The Supreme Court clarified that a petition for reconstitution of a lost owner’s duplicate certificate of title cannot be granted if the certificate is not actually lost but is in the possession of another party. The Court emphasized that reconstitution is a remedy available only when the original certificate is genuinely lost or destroyed, and the applicant must demonstrate good faith and the absence of any intention to defraud. This ruling protects the integrity of the Torrens system and prevents fraudulent attempts to obtain duplicate titles.

Mortgage Disputes and the Limits of Title Reconstitution

This case revolves around a property dispute between Spouses Crisanto Alcazar and Susana Villamayor (petitioners) and Evelyn Arante (respondent). The crux of the matter is whether the Regional Trial Court (RTC) of Pasig City had jurisdiction to order the reconstitution of a lost owner’s duplicate copy of Transfer Certificate of Title (TCT) No. 169526. The petitioners claimed the title was lost and sought a new one, while the respondent asserted that she possessed the original title as collateral for a loan she extended to the petitioners. The Court of Appeals (CA) sided with the respondent, annulling the RTC’s decision. The question is, did the CA err in concluding that the RTC lacked jurisdiction and awarding damages to the respondent?

The petitioners argued that the Court of Appeals erred in its factual findings, particularly in giving credence to the respondent’s version of events and ruling that TCT No. 169526 was never lost or misplaced. They also contended that Section 109 of Presidential Decree (P.D.) No. 1529, which provides for the replacement of lost duplicate certificates, should apply to their situation. Finally, they challenged the CA’s award of moral and exemplary damages, as well as attorney’s fees, to the respondent. These arguments are deeply rooted in the specific facts of the case, hinging on the circumstances surrounding the alleged loss of the title and the subsequent mortgage transaction.

The Supreme Court firmly stated that it is not its role to re-evaluate evidence already considered by lower courts. The court reiterated that in a petition for review on certiorari under Rule 45, only questions of law may be raised. The Court cited Heirs of Pacencia Racaza v. Spouses Abay-Abay, G.R. No. 198402, June 13, 2012, emphasizing this fundamental principle. The resolution of factual issues is the domain of lower courts, and their findings are generally respected. Therefore, the Court would only intervene if certain exceptions were present, such as contradictory findings between the Court of Appeals and the trial court, or findings based on speculation.

The Court found no compelling reason to deviate from the CA’s findings. First, the petitioners’ claim that they did not mortgage the property was unsupported by evidence. It is a basic tenet of law that the burden of proof lies with the one who alleges a fact, as highlighted in Spouses Guidangen v. Wooden, G.R. No. 174445, February 15, 2012. A mere allegation, without supporting evidence, cannot be the basis for a legal conclusion. Second, the real estate mortgage contract was notarized, giving it a presumption of regularity. This presumption can only be overturned by clear, strong, and convincing evidence, as stated in Ros v. Philippine National Bank-Laoag Branch, G.R. No. 170166, April 6, 2011. The petitioners failed to provide such evidence, thus, the presumption of due execution stood.

The Court also addressed the petitioners’ argument that the TCT should be considered lost due to fraud and deceit. According to the Court, the ordinary meaning of “loss” as used in Section 109 of Presidential Decree No. 1529 should apply. The court cited numerous cases: Secretary of Justice v. Koruga, G.R. No. 166199, April 24, 2009; South African Airways v. Commissioner of Internal Revenue, G.R. No. 180356, February 16, 2010; and Ruben E. Agpalo, Statutory Construction, p. 180 (2003). The Court stated that words are presumed to have been employed by the lawmaker in their ordinary and common use and acceptation. The respondent proved that the TCT was not lost but was in her possession, negating the premise for reconstitution.

