Philippine Supreme Court Resolutions

G.R. No. 178674^[*]  (Republic of the Philippines v. Nordec Philippines).

This case is about the requirements in a petition for judicial reconstitution of land titles.

On August 10, 1999 Nordec filed with the Regional Trial Court (RTC) of Quezon City a petition for judicial reconstitution of Transfer Certificates of Title (TCTs) 54794, 54796, and 54798 of the Register of Deeds of Quezon City which were in the name of Marvex Insecticides and Chemical Industries, Inc. (Marvex), covering three parcels of land that once formed part of the Marvex Compound.^[1]

For a time, Marvex mortgaged certain portions of the Marvex Compound to the Development Bank of the Philippines (DBP) to secure its loans. When the loans could not be paid, the DBP foreclosed the lands and sold them to respondent Nordec Philippines (Nordec). Nordec later discovered, however, that the three parcels of land subject matter of this case, although part of the Marvex compound, were actually not among the properties that Marvex mortgaged to DBP and later sold to Nordec. Because it needed the three parcels of land, Nordec negotiated with Marvex's successor-in-interest, Futurex Trading Corporation (Futurex) for the purchase of the same.

Marvex was a family corporation headed by the late Santiago Yap. The stockholders dissolved Marvex prior to his death in 1997 and the subject three parcels of land were transferred by assignment to Futurex, another family corporation belonging to a group of Santiago Yap's children. Marvex executed a deed of assignment in Futurex's favor and delivered the owner's copies of the titles to the latter. These documents, however, could no longer be found. Consequently, Santiago Yap's children, namely Carmencita Yap, as president of Futurex, Esperanza Yap, as secretary of Futurex, and James R. Yap, as manager of Marvex prior to its dissolution, executed a Deed of Confirmation^[2]  affirming the assignment of the Marvex properties in question to Futurex. On July 31, 1999 Futurex executed a Deed of Absolute Sale in favor of Nordec covering the subject three parcels of land.^[3] The owner's copies of the TCTs remained missing.

Nordec further alleged in its petition for reconstitution that the original TCTs 54794, 54796, and 54798 kept with the Register of Deeds of Quezon City were lost due to a fire which gutted portions of the Quezon City Hall on June 11, 1988 as certified to by the Register of Deeds.^[4]

The RTC served copies of the notice of hearing and the petition for reconstitution on the Office of the Solicitor General (OSG), the Register of Deeds of Quezon City, the Land Registration Authority, the Director of Lands, the City Prosecutor of Quezon City, the City Attorney of Quezon City, and the owners and occupants of the properties adjacent to the subject lots. Copies of the same were likewise posted at the lobby of the Quezon City Hall, the lobby of the Quezon City Hall of Justice, and at a conspicuous place where the subject properties were located.

There having been no opposition to the petition, the RTC directed the ex parte  presentation of evidence in the case.

On August 15, 2005 the RTC issued an Order, approving the petition and ordering the Register of Deeds of Quezon City to reconstitute TCTs 54794, 54796, and 54798. The OSG appealed this order to the Court of Appeals (CA) which denied the appeal in its decision of June 29, 2007,^[5] hence this petition.

The sole issue presented in this case is whether or not the CA erred in ruling that the requirements for reconstitution were satisfied although:

1. The jurisdictional requirements for reconstitution proceedings were not satisfied since Nordec failed to send notices of the petition to all interested parties; and

2. The reconstitution cannot be based on mere photocopies of the allegedly lost certificates of title.

The OSG points out that Republic Act (R.A.) 26 and previous cases decided under it required that, in actions for reconstitution, in addition to the posting and publication of the notice, individual notices have to be sent to all interested parties. The OSG claims that copies of the notice were not sent to Marvex, Futurex, and the DBF.

But the evidence presented in the case shows that Marvex had already been dissolved as early as 1997. Consequently, it was not possible to furnish it with notice of the petition. Carmencita Yap, president of Futurex and daughter of Santiago Yap testified to such dissolution and her testimony had remained unrefuted. The OSG of course claims that Nordec failed to present a certification from the Securities and Exchange Commission to prove Marvex's dissolution. But, while perhaps desirable, the same was not indispensable especially since the dissolution of Marvex was never specifically put in issue during the hearing of the petition.

