Philippine Bank of Communications v. Register of Deeds for the Province of Benguet

A registered owner who fails to prove the loss or destruction of the owner's duplicate certificate of title in a first petition may not be barred by res judicata from refiling a new petition to replace the same, because proceedings for replacement of a lost owner's duplicate certificate only involve re-issuance and do not pass upon ownership, and the Rules of Court apply to land registration cases only by analogy, in a suppletory character, and whenever practicable and convenient.

PBCOM is a banking institution that acquired a parcel of land in Benguet through an extrajudicial foreclosure sale on March 2, 1985, and is the registered owner thereof under TCT No. 21320 on file with the Register of Deeds. The property was not included in the bank's inventory of assets because its La Union branch failed to forward the pertinent records to the Makati head office; PBCOM only learned of the property's existence upon receiving a May 2010 real property tax notice from the Municipal Treasurer of La Trinidad, Benguet. As a bank, PBCOM is bound by R.A. 8791 (General Banking Law) to dispose of acquired real property within five years, making the owner's duplicate certificate of title indispensable for registering any voluntary transaction over the property.

PBCOM is the registered owner of a parcel of land in Benguet covered by TCT No. 21320, having acquired the property on March 2, 1985 through an extrajudicial foreclosure sale conducted by its La Union branch. The property was not included in the bank's inventory of assets because the La Union branch failed to forward all pertinent records of the acquisition to the Makati head office. PBCOM only became aware of the property's existence when it received a May 2010 Notice and Reminder to Real Property Tax Payers from the Office of the Municipal Treasurer of La Trinidad, Benguet. Upon discovery, the bank exerted efforts to locate the owner's duplicate copy of TCT No. 21320 but was unable to find it, prompting the filing of an affidavit of loss with the Registry of Deeds of Benguet.

On January 28, 2011, PBCOM filed its first petition for issuance of a replacement owner's duplicate copy of TCT No. 21320, docketed as LRC Case No. 11-AD-1335 and raffled to RTC-Branch 62, La Trinidad, Benguet. After PBCOM's ex parte presentation of evidence, the RTC-Branch 62 dismissed the petition on July 29, 2011 for insufficiency of evidence. The court found that PBCOM's lone witness, Orlando Rafael Cucueco, Jr., head of the bank's Acquired Property Management Unit, had no personal knowledge of the existence or fact of loss of the title. The court stressed that PBCOM failed to show it exerted all efforts to determine the whereabouts of the missing title from its available records and from past and present officers, employees, and legal counsel who could have knowledge of the property. The court noted it was possible that a previous accountable officer did not turn over the title or that the lawyer handling the foreclosure failed to include it in the documents forwarded to the main office, but PBCOM did not verify with these persons. The court emphasized that if any other person is known or suspected to be in possession of the title, the petition would not be the appropriate remedy.

PBCOM filed an omnibus motion for reconsideration of the July 29, 2011 Order, praying that it be allowed to present additional evidence, and filed a manifestation suggesting publication of the fact of loss. The RTC-Branch 62 gave PBCOM five days to file a supplemental motion, but PBCOM failed to comply and did not set its motions for hearing. Consequently, in its February 9, 2012 Order, the RTC-Branch 62 considered the omnibus motion and manifestation as abandoned. Instead of appealing the July 29, 2011 Order, PBCOM filed a second petition for replacement of the lost owner's duplicate of TCT No. 21320, docketed as LRC Adm. Case No. 12-AD-1401 and raffled to RTC-Branch 63. The allegations in the second petition were essentially the same as those in the first.

On April 27, 2012, the RTC-Branch 63 dismissed the second petition motu proprio on the ground of res judicata, holding that the first petition's dismissal for insufficiency of evidence constituted an adjudication on the merits, and that the second petition involved the same parties and cause of action. PBCOM's motion for reconsideration was denied on June 7, 2012. PBCOM then filed a notice of appeal, which it subsequently withdrew, before filing a petition for certiorari with the Court of Appeals. The CA dismissed the certiorari petition, holding that PBCOM availed of the wrong remedy and that all elements of res judicata were attendant. PBCOM then elevated the matter to the Supreme Court via a Petition for Review on Certiorari under Rule 45.

