Equatorial Realty Development, Inc. vs. Spouses Frogozo

An adverse claim annotated under Section 70 of P.D. 1529 does not automatically expire after thirty days; it remains effective until cancelled upon verified petition by a party in interest, and a subsequent levy on execution cannot prevail over it. A levy on real property is also invalid where the writ of execution covered only the judgment debtor's goods and chattels, the sheriff's duty being purely ministerial and limited to the dispositive portion of the decision.

Spouses Zosimo and Benita Asis owned a parcel of land and its improvements in Manila, covered by TCT No. 119203, which they agreed to sell to spouses Desiderio and Edarlina Frogozo. ERDI was a judgment creditor of the Asis spouses in Civil Case No. 097455. The dispute turns on the construction of Section 70 of P.D. 1529 on the effectivity of an adverse claim, and Section 16, Rule 39 on the effect of a levy on execution as against third persons.

Spouses Zosimo and Benita Asis owned a parcel of land and the improvements thereon in Manila, covered by Transfer Certificate of Title (TCT) No. 119203. On December 29, 1982, the Frogozos agreed to buy the property for ₱155,000, paying ₱10,000 as earnest money to Benita Asis, with the ₱145,000 balance payable upon execution of the deed of absolute sale. On January 17, 1983, the Frogozos caused the annotation of an adverse claim, Entry No. 1245, at the back of TCT No. 119203, setting out that the Asis spouses had sold the property to them and that they had paid earnest money.

Three years later, on August 28, 1986, ERDI levied on the property, annotating at the back of the same title a notice of levy under Entry No. 964-65. The writ of execution pursuant to which the notice was taken mentioned only the goods and chattels of Benita Asis and Guadalupe Lucila.

On February 12, 1988, the Asis spouses and the Frogozo spouses executed a Deed of Absolute Sale, and TCT No. 178892 was issued in the Frogozos' name. Because TCT No. 178892 carried the annotation of ERDI's notice of levy, the Frogozos asked the RTC of Manila on March 4, 1988 for cancellation of the annotation in LRC Record No. 4004. The RTC granted the cancellation.

ERDI appealed the RTC Order to the CA on May 14, 1993, raising whether the RTC erred in ordering the cancellation. After the parties filed their briefs, ERDI filed a Reply, to which the Frogozos responded with a Rejoinder and a Supplemental Rejoinder. ERDI moved to expunge the latter two pleadings, but the CA did not act on the motions. Instead, on March 12, 1997, the CA rendered its Decision denying the appeal on the ground that the issues raised were pure questions of law not reviewable by it. ERDI then filed the present Petition for Review.

• Motions to Expunge: ERDI argued that the CA erred in considering the Frogozos' rejoinder and supplemental rejoinder without resolving ERDI's motions to expunge.
• Jurisdiction: ERDI argued that the CA erred in dismissing its appeal for lack of jurisdiction on the ground that the questions raised were purely legal.
• Validity of the Adverse Claim: ERDI argued that under Section 70 of P.D. 1529, the adverse claim annotated on January 17, 1983 was effective only for thirty days, or until February 16, 1983, and automatically expired by sheer force of law without need of judicial declaration; resort to court is necessary only when the aggrieved party wants the adverse claim cancelled before the thirty-day period lapses.
• Validity of the Levy: ERDI argued that all property of the judgment debtor, real and personal, may be levied upon on execution, and what controls is the Rules of Court, not the writ; the fact that title was no longer in the Asis spouses' name should not militate against the levy because at the time of levy on August 28, 1986, the property was still in Asis' name; registration is the operative act to affect the land as to third persons.

• Motions to Expunge: Whether the CA erred in considering the Frogozos' rejoinder and supplemental rejoinder without resolving ERDI's motions to expunge.
• Jurisdiction over Pure Questions of Law: Whether the CA erred in dismissing ERDI's appeal on the ground that the issues raised were pure questions of law.
• Validity of the Adverse Claim: Whether the adverse claim annotated by the Frogozos expired after thirty days under Section 70 of P.D. 1529.
• Validity of the Levy: Whether the RTC erred in ordering the cancellation of the annotation of ERDI's notice of levy.

• Motions to Expunge: No. The CA's failure to expressly resolve the motions was a tacit denial, deemed made when it proceeded to decide the case and treated the rejoinders as properly filed.
• Jurisdiction over Pure Questions of Law: No. The CA has no appellate jurisdiction over appeals raising only questions of law; these must be brought to the SC by petition for certiorari under Rule 45, and SC Circular No. 2-90 requires dismissal of such erroneous appeals.
• Validity of the Adverse Claim: No. Section 70 of P.D. 1529 does not make the adverse claim expire automatically after thirty days; cancellation requires a verified petition by a party in interest, and the claim subsists until then.
• Validity of the Levy: No. The writ of execution covered only goods and chattels, so the levy on real property exceeded the sheriff's ministerial authority; in any event, the levy could not prevail over the subsisting adverse claim.

