Leviste & Co. v. Noblejas
REITERATIONFacts
The Antecedents: Z. Garcia Realty, Inc. (Garcia Realty) owned a property covered by Transfer Certificate of Title No. 108425. The property was converted into Garville Subdivision. A notice of lis pendens was filed on September 7, 1964, concerning Lot 3 (redesignated as Lot 5), Civil Case No. 2489-P. An adverse claim was filed on April 28, 1966, for Lot 1, Block 5, based on an assignment. On May 6, 1966, respondent Maria Villanueva filed an adverse claim for Lot 6, Block 4 (the Disputed Lot), based on an agreement to sell with Garcia Realty. Subsequently, attachments were registered affecting the Disputed Lot: by Nita U. Berthelsen on July 19, 1966; by Leviste & Co. on July 25, 1966; and another in Civil Case No. 2489-P on November 18, 1966. On May 29, 1967, Garcia Realty and Villanueva consummated a contract of sale for the Disputed Lot. Procedural History: Villanueva sought to register the sale and obtain a title free of encumbrances. Petitioners Leviste and Berthelsen objected, citing their registered adverse claims and attachments. The Register of Deeds refused to issue a new title without carrying over prior annotations and subsequent attachments. The Register of Deeds elevated the matter to the Land Registration Commission (LRC) for consultation. The LRC, in a Resolution dated October 20, 1967, held that the deed of sale could be registered, the title partially cancelled, and a new title issued to Villanueva free of encumbrances. Petitioners' Motion for Reconsideration was denied. The Petition: Petitioners appealed by certiorari to the Supreme Court, assigning errors concerning the LRC's failure to consider Villanueva's adverse claim as a nullity due to its basis on an unregistered agreement to sell, Villanueva's alleged bad faith, and her failure to exhaust remedies.
Issue(s)
Whether respondent Maria Villanueva's adverse claim, based on an unregistered agreement to sell, is valid and effective for the purpose of protecting her interest. Whether the adverse claim and subsequent sale to Maria Villanueva are superior to the prior registered adverse claim of J. Antonio Leviste and the subsequent attachments of Nita U. Berthelsen, Leviste & Co., and the attachment in Civil Case No. 2489-P. Whether the Register of Deeds erred in refusing to carry over the prior lis pendens, adverse claim, and subsequent attachments to the new title to be issued to Maria Villanueva.
Ruling
The Supreme Court set aside the Resolution of the Land Registration Commission. It ruled that the attachments of Nita U. Berthelsen, Leviste & Co., and that in Civil Case No. 2489-P must be carried over to the new transfer certificate of title to be issued to respondent Maria Villanueva.
Ratio Decidendi
On the validity and effectiveness of Maria Villanueva's adverse claim: The Court held that an adverse claim based on an agreement to sell, which is a voluntary instrument, is ineffective if the claimant fails to register the agreement to sell under Section 52 of Act No. 496 and does not show inability to produce the owner's duplicate certificate. Section 110 of Act 496 provides a remedy for adverse claims when registration is not otherwise provided for, or when the owner refuses to surrender the duplicate certificate. However, for a voluntary instrument like an agreement to sell, the act of registration is the operative act to convey and affect the land, requiring presentation of the owner's duplicate certificate. Since Villanueva did not attempt to register the agreement to sell under Section 52 and there was no showing of her inability to produce the owner's duplicate certificate, her resort to Section 110 was ineffective for protecting her right or interest. The Court cited Register of Deeds of Quezon City vs. Nicandro (1 SCRA 1334 [1961]) which held that the special remedy of adverse claim must be availed of only when there is no other provision in law for registration of the claimant's right or interest. On the priority of rights and the effect of the adverse claim: The Court found that because Villanueva's adverse claim was not valid, it did not have the effect of a conveyance of her right or interest on the disputed lot and could not prejudice any right that arose thereafter in favor of third parties. Consequently, the attachments of Berthelsen, Leviste, and that in Civil Case No. 2489-P, which were registered subsequent to Villanueva's adverse claim but were based on valid legal processes, were superior to any right acquired by Villanueva through her invalid adverse claim. The rule that between two involuntary documents, the earlier entry prevails, was considered, but it was noted that the prior lis pendens and adverse claim of J. Antonio Leviste referred to different lots and thus did not affect Villanueva's claim over Lot 6, Block 4. However, the subsequent attachments, covering the disputed lot, were deemed superior to Villanueva's ineffective adverse claim. On the Register of Deeds' refusal to issue a title free of encumbrances: The Court agreed with the Register of Deeds' position that the attachments covering the entire property were valid and affected the Disputed Lot. Therefore, these attachments, along with any other valid encumbrances or claims adverse to the title of the registered owner, must be stated in the new certificate of title issued, as provided by Section 72 of Act No. 496. The LRC's resolution to issue a title free of encumbrances was consequently set aside. The Court emphasized that Section 110 of Act 496 is a protective measure for claims not otherwise registrable, and not a substitute for the proper registration of voluntary instruments.
Main Doctrine
An adverse claim based on an agreement to sell, which is a voluntary instrument, is ineffective for the purpose of protecting the claimant's right or interest on a disputed lot if the claimant failed to register the agreement to sell under Section 52 of Act No. 496 and there was no showing of inability to produce the owner's duplicate certificate. Consequently, subsequent attachments are superior to such an invalid adverse claim.