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DURAWOOD CONSTRUCTION v. CANDICE S. BONA

FACTS:

The petitioner, Durawood Construction and Lumber Supply, Inc., filed a case for sum of money and damages against LBB Construction and Development Corporation and its president, Leticia Barber. They sought payment for construction materials delivered to LBB Construction. The RTC granted the petitioner's prayer for the issuance of a writ of attachment, and a corresponding writ was issued. The sheriff levied a parcel of land covered by TCT No. R-17571 in the name of LBB Construction. Candice Bona filed a motion seeking leave to intervene, claiming co-ownership of the property covered by TCT No. R-17571. LBB Construction and Barber filed their answer but failed to attend hearings. The RTC rendered a decision in favor of the petitioner, ordering payment plus interest and attorney's fees. The decision became final and executory. Upon seeking enforcement of the writ of execution, it was discovered that TCT No. R-17571 was cancelled and TCT No. R-22522 was issued in the name of Candice and her siblings. The cancellation of TCT No. R-17571 and issuance of TCT No. R-22522 was found to be antedated and done by a person who was not the register of deeds at the time. The petitioner filed a motion to reinstate the notice of levy on attachment in TCT No. R-22522 and to cite the person responsible for contempt.

The case involves a dispute over the cancellation of TCT No. R-17571 and the issuance of TCT No. R-22522. Atty. Randy Rutaquio cancelled TCT No. R-17571 and issued TCT No. R-22522 without inscribing the Notice of Levy on Attachment, despite the absence of a court order dissolving the writ of preliminary attachment. Atty. Rutaquio claimed that the cancellation and issuance were completed before he took over as Acting Register of Deeds. The Land Registration Authority (LRA) Administrator replied that the Deed of Sale was considered registered and shall take precedence over the Notice of Levy on Attachment. Durawood filed a Motion to Reinstate Notice of Levy on Attachment and cited Atty. Rutaquio for contempt. The RTC ruled in favor of Durawood, stating that Atty. Santos was the only person authorized to sign and approve transactions at the time. The RTC also considered the alienation of property in favor of the Bonas without leaving sufficient property to pay its obligation as fraud against the creditor. The RTC ordered the reinstatement of the Notice of Levy on Attachment in TCT No. R-22522. Candice filed a Motion for Reconsideration, but it was denied by the RTC. Sheriff Leyva conducted a public auction and sold the property to Durawood. Candice filed a Petition for Certiorari and Prohibition with the Court of Appeals, which rendered a decision in favor of Candice, stating that the order of reception in the Primary Entry Book establishes the rights of claimants over a disputed property.

ISSUES:

  1. Whether the sequence of presentation of entries in the Transfer Certificate of Title (TCT) controls the determination of rights over a disputed property.

  2. Whether the issuance of TCT No. R-22522 by Atty. Rutaquio, who was not yet the Register of Deeds, complied with NALTDRA Circular No. 94.

  3. Whether the entries in TCT No. R-17571 serve as evidence of the stated facts.

  4. Whether the registration of an instrument in the Primary Entry Book is equivalent to registration, even if the instrument is not annotated in the corresponding certificate of title.

  5. Whether the registration of the Notice of Levy on Attachment, which was annotated earlier in the certificate of title, takes precedence over the registration of the Absolute Deed of Sale.

  6. Whether the payment of the requisite fees for entry and registration is necessary for the entry to have the effect of registration.

  7. Whether the subsequent payment of the entry fee can be deemed as substantial compliance with the law.

RULING:

  1. The Court of Appeals held that the sequence of presentation of entries in the TCT does not control the determination of rights over a disputed property. It is the registration in the Primary Entry Book that establishes the order of reception of instruments affecting registered land. The inscription of the levy on attachment on TCT No. R-17571 retroacts to the date of entry in the Primary Entry Book, while the inscription of the Deed of Sale on said title retroacts to the earlier date of entry in the Primary Entry Book. Therefore, the Court declared the notice of levy on attachment reinstated and the auction sale null and void.

  2. The Court of Appeals ruled that there was substantial compliance with NALTDRA Circular No. 94. Although Atty. Rutaquio issued TCT No. R-22522 despite not yet being the Register of Deeds at that time, he signed the document while he was already the Acting Register of Deeds. The Court accepted Atty. Rutaquio's explanation that he signed the document subsequent to June 16, 2004, and that the name of the former Register of Deeds still appeared due to the timing of the entry in the Primary Entry Book. The Court held that Candice cannot be made to suffer for the failure to affix the date when Atty. Rutaquio signed the document.

  3. The Court of Appeals did not specifically address the issue of whether the entries in TCT No. R-17571 serve as evidence of the stated facts.

  4. Yes, the registration of an instrument in the Primary Entry Book is equivalent to registration, even if the instrument is not annotated in the corresponding certificate of title. The entry in the Primary Entry Book is considered the date of registration, and the memorandum of the instrument, when made on the certificate of title, shall bear the same date as the entry in the Primary Entry Book.

  5. No, the registration of the Notice of Levy on Attachment does not take precedence over the registration of the Absolute Deed of Sale. The annotation in the certificate of title is not determinative of the effectivity of the registration of the instrument.

  6. The payment of the requisite fees is necessary for the entry to have the effect of registration. The entry alone does not automatically produce the effect of registration unless the registrant has complied with all requirements, including the payment of fees.

  7. The subsequent payment of the entry fee can be deemed as substantial compliance with the law, especially in cases where the payment was delayed due to unavoidable circumstances. In this case, the payment was made the day after the entry was made, and it was still considered as substantial compliance.

PRINCIPLES:

  • The sequence of presentation of entries in a TCT does not control the determination of rights over a disputed property. It is the registration in the Primary Entry Book that establishes the order of reception of instruments affecting registered land.

  • There is substantial compliance with NALTDRA Circular No. 94 when the Acting Register of Deeds signs a certificate of title and affixes his signature below the name of the former Register of Deeds, placing the actual date and time of signing enclosed in parenthesis below his signature.

  • A certificate of title, once registered, cannot be impugned, altered, changed, modified, enlarged or diminished except in a direct proceeding permitted by law.

  • An action for rescission of contracts entered into in fraud of creditors cannot be instituted except when the party suffering damage has no other legal means to obtain reparation for the same.

  • The date of registration of an instrument is based on the entry in the Primary Entry Book, regardless of whether the instrument is annotated in the certificate of title.

  • The annotation in the certificate of title is not determinative of the effectivity of the registration of the instrument.

  • The payment of the requisite fees is necessary for the entry to have the effect of registration.

  • Subsequent payment of the entry fee can be deemed as substantial compliance with the law, especially in cases where the delay was due to unavoidable circumstances.