PROVISIONAL REMEDIES Sec.

1-6 Rule 57 | 2014 SYLLABUS | 1

RULE 57
SECTION 1. Grounds upon which attachment may issue. At
the commencement of the action or at any time before entry of
judgment, a plaintiff may have the proper party have the property of
the adverse party attached as security for the satisfaction of any
judgment that may be recovered in the following cases:

(a) In an action for the recovery of a specified amount of money or
damages, other than moral and exemplary, on a cause of action
arising from law, contract, quasi-contract, delict or quasi-delict against
a party who is about to depart from the Philippines with intent to
defraud his creditors;

(b) In an action for money or property embezzled or fraudulently
misapplied or converted to his own use by a public officer, or an officer
of a corporation, or an attorney, factor, broker, agent, or clerk, in the
course of his employment as such, or by any other person in fiduciary
capacity, or for a willful violation of duty;

(c) In an action to recover the possession of property unjustly or
fraudulently taken, detained or converted when the property, or any
part thereof, has been concealed removed, or disposed of to prevent
its being found or taken by the applicant or an authorized person;

(d) In an action against a party who has been guilty of fraud in
contracting the debt or incurring the obligation upon which the action
is brought, or in the performance thereof;

(e) In an action against a party who has removed or disposed of his
property, or is about to do so, with intent to defraud his creditors; or

(f) In an action against a party who does not reside and is not found in
the Philippines, or on whom summons may be served by publication.
(1a)
G.R. No. L-252 March 30, 1946
TRANQUILINO CALO and DOROTEO SAN JOSE, petitioners,
vs.
ARSENIO C. ROLDAN, Judge of First Instance of Laguna,
REGINO RELOVA and TEODULA BARTOLOME,respondents.
This is a petition for writ of certiorari against the respondent Judge
Arsenio C. Roldan of the Court First Instance of Laguna, on the ground
that the latter has exceeded his jurisdiction or acted with grave abuse
of discretion in appointing a receiver of certain lands and their fruits
which, according to the complainant filed by the other respondents, as
plaintiffs, against petitioners, as defendants, in case No. 7951, were in
the actual possession of and belong to said plaintiffs.
The complaint filed by plaintiffs and respondents against defendants
and petitioners in the Court of First Instance of Laguna reads as
follows:
1. That the plaintiffs and the defendants are all of legal age,
Filipino citizens, and residents of Pila, Laguna; the plaintiffs
are husband and wife..
2. That the plaintiff spouses are the owners and the
possessors of the following described parcels of land, to wit:.
x x x x x x x x x
3. That parcel No. (a) described above is now an unplanted
rice land and parcel No. (b) described in the complaint is a
coconut land, both under the possession of the plaintiffs..
4. That the defendants, without any legal right whatsoever
and in connivance with each other, through the use of force,
stealth, threats and intimidation, intend or are intending to
enter and work or harvest whatever existing fruits may now
be found in the lands above-mentioned in violation of
plaintiff's in this case ineffectual..
5. That unless defendants are barred, restrained, enjoined,
and prohibited from entering or harvesting the lands or
working therein through ex-parte injunction, the plaintiffs
will suffer injustice, damages and irreparable injury to their
great prejudice..
6. That the plaintiffs are offering a bond in their application
for ex-parte injunction in the amount of P2,000, subject to
the approval of this Hon. Court, which bond is attached
hereto marked as Annex A and made an integral part of this
complaint..
7. That on or about June 26, 1945, the defendants, through
force, destroyed and took away the madre-cacao fencer, and
barbed wires built on the northwestern portion of the land
designated as parcel No. (b) of this complaint to the damage
and prejudice of the plaintiffs in the amount of at least
P200..
Wherefore, it is respectfully prayed:.
(a) That the accompanying bond in the amount of P2,000 be
approved;
(b) That a writ of preliminary injunction be issued ex-
parte immediately restraining, enjoining and prohibiting the
defendants, their agents, servants, representatives,
attorneys, and, (or) other persons acting for and in their
behalf, from entering in, interfering with and/or in any wise
taking any participation in the harvest of the lands belonging
to the plaintiffs; or in any wise working the lands above-
described;
(c) That judgment be rendered, after due hearing, declaring
the preliminary injunction final;.
(d) That the defendants be condemned jointly and severally
to pay the plaintiffs the sum of P200 as damages; and.
(e) That plaintiffs be given such other and further relief just
and equitable with costs of suit to the defendants.
The defendants filed an opposition dated August 8, 1945, to the
issuance of the writ of preliminary injunction prayed for in the above-
quoted complaint, on the ground that they are owners of the lands
and have been in actual possession thereof since the year 1925; and
their answer to the complaint filed on August 14, 1945, they reiterate
that they are the owners and were then in actual possession of said
property, and that the plaintiffs have never been in possession thereof.
The hearing of the petition for preliminary injunction was held on
August 9, 1945, at which evidence was introduced by both parties.
After the hearing, Judge Rilloraza, then presiding over the Court of
First Instance of Laguna, denied the petition on the ground that the
defendants were in actual possession of said lands. A motion for
reconsideration was filed by plaintiffs on August 20, 1945, but said
motion had not yet, up to the hearing of the present case, been
decided either by Judge Rilloraza, who was assigned to another court,
or by the respondent judge.
The plaintiffs (respondents) filed on September 4, 1945, a reply to
defendants' answer in which, among others, they reiterate their
allegation in the complaint that they are possessors in good faith of
the properties in question.
And on December 17, plaintiffs filed an urgent petition ex-
parte praying that plaintiffs' motion for reconsideration of the order
denying their petition for preliminary injunction be granted and or for
the appointment of a receiver of the properties described in the
complaint, on the ground that (a) the plaintiffs have an interest in the
properties in question, and the fruits thereof were in danger of being
lost unless a receiver was appointed; and that (b) the appointment of
a receiver was the most convenient and feasible means of preserving,
administering and or disposing of the properties in litigation which
included their fruits. Respondents Judge Roldan, on the same date,
December 17, 1945, decided that the court would consider the motion
for reconsideration in due time, and granted the petition for
appointment of and appointed a receiver in the case.
The question to be determined in the present special civil action
of certiorari is, whether or not the respondent judge acted in excess of
his jurisdiction or with grave abuse of discretion in issuing the order
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appointing a receiver in the case No. 7951 of the Court of First
Instance of Laguna; for it is evident that there is no appeal or any
other plain, speedy, and adequate remedy in the ordinary course of
the law against the said order, which is an incidental or interlocutory
one.
It is a truism in legal procedure that what determines the nature of an
action filed in the courts are the facts alleged in the complaint as
constituting the cause of the action. The facts averred as a defense in
the defendant's answer do not and can not determine or change the
nature of the plaintiff's action. The theory adopted by the plaintiff in
his complaint is one thing, and that of the defendant in his answer is
another. The plaintiff has to establish or prove his theory or cause of
action in order to obtain the remedy he prays for; and the defendant
his theory, if necessary, in order to defeat the claim or action of the
plaintiff..
According to the complaint filed in the said case No. 7951, the
plaintiff's action is one of ordinary injunction, for the plaintiffs allege
that they are the owners of the lands therein described, and were in
actual possession thereof, and that "the defendants without any legal
right whatever and in connivance with each other, through the use of
force, stealth, threat and intimidation, intend or are intending to enter
and work or harvest whatever existing fruits may be found in the lands
above mentioned in violation of plaintiffs' proprietary rights thereto;"
and prays "that the defendants, their agents, servants,
representatives, and other persons acting for or in their behalf, be
restrained, enjoined and prohibited from entering in, interfering with,
or in any way taking any participation in the harvest of the lands above
describe belonging to the plaintiffs."
That this is the nature of plaintiffs' action corroborated by the fact that
they petitioned in the same complaint for a preliminary prohibitory
injunction, which was denied by the court in its order dated August 17,
1945, and that the plaintiffs, in their motion for reconsideration of said
order filed on August 20 of the same year, and in their urgent petition
dated December 17, moving the court to grant said motion for
reconsideration, reiterated that they were actual possessors of the land
in question.
The fact that plaintiffs, in their reply dated September 4, after
reiterating their allegation or claim that they are the owners in fee
simple and possessors in good faith of the properties in question, pray
that they be declared the owners in fee simple, has not changed the
nature of the action alleged in the complaint or added a new cause of
action thereto; because the allegations in plaintiffs' reply were in
answer to defendants' defenses, and the nature of plaintiffs' cause of
action, as set forth in their complaint, was not and could not be
amended or changed by the reply, which plaintiffs had the right to
present as a matter of course. A plaintiff can not, after defendant's
answer, amend his complaint by changing the cause of action or
adding a new one without previously obtaining leave of court (section
2, Rule 17)..
Respondents' contention in paragraph I of their answer that the action
filed by them against petitioners in the case No. 7951 of the Court of
First Instance of Laguna is not only for injunction, but also to quiet title
over the two parcels of land described in the complaint, is untenable
for the reasons stated in the previous paragraph. Besides, an equitable
action to quiet title, in order to prevent harrassment by continued
assertion of adverse title, or to protect the plaintiff's legal title and
possession, may be filed in courts of equity (and our courts are also of
equity), only where no other remedy at law exists or where the legal
remedy invokable would not afford adequate remedy (32 Cyc., 1306,
1307). In the present case wherein plaintiffs alleged that they are the
owners and were in actual possession of the lands described in the
complaint and their fruits, the action of injunction filed by them is the
proper and adequate remedy in law, for a judgment in favor of
plaintiffs would quiet their title to said lands..
The provisional remedies denominated attachment, preliminary
injunction, receivership, and delivery of personal property, provided in
Rules 59, 60, 61, and 62 of the Rules of Court, respectively, are
remedies to which parties litigant may resort for the preservation or
protection of their rights or interest, and for no other purpose, during
the pendency of the principal action. If an action, by its nature, does
not require such protection or preservation, said remedies can not be
applied for and granted. To each kind of action or actions a proper
provisional remedy is provided for by law. The Rules of Court clearly
specify the case in which they may be properly granted. .
Attachment may be issued only in the case or actions specifically
stated in section 1, Rule 59, in order that the defendant may not
dispose of his property attached, and thus secure the satisfaction of
any judgment that may be recovered by plaintiff from defendant. For
that reason a property subject of litigation between the parties, or
claimed by plaintiff as his, can not be attached upon motion of the
same plaintiff..
The special remedy of preliminary prohibitory injunction lies when the
plaintiff's principal action is an ordinary action of injunction, that is,
when the relief demanded in the plaintiff's complaint consists in
restraining the commission or continuance of the act complained of,
either perpetually or for a limited period, and the other conditions
required by section 3 of Rule 60 are present. The purpose of this
provisional remedy is to preserve thestatus quo of the things subject of
the action or the relation between the parties, in order to protect the
rights of the plaintiff respecting the subject of the action during the
pendency of the suit. Because, otherwise or if no preliminary
prohibition injunction were issued, the defendant may, before final
judgment, do or continue the doing of the act which the plaintiff asks
the court to restrain, and thus make ineffectual the final judgment
rendered afterwards granting the relief sought by the plaintiff. But, as
this court has repeatedly held, a writ of preliminary injunction should
not be granted to take the property out of the possession of one party
to place it in the hands of another whose title has not been clearly
established..
A receiver may be appointed to take charge of personal or real
property which is the subject of an ordinary civil action, when it
appears that the party applying for the appointment of a receiver has
an interest in the property or fund which is the subject of the action or
litigation, and that such property or fund is in danger of being lost,
removed or materially injured unless a receiver is appointed to guard
and preserve it (section 1 [b], Rule 61); or when it appears that the
appointment of a receiver is the most convenient and feasible means
of preserving, administering or disposing of the property in litigation
(section 1 [e] of said Rule). The property or fund must, therefore be in
litigation according to the allegations of the complaint, and the object
of appointing a receiver is to secure and preserve the property or thing
in controversy pending the litigation. Of course, if it is not in litigation
and is in actual possession of the plaintiff, the latter can not apply for
and obtain the appointment of a receiver thereof, for there would be
no reason for such appointment.
Delivery of personal property as a provisional remedy consists in the
delivery, by order of the court, of a personal property by the defendant
to the plaintiff, who shall give a bond to assure the return thereof or
the payment of damages to the defendant in the plaintiff's action to
recover possession of the same property fails, in order to protect the
plaintiff's right of possession of said property, or prevent the defendant
from damaging, destroying or disposing of the same during the
pendency of the suit.
Undoubtedly, according to law, the provisional remedy proper to
plaintiffs' action of injunction is a preliminary prohibitory injunction, if
plaintiff's theory, as set forth in the complaint, that he is the owner
and in actual possession of the premises is correct. But as the lower
court found at the hearing of the said petition for preliminary
injunction that the defendants were in possession of the lands, the
lower court acted in accordance with law in denying the petition,
although their motion for reconsideration, which was still pending at
the time the petition in the present case was heard in this court,
plaintiffs insist that they are in actual possession of the lands and,
therefore, of the fruits thereof.
From the foregoing it appears evident that the respondent judge acted
in excess of his jurisdiction in appointing a receiver in case No. 7951 of
the Court of First Instance of Laguna. Appointment of a receiver is not
proper or does not lie in an action of injunction such as the one filed
by the plaintiff. The petition for appointment of a receiver filed by the
plaintiffs (Exhibit I of the petition) is based on the ground that it is the
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most convenient and feasible means of preserving, administering and
disposing of the properties in litigation; and according to plaintiffs'
theory or allegations in their complaint, neither the lands nor the palay
harvested therein, are in litigation. The litigation or issue raised by
plaintiffs in their complaint is not the ownership or possession of the
lands and their fruits. It is whether or not defendants intend or were
intending to enter or work or harvest whatever existing fruits could
then be found in the lands described in the complaint, alleged to be
the exclusive property and in the actual possession of the plaintiffs. It
is a matter not only of law but of plain common sense that a plaintiff
will not and legally can not ask for the appointment or receiver of
property which he alleges to belong to him and to be actually in his
possession. For the owner and possessor of a property is more
interested than persons in preserving and administering it.
Besides, even if the plaintiffs had amended their complaint and alleged
that the lands and palay harvested therein are being claimed by the
defendants, and consequently the ownership and possession thereof
were in litigation, it appearing that the defendants (now petitioners)
were in possession of the lands and had planted the crop or palay
harvested therein, as alleged in paragraph 6 (a) and (b) of the petition
filed in this court and not denied by the respondent in paragraph 2 of
his answer, the respondent judge would have acted in excess of his
jurisdiction or with a grave abuse of discretion in appointing a receiver
thereof. Because relief by way of receivership is equitable in nature,
and a court of equity will not ordinarily appoint a receiver where the
rights of the parties depend on the determination of adverse claims of
legal title to real property and one party is in possession (53 C. J., p.
26). The present case falls within this rule..
In the case of Mendoza vs. Arellano and B. de Arellano, this court said:
Appointments of receivers of real estate in cases of this kind
lie largely in the sound discretion of the court, and where
the effect of such an appointment is to take real estate out
of the possession of the defendant before the final
adjudication of the rights of the parties, the appointment
should be made only in extreme cases and on a clear
showing of necessity therefor in order to save the plaintiff
from grave and irremediable loss or damage. (34 Cyc., 51,
and cases there cited.) No such showing has been made in
this case as would justify us in interfering with the exercise
by trial judge of his discretion in denying the application for
receiver. (36 Phil., 59, 63, 64.).
Although the petition is silent on the matter, as the respondents in
their answer allege that the Court of First Instance of Laguna has
appointed a receiver in another case No. 7989 of said court, instituted
by the respondents Relova against Roberto Calo and his brothers and
sisters, children of Sofia de Oca and Tranquilino Calo (petitioner in this
case), and submitted copy of the complaint filed by the plaintiffs (now
respondents) in case No. 7989 (Exhibit 9 of the respondents' answer),
we may properly express and do hereby express here our opinion, in
order to avoid multiplicity of suits, that as the cause of action alleged
in the in the complaint filed by the respondents Relova in the other
case is substantially the same as the cause of action averred in the
complaint filed in the present case, the order of the Court of First
Instance of Laguna appointing a receiver in said case No. 7989 was
issued in excess of its jurisdiction, and is therefore null and void.
In view of all the foregoing, we hold that the respondent Judge
Arsenio C. Roldan of the Court of First Instance of Laguna has
exceeded his jurisdiction in appointing a receiver in the present case,
and therefore the order of said respondent judge appointing the
receiver, as well as all other orders and proceedings of the court
presided over by said judge in connection with the receivership, are
null and void.
As to the petitioners' petition that respondents Relova be punished for
contempt of court for having disobeyed the injunction issued by this
court against the respondents requiring them to desist and refrain
from enforcing the order of receivership and entering the palay
therein, it appearing from the evidence in the record that the palay
was harvested by the receiver and not by said respondents, the
petition for contempt of court is denied. So ordered, with costs against
the respondents.

