Garcia vs. Court of Appeals

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380 SUPREME COURT REPORTS ANNOTATED


Garcia vs. Court of Appeals

*
Nos. L-48971 & 49011. January 22, 1980.

PACIFICO GARCIA, petitioner-appellant, vs. COURT OF


APPEALS, CAROLINA LAPUZ-GOZON, assisted by her husband
BENJAMIN M. GOZON, TECLA GUTIERREZ, ROSARIO
FELIX, PAULINO D. BUENAVENTURA, RAYMUNDO
DIONISIO, VIRGILIO AUSTRIA and MARCEON VICENCIO,
respondents-appellees; PHILIPPINE NATIONAL BANK,
petitioner-appellant, vs. COURT OF APPEALS (Third Division),
CAROLINA LAPUZ-GOZON, assisted by her husband
BENJAMIN M. GOZON, TECLA GUTIERREZ, ROSARIO
FELIX, PAULINO D. BUENAVENTURA, RAYMUNDO
DIONISIO, VIRGILIO AUSTRIA and MARCEON VICENCIO,
respondentsappellees.

Land Registration; A transfer certificate of title cannot be nullified by


the issuance 43 years later of another TCT over the same lot to another
person due to the failure of the Register of Deeds to cancel the OCT
preceding the title issued previously.—There can be no doubt that Lapus
was an innocent purchaser for value. He validly transmitted to his
successors-in-interest his indefeasible title or ownership over the disputed
lots or parcels of land. That title could not be nullified or defeated by the
issuance forty-three years later to other persons of another title over the
same lots due to the failure of the register of deeds to cancel the title
preceding the title issued to Lapus. This must be so considering that Lapus
and his successors-ininterest remained in possession of the disputed lots and
the rival claimants never possessed the same.

_____________

* SECOND DIVISION

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VOL. 95, JANUARY 22, 1980 381

Garcia vs. Court of Appeals

Same; The earlier registered title prevails.—The general rule is that in


the case of two certificates of title, purporting to include the same land, the
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earlier in date prevails, whether the land comprised in the latter certificate
be wholly, or only in part, comprised in the earlier certificate”.
Same; Same.—And the rule that in case of double registration the
owner of the earner certificate is the owner of the land applies to the
successive vendees of the owners of such certificates. The vendee of the
earlier certificate would be the owner as against the vendee of the owner of
the later certificate” (Legarda and Prieto vs. Saleeby, supra, pages 597-9).
Same; In case of involuntary registration an entry in the day book is
sufficient notice.—That ruling was superseded by the holding in the later six
cases of Levin vs. Bass, 91 Phil. 420, where a distinction was made between
voluntary and involuntary registration, such as the registration of an
attachment, levy upon execution, notice of lis pendens, and the like. In cases
of involuntary registration, an entry thereof in the day book is a sufficient
notice to all persons even if the owner’s duplicate certificate of title is not
presented to the register of deeds.
Same; In voluntary registration, the buyer becomes the registered
owner the moment the deed is entered in the day book and he surrenders the
owner’s duplicate certificate of title and pays the fees.—On the other hand,
according to the said cases of Levin vs. Bass, in case of voluntary
registration of documents an innocent purchaser for value of registered land
becomes the registered owner, and, in contemplation of law the holder of a
certificate of title, the moment he presents and files a duly notarized and
valid deed of sale and the same is entered in the day book and at the same
time he surrenders or presents the owner’s duplicate certificate of title
covering the land sold and pays the registration fees, because what remains
to be done lies not within his power to perform. The register of deeds is duty
bound to perform it. (See Potenciano vs. Dineros, 97 Phil. 196.)
Same; In the case at bar a new title was issued to the purchaser.—The
instant case is not identical to the Bass cases. Here the deed of sale in favor
of Lapus, which was judicially authorized, was entered in the entry book
and a new title was issued to him. As already stated, and this point should be
underscored, the deed of sale in favor of Lapus contains the notation that it
was annotated on the

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Garcia vs. Court of Appeals

back of OCT No. 983 (presumably, the original and owner’s duplicate
thereof).
Same; In the case at bar the transaction subsequently made by the first
transferee on the land in question were matters of public record, e.g.
mortgage made to PNB.—It should be further observed that the deed of sale
in favor of Lapus and the titles issued to him and his successors-in-interest,
together with his mortgage in 1929 of the disputed lots to the PNB itself, are
all a matter of public record in the registry of deeds.

