THE GOVERNMENT OF THE REPUBLIC OF THE PHILIPPINES, REPRESENTED BY THE BOARD OF LIQUIDATORS, PETITIONER AND APPELLEE, VS. ROBERTO LAPERAL, OPPOSITOR AND APPELLANT.

This is an appeal, taken by Roberto Laperal, from an order of the
Court of First Instance of Manila in L. R. C. (G.L.R.O.) Cadastral
Record No. 917, the dispositive part of which reads as follows:

“WHEREFORE, the opposition is hereby denied and the
Register of Deeds of Manila ordered and directed upon payment of his
fees and presentation of the owners duplicates of Transfer Certificates
of Title Nos. 11307, 11308 and 11309, to cancel from said titles the
annotation of a mortgage in favor of Roberto Laperal under Entries Nos.
7593 and 7899; provided, that no document or transaction registered or
pending registration in his office shall be adversely affected thereby.”

The case was certified to us by the Court of Appeals upon the ground
that only questions of law are raised in the appeal. In fact, the
jurisdiction of the lower court is, likewise, assailed in this case.

The pertinent facts are not disputed. On January 27 and February 16,
1937, Giichi Yasugami, a Japanese subject, borrowed from Roberto
Laperal, hereinafter referred to as the appellant, the sums of P8,000
and P2,000, respectively, to secure payment of which the former
executed in favor of the latter two (2) separate deeds of mortgage on
twenty-three (23) parcels of land located in the City of Manila and
covered by Transfer Certificates of Title Nos. 40133, 41295, 41693 and
54337, in the name of Giichi Yasugami, issued in said L.R.C. (G.L.R.O.)
Cadastral Record No. 917. These deeds of mortgage were, on said dates,
duly registered in the office of the Register of Deeds of Manila and
annotated on the back of the aforementioned transfer certificates of
title as primary entries Nos. 7593 and 7879.

After the liberation of the Philippines, or on February 12, 1946,
said properties were vested in the Alien Property Custodian of the
United States, subject to the aforementioned mortgages in favor of
appellant, by virtue of Vesting Order No. P-11, issued in pursuance of
the Trading with the Enemy Act of the United States and filed with the
Federal Register on April 14, 1946, as well as with the Office of the
Register of Deeds of Manila. Accordingly, the said transfer
certificates of title were cancelled and, in lieu thereof, Transfer
Certificates of Title Nos. 11307 to 11310 were issued in the name of
the Philippine Alien Property Administration. Subsequently, or on May
7, 1953, the Attorney General of the United States, through Stanley
Gilbert, manager of the Philippine Office, Office of the Alien Property
Custodian of the United States, transferred, in conformity with law, to
the Republic of the Philippines, the twenty-three (23) parcels of land
aforementioned.

Soon thereafter, or on June 12, 1953, the Republic of the
Philippines, represented by its Board of Liquidators, filed with the
Court of First Instance of Manila, in the aforementioned L.R.C.
(G.L.R.O) Cadastral Record No. 917, a petition for the cancellation of
said primary entries Nos. 7593 and 7879, corresponding to the
aforementioned mortgages in favor of appellant, from Transfer
Certificates of Title Nos. 11307, 11308 and 11309, upon the ground
that, whatever cause of action he may have had to foreclose said
mortgages had prescribed already, more than ten (10) years having
elapsed since the accrual of his cause of action.

Appellant opposed the petition upon the ground that the statute of
limitations had been interrupted by an acknowledgment of said
mortgages, as well as by extra-judicial demands made by the creditor
and by the Moratorium Law, and that a mortgage lien does not prescribe.
After due hearing, the lower court issued the order complained of.
Thereupon, the appellant filed a motion for reconsideration,
predicated, among other grounds, upon the alleged lack of jurisdiction
of the lower court as a land registration court to hear and decide the
controversy between the parties. The motion having been denied, the
appellant seeks a review of said order by record on appeal.