G.R. No. L-48756 September 11, 1982
K.O. GLASS CONSTRUCTION CO., INC., petitioner,
vs.
THE HONORABLE MANUEL VALENZUELA, Judge of the Court of
First Instance of Rizal, and ANTONIO D. PINZON, respondents.
Petition for certiorari to annul and set aside the writ of preliminary
attachment issued by the respondent Judge in Civil Case No. 5902-P of
the Court of First Instance of Rizal, entitled: Antonio D. Pinzon plaintiff,
versus K.O. Glass Construction Co., Inc., and Kenneth O. Glass,
defendants, and for the release of the amount of P37,190.00, which
had been deposited with the Clerk of Court, to the petitioner.
On October 6, 1977, an action was instituted in the Court of First
Instance of Rizal by Antonio D. Pinzon to recover from Kenneth O.
Glass the sum of P37,190.00, alleged to be the agreed rentals of his
truck, as well as the value of spare parts which have not been
returned to him upon termination of the lease. In his verified
complaint, the plaintiff asked for an attachment against the property of
the defendant consisting of collectibles and payables with the
Philippine Geothermal, Inc., on the grounds that the defendant is a
foreigner; that he has sufficient cause of action against the said
defendant; and that there is no sufficient security for his claim against
the defendant in the event a judgment is rendered in his favor.
1

Finding the petition to be sufficient in form and substance, the
respondent Judge ordered the issuance of a writ of attachment against
the properties of the defendant upon the plaintiff's filing of a bond in
the amount of P37,190.00.
2

Thereupon, on November 22, 1977, the defendant Kenneth O. Glass
moved to quash the writ of attachment on the grounds that there is no
cause of action against him since the transactions or claims of the
plaintiff were entered into by and between the plaintiff and the K.O.
Glass Construction Co., Inc., a corporation duly organized and existing
under Philippine laws; that there is no ground for the issuance of the
writ of preliminary attachment as defendant Kenneth O. Glass never
intended to leave the Philippines, and even if he does, plaintiff can not
be prejudiced thereby because his claims are against a corporation
which has sufficient funds and property to satisfy his claim; and that
the money being garnished belongs to the K.O. Glass Corporation Co.,
Inc. and not to defendant Kenneth O. Glass.
3

