In the Matter of the Philippine Agricultural Products Industries

[SEC-SICD * UNNUMBERED. June 11, 1982.] IN THE MATTER OF THE PHILIPPINE AGRICULTURAL PRODUCTS INDUSTRIES, INC. RE: APPLICATION FOR INCREASE IN CAPITAL STOCK O R D E R For consideration of this Commission is an Application for Increase in the Authorized Capital Stock of PHILIPPINE AGRICULTURAL PRODUCTS INDUSTRIES, INC. The records show that the Philippine Agricultural Products Industries, Inc. which was incorporated on December 13, 1961 for the purpose of engaging in agricultural development, had an authorized capital stock of P2,000,000.00 subscribed of P400,000.00 and paid-up of P100,000.00. On August 5, 1980, the company filed an amended articles of incorporation changing its corporate name to Agro-Industrial Complex Ecology Inc. and increasing its authorized capital stock from P2,000,000.00 to P100,000,000.00. The increase of capital stock was to be effected by transfer of real properties by the stockholders to the corporation. The following documents were presented to evidence the ownership of real properties: 1. Deed of Absolute Sale executed by the spouses Felipe and Modesta Eco in favor of the corporation covering a parcel of land situated in Daet, Camarines Norte embraced by Titulo Informacion Possessoria ;and 2. Deed of Absolute Sale executed by the same spouses in favor of Gabriel Anadase, the corporate president, covering a parcel of land situated in Sipocot, Camarines Sur which property is covered by OCT No . 13737 issued in the name of Felipe Eco. On September 18, 1980, the Examiners and Appraisers Department of this Commission forwarded the above-mentioned application to the Corporate and Legal Department, (CLD) also of this Commission for comments on whether the evidence to support ownership of the real estate property are sufficient. The CLD then referred the application to: 1. Land Registration Commission which returned the same to the SEC with the information that it cannot comment thereon for the reason that the matter was not within its jurisdiction. 2. Register of Deeds of Daet, Camarines Norte who returned the same with the information that he cannot act on the matter as said documents have not been formally presented to him for registration. He however, noted that registration under the Spanish Mortgage Law (Titulo Informacion Possessoria) is no longer allowed. 3. Register of Deeds of Camarines Sur (OCT No. 13737) who informed the SEC that he cannot comment thereon because all the records on file with the said registry have been destroyed by fire. He however suggested the filing by the interested party of a petition for judicial reconstitution of said title pursuant to Sec. 110 of PD No. 1529 and R.A. No. 26. The issue to be resolved in the instant case is whether said titles would be sufficient to support the application for increase in the authorized capital stock of the corporation. LibLex As regards the Deed of Sale covering the property situated in Daet, Camarines Norte and embraced by Titulo Informacion Possessoria, this Commission finds that the same cannot be considered as adequate evidence to support the subject corporation's application for increase in the authorized capital stock for the following reasons: 1. The said Deed of Sale has not even been presented for registration with the Register of Deeds of Daet, Camarines Norte and considering that registration is the operative act that conveys and binds the land, and serves notice to third persons, said Deed of Sale, at most, is merely binding between the contracting parties, and does not at all bind third persons. 2. Granting that the same has been presented for registration, the same would not have been admitted inasmuch as the registration of Titulo de Informacion Possessoria covering the property subject of said Deed of Sale, has already been discontinued under Presidential Decree No. 892, as implemented by LRC Circular No. 294, issued on February 16, 1976. Its pertinent provisions are quoted hereunder. "SECTION 1. The system of registration under the Spanish Mortgage Law is discontinued and all lands recorded under said system which are not yet covered by Torrens Title shall be considered as unregistered lands. All holders of Spanish titles or grants should apply for registration of their lands under Act No. 496, otherwise known as the Land Registration Act, within six (6) months from the effectivity of this decree. Thereafter, Spanish titles cannot be used as evidence of land originally registered under Section 194 of the Revised Administrative Code ,as amended by Act 3344 ." It appearing that the said property has reverted to the status of an unregistered land, the corporation has to apply for original registration under the Torrens System so that the proper court can adjudicate ownership of the property in favor of said corporation. As regards the xerox copy of OCT No. 13737 issued in the name of Felipe Eco covering the parcel of land situated at Sipocot, Camarines Sur and attached to the records of the case, this Commission agrees with the Ex-Officio Register of Deeds of Camarines Sur that the party should file a petition for the judicial reconstitution of the Title in accordance with Republic Act No. 26 and Sec. 110 of PD No. 1529. An examination of Original Certificate of Title No. 13737 in the name of Felipe Eco on its face shows that it has Decree No. 48207, Psu-110297 and Rec. No. 3253 and issued on December 10, 1944. Verification of Rec. No. 3253, revealed that said record number refers to Decree No. 1953, issued on June 25, 1907 and covers a property situated in Manila. Verification of Psu-110297 disclosed that the same refers to a plan of property situated at Batangas and refers to Decree No. 3129 issued on March 15, 1950. Examination of the Technical description of OCT No. 13737 supposedly issued on December 10, 1944 reveals that it made use of a system in surveying adopted only in the 1960s. Furthermore, OCT No. 13737 has been made subject to the provision of Sec. 18 of Act 2259 , as amended, which provision refers to the payment of cadastral costs. This proviso should not have been incorporated in the title inasmuch as the title has been supposedly decreed through ordinary (judicial) proceedings, and not through cadastral (administrative) proceedings. All these badges of fraud appearing on the face of the title should militate against the acceptance of said title. WHEREFORE, in view of the foregoing, this Commission hereby disapproves the subject corporation's application for increase of its capital stock from P2,000,000.00 to P100,000,000.00. SO ORDERED. (SGD.) JULIO A. SULIT, JR. Associate Commissioner