Valderama vs. Arguelles

A subsequent annotation of a notice of lis pendens on a certificate of title does not automatically render a petition for cancellation of an adverse claim on the same title moot and academic, because an adverse claim and a notice of lis pendens are not of the same nature and do not serve the same purpose. An adverse claim protects the right of a claimant during the pendency of a controversy and may only be cancelled after a court hearing on its validity, while a notice of lis pendens protects the right of the claimant during the pendency of an action or litigation and may be cancelled without a court hearing.

The case involves a parcel of land in Sampaloc, Manila, originally registered under TCT No. 180198 in the name of Conchita Amongo Francia. Conchita executed an absolute deed of sale in favor of respondents Sonia Arguelles and Lorna Arguelles, and the property was subsequently registered in their names under TCT No. 266311. The dispute centers on the interplay between two involuntary dealings recognized under Presidential Decree No. 1529 (the Property Registration Decree): the annotation of an adverse claim under Section 70 and the annotation of a notice of lis pendens under Section 76.

On November 18, 2004, Conchita Amongo Francia, the registered owner of a 1,000-square-meter parcel of land in Sampaloc, Manila, covered by TCT No. 180198, executed an absolute deed of sale in favor of respondents Sonia Arguelles and Lorna Arguelles. The property was subsequently registered in the respondents' names under TCT No. 266311. On November 14, 2007, Conchita filed an affidavit of adverse claim, which was registered and annotated on TCT No. 266311. Conchita died on January 24, 2008.

On December 11, 2009, respondents filed a petition to cancel the adverse claim before the RTC, Branch 4, Manila, docketed as Case No. P-09-499, LRC Record No. 2400. On February 10, 2010, petitioner Lourdes Valderama and Tarcila Lopez, as full-blooded sisters of Conchita, filed an opposition, claiming that upon Conchita's death, her claims and rights against the subject property were transmitted to her heirs by operation of law. They argued that the sale to respondents was simulated, as evidenced by: (1) Conchita's continuous physical and legal possession of the property; (2) Conchita's payment of real estate taxes; and (3) Conchita's possession of the Owner's Duplicate Copy of TCT No. 266311 up to the time of her death.

On September 24, 2013, while the petition to cancel adverse claim was pending, respondents filed a complaint for recovery of ownership and physical possession with damages before the RTC, Branch 47, Manila, docketed as Civil Case No. 13130761. In light of this filing, petitioner and Tarcila filed a notice of lis pendens with respect to TCT No. 266311 on October 22, 2013. On November 21, 2013, respondents filed a manifestation and motion praying for the outright cancellation of the adverse claim on the ground that the subsequent filing of the notice of lis pendens rendered the issue moot and academic.

The RTC issued a Resolution on April 11, 2014 ordering the cancellation of the adverse claim, reasoning that ownership and physical possession were already made issues in Civil Case No. 13130761 and that the notice of lis pendens called for the cancellation of the adverse claim. The RTC expressly stated that the cancellation was not a determination of the veracity and substance of the adverse claim and was not a final determination on the issue of ownership and possession. The RTC denied petitioner's motion for reconsideration on July 31, 2014.

Petitioner and Tarcila appealed to the CA, raising the sole assignment of error that the RTC committed grave and reversible error in ordering the cancellation of the adverse claim simply because a notice of lis pendens was subsequently annotated on TCT No. 266311. The CA dismissed the appeal for lack of merit, holding that the issue on cancellation of adverse claim is a question of law and that the appeal was an improper appeal pursuant to Section 2, Rule 50 of the Rules of Court. The CA nonetheless found no error in the RTC's cancellation, applying the ruling in Villaflor vs. Juezan. Petitioner alone brought the instant petition before the Supreme Court.