By reason thereof, Pinzon amended his complaint to include K.O. Glass
Construction Co., Inc. as co-defendant of Kenneth O. Glass.
4

On January 26, 1978, the defendants therein filed a supplementary
motion to discharge and/or dissolve the writ of preliminary attachment
upon the ground that the affidavit filed in support of the motion for
preliminary attachment was not sufficient or wanting in law for the
reason that: (1) the affidavit did not state that the amount of plaintiff's
claim was above all legal set-offs or counterclaims, as required by Sec.
3, Rule 57 of the Revised Rules of Court; (2) the affidavit did not state
that there is no other sufficient security for the claim sought to be
recovered by the action as also required by said Sec. 3; and (3) the
affidavit did not specify any of the grounds enumerated in Sec. 1 of
Rule 57,
5
but, the respondent Judge denied the motion and ordered
the Philippine Geothermal, Inc. to deliver and deposit with the Clerk of
Court the amount of P37,190.00 immediately upon receipt of the order
which amount shall remain so deposited to await the judgment to be
rendered in the case.
6

On June 19, 1978, the defendants therein filed a bond in the amount
of P37,190.00 and asked the court for the release of the same amount
deposited with the Clerk of Court,
7
but, the respondent Judge did not
order the release of the money deposited.
8

Hence, the present recourse. As prayed for, the Court issued a
temporary restraining order, restraining the respondent Judge from
further proceeding with the trial of the case.
9

We find merit in the petition. The respondent Judge gravely abused his
discretion in issuing the writ of preliminary attachment and in not
ordering the release of the money which had been deposited with the
Clerk of Court for the following reasons:
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First, there was no ground for the issuance of the writ of preliminary
attachment. Section 1, Rule 57 of the Revised Rules of Court, which
enumerates the grounds for the issuance of a writ of preliminary
attachment, reads, as follows:
Sec. 1. Grounds upon which attachment may
issue. A plaintiff or any proper party may, at the
commencement of the action or at any time
thereafter, have the property of the adverse party
attached as security for the satisfaction of any
judgment that may be recovered in the following
cases:
(a) In an action for the recovery of money or
damages on a cause of action arising from
contract, express or implied, against a party who
is about to depart from the Philippines with intent
to defraud his creditor;
(b) In an action for money or property embezzled
or fraudulently misapplied or converted to his own
use by a public officer, or an officer of a
corporation, or an attorney, factor, broker, agent,
or clerk, in the course of his employment as such,
or by any other person in a fiduciary capacity, or
for a willful violation of duty;
(c) In an action to recover the possession of
personal property unjustly detained, when the
property, or any part thereof, has been concealed,
removed, or disposed of to prevent its being found
or taken by the applicant or an officer;
(d) In an action against the party who has been
guilty of a fraud in contracting the debt or
incurring the obligation upon which the action is
brought, or in concealing or disposing of the
property for the taking, detention or conversion of
which the action is brought;
(e) In an action against a party who has removed
or disposed of his property, or is about to do so,
with intent to defraud his creditors;
(f) In an action against a party who resides out of
the Philippines, or on whom summons may be
served by publication.
In ordering the issuance of the controversial writ of preliminary
attachment, the respondent Judge said and We quote:
The plaintiff filed a complaint for a sum of money
with prayer for Writ of Preliminary Attachment
dated September 14, 1977, alleging that the
defendant who is a foreigner may, at any time,
depart from the Philippines with intent to defraud
his creditors including the plaintiff herein; that
there is no sufficient security for the claim sought
to be enforced by this action; that the amount due
the plaintiff is as much as the sum for which an
order of attachment is sought to be granted; and
that defendant has sufficient leviable assets in the
Philippines consisting of collectibles and payables
due from Philippine Geothermal, Inc., which may
be disposed of at any time, by defendant if no
Writ of Preliminary Attachment may be issued.
Finding said motion and petition to be sufficient in
form and substance.
10

Pinzon however, did not allege that the defendant Kenneth O. Glass "is
a foreigner (who) may, at any time, depart from the Philippines with
intent to defraud his creditors including the plaintiff." He merely stated
that the defendant Kenneth O. Glass is a foreigner. The pertinent
portion of the complaint reads, as follows:
15. Plaintiff hereby avers under oath that
defendant is a foreigner and that said defendant
has a valid and just obligation to plaintiff in the
total sum of P32,290.00 arising out from his
failure to pay (i) service charges for the hauling of
construction materials; (ii) rentals for the lease of
plaintiff's Isuzu Cargo truck, and (iii) total cost of
the missing/destroyed spare parts of said leased
unit; hence, a sufficient cause of action exists
against saiddefendant. Plaintiff also avers under
oath that there is no sufficient security for his
claim against the defendantin the event a
judgment be rendered in favor of the plaintiff.
however, defendant has sufficient assets in the
Philippines in the form of collectible and payables
due from the Philippine Geothermal, Inc. with
office address at Citibank Center, Paseo de Roxas,
Makati, Metro Manila, but which properties, if not
timely attached, may be disposed of
by defendants and would render ineffectual the
reliefs prayed for by plaintiff in this Complaint.
11

In his Amended Complaint, Pinzon alleged the following:
15. Plaintiff hereby avers under oath that
defendant GLASS is an American citizen who
controls most, if not all, the affairs of defendant
CORPORATION. Defendants CORPORATION and
GLASS have a valid and just obligation to plaintiff
in the total sum of P32,290.00 arising out
for their failure to pay (i) service charges for
hauling of construction materials, (ii) rentals for
the lease of plaintiff's Isuzu Cargo truck, and (iii)
total cost of the missing/destroyed spare parts of
said leased unit: hence, a sufficient cause of
action exist against saiddefendants. Plaintiff also
avers under oath that there is no sufficient
security for his claim against thedefendants in the
event a judgment be rendered in favor of the
plaintiff. however, defendant CORPORATION has
sufficient assets in the Philippines in the form of
collectibles and payables due from the Philippine
Geothermal., Inc. with office address at Citibank
Center, Paseo de Roxas, Makati, Metro Manila, but
which properties, if not timely attached, may be
disposed of by defendants and would render
ineffectual the reliefs prayed for by plaintiff in this
Complaint.
12

There being no showing, much less an allegation, that the defendants
are about to depart from the Philippines with intent to defraud their
creditor, or that they are non-resident aliens, the attachment of their
properties is not justified.
Second, the affidavit submitted by Pinzon does not comply with the
Rules. Under the Rules, an affidavit for attachment must state that (a)
sufficient cause of action exists, (b) the case is one of those mentioned
in Section I (a) of Rule 57; (c) there is no other sufficient security 'or
the claim sought to be enforced by the action, and (d) the amount due
to the applicant for attachment or the value of the property the
possession of which he is entitled to recover, is as much as the sum
for which the order is granted above all legal counterclaims. Section 3,
Rule 57 of the Revised Rules of Court reads. as follows:
Section 3. Affidavit and bond required.An order
of attachment shall be granted only when it is
made to appear by the affidavit of the applicant,
or of some person who personally knows the
facts, that a sufficient cause of action exists that
the case is one of those mentioned in Section 1
hereof; that there is no other sufficient security for
the claim sought to be enforced by the action, and
that 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 order is granted above all legal
counterclaims. The affidavit, and the bond
required by the next succeeding section, must be
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duly filed with the clerk or judge of the court
before the order issues.
In his affidavit, Pinzon stated the following:
I, ANTONIO D. PINZON Filipino, of legal age,
married and with residence and postal address at
1422 A. Mabini Street, Ermita, Manila, subscribing
under oath, depose and states that.
1. On October 6,1977,I filed with the Court of First
Instance of Rizal, Pasay City Branch, a case
against Kenneth O. Glass entitled 'ANTONIO D.
PINZON vs. KENNETH O. GLASS', docketed as Civil
Case No. 5902-P;
2. My Complaint against Kenneth O. Glass is based
on several causes of action, namely:
(i) On February 15, 1977, we mutually agreed that
I undertake to haul his construction materials from
Manila to his construction project in Bulalo, Bay,
Laguna and vice-versa, for a consideration of
P50.00 per hour;
(ii) Also, on June 18, 1977, we entered into a
separate agreement whereby my Isuzu cargo
truck will be leased to him for a consideration of
P4,000.00 a month payable on the 15th day of
each month;
(iii) On September 7, 1977, after making use of
my Isuzu truck, he surrendered the same without
paying the monthly rentals for the leased Isuzu
truck and the peso equivalent of the spare parts
that were either destroyed or misappropriated by
him;
3. As of today, October 11, 1977, Mr. Kenneth 0.
Glass still owes me the total sum of P32,290.00
representing his obligation arising from the
hauling of his construction materials, monthly
rentals for the lease Isuzu truck and the peso
equivalent of the spare parts that were either
destroyed or misappropriated by him;
4. I am executing this Affidavit to attest to the
truthfulness of the foregoing and in compliance
with the provisions of Rule 57 of the Revised Rules
of Court.
13

While Pinzon may have stated in his affidavit that a sufficient cause of
action exists against the defendant Kenneth O. Glass, he did not state
therein that "the case is one of those mentioned in Section 1 hereof;
that there is no other sufficient security for the claim sought to be
enforced by the action; and that the amount due to the applicant is as
much as the sum for which the order granted above all legal counter-
claims." It has been held that the failure to allege in the affidavit the
requisites prescribed for the issuance of a writ of preliminary
attachment, renders the writ of preliminary attachment issued against
the property of the defendant fatally defective, and the judge issuing it
is deemed to have acted in excess of his jurisdiction.
14