Crucially, the Supreme Court upheld the CA’s decision that the RTC lacked jurisdiction to order the reconstitution of the title. The Court emphasized that reconstitution is a remedy available only when the original certificate is genuinely lost or destroyed. The landmark case of Strait Times, Inc. v. CA, G.R. No. 126673, August 28, 1998, clearly established that a reconstituted certificate is void if the owner’s duplicate certificate of title has not been lost, but is in fact in the possession of another person, because the court that rendered the decision had no jurisdiction. This principle has been consistently upheld in subsequent cases, including Rexlon Realty Group, Inc. v. Court of Appeals, G.R. No. 128412, March 15, 2002, and Eastworld Motor Industries Corporation v. Skunac Corporation, G.R. No. 163994, December 16, 2005. Since the respondent possessed the original TCT, the RTC’s order for reconstitution was null and void.

The Court clarified that the issue of whether the respondent obtained possession of the TCT through fraudulent means was irrelevant to the determination of whether the title should be cancelled and a new one issued. The proper remedy for the petitioners, had they been defrauded, would have been to file a criminal complaint for estafa or a suit for specific performance to compel the respondent to return the title. The Court then discussed the ownership of the property at the time of the mortgage. Petitioners admit that petitioner Alcazar’s father died on December 12, 1967, while his mother died on March 4, 2002 and that he is their sole heir. According to Articles 774 and 777 of the Civil Code, Alcazar became the absolute owner of the subject lot by operation of law upon the death of his mother in 2002.

The Court also affirmed the award of damages to the respondent, finding that the petitioners’ malicious and fraudulent actions had caused her reputational damage, social humiliation, and mental anguish. To justify an award of moral damages, it is necessary to plead and prove moral suffering, mental anguish, fright, and the like, as established in Espino v. Bulut, G.R. No. 183811, May 30, 2011. The CA found that the respondent had successfully substantiated her claims of wounded feelings, sleepless nights, and mental anxiety. Exemplary damages were also deemed appropriate as a deterrent to similar misconduct, and attorney’s fees were justified due to the respondent’s need to engage legal counsel to protect her rights and reputation. Based on Article 2208 (1) of the Civil Code, attorney’s fees may be awarded when exemplary damages are awarded.

FAQs

What was the key issue in this case?	The key issue was whether the RTC had jurisdiction to order the reconstitution of a lost owner’s duplicate certificate of title when the certificate was not actually lost but in the possession of another party.
What is reconstitution of title?	Reconstitution of title is a legal process to restore a lost or destroyed certificate of title to land. It aims to recreate the original document based on available records and evidence.
When is reconstitution of title appropriate?	Reconstitution is appropriate only when the original certificate of title has been genuinely lost or destroyed. It is not a substitute for recovering a title that is in the possession of another person.
What happens if the owner’s duplicate is not actually lost?	If the owner’s duplicate certificate is not actually lost but is in the possession of another person, a court order for reconstitution is void for lack of jurisdiction.
What should the owner do if someone else possesses their title?	The owner should file a criminal complaint for recovery of document or a suit for specific performance to compel the possessor to return the title, rather than seeking reconstitution.
What is the significance of a notarized document?	A notarized document carries a presumption of regularity and due execution, making it strong evidence of the agreement it represents. This presumption can only be overturned by clear and convincing evidence of fraud or forgery.
What is the burden of proof in alleging forgery?	The person alleging forgery has the burden of proving it with clear and convincing evidence. A mere denial is not sufficient to overcome the presumption of regularity of a notarized document.
What damages can be awarded in cases of malicious actions?	In cases of malicious and fraudulent actions, moral damages, exemplary damages, and attorney’s fees can be awarded to compensate the injured party for reputational damage, mental anguish, and the cost of legal representation.

This case underscores the importance of verifying the actual loss of a certificate of title before initiating reconstitution proceedings. It also highlights the significance of notarized documents and the legal remedies available to parties who are fraudulently deprived of their property. Diligence in safeguarding property titles and seeking appropriate legal counsel are crucial in protecting one’s rights.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: Spouses Crisanto Alcazar and Susana Villamayor v. Evelyn Arante, G.R. No. 177042, December 10, 2012