• Inapplicability of Res Judicata to Land Registration: PBCOM argued that the Rules of Court and the concept of res judicata do not apply to land registration proceedings.
• Correct Remedy: PBCOM contended that it availed of the correct remedy in filing a Rule 65 petition for certiorari.
• Right to Replacement: PBCOM claimed that the dismissal of the first petition did not bar the filing of a second petition, for otherwise it would be forever barred from securing a replacement copy of the missing title.
• Void Order for Lack of Due Process: PBCOM contended that the RTC-Branch 63's motu proprio dismissal of the second petition on res judicata was void for lack of due process.

• Correct Application of Res Judicata: Respondent, through the Office of the Solicitor General, argued that the RTC-Branch 63 correctly dismissed the second petition on the ground of res judicata.
• Wrong Remedy: Respondent argued that PBCOM availed of the wrong remedy in filing a Rule 65 petition for certiorari instead of an ordinary appeal.

• Proper Remedy: Whether PBCOM availed of the correct remedy to challenge the dismissal of the second petition.
• Res Judicata: Whether the RTC-Branch 63 correctly dismissed the second petition on the ground of res judicata.

• Proper Remedy: No. Appeal — and not a special civil action for certiorari — was the correct remedy to challenge the dismissal of the second petition on the ground of res judicata, as such dismissal is a final order that completely disposes of the case and is expressly appealable under Rule 16, Section 1(f) in relation to Section 5 of the Rules of Court.
• Res Judicata: No. Res judicata does not bar the refiling of a petition for replacement of a lost owner's duplicate certificate of title, because such proceedings do not adjudicate ownership rights, the Rules of Court apply to land registration only suppletorily, and a dismissal for insufficiency of evidence in such proceedings is without prejudice to subsequent compliance.

• Proper Remedy: A dismissal on the ground of res judicata is a final order that completely disposes of the case and leaves nothing more to be done in the trial court. Under Rule 41, Section 1 of the Rules of Court, an appeal may be taken from a judgment or final order that completely disposes of the case. A dismissal on res judicata does not fall within the enumeration of orders from which no appeal may be taken; in fact, Rule 16, Section 1(f) expressly identifies a cause of action barred by prior judgment as a ground for a motion to dismiss, and Section 5 thereof declares such dismissal to be with prejudice and subject to the right of appeal. As appeal was available, a Rule 65 petition for certiorari would not prosper even if grave abuse of discretion was alleged, because the remedies of appeal and certiorari are mutually exclusive and not alternative or successive. PBCOM itself admitted the availability of appeal when it initially filed a notice of appeal before withdrawing it. PBCOM's contention that the dismissal was void for lack of due process was also untenable, as Rule 9, Section 1 of the Rules of Court expressly allows motu proprio dismissal when it appears from the pleadings or evidence on record that the action is barred by a prior judgment. Nevertheless, in the interest of substantial justice, the Court relaxed the technical rules of procedure to resolve the novel issue presented.

