Understanding the strings attached to your property

Under the Torrens system, the certificate of title is the best proof of ownership of a parcel of land. Thus, in a long line of cases, the Supreme Court consistently held that anyone who deals with registered property may rely on the title and need not go beyond it.

Meanwhile, in transacting with a person who is not the registered owner of a parcel of land, its buyer is expected to examine the certificate of title, as well as all factual circumstances necessary for him to determine any flaws in the transferor’s title or in his capacity to transfer the land.

Upon examining the title and if necessary, determining the surrounding factual circumstances, potential buyers may discover that the property is attached as security to satisfy the judgment in a particular case. According to the Supreme Court, this security is neither contingent, conditional, nor inchoate, but constitutes a vested interest and thus, a cloud on the legal title.

Property is attached as such security upon, among others, the court’s issuance of a writ of preliminary attachment (WPA). A WPA is sought either to seize the debtor’s property in order to satisfy the judgment against him, or to enable the court to acquire jurisdiction over the action, particularly where summons cannot be personally served upon the debtor.

A WPA may be issued ex parte or upon the application of the plaintiff or any proper party in actions involving: (a) the recovery of damages, other than moral and exemplary, against a party who is about to depart the Philippines, with intent to defraud his creditors; (b) the embezzlement or fraudulent misapplication of money or property by a public officer, a person acting in a fiduciary capacity, or for a willful violation of duty; (c) the recovery of possession of property unjustly or fraudulently taken, but was concealed, removed, or disposed of to prevent its being found or taken by the applicant or an authorized person; (d) a party found guilty of fraud in contracting or performing the relevant obligation; (e) a party who has removed or disposed of his property, or is about to do so, with intent to defraud his creditors; and (f) a party who does not reside in the Philippines, or on whom summons may be served by publication.

A WPA shall be issued only when the applicant or some other person who personally knows the facts files an affidavit and posts bond pursuant to the relevant provisions of the Rules of Court. To be sure, the affidavit shall state that: (a) a sufficient cause of action exists; (b) the case before the court is among the above-mentioned actions; (c) there is no other sufficient security for the claim sought to be enforced by the action; and (d) the amount due to the applicant, or the value of the property the possession of which he is entitled to recover, is as much as the sum for which the WPA is granted above all legal counterclaims.

Meanwhile, the bond shall be in the amount fixed by the court upon issuing the WPA conditioned that the applicant will pay all costs which may be adjudged to the adverse party and all damages which he may sustain by reason of the attachment, if the court shall finally adjudge that the applicant was not entitled thereto.

The sheriff shall immediately enforce the WPA and with all reasonable diligence attach only so much of the property in the Philippines of the party against whom it is issued, not exempt from execution, and as may be sufficient to satisfy the applicant’s demand. He may not be compelled to do so, however, when, among others, the adverse party: (a) makes a deposit with the court from which the WPA is issued; or (b) posts a counter-bond in favor of the applicant, in an amount equal to the bond fixed by the court in issuing the WPA or to the value of the property attached, exclusive of costs.

Moreover, the sheriff may not levy the attached property unless the issuance of the WPA was preceded or contemporaneously accompanied by service of summons, together with a copy of the complaint, the application for attachment, the applicant’s affidavit and bond, and the order and WPA, on the defendant within the Philippines. This requirement shall not apply, however, where: (a) the summons could not be served personally or by substituted service despite diligent efforts; (b) the defendant is a resident of the Philippines temporarily absent therefrom; (c) the defendant is a nonresident of the Philippines; or (d) the action is one in rem or quasi in rem.