Background facts:
Elsie and her siblings inherited in 2004 a parcel of land in the province from their parents. Sometime in September 2011, Rose (the person living adjacent to that parcel of land) occupied a certain portion and claimed it as her own. Moreover, Rose filed with the Register of Deeds (RD) an application for annotation of an adverse claim (“application for adverse claim”).
The Register of Deeds did not inform Elsie and her siblings of the pending application for adverse claim.
Sometime in early 2012, when a buyer expressed interest in the land, Elsie and her siblings tried to get a certified copy of their Transfer Certificate of Title (TCT). The RD refused to issue the certified copy saying that there was a pending application for adverse claim. (Elsie and her siblings also found out later on that several persons interested in the land were told by the RD staff that there was a pending application for adverse claim.)
Sometime in April 2013 (two years after the application was filed), the RD approved and annotated the adverse claim on the TCT of the land inherited by Elsie and her siblings.
Again, the RD did not inform Elsie and her siblings that the adverse claim was approved and annotated on the TCT.
The RD also dated the annotation as of September 2011 (the date of the filing of the application), not as of April 2013 (date when the application was approved and actually annotated).
Elsie and her siblings filed a “consulta” with the Land Registration Authority (LRA) with the following questions:
1. Why didn’t the RD notify them that an application for annotation of adverse claim was filed against their land?
2. Why did it take the RD two years to decide whether to deny or grant the application for annotation of the adverse claim?
3. Why did the RD date the annotation as of September 2011 (the date of the filing of the application) and not as of April 2013 (date when the application was approved and actually annotated)?
The relevant law on adverse claims: PD 1529 Property Registration Decree
Section 70 of PD 1529 states:
Adverse claim. Whoever claims any part 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 this Decree for registering the same, make a statement in writing setting forth fully his alleged right or interest, and how or under whom acquired, a reference to the number of the certificate of title of the registered owner, the name 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 a place at which all notices may be served upon him. This statement shall be entitled to registration as an adverse claim on the certificate of title. The adverse claim shall be effective for a period of thirty days from the date of registration. After the lapse of said period, the annotation of adverse claim may be canceled upon filing of a verified petition therefor by the party in interest: Provided, however, that after cancellation, no second adverse claim based on the same ground shall be registered by the same claimant.
Before the lapse of thirty days aforesaid, any party in interest may file a petition in the Court of First Instance where the land is situated for the cancellation of the adverse claim, and the court shall grant a speedy hearing upon the question of the validity of such adverse claim, and shall render judgment as may be just and equitable. If the adverse claim is adjudged to be invalid, the registration thereof shall be ordered canceled. If, in any case, the court, after notice and hearing, shall find that the adverse claim thus registered was frivolous, it may fine the claimant in an amount not less than one thousand pesos nor more than five thousand pesos, in its discretion. Before the lapse of thirty days, the claimant may withdraw his adverse claim by filing with the Register of Deeds a sworn petition to that effect.
Lawyers who graduated from law school or were admitted into the bar before 1996 understood this section to mean:
1. The adverse claim is effective only for 30 days from the date of annotation.
2. Within 30 days after the adverse claim is annotated, the claimant must file with the Regional Trial Court (RTC) the proper petition to enforce the claim. (The reason for filing the adverse claim with the RD is to prevent the landowner from disposing of the property while the lawyer is preparing the petition with the RTC.)
3. Although the adverse claim automatically loses its effectivity after the 30-day period, the affected landowner needs to file a petition with the RTC to have the annotation cancelled. (The landowner can include in the petition a claim for damages against the party who filed the adverse claim.)
The Supreme Court ruling on adverse claims in Sajonas vs. Court of Appeals
The Supreme Court in Sajonas vs. CA (G. R. No. 102377, July 5, 1996) ruled that the adverse claim is effective even beyond the 30-day period, for as long as there’s no decision from the RTC declaring that the adverse claim has been cancelled. The Supreme Court said: “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.” It also clarified the reason for the required court hearing:
[t]he 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 496 (now P.D. 1529 or the Property Registration Decree), and serves as a warning to third parties dealing with said property that someone is claiming an interest or the same or a better right than the registered owner thereof.
The reason why the law provides for a hearing where the validity of the adverse claim is to be threshed out is to afford the adverse claimant an opportunity to be heard, providing a venue where the propriety of his claimed interest can be established or revoked, all for the purpose of determining at last the existence of any encumbrance on the title arising from such adverse claim.
The Supreme Court upheld its Sajonas ruling in these subsequent cases: Diaz-Duarte vs. Ong and CA, G.R. No. 130352 November 3, 1998; Equatorial Realty Development vs. Frogozo and CA, G.R. No. 128563, March 25, 2004.
Proposed legislation: Amendments to Section 70 of PD 1529 so as to negate the Sajonas ruling
According to the LRA staff whom I have talked to, numerous landowners have complained to them of the negative effects of the Sajonas ruling, specifically about frivolous claims that are meant to harass landowners. One staff member told me that the LRA has approached some members of Congress asking them to amend the law on adverse claims.
1. Proposed legislation: Increase the penalty imposed on frivolous adverse claims from “not less than one thousand pesos nor more than five thousand pesos” to, for example, from fifty thousand pesos to one hundred thousand pesos.
Section 70, PD 1529 states:
If the adverse claim is adjudged to be invalid, the registration thereof shall be ordered canceled. If, in any case, the court, after notice and hearing, shall find that the adverse claim thus registered was frivolous, it may fine the claimant in an amount not less than one thousand pesos nor more than five thousand pesos, in its discretion.