• Res Judicata: The certificate of title under the Torrens system is indefeasible and incontrovertible evidence of ownership. P.D. 1529 mandates the issuance of certificates of title in duplicates — the original kept by the Register of Deeds and the owner's duplicate kept by the registered owner. The owner's duplicate is indispensable because no voluntary instrument affecting the land shall be registered without its presentation, except in cases expressly provided by law or upon order of the court. Without the owner's duplicate, transfers, conveyances, mortgages, and leases — while valid between the parties — will not bind the registered land or third persons. A registered owner therefore has a substantive right to possess the owner's duplicate and to seek its replacement in case of loss or destruction. Rule 1, Section 4 of the Rules of Court expressly provides that the Rules shall not apply to land registration cases except by analogy or in a suppletory character and whenever practicable and convenient. Proceedings for the replacement of a lost owner's duplicate certificate, like proceedings for reconstitution of original certificates, only involve the re-issuance of a new certificate in its original form and condition and do not pass upon ownership of the land. There is thus no conclusive adjudication of rights between adversarial parties. Under Section 109 of P.D. 1529, the court's authority is limited to determining whether the prescribed procedure was complied with and whether the title was in fact lost or destroyed. If the requisites are not satisfied, the court should dismiss the petition without prejudice to the registered owner's subsequent compliance. The RTC-Branch 62's dismissal of the first petition was actually without prejudice, as it merely found that PBCOM failed to show it exerted best efforts to locate the title. Applying res judicata would perpetually preclude PBCOM from registering any voluntary transaction over its own property and from complying with its statutory obligations under R.A. 8791 to dispose of acquired real property within five years — an absurd result. Accordingly, PBCOM, as the undisputed registered owner, cannot be barred by res judicata from filing a second petition to replace its lost owner's duplicate certificate of title.

• Inapplicability of Res Judicata to Replacement of Lost Owner's Duplicate Certificate of Title — Res judicata does not bar a registered owner from refiling a petition for replacement of a lost or destroyed owner's duplicate certificate of title where the first petition was dismissed for insufficiency of evidence. Proceedings for replacement under Section 109 of P.D. 1529 only involve re-issuance of the certificate in its original form and condition and do not pass upon ownership of the land. There is no conclusive adjudication of rights between adversarial parties. A dismissal for failure to prove loss is without prejudice to the registered owner's subsequent compliance with the requisites prescribed by law.

• Suppletory Application of the Rules of Court to Land Registration — Under Rule 1, Section 4 of the Rules of Court, the Rules shall not apply to election cases, land registration, cadastral, naturalization, and insolvency proceedings, except by analogy or in a suppletory character and whenever practicable and convenient. The nature and purpose of the Torrens system and the absolute indispensability of the owner's duplicate certificate of title mandate that primacy be given to the registered owner's substantive right to possess and replace the same.

• Substantive Right to the Owner's Duplicate Certificate of Title — A registered owner has a substantive right to own and possess the owner's duplicate certificate of title and to replace the same in case of loss or destruction. The owner's duplicate safeguards ownership and is crucial to the full and effective exercise of ownership rights over registered land, as no voluntary transaction affecting the land will be registered without its presentation.

• Appeal as the Proper Remedy for Dismissal on Res Judicata — A dismissal on the ground of res judicata is a final order that completely disposes of the case and is appealable under Rule 16, Section 1(f) in relation to Section 5 of the Rules of Court. Certiorari under Rule 65 is not the proper remedy where appeal is available, as the remedies of appeal and certiorari are mutually exclusive and not alternative or successive.

• "a registered owner who fails to prove the loss or destruction of his/her owner's duplicate certificate of title may not be barred from refiling a new petition to replace the same" — This is the core holding of the case, articulating the principle that res judicata does not perpetually preclude a registered owner from seeking replacement of a lost owner's duplicate certificate of title.

• "When there is a right, there must be a remedy." — This passage encapsulates the Court's rationale for relaxing procedural barriers: because the registered owner has a substantive right to possess and replace the owner's duplicate certificate, the law must provide a corresponding remedy.

• "it would be extremely impracticable, inconvenient, and unjust to perpetually preclude the registered owner from registering any voluntary transaction, i.e., sale, donation, mortgage, lease, etc., on his/her land simply because he/she failed to prove, to the satisfaction of the court, that he/she, in fact, lost his/her title." — This passage explains why applying res judicata in the context of replacement proceedings produces an absurd result, undermining the Torrens system's guarantee of security and peace of mind.

