G.R. No. L-1597. May 05, 1950
SANTIAGO SYJUCO, INC., PETITIONER AND APPELLANT, VS. PHILIPPINE NATIONAL BANK AND JOSE PONCE DE LEON, OPPOSITORS AND APPELLEES.
MONTEMAYOR, J.:
For several years prior to June 16, 1944, the two parcels of land
known as lots Nos. 871 and 872 of the Murcia Cadastre (Cad. Case No. 6,
G.L.R.O. Cad. Rec. No. 73), were covered by Transfer Certificates of
Title Nos. 17176 and 17175, respectively, of the office of the Register
of Deeds of Occidental Negros, in the name of the Philippine National
Bank. On May 5, 1944, the bank sold the said two lots to Jose L. Ponce
de Leon. On the same date, De Leon mortgaged the same lots to Santiago
Syjuco, Inc., a domestic corporation, to guarantee the payment of a
loan of P200,000, evidenced by a promissory note for the same amount.
The promissory note provided that the loan shall be payable “within one
year from May 5, 1948 * * * peso for peso in the coin or currency of
the Government of the Philippines that, at the time of payment above
fixed, is the legal tender for public and private debts, with interest
at the rate of 6% per annum”. The deed of sale executed by the
Philippine National Bank in favor of De Leon, as well as the mortgage
executed by the latter in favor of Santiago Syjuco, Inc., were
registered in the office of the Register of Deeds of Negros Occidental
on June 16, 1944, resulting in the cancellation of Transfer
Certificates of Title Nos. 17175 and 17176, the issuance of new
Transfer Certificates of Title Nos. 398 (P.R.) and 399 (P.R.) in the
name of Jose L. Ponce de Leon, and with the mortgage in favor of
Santiago Syjuco, Inc. duly annotated on the backs thereof. The
corresponding owner’s duplicate transfer certificates of title were, by
agreement of the parties, entrusted to and kept by Santiago Syjuco,
Inc., and are still with it.
During the fight for the liberation of the Philippines, the
original records of the transactions above described, filed in the
office of the Register of Deeds of Negros Occidental, were destroyed5
but, as already stated, the duplicate originals of the said records
were preserved by Santiago Syjuco, Inc.
On May 15, 1946, Jose L. Ponce de Leon filed a verified petition in
the Court of First Instance of Negros Occidental, alleging that the two
lots in question, Nos, 871 and 872, were still covered by Transfer
Certificates of Title Nos. 17176 and 17175, respectively; that the
registered owner, Philippine National Bank, had executed in his favor a
deed of absolute sale, but that copies of said deed of sale, together
with the corresponding owner’s duplicate Transfer Certificates of Title
Nos. 17176 and 17175, write lost in his possession as a consequence of
the last war; that the originals of the aforementioned transfer
certificates of title were also destroyed in the office of the Register
of Deeds; that he desired to reconstitute both the original and the
owners duplicate Transfer Certificates of Title Nos. 17175 and 17176 on
the bases of Transfer Certificate; of Title Nos. 1663 and Original
Certificate of Title No. 8363, from which the said titles had been
taken, and he asked the court to issue an order authorizing the
Register of Deeds to make the reconstitution, and that, once
reconstituted, to order the said Register of Deeds to cancel said
Transfer Certificates of Title Nos. 17176 and 17175, and issue new
transfer certificates of title in his favor.
At first, the court wanted to order the publication of the said
petition for the information of interested parties. De Leon, however,
assured the Court that the only possible interested party was the
Philippine National Bank and said entity had already given its
conformity to his petition. Because of this assurance, and because the
petitioner had informed the court of a supposed practice followed by
the Court of First Instance of Rizal in similar cases where publication
of petitions for reconstitution was not required, the Court of First
Instance of Negros Occidental dispensed with the publication and issued
an order dated June 4, 1946 directing the Register of Deeds to make the
reconstitution applied for, and after said reconstitution, to issue in
favor of the petitioner the corresponding new transfer certificates of
title. De Leon served no notice of his petition on Santiago Syjuco, Inc.