Finally, it appears that the petitioner has filed a counterbond in the
amount of P37,190.00 to answer for any judgment that may be
rendered against the defendant. Upon receipt of the counter-bond the
respondent Judge should have discharged the attachment pursuant to
Section 12, Rule 57 of the Revised Rules of Court which reads, as
follows:
Section 12. Discharge of attachment upon giving
counterbond.At any time after an order of
attachment has been granted, the party whose
property has been attached, or the person
appearing on his behalf, may upon reasonable
notice to the applicant, apply to the judge who
granted the order, or to the judge of the court in
which the action is pending, for an order
discharging the attachment wholly or in part on
the security given. The judge shall, after hearing,
order the discharge of the attachment if a cash
deposit is made or a counterbond executed to the
attaching creditor is filed, on behalf of the adverse
party, with the clerk or judge of the court where
the application is made, in an amount equal to the
value of the property attached as determined by
the judge, to secure the payment of any judgment
that the attaching creditor may recover in the
action. Upon the filing of such counter-bond, copy
thereof shall forthwith be served on the attaching
creditor or his lawyer. Upon the discharge of an
attachment in accordance with the provisions of
this section the property attached, or the proceeds
of any sale thereof, shall be delivered to the party
making the deposit or giving the counter-bond, or
the person appearing on his behalf, the deposit or
counter-bond aforesaid standing in the place of
the property so released. Should such counter-
bond for any reason be found to be, or become,
insufficient, and the party furnishing the same fail
to file an additional counter-bond the attaching
creditor may apply for a new order of attachment.
The filing of the counter-bond will serve the purpose of preserving the
defendant's property and at the same time give the plaintiff security
for any judgment that may be obtained against the defendant.
15

WHEREFORE, the petition is GRANTED and the writ prayed for is
issued. The orders issued by the respondent Judge on October 11,
19719, January 26, 1978, and February 3, 1978 in Civil Case No. 5902-
P of the Court of First Instance of Rizal, insofar as they relate to the
issuance of the writ of preliminary attachment, should be as they are
hereby ANNULLED and SET ASIDE and the respondents are hereby
ordered to forthwith release the garnished amount of P37,190.00 to
the petitioner. The temporary restraining order, heretofore issued, is
hereby lifted and set aside. Costs against the private respondent
Antonio D. Pinzon.
SO ORDERED.

G.R. No. L-894 July 30, 1947
LUIS F. GENERAL, petitioner,
vs.
JOSE R. DE VENECIA, Judge of First Instance of Camarines
Sur, and PETRA VDA. DE RUEDAS, also representing Ernesto,
Armando and Gracia (minors), respondents.
Petition for certiorari to annul the order of the Court of First Instance
of Camarines Sur denying the motion to dismiss the complaint, and to
vacate the attachment issued, in civil case No. 364 therein entitled,
"Ruedas vs. Luis F. General."
That complaint was filed on June 4, 1946, to recover the value of a
promissory note, worded as follows:
For value received, I promise to pay Mr. Gregorio Ruedas
the amount of four thousand pesos (P4,000), in Philippine
currency within six (6) months after peace has been
declared and government established in the Philippines.
Naga, Camarines Sur, September 25, 1944.
It prayed additionally for preliminary attachment of defendant's
property, upon the allegation that the latter was about to dispose of
his assets to defraud creditors. Two days later, the writ of attachment
was issued upon the filing of a suitable bond.
Having been served with summons, the defendant therein, Luis F.
General, submitted, on June 11, 1946, a motion praying for dismissal
of the complaint and dissolution of the attachment. He claimed it was
premature, in view of the provisions of the debt moratorium orders of
the President of the Philippines (Executive Orders Nos. 25 and 32 of
1945). Denial of this motion and of the subsequent plea for
PROVISIONAL REMEDIES Sec. 1-6 Rule 57 | 2014 SYLLABUS | 6

reconsideration, prompted the institution of this special civil action,
which we find to be meritorious, for the reason that the attachment
was improvidently permitted, the debt being within the terms of the
decree of moratorium (Executive Order No. 32).
It is our view that, upon objection by the debtor, no court may now
proceed to hear a complaint that seeks to compel payment of a
monetary obligation coming within the purview of the moratorium. And
the issuance of a writ of attachment upon such complaint may not, of
course, be allowed. Such levy is necessarily one step in the
enforcement of the obligation, enforcement which, as stated in the
order, is suspended temporarily, pending action by the Government.
But the case for petitioner is stronger when we reflect that his promise
is to pay P4,000 "within six months after peace has been declared." It
being a matter of contemporary history that the peace treaty between
the United States and Japan has not even been drafted, and that no
competent official has formally declared the advent of peace (see
Raquiza vs. Bardford, 75 Phil., 50), it is obvious that the six-month
period has not begun; and Luis F. General has at present and in June,
1946, no demandable duty to make payment to plaintiffs,
independently of the moratorium directive.
On the question of validity of the attachment, "the general rule is that,
unless the statute expressly so provides, the remedy by attachment is
not available in respect to a demand which is not due and payable,
and if an attachment is issued upon such a demand without statutory
authority it is void." (7 C.J.S., p. 204.)
It must be observed that under our rules governing the matter the
person seeking a preliminary attachment must show that "a sufficient
cause of action exists" and that the amount due him is as much as the
sum for which the order of attachment is granted" (sec. 3, Rule 59).
Inasmuch as the commitment of Luis F. General has not as yet
become demandable, there existed no cause of action against him,
and the complaint should have been dismissed and the attachment
lifted. (Orbeta vs. Sotto, 58 Phil., 505.)
And although it is the general principle that certiorari is not available to
correct judicial errors that could be straightened out in an appeal, we
have adopted the course that where an attachment has been wrongly
levied the writ may be applied for, because the remedy by appeal is
either unavailable or inadequate. (Leung Ben vs.O'Brien, 38 Phil., 182;
Director of Commerce and Industry vs. Concepcion, 43 Phil., 384;
Orbeta vs. Sotto, supra.)
Wherefore, the writ of attachment is quashed and the complaint is
dismissed. Costs for petitioner. So ordered.

G.R. No. L-67715 July 11, 1986
WILLIAM ALAIN MIAILHE and THE HON. FELIX V. BARBERS, in
his capacity as Presiding Judge, RTC of Manila, Branch
XXXIII, petitioners-appellants,
vs.
ELAINE M. DE LENCQUESAING and HERVE DE
LENCQUESAING, respondents-appellees.
This petition is an appeal by certiorari from the Decision of the
Intermediate Appellate Court in AC-G.R. SP. No. 01914 which declared
null-and void, the Order of the Hon. Judge Felix V. Barbers, issued in
Civil Case No. 83-16829, dated April 14, 1983, granting petitioner's
application for the issuance of a writ of preliminary attachment and the
Order dated September 13, 1983 denying respondent's motion to lift
said attachment.
The pertinent facts that gave rise to the instant petition are as follows:
Petitioner William Alain Miailhe, his sisters Monique Miailhe Sichere,
Elaine Miailhe de Lencquesaing and their mother, Madame Victoria D.
Miailhe are co-owners of several registered real properties located in
Metro Manila. By common consent of the said co-owners, petitioner
William Alain has been administering said properties since 1960. As
Madame Victoria D. Miailhe, her daughter Monique and son William
Alain (herein petitioner) failed to secure an out-of court partition
thereof due to the unwillingness or opposition of respondent Elaine,
they filed in the Court of First Instance of Manila (now Regional Trial
Court) an action for Partition, which was docketed as Civil Case No.
105774 and assigned to Branch . . . thereof, presided over by Judge
Pedro Ramirez. Among the issues presented in the partition case was
the matter of petitioner's account as administrator of the properties
sought to be partitioned. But while the said administrator's account
was still being examined, respondent Elaine filed a motion praying that
the sum of P203,167.36 which allegedly appeared as a cash balance in
her favor as of December 31, 1982, be ordered delivered to her by
petitioner William Alain. Against the opposition of petitioner and the
other co-owners, Judge Pedro Ramirez granted the motion in his Order
dated December 19, 1983 which order is now the subject of a
certiorari proceeding in the Intermediate Appellate Court under AC-
G.R. No. SP-03070.
Meanwhile however, and more specifically on February 28, 1983,
respondent Elaine filed a criminal complaint for estafa against
petitioner William Alain, with the office of the City Fiscal of Manila,
alleging in her supporting affidavit that on the face of the very account
submitted by him as Administrator, he had misappropriated
considerable amounts, which should have been turned over to her as
her share in the net rentals of the common properties. Two days after
filing the complaint, respondent flew back to Paris, the City of her
residence. Likewise, a few days after the filing of the criminal
complaint, an extensive news item about it appeared prominently in
the Bulletin Today, March 4, 1983 issue, stating substantially that Alain
Miailhe, a consul of the Philippines in the Republic of France, had been
charged with Estafa of several million pesos by his own sister with the
office of the City Fiscal of Manila.
On April 12, 1983, petitioner Alain filed a verified complaint against
respondent Elaine, for Damages in the amount of P2,000,000.00 and
attorney's fees of P250,000.00 allegedly sustained by him by reason of
the filing by respondent (then defendant) of a criminal complaint for
estafa, solely for the purpose of embarrassing petitioner (then plaintiff)
and besmirching his honor and reputation as a private person and as
an Honorary Consul of the Republic of the Philippine's in the City of
Bordeaux, France. Petitioner further charged respondent with having
caused the publication in the March 4, 1983 issue of the Bulletin
Today, of a libelous news item. In his verified complaint, petitioner
prayed for the issuance of a writ of preliminary attachment of the
properties of respondent consisting of 1/6 undivided interests in
certain real properties in the City of Manila on the ground that
"respondent-defendant is a non-resident of the Philippines", pursuant
to paragraph (f), Section 1, Rule 57, in relation to Section 17, Rule 14
of the Revised Rules of Court.
This case for Damages was docketed as Civil Case No. 83-16829 of the
Regional Trial Court of Manila, Branch XXXIII presided over by the
Honorable Felix V. Barbers.
On April 14, 1983, Judge Barbers granted petitioner's application for
preliminary attachment upon a bond to be filed by petitioner in the
amount of P2,000,000.00. Petitioner filed said bond and upon its
approval, the Writ of Preliminary Attachment was issued on April 18,
1983 which was served on the Deputy Clerk of Court of Branch XXX
before whom the action for Partition was pending.
On May 17, 1983, respondent thru counsel filed a motion to lift or
dissolve the writ of attachment on the ground that the complaint did
not comply with the provisions of Sec. 3 of Rule 57, Rules of Court and
that petitioner's claim was for unliquidated damages. The motion to lift
attachment having been denied, respondent filed with the
Intermediate Appellate Court a special action for certiorari under AC-
G.R. SP No. 01914 alleging that Judge Barbers had acted with grave
abuse of discretion in the premises. On April 4, 1984, the IAC issued
its now assailed Decision declaring null and void the aforesaid Writ of
preliminary attachment. Petitioner filed a motion for the
reconsideration of the Decision but it was denied hence, this present
petition which was given due course in the Resolution of this Court
dated February 6, 1985.
We find the petition meritless. The most important issue raised by
petitioner is whether or not the Intermediate Appellate Court erred in
construing Section 1 par. (f) Rule 57 of the Rules of Court to be
applicable only in case the claim of the plaintiff is for liquidated
PROVISIONAL REMEDIES Sec. 1-6 Rule 57 | 2014 SYLLABUS | 7