As to the lack of notice to Futurex, the CA was correct in ruling that this had been cured by the appearance at the hearing of Carmencita Yap, the president and general manager of Futurex. The OSG of course argues that notice to the president of a corporation may not necessarily be notice to the corporation itself. This may be true but it has been held that knowledge acquired by an officer of a corporation relating to matters within the scope of his or her authority is equivalent to notice to the corporation.^[6] Notice in proceeding such as this is jurisdictional because it is a requirement of due process or the right of the party concerned to a hearing. That Carmencita Yap, the president of Futurex, testified to her company's sale of the lands to Nordec more than satisfies such requirement.

The OSG also claims that the subject lands appear to have been mortgaged to the DBP considering that Marvex had offered the properties as collateral to the DBP to secure an additional loan as evidenced by the DBF's letter of June 29, 1982.^[7] But the OSG had chosen to ignore two important documents. The first was Marvex's letter^[8] to the DBP which clearly shows that it rejected the DBP's mortgage proposal, withdrew the request for additional loan, and instead sought the restructuring of its existing loans. The second was DBP's letter of June 21, 1999,^[9] unequivocally stating that the subject lands were not among those that Marvex mortgaged to it. The OSG was, therefore, merely speculating.

The RTC ordered the reconstitution of the TCTs partly based on photocopies of the owner's copy of the TCTs that Nordec requested from the DBP. These photocopies came into the possession of the DBP in the ordinary course of its business, when Marvex offered the subject lands as collateral for an additional loan.

The OSG argues, however, that the CA erred in affirming reconstitution based on photocopies of the allegedly lost TCTs since photocopies are not among the documents which may be made basis for reconstitution under R.A. 26. Citing Department of Agrarian Reform v. Republic of the Philippines.^[10] the OSG argues that reconstitution based on a mere photocopy is "reconstitution based on plainly inferior evidence." Further, the OSG contends that under the best evidence rule, photocopies are merely secondary evidence and Nordec failed to justify the presentation of secondary evidence.

But nothing specifically prohibits photocopies from being used as basis for reconstitution. Section 3(f) of R.A. 26 itself states that the court may use "[a]ny other document which, in the judgment of the court, is sufficient and proper basis for reconstituting the lost or destroyed certificate of title." As to the ruling in Department of Agrarian Reform, that case was dismissed mainly because the trial court failed to acquire jurisdiction over the action. The Court in that case pointed out that the Department of Agrarian Reform, which sought the reconstitution, had no interest over the subject property and failed to explain how it came into possession of photocopies of the alleged lost TCTs.

Besides, Nordec proved that the original copies of the TCTs on file with the Register of Deeds of Quezon City had been lost in a fire and that the owner's copies could no longer be found. These are precisely the reasons for the action for reconstitution. At any rate, the OSG failed to make timely objections to the admissibility of the secondary evidence introduced in the case. It asserted its objection to the photocopies only on appeal to the CA. Further, the RTC based the reconstitution not only on the photocopies presented but also on other available documents such as the corresponding Land Registration Commission plans and technical details.

WHEREFORE, the Court AFFIRMS in its entirety the decision of the Court of Appeals in CA-G.R. CV 86371 dated June 29, 2007.

SO ORDERED.

Very truly yours,

MA. LUISA L. LAUREA
Clerk of Court

By:

(Sgd.) TERESITA AQUINO TUAZON
  Asst. Clerk of Court

Endnotes:

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^[*] J. Nachura, on official leave, J. Velasco, Jr., additional member, per Special Order 933 dated January 24, 2011.

^[1] Docketed as LRC Case No. Q-11824 (99). 

^[2] Exhibit "O," rollo, pp. 211-213. 

^[3] Exhibit "P," id. at 214-216. 

^[4] Exhibit "Q," id. at 217. 

^[5] In CA-G.R. CV 86371, penned by Associate Justice Mariflor P. Punzalan Castillo and concurred in by Associate Justices Marina L. Buzon and Rosmari D. Carandang 

^[6] Carrascoso, Jr. v. Court of Appeals, 514 Phil. 48, 88 (2005). 

^[7] Exhibit "M," rollo, p. 99. 

^[8] Exhibit "N," id. at 100. 

^[9] Exhibit "J," id. at 92. 

^[10] 503 Phil. 379 (2005).