G.R. No. L-6711. September 20, 1954

The respondents are the registered owners of fifteen parcels of land
in the district of Tondo, City of Manila. On 28 March 1946 they leased
the parcels of land to the Laguna Tayabas Bus Company and the Batangas
Transportation Company for five years renewable for another five years.
On 24 September 1951 the lessees subleased eight of the fifteen parcels
of land to one of the lessors, Prudencio T. Cruz. On 18 December 1951
the owners and lessors of the fifteen parcels of land and the sublessee
Prudencio T. Cruz subleased the eight parcels of land to Juanita L.
Lirio for a period of ten years beginning 1 January 1952. The last
lease contract was signed by Prudencio T. Cruz in his behalf and in
behalf of the other owners and lessors of the fifteen parcels of land
leased to the Laguna Tayabas Bus Company and the Batangas
Transportation Company. The contract of lease on the fifteen parcels of
land in favor of the last mentioned companies and that on the eight
parcels of land by the companies to Prudencio T. Cruz were not
registered or noted on the Torrens certificates of title for said
parcels of land. Juanita L. Lirio, the last lessee, filed in the office
of the registrar of deeds of Manila the contract of lease in her favor
for registration and it was entered in the day book; but as she did not
surrender the owner’s duplicate certificates of title for the eight
parcels of land leased by her, the registration of the lease contract
was not accomplished. For that reason she filed with the registrar of
deeds of Manila an adverse claim based on the lease contract. The
registrar required the owners and lessors to surrender the owner’s
duplicate certificates of title for the eight parcels of land leased by
Juanita L. Lirio. As the owners refused to surrender the certificates
of title, the registrar reported the matter to the Court which after
hearing entered the following order:

This is a report submitted to this Court by the
Register of Deeds of Manila pursuant to the provisions of section 72 of
Act 496, stating that the respondents Maxima Tinoco Vda. de Cruz et
al., had failed to comply with his request to surrender to him the
owner’s duplicate of transfer certificate of title Nos. 61804, 61805,
61808, 61810, 61814 and 61815, in order that a memorandum of the notice
of adverse claim in connection with the sublease contract executed in
favor of Juanita L. Lirio may be annotated thereon. Said notice of
adverse claim was presented for registration in the Office of the
Register of Deeds on June 6, 1952, and duly recorded in the said
Registry on August 27, 1952.

The respondents, through their
counsel opposed the registration of the sublease contract on the ground
that the lease in favor of Juanita L. Lirio is no longer subsisting,
having been terminated on July 31, 1952, pursuant to agreement of the
parties.

It appearing from the record of the case that a
contract of lease was executed in favor of Juanita L. Lirio for a
period of ten years. Upon demand of payment of back rentals, she
notified the respondents’ attorney that she asked for an extension of
time and agreed to give up the leased premises if she cannot pay the
said back rentals on or before July 31, 1952. Because she failed to pay
as agreed upon, the respondents lessor took possession of the premises
and leased the same to the other respondents herein, effective August
1, 1952. Whereupon Juanita L. Lirio filed a complaint alleging the
nullity of the lease contract in favor of the said respondents, and the
effectivity of the lease in her favor.

The main issue to be
decided in the above-entitled case, is whether or not the respondent
should surrender to the Register of Deeds the above-mentioned
duplicates of transfer certificate of title so that the notice of
adverse claim in connection with the lease agreement executed in favor
of Juanita L. Lirio may be annotated thereon.

Since the
adverse claim in connection with the lease contract in favor of Juanita
L. Lirio has already been annotated on the original of the transfer
certificates of title above-mentioned, said adverse claim should also
be annotated on the duplicate of the said transfer certificate of title.

The respondents Maxima Tinoco Vda. de Cruz, et al., are therefore, hereby ordered to surrender
to the Register of Deeds the above-mentioned duplicates of transfer
certificates of title in order that the adverse claim of Juanita L.
Lirio may be annotated thereon. As soon as the annotation is
accomplished, the said duplicates shall be returned to !the respondents
herein.

This is, however, without prejudice to the rights of
the respondents Maxima Tinoco Vda. de Cruz, et al., to file a petition
for the cancellation of the said adverse claim and to the rights of
Juanita L. Lirio to oppose its cancellation. So ordered.

Manila, Philippines, November 26, 1952.

A motion for reconsideration of the order was denied. The respondents have appealed.