• Motions to Expunge: Although the CA did not resolve the motions expressly, it did so tacitly, albeit belatedly, when it rendered its Decision. By proceeding to decide the case, the appellate court in effect denied ERDI's motions to expunge and considered the Frogozos' rejoinder and supplemental rejoinder as properly and reasonably filed.

• Jurisdiction over Pure Questions of Law: Section 9 of B.P. 129 vests in the CA exclusive appellate jurisdiction over all final decisions and orders of the RTC, except those falling within the SC's appellate jurisdiction under the Constitution and R.A. No. 296. Appeals involving only questions of law fall within the SC's jurisdiction; under Section 25 of the Interim Rules Implementing B.P. 129, in conjunction with Section 3 of R.A. No. 5440, the appeal to the SC is taken by petition for certiorari governed by Rule 45. A question of law arises when the doubt or difference arises as to what the law is pertaining to a certain state of facts. The facts here are not in dispute, and the issues ERDI raised — the thirty-day effectivity of the adverse claim, the scope of levy on execution, the effect of the property remaining in Asis' name at the time of levy, and the operative effect of registration — are pure questions of law. SC Circular No. 2-90 mandates dismissal of appeals involving pure questions of law erroneously brought to the CA. The CA's dismissal was therefore in order.

• Validity of the Adverse Claim: Section 70 of P.D. 1529 must be read in its entirety. The third sentence of the second paragraph provides that the adverse claim is effective for thirty days from registration, but the next sentence provides that "After the lapse of said period, the annotation of adverse claim may be cancelled upon filing of a verified petition therefore by the party in interest." If the claim automatically lost force after thirty days, the caveat would be unnecessary and the requirement of a verified petition would be a useless act. The phrase "may be cancelled" indicates that the court may or may not order cancellation notwithstanding the thirty-day period, and the validity of the claim is determined at a hearing. The purpose of the adverse claim is to protect the interest of a person over real property where registration of that interest is not otherwise provided for, and to warn third parties dealing with the property. The thirty-day period is not an absolute cut-off. Sajonas vs. Court of Appeals, reiterated in Diaz-Duarte vs. Ong, rejected the same contention that an adverse claim automatically expires. Since the Frogozos' adverse claim was annotated on January 17, 1983 and remained uncancelled, it was still in effect when ERDI annotated its notice of levy on August 28, 1986. ERDI is charged with knowledge that the property was encumbered by an interest the same as or better than that of the registered owner. Under Section 16, Rule 39, the levy created a lien subject to liens or encumbrances then existing, so the notice of levy cannot prevail over the adverse claim.

• Validity of the Levy: The RTC did not err in cancelling the annotation of the notice of levy. The writ of execution pursuant to which the notice was taken mentioned only the goods and chattels of Benita Asis and Guadalupe Lucila. While Section 15, Rule 39 allows levy on all property of the judgment debtor, the sheriff's duty in executing a writ is purely ministerial, and he must execute the order strictly to the letter. Only the portion of a decision ordained in the dispositive portion should be executed. The validity of the writ should not be left to the sheriff or the parties. Since the writ covered only goods and chattels, the levy on the real property under TCT No. 119203 was in excess of the sheriff's authority, and the cancellation of the annotation was justified. Even if the writ covered real property, following Sajonas, the notice of levy cannot prevail over the subsisting adverse claim, since the Frogozos had paid earnest money and eventually obtained a deed of absolute sale and a new title in their name.

• Adverse Claim under Section 70, P.D. 1529 — An adverse claim annotated on a Torrens title does not automatically expire after thirty days from registration. It remains effective until cancelled upon verified petition by a party in interest, and the court may or may not order cancellation after a hearing on its validity. The adverse claim serves to protect the claimant's interest and warn third parties dealing with the property. Applied: the Frogozos' adverse claim, annotated January 17, 1983, still subsisted when ERDI levied on August 28, 1986.

• Pure Question of Law — A question of law arises when the doubt or difference arises as to what the law is pertaining to a certain state of facts. An appeal from the RTC raising only questions of law must be taken to the SC by petition for certiorari under Rule 45, not to the CA; an appeal taken to the wrong court is dismissed under SC Circular No. 2-90.

• Ministerial Duty of the Sheriff — A sheriff's duty in executing a writ is purely ministerial; he must execute the order strictly to the letter, and only the portion of the decision ordained in the dispositive portion may be executed. The validity of the writ is not for the sheriff or the parties to determine. Applied: the levy on real property was in excess of the sheriff's authority because the writ covered only goods and chattels.

