GR L 6833; (October, 1955) (Digest)
G.R. No. L-6833; October 10, 1955
Testate Estate of the late Isabel de Rohde thru the executor ANSELMO H. SHOTWELL, plaintiff-appellee, vs. Intestate Estate of the late Manuel Urquico, represented by AMALIA URQUICO DE LAZATIN, Administratrix, et al., defendants-appellants.
FACTS
Manuel Urquico executed a mortgage on October 25, 1927, in favor of William J. Rohde to secure a loan of P77,500. On August 26, 1938, the debt was reduced to P71,743, with interest at 8% per annum, secured by properties under Transfer Certificate of Title No. 126, with the owner’s duplicate held by the mortgagee. On May 1, 1944, during the Japanese occupation, Urquico sold the mortgaged property to defendants Lucila Cruz, Jose Perez, Margarita Prodon, and Graciana de Llamado, who assumed the mortgage debt. The vendees attempted to pay Rohde and later his son-in-law, Anselmo H. Shotwell, but payment was refused. On October 28, 1944, the vendees paid the mortgage indebtedness (approximately P97,000) to the Enemy Property Custodian of the Imperial Japanese Forces, which issued a certificate of payment. This payment and the deed of sale were registered, leading to the cancellation of TCT No. 126 and the issuance of TCT No. 20666 to the vendees. Rohde died on July 16, 1945. His widow, Isabel de Rohde, through executor Shotwell, later discovered the release and filed an action to declare the payment void and to enforce the mortgage.
ISSUE
Whether the payment of the mortgage debt to the Enemy Property Custodian of the Japanese Imperial Forces during the occupation was valid and had the effect of extinguishing the mortgage obligation.
RULING
Yes. The Supreme Court reversed the trial court’s decision and dismissed the complaint. Applying the doctrine in Haw Pia vs. China Banking Corporation and the directly controlling precedent of Hodges vs. Gay, the Court held that the Enemy Property Custodian was an entity authorized by law to receive payment of debts due to enemy aliens. Under Article 1162 of the Civil Code, such payment was valid and binding upon the creditor, thereby extinguishing the mortgage obligation. The Register of Deeds of Tarlac was ordered to cancel the annotation of the original mortgage on the relevant certificates of title.