• "if the requisites are not satisfied, the court, after notice and hearing, should dismiss the petition without prejudice to the registered owner's subsequent compliance with the requisites prescribed by law." — This defines the proper effect of a dismissal in replacement proceedings, clarifying that such dismissal is without prejudice rather than an adjudication on the merits barring refiling.

• Medina vs. Spouses Lozada, G.R. No. 185303, August 1, 2018 — Followed for the proposition that an order of dismissal, whether correct or not, is a final order and the remedy of the aggrieved party is to appeal the order, not to file certiorari.

• United Alloy Phils. Corp. vs. United Coconut Planters Bank, 773 Phil. 242 (2015) — Followed for the rule that if a dismissal is based on Rule 16, Section 1(f) (res judicata), the dismissal is with prejudice and the remedy is appeal.

• Chingkoe vs. Republic, 715 Phil. 651 (2013) — Followed for the principle that certiorari is unavailable when appeal is available, as the remedies of appeal and certiorari are mutually exclusive.

• Katon vs. Palanca, Jr., 481 Phil. 168 (2004) — Followed, citing Gumabon vs. Larin, 422 Phil. 222 (2001), for the rule that a court may motu proprio dismiss a claim when it appears from the pleadings or evidence on record that the action is barred by a prior judgment.

• The Heirs of Alfredo Cullado vs. Gutierrez, G.R. No. 212938, July 30, 2019 — Followed for the principle that the bedrock of the Torrens system is the indefeasibility and incontrovertibility of a land title, giving the registered owner complete peace of mind and security in ownership.

• Spouses Layos vs. Fil-Estate Golf and Development, Inc., 583 Phil. 72 (2008) — Followed for the definition of res judicata and for the principle that proceedings for reconstitution of certificates of title only involve re-issuance and do not pass upon ownership.

• Rule 41, Section 1, Rules of Court — Governs ordinary appeals from the RTC; provides that an appeal may be taken from a judgment or final order that completely disposes of the case. Applied to establish that the dismissal on res judicata was appealable.

• Rule 16, Section 1(f) and Section 5, Rules of Court — Section 1(f) identifies a cause of action barred by prior judgment as a ground for a motion to dismiss; Section 5 provides that a dismissal based on paragraph (f) is with prejudice and subject to the right of appeal. Applied to confirm that appeal was the proper remedy.

• Rule 9, Section 1, Rules of Court — Allows motu proprio dismissal when it appears from the pleadings or evidence on record that the action is barred by a prior judgment. Applied to reject PBCOM's due process challenge to the motu proprio dismissal.

• Rule 1, Section 4, Rules of Court — Provides that the Rules of Court shall not apply to land registration cases except by analogy or in a suppletory character and whenever practicable and convenient. Applied as the textual basis for holding that res judicata does not strictly apply to bar refiling of a petition for replacement of a lost owner's duplicate certificate.

• Section 109, P.D. 1529 (Property Registration Decree) — Governs the notice and replacement of lost duplicate certificates of title; provides that upon petition of the registered owner, the court may, after notice and due hearing, direct the issuance of a new duplicate certificate. Applied to define the limited scope of the court's authority in replacement proceedings — determining compliance with procedure and the fact of loss — and to establish that dismissal for failure to prove loss is without prejudice.

• Sections 51–54, P.D. 1529 — Govern voluntary dealings with registered lands, requiring presentation of the owner's duplicate certificate for registration of voluntary instruments. Applied to demonstrate the indispensable role of the owner's duplicate in the Torrens system and the registered owner's substantive right to possess and replace it.

• Sections 51–52, R.A. 8791 (General Banking Law) — Require banks to dispose of acquired real property within five years. Applied to show that barring PBCOM from replacing its lost title would perpetually prevent it from complying with statutory obligations, producing an absurd result.

Peralta, C.J. (Chairperson), J. Reyes, Jr., Lazaro-Javier, and Lopez, JJ., concur.