GR L 16606; (June, 1963) (Digest)
G.R. No. L-16606; June 29, 1963
STANDARD COMMERCIAL CORPORATION, petitioner-appellant, vs. REGISTER OF DEEDS OF MANILA, respondent-appellee.
FACTS
On October 24, 1957, Standard Commercial Corporation executed a real estate mortgage over two parcels of land in favor of the Philippine Bank of Commerce to secure a P1,500,000 obligation of its sister corporation, Consolidated Philippines, Inc. This mortgage was duly registered. Subsequently, on June 23, 1959, the same mortgagor executed an instrument titled “Amendment to Real Estate Mortgage” in favor of the same bank. This second instrument, while styled as an amendment, contained provisions that cancelled the original P1,500,000 obligation of Consolidated Philippines, Inc. and instead secured a new and larger obligation of P1,900,000 owed by a different sister corporation, Standard Investment Corporation. The mortgaged properties from the first deed were included, along with one additional parcel.
When this second instrument was presented for registration, the Register of Deeds of Manila required the payment of registration fees and documentary stamp taxes based on the full new amount of P1,900,000. The mortgagor, Standard Commercial Corporation, contested this, arguing that fees should only be computed on the incremental difference of P400,000. After the Land Registration Commission sustained the Register of Deeds’ position, the mortgagor paid under protest and elevated the case on appeal.
ISSUE
Whether the second instrument, the “Amendment to Real Estate Mortgage,” should be treated as a mere amendment to the original mortgage for the purpose of computing registration fees and documentary stamp taxes, or as an entirely new and independent contract.
RULING
The Supreme Court ruled against the petitioner-appellant, affirming the position of the Register of Deeds. The Court held that the second instrument constituted a new and independent contract of mortgage, not a mere amendment. The legal logic is clear from the instrument’s own terms: it extinguished the original secured obligation of Consolidated Philippines, Inc. and introduced a completely distinct obligation of a different debtor, Standard Investment Corporation, for a different and larger sum. Since the original secured debt was cancelled, the original mortgage was effectively discharged. The subsequent transaction, therefore, created a fresh security interest for a new principal obligation.
Consequently, for registration purposes, it must be treated as an original mortgage deed. The fees and taxes must be computed on the basis of the full consideration of the new contract—the P1,900,000 obligation it secures—and not merely on the incremental difference. To rule otherwise would allow parties to circumvent payment of lawful fees by disguising a new mortgage as an amendment. The resolution of the Land Registration Commission was affirmed.