Complying with the order of the Court, the Register of Deeds of Occidental Negros, on June 17, 1946, issued Transfer Certificates of
Title Nos. 1297-R and 1298-R as reconstituted titles or in lieu of
Transfer Certificates of Title Nos. 17175 and 17176, respectively, and,
after cancelling these new titles, issued in their stead Transfer
Certificates of Title Nos. 526-N and 527-N in the name of Jose L. Ponce
de Leon, All these four titles (Nos. 1297-R, 1298-R, 526-N and 527-N)
carried on their face the following caveat:
“This reconstitution is subject to claim by third
parties whose rights was duly noted on the original of the certificate
of title at the time of its loss or destruction, but for any reason has
not been, noted on the reconstituted title.”
On August 16, 1946, Jose L. Ponce de Leon executed a deed of
mortgage on the two above-mentioned lots in favor of the Philippine
National Bank to guarantee a loan of P135,000, which deed was duly
registered and annotated on the backs of Transfer Certificates of Title
Nos. 526-N and 527-N.
Upon learning of the reconstitution and of the subsequent issuance
of new transfer certificates of title, as well as the execution of the
deed of mortgage in favor of the Philippine National Bank, covering
said Lots Nos. 871 and 872, Santiago Syjuco, Inc. initiated the present
proceedings by filing a petition on September 14, 1946, in the Court of
First Instance of Negros Occidental, calling attention to the
misrepresentations made by Jose L. Ponce de Leon,—to the effect that
the two lots in question were still covered by Transfer Certificates of
Title Nos. 17175 and 17176 in the name of the Philippine National Bank,
when in truth those two lots were covered by Transfer Certificates of
Title Nos. 398 (P.R.) and 399 (P.R.) and were subject to a lien in
favor of Santiago Syjuco, Inc., calling the actuations of De Leon as
maliciously false, fraudulent and felonious by concealing the
registered interest and lien of Santiago Syjuco, Inc., on the said two
lots, by refusing to notify said company of his petition for
reconstitution, assuring the Court that the Philippine National Bank
was the only possible interested party in the reconstitution and
praying the court to dispense with the publication of his petition for
reconstitution, thereby leading the court to authorize and direct the
Register of Deeds to make the desired reconstitution. Syjuco asked the
Court to declare its order of June 4, 1946, directing the Register of
Deeds of Negros Occidental to make the reconstitution, illegal and void
and to rule that Transfer Certificates of Title Nos. 1297-B., 1298-R,
526-N and 527-N, are void and of no effect whatsoever, and to declare
that the two lots in question, known as lots Nos, 871 and 872, are
still covered by Transfer Certificates of Title Nos. 399 (P.R.) and 398
(P.R.), respectively, and to order the reconstitution of Transfer
Certificates of Title Nos. 398 (P.R.) and 399 (P.R.), with the
annotation of the mortgage in favor of Santiago Syjuco, Inc. This
petition was opposed by Jose L. Ponce de Leon and the Philippine
National Bank.
After hearing and the presentation of some evidence, the trial
court issued an order dated January 31, 1947, stating among others that
it had been misled by De Leon’s misrepresentations into issuing its
order of June 4, 1946, directing the Register of Deeds to make the
necessary reconstitution, and so it declared said order of June 4, 1946
null and void and without any legal effect.
