GR L 5798; (February, 1954) (Digest)
G.R. No. L-5798; February 26, 1954
Demetria Flores, plaintiff-appellant, vs. Rehabilitation Finance Corporation, defendant-appellee.
FACTS
On August 31, 1928, K. Ishiwata purchased lot No. 379, and on March 4, 1932, he purchased lot No. 169. Both deeds of sale and the corresponding Transfer Certificates of Title (TCT No. T-10022 and TCT No. 14275) were issued in the name of “K. Ishiwata, single, Japanese citizen.” On September 29, 1938, Ishiwata obtained a loan of P70,000 from the National Investment Board (later the Agricultural and Industrial Bank), mortgaging the two lots. The mortgage was duly registered. Due to non-payment, the mortgage was foreclosed in 1940, and the property was auctioned to the Agricultural and Industrial Bank. After the redemption period expired, the bank took possession in 1941. The Rehabilitation Finance Corporation, as the bank’s successor, obtained the certificates of title. Demetria Flores filed a complaint on August 2, 1948, seeking to annul the mortgage and foreclosure, claiming she was entitled to one-half of the lots. She alleged she had lived with Ishiwata as common-law wife since 1922, contributed P50,000 to his construction business, worked as cashier and paymaster, and that the lots were acquired during their cohabitation. She claimed ignorance of the mortgage until 1946.
ISSUE
Whether the mortgage executed by K. Ishiwata is valid as to the whole property, or only as to one-half, given Demetria Flores’s claim of co-ownership acquired through their common-law partnership.
RULING
The mortgage is valid as to the whole property. The Supreme Court affirmed the trial court’s decision absolving the defendant. The certificates of title were solely in the name of “K. Ishiwata, single,” and there was no proof that the lots were acquired through the joint efforts or labor of Flores and Ishiwata. Even if Flores assisted in the business, there was no evidence linking the purchase of the lots to that business. The National Investment Board and its successors were mortgagees in good faith, relying on the face of the Torrens certificates of title without notice of any defect or claim by Flores. Under the Torrens system, a mortgagee in good faith who advances money on land covered by a Torrens title, without notice of any defect, obtains a valid title as mortgagee. The foreclosure proceedings were regular, and Flores’s silence from 1940 until 1948 was incompatible with her claim of co-ownership.