Orlino v. Philippine National Bank
REITERATIONFacts
The Antecedents: Candido Orlino possessed a parcel of land and applied for a free patent. In 1925, he exchanged this land with Aniceto Orlino, but the Bureau of Lands was not informed. Aniceto took possession. Candido died in 1944, his wife in 1943. Allegedly through the manipulation of Juan Conde, the free patent was issued on February 17, 1956, to the 'Heirs of Candido Orlino,' and Original Certificate of Title (OCT) No. P-1179 was issued. On December 26, 1956, Federico Cabais, Juan Conde, and Feliciano Conde, using the names Federico Orlino, Juan Orlino, and Feliciano Orlino, executed an extrajudicial partition, leading to the issuance of Transfer Certificate of Title (TCT) No. 2279 in their names. They mortgaged the land to the Philippine National Bank (PNB) for P3,500. The loan was not paid, and the bank foreclosed the mortgage, purchasing the land at an auction sale on July 12, 1961. A final deed of sale was executed in favor of the bank, and TCT No. 40878 was issued. However, a third-party claim was filed by the heirs of Aniceto Orlino prior to the foreclosure sale. On February 14, 1957, the heirs of Aniceto Orlino filed a protest with the Bureau of Lands seeking cancellation of the free patent, which was annotated as a notice of lis pendens on TCT No. 22179 on April 6, 1959. The Director of Lands, in a decision dated April 30, 1962, held that the free patent was wrongfully issued and recommended legal action for reversion to the government. Crisanto Cabals, claiming to be the sole heir of Candido Orlino, filed a case (Civil Case No. A-283) against the alleged heirs and PNB to assert ownership. This case was settled amicably, with Crisanto Cabals allowed to redeem the land from the bank within one year from January 19, 1962, upon payment of P5,191. The lower court suspended the redemption period until the notice of lis pendens was cancelled. The heirs of Aniceto Orlino did not intervene in this case. Subsequently, the land was conveyed by the bank to Roman Cabacungan, the assignee of Crisanto Cabais, and TCT No. 84579 was issued to Cabacungan on April 21, 1970. On July 3, 1963, the heirs of Aniceto Orlino filed another suit (Civil Case No. A-399) against the alleged heirs and PNB for reconveyance. PNB asserted it was a mortgagee in good faith. The lower court found the heirs of Aniceto Orlino had established ownership against the other defendants but ruled PNB was a mortgagee in good faith, dismissing the complaint. The heirs appealed to the Supreme Court (L-30011), which denied their petition for review on April 28, 1969. Procedural History: Three months after the denial of their appeal in L-30011, the heirs of Aniceto Orlino filed the instant action (Civil Case No. A-662) in the Court of First Instance of Pangasinan on July 16, 1969, seeking to enjoin PNB from selling the land to Cabacungan, claiming they were the adjudged owners with the right to redeem. The lower court dismissed this action on the ground of prescription, as the foreclosure sale occurred on July 12, 1961, and both the one-year redemption period and the five-year period under Section 119 of the Public Land Law had expired by 1969. The Petition: The plaintiffs-appellants (heirs of Aniceto Orlino) appealed the dismissal order, anchoring their claim on the theory that their prior action for reconveyance in Civil Case No. A-399 suspended the five-year redemption period under Section 119 of the Public Land Law. This issue was not raised in the lower court.
Issue(s)
Whether the prior action for reconveyance in Civil Case No. A-399 suspended the five-year period for legal redemption under Section 119 of the Public Land Law. Whether the heirs of Aniceto Orlino have a cause of action against the Philippine National Bank for legal redemption.
Ruling
The Supreme Court affirmed the lower court's order of dismissal. The Court held that the petitioners have no cause of action against the bank for legal redemption.
Ratio Decidendi
On the issue of whether the prior action for reconveyance suspended the redemption period: The Court noted that the issue of whether the prior action suspended the redemption period was not raised in the lower court. However, the Court ultimately found that the petitioners had no cause of action for legal redemption against the bank. The Court emphasized that the petitioners were not the registered owners of the land, and their predecessor-in-interest, Aniceto Orlino, was not the applicant for the free patent. The Director of Lands had already determined that the land should be reverted to the government, which precluded any right of redemption by the petitioners. The Court also pointed out that the bank was a mortgagee in good faith, and its ownership, acquired through foreclosure, was not affected by the notice of lis pendens annotated on the mortgagors' title at the time of the sale. The prior decisions, including the denial of their appeal in L-30011, did not recognize their right to redeem from the bank. On the issue of whether the heirs of Aniceto Orlino have a cause of action against the bank for legal redemption: The Court definitively ruled that the petitioners have no cause of action against the bank for legal redemption. This conclusion was based on several critical findings. Firstly, the petitioners were not the registered owners of the land; the Torrens title was in the names of the alleged impostors who mortgaged it to the bank. Secondly, their predecessor-in-interest, Aniceto Orlino, was not the applicant for the free patent, and the Director of Lands had ruled that the patent was wrongfully issued and the land should be reverted to the government. This reversion order negated any claim of ownership or redemption right by the petitioners. Thirdly, the bank was established as a mortgagee in good faith, and its title acquired through foreclosure was valid against claims arising from the fraudulent issuance of the patent. The Court reiterated that the fact that impostors mortgaged the land to the bank, which held a Torrens title, did not invalidate the mortgage, distinguishing it from a situation where the title itself was forged. The Court concluded that the petitioners' attempt to redeem the land from the bank was unwarranted.
Main Doctrine
The heirs of Aniceto Orlino have no cause of action against the Philippine National Bank for legal redemption because they were not the registered owners of the disputed land, their predecessor-in-interest was not the applicant for the free patent, and the Director of Lands held that the land should be reverted to the government. Furthermore, the bank was a mortgagee in good faith, and its ownership was not affected by the notice of lis pendens annotated on the mortgagors' title at the time of the foreclosure sale.