Ligon vs. Regional Trial Court

A duly registered prior attachment lien binds the property itself and continues to subsist despite cancellation of the certificate of title on which it was annotated, and must be carried over to any subsequent certificate until the judgment debt is satisfied or the attachment is discharged or vacated as provided by law.

On November 20, 2002, Leticia P. Ligon filed an amended complaint before the Regional Trial Court of Quezon City, Branch 101, docketed as Civil Case No. Q-10-48145, against Spouses Rosario and Saturnino Baladjay, Olivia Marasigan, Polished Arrow Holdings, Inc. and its incorporators and their spouses. Ligon alleged that Rosario enticed her to extend a short-term ₱3,000,000.00 loan payable in a month, secured by an Allied Bank post-dated check for the same amount, and further represented that she and her husband were selling their Ayala Alabang Village property in Muntinlupa City covered by clean TCT No. 8502 in the name of Rosario Baladjay, married to Saturnino Baladjay, whose proceeds could pay the loan. The check was dishonored upon presentment and was never replaced with cash, and Ligon discovered the property had already been transferred to Polished Arrow, alleged to be the Baladjays' dummy corporation, resulting in cancellation of TCT No. 8502 and issuance of TCT No. 9273 in Polished Arrow's name on October 11, 2002. Ligon prayed for solidary liability for ₱3,000,000.00 with interest, ₱1,000,000.00 attorney's fees and ₱1,000,000.00 moral and exemplary damages, nullification of the fraudulent transfer, and a writ of preliminary attachment, which was issued as an Amended Writ on November 26, 2002 and annotated on TCT No. 9273 on December 3, 2002.

Thereafter, on February 18, 2003, Spouses Cecilia and Gil Vicente filed a similar collection, damages and cancellation suit before the Regional Trial Court of Makati City, Branch 56, docketed as Civil Case No. 03-186, against Sps. Baladjay, Polished Arrow and other corporations, alleging solicitation of millions in investments through conduit companies controlled by Rosario. A writ of preliminary attachment therein was annotated on TCT No. 9273 on March 12, 2003. Before the Quezon City case concluded, the Makati City RTC rendered a Decision on December 9, 2004 rescinding the transfer from Sps. Baladjay to Polished Arrow as made in fraud of creditors and directing the Register of Deeds of Muntinlupa City to cancel TCT No. 9273 and restore TCT No. 8502 in its previous condition in the name of Rosario Baladjay, married to Saturnino Baladjay.

In the meantime, the Quezon City case proceeded only against Sps. Baladjay and Marasigan after Polished Arrow and the individual defendants were successively dropped upon establishment that they had no more ownership, interest, title or claim over the property, with stipulation on the existence and finality as to them of the December 9, 2004 Makati City Decision. After trial, the Quezon City RTC rendered a Decision on March 26, 2008 directing Sps. Baladjay to pay Ligon ₱3,000,000.00 with interest plus attorney's fees and costs, which became final and executory on September 25, 2008. When Ligon sought execution, she learned the December 3, 2002 attachment had been deleted when the property was sold at public auction on September 9, 2005 to highest bidder Leonardo J. Ting for ₱9,000,000.00 during Makati City execution, evidenced by the Officer's Final Deed of Sale dated October 27, 2006 issued by Sheriff Lucito V. Alejo.

The Makati City RTC had issued an Order on February 9, 2007 directing Register of Deeds Atty. Silverio Garing to register the Final Deed, cancel TCT No. 8502 in the name of Sps. Baladjay, and issue a new title to Ting free from liens and encumbrances. After Garing manifested uncertainty and submitted the matter en consulta to the Land Registration Authority on whether annotations on TCT No. 9273 should be carried over to TCT No. 8502, the Makati City RTC issued an Order on March 20, 2007 directing compliance under pain of contempt, reasoning that carrying over all annotations on TCT No. 9273 would run counter to the December 9, 2004 Decision and that only liens existing on TCT No. 8502 before its cancellation need be carried over. On Ting's motion following Garing's March 26, 2006 letter requiring documentary compliance and payment of capital gains, documentary stamp and transfer taxes, the Makati City RTC issued an Order on April 25, 2007 directing Ting to pay said taxes and Garing to cancel TCT No. 8502 and issue a new title. On June 7, 2007, Garing issued TCT No. 19756 in Ting's name free from liens, and Ting later sold the property to Benito G. Techico, resulting in TCT No. 31001 in Techico's name. The trial courts thus factually established the priority of Ligon's December 3, 2002 annotation, the rescission restoring Baladjay ownership, and the subsequent auction and issuance of clean titles omitting that annotation.

