title issued in the name of Soledad C. de Teruel.

From the decision, the Philippine National Bank appealed contending that
being an innocent mortgagee for value, it is entitled to protection under Sec.
55, Act 496 as amended; that in the case of Blondeau vs. Nano and Vallejo,^[1] a mortgagee (relying upon a
Torrens title in good faith and unaware that fraud had been committed by
forgery) was protected. It cites other cases holding that the innocent purchaser
for value may take good title, notwithstanding defects of the mortgagor’s title
deeds.

The ratio decidendi in Hodges vs. Dy Buncio, et al.^[2] squarely resolves the issue in the
instant case. Expounding on the theory of indefeasibility of titles under the
Torrens System, we said that the indefeasibility of title thereunder could be
claimed only if a previous valid title to the same parcel of land does not
exist. Where issuance of the title was attended by fraud, the same cannot vest
in the titled owner any valid legal title to the land covered by it; and the
person in whose name the title was issued cannot transmit the same, for he has
no true title thereto. This ruling is a mere affirmation of the recognized
principle that a certificate is not conclusive evidence of title if it is shown
that the same land had already been registered and that an earlier certificate
for the same land is in existence.^[3]

It must be observed that the titles of the Datu (actually mortgaged to the
Bank) were issued in August, 19A7, as original certificates whereas in 1938,
about ten years before, Soledad C. de Teruel had already acquired a Torrens
title to the land. Within the meaning and scope of Legarda vs. Saleeby, 31 Phil.
550, and others,^[4] the titles
issued to Datu Binasing could not prevail against those previously issued to
Teruel. (Prior in tempore, potior in jure.)

Anyway, the Bank’s claim to protection does not deserve too much attention,
because its credit against Binasing might still be enforced; it appearing
furthermore that other properties of the Datu were also given as security.

A disturbing question although not made an issue in the lower court nor
pleaded in appellant’s brief is— should Soledad C. de Teruel be made a party
hereto?

The petition seeks as relief the cancellation of the original certificates of
title Nos. V-18, V-19, V-20 and V-21 erroneously issued in the name of Datu
Binasing in 1947. The purpose was to protect the Register of Deeds of Cotabato,
as administrative official relative to his liability under the Assurance Fund
provisions. Soledad C. de Teruel’s transfer certificates of title as may be
gleaned from the allegations in the petition, are not questioned. She does not
have to participate, therefore, in the proceedings. If the petition is favorably
adjudged, the certificates in question would be cancelled; if otherwise, the
petition should be dismissed. Any adjudication adverse to Soledad C. de Teruel
in the said case should not affect her because she was, after all, not a party
thereto. The cancellation of her transfer certificates of title would
necessitate the filing of a separate action where she herself has to litigate as
the real party in interest.

On the other hand, assuming (for the sake of argument) that she was a
necessary party, her non-inclusion therein would constitute a procedural defect
which this Court could remedy by directing at this stage, her inclusion as party
petitioner. (Alonso vs. Villamor, 16 Phi!. 315.)

The decision appealed from is affirmed, with costs against appellant. The
Bank’s recourse, if any, against the Assurance Fund, is reserved. So
ordered.

Bautista Angelo, Reyes, J. B. L., Barrera, Paredes, Dizon, Regala,
Makalintal, Bengzon, J.P. and Zaldivar, JJ., concur.

^[1] 61 Phil. 625.

^[2] G.R. No. L-16096, Oct. 30,
1962.

^[3] Sec. 153.,
p.237, William Nidbalck, “An Analysis of the Torrens System of Conveying Land,
1912 Ed.

^[4] Roman Catholic Bishop vs.
Phil. Railway, 49 Phil. 546; Reyes vs. Borbon, 50 Phil. 791.

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