CONSTANCIO JOAQUIN v. ABUNDIO MADRID, ET AL.,January 30, 1960

1. The spouses Abundio Madrid and Rosalinda Yu are the owners of a residential lot at 148 Provincial corner Sto. Sacramento, Makati, Rizal, covered by TCT No. 31379 .2. Planning to build a house thereon, the said spouses sought a loan, in November, 1953.3. One Carmencita de Jesus, godmother of Rosalinda, offered to work for the shortening of the usually long process before a loan could be granted and the spouses, accepting the proferred assistance, delivered to her the Transfer Certificate of Title covering the lot in January, 1954, to be surrendered to ]the RFC.4. Later the spouses were able to secure a loan of P4,000.00 from their parents for the construction of their house and they decided to withdraw the application for a loan they had filed with the RFC.5. They so informed Carmencita de Jesus and asked her to retrieve the Transfer Certificate of Title and return it to them. Shortly thereafter, Carmencita told them, however, that the RFC employee in charge of keeping the Transfer Certificate of Title was out on leave.6. In August, 1954, one Florentino Calayag showed up in the house of the spouses and asked for Abundio Madrid and Rosalinda Yu. Rosalinda answered that she was Rosalinda Yu and Abundio, that he was Abundio Madrid. Calayag would not believe them. He said that he was looking for Abundio Madrid and Rosalinda Yu who had executed a deed of mortgage on the lot where the house they were in then stood, and that the term of the mortgage had already expired, he added. 7. Abundio and Rosalinda then retorted that they had not mortgaged their land to anyone. 8. The spouses immediately went to consult with a lawyer who accompanied them to the Office of the Register of Deeds of Rizal. They found out then that the land had been mortgaged to Constancio Joaquin on January 21, 1954. 9. The appellant admits that Abundio Madrid and Rosalinda Yu, the registered owners of the mortgaged property, were not those persons who had signed the deed of mortgage. His version of the case is as follows: In the month of January, 1954 Carmencita de Jesus saw Florentino Calayag and asked the latter to find a money-lender who could grant a loan on a security of real property She showed the TCT in the name of the spouses Abundio Madrid and Rosalinda Yu. Calayag approached Constancio Joaquin who having funds to spare for the purpose, visited the land and finding it well situated, told Calayag to show him the prospective borrowers. On the following day, Calayag brought two women to the law office of Atty. M.S. Calayag and presente them to Constancio Joaquin as Rosalinda Yu and Carmencita de Jesus. The alleged Rosalinda Yu claimed to be the owner of the lot with her husband Abundio Madrid who authorized her to secure a loan on their property, she assured him, and that Abundio would come where the contract therefor was ready to sign it with her. Thus, the deed of mortgage Exhibit I was signed by the persons who posed themselves as Abundio Madrid and Rosalinda Yu on the following day. The whole amount of the loan was delivered to the supposed Rosalinda Yu immediately after the registration of the document of mortgage in the Office of the Register of Deeds of Rizal, according to Florentino Calayag.

The appellate court found that the petitioner "visited the property proposed for mortgage to find out at the same time who was the real owner thereof. But he contented himself with the information given to him by the person living then on the land that the owner was woman known as 'Taba'. There ended his inquiry about the identity of the prospective mortgagors."(Dec. of the Court of Appeals, p. 8).The lower court based it decision on the case of Lara, et al., vs. Ayroso, 95 Phil., 185, 50 Off. Gaz., (10), 4838, in which we held that as the land mortgaged was still in the name of the real owner when mortgaged to the mortgagees by an impostor, the mortgagees were defrauded not because they relied upon what appeared in a Torrens certificate of title, but because they believed the words of the impostor; that it was the duty of the mortgagees to ascertain the identity of the man with whom they were dealing which circumstances differentiate the case from the previous cases of De la Cruz vs, Fabie, 35 Phil., 144 and Blondeau, et al., vs. Nano and Vallejo, 61 Phil., 625.