Landowners whose property have been subjected to adverse claims are reluctant to go to court to have the annotation cancelled because of the high costs of litigation. The penalty of “not less than one thousand pesos nor more than five thousand pesos” does not even cover the cost of a lawyer’s single appearance fee. The increase in the penalty can (a) discourage the frivolous filing of adverse claims and (b) answer for the landowner’s legal expenses.
2. With the Sajonas ruling that an adverse claim is valid beyond the 30-day period, the claimant doesn’t have to do anything else once the adverse claim has been annotated. The landowner is now forced to incur legal expenses by retaining the services of a lawyer to have the annotation canceled.
Moreover, Section 70, PD 1529 seemingly violates the doctrine that a Torrens title cannot be subjected to a collateral attack. For example: The landowner files a petition to have the annotation of adverse claim cancelled. What if the adverse claimant, in the Answer, raises grounds that question the authenticity of the title? Normally, such an Answer is not allowed because it’s a collateral attack, but Section 70, PD 1529 (as clarified in the Sajonas ruling) states:
The reason why the law provides for a hearing where the validity of the adverse claim is to be threshed out is to afford the adverse claimant an opportunity to be heard, providing a venue where the propriety of his claimed interest can be established or revoked, all for the purpose of determining at last the existence of any encumbrance on the title arising from such adverse claim.
Proposed legislation: Amend Section 70, PD 1529 so that the adverse claimant must proactively pursue the claim in court. (“He who alleges must prove.”) The claimant must file, within 30 days from the annotation, the proper petition in court to prove the adverse claim. If the claimant fails to do so, then the adverse claim should no longer be effective.
This proposed amendment will prevent the filing of frivolous adverse claims.
3. Proposed legislation: To prevent the filing of frivolous adverse claims, an adverse claim must be effective only for 30 days and will be automatically canceled by the mere lapse of the period, without the need for a court order or an annotation by the RD.
In the alternative, the RD can annotate the cancellation upon the application by the landowner. To prevent the RD from sitting on the application for cancellation, the action on the application must be made within the 5-day period for simple transactions provided by RA 9485 Anti-Red Tape Act of 2007.
Another alternative: The effectivity of an adverse claim can be increased from 30 days to 45 days, so as to give the adverse claimant enough time to enforce the claim in the Regional Trial Court.
Benefits of this proposed legislation:
(a) Frivolous adverse claims will be minimized.
(b) Landowners will not incur legal expenses in going to court to have the adverse claim canceled.
4. As stated in the “Background facts” above, the RD did not inform Elsie and her siblings of the pending application for adverse claim.
The third paragraph of Section 70 of PD 1529 provides that the landowner (who is a “party in interest”) has the remedy of going to court for the cancellation of the adverse claim within 30 days from the registration of the claim. This section thus implies that the RD must immediately notify the landowner so that the legal remedy can be availed of.
Proposed legislation:
(a) Make explicit the duty of the RD to immediately notify the landowner of the registration of the adverse claim, and
(b) Provide penalties if the RD fails to notify the landowner.
The legislation could require the RD to notify the landowner twice: first notice that an application for adverse claim has been filed, and second notice that the application has either been denied or approved.
5. As stated in the “Background facts” above, it took the RD two years to act on the application for adverse claim.
Proposed legislation:
(a) Set a time limit of 30 days from the time the application for an adverse claim was filed within which the RD must either deny or approve the application, with the corresponding penalty if the RD fails to comply with this period;
(b) Provide that if the RD denies the application for adverse claim, the denial cannot be subject of a motion for reconsideration or an appeal to the Land Registration Authority. The remedy of the applicant should be to file a court action to pursue the claim.
As stated in the “Background facts,” the RD refused to issue a certified copy of the TCT to Elsie and her siblings while the application for adverse claim was pending. Under the LRA guidelines, if the RD denies the application for adverse claim, the claimant can file a “consulta” with the LRA questioning the denial. This guideline should be repealed because it means that, while the “consulta” is pending, the RD can continue to refuse issuing a certified copy of the affected TCT (or continue to tell interested buyers of the pending appeal), to the detriment of the landowner who may wish to sell the property.
(The LRA usually takes years to resolve a “consulta” because it goes through numerous stages or departments — investigation by an RD designated as the hearing officer or by the Investigation and Inspection Division; preliminary review of the hearing officer’s draft resolution by the LRA Administrator; consulta conference; drafting and signing of the final resolution by the LRA Deputy Administrator; final review by the LRA Administrator; and promulgation by the Clerks of Court Division.)
6. As stated in the “Background facts” above, Elsie and her siblings questioned why the RD dated the annotation as of September 2011 (the date of the filing of the application) and not as of April 2013 (date when the application was approved and actually annotated)?
In reply to this question, the RD invoked the Implementing Guidelines of the Philippine Land Registration and Information System (PHILARIS), specifically Section 5, sub-paragraph k), which states:
k) Electronic Primary Entry Book for Registered Land (EPEB-RL) – refers to the electronic book wherein registered lands,including all transactions and/or instruments registered related thereto, are recorded and assigned sequential entry numbers in the order of presentation indicating therein the date, hour, and minute when the same was received.
But Section 5, sub-paragraph k) of the PHILARIS guidelines is contrary to the provisions of the third paragraph of Section 70 of PD 1529. As stated above, this section of PD 1529 provides that the landowner (“party in interest”) has the remedy of going to court for the cancellation of the adverse claim within 30 days from the registration of the claim. But how can Elsie and her siblings have availed of this remedy when the approval of the application for adverse claim made in 2013 was retroactively dated to 2011?
In effect, this provision of the PHILARIS guidelines on retroactive dating negates the legal remedy provided by PD 1529.
Proposed legislation: Require the RD to annotate any adverse claim using the date of actual registration rather than the date of the filing of the claim. (The implementing guidelines of PHILARIS must therefore also be amended by the LRA.)