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Same; Same.—“When a conveyance has been properly recorded, such


record is constructive notice of its contents and all interests, legal and
equitable, included therein.” “Under the rule of notice, it is presumed that
the purchaser has examined every instrument of record affecting the title.
Such presumption is irrefutable. He is charged with notice of every fact
shown by the record and is presumed to know every fact which an
examination of the record would have disclosed” (Legarda and Prieto vs.
Saleeby, supra, page 600).

APPEAL from the decision of the Court of Appeals.

The facts are stated in the opinion of the Court.


     Agapito Mendoza & Antonio G. Ibarra for appellant Pacifico
Garcia
     Laurel Law Office and Flores, Ocampo, Dizon & Domingo for
private appellees.

AQUINO, J.:

This case is about the issuance of two or more transfer certificates of


title to different persons for the same lots, or subdivisions thereof,
due to the fact that the original title was allegedly not cancelled
when the first transfer certificates of title were issued to replace the
original title. The factual background is as follows:

1. On August 9, 1918, a deed of sale for two parcels of land, E


and G (with a total area of more than seven hectares) of the
Hacienda Maysilo, located in Malabon, Rizal and covered
by Original Certificate of Title No. 983, was executed in
favor of Ismael Lapus, a bona fide occupant thereof. The
deed was executed pursuant to an order of the Court of First
Instance of

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VOL. 95, JANUARY 22, 1980 383


Garcia vs. Court of Appeals

Rizal in Civil Case No. 391, Negao vs. Vidal, a partition


proceeding involving the said hacienda (See Bustamante vs.
Tuason, 47 Phil. 433, 434).
2. The deed of sale was presented for registration at
twotwenty-five in the afternoon of January 15, 1920 and
was recorded as Primary Entry No. 7710. That deed of sale
itself contains the following entries showing that it was
annotated on the back of OCT No. 983:

“Presentado en este Registro a las 2:25 de la tarde del dia de hoy segun el
Asiento No. 7710 de Tomo 10 del Libro Diario, Pasig, Rizal, Enero 15,
1920.

Register of Deeds” (Exh. B-12)


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“Inscrito el documento que precede al dorso del Certificado de Titulo


Original No. 983 del Tomo A-9, de inscritor en las paginas 113 y 114 ambos
del Libro T-25 de Registro como certificados de Titulo Nos. 4910 y 4911,
archivado en el Legajo T-#4910, Pasig, Rizal, Enero 15, 1920.”

Register of Deeds” (Exh. B-1).

However, it seemed that, contrary to the foregoing entry and the


official routine or standard operating procedure, the deed of sale was
not annotated on OCT No. 983 and that, consequently, that title was
apparently not cancelled. Why that annotation did not appear in
OCT No. 983 and why there was no notation of the cancellation of
that title, as it appeared in 1962, is a mystifying circumstance in this
case.

3. As a result of the registration of that deed of sale, Transfer


Certificate of Title No. 4910 was issued to Lapus for the
two parcels of land, E and G, and Transfer Certificate of
Title No. 4911 was issued for the remaining five lots
covered by OCT No. 983 (which embrace an area of more
than two hundred fifty-eight hectates registered in the
names of more than twenty-six-co-owners). TCT Nos 4910
and 4911 contain the following entries: “Transfer from No.
983. Originally registered on the 29th day of January, in the
year 1917 in Book No. A-9, page 215, of the said Province
of Rizal, pursuant to a decree entered in Case No. 3850.”
4. Lapus on different occasions mortgaged the two parcels of
land to secure his obligations to the Philippine National

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Garcia vs. Court of Appeals

Bank, the Government and the Philippine Trust Company.


