DURAWOOD CONSTRUCTION AND LUMBER SUPPLY, INC., PETITIONER, VS. CANDICE S. BONA, RESPONDENT.

Durawood Construction and Lumber Supply versus Bona

The Case

This is a petition for review on certiorari brought by Durawood Construction and Lumber Supply, Incorporated against Candice Bona. Durawood obtained a judgment for a sum of money against LBB Construction and Development Corporation, caused a parcel of registered land to be levied upon by preliminary attachment, and later discovered that the title had been cancelled and a new one issued in the name of Candice Bona and her siblings. The case matters because it fixes the moment at which a deed of sale is deemed registered for purposes of priority against a levy on attachment, and because it measures how far a court may go in reinstating a levy that was never carried over to the new certificate of title.

Procedural History

Durawood sued LBB Construction and its president, Leticia Barber, for a sum of money with damages before the Regional Trial Court of Antipolo, praying for a writ of preliminary attachment. The trial court granted the writ, and the sheriff levied on the land covered by the old certificate of title in the name of LBB Construction. Candice Bona was allowed to intervene, claiming co-ownership of the property by virtue of a deed of absolute sale. The trial court rendered judgment in favor of Durawood, and that judgment became final and executory. When Durawood moved for execution, it discovered that the old title had been cancelled and a new title issued in the names of Candice Bona and her co-owners, without the notice of levy being carried over. Durawood then moved to reinstate the notice of levy on the new title and to cite the registering officer for contempt. The trial court granted the reinstatement, and denied Candice Bona's motion for reconsideration. Candice Bona went to the Court of Appeals on a petition for certiorari and prohibition. The Court of Appeals annulled the trial court's orders and declared the public auction sale void, and denied reconsideration. Durawood then came to the Supreme Court by petition for review on certiorari.

Facts

On the third of June 2004, Durawood filed a complaint for a sum of money against LBB Construction and Leticia Barber, claiming six hundred sixty-five thousand three hundred eighty-five pesos and fifty centavos for construction materials delivered. The trial court granted a writ of preliminary attachment, and on the seventeenth of June 2004 the sheriff levied on a three hundred forty-four square meter parcel of land in Antipolo City covered by a transfer certificate of title in the name of LBB Construction. The notice of levy was annotated on the memorandum of encumbrances that same day.

Candice Bona then sought to intervene, claiming that LBB Construction had sold the property to her and her siblings by a deed of absolute sale dated the second of June 2004, and that the sale had been entered in the registry's records on the sixteenth of June 2004, a day ahead of the levy. The trial court allowed the intervention. Judgment was later rendered for Durawood, and it became final. When execution was about to be enforced, Durawood learned that the old title had been cancelled and a new title issued in the names of Candice Bona and her co-owners, with the notice of levy omitted.

The records showed that the officer who cancelled the old title and issued the new one was not yet the Register of Deeds of Antipolo City on the date appearing on the document, and that the cancellation and issuance had been antedated. The officer who was actually acting as Register of Deeds on that date had not acted on the deed of sale because the registration fees had not been paid. The trial court ordered the notice of levy reinstated on the new title, and the property was later sold at public auction to Durawood as the lone bidder. The Court of Appeals set aside those orders and voided the sale, holding that the entry in the primary entry book, not the sequence of annotations on the title, controls, and that there had been substantial compliance with the circular on titles left unsigned by a former Register of Deeds.

Issues

• Whether or not the Court of Appeals correctly held that the trial court committed grave abuse of discretion in ordering the reinstatement of the notice of levy on attachment in the new certificate of title.
• Whether or not the entry of the deed of absolute sale in the primary entry book on the sixteenth of June 2004, without payment of the required registration fees, operated as a completed registration that took precedence over the levy on attachment entered on the seventeenth of June 2004.

Applicable Provisions

Section 56 of Presidential Decree Number 1529, the Property Registration Decree, provides:

SEC. 56. Primary Entry Book; fees; certified copies. - Each Register of Deeds shall keep a primary entry book in which, upon payment of the entry fee, he shall enter, in the order of their reception, all instruments including copies of writs and processes filed with him relating to registered land. He shall, as a preliminary process in registration, note in such book the date, hour and minute of reception of all instruments, in the order in which they were received. They shall be regarded as registered from the time so noted, and the memorandum of each instrument, when made on the certificate of title to which it refers, shall bear the same date: Provided, that the national government as well as the provincial and city governments shall be exempt from the payment of such fees in advance in order to be entitled to entry and registration.

This provision supplies the reckoning point for registration and the rule that the memorandum on the title bears the date of entry, which is the very question in dispute between the deed of sale and the levy.

Ruling

On the first issue, the Court held that there was no grave abuse of discretion. Grave abuse of discretion means a capricious and whimsical exercise of judgment equivalent to lack of jurisdiction, so patent and gross as to amount to an evasion of a positive duty. The trial court's order reinstating the levy rested on established facts, and the Court of Appeals was wrong to annul it.

On the second issue, the Court ruled that the entry of the deed of sale in the primary entry book did not complete the registration, because the registrant had not paid the prescribed fees. The Court recalled its earlier doctrine that entry alone produces the effect of registration, so long as the registrant has complied with all that is required of him and nothing remains but a duty incumbent solely on the Register of Deeds. Payment of the fees is part of what is required. Since the fees for the deed of sale had not been paid, its entry could not be regarded as registration, and it did not take precedence over the levy on attachment. The Court thus reversed the Court of Appeals and sustained the trial court.

Doctrine

Under Section 56 of Presidential Decree Number 1529, instruments relating to registered land are regarded as registered from the time they are noted in the primary entry book, and the memorandum later made on the certificate of title bears that same date. The annotation on the title is therefore not determinative of the effectivity of registration.

But entry alone produces the effect of registration only if the registrant has complied with everything required of him for entry and annotation, including payment of the prescribed fees, leaving nothing to be done but a duty incumbent solely on the Register of Deeds. Where the fees are unpaid, the entry does not operate as a completed registration and confers no priority.

Disposition

The Supreme Court granted Durawood's petition, reversed the Court of Appeals, and sustained the trial court's orders reinstating the notice of levy on attachment and the auction sale held pursuant thereto.

Remember This

Memorize the line that entry in the primary entry book is equivalent to registration only when the registrant has done all that is required of him, including payment of the fees. Examiners use this case to test priority between a deed of sale and a levy on attachment, and to test the meaning of grave abuse of discretion.