damages (and therefore not where he seeks to recover unliquidated
damages arising from a crime or tort).
In its now assailed decision, the IAC stated
We find, therefore, and so hold that respondent
court had exceeded its jurisdiction in issuing the
writ of attachment on a claim based on an action
for damages arising from delict and quasi
delict the amount of which is uncertain and had
not been reduced to judgment just because the
defendant is not a resident of the Philippines.
Because of the uncertainty of the amount of
plaintiff's claim it cannot be said that said claim is
over and above all legal counterclaims that
defendant may have against plaintiff, one of the
indispensable requirements for the issuance of a
writ of attachment which should be stated in the
affidavit of applicant as required in Sec. 3 of Rule
57 or alleged in the verified complaint of plaintiff.
The attachment issued in the case was therefore
null and void.
We agree.
Section 1 of Rule 57 of the Rules of Court provides
SEC. 1. Grounds upon which attachment may
issue. A plaintiff or any proper party may, at the
commencement of the action or at any time
thereafter, have the property of the adverse party
attached as security for the satisfaction of any
judgment that may be recovered in the following
cases:
(a) In an action for the recovery of money or
damages on a cause of action arising
fromcontract, express or implied, against a party
who is about to depart from the Philippines with
intent to defraud his creditors;
(b) In an action for money or property embezzled
or fraudulently misapplied or converted to his own
use by a public officer, or an officer of a
corporation or an attorney, factor, broker, agent,
or clerk, in the course of his employment as such,
or by any other person in a fiduciary capacity, or
for a willful violation of duty;
(c) In an action to recover the possession of
personal property unjustly detained, when the
property, or any part thereof, has been concealed.
removed, or disposed of to prevent its being found
or taken by the applicant or an officer;
(d) In an action against a party who has been
guilty of a fraud in contracting the debt or
incurring the obligation upon which the action is
brought, or in concealing or disposing of the
property for the taking, detention or conversion of
which the action is brought;
(e) In an action against a party who has removed
or disposed of his property, or is about to do so,
with intent to defraud his creditors;
(f) In an action against a party who resides out of
the Philippines, or on whom summons may be
served by publication. (emphasis supplied)
While it is true that from the aforequoted provision attachment may
issue "in an action against a party who resides out of the Philippines,
" irrespective of the nature of the action or suit, and while it is also
true that in the case ofCu Unjieng, et al vs. Albert, 58 Phil. 495, it was
held that "each of the six grounds treated ante is independent of the
others," still it is imperative that the amount sought be liquidated.
In view of the foregoing, the Decision appealed from is hereby
AFFIRMED.
SO ORDERED.

G.R. NO. 123638 June 15, 2005
INSULAR SAVINGS BANK, Petitioner,
vs.
COURT OF APPEALS, JUDGE OMAR U. AMIN, in his capacity as
Presiding Judge of Branch 135 of the Regional Trial Court of
Makati, and FAR EAST BANK AND TRUST
COMPANY, Respondents.
Thru this appeal via a petition for review on certiorari under Rule 45 of
the Rules of Court, petitioner Insular Savings Bank seeks to set
aside the D E C I S I O N
1
dated October 9, 1995 of the Court of
Appeals in CA-G.R. SP No. 34876 and its resolution dated
January 24, 1996,
2
denying petitioners motion for reconsideration.
The assailed decision of October 9, 1995 cleared the Regional Trial
Court (RTC) at Makati, Branch 135, of committing, as petitioner
alleged, grave abuse of discretion in denying petitioners motion to
discharge attachment by counter-bond in Civil Case No. 92-145, while
the equally assailed resolution of January 24, 1996 denied petitioners
motion for reconsideration.
The undisputed facts are summarized in the appellate courts
decision
3
under review, as follows:
"On December 11, 1991, respondent Bank [Far East Bank and Trust
Company] instituted Arbitration Case No. 91-069 against petitioner
[Insular Savings Bank] before the Arbitration Committee of the
Philippine Clearing House Corporation [PCHC]. The dispute between
the parties involved three [unfunded] checks with a total value
ofP25,200,000.00. The checks were drawn against respondent Bank
and were presented by petitioner for clearing. As respondent Bank
returned the checks beyond the reglementary period, [but after
petitioners account with PCHC was credited with the amount of
P25,200,000.00] petitioner refused to refund the money to respondent
Bank. While the dispute was pending arbitration, on January 17, 1992,
respondent Bank instituted Civil Case No. 92-145 in the Regional
Trial Court of Makati and prayed for the issuance of a writ of
preliminary attachment. On January 22, 1992, Branch 133 of the
Regional Trial Court of Makati issued an Order granting the application
for preliminary attachment upon posting by respondent Bank of an
attachment bond in the amount of P6,000,000.00. On January 27,
1992, Branch 133 of the Regional Trial Court of Makati issued a writ of
preliminary attachment for the amount of P25,200,000.00. During the
hearing on February 11, 1992 before the Arbitration Committee of the
Philippine Clearing House Corporation, petitioner and respondent Bank
agreed to temporarily divide between them the disputed amount
of P25,200,000.00 while the dispute has not yet been resolved. As a
result, the sum ofP12,600,000.00 is in the possession of respondent
Bank. On March 9, 1994, petitioner filed a motion to discharge
attachment by counter-bond in the amount of P12,600,000.00. On
June 13, 1994, respondent Judge issued the first assailed
order denying the motion. On June 27, 1994, petitioner filed a
motion for reconsideration which was denied in the second
assailed order dated July 20, 1994" (Emphasis and words in
bracket added).
From the order denying its motion to discharge attachment by
counter-bond, petitioner went to the Court of Appeals on a petition for
certiorari thereat docketed as CA-G.R. SP No. 34876, ascribing on the
trial court the commission of grave abuse of discretion amounting to
lack of jurisdiction.
While acknowledging that "[R]espondent Judge may have erred in his
Order of June 13, 1994 that the counter-bond should be in the amount
of P27,237,700.00", in that he erroneously factored in, in arriving at
such amount, unliquidated claim items, such as actual and exemplary
damages, legal interest, attorneys fees and expenses of litigation, the
CA, in the herein assailed decision dated October 9, 1995,
nonetheless denied due course to and dismissed the petition. For,
according to the appellate court, the RTCs order may be defended by,
among others, the provision of Section 12 of Rule 57 of the Rules of
Court, infra. The CA added that, assuming that the RTC erred on the
PROVISIONAL REMEDIES Sec. 1-6 Rule 57 | 2014 SYLLABUS | 8