He died in 1951. The two parcels of land were inherited by
his daughter, Carolina Lapuz-Gozon. She became the
registered owner of the two lots. She subdivided them into
fifty-five lots. She sold some of the subdivision lots to her
co-respondentsappellees herein. Lapus and his successors-
in-interest have been in possession of the two parcels even
before 1910 or for more than seventy years.
5. Meanwhile, in 1962, certain alleged heirs (collectively
known as the Riveras) of the late Maria de la Concepcion
Vidal filed a motion in Land Registration Cases Nos. 4429
and 4496 of the Court of First Instance of Rizal, alleging
that they were deprived of their participation in the
Hacienda Maysilo covered by OCT No. 983 and for other
titles and that, since only OCT No. 983 was supposedly
unencumbered, all the land covered by that title should be
adjudicated to them. The court granted the motion. It should
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be stressed that OCT No. 983 appears to have remained


uncancelled notwithstanding the sale to Lapus of two
parcels covered by it and the fact that it had been replaced
by TCT Nos. 4910 and 4911.
6. On June 7, 1963, OCT No. 983 was definitely cancelled and
in lieu thereof Transfer Certificate of Title No. 112235 was
issued to the Riveras. Later, Lots 5 and 7 of the said title
(corresponding to parcels E and G which were sold to
Ismael Lapus in 1918 as stated earlier) were assigned by
Bartolome Rivera to Sergio Cruz and Pacifico Garcia and
TCT Nos. 112743 and 112742 were issued to Cruz and
Garcia, respectively. Thus, two sets of transfer certificates
of title for Lots E and G or 5 and 7, originally covered by
OCT No. 983, were issued, one to the heir of Ismael Lapus
and another set to the successors-in-interest of the Riveras.
7. On October 22, 1964, Garcia subdivided Lot 7 (G) into Lots
A and B. Garcia retained Lot A and obtained TCT No.
134958 for it. He assigned Lot B to Antonio Muñoz on
November 5, 1964. As a consequence of the assignment,
TCT No. 112742 was cancelled and TCT No. 134957 was
issued to Muñoz. In 1965, he mortgaged Lot B to the
Associated Banking Corporation to secure a loan of
P200,000.

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VOL. 95, JANUARY 22, 1980 385


Garcia vs. Court of Appeals

8. On the other hand, on July 17, 1964 Cruz sold to Santiago


Go Lot 5 (E) covered by TCT No. 112743. TCT No.
131329 was issued to Go on August 25, 1964. On
December 23, 1964, Go mortgaged Lot 5 to the Philippine
National Bank (PNB) to secure a loan of P50,000 which
was later increased to P60,000.
9. Muñoz and Go did not pay their mortgage debts. The two
banks foreclosed the mortgages. The PNB bought the
mortgaged lot at the auction sale held on May 4, 1967. The
sheriff issued to it a certificate of sale dated May 19, 1967
but at that time there was already a notice of lis pendens
annotated on the title of the mortgaged lot. TCT Nos.
212153 and 236881 for the mortgaged lots were issued to
the Associated Banking Corporation and the Philippine
National Bank, respectively.
10. The Riveras and their successors-in-interest have never set
foot on the disputed lots.
11. Mrs. Gozon later learned that the Riveras and their
successors-in-interest had acquired the land (more than two
hundred fifty-eight hectares) covered by OCT No. 983. Her
lawyer and a surveyor informed her that parcels E and G,
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which she inherited from her father, were identical to Lots 5


and 7 which were conveyed to Cruz and Garcia. She
registered adverse claims on the titles covering Lots 5 and
7. On December 27, 1965 she and the persons to whom she
had transferred portions of parcels E and G filed with the
Court of First Instance of Rizal at Caloocan City against the
Riveras, Cruz, Muñoz, Garcia, Associated Banking
Corporation, PNB and others an action to quiet title and for
damages.
12. A notice of lis pendens was annotated on January 25, 1966
on the titles of Garcia, Muñoz and Go. The notice of lis
pendens was annotated on the title of the PNB when the
sale in its favor was registered on December 13, 1969.
13. The trial court in its decision of July 30, 1975 declared
valid TCT Nos. 141802 to 141855 and 143512 issued to
Mrs. Gozon and her co-plaintiffs. It voided TCT No.
112235 issued to the Riveras and all titles and transactions
emanating therefrom insofar as those titles covered the lots
embraced in