• Question of Law vs. Question of Fact: Petitioner argued that the appeal before the CA did not involve a pure question of law, as questions of fact were involved, such as whether the facts of the case are similar to the facts in Villaflor vs. Juezan so as to justify its application. Petitioner also noted that respondents themselves called the attention of the CA to examine the peculiar facts surrounding the instant case and Civil Case No. 13130761, and that respondents questioned the legitimate interest of the petitioner over the subject property.

• Inapplicability of Villaflor: Petitioner argued that the ruling in Villaflor vs. Juezan is inapplicable to this case, pointing out that in the case at bar, the respondents are the ones who filed the case subject of the notice of lis pendens, and that the related civil case is still pending before the RTC, unlike in Villaflor where the related case was already terminated and attained finality.

• Cancellation of Adverse Claim: Petitioner argued that an adverse claim caused to be annotated by a person on a title may not be cancelled merely because another person caused the annotation of a notice of lis pendens on the same title, as the two remedies are not contradictory and may be availed of at the same time.

• Mootness Due to Lis Pendens: Respondents argued that the subsequent filing of the notice of lis pendens on TCT No. 266311 rendered the issue of cancellation of the adverse claim moot and academic, and prayed for the outright cancellation of the adverse claim on this ground.

• Application of Villaflor: Respondents relied on the ruling in Villaflor vs. Juezan, which held that a notice of lis pendens annotated on a certificate of title is sufficient basis for the cancellation of an adverse claim affecting the same property in connection with a civil case.

• Propriety of Appeal: Whether the appeal filed before the CA involved a pure question of law warranting its outright dismissal under Section 2, Rule 50 of the Rules of Court.

• Applicability of Villaflor vs. Juezan: Whether the ruling in Villaflor vs. Juezan is inapplicable to this case.

• Cancellation of Adverse Claim: Whether an adverse claim caused to be annotated by a person on a title may be cancelled merely because another person caused the annotation of a notice of lis pendens on the same title.

• Propriety of Appeal: Yes, the appeal before the CA raised a pure question of law, and the CA did not err in dismissing it as an improper appeal. However, the Court opted to relax the rules and take cognizance of the petition in the interest of justice and to write finis to the controversy, considering the confusion brought by conflicting jurisprudence on the issue.

• Applicability of Villaflor vs. Juezan: No. Villaflor vs. Juezan is not applicable in this case because the termination of the related case subject of the notice of lis pendens was a material factor in considering the petition for cancellation of adverse claim moot and academic in that case, whereas here the civil case filed by the respondents is still pending before the RTC.

• Cancellation of Adverse Claim: No. A subsequent annotation of a notice of lis pendens on a certificate of title does not necessarily render a petition for cancellation of adverse claim on the same title moot and academic. The two remedies are not contradictory and may be availed of at the same time; the court hearing the petition for cancellation of adverse claim cannot excuse itself from hearing the validity of the adverse claim unless the subject controversy is finally settled by another court in a related case.

• Propriety of Appeal: The Court applied the test for distinguishing a question of law from a question of fact: a question of law arises when there is doubt as to what the law is on a certain state of facts, while a question of fact arises when the doubt is as to the truth or falsity of the alleged facts. The test is not the appellation given to a question by the party raising it, but whether the appellate court can resolve the issue without examining or evaluating the evidence. The Court found that the essential facts of the case were not disputed by the parties before the CA, and the question of whether Villaflor is applicable to the present case is not a question of fact. Given an undisputed set of facts, an appellate court may resolve the issue on what law or ruling is applicable without examining the probative value of the evidence. The Court nonetheless proceeded to decide the merits, citing jurisprudence allowing the relaxation of procedural rules in the interest of justice and to write finis to the controversy.

• Applicability of Villaflor vs. Juezan: The Court revisited Villaflor and found that the ruling stemmed from a different factual milieu. In Villaflor, the related civil case was already terminated and attained finality, which was a material factor in considering the petition for cancellation of adverse claim moot and academic. In the present case, the civil case filed by the respondents is still pending before the RTC. The Court held that Villaflor remains good law if the same factual circumstances are attendant, but the facts in the present case call for a different ruling.

