G.R. No. L-14601; August 31, 1960
PHILIPPINE NATIONAL BANK, petitioner-appellant, vs. EMILIANO DE LA VIÑA and JUAN URIARTE ZAMACONA, oppositors-appellees.

FACTS

The Philippine National Bank (PNB) filed a petition in Cadastral Case No. 34 of the Court of First Instance of Negros Occidental. It alleged that Lots Nos. 3107, 3109, and 3121 of the San Carlos Cadastral Survey were originally registered in the names of the late Jose de la Viña and his wife, Maria Española, under Original Certificates of Title (OCTs) Nos. 23883, 23881, and 23876, respectively. Carlos Esteban, as judicial administrator of Jose de la Viña’s estate (Special Proceedings No. 6812) and as attorney-in-fact of Maria Española, obtained a loan of P300.00 from PNB, secured by a lien on Lot 3109, which was annotated on OCT No. 23881. Later, Maria Española and Carlos Esteban jointly executed a real estate mortgage for P1,200.00 in favor of PNB over Lots 3107 and 3121, approved by the probate court and annotated on the OCTs. These OCTs were later cancelled, and Reconstituted Original Certificates (RO-2253, RO-2255, and RO-1431) were issued without mentioning PNB’s mortgage liens. On August 11, 1953, Emiliano de la Viña and Maria Española, with court authority, sold the lots to Juan Uriarte Zamacona, resulting in the issuance of Transfer Certificates of Title (TCTs) in Zamacona’s name. PNB, claiming its duplicates of the OCTs (considered lost) had been found, invoked Section 18 of Republic Act No. 26 to seek an order directing the Register of Deeds to annotate its liens on Zamacona’s TCTs or to cancel the reconstituted titles. The oppositors (Zamacona and the estate administrator) moved to dismiss, arguing that the reconstitution was judicial, Zamacona was a purchaser in good faith, and the matter should be an ordinary civil action. The lower court dismissed PNB’s petition, and PNB appealed.

ISSUE

Whether the Philippine National Bank’s petition for annotation of its mortgage liens on the reconstituted and subsequent transfer certificates of title should be granted under Section 18 of Republic Act No. 26 , considering the prior judicial reconstitution of the titles and the sale to a third party.

RULING

The Supreme Court dismissed the appeal, upholding the lower court’s dismissal of PNB’s petition. The Court held:
1. Proper Venue: PNB’s petition was properly filed in the cadastral court as per Section 22 of Republic Act No. 26 , which requires such petitions to be filed in the original land registration or cadastral case.
2. Effect of Judicial Reconstitution: Under Republic Act No. 26 , a judicially reconstituted title, by express provision of Section 10, is not subject to encumbrances that were noted in the original but not in the reconstituted title (unlike extrajudicial reconstitution under Section 7, which preserves such encumbrances). The reconstituted titles here were issued after judicial proceedings, and PNB’s liens were not annotated on them.
3. Jurisdiction and Notice: The judicial reconstitution proceedings were in rem; jurisdiction was acquired through posting and publication in the Official Gazette. Failure to send registered mail notice to PNB did not render the proceedings jurisdictionally defective. PNB could have sought annulment of the reconstitution order on grounds of fraud under Article 1146 of the Civil Code within four years, but it did not (the reconstitution order was dated March 31, 1949).
4. Section 18 of Republic Act No. 26 : This provision, stating that a recovered original certificate “shall prevail over the reconstituted certificate,” does not apply to mere mortgagee’s duplicate certificates of title, as held in Santiago Syjuco, Inc. vs. Philippine National Bank. PNB only had duplicates, not the originals.
5. Validity of Reconstituted Titles: Reconstituted titles have the same validity as originals under Section 7 of Republic Act No. 26 . While reconstitution should reflect the title as it stood at loss, liens not appearing in the judicially reconstituted title are considered foreclosed to avoid uncertainty.
6. Preservation of Debt Rights: The ruling does not prejudice PNB’s right to pursue the mortgage debt itself, if not otherwise barred by prescription, which is distinct from the limitation period for annulling the reconstitution.
The Court affirmed the dismissal without costs.