Attachment Liens Priority AND Protection IN Real Property Disputes

The Supreme Court's 2014 ruling in Ligon v. Regional Trial Court of Makati City (G.R. No. 190028) clarifies a critical point in Philippine property law: a properly registered attachment lien is not destroyed by the cancellation of a certificate of title or by a subsequent sale of the property. The decision protects creditors who secure their claims through attachment and affirms that such liens bind the property itself, regardless of who holds title.

The Facts

Leticia Ligon lent ₱3 million to Rosario Baladjay, secured by a post-dated check that was later dishonored. Ligon sued and obtained a writ of preliminary attachment over a property in Ayala Alabang Village, which was annotated on the title on December 3, 2002.

Meanwhile, another creditor, the Vicentes, also obtained an attachment over the same property in a separate case filed in Makati. That court rendered a decision in December 2004 rescinding the transfer of the property to a corporation (Polished Arrow) for being fraudulent, and ordered the restoration of title to the Baladjays.

In executing the Vicentes' judgment, the Makati court ordered the property sold at public auction. The highest bidder, Leonardo Ting, bought it for ₱9 million. The court then directed the Register of Deeds to cancel the restored title and issue a new one in Ting's name "free from any liens and encumbrances"—effectively deleting Ligon's attachment annotation. Ting later sold the property to Benito Techico.

The Issue

The central question was whether the Makati court gravely abused its discretion when it ordered the issuance of a new title free from all liens, thereby erasing Ligon's prior attachment annotation.

The Ruling

The Supreme Court ruled in Ligon's favor, holding that the Makati court committed grave abuse of discretion. The Court explained that attachment is a proceeding in rem—it binds the property itself, enforceable against the whole world. An attaching creditor acquires a specific lien on the attached property that nothing can destroy except the dissolution of the attachment, payment of the debt, or sale under execution.

The Court emphasized that a prior registration of an attachment lien creates a preference. Under Section 52 of Presidential Decree No. 1529 (the Property Registration Decree), registration of a lien operates as constructive notice to all persons. Consequently, a purchaser who acquires property after an attachment takes it subject to that attachment.

Critically, the Court held that Ligon's attachment lien continued to subsist even after the cancellation of the title in Polished Arrow's name. The lien bound the property itself, and the restoration of title to the Baladjays did not extinguish it. Under Section 59 of PD 1529, subsisting encumbrances must be carried over to any new certificate of title.

The Court declared the assailed orders null and void only insofar as they directed the issuance of a title free from liens. It ordered the Register of Deeds to annotate Ligon's original attachment lien on the current title in Techico's name.

The Court, however, dismissed the indirect contempt charges against the judge and other respondents, finding no willful disregard of authority—the judge was merely performing judicial functions.

Practical Takeaways

• Attachment liens survive title transfers. A properly registered attachment lien binds the property regardless of who holds title, and it survives cancellation or replacement of certificates of title.
• Registration is critical. Under PD 1529, registering an attachment lien provides constructive notice to all persons and creates a preference over subsequent claims.
• Purchasers take property subject to existing liens. Buying property with an annotated attachment means taking it subject to that lien, which may be enforced against the property later.
• Encumbrances must be carried over. When a new title is issued, Section 59 of PD 1529 requires that subsisting encumbrances be carried over and stated in the new certificate.
• Challenge titles directly. A certificate of title cannot be attacked collaterally under Section 48 of PD 1529; disputes over annotations must be raised in direct proceedings.

This article is general information and not legal advice. For your specific situation, consult a lawyer or ask ASG Legal AI.