The court further found that the two lots in question were still
covered by Transfer Certificates of Title Nos. 398 (P.R.) and 399
(P.R.), the owner’s duplicate copies of which were in the possession
and custody of Santiago Syjuco, Inc., and because of the destruction of
the records of the Register of Deeds, the Court ordered the said
Register of Deeds to reconstitute the originals of said Transfer
Certificates of Title Nos. 398 (P.R.) and 399 (P.R.) on the bases of
the owner’s duplicate transfer certificates of title in the possession
of Santiago Syjuco, Inc. We copy the last part of the order
aforementioned, dated January 31, 1947, because it is the portion
subject of the appeal by Santiago Syjuco, Inc.:
* * * * * * *
It appearing, therefore, that Transfer Certificates
of Title Nos. 526-N and 527-N covering Lots Nos. 871 and 872,
respectively, of the Murcia Cadastre are also in the name of the same
Jose L, Ponce de Leon, who is the owner of the same Lots, under
Transfer Certificates of Title Nos. 398 (P.R.) and 399 (P.R.) the
provision of Section 18 of Republic Act 26 quoted below must be applied
therefor:“Sec. 18. In case a certificate
of title, considered lost or destroyed, be found or recovered, the same
shall prevail over the reconstituted certificate of title, and, if both
titles appear in the name of the same registered owner, all memoranda
of new liens or encumbrances, if any. made on the latter, after its
reconstitution, except the memorandum of the reservation referred to in
section seven of this Act, shall be transferred to the recovered
certificate of title. Thereupon, the register of deeds shall cancel the
reconstituted certificate of title and spread upon the owner1s duplicate,
as well as on the co-owner’s, mortgagee’s or lessees duplicate, if any
has been issued, such annotations of subsisting liens or encumbrances
as may appear on the recovered certificate of title, cancelling at the
same time the memorandum of the reservation referred to in section
seven hereof: Provided, however, That if the reconstituted
certificate of title has been cancelled by virtue of any deed or
instrument, whether voluntary or involuntary, or by an order of the
court, and a new certificate of title has been issued, the recovered
certificate of title shall be likewise cancelled, but all subsisting
liens or encumbrances, if any, appearing thereon shall be transferrea
to the new certificate of title and to its owner’s duplicate, as well
as to any co-owner’s, mortgagee’s or lessee’s duplicate that may have
been issued, the memorandum of the reservation referred to in section
seven of this Act, if any, being thereby ipso facto cancelled.’Wherefore, The Court sits aside its Order dated June 4, 1946 as null
and void and without any legal effect and orders the cancellation of
Transfer Certificates of Title Nos. 526-N and 527-N, which were issued
by virtue thereof. The Register of Deeds for this province is also
hereby ordered to reconstitute the originals of Transfer Certificates
of Title Nos. 398 (P.R.) and 399 (P.R.) on the basis of the owner’s
duplicates in the possession of Santiago Syjuco, Inc. Exhibits “8” and
“9”, and all subsisting liens and encumbrances affecting Lots Nos, 871
and 872 appearing on Transfer Certificates of Title Nos. 526-N and
527-N shall be transferred or annotated to the originals as well as the
owners duplicates of Transfer Certificates of Title Nos. 398 (P.R.) and
399 (P.R.) upon reconstitution thereof.“* * * * * * *”
On March 8, 1947, Santiago Syjuco, Inc., filed a motion to set
aside the portion of the order of January 31, 1947 regarding the
transfer of the liens and encumbrances appearing in Transfer
Certificates of Title Nos. 526-N and 527-N to the originals as well as
the owner’s duplicates of Transfer Certificates of Title Nos. 398
(P.R.) and 399 (P.R.), which portion of the said order reads as follows:
“* * * and all subsisting liens and encumbrances
affecting Lots Nos. 871 and 872 appearing on Transfer Certificates of
Title Nos. 526-N and 527-N shall be transferred or annotated to the
originals as well as the owner’s duplicates of Transfer Certificates of
Title Nos. 398 (P.R.) and 399 (P.R.) upon reconstitution thereof.
On March 11, 1947, an amended motion was filed by Santiago Syjuco, Inc., praying that the court—
* * * either * * * set aside that part of its order of January 31.
1947 that is impugned in the motion to set aside of March 8, 1947, or
in the event that this Honorable Court should deem it improper to do
so, then at least to make a clear and categorical pronouncement that
your petitioner’s lien is superior to that of the Philippine National
Bank; and, in either case, to order Jose L. Ponce de Leon to pay all
the costs of these proceedings, including the cost of publishing this
petition.
Apparently, the court acted only on the first motion which it
denied. Santiago Syjuco, Inc., has brought this case before us to
reverse that portion of the order of January 31, 1947, already referred
to, as well as the failure of the trial court to order De Leon to pay
the costs and the expenses of the publication of its petition.