ISSUE:

HELD:

In the first assignment of error it is argued that since par. 2 of Sec. 55 of the Land Registration Act expressly provides that "in all cases of registration by fraud the owner may pursue all his legal and equitable remedies against the parties to the fraud, without prejudice to the rights of any innocent holder for value of a certificate of title", the second proviso in the same section "that a registration procured by the presentation of a forged deed shall be null and void" should be overlooked. There is no merit in this argument, which would have the effect of deleting the last proviso. This last proviso is a limitation of the first part of par. 2 in the sense that in order that the holder of a certificate for value issued by virtue of the registration of a voluntary instrument may be considered a holder in good faith for value, the instrument registered should be forged. When the instrument presented is forged, even if accompanied by the owner's duplicate certificate of title, the registered owner does not thereby lose his title, and neither does the assignee in the forged deed acquire any right or title to the property.

In the second assignment of error it is further argued that as the petitioner is an innocent purchaser for value, he should be protected as against the registered owner because the latter can secure reparation from the assurance fund. The fact is, however, that petitioner herein in not the innocent purchaser for value protected by law is one who purchases a titled land by virtue of a deed executed by the registered owner himself, not by a forged deed, as the law expressly states. Such is not the situation of the petitioner, who has been the victim of impostors pretending to be registered owners but who are not said owners.

The next assignments of errors are predicted on the assumption that both the petitioner and the respondents are guilty of negligence. The giving of the certificate of title to Carmencita de Jesus is in itself no act of negligence on the part of respondents; it was perfectly a legitimate act. Delay in demanding the certificate of title is no act of neglect either, as respondents have not executed any deed or document authorizing Carmencita de Jesus to execute deeds for and on their behalf. It was petitioner who was negligent, as he did not take enough care to see to it that the persons who executed the deed of mortgage are the real registered owners of the property. The argument raised by petitioner's counsel that in case of negligence on the part of both the one who committed a breach of faith is responsible, is not applicable. Petitioner alone is guilty of neglect, so he must suffer from it.

BORLOUGH V. FORTUNE ENTERPRISES, INC. and CA

On March 8, 1952, the United Car Exchange sold to the Fortune Enterprises, IncChevrolet (1947); Plate No. 34-1465 Type: Sedan; Motor No. EAA-20834 (Exhibit D). The same car was sold by the Fortune Enterprises, Inc. to Salvador Aguinaldo Aguinaldo executed a promissory note for not paying in full. The amount of P2,400 payable in 20 installments including interest thereon at 12 per cent per annum. To secure the payment of promissory note, Aguinaldo executed a deed of chattel mortgage over said car. The deed was duly registered in the office of the Register of Deeds of Manila at 1:12 p.m. on March 11, 1952. Aguinaldo, as the buyer-mortgagor defaulted in the payment of the installments due, counsel for Fortune Enterprises Inc. addressed a letter on May 16, 1952, requesting him to make the necessary payment and to keep his account up to date, to that no court action would be resorted to. It further appears that the above-described car found its way again into the United Car Exchange which sold to O. N. Borlough on April 6, 1952, in cash for P4,000. Accordingly, he registered it on the following day with the Motor Vehicles Office. It also appears from the record that defendant 0. N. Borlough took possession of the vehicle from the time he purchased it On July 10, 1952, Fortune Enterprises, Inc. brought action against Salvador Aguinaldo to recover the balance of the purchase price. Borlough filed a third-party complaint, claiming the vehicle. Thereupon, Fortune Enterprises, Inc. amended its complaint, including Borlough as a defendant and alleging that he was in connivance with Salvador Aguinaldo and was unlawfully hiding and concealing the vehicle in order to evade seizure by judicial process. Borlough answered alleging that he was in legal possession thereof, having purchased it in good faith and for the full price of P4,000, and that he had a certificate of registration of the vehicle issued by the Motor Vehicles Office, and he prayed for the dismissal of the complaint, the return of the vehicle and for damages against the plaintiff. The vehicle was seized by the sheriff of Manila on August 4, 1952 and was later sold at public auction. The CFI rendered judgment in favor of Borlough, it ordered Fortune Enterprices to pay Borlough the sum of P4,000, with interest at 6 per cent per annum, from the date of the seizure of the car on August 4, 1952, and in addition thereto, attorney's fees in the sum of P1,000.