The first question raised in the appeal is the jurisdiction of the
lower court to settle the issue between the parties, under the
provisions of section 112 of Act No. 496, it appearing that appellee’s
petition has been filed as an incident of the cadastral proceedings in
which the mortgaged properties were registered, and that said court had
acted, therefore, as a land registration court. In Tañgunan and
Tañgunan vs. Republic of the Philippines (94 Phil., 171; 50 Off. Gaz., 115), we held:

“We are of the opinion that the lower court did not
err in finding that it lacks jurisdiction to entertain the present
petition for the simple reason that it involves a controversial issue
which takes this case out of the scope of Section 112 of Act No. 496.
While this section, among other things, authorizes a person in interest
to ask the court for any erasure, alteration, or amendment of a
certificate of title upon the ground that registered interests of any
description, whether vested, contingent, expectant, or inchoate, have
terminated and ceased’, and apparently the petition comes under its
scope, such relief can only be granted if there is unanimity among
the parties, or there is no adverse claim or serious objection on the
part of any party in interest; otherwise the case becomes controversial
and should be threshed out in an ordinary case or in the case where the
incident properly belongs. Thus, it was held that ‘It is not
proper to cancel an original certificate of Torrens Title issued
exclusively in the name of a deceased person, and to issue a new
certificate in the, name of his heirs, under the provisions of Section
112 of Act No. 496, when the surviving spouse claims right of ownership
over the land covered by said certificate.’ (Jimenez vs. de
Castro, 40 Off. Gaz., [No. 3] 1st Supp. p. 80.) And, in another case,
where there was a serious controversy between the parties as to the
right of ownership over the properties involved, this Court held, ‘that
following the principle laid down in the decision above cited, the
issues herein should be ventilated in a regular action, as was done in
the case of Montilla vs. Jalandoni (TA-R.G. No. 3133), above mentioned.’ (Government of the Philippines vs. Jalandoni, 44 Off. Gaz. 1837.)” (Italics ours.)

The doctrine laid down in the Tanguñan case was applied in Garcia vs. Belzunce, 84 Phil., 802; 47 Off. Gaz., 1820; Miraflor vs. Leaño, 94 Phil., 466; 49 Off. Gaz. [7] 2775; Laguia vs. Casimiro, 98 Phil., 102; 52 Off. Gaz. (1) 196; Enriquez vs. Atienza, 101 Phil., 1072; 53 Off. Gaz. [20] 7231; Angeles vs. Razon, 106 Phil., 384; 57 Off. Gaz. [5] 840) and Rehabilitation Finance Corporation vs. Alto Surety & Insurance Co., 107 Phil., 386 (see, also, Bank of the P.I. vs. Ty Cameo Sobrino; 57 Phil., 801; Lopez vs. Constantino, 74 Phil., 160,; Garchitorena vs. Dir. of Lands, 91 Phil., 514; Castillo vs. Ramos, 45 Off. Gaz. 183; Cabangcala vs. Domingo, 96 Phil., 124; 50 Off. Gaz., 5319; Mendoza vs. Abiera, 105 Phil., 611; 56 Off. Gaz. [33] 5170; and is equally applicable to the case at bar.

Indeed, some of the issues therein raised are highly controversial.
The decisions on the question whether a mortgage lien duly registered
under the Torrens System may be nullified by operation of the statute
of limitations are conflicting. The American Jurisprudence has the
following to say thereon:

“Bar of Debt as Affecting Lien or Other Security; Vice-Versa.—
Although a different rule obtains in those jurisdictions where it is
held that the statute of limitations not only bars the remedy, but
destroys and annihilates the debt by the presumption that it has been
paid or discharged, and in some states it is expressly provided by
statute that a lien is extinguished by the lapse of time within which
an action can be brought on the principal obligation, it is a general
rule, recognized in England and in a majority of the courts in this
country that a lien which one may have on property, personal or real,
as security for a debt is not impaired because the remedy at law for
the “recovery of the debt is barred. * * * With regards to the effect
of the bar of a debt upon a mortgage given to secure such debt, one
line of authorities holds that the mortgagee can pursue his remedy on
the mortgage by foreclosure or ejectment, notwithstanding the debt or
the evidence thereof is barred by the statute of limitations, while
another line of decisions takes the view that a mortgage, being a mere
incident, cannot be foreclosed when the note or other evidence of
indebtedness secured thereby, is barred. * * *.” (34 Am. Jur., 317-318.)