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Garcia vs. Court of Appeals

plaintiffs’ titles. The Riveras were ordered to pay the


plaintiffs twenty thousand pesos as attorney’s fees.
14. The trial court also ordered Muñoz to pay the Associated
Banking Corporation, in the event that the bank would be
evicted from the lot covered by TCT No. 212153, two
hundred sixty-five thousand seventy-two pesos and fifteen
centavos with twelve percent interest per annum from the
date of the eviction plus ten thousand pesos as attorney’s
fees.
15. Santiago Go was ordered to pay the PNB, should it be
evicted from the lot covered by TCT No. 236881, the sum
of sixty thousand pesos plus nine percent interest per
annum from the date of the eviction and six thousand pesos
as attorney’s fees.
16. That judgment of the trial court was affirmed by the Court
of Appeals in its decision of May 25, 1978. Garcia and the
PNB appealed from that decision. The Associated Banking
Corporation, now the Associated Citizens Bank, tried to
appeed but it was not able to file its petition for review (L-
49010).

Garcia contends that the Court of Appeals erred in not holding that
his title is valid and that the titles of Ismael Lapus and his daughter,
Mrs. Gozon, are void because the sale to Lapus was not annotated
on OCT No. 983.
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The PNB contends that the Court of Appeals erred in not holding
that its title is valid, that it is mortgagee and buyer in good faith and
for value and that Lapus and his successors-ininterest lost their right
to the disputed lots due to their negligence or inaction.
The issue is whether the 1920 title issued to Lapus and the titles
derived therefrom should prevail over the 1963 title issued to the
Riveras and the subsequent titles derived from it. Should Lapus’ title
prevail even if it was not annotated by the register of deeds on the
anterior or parent title which was not cancelled before 1963? It was
that noncancellation which led to the issuance of the duplicative title
to the Riveras and eventually to the execution of the controversial
mortgages and foreclosure sales to the two banks.
We hold that the two appeals have no merit. The title of Lapus
and the titles derived therefrom should be given effect. The title of
the Riveras and the titles springing from it are void.

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Garcia vs. Court of Appeals

There can be no doubt that Lapus was an innocent purchaser for


value. He validly transmitted to his successors-ininterest his
indefeasible title or ownership over the disputed lots or parcels of
land. That title could not be nullified or defeated by the issuance
forty-three years later to other persons of another title over the same
lots due to the failure of the register of deeds to cancel the title
preceding the title issued to Lapus. This must be so considering that
Lapus and his successors-in-interest remained in possession of the
disputed lots and the rival claimants never possessed the same.
“The general rule is that in the case of two certificates of title,
purporting to include the same land, the earlier in date prevails,
whether the land comprised in the latter certificate be wholly, or only
in part, comprised in the earlier certificate” (Hogg, Australian
Torrens System 823, citing cases and cited in Legarda and Prieto vs.
Saleeby, 31 Phil. 590, 595).
“Where two certificates (of title) purport to include the same
land, the earlier in date prevails. x x x. In successive registrations,
where more than once certificate is issued in respect of a particular
estate or interest in land, the person claiming under the prior
certificate is entitled to the estate or interest; and that person is
deemed to hold under the prior certificate who is the holder of, or
whose claim is derived directly or indirectly from the person who
was the holder of the earliest certificate issued in respect thereof”
(Niblack, Analysis of the Torrens System, page 237, cited in
Legarda and Prieto vs. Saleeby, supra, pages 595-6).
And the rule that in case of double registration the owner of the
earlier certificate is the owner of the land applies to the successive
vendees of the owners of such certificates. “The vendee of the earlier
certificate would be the owner as against the vendee of the owner of

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the later certificate” (Legarda and Prieto vs. Saleeby, supra, pages
597-9).
It is settled that is this jurisdiction the maxim prior est in
tempore, potior est in jure (he who is first in time is preferred in
right) is followed in land registration matters (La Urbana vs.
Bernardo, 62 Phil. 790, 806).
Appellant Garcia invokes the ruling that the mere entry of a
document in the day or entry book without noting it on the cer-