matter of computing the amount of the discharging counter-bond, its
error does not amount to grave abuse of discretion.
With its motion for reconsideration having been similarly denied,
petitioner is now with us, faulting the appellate court, as follows:
"I. THE COURT OF APPEALS ERRED IN NOT RULING THAT
THE PRINCIPAL AMOUNT CLAIMED BY RESPONDENT BANK
SHOULD BE THE BASIS FOR COMPUTING THE AMOUNT OF
THE COUNTER-BOND, FOR THE PRELIMINARY
ATTACHMENT WAS ISSUED FOR THE SAID AMOUNT ONLY.
"II. THE COURT OF APPEALS ERRED IN NOT RULING THAT
THE ARGUMENT THAT THE AMOUNT OF THE COUNTER-
BOND SHOULD BE BASED ON THE VALUE OF THE
PROPERTY ATTACHED CANNOT BE RAISED FOR THE FIRST
TIME IN THE COURT OF APPEALS.
"III. THE COURT OF APPEALS ERRED IN RULING THAT THE
AMOUNT OF THE COUNTER-BOND SHOULD BE BASED ON
THE VALUE OF THE PROPERTY ATTACHED EVEN IF IT WILL
RESULT IN MAKING THE AMOUNT OF THE COUNTER-BOND
EXCEED THE AMOUNT FOR WHICH PRELIMINARY
ATTACHMENT WAS ISSUED."
Simply put, the issue is whether or not the CA erred in not ruling that
the trial court committed grave abuse of discretion in denying
petitioners motion to discharge attachment by counter-bond in the
amount ofP12,600,000.00.
Says the trial court in its Order of June 13, 1994:
"xxx (T)he counter-bond posted by [petitioner] Insular Savings Bank
should include the unsecured portion of [respondents] claim
of P12,600,000.00 as agreed by means of arbitration between
[respondent] and [petitioner]; Actual damages at 25% percent per
annum of unsecured amount of claim from October 21, 1991 in the
amount ofP7,827,500.00; Legal interest of 12% percent per annum
from October 21, 1991 in the amount of P3,805,200.00; Exemplary
damages in the amount of P2,000,000.00; and attorneys fees and
expenses of litigation in the amount of P1,000,000.00 with a total
amount of P27,237,700.00 (Adlawan vs. Tomol, 184 SCRA 31 (1990)".
Petitioner, on the other hand, argues that the starting point in
computing the amount of counter-bond is the amount of the
respondents demand or claim only, in this case P25,200,000.00,
excluding contingent expenses and unliquidated amount of damages.
And since there was a mutual agreement between the parties to
temporarily, but equally, divide between themselves the said amount
pending and subject to the final outcome of the arbitration, the
amount of P12,600,000.00 should, so petitioner argues, be the basis
for computing the amount of the counter-bond.
The Court rules for the petitioner.
The then pertinent provision of Rule 57 (Preliminary Attachment) of
the Rules of Court under which the appellate court issued its assailed
decision and resolution, provides as follows:
"SEC. 12. Discharge of attachment upon giving counter-bond. At any
time after an order of attachment has been granted, the party whose
property has been attached, . . . may upon reasonable notice to the
applicant, apply to the judge who granted the order or to the judge of
the court which the action is pending, for an order discharging the
attachment wholly or in part on the security given. The judge shall,
after hearing, order the discharge of the attachment if a cash deposit
is made, or a counter-bond executed to the attaching creditor is filed,
on behalf of the adverse party, with the clerk or judge of the court
where the application is made in an amount equal to the value of
the property attached as determined by the judge, to secure
the payment of any judgment that the attaching creditor may
recover in the action. x x x . Should such counter-bond for any
reason be found to be, or become insufficient, and the party furnishing
the same fail to file an additional counter-bond, the attaching party
may apply for a new order of attachment"
4
(Emphasis supplied).
4

As may be noted, the amount of the counter-attachment bond is,
under the terms of the aforequoted Section 12, to be measured
against the value of the attached property, as determined by the judge
to secure the payment of any judgment that the attaching creditor
may recover in the action. Albeit not explicitly stated in the same
section and without necessarily diminishing the sound discretion of the
issuing judge on matters of bond approval, there can be no serious
objection, in turn, to the proposition that the attached property - and
logically the counter-bond necessary to discharge the lien on such
property - should as much as possible correspond in value to, or
approximately match the attaching creditors principal claim. Else,
excessive attachment, which ought to be avoided at all times, shall
ensue. As we held in Asuncion vs. Court of Appeals:
5

"We, however, find the counter-attachment bond in the amount of
P301,935.41 required of the private respondent by the trial court as
rather excessive under the circumstances. Considering that the
principal amounts claimed by the petitioner . . . total only P185,685.00,
and that he had posted a bond of only P80,000.00 for the issuance of
the writ of preliminary attachment, we deem it reasonable to lower the
amount of the counter-attachment bond to be posted by the private
respondent . . . to the sum of P185,685.00."
The following excerpts from Herrera, REMEDIAL LAW, Vol. VII, 1997
ed., p. 61, citing retired Justice Jose Y. Feria, drive home the same
point articulated in Asuncion:
"The sheriff is required to attach only so much of the property of the
party against whom the order is issued as may be sufficient to satisfy
the applicants demand, the amount of which is stated in the
order, unless a deposit is made or a counter-bond is given
equal to said amount. However, if the value of the property to be
attached is less than the amount of the demand, the amount of the
applicants bond may be equal to the value of said property, and the
amount of the adverse partys deposit or counter-bond may be
equal to the applicants bond. The writ of preliminary attachment
is issued upon approval of the requisite bond". (Emphasis
supplied).1avvphi1.net
Turning to the case at bar, the records show that the principal claim of
respondent, as plaintiff a quo, is in the amount
of P25,200,000.00,
6
representing the three (3) unfunded checks drawn
against, and presented for clearing to, respondent bank. Jurisprudence
teaches that a writ of attachment cannot be issued for moral and
exemplary damages, and other unliquidated or contingent claim.
7

The order of attachment dated January 22, 1992 fixed the bond to be
posted by respondent, as applicant, atP6,000,000.00. The writ of
attachment issued on January 27, 1992, in turn, expressly indicated
that petitioner is justly indebted to respondent in the amount
of P25,200,000.00.
8
On February 11, 1992, before the Arbitration
Committee of the Philippine Clearing House Corporation, petitioner and
respondent, however, agreed to equally divide between themselves,
albeit on a temporary basis, the disputed amount of P25,200,000.00,
subject to the outcome of the arbitration proceedings. Thus, the
release by petitioner of the amount of P12,600,000.00 to respondent.
On March 7, 1994, petitioner filed a motion to discharge attachment by
counter-bond in the amount ofP12,600,000.00
9
which, to petitioner, is
the extent that respondent may actually be prejudiced in the event its
basic complaint for recovery of money against petitioner prospers.
As things stood, therefore, respondents principal claim against
petitioner immediately prior to the filing of the motion to discharge
attachment has effectively been pruned down to P12,600,000.00. The
trial court was fully aware of this reality. Accordingly, it should have
allowed a total discharge of the attachment on a counter-bond based
on the reduced claim of respondent. If a portion of the claim is already
secured, we see no justifiable reason why such portion should still be
subject of counter-bond. It may be that a counter-bond is intended to
secure the payment of any judgment that the attaching party may
recover in the main action. Simple common sense, if not consideration
of fair play, however, dictates that a part of a possible judgment that
has veritably been preemptively satisfied or secured need not be
covered by the counter-bond.
With the view we take of this case, the trial court, in requiring
petitioner to post a counter-bond in the amount ofP27,237,700.00,
PROVISIONAL REMEDIES Sec. 1-6 Rule 57 | 2014 SYLLABUS | 9

obviously glossed over one certain fundamental. We refer to the fact
that the attachment respondent applied for and the corresponding writ
issued was only for the amount of P25.2 Million. Respondent, it bears
to stress, did not pray for attachment on its other claims, contingent
and unliquidated as they were. Then, too, the attaching writ rightly
excluded such claims. While the records do not indicate, let alone
provide a clear answer as to the actual value of the property levied
upon, it may reasonably be assumed that it is equal to respondents
principal claim. Be that as it may, it was simply unjust for the trial
court to base the amount of the counter-bond on a figure beyond
the P25,200,000.00 threshold, as later reduced to P12,600,200.00.
The trial court, therefore, committed grave abuse of discretion when it
denied petitioners motion to discharge attachment by counter-bond in
the amount of P12,600,000.00, an amount more than double the
attachment bond required of, and given by, respondent. As a
necessary consequence, the Court of Appeals committed reversible
error when it dismissed petitioners recourse thereto in CA-G.R. SP No.
34876.
It bears to stress, as a final consideration, that the certiorari
proceedings before the appellate court and the denial of the motion to
discharge attachment subject of such proceedings, transpired under
the old rules on preliminary attachment which has since been
revised.
10
And unlike the former Section 12 of Rule 57 of the Rules of
Court where the value of the property attached shall be the defining
measure in the computation of the discharging counter-attachment
bond, the present less stringent Section 12 of Rule 57 provides that
the court shall order the discharge of attachment if the movant "makes
a cash deposit, or files a counter-bond . . . in an amount equal to that
fixed by the court in the order of attachment, exclusive of costs." Not
being in the nature of a penal statute, the Rules of Court cannot be
given retroactive effect.
11

This disposition should be taken in the light of then Section 12, Rule
57 of the Rules of Court.
WHEREFORE, the instant petition is GRANTED. Accordingly, the
assailed decision and resolution of the Courts of Appeals are
hereby REVERSED and SET ASIDE, along with the orders dated June
13, 1994 and July 20, 1994 of the Regional Trial Court at Makati,
Branch 135, in Civil Case No. 92-145 insofar they denied petitioners
motion to discharge attachment by counter-bond in the amount
of P12,600,000.00, and a new one entered GRANTINGsuch motion
upon the reposting of the same counter-bond.
SO ORDERED.