• Grave Abuse of Discretion in Issuing Assailed Orders: Petitioner argued that the Makati City RTC committed grave abuse of discretion in issuing the Orders dated February 9, 2007, March 20, 2007 and April 25, 2007 directing registration of the Final Deed and issuance of a title free from liens and encumbrances.
• Due Process and Prior Attachment Lien: Petitioner maintained that the Assailed Orders should be declared null and void for violation of her right to due process, resulting in deletion of the December 3, 2002 attachment annotation evidencing her prior attachment lien and issuance of new titles in the names of Ting and Techico.
• Indirect Contempt and Interference: Petitioner argued that respondents unlawfully interfered with the processes of the Quezon City RTC, particularly by deleting the December 3, 2002 attachment annotation, thereby preventing execution of the March 26, 2008 Decision.

• Grave Abuse of Discretion in Execution Orders: Whether the CA erred in ruling that the Makati City RTC did not gravely abuse its discretion in issuing the Orders dated February 9, 2007, March 20, 2007 and April 25, 2007 directing issuance of title to Ting free from liens and encumbrances.
• Indirect Contempt and Administrative Liability: Whether Judge Laigo should be cited in contempt and penalized administratively for issuing the Assailed Orders.

• Grave Abuse of Discretion in Execution Orders: Yes. The CA erred because the orders disregarded Ligon's prior registered attachment lien, which binds the property until satisfied, discharged or vacated by law, and must be carried over to subsequent titles.
• Indirect Contempt and Administrative Liability: No. Indirect contempt was not established, Judge Laigo having merely performed judicial functions pursuant to the final December 9, 2004 Decision, with official acts presumed regular absent sufficient substantiation of willful disregard.

• Grave Abuse of Discretion in Execution Orders: Attachment is a proceeding in rem enforceable against the whole world, giving the attaching creditor a specific lien that nothing can destroy except dissolution of the attachment itself, continuing until the debt is paid, sale is had under execution on the judgment, judgment is satisfied, or the attachment is discharged or vacated as provided by law. Prior registration creates preference, so a purchaser subsequent to attachment takes subject thereto, with registration operating as constructive notice under PD 1529. Applied here, Ligon's November 25, 2002 writ annotated December 3, 2002 on TCT No. 9273 continued to subsist despite later cancellation of TCT No. 9273 pursuant to the December 9, 2004 rescission, because the lien bound the property itself and her claim was against Sps. Baladjay whose ownership was restored. Directing issuance of TCT No. 19756 to Ting free from liens negated that lien and defied the nature of attachment, constituting patently violative grave abuse; the annotation should be preserved and carried over to TCT No. 31001 in Techico's name without prejudice to his ownership interest.
• Indirect Contempt and Administrative Liability: Indirect contempt is committed out of court presence by improper conduct tending to impede, obstruct or degrade justice, punishable under paragraphs (b), (c) and (d), Section 3, Rule 71 for disobedience to lawful writ, unlawful interference with processes, or improper conduct obstructing justice, requiring willful disregard or disobedience. Ligon failed to show how each respondent, particularly Judge Laigo, committed such acts, since the Assailed Orders were mere performance of judicial functions to implement the final December 9, 2004 Decision and were issued even before the Quezon City March 26, 2008 Decision. With official acts presumed regular under Section 3(m), Rule 131, dismissal of the contempt charges was warranted.

• Attachment as Proceeding in Rem and Specific Lien — Attachment is a provisional remedy taking an adverse party's property into legal custody as security for satisfaction of any judgment. It is a proceeding in rem against the particular property enforceable against the whole world; the attaching creditor acquires a specific lien which nothing can subsequently destroy except dissolution of the attachment or levy itself, continuing until the debt is paid, sale is had under execution, judgment is satisfied, or the attachment is discharged or vacated as provided by law. Applied to preserve Ligon's lien despite cancellation of the title on which it was annotated.
• Preference from Prior Registration of Attachment; Purchaser Takes Subject Thereto — Prior registration of an attachment lien creates preference, such that a purchaser subsequent to attachment takes the property subject to said attachment. Registration under PD 1529 operates as constructive notice to all persons. Applied to hold Ting and successor Techico subject to Ligon's December 3, 2002 annotation.
• Carry-Over of Subsisting Encumbrances and Annotations — Under Section 59 of PD 1529, if subsisting encumbrances or annotations appear in the registration book at the time of transfer, they shall be carried over and stated in the new certificate except as simultaneously released or discharged. Applied to direct carry-over of Ligon's attachment to TCT No. 31001.
• Grave Abuse of Discretion — Grave abuse of discretion arises when a lower court patently violates the Constitution, the law or existing jurisprudence, as in Sps. Marquez vs. Sps. Alindog. Found where the execution orders directed a clean title in defiance of established attachment law and jurisprudence.
• Contempt of Court; Direct vs. Indirect Contempt — Contempt is willful disregard or disobedience of public authority, despising the authority, justice or dignity of a court. Direct contempt is committed in presence; indirect or constructive contempt is committed out of presence by improper conduct tending directly or indirectly to impede, obstruct or degrade administration of justice. Ligon's invocation of Section 3(b), (c) and (d), Rule 71 failed for lack of proof of willful disregard, the judge having acted in regular performance of judicial function.