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Garcia vs. Court of Appeals

tificate of title is not a sufficient registration (Bass vs. De la Rama,


73 Phil. 682, 685).
That ruling was superseded by the holding in the later six cases
of Levin vs. Bass, 91 Phil. 420, where a distinction was made
between voluntary and involuntary registration, such as the
registration of an attachment, levy upon execution, notice of lis
pendens, and the like. In cases of involuntary registration, an entry
thereof in the day book is a sufficient notice to all persons even if the
owner’s duplicate certificate of title is not presented to the register of
deeds.
On the other hand, according to the said cases of Levin vs. Bass,
in case of voluntary registration of documents an innocent purchaser
for value of registered land becomes the registered owner, and, in
contemplation of law the holder of a certificate of title, the moment
he presents and files a duly notarized and valid deed of sale and the
same is entered in the day book and at the same time he surrenders
or presents the owners duplicate certificate of title covering the land
sold and pays the registration fees, because what remains to be done
lies not within his power to perform. The register of deeds is duty
bound to perform it. (See Potenciano vs. Dineros, 97 Phil. 196.)
The instant case is not identical to the Bass cases. Here the deed
of sale in favor of Lapus, which was judicially authorized, was
entered in the entry book and a new title was issued to him. As
already stated, and this point should be underscored, the deed of sale
in favor of Lapus contains the notation that it was annotated on the
back of OCT No. 983 (presumably, the original and owner’s
duplicate thereof).
But why in 1962 it appeared that no such annotation was found
on the back of OCT No. 983, contrary to what was stated in the 1918
deed of sale, is a mystery that the trial court and the plaintiffs failed
to unravel during the trial. Moreover, the title issued to Lapus
contains the usual notation that it was a transfer from a previous title
which in this case was OCT No. 983.
It should be further observed that the deed of sale in favor of
Lapus and the titles issued to him and his successors-ininterest,
together with his mortgage in 1929 of the disputed
389
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VOL. 95, JANUARY 22, 1980 389


Garcia vs. Court of Appeals

lots to the PNB itself, are all a matter of public record in the registry
of deeds.
As stressed in Legarda and Prieto vs. Saleeby, 31 Phil. 590, 600,
“the record is notice to all the world. All persons are charged with
the knowledge of what it contains. All persons dealing with the land
so recorded, or any portion of it, must be charged with notice of
whatever it contains. The purchaser is charged with notice of every
fact shown by the record and is presumed to know every fact which
the record discloses.”
“When a conveyance has been properly recorded, such record is
constructive notice of its contents and all interests, legal and
equitable, included therein.” “Under the rule of notice, it is
presumed that the purchaser has examined every instrument of
record affecting the title. Such presumption is irrefutable. He is
charged with notice of every fact shown by the record and is
presumed to know every fact which an examination of the record
would have disclosed” (Legarda and Prieto vs. Saleeby, supra, page
600).
As Justice Johnson says, “this presumption cannot be overcome
by proof of innocence or good faith. Otherwise, the very purpose
and object of the law requiring a record would be destroyed. Such
presumption cannot be defeated by proof of want of knowledge of
what the record contains any more than one may be permitted to
show that he was ignorant of the provisions of the law. The rule that
all persons must take notice of the facts which the public record
contains is a rule of law. The rule must be absolute. Any variation
would lead to endless confusion and useless litigation” (Legarda and
Prieto vs. Saleeby, supra, pp. 600-601).
As to the PNB’s claim that it was a mortgagee and purchaser in
good faith and for value, the Appellate Court held that the bank
should have made an on-the-spot investigation of the lot mortgaged
by Go to ascertain whether he was in possession of it or it was
claimed by other persons. Its failure to do so precludes the bank
from being considered as a mortgagee in good faith and for value
(Gatioan vs. Gaffud, L21953, March 28, 1969, 27 SCRA 706).
On the other hand, the trial court held that the PNB was not a
buyer in good faith when it bought Go’s lot at the auction

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Garcia vs. Court of Appeals

sale because there was already a notice of lis pendens annotated on


his title.