The opposition to the surrender of the certificates of title is
predicated upon the following grounds: (1) that Juanita L. Lirio was in
arrears in the payment of the monthly rental from May to June 1952;
that upon being pressed for payment she requested for an extention of
time to pay the back rentals up to the end of July 1952 and agreed that
should she fail to pay the unpaid rentals the sublessors could take
possession of the parcels of land on 1 August 1952, as in fact they
took possession on said date upon her failure to pay the back rentals
on or before 31 July 1952; and that on the following day, 2 August, the
owners and lessors and later sublessors of Juanita L. Lirio leased the
eight parcels of land to Timoteo Pazcoguin and Maria Cruz; (2) that on
2 September 1952, Juanita L. Lirio brought an action in the Court of
First Instance of Manila for recovery of possession (civil case No.
17385) against Prudencio T. Cruz, Timoteo Pazcoguin and Maria Cruz
which was dismissed by the Court because it was not within its
jurisdiction, the alleged deprivation of possession having taken place
within one year; that on 12 September, while the order of dismissal was
pending in the Court of First Instance for reconsideration, Juanita L.
Lirio brought an action of forcible entry against Prudencio T. Cruz,
Timoteo Pazcoguin and Maria Cruz (civil case No. 22497) which was also
dismissed on the ground that Juanita L. Lirio had surrendered
voluntarily the possession of the eight parcels of land on 1 August
1952; that from the order of dismissal an appeal was taken to the Court
of First Instance which is still pending trial; that on 18 November,
Juanita L. Lirio brought an action against Prudencio T. Cruz, Timoteo
Pazcoguin and Maria Cruz in the Court of First Instance of Manila
(civil case No. 18212) for specific performance of contract, the
hearing of which was to be held jointly with the second case appealed
from the municipal court. Upon these grounds the appellants claim that
they are not legally bound to surrender the duplicate certificates of
title for the parcels of land for annotation of the lease contract in
favor of Juanita L. Lirio or of her adverse claim. They argue that the
lease in favor of Juanita L. Lirio, if it was registerable, should have
been registered in accordance with the provisions of section 64 in
connection with section 52 of the Land Registration Act, but as she
could not produce the owner’s duplicate certificates of title, the
registrar of deeds could not register the lease contract in favor of
Juanita L. Lirio pursuant to section 55 of the Act. If the owner’s
duplicate certificates of title for the parcels of land leased by
Juanita L. Lirio had been surrendered or produced, the need for an
order to compel the owners of the parcels of land to surrender the
owner’s duplicate certificates of title would not have arisen, because
her lease contract would have been registered pursuant to the
provisions cited by the appellants. But precisely because the owners
and lessors of the parcels of land had refused to surrender the
duplicate certificates of title she had to file with the registrar of
deeds a statement setting forth her adverse claim as provided for in
section 110. The appellants contend that it should not be under section
110 but under section 111 of the Land Registration Act, but the latter
clearly refers to a voluntary act of the registered owner or by reason
of an instrument or proceedings which divest the owner of the title to
the registered property against his consent. However, the instant case
is not the one contemplated in section 111, because it is not a
divesture of title of the owner to the registered property; neither is
it an extinguishment or discharge of a mortgage; nor is it a
termination of a lease, but only an adverse claim to be annotated on
the owner’s duplicate certificates of title. Section 111 is clearly
inapplicable.

On the other hand, sections 72 and 110 of the Land Registration Act
vest the Court with authority to direct an adverse claim registered and
to compel the holder of a certificate of title to produce it for the
purpose of registration or annotation of the adverse claim. In Gurbax
Singh Pabla and Co., et al. vs. Reyes et al., 48 Off. Gaz., 4365,
4368-4370, 92 Phil., 177, this Court said—.

* * * the Court of First Instance of Manila issued
the order already mentioned above, directing respondents to surrender
the certificates of title to the Register of Deeds of Manila in order
that petitioners-appellees contract of lease may be noted thereon. * * *

* * * * * * *

It
should be noted that all that the petitioners demand or pray for is the
surrender of the titles to the Register of Deeds so that their
contracts of lease, Exhibits A and C, may be noted thereon. The only
issue, therefore, is whether petitioners have a right to have said
deeds registered. * * *

The purpose of registering an
instrument is to give notice thereof to all persons (section 51, Act
No. 496); it is not intended by the proceedings for registration to
seek to destroy or otherwise affect already registered rights over the
land, subsisting or existing at the time of the registration. * * *

* * * * * * *

On the other hand, the supposed invalidity of the
contracts of lease is no valid objection to their registration, because
invalidity is no proof of !their non-existence or a valid excuse for
denying their registration. * * * If the purpose of registration is
merely to give notice, then questions regarding the effect or
invalidity of instruments are expected to be decided after, not before,
registration. It must follow as a necessary consequence that
registration must first be allowed, and validity or effect litigated
afterwards.

* * * * * * *

Wherefore, the opposition to the motion for the
surrender of the certificates of title to the Register of Deeds of
Manila is overruled, and the order appealed from, in so far as it
orders the surrender of the certificates of title for the registration
of the contracts of lease, is hereby affirmed. * * *

In Employees Club, Inc. vs. China Banking Corporation, 60 Phil., 233, which was an appeal—

from the order entered by the trial court on May 16,
1933, requiring it to surrender to the register of deeds of the City
of Manila the duplicate of transfer certificate of title No. 21192 of
the said registry, which it has in its possession, in order that the
contract of lease evidenced by Exhibit A which was executed under
judicial authorization on November 29, 1932, by the administrator of
the intestate estate of said deceased Jose Javier Go Chioco might be
acted thereon and entered in the corresponding records.

the appellant contended that section 52 of the Land Registration Act
refers exclusively to real rights or interest in land registered in the
registry of deeds, but this Court held that said section refers to all
interests in registered lands less than estate in fee simple which are
registerable without the need of issuing a new certificate of title
therefor. The order requiring the appellant China Banking Corporation
to surrender the owner’s duplicate certificate of title referred to for
the purpose of annotating the contract of lease was affirmed.

The remedy of the owner of the registered land if the claim be
adjudged invalid is to have it cancelled and if found by the court to
be frivolous or vexatious the court may tax the adverse claimant double
or treble cost in its discretion.

The order appealed from is affirmed, without costs.

Paras, C.J., Pablo, Bengzon, Montemayor, Reyes, A., Jugo, Bautista Angelo, Labrador, Concepcion and Reyes, J.B.L., JJ., concur.