• Cancellation of Adverse Claim: The Court distinguished an adverse claim from a notice of lis pendens under P.D. 1529. An adverse claim protects the right of a claimant during the pendency of a controversy and may only be cancelled upon filing of a petition before the court, which shall conduct a hearing on its validity. A notice of lis pendens protects the right of the claimant during the pendency of the action or litigation and may be cancelled without a court hearing. The Court applied the ruling in Ty Sin Tei vs. Dy Piao, which held that the institution of an action and the corresponding annotation of a notice of lis pendens does not invalidate a prior notation of an adverse claim appearing on the same title. The Court reasoned that if any of the registrations should be considered unnecessary or superfluous, it would be the notice of lis pendens and not the annotation of the adverse claim, which is more permanent and cannot be cancelled without adequate hearing and proper disposition of the claim. The Court emphasized that Section 70 of P.D. 1529 mandates the court to grant a speedy hearing upon the question of the validity of the adverse claim, and the RTC cannot excuse itself from this duty unless the subject controversy is finally settled by another court in a related case. The Court further noted that upholding the outright cancellation of an adverse claim on the sole basis of a subsequent notice of lis pendens would encourage parties to avoid availing of the remedy of annotation of a notice of lis pendens if an adverse claim was already registered, and could leave the adverse claimant with no remedy if the related case is dismissed on grounds not attributable to the claimant.

• Distinction between Adverse Claim and Notice of Lis Pendens — An adverse claim and a notice of lis pendens are both involuntary dealings under P.D. 1529 but differ in nature and purpose: (1) an adverse claim protects the right of a claimant during the pendency of a controversy, while a notice of lis pendens protects the right of the claimant during the pendency of the action or litigation; and (2) an adverse claim may only be cancelled upon filing of a petition before the court, which shall conduct a hearing on its validity, while a notice of lis pendens may be cancelled without a court hearing. The Court applied this distinction to hold that the two remedies may be availed of at the same time and are not contradictory to one another.

• Non-Mootness of Adverse Claim Petition Despite Lis Pendens — A subsequent annotation of a notice of lis pendens on a certificate of title does not necessarily render a petition for cancellation of adverse claim on the same title moot and academic. The court before which the petition for cancellation of adverse claim is filed cannot excuse itself from hearing the validity of the adverse claim unless the subject controversy is finally settled by another court in a related case. This doctrine was applied to reverse the RTC's cancellation of the adverse claim.

• Question of Law vs. Question of Fact — A question of law arises when there is doubt as to what the law is on a certain state of facts, while a question of fact arises when the doubt is as to the truth or falsity of the alleged facts. The test is not the appellation given to a question by the party raising it, but whether the appellate court can resolve the issue without examining or evaluating the evidence. The Court applied this test to uphold the CA's dismissal of the appeal as an improper appeal raising only a question of law.

• "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 or Act No. 496 (now P.D. No. 1529 or the Property Registration Decree), and serves a warning to third parties dealing with said property that someone is claiming an interest on the same or a better right than that of the registered owner thereof." — This passage from Flor Martinez vs. Garcia defines the purpose of an adverse claim and was cited by the Court to distinguish it from a notice of lis pendens.

• "The purpose of annotating the adverse claim on the title of the disputed land is to apprise third persons that there is a controversy over the ownership of the land and to preserve and protect the right of the adverse claimant during the pendency of the controversy. It is a notice to third persons that any transaction regarding the disputed land is subject to the outcome of the dispute." — This passage from Arrazola vs. Bernas further elaborates the protective function of an adverse claim and was relied upon by the Court in its analysis.

• "But, if any of the registrations should be considered unnecessary or superfluous, it would be the notice of lis pendens and not the annotation of the adverse claim which is more permanent and cannot be cancelled without adequate hearing and proper disposition of the claim." — This passage from Ty Sin Tei vs. Dy Piao articulates the core reasoning adopted by the Court: the adverse claim is the more permanent remedy that cannot be cancelled without adequate hearing, and thus the subsequent lis pendens does not render it superfluous.