G.R. No. L-43721 June 15, 1935
ISIDRO TAN (alias TAN LIT), petitioner,
vs.
FRANCISCO ZANDUETA, Judge, of First Instance of Manila,
and TIU CHAY (alias TAN KIA), respondents.
This case is intimately related to the habeas corpus case, G.R. No.
43772 (page 530, post), instituted by the same petitioner against the
same respondents, and considered and decided on the same day.
The respondent Tiu Chay (alias Tan Kia) sued the petitioner Isidro Tan
(alias Tan Lit) in civil case No. 47826 of the Court of First Instance of
Manila, to recover from him the amount of P22,500 which he alleged
to be the half corresponding to him of the P45,000 which they won as
a prize in the last drawing of the sweepstakes with ticket No. 228619
which they purchased with a part of the capital invested in a sari-
sari store. Simultaneously with his complaint, said Tiu Chay (alias Tan
Kia) asked and obtained from the respondent judge the attachment of
the property of the petitioner Isidro Tan (alias Tan Lit) upon filing a
bond in the amount of P5,000.
Isidro Tan (alias Tan Lit) succeeded in dissolving the attachment by
filing, in turn, a counter bond in the same amount as that filed by Tiu
Chay (alias Tan Kia) to secure said attachment; and as soon as he
obtained the order to that effect and filed the required counter bond
on April 20, 1935, he withdrew from the Philippine National Bank his
deposit in the amount of P23,500 the greater part of which was
attached days before pursuant to the order of the respondent judge
dated February 26, 1935. Three days after petitioner's withdrawal of
the aforesaid amount from the Philippine National Bank, the
respondent Tiu Chay (alias Tan Kia) asked and obtained an order from
the respondent judge requiring the petitioner to file an additional
counter bond at first P10,000, later P15,000 in lieu of P10,000, and still
later P17,000, subsequently reduced to P12,000.
When the time given the petitioner by the respondent judge to file said
counter bond or to deposit in the Philippine National Bank the amount
of P12,000 of the P23,500 which he withdrew therefrom, expired
without having done either the one or the other, he was required to
appear before the respondent judge and show cause, if any, why he
should not be found in contempt of court for disobeying an order given
him to that effect. And inasmuch as the explanations given by him
were not deemed satisfactory by the respondent judge, the latter
declared him guilty of contempt and immediately ordered his
confinement, clearly advising him that he would continue so confined
until he puts up the said counter bond of P12,000 or deposits the
same amount in the bank.
From its allegations, we gather that the petitioner of Isidro Tan
(alias Tan Lit) is based upon the following grounds: (1) That the writ
of preliminary attachment issued by the respondent judge at the
instance of Tiu Chay (alias Tan Kia) was irregular and illegal, and (2)
that the order of the respondent judge directed the confinement of the
petitioner until he complies with the order requiring him to file a
counter bond in the amount of P12,000 or to deposit the identical
amount in the bank, is likewise illegal because it is a sequel to another,
also illegal, which directed the attachment of his property.
As to the first ground, we find that the writ of preliminary attachment
was issued in strict conformity to the law, because the complaint
wherein the said attachment was issued alleged that the petitioner,
after collecting the prize of a ticket in the last sweepstakes, consisting
of the amount of P50,000, belonging to the two, that is the petitioner
and the respondent Tiu Chay (alias Tan Kia), appropriated the entire
prize exclusively for himself, in complete disregard of said Tiu Chay
(alias Tan Kia), knowing that one-half thereof did not belong to him to
said respondent; that he was merely a depository or agent of the latter
as to said half, and that the petitioner acted in the manner stated
notwithstanding the fact that he was required to turn over to the
respondent the part of the prize won corresponding to the latter. The
allegations to this effect are found in paragraphs 6, 7, 8, and 9 of the
complaint of said Tiu Chay (alias Tan Kia).
Petitioner's contention that, in view of his motion to dissolve the writ
of preliminary attachment, on the ground that the allegations of the
complaint of the respondent Tiu Chay (alias Tan Kia) were not true,
said attachment should have been dissolved without any condition, is
without force, because the respondent judge had discretionary power,
according to section 441 of Act No. 190, to dissolve or to leave in force
the said attachment, and it was precisely in the exercise of this power,
after hearing the parties, as may be deduced from the orders issued
and now of record, that he decided to dissolve the attachment but
conditioned on petitioner's filing a counter bond for P5,000; and this
was voluntarily done by the petitioner, thereby enabling him to
withdraw, as in fact he did withdraw, the amount he had on deposit in
the Philippine National Bank which was a part of the money won in the
last sweepstakes. On this sole ground, therefore, the writ
of certiorari will not lie.
As to the second ground we understand that the adequate remedy is
not certiorari but habeas corpus, and the petitioner himself, learning of
this afterwards, instituted motu proprio a habeas corpus proceeding
herein mentioned in the beginning.
In view of the facts and considerations above set forth, we are of the
opinion, and so hold, that the proceeding instituted is without merit,
especially after the habeas corpus commenced by the same petitioner
has been favorably acted upon, without special finding as to the costs.
So ordered.
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G.R. No. L-23237 November 14, 1925
WALTER E. OLSEN & CO., plaintiff-appellee,
vs.
WALTER E. OLSEN, defendant-appellant.
This is an appeal taken by the defendant from a judgment of
the Court of First Instance of Manila, sentencing him to pay plaintiff
corporation the sum of P66,207.62 with legal interest thereon at the
rate of 6 per cent per annum from February 1, 1923, the date of the
filing of the complaint, until full payment and the costs, and dismissing
the cross-complaint and counterclaim set up by him.
As ground of his appeal, the defendant assigns four errors as
committed by the trial court, to wit: (1) The holding that the
defendant-appellant contracted fraudulently the debt which the
plaintiff-appellee seeks to recover in its complaint; (2) its failure to set
aside the writ of preliminary attachment issued by it ex parte; (3) the
fact of it not having absolved the defendant from the complaint of the
plaintiff corporation and of not having given judgment for the
defendant and against the plaintiff for the amount of his counterclaim,
after deducing the debt due from him to the plaintiff corporation in the
sum of P66,207.62; and (4) its action in denying the motion for new
trial of the defendant.
As the first two supposed errors are intimately connected with
each other, we will discuss them jointly.
The first question that arises is whether or not an order denying
a motion for the annulment of a preliminary attachment may be
reviewed through an appeal.
The preliminary attachment is an auxiliary remedy the granting
of which lies within the sound discretion of the judge taking
cognizance of the principal case upon whose existence it depends. The
order of the judge denying a motion for the annulment of a writ of
preliminary attachment, being of an incidental or interlocutory and
auxiliary character, cannot be the subject of an appeal independently
from the principal case, because our procedural law now in force
authorizes an appeal only from a final judgement which gives an end
to the litigation. (Section 143, Act No. 190: 3 C. J., 549 par. 389.) This
lack of ordinary remedy through an appeal does not mean, however,
that any excess a lower court may commit in the exercise of its
jurisdiction is without remedy; because there are the especial
remedies, such as certiorari, for the purpose. (Leung Ben vs. O'Brien,
38 Phil., 182.)
While it is true that an order denying a motion for the
annulment of a preliminary attachment is not subject to review
through an appeal independently from the principal case, it not
consisting a final order, yet when the writ of preliminary attachment
becomes final by virtue of a final judgment rendered in the principal
case, said writ is subject to review jointly with the judgment rendered
in the principal case through an ordinary appeal. The appellate court
has the power to revoke or confirm said order, in like manner as a
judgment on the merits; because it is a ruling to which an exception
may be taken, and therefore is subject to review in an appeal by bill of
exceptions. (Secs. 141-143, Act No. 190.) The fact that section 441 of
the Code of Civil Procedure does not provide any remedy against the
granting or denial of a motion for the annulment of a writ of
preliminary attachment, except in case of excess of jurisdiction, does
not confer upon said order a final and irrevocable character, taking it
out from the general provisions as to appeal and review, for a special
provision is necessary for that purpose.
Having arrived at the conclusion that an order denying a motion
for the annulment of a preliminary attachment may be reviewed in an
appeal taken from a final judgment rendered in the principal case, in
which said order was entered as an auxiliary remedy, we will now turn
to consider the question whether or not the trial court committed error
in denying the motion for the annulment of the preliminary attachment
levied upon the property of the defendant-appellant.
It is admitted by the defendant-appellant that he is indebted to
the plaintiff-appellee corporation in the sum of P66,207.62, but denies
that he has contracted said debt fraudulently.
The evidence shows that the defendant-appellant was
president-treasurer and general manager of the plaintiff-appellee
corporation and exercised direct and almost exclusive supervision over
its function, funds and books of account until about the month of
August, 1921. During that time he has been taking money of the
corporation without being duly authorized to do so either by the board
of directors or by the by-laws, the money taken by him having
amounted to the considerable sum of P66,207.62. Of this sum,
P19,000 was invested in the purchase of the house and lot now under
attachment in this case, and P50,000 in the purchase of 500 shares of
stock of Prising at the price of P100 per share for himself and Marker.
A few days afterwards he began to sell the ordinary shares of the
corporation for P430 each. The defendant-appellant attempted to
justify his conduct, alleging that the withdrawal of the funds of the
corporation for his personal use was made in his current account with
said corporation, in whose treasury he deposited his own money and
the certificates of title of his shares, as well as of his estate, and that
at the first meeting of the stockholders, which took place on February
1, 1919, a statement of his account with a debit balance was
submitted and approved.
Having, as he had, absolute and almost exclusive control over
the function of the corporation and its funds by virtue of his triple
capacity as president, treasurer and general manager, the defendant-
appellant should have been more scrupulous in the application of the
funds of said corporation to his own use. As a trustee of said
corporation, it was his duty to see by all legal means possible that the
interests of the stockholders were protected, and should not abuse the
extraordinary opportunity which his triple position offered him to
dispose of the funds of the corporation. Ordinary delicacy required that
in the disposition of the funds of the corporation for his personal use,
he should be very careful, so as to do it in such a way as would be
compatible with the interest of the stockholders and his fiduciary
character. And let it not also be said that he did every thing openly
and with the security of his shares of stock, because as he could
dispose of the funds of the corporation so he could dispose of his won
shares and with greater freedom. And let it not also be said that other
officers of the corporation, such as the vice-president, the secretary
and other chiefs and employees, were doing the same thing, because
that does not show but that his bad example had spread among his
subordinates and all believed themselves with the same right as their
chief to dispose of the funds of the corporation for their personal use,
although it were merely by way of loan, without any security of
whatever kind of course. The approval of his account at the first
meeting of the stockholders cannot be considered as a justification of
his conduct, nor does it remove every suspicion of bad faith, because
the corporation was constituted exclusively by the defendant-appellant
himself and his cospeculator, Marker, and nothing else could be
expected from it. As to the debt he owed to the corporation, Walter E.
Olsen was in effect a lender and a borrower at the same time. The
conduct of the defendant-appellant in connection with the funds of the
corporation he represented was more than an irregularity; and while it
is not sufficiently serious to constitute a criminal fraud, it is
undoubtedly a fraud of a civil character, because it is an abuse of
confidence to the damage of the corporation and its stockholders, and
constitutes one of the grounds enumerated in section 424, in
connection with section 412, of the Code of Civil Procedure for the
issuance of a preliminary attachment, and the order of the Court of
First Instance of Manila, denying the motion for the annulment of the
injunction in question, is in accordance with law. lawph!1.net
As to the counterclaim set up by the defendant-appellant, we
have nothing to add to the considerations of the trial court which we
make ours.
For the foregoing, and no error having been found in the
judgment appealed from, the same is hereby affirmed, with the costs
against the defendant-appellant. So ordered.

