L. P. LEVISTE & COMPANY, INC., AND NITA U. BERTHELSEN, PETITIONERS, VS. HON. ANTONIO H. NOBLEJAS, IN HIS CAPACITY AS LAND REGISTRATION COMMISSIONER, THE REGISTER OF DEEDS OF RIZ…

This is an appeal by certiorari from the Resolution of the
Land Registration Commission in LRC Consulta No. 555
issued on October 20, 1967.

The property involved, situated in Parañaque,
Rizal, has a total area of approximately 1.6 hectares
and is covered by Transfer Certificate of Title No. 108425 of the Province
of Rizal
in the name of Z. Garcia Realty, Inc. (Garcia Realty, for short), a corporation
duly organized and existing under our laws. 
On a date that does not appear of record, the property was converted
into a subdivision called the Garville
Subdivision.  This subdivision has blocks
and certain lots and the controversy in this case centers on Lot
6, Block 4 (subsequently Lot 16, plan (LRC)
Psd-56800).

The following chronology will explain the controversy between the
parties:

Respondent Villanueva sought to have the sale registered and
title issued in her favor, free of any encumbrance, but petitioners Leviste and Berthelsen objected
alleging that they had registered adverse claims and attachments.  The Register of Deeds refused to issue a new
title to Villanueva without carrying over (A) the two annotations registered prior
to Villanueva’s adverse claim, namely, the notice of lis
pendens (Entry No. 7115) made on September 7,
1964 referring to a pending Civil Case No. 2489-P in the Court of First
Instance of Rizal entitled Vivencio
R. de Guzman vs. Z. Garcia Realty, Inc.; and the adverse claim (Entry No.
55205) of J. Antonio Leviste registered on April 28,
1966 according to the deed of assignment in his favor executed by one Leticia
P. Ramos; and (B) the attachments covering the entire property annotated on the
title subsequent to Villanueva’s adverse claim, namely, the Berthelsen
attachment on July 19, 1966 (Entry No. 62224), the Leviste
attachment on July 25, 1966 (Entry No. 62748), and the attachment issued in
connection with Civil Case No. 2489-P of the Court of First Instance of Rizal on November 18, 1966 (Entry No. 73465).

The position taken by the Register of Deeds was predicated on the
following reasons:

“1.    A registered adverse claim is only a claim,
and not a lien or encumbrance on the property. 
Hence, the superior rights of a lienholder
established by law cannot be involved in this case.

“The case would have been otherwise, if the agreement itself
were the one registered.

“2.    From the annotations of the said attachments
on Transfer Certificate of Title No. 108425, it appears clearly that the whole
property known as Lot 1-E-2, described therein is being
attached; therefore, it is no longer necessary to make any distinction.”

Upon the request of respondent Villanueva, the Register of Deeds
elevated the matter en consulta to the
Land Registration Commission, which, on October 20, 1967, issued its
Resolution, the decretal portion of which is worded
thus:

“IN VIEW OF THE FOREGOING, this Commission holds that the deed
of sale may be registered; Transfer Certificate of Title No. 108425 may be
partially cancelled; and a new transfer certificate of title covering Lot
16 of subdivision plan (LRC) Psd-56800 may be issued to Maria Villanueva free
of any encumbrance.

“SO ORDERED.”^[1]

In so disposing of the consulta, the
Commission opined:

“A registered notice of adverse claim takes priority over all subsequent
encumbrances and becomes subject only to all annotations registered prior to
it, except legal liens.  While the notice
of adverse claim of Maria Villanueva appears to be subject to the notice of lis pendens filed
in connection with Civil Case No. 2489-P of the Court of First Instance of Rizal and to the notice of adverse claim of J. Antonio C. Leviste, both having been registered ahead, yet, as said
notice of lis pendens and adverse claim refer to specific
lots other than Lot 6, Block 4, sold to Maria Villanueva, her notice of adverse
claim becomes free of any encumbrances, much less of the attachments subsequently
annotated.”

Petitioners’ Motion for Reconsideration having been denied, they
interposed this appeal by certiorari, with the following Assignments of
Error:

“I

“THE HONORABLE COMMISSIONER ERRED IN NOT CONSIDERING THE FACT
THAT RESPONDENT MARIA VILLANUEVA’S ADVERSE CLAIM HAS FOR ITS BASIS AN
UNREGISTERED ‘AGREEMENT TO SELL.’ SAID ADVERSE CLAIM, THEREFORE, HAS NO FORCE
AND EFFECT AND, HENCE, A NULLITY AS FAR AS PETITIONERS ARE CONCERNED.

“II

“THE HONORABLE COMMISSIONER ERRED IN NOT CONSIDERING THE FACT
THAT RESPONDENT MARIA VILLANUEVA ACTED IN BAD FAITH WHEN SHE ENTERED INTO A
CONTRACT OF ABSOLUTE SALE WITH Z. GARCIA REALTY, INC. AS REGARDS THAT PARCEL OF
LAND (LOT 6, BLOCK 4, OF THE SCHEME PLAN OF GARVILLE SUBDIVISION AND COVERED BY
TRANSFER CERTIFICATE OF TITLE NO. 108425).

“III

“THE HONORABLE COMMISSIONER ERRED IN NOT CONSIDERING THE FACT
THAT RESPONDENT, MARIA VILLANUEVA, FAILED TO EXHAUST THE REMEDY OF REGISTERING
THE ‘AGREEMENT TO SELL’ SHE EXECUTED WITH Z. GARCIA REALTY, INC.”^[2]

Petitioners take the position that:

“The registered adverse claim or lien of J. Antonio Leviste under Entry No. 55209 involving Lot 5 of Block 5 of
the Garville Subdivision, according to the deed of
assignment executed by Leticia Ramos is prior to and superior to that of
petitioner Maria Villanueva (herein respondent).  Hence, the lien annotated in favor of Leviste holds preference over that of Maria Villanueva.

“The agreement to sell
in favor of Maria Villanueva was not registered.  Hence, the rights of a lienholder
established by law cannot be invoked in favor of petitioner (herein
respondent).”

On the other hand, respondent Villanueva contends that her
adverse claim is valid; that it conforms with the requirements of Section 110
of Act 496, and until found to be frivolous, vexatious or unmeritorious by a
Court of competent jurisdiction, it is an interest or lien protected by
law.  Moreover, a registered adverse
claim is a lien or encumbrance on the property, specifically on the particular
portion which it covers.  Furthermore,
Section 110 of Act 496 does not require registration as the basis of the
adverse claim, referring to the agreement to sell in this case, it being
sufficient that a statement be made setting forth the basis of the claim.

The rule is that between two involuntary documents, the earlier
entry prevails.^[3]
Ordinarily, therefore, the notice of lis pendens entered on September 7, 1964, and Leviste’s
adverse claim annotated on April 28,
1966, both registered prior to respondent Villanueva’s adverse
claim, which was entered on May 6, 1966,
are entitled to precedence over the latter. 
However, inasmuch as the aforesaid lis pendens refers to Lot 3  (redesignated
as Lot 5) and Leviste’s
adverse claim to Lot 1, Block 5, notwithstanding
their prior registration, they cannot affect Villanueva’s adverse claim over Lot 6, Block 4.  The
aforesaid inscriptions, therefore, need not be carried over to the new title to
be issued in Villanueva’s favor.

The question to resolve is the priority between Villanueva’s
adverse claim and the attachments of Berthelsen, Leviste, and that in Civil Case No. 2489-P of the Court of
First Instance of Rizal, all registered subsequent to Villanueva’s adverse claim. 
The answer would depend on whether Villanueva’s adverse claim is, in
fact, registerable, and if so, whether it can be
preferred over the attachments.

Section 110 of Act 496 provides:

“Whoever claims any right or interest in registered land adverse
to the registered owner, arising subsequent to the date of the original
registration, may, if no other provision is made in the Land Registration Act
for registering the same, make a statement in writing setting forth fully his
alleged right or interest, and how or under whom acquired, and a reference to
the volume and page of the certificate of title of the registered owner, and a
description of the land in which the right or interest is claimed.  The statement shall be signed and sworn to,
and shall state the adverse claimant’s residence, and designate a place at
which all notices may be served upon him. 
This statement shall be entitled to registration as an adverse claim,
and the court, upon a petition of any party in interest, shall grant a speedy
hearing upon the question of the validity of such adverse claim and shall enter
such decree therein as justice and equity may require.  If the claim is adjudged to be invalid, the
registration shall be cancelled.  If in
any case the court after notice and hearing finds that a claim thus registered
was frivolous or vexatious, it may tax the adverse claimant double or treble
costs in its discretion.”

The basis of respondent Villanueva’s adverse claim was an
agreement to sell executed in her favor by Garcia Realty.  An agreement to sell is a voluntary
instrument as it is a wilful act of the registered
owner.  As such voluntary instrument,
Section 50 of Act No. 496 expressly provides that the act of registration shall
be the operative act to convey and affect the land.  And Section 55 of the same Act requires the
presentation of the owner’s duplicate certificate of title for the registration
of any deed or voluntary instrument.  As
the agreement to sell involves an interest less than an estate in fee simple,
the same should have been registered by filing it with the Register of Deeds
who, in turn, makes a brief memorandum there upon the original and owner’s
duplicate certificate of title.^[4]
The reason for requiring the production of the owner’s duplicate certificate in
the registration of a voluntary instrument is that, being a wilful
act of the registered owner, it is to be presumed that he is interested in
registering the instrument and would willingly surrender, present or produce
his duplicate certificate of title to the Register of Deeds in order to
accomplish such registration.^[5]
However, where the owner refuses to surrender the duplicate certificate for the
annotation of the voluntary instrument, the grantee may file with the Register
of Deeds a statement setting forth his adverse claim, as provided for in
Section 110 of Act No. 496.^[6]
In such a case, the annotation of the instrument upon the entry book is
sufficient to affect the real estate to which it relates, although Section 72
of Act No. 496 imposes upon the Register of Deeds the duty to require the
production by the registered owner of his duplicate certificate for the
inscription of the adverse claim.^[7]
The annotation of an adverse claim is a measure designed to protect the
interest of a person over a piece of real property where the registration of
such interest or right is not otherwise provided for by the Land Registration
Act, and serves as a notice and warning to third parties dealing with said
property that someone is claiming an interest on the same or a better right
than the registered owner thereof.^[8]

In Register of Deeds of Quezon City vs.
Nicandro (1 SCRA 1334 [1961]), it was held that for
the special remedy of adverse claim to be availed of, it must be shown that
there is no other provision in the law for registration of the claimant’s
alleged right or interest in the property. 
In said case, the basis of the adverse claim was a perfected contract of
sale.  As the Land Registration Act
specifically prescribes the procedure for registration of the vendee’s right on
a registered property (Section 57), the filing of an adverse claim was held
ineffective for the purpose of
protecting the vendee’s right.

In the case at bar, it does not appear that Villanueva attempted
to register the agreement to sell under Section 52 of Act No. 496 and that the registered owner, Garcia Realty,
refused to surrender the duplicate certificate for the annotation of said
instrument.  Instead, Villanueva merely
filed an adverse claim based on said agreement to sell.  Considering that Section 52 of the Land
Registration Act prescribes the procedure
for the registration of Villanueva’s interest less than an estate in fee simple
on the disputed lot and there being no showing of her inability to produce the
owner’s duplicate certificate, the remedy provided in Section 110 of Act 496,
which was resorted to by Villanueva, is, therefore, ineffective for the purpose
of protecting her right or interest on the disputed lot.

Inasmuch as the adverse claim filed by Villanueva was not valid,
the same did not have the effect of a conveyance of her right or interest on
the disputed lot and could not prejudice any right that may have arisen
thereafter in favor of third parties. 
Consequently, the attachments of Berthelsen, Leviste, and that in Civil Case No. 2489-P of the Court of
First Instance of Rizal covering the disputed lot are
superior to that acquired by Villanueva and will have to be carried over to the
new title to be issued in her favor. 
Thus, Section 59 of Act 496 provides that:

“If at the time of any transfer there appear upon the
registration book encumbrances or claims adverse to the title of the registered
owner, they shall be stated in the new certificate or certificates, except so
far as they may be simultaneously released or discharged.”

WHEREFORE, the Resolution of the Land Registration
Commission in LRC Consulta No. 555 decreeing the
issuance of a new transfer certificate of title covering Lot
16 of subdivision plan (LRC) Psd-56800 in the name of Maria Villanueva free of
any encumbrance is hereby set aside.  The
attachments of Nita U. Berthelsen (Entry No. 62224), Leviste & Co. (Entry No. 62748) and that in Civil Case
No. 2489-P of the Court of First Instance of Rizal
(Entry No. 73465), must have to be carried over to the new transfer certificate
of title to be issued to respondent Maria Villanueva.

No pronouncement as to costs.

SO ORDERED.

Teehankee, (Chairman), Makasiar, Fernandez, Guerrero, and De Castro, JJ., concur.

^[1]
p. 35, Original Record.

^[2]
pp. 6-7, Petitioner’s Brief.

^[3]
see Santos vs. Robledo, 28 Phil. 245; Co-Trongco
vs. Co-Gura, 1 Phil. 210.

^[4]
Section 52, Act No. 496.

^[5]
Ramirez vs. Causin, 101 Phil. 1009 (1957); Villasor vs. Camon, 89
Phil. 404, 412 [1951].

^[6]
Register of Deeds of Manila vs.
Tinoco, 95 Phil. 818 [1954].

^[7]
Villasor vs. Camon, supra.

^[8]
Ty Sin Tei vs. Lee Dy Piao, 103 Phil. (1958).