• "Unless the subject controversy of the adverse claim is finally settled by another court in a related case, the court before which the petition for cancellation of adverse claim is filed can not excuse itself from hearing the validity of the said adverse claim." — This statement states the Court's ruling on the mandatory duty of the court hearing a petition for cancellation of adverse claim to conduct a hearing on its validity.

• Villaflor vs. Juezan, 263 Phil. 224 (1990) — Distinguished. The Court held that this case is not applicable because the termination of the related case subject of the notice of lis pendens was a material factor in considering the petition for cancellation of adverse claim moot and academic, whereas in the present case the related civil case is still pending.

• Paz Ty Sin Tei vs. Jose Lee Dy Piao, 103 Phil. 858 (1958) — Controlling precedent. The Court applied this En Banc decision, which held that the institution of an action and the corresponding annotation of a notice of lis pendens does not invalidate a prior notation of an adverse claim on the same title, and that the two remedies are not contradictory.

• Sajonas vs. CA, 327 Phil. 689 (1996) — Cited. The Court noted this case in reconciling the conflicting rulings in Villaflor and Ty Sin Tei, and cited it for the proposition that an adverse claim constitutes a lien on a property.

• Flor Martinez vs. Ernesto G. Garcia and Edilberto M. Brua, 625 Phil. 377 (2010) — Cited. This case defines the annotation of an adverse claim as a measure designed to protect the interest of a person over a piece of real property and serves as a warning to third parties.

• Teresita Rosal Arrazola vs. Pedro A. Bernas and Soledad Bernas Alivio, 175 Phil. 452 (1978) — Cited. This case explains the purpose of annotating an adverse claim as apprising third persons of a controversy over ownership of the land.

• Fernando Carrascoso, Jr. vs. The Hon. Court of Appeals, 514 Phil. 48 (2005) — Cited. This case discusses the doctrine of lis pendens, which is founded upon reason of public policy and necessity.

• A. Doronila Resources Dev., Inc. vs. Court of Appeals, 241 Phil. 28 (1988) — Cited. This later case ruled that the annotation of a notice of lis pendens does not preclude the subsequent registration of an adverse claim on the same certificate of title.

• Section 70, Presidential Decree No. 1529 (Property Registration Decree) — Governs the annotation and cancellation of adverse claims. The Court applied this provision to hold that the court shall grant a speedy hearing upon the question of the validity of the adverse claim and shall render judgment as may be just and equitable, and that the adverse claim may only be cancelled after the claim is adjudged invalid.

• Section 76, Presidential Decree No. 1529 (Property Registration Decree) — Governs the annotation of a notice of lis pendens. The Court applied this provision to distinguish the notice of lis pendens from an adverse claim, noting that it is an extrajudicial incident in an action intended merely to constructively advise or warn all people who deal with the property.

• Section 77, Presidential Decree No. 1529 (Property Registration Decree) — Governs the cancellation of a notice of lis pendens. The Court applied this provision to show that a notice of lis pendens may be cancelled without a court hearing, unlike an adverse claim.

• Section 2, Rule 41, Rules of Court — Provides the three modes of appeal from decisions of the RTC. The Court applied this provision to determine that an appeal raising only questions of law should be taken to the Supreme Court by petition for review on certiorari under Rule 45.

• Section 2, Rule 50, Rules of Court — Provides that an appeal to the CA raising only questions of law shall be dismissed outright. The Court applied this provision to uphold the CA's dismissal of the petitioner's appeal as an improper appeal.

Sereno, C.J. (Chairperson), on leave; Leonardo-De Castro (Designated as Acting Chairperson pursuant to Special Order No. 2540 dated February 28, 2018), Del Castillo, and Jardeleza, JJ., concurring.