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In the Gatioan case, it appears that in 1935 Rufina Permison


secured a Torrens title for a parcel of land on the basis of a free
patent. The land was sold to Encarnacion Gatioan and Transfer
Certificate of Title No. T-1212 was issued to her. She mortgaged the
land three times to the PNB.
In 1956, the spouses Sixto Gaffud and Villamora Logan were
able to secure a Torrens title for the same lot also on the basis of a
free patent. They mortgaged the land also to the PNB. The Secretary
of Agriculture and Natural Resources, on discovering that two
Torrens titles were issued for the same land, recommended the
cancellation of the later title issued to the Gaffud spouses. As the
PNB refused to cancel the mortgaged executed by Gatioan, in spite
of the fact that she had made full payment of the mortgage debt, she
filed against the Gaffud spouses and the PNB an action to quiet title.
It was held that Gatioan’s title should prevail over that of the
Gaffud spouses and that the mortgage executed by them in favor of
the PNB was void. The Gaffud spouses were ordered to pay
damages to Gatioan.
Since the applicable rule in the instant case is that the earlier
certificate of title should be recognized as superior and controlling,
there is no justification for relying on the doctrine laid down by
Justice Holmes in Eliason vs. Wilborn, 281 U.S. 457, that “as
between two innocent persons, one of whom must suffer the
consequence of a breach of trust, the one who made it possible by
his act of confidence must bear the loss.”
There was no breach of trust in this case. What is noteworthy in
this case is that after it was recited in the registered deed of sale that
sale was annotated at the back of the title covering the lots sold, it
turned out that the title did not contain such an annotation and that
the title was not cancelled. For that anomaly, the purchaser, Ismael
Lapus, the holder of the earlier title, was not culpable or
blameworthy.
WHEREFORE, the judgment of the Court of Appeals, affirming
the decision of the trial court, should stand. Costs against the
appellants.

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VOL. 95, JANUARY 22, 1980 391


Garcia vs. Court of Appeals

SO ORDERED.

     Barredo (Chairman), Antonio, Concepcion Jr. and Santos,


JJ., concur.
     Abad Santos, J., no part.

Decision affirmed.

Notes.—Where one purchases from a subdivision owner two lots


and has paid more than the value of one lot, the former is entitled to

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a certificate of title to one lot in case of default. (Hermanos vs.


Saldana, 55 SCRA 324).
A bona fide sale and transfer of real property, although not
recorded, is good and valid against a subsequent attempt to levy
execution on the same property by a creditor of the vendor.
(Panizales vs. Palmores, 47 SCRA 376).
The vendee a retro automatically acquires ownership of the
property when the period stipulated for repurchase expires without
the vendor having exercised her right. (Oviedo vs. Garcia, 40 SCRA
17).
An option to purchase land need not be in a public document.
(De Guzman vs. Guieb, 48 SCRA 68).
The action of appellant in suspending payments to appellee
Corporation was a breach of contract tainted with fraud or malice,
such that it having acted in bad faith, it was not entitled to ask the
court to give it further time to make payment and thereby erase the
breach it had deliberately incurred. (Luzon Brokerage Co., Inc. vs.
Maritime Building Co., Inc., 43 SCRA 93).
So long as a decree of registration has not been issued,
registration proceedings are still pending for the purposes of the pre-
Commonwealth Act 3110, and, when lost or destroyed must be
reconstituted in conformity with said Act. (Villegas vs. Fernando, 27
SCRA 1119; Sampedro vs. Director of Lands, 27 SCRA 1119.)
Where a petition for reconstitution would have the certificates of
title reconstituted from the plans and technical description of the lots
involved, which sources may full properly under section 3(e) or 3(f)
of Republic Act No. 26, the possession thereof or the one who is
known to have an interest in the

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Dumlao vs. COMELEC

property should be sent a copy of the notice of the petition at the


expense of the petitioner, pursuant to section 13 of the said Act.
(Manila Railroad Co. vs. Moya, 14 SCRA 358.)
A judicially reconstituted certificate of title has the same validity
and level effect as the original thereof (Section 7, Republic Act No.
26). Unlike in the extrajudicial reconstitution of titles, where there is
the statutory reservation that the new title “shall be without
prejudice to any party whose right or interest in the property was
duly noted in the original, at the same time it was lost or destroyed”
(Section 7, Republic Act No. 26), a judicially reconstituted title, by
express provisions of the statute (Section 10, Ibid.), “shall not be
subject to the encumbrance” “referred to in Section 2 of Republic
Act 26. (Municipality of Legaspi vs. A.L. Ammen Transportation
Co., Inc., 26 SCRA 218.)

——o0o——

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8/16/2019 SUPREME COURT REPORTS ANNOTATED VOLUME 095

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