• "Attachment is defined as a provisional remedy by which the property of an adverse party is taken into legal custody, either at the commencement of an action or at any time thereafter, as a security for the satisfaction of any judgment that may be recovered by the plaintiff or any proper party." — States the controlling definition of attachment as security for a future judgment, grounding the in rem analysis.
• "Accordingly, the attaching creditor acquires a specific lien on the attached property which nothing can subsequently destroy except the very dissolution of the attachment or levy itself." — Articulates the durability of the attachment lien, central to holding that cancellation of TCT No. 9273 did not extinguish Ligon's lien.
• "Contempt of court has been defined as a willful disregard or disobedience of a public authority." — Defines the threshold for contempt, supporting dismissal where only regular judicial performance was shown.
• "[G]rave abuse of discretion arises when a lower court or tribunal patently violates the Constitution, the law or existing jurisprudence." — Provides the standard for nullifying the orders that disregarded attachment law and jurisprudence.

• Sps. Olib vs. Judge Pastoral, G.R. No. 81120, August 20, 1990, 188 SCRA 692 — Cited as source of the definition of attachment as provisional remedy taking property into legal custody as security for judgment.
• Valdevieso vs. Damalerio, 492 Phil. 51, 58 (2005) — Cited for the in rem nature of attachment and continuation of the lien until paid, sold on execution, satisfied, discharged or vacated.
• Philippine Veterans Bank vs. Monillas, G.R. No. 167098, March 28, 2008, 550 SCRA 251 — Cited for the rule that prior registration of an attachment lien creates preference.
• Joaquin vs. Avellano, 6 Phil. 551 (1906) — Cited for the rule that a purchaser subsequent to duly levied attachment takes subject thereto.
• Sps. Marquez vs. Sps. Alindog, G.R. No. 184045, January 22, 2014 — Cited for the formulation of grave abuse as patent violation of Constitution, law or jurisprudence.
• Lorenzo Shipping Corporation vs. Distribution Management Association of the Philippines, G.R. No. 155849, August 31, 2011, 656 SCRA 331 — Cited for the broad and restricted definitions of contempt of court.
• Baculi vs. Belen, A.M. No. RTJ-09-2176, April 20, 2009, 586 SCRA 69 — Cited for the definition of indirect or constructive contempt as improper conduct impeding justice.

• Section 69, PD 1529 — Governs filing and registration of attachment, writ, order or process to create or preserve a lien on registered land with reference to certificate number and owner. Applied to recognize Ligon's duly annotated December 3, 2002 attachment.
• Section 52, PD 1529 — Provides that every registered lien, attachment, order or judgment is constructive notice to all persons from registration. Applied to bind subsequent purchasers Ting and Techico.
• Section 59, PD 1529 — Requires subsisting encumbrances or annotations appearing in the registration book to be carried over to new certificates except as released or discharged. Applied to order carry-over of Ligon's lien to TCT No. 31001.
• Section 48, PD 1529 — Provides a certificate of title is not subject to collateral attack and cannot be altered except in direct proceeding. Relied upon by the CA to dismiss, but reversed insofar as correction of the lien omission was warranted.
• Section 3(b), (c) and (d), Rule 71, Rules of Court — Punishes as indirect contempt disobedience to lawful writ, unlawful interference with court processes, and improper conduct obstructing justice. Invoked but not proven against respondents.
• Section 3(m), Rule 131, Rules of Court — Presumes official duty regularly performed. Applied to sustain Judge Laigo's acts absent contrary substantiation.

Antonio T. Carpio, Acting Chief Justice, Chairperson; Mariano C. Del Castillo, Associate Justice; Jose Portugal Perez, Associate Justice; Marvic Mario Victor F. Leonen, Associate Justice. No separate concurring opinions with additional reasoning appear in the text.