G.R. No. L-31163 November 6, 1929
URBANO SANTOS, plaintiff-appellee,
vs.
JOSE C. BERNABE, ET AL., defendants.
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PABLO TIONGSON and THE PROVINCIAL SHERIFF OF
BULACAN, appellants.
This appeal was taken by the defendants Pablo Tiongson and
the Provincial Sheriff of Bulacan from the judgment of the Court of
First of said province, wherein said defendant Pablo Tiongson was
ordered to pay the plaintiff Urbano Santos the value of 778 cavans and
38 kilos of palay, at the rate of P3 per cavan, without special
pronouncement as to costs.
In support of their appeal, the appellants assign the following
alleged errors committed by the lower court in its judgment, to wit:
1. The court erred in holding that it has been proved that in
the cavans of palay attached by the herein defendant Pablo
Tiongson from the defendant Jose C. Bernabe were included
those claimed by the plaintiff in this cause.
2. The court erred in ordering the defendant Pablo Tiongson
to pay the plaintiff the value of 778 cavans and 38 kilos of
palay, the refund of which is claimed by said plaintiff.
3. The court erred in denying the defendants' motion for a
new trial.1awphil.net
The following facts were conclusively proved at the trial:
On March 20, 1928, there were deposited in Jose C. Bernabe's
warehouse by the plaintiff Urbano Santos 778 cavans and 38 kilos of
palay and by Pablo Tiongson 1,026 cavans and 9 kilos of the same
grain.
On said date, March 20, 1928, Pablo Tiongson filed with the
Court of First Instance of Bulacan a complaint against Jose C. Bernabe,
to recover from the latter the 1,026 cavans and 9 kilos of palay
deposited in the defendant's warehouse. At the same time, the
application of Pablo Tiongson for a writ of attachment was granted,
and the attachable property of Jose C. Bernabe, including 924 cavans
and 31 1/2 kilos of palay found by the sheriff in his warehouse, were
attached, sold at public auction, and the proceeds thereof delivered to
said defendant Pablo Tiongson, who obtained judgment in said case.
The herein plaintiff, Urbano Santos, intervened in the
attachment of the palay, but upon Pablo Tiongson's filing the proper
bond, the sheriff proceeded with the attachment, giving rise to the
present complaint.
It does not appear that the sacks of palay of Urbano Santos
and those of Pablo Tiongson, deposited in Jose C. Bernabe's
warehouse, bore any marks or signs, nor were they separated one
from the other.
The plaintiff-appellee Urbano Santos contends that Pablo
Tiongson cannot claim the 924 cavans and 31 kilos of palay
attached by the defendant sheriff as part of those deposited by him in
Jose C. Bernabe's warehouse, because, in asking for the attachment
thereof, he impliedly acknowledged that the same belonged to Jose C.
Bernabe and not to him.
In the complaint filed by Pablo Tiongson against Jose C.
Bernabe, civil case No. 3665 of the Court of First Instance of Bulacan,
it is alleged that said plaintiff deposited in the defendant's warehouse
1,026 cavans and 9 kilos of palay, the return of which, or the value
thereof, at the rate of P3 per cavan was claimed therein. Upon filing
said complaint, the plaintiff applied for a preliminary writ of
attachment of the defendant's property, which was accordingly issued,
and the defendant's property, including the 924 cavans and 31 kilos
of palay found by the sheriff in his warehouse, were attached.
It will be seen that the action brought by Pablo Tiongson
against Jose C. Bernabe is that provided in section 262 of the Code of
Civil Procedure for the delivery of personal property. Although it is true
that the plaintiff and his attorney did not follow strictly the procedure
provided in said section for claiming the delivery of said personal
property nevertheless, the procedure followed by him may be
construed as equivalent thereto, considering the provisions of section 2
of the Code of Civil Procedure of the effect that "the provisions of this
Code, and the proceedings under it, shall be liberally construed, in
order to promote its object and assist the parties in obtaining speedy
justice."
Liberally construing, therefore, the above cited provisions of
section 262 of the Code of Civil Procedure, the writ of attachment
applied for by Pablo Tiongson against the property of Jose C. Bernabe
may be construed as a claim for the delivery of the sacks of palay
deposited by the former with the latter.
The 778 cavans and 38 kilos of palay belonging to the plaintiff
Urbano Santos, having been mixed with the 1,026 cavans and 9 kilos
of palay belonging to the defendant Pablo Tiongson in Jose C.
Bernabe's warehouse; the sheriff having found only 924 cavans and 31
1/2 kilos of palay in said warehouse at the time of the attachment
thereof; and there being no means of separating form said 924 cavans
and 31 1/2 of palay belonging to Urbano Santos and those belonging
to Pablo Tiongson, the following rule prescribed in article 381 of the
Civil Code for cases of this nature, is applicable:
Art. 381. If, by the will of their owners, two things of
identical or dissimilar nature are mixed, or if the mixture
occurs accidentally, if in the latter case the things cannot be
separated without injury, each owner shall acquire a right in
the mixture proportionate to the part belonging to him,
according to the value of the things mixed or commingled.
The number of kilos in a cavan not having been determined, we
will take the proportion only of the 924 cavans of palay which were
attached and sold, thereby giving Urbano Santos, who deposited 778
cavans, 398.49 thereof, and Pablo Tiongson, who deposited 1,026
cavans, 525.51, or the value thereof at the rate of P3 per cavan.
Wherefore, the judgment appealed from is hereby modified,
and Pablo Tiongson is hereby ordered to pay the plaintiff Urbano
Santos the value of 398.49 cavans of palay at the rate of P3 a cavan,
without special pronouncement as to costs. So ordered.

G.R. No. 82446 July 29, 1988
STATE INVESTMENT HOUSE, INC., petitioner,
vs.
HON. COURT OF APPEALS, HON. DOROTEO N. CANEBA, in his
capacity as Presiding Judge of Branch 20, Regional Trial Court,
Manila, P.O. VALDEZ, INC., and PEDRO 0. VALDEZ, respondents.
The issue posed by the petition in this case is whether the trial court
(whom the Court of Appeals sustained) gravely abused its discretion in
lifting the preliminary attachment on the private respondents'
properties.
On September 30 and October 31,1977, Pedro 0. Valdez and Rudy H.
Sales executed two Comprehensive Surety Agreements to secure any
and all loans of P.O. Valdez, Inc. not exceeding the sums of P500,000
(Annex C) and P4,934,000 (Annex D) from the petitioner State
Investment House, Inc., a domestic corporation engaged in quasi
banking.
Four years later, on July 30, 1981, petitioner and P.O. Valdez, Inc.
entered into an agreement for discounting with the petitioner the
receivables of P.O. Valdez, Inc. (Annex E). The other details of the
transactions between the petitioner and P.O. Valdez, Inc. are recited in
the decision of the Court of Appeals as follows:
At the time the basic loan agreement (which is the
Agreement dated July 30, 1981) was entered into,
respondent P.O. Valdez, Inc. was required to
provide collateral security for the loan. And
pursuant thereto, private respondents turned over
to the petitioner various certificates of stock of
several corporations such as CDCP-Mining,
Northern Lines, Inc., Oriental Petroleum and
others. In addition, private respondents executed
a Real Estate Mortgage in favor of the petitioner
covering two (2) parcels of land located outside
Baguio City. Later, private respondents were also
made to execute a Deed of Sale dated December
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29, 1982 covering the proceeds of a postdated
check for P4,066,410.20, another Deed of Sale
dated January 4, 1983, covering the proceeds as a
postdated check for P197,010.31 and a Deed of
Assignment dated January 4, 1983, covering P.O.
Valdez, Inc.'s construction receivables from the
Development Academy of the Philippines to the
extent of P100,000.00. (p. 34, Rollo.)
When Pedro Valdez' two checks were deposited by the petitioner upon
maturity, they bounced for insufficient funds. Despite demands,
respondent corporation failed to pay its obligations to petitioner
amounting to P6,342,855.70 as of April 11, 1985.
Petitioner foreclosed its real estate mortgage on the two lots in
Benguet of Pedro and Remedios Valdez on April 11, 1985 and acquired
them as the highest bidder in the foreclosure sale. Presumably
because the proceeds of the foreclosure were insufficient to satisfy the
debt, petitioner also filed a collection suit, with a prayer for preliminary
attachment. It was docketed in the Regional Trial Court of Manila as
Civil Case No. 8533050 entitled "STATE INVESTMENT HOUSE, INC. vs.
P.O. VALDEZ, INC., PEDRO 0. VALDEZ and RUