G.R. No. 223660 - Valderama vs. Arguelles

Case Summary (G.R. No. 223660)

Factual Background

Respondents alleged that on November 18, 2004 the registered owner, Conchita Amongo Francia, executed an absolute deed of sale of a parcel in Sampaloc, Manila covered by TCT No. 180198 in favor of respondents, and that the subject parcel was later registered in the names of respondents under TCT No. 266311. On November 14, 2007, Conchita registered an affidavit of adverse claim which was annotated on TCT No. 266311. Conchita died on January 24, 2008. Petitioner and Tarcila Lopez, as full blooded sisters and heirs of Conchita, filed an opposition to respondents’ petition to cancel the adverse claim, alleging that Conchita’s claims devolved to her heirs and that the sale to respondents was simulated, citing Conchita’s continued possession, tax payments, and retention of the owner’s duplicate of TCT No. 266311.

Parallel Proceedings and Lis Pendens

While the petition to cancel the adverse claim remained pending in Branch 4, respondents instituted Civil Case No. 13130761 before RTC, Branch 47, Manila, for recovery of ownership and physical possession and sought injunctive relief against petitioner and others on September 24, 2013. Petitioner and Tarcila then caused the filing and annotation of a notice of lis pendens on TCT No. 266311 on October 22, 2013. Respondents thereafter moved for outright cancellation of the adverse claim on the ground that the subsequent annotation of a notice of lis pendens rendered the petition to cancel the adverse claim moot and academic.

RTC Rulings

The RTC issued a Resolution dated April 11, 2014 ordering cancellation of the adverse claim annotated as Entry No. 8957/Vol. 132/T-266311. The RTC reasoned that ownership and possession were issues in the related Civil Case No. 13130761 and that the parties had effectively submitted those issues to Branch 47; it relied on Villaflor v. Juezan and Villaflor’s apparent reconciliation with other authority, concluding that the subsequent notice of lis pendens justified cancellation of the adverse claim while reserving that the cancellation was not a determination on the merits of ownership and possession. The RTC denied petitioner’s motion for reconsideration by Resolution dated July 31, 2014.

Court of Appeals Proceedings and Ruling

Petitioner and Tarcila appealed to the CA raising as their sole assignment of error that the RTC gravely erred in cancelling the adverse claim solely because of the subsequent annotation of a notice of lis pendens. The CA, by Decision dated December 14, 2015, dismissed the appeal for lack of merit and held that the appeal raised only a question of law and was therefore improperly taken to the CA under Section 2, Rule 41 and subject to dismissal under Section 2, Rule 50, Rules of Court. On the merits, the CA affirmed the RTC’s cancellation and relied on this Court’s decision in Villaflor v. Juezan to find no basis for maintaining the adverse claim where a notice of lis pendens had been annotated.

Procedural Challenge to Mode of Appeal

The Supreme Court addressed whether the CA correctly characterized the appeal as raising only questions of law. The Court recalled the applicable rules: an appeal from the RTC raising only questions of law is to the Supreme Court via Rule 45, and the CA must dismiss an appeal under Rule 41 that raises only questions of law pursuant to Rule 50, Section 2. The Court applied the test distinguishing questions of law from questions of fact: whether resolution requires examination and evaluation of evidence. The Court found that the facts were undisputed before the CA and that the issue — whether a subsequent notice of lis pendens renders a petition to cancel an adverse claim moot and academic — presented a pure question of law. Thus the CA did not err in dismissing the appeal as an improper appeal, and the Supreme Court observed that the proper mode of appeal from the RTC was by certiorari under Rule 45.

Exercise of Discretion to Reach Merits

Notwithstanding petitioner’s failure to perfect a timely Rule 45 appeal, the Supreme Court invoked precedents relaxing technical time requirements in the interest of justice and to resolve conflicting jurisprudence. The Court therefore proceeded to address the merits to reconcile and clarify prior cases dealing with the interaction between an adverse claim and a notice of lis pendens.

