GR L 4602; (August, 1951) (Digest)
G.R. No. L-4602; August 31, 1951
JOSEFA PEÑAFLORIDA VDA. DE ARANCILLO and VICENTE ARANCILLO, movants and appellants, vs. REHABILITATION FINANCE CORPORATION, oppositor-appellee.
FACTS
On February 19, 1947, Carmen Ubalde executed a deed of donation inter vivos in favor of Asuncion Arancillo, predecessor-in-interest of the appellants, involving Lot No. 7669 of the Cadastral Survey of Pototan, Iloilo, covered by Original Certificate of Title No. 41448. Asuncion Arancillo died on June 18, 1948, and was succeeded by the appellants. The lot had been mortgaged to the Agricultural and Industrial Bank, predecessor-in-interest of the appellee Rehabilitation Finance Corporation, prior to the donation. On July 29, 1948, Carmen Ubalde liquidated her mortgage indebtedness and executed a new mortgage in favor of the appellee, and the owner’s copy of the Torrens title remained in the mortgagee’s possession. On October 13, 1948, the appellants requested the appellee to lend them the owner’s copy of the title to register the deed of donation, but the appellee refused. The appellants filed a motion in court to compel the appellee to deliver the title to the Register of Deeds for registration. The Court of First Instance of Iloilo denied the motion and a subsequent motion for reconsideration. The mortgage contract contained a proviso prohibiting the mortgagor from selling, disposing of, or encumbering the mortgaged property without the written consent of the mortgagee, and stipulating that if the property is sold, the vendee shall assume the mortgage.
ISSUE
Whether the appellee mortgagee may be compelled, against its will, to give its consent to the registration of the deed of donation by delivering the owner’s copy of the Torrens title, in view of the prohibition in the mortgage contract against disposal of the property without the mortgagee’s written consent.
RULING
The order appealed from is affirmed. The appellee cannot be compelled to give its consent to the registration of the deed of donation. The prohibition in the mortgage contract against the sale, disposal, or encumbrance of the mortgaged property without the mortgagee’s consent is valid and not contrary to law, morals, or public policy. Consequently, the appellee cannot be forced by the courts to consent to the registration, as doing so would allow the mortgagor to circumvent the valid prohibition. The case of Bank of the Philippine Islands vs. Ty Camco Sobrino is not applicable because, in that case, the second mortgage had already been registered, raising a question of its validity, whereas here the donation has not been registered, and the issue is the mortgagee’s right to withhold consent under the contract. The court is not to inquire into the mortgagee’s reasons for withholding consent; it is sufficient that the prohibiting agreement is valid and binding.