• Levy Subject to Existing Encumbrances — A levy on execution creates a lien in favor of the judgment creditor over the judgment debtor's right, title, and interest in the property at the time of the levy, subject to liens or encumbrances then existing. Applied: ERDI's levy was subordinate to the Frogozos' subsisting adverse claim.

• Tacit Denial of Motions — A court's failure to expressly resolve a motion may be deemed a tacit denial when the court proceeds to decide the case. Applied: the CA's failure to act on ERDI's motions to expunge was a tacit denial when it rendered its Decision.

• "The adverse claim shall be effective for a period of thirty days from the date of registration. After the lapse of the said period, the annotation of adverse claim may be cancelled upon filing of a verified petition therefore by the party in interest." — The provision of Section 70 of P.D. 1529 that the SC construed; the second sentence is the textual basis for requiring a verified petition before cancellation.

• "The law, taken together, simply means that the cancellation of the adverse claim is still necessary to render it ineffective, otherwise, the inscription will remain annotated and shall continue as a lien upon the property." — The ratio of the adverse-claim ruling: the thirty-day period does not by itself extinguish the annotation.

• "The levy on execution shall create a lien in favor of the judgment creditor over the right, title and interest of the judgment debtor in such property at the time of the levy, subject to liens or encumbrances then existing." — Section 16, Rule 39, which the SC used to subordinate ERDI's levy to the subsisting adverse claim.

• "As the writ of execution covered only 'goods and chattels,' the levy on the real property under TCT No. 119203 is in excess of the sheriff's authority." — The SC's holding on the invalidity of the levy, tied to the ministerial limits of the sheriff's authority.

• Sajonas vs. Court of Appeals, G.R. No. 102377, July 5, 1996, 258 SCRA 79 — Controlling precedent; construed Section 70 of P.D. 1529 to hold that an adverse claim does not automatically expire after thirty days and requires a verified petition for cancellation.
• Diaz-Duarte vs. Ong, G.R. No. 130352, November 3, 1998, 298 SCRA 388 — Reiterated and affirmed the Sajonas ruling on the effectivity of adverse claims.
• Ong vs. Fonacier, G.R. No. L-20887, July 8, 1966, 17 SCRA 617 — Cited to support the ruling that a court's failure to act on a motion is a tacit denial when it proceeds to decide the case.
• Lavides vs. Pre, G.R. No. 127830, October 17, 2001, 367 SCRA 382 — Cited alongside Ong vs. Fonacier on tacit denial of motions.
• Calvo vs. Vergara, G.R. No. 134741, December 19, 2001, 372 SCRA 650 — Cited for the definition of a question of law.
• Western Shipyard Services, Inc. vs. Court of Appeals, G.R. No. 110340, May 28, 2001, 358 SCRA 257 — Cited for the definition of a question of law.
• Araza vs. Garcia, A.M. No. P-00-1363, February 8, 2000, 325 SCRA 1 — Cited for the rule that the sheriff's duty in executing a writ is purely ministerial.
• V.C. Ponce Co., Inc. vs. Eduarte, A.M. No. RTJ-99-1495, October 18, 2000, 343 SCRA 445 — Cited for the rule that only the portion of a decision ordained in the dispositive portion may be executed.

• Section 70, P.D. 1529 (Property Registration Decree) — Governs adverse claims. The SC read it as a whole to hold that the thirty-day period does not automatically extinguish the adverse claim; cancellation requires a verified petition by a party in interest, and the court may or may not order it after a hearing.
• Section 9, B.P. 129 (Judiciary Reorganization Act of 1980) — Vests in the CA exclusive appellate jurisdiction over final decisions and orders of the RTC, except those falling within the SC's appellate jurisdiction; used to explain why appeals raising only questions of law do not belong to the CA.
• Section 25, Interim Rules and Guidelines Implementing B.P. 129; Section 3, R.A. No. 5440 — Provide that appeals to the SC in cases involving only questions of law are taken by petition for certiorari under Rule 45.
• Rule 45, Rules of Court — The governing rule for the petition for certiorari by which pure questions of law are elevated to the SC.
• SC Circular No. 2-90 (March 9, 1990) — Mandates dismissal of appeals taken to the wrong court, including appeals raising issues purely of law brought to the CA; applied to affirm the CA's dismissal.
• Section 15, Rule 39, Rules of Court — Allows levy on all property of the judgment debtor; invoked by ERDI but held subject to the sheriff's ministerial duty to execute only what the writ and dispositive portion cover.
• Section 16, Rule 39, Rules of Court — Provides that a levy creates a lien subject to liens or encumbrances then existing; applied to subordinate ERDI's levy to the Frogozos' subsisting adverse claim.