Legal Characteristics of an Adverse Claim and a Notice of Lis Pendens

The Court examined statutory provisions and jurisprudence to delineate the nature and purpose of the two registrable instruments. Under Act 496, Section 110, and under Section 70, P.D. 1529, an annotation of an adverse claim serves to protect a claimant’s interest in registered land where no other statutory registration is available, and the adverse claim is effective for a limited period but may be canceled only upon petition and adjudication by the court. Jurisprudence characterizes the adverse claim as a measure to preserve a claimant’s interest and to warn third parties, and as an incipient lien that requires judicial inquiry for cancellation. By contrast, under Sections 76 and 77 of P.D. 1529, a notice of lis pendens is an annotation that advises third persons of pending litigation affecting title or possession, is ordinarily recorded extrajudicially, does not create a right or lien, and is an incident of the action that may be cancelled without the same formal adjudication required for an adverse claim.

Inapplicability of Villaflor v. Juezan to the Present Factual Milieu

The Court reviewed Villaflor v. Juezan and found that its conclusion rested on material facts not present here, specifically the termination and finality of the related civil action which rendered the adverse claim moot and academic in that case. Because the related civil case in the present matter remained pending and had not attained finality, the Court held that Villaflor did not control the present dispute.

Controlling Precedent: Ty Sin Tei v. Dy Piao

The Court found Paz Ty Sin Tei v. Jose Lee Dy Piao controlling. In Ty Sin Tei the Court held that the institution of an action and the annotation of a notice of lis pendens did not invalidate a prior registered adverse claim; the remedies are not contradictory and both serve to protect interests, but the adverse claim is the more permanent of the two and may be cancelled only upon judicial adjudicat

Case Syllabus (G.R. No. 223660)

Parties and Procedural Posture

Lourdes Valderama filed the petition for review under Rule 45 assailing the Court of Appeals decision and resolution sustaining the RTC order cancelling an adverse claim annotated on a transfer certificate of title.
Sonia Arguelles and Lorna Arguelles filed the petition to cancel the adverse claim annotated on TCT No. 266311 and sought outright cancellation of the adverse claim.
The case originated as a petition to cancel adverse claim docketed as Case No. P-09-499, LRC Record No. 2400 before the Regional Trial Court, Branch 4, Manila.
The Court of Appeals dismissed Valderama’s appeal for raising only questions of law under Section 2, Rule 50 and nonetheless found no error in the RTC’s cancellation order.
The Supreme Court granted certiorari review and resolved both procedural and substantive questions regarding the interplay of an adverse claim and a notice of lis pendens.

Key Factual Allegations

The registered owner of the subject property was Conchita Amongo Francia who purportedly executed an absolute deed of sale in favor of respondents on November 18, 2004.
The subject property was subsequently registered in the names of Sonia Arguelles and Lorna Arguelles under TCT No. 266311.
On November 14, 2007, Conchita filed an affidavit of adverse claim which was annotated on TCT No. 266311 as Entry No. 8957/Vol. 132.
Conchita died on January 24, 2008, and petitioner and her sister Tarcila Lopez asserted hereditary rights and opposed the petition to cancel the adverse claim.
Respondents thereafter filed Civil Case No. 13130761 for recovery of ownership and possession and caused annotation of a notice of lis pendens on TCT No. 266311, after which the RTC ordered cancellation of the adverse claim.

Procedural History

The RTC, Branch 4, Manila issued a Resolution dated April 11, 2014 ordering cancellation of the adverse claim and denied reconsideration on July 31, 2014.
Petitioner appealed to the Court of Appeals which dismissed the appeal on December 14, 2015 for raising a pure question of law and affirmed the RTC’s practical conclusion.
The CA denied reconsideration by Resolution dated February 24, 2016.
Petitioner filed the present petition for review under Rule 45 before the Supreme Court challenging both the CA’s procedural disposition and the RTC’s substantive cancellation.

Issues

Whether the CA correctly dismissed the appeal as raising only a question of law under Section 2, Rule 50 of the Rules of Court.
Whether the Supreme Court’s decision in Villaflor v. Juezan was applicable to warrant cancellation of an adverse claim upon subsequent annotation of a notice of lis pendens.
Whether the subsequent annotation of a notice of lis pendens on a