To the same effect, substantially, is the view expressed in Glenn on Mortgages:

“* * * Since the mortgage subsists as a Hen for the
purpose of securing a debt, it follows that if recovery on the debt is
barred by the statute of limitations, surely no lien should be enforced
which secures an obligation. The equity process should not be
sanctioned in that sort of case; hence a plea, that the debt was barred
at law by the statute of limitations, would be equally available in a
suit to foreclose the lien. That was, and is, undoubtedly the rule as
to equitable liens; but it should also apply to a mortgage if the
latter is treated as a lien only. In truth, there is no reason why the
same rule should not apply in a title State, so far as foreclosure is
concerned. The mortgage secures a debt,—that is its first and only
purpose,—and when the debt ceases to be wholly enforceable, it is hard
to see why the mortgagee should have the affirmative aid of equity.

“The
prevailing view, however, is different. According to this, the
mortgagee’s rights are several and distinct. First, he has the debt,
but second, as a separate proposition, he has the lien. If, then, a
short statute of limitations bars a suit on the debt, it is not thereby
destroyed, and the creditor may properly turn to his lien. Enforcement
of the latter not being barred at all, the creditor, according to this
view, may foreclose his lien, either by an equity suit or by exercising
a power of sale. He cannot obtain a deficiency judgment by any process,
but so far as the security may go, the mortgage can realize his debt by
this sort of strict foreclosure. Since this rule just mentioned is
logical, it has been perpetuated by statute in at least one State. In
Virginia, indeed, no statute of limitations whatever governed
foreclosure until 1887; and her present law is very liberal as to the
mortgagee’s right.” (Glenn on Mortgages, Vol. II, pp. 814-816.)

There are, also, two (2) sets of decisions, on said issue, in this jurisdiction. Aldeguer vs. Hoskyn (2 Phil., 500), Domingo vs. Osorio (7 Phil., 405), Maxilom vs. Tabotabo (9 Phil., 390) and Sunico vs. Ramirez (14 Phil., 500), among others, hold one view, whereas Buhat vs. Sesana, (95 Phil., 721; 50 Off. Gaz. [9] 4215) and Estayo vs. De Guzman (104 Phil., 1038; 55 Off. Gaz., 7653) maintain another view.

Again, the order, pursuant to which the title to the properties in
question was vested in the Alien Property Custodian of the United
States, explicitly states that it is “subject to recorded liens,
encumbrances and other rights of record held by or for persons who are
not nationals of * * * enemy countries,” such as the mortgages
constituted in favor of appellant herein, and there is authority to the
effect that the acknowledgment of a mortgage is tantamount to an
acknowledgment of the debt thereby secured (37 C.J., 1107) and hence,
it suffices to renew the period of prescription of the action for
foreclosure.

Lastly, the question, raised by herein appellee, whether an enemy
alien, like the mortgagor Yasugami, could be sued in the Philippine
courts before the signing and ratification of the Treaty of Peace
between the Philippines and Japan, and, in the affirmative, whether he
could have availed himself of the benefits of the moratorium law, is
one of first impression in this jurisdiction, which should be threshed
out, not within the limited confines of the summary proceedings
contemplated in section 112 of Act No. 496, but in an ordinary action.

Wherefore, without prejudice to such appropriate proceedings as the
herein appellee may deem best to institute, the order appealed from is
hereby reversed, without special pronouncement as to costs. It is so
ordered.

Bengzon, Mantemayor, Bautista Angelo, Labrador, Reyes, J. B. L., Barrera, and Gutierrez David, JJ., concur.