In our opinion, the main, if not the only issue involved in the
present appeal is whether or not section18 of Republic Act No. 26 is
applicable in the present case. By confining ourselves to that issue,
we find it unnecessary to discuss and pass upon several points raised
by the parties, specially by the Philippine National Bank.
After carefully examining section 18 of said act, in relation with
the facts of the case, we find that that section is not applicable. For
purpose of clarity, we reproduce the first portion of said section,
as follows:
“Sec. 18. In case a certificate of title,
considered lost or destroyed, be found or recovered, the same shall
prevail over the reconstituted certificate of title, and, if both
titles appear in the name of the same registered owner, all memoranda
of new liens or encumbrances, if any, made on the latter, after its
reconstitution, except the memorandum of the reservation referred to In
section seven of this Act, shall be transferred to the recovered
certificate of title, * * *.”
The phrase “certificate of title, considered lost or destroyed, be
found or recovered” cannot refer to Transfer Certificates of Title Nos.
17175 and 17176, for the reason that these two certificates had never
been recovered. Neither can the phrase refer to the owner’s duplicate
Transfer Certificates of Title Nos. 398 (P.R.) and 399 (P.R.) In the
custody of Santiago Syjuco, Inc., for the reason that, although these
were recovered, they were mere owner’s duplicate transfer certificates
of title and not the original certificates of title which were lost or
destroyed in the office of the register of deeds and contemplated by
Section 18. Furthermore, the reconstituted titles herein were based on
certificates Nos, 17175 and 17176, while the recovered titles were Nos.
398 (P.R.) and 399 (P.R.) which were wholly different. Consequently,
there is here no finding or recovery of certificates of title
contemplated by Section 18, wherein to apply its provisions.
As regards the propriety and validity of the reconstitution ordered
by the trial court and made by the register of deeds, it is clear from
the provisions of Section 15, Republic Act No. 26, that the destroyed
or lost certificate of title which may be reconstituted, Is one that
was in force at the time of loss or destruction. This,
however, is not true in the present case. De Leon sought and succeeded
in.obtaining the reconstitution of Transfer Certificates.of Title Nos.
17175 and 17176, both of which at the time of their loss or destruction
were no longer in force, for the reason that they had already been
cancelled and superseded by Transfer Certificates of Title Nos. 398
(P.R.) and 399 (P.R.). In other words, the law neither contemplates nor
permits the reconstitution of said two cancelled certificates of title
which were no longer in force. De Leon should have asked for the
reconstitution of Transfer Certificates of Title Nos. 398 (P.R.) and
399 (P.R.) in his name, which were then in force at the time of their
loss in the office of the register of deeds; but, he would not do that,
because Santiago Syjuco, Inc., when notified of the petition for
reconstitution, would immediately produce the owner’s duplicate
transfer certificates of title which he had been able to keep and
preserve, and these would show to the court that the two lots in
question were still mortgaged to Santiago Syjuco, Inc. So, what De
Leon did was to ignore Syjuco, conceal from the trial court the
issuance of the originals and duplicates of Transfer Certificates of
Title Nos. 398 (P.R.) and 399 (P.R.), and make the court believe that
the two lots in question were still covered by Transfer Certificates of
Title Nos. 17175 and 17176, which he knew was not true.
The Philippine National Bank contends that it was not aware of the
lien in favor of Syjuco, consisting of a mortgage to secure a loan of
more than P200,000. However, as already stated, the reconstituted
Transfer Certificates of Title Nos. 1297-R, 1298-R, 526-N and 527-N,
bore the caveat or caution that the “reconstitution is subject to claim
by third parties * * *”. These should have placed the bank on its guard
and impelled it to make the corresponding investigation and give the
matter some thought. It must have known that it had previously sold the
two lots in question as far back as May 5, 1944, and that, as a result
thereof, Transfer Certificates of Title Nos. 17175 and 17176 in its
name had been cancelled and that new ones (T.C.T. 398 [P.R.] and 399
[P.R.]) had been issued in the name of its vendee Jose L. Ponce de
Leon, Knowing this, the bank should have wondered and speculated why De
Leon did not ask for the reconstitution of his own certificates of
title which he obtained as a result of his purchase of the two lots,
but instead asked for the reconstitution of the certificates of title
of the bank (T.C.T. No. 17175 and 17176) which had already been
cancelled, and so were no longer in force at the time of their loss and
destruction.