Upon appeal to the CA, it modified of the judgment on the ground that the mortgage was superior, being prior in point of time, to whatever rights may have been acquired by Borlough by reason of his possession and by the registration of his title in the Motor Vehicle Office.

ISSUE: Whether the prior mortgage executed over a motor vehicle, registered under the Chattel Mortgage Law only, without annotation thereof in the Motor Vehicles Office, should prevail over a subsequent registration of the vehicle in the Motor Vehicles Office accompanied by actual possession of the motor vehicle. NO

HELD: the court upheld the right to vehicle of Borlough as against the previous and prior mortgage to Fortune Enterprises, which failed to record its lien in accordance with the Revised Motor Vehicles LawIt is to be noted that under section 4 (b) of the Revised Motor Vehicles Law the Chief of the Motor Vehicles Office is required to enter or record xxx transfers of motor vehicles "with a view of making and keeping the same and each all of them as accessible as possible to and for persons and officers properly interested in the same," and to "issue such reasonable regulations governing the search and examination of the documents and records . . . as will be consistent with their availability to the public and their safe and secure prevention."Two recording laws are here being invoked, one by each contending party the Chattel Mortgage Law (Act No. 1508), by the mortgagor and the Revised Motor Vehicles Law (Act No. 3992), by a purchaser in possession. What effect did the passenger of the Revised Motor Vehicles Law have on the previous enactment? Passage of the Revised Motor Vehicles Law had the effect of repealing the Chattel Mortgage Law, as regards registration of motor vehicles and of the recording of transaction affecting the same. The provisions of the Revised Motor Vehicles Law on registration are not inconsistent with does of the Chattel Mortgage Law. Implied repeals are not favored; implied repeals are permitted only in cases of clear and positive inconsistency. The first paragraph of section 5 indicates that the provisions of the Revised Motor Vehicles Law regarding registration and recording of mortgage are not incompatible with a mortgage under the Chattel Mortgage Law. The section merely requires report to the Motor Vehicles Office of a mortgage; it does not state that the registration of the mortgage under the Chattel Mortgage Law is to be dispensed with. We have, therefore, an additional requirements in the Revised Motor Vehicles Law, aside from the registration of a chattel mortgage, which is to report a mortgage to the Motor Vehicles Office, if the subject of the mortgage is a motor vehicle; the report merely supplements or complements the registration. The recording provisions of the Revised Motor Vehicles Law, therefore, are merely complementary to those of the Chattel Mortgage Law. A mortgage in order to affect third persons should not only be registered in the Chattel Mortgage Registry, but the same should also be recorded in the motor Vehicles Office as required by section 5 (e) of the Revised Motor Vehicles Law. And the failure of the respondent mortgage to report the mortgage executed in its favor had the effect of making said mortgage ineffective against Borlough, who had his purchase registered in the said Motor Vehicles Office.Revised Motor Vehicles LawChattel Mortgage Law

is a special legislation enacted to "amend and compile the laws relative to motor vehiclesthe latest attempt to assemble and compile the motor vehicle laws of the Philippines, all the earlier laws on the subject having been found to be very deficient in form as well as in substanceit had been designed primarily to control the registration and operation of motor vehiclesis a general law covering mortgages of all kinds of personal property.

On failure to comply with the statute, the transferee's title is rendered invalid as against a subsequent purchaser from the transferor, who is enabled by such failure of compliance to retain the indicia of ownership, such as a subsequent purchaser in good faith, or a purchaser from a conditional buyer in possession; and the lien of a chattel mortgage given by the buyer to secure a purchase money loan never becomes effective in such case as against an innocent purchaser. (60 Corpus Juris Secundum, p. 171.)One holding a lien on a motor vehicle, in so far as he can reasonably do so, must protect himself and others thereafter dealing in good faith by complying and requiring compliance with the provisions of the laws concerning certificates of title to motor vehicles, such as statutes providing for the notation of liens or claims against the motor vehicle certificate of title or manufacturer's certificate, or for the issuance to the mortgagee of a new certificate of ownership. Where the lien holder has satisfied himself that the existence of the lien is recited in the certificate of title, he has done all that the law contemplates that he should do, and there is notice to the public of the existing lien, which continues valid until the record shows that it has been satisfied and a new certificate issued on legal authority, even though another certificate which does not disclose the lien is procured as the result of false statements made in the application therefore, and the vehicle is purchased by a bona fide purchaser.The holder of a lien who is derelict in his duty to comply and require compliance with the statutory provisions acts at his own peril, and must suffer the consequence of his own negligence; and accordingly, he is not entitled to the lien as against a subsequent innocent purchaser filed as provided by other chattel mortgage statutes. The rule is otherwise, however, as against claimants not occupying the position of innocent purchaser, such as a judgment creditor, or one acquiring title with actual notice of an unregistered lien, and the statutes do not protect a purchaser holding under registered title if a link in the title is forgery. Moreover, such statute will not impair vested rights of a mortgage under a chattel mortgage duly recorded. (60 C.J.S., pp. 181-182.The Revised Motor Vehicles Law, expressly and specifically regulate the registration, sale or transfer and mortgage of motor vehicles. The following provisions of said law may help decide the legal question now under consideration:SEC. 5 (c) Reports of motor vehicle sales. On the first day of each month, every dealer in motor vehicles shall furnish the Chief of the Motor Vehicles Office a true report showing the name and address of each purchase of a motor vehicle during the previous month and the manufacturer's serial number and motor number; a brief description of the vehicle, and such other information as the Chief of the Motor Vehicles Office may require.SEC. 5 (e) Report of mortgages. Whenever any owner hypothecates or mortgage any motor vehicle as surety for a debt or other obligation, the creditor or person in whose favor the mortgage is made shall, within seven days, notify the Chief of the Motor Vehicles Office in writing to the effect, stating the registration number of the motor vehicle, date of mortgage, names and addresses of both parties, and such other information as the Chief of the Motor Vehicles Office may require. This notice shall be signed jointly by the parties to the mortgage.On termination, cancellation or foreclosure of the mortgage, a similar written notice signed by both parties, shall be forwarded to the Chief of the Motor Vehicles Office by the owner.These notice shall be filed by the Chief of the Motor Vehicles Office in the motor records, and in the absence of more specific information, shall be deemed evidence of the true status of ownership of the motor vehicle. (Revised Motor Vehicles Law.)

TEODORO ALMIROL v. ROD OF AGUSAN

On June 28, 1961 Teodoro Almirol purchased from Arcenio Abalo a parcel of land situated in the municipality of Esperanza, province of Agusan, and covered by original certificate of title P-1237 in the name of "Arcenio Abalo, married to Nicolasa M. Abalo." Sometime in May, 1962 Almirol went to the office of the Register of Deeds of Agusan in Butuan City to register the deed of sale and to secure in his name a transfer certificate of title. Registration was refused by the Register of Deeds upon the following grounds, inter alia, stated in his letter of May 21, 1962:1. That Original Certificate of Title No. P-1237 is registered in the name of Arcenio Abalo, married to Nicolasa M. Abalo, and by legal presumption, is considered conjugal property;2. That in the sale of a conjugal property acquired after the effectivity of the New Civil Code it is necessary that both spouses sign the document; but3. Since, as in this case, the wife has already died when the sale was made, the surviving husband can not dispose of the whole property without violating the existing law (LRC Consulta No. 46 dated June 10, 1958). To effect the registration of the aforesaid deed of absolute Sale, it is necessary that the property be first liquidated and transferred in the name of the surviving spouse and the heirs of the deceased wife by means of extrajudicial settlement or partition and that the consent of such other heir or heirs must be procured by means of another document ratifying this sale executed by their father. In view of such refusal, Almirol went to CFI of Agusan on a petition for mandamus , to compel the Register of Deeds to register the deed of sale and to issue to him the corresponding transfer certificate of title, and to recover P5,000 in moral damages and P1,000 attorney's fees and expenses of litigation. Almirol's asserted that it is but a ministerial duty of the respondent to perform the acts required of him, and that he has no other plain, speedy and adequate remedy in the ordinary course of law.