The Philippine National Bank relies upon the supposed payment or
liquidation of De Leon’s debt to Syjuco, based on the fact that in
November 1944, De Leon attempted to pay off his debt to Syjuco, and
when the latter refused to accept tender of payment, De Leon consigned
the amount in court, received the corresponding receipt therein, and
then filed Civil Case No. 3003 in the Court of First Instance of
Manila, to compel Santiago Syjuco, Inc. to accept payment. We
understand that that case is still pending in court. The bank and De
Leon, however, seem to forget that, according to the agreement between
De Leon and Syjuco, the loan was to be paid within one year after May
5, 1948. In other words, the obligation was not due until that date.
Moreover, De Leon expressly agreed and promised not to pay the loan
before the day agreed upon for payment.
Without anticipating the determination of that Civil Case No. 3003,
it may be here stated that, in similar cases, this Court has already
ruled,—particularly on obligations or debts contracted during the
Japanese occupation, payable not within but after a certain period,
specially where the parties timed the payment with their speculation or
belief as to the termination of the Pacific War, – that such
obligations or debts could not without the creditor’s consent be
legally paid before they were due, and that the creditors may not be
obliged to accept premature payments.
Going back to the portion of the order of the trial court appealed
from, we observe a certain inconsistency on the part of the said court.
It will be noticed that in its order of January 31, 1947, it set aside
its order of reconstitution dated June 4, 1946, as null and void and
without any legal effect. That was correct, for the reason that the
order of reconstitution was issued without any previous publication, as
required by law, particularly section 13 of Republic Act No. 26, Now,
if the order of reconstitution was null and void and of no effect,
naturally, anything done under said void order (such as the
reconstitution of the alleged lost transfer certificates of title) is
also void, including the titles reconstituted under said void order
(such as Transfer Certificates of Title Nos. 526-N and 527-N). If these
two transfer certificates of title (526-N and 527-N) were void and of
no effect, then there can be no basis or reason, as ordered by the
trial court, for the transfer of the liens and encumbrances affecting
lots Nos. 871 and 872, appearing on said Transfer Certificates of Title
Nos. 526-N and 527-N, to the originals and owner’s duplicate of
Transfer Certificates of Title Nos. 398 (P.R.) and 399 (P.R.). This is
another reason for reversing that part of the order of the trial court
appealed from, dated January 31, 1947.
It is clear from the record of this case, and as found by the trial
court, that the appellant Santiago Syjuco, Inc. was constrained to go
into the trouble and expense of prosecuting this case in court, because
of the misrepresentation, if not fraud committed by De Leon. It is,
therefore, but just that De Leon should pay the costs, including the
expenses of publication of the petition Incurred by Syjuco.
Before closing, it may be stated for the satisfaction of the
Philippine National Bank, that it may still take any legal steps to
protect its interests in the way of annotating its lien on the validly
reconstituted certificates of title covering the two lots in question.
Whether or not said lien is superior to that of Santiago Syjuco, Inc.,
we need not decide in the present case.
In view of all the foregoing, the order of the trial court dated
January 31, 1947, insofar as it orders the transfer of the liens and
encumbrances affecting Lots Nos. 871 and 872, appearing on Transfer
Certificates of Title Nos. 526-N and 527-N, to the original and owner’s
duplicate of the reconstituted Transfer Certificates of Title Nos. 398
(P.R.) and 399 (P.R.), is reversed. Jose L. Ponce de Leon is ordered to
pay all the costs in these proceedings, including the cost of
publication of the petition in filed by appellant Santiago Syjuco, Inc.
Moran, C.J., Ozaeta, Pablo, Bengzon, Tuason and Reyes, JJ., concur.