In his answer with counterclaim for P10,000 damages, the ROD of Agusan reiterated the grounds stated in his letter of May 21, 1962, averred that the petitioner has "other legal, plain, speedy and adequate remedy at law by appealing the decision of the respondent to the Honorable Commissioner of Land Registration," and prayed for dismissal of the petition.CFI, on October 16, 1963, ", dismissed the petition and declared that "mandamus does not lie . . . because the adequate remedy is that provided by Section 4 of Rep. Act 1151. Hence the present appeal by Almirol.ISSUE: whether mandamus will lie to compel the respondent to register the deed of sale in question. NOHELD: The court a quo correctly dismissed the petition for mandamus. The administrative remedy must be resorted to by the petitioner before he can have recourse to the courts.Under Section 4 of RA 1151 (An Act Creating the Land Registration Commission) provides that "where any party in interest does not agree with the Register of Deeds . . . the question shall be submitted to the Commissioner of Land Registration," who thereafter shall "enter an order prescribing the step to be taken or memorandum to be made," which shall be "conclusive and binding upon all Registers of Deeds." The Court also held that ROD of Agusan has no legal grounds to refuse to register the deed. Whether a document is valid or not, is not for the register of deeds to determine; this function belongs properly to a court of competent jurisdiction. The law on registration does not require that only valid instruments shall be registered. How can parties affected thereby be supposed to know their invalidity before they become aware, actually or constructively, of their existence or of their provisions? If the purpose of registration is merely to give notice, then questions regarding the effect or invalidity of instruments are expected to be decided after, not before, registration. It must follow as a necessary consequence that registration must first be allowed, and validity or effect litigated afterwards. (Gurbax Singh Pablo & Co. vs. Reyes and Tantoco, 92 Phil. 182-183).Indeed, a register of deeds is entirely precluded by section 4 of Republic Act 1151 from exercising his personal judgment and discretion when confronted with the problem of whether to register a deed or instrument on the ground that it is invalid. For under the said section, when he is in doubt as to the proper step to be taken with respect to any deed or other instrument presented to him for registration, all that he is supposed to do is to submit and certify the question to the Commissioner of Land Registration who shall, after notice and hearing, enter an order prescribing the step to be taken on the doubtful question. Section 4 of R.A. 1151 reads as follows: Reference of doubtful matters to Commissioner of Land Registration. When the Register of Deeds is in doubt with regard to the proper step to be taken or memorandum to be made in pursuance of any deed, mortgage, or other instrument presented to him for registration, or where any party in interest does not agree with the Register of Deeds with reference to any such matter, the question shall be submitted to the Commissioner of Land Registration either upon the certification of the Register of Deeds, stating the question upon which he is in doubt, or upon the suggestion in writing by the party in interest; and thereupon the Commissioner, after consideration of the matter shown by the records certified to him, and in case of registered lands, after notice to the parties and hearing, shall enter an order prescribing the step to be taken or memorandum to be made. His decision in such cases shall be conclusive and binding upon all Registers of Deeds: Provided, further, That when a party in interest disagrees with the ruling or resolution of the Commissioner and the issue involves a question of law, said decision may be appealed to the Supreme Court within thirty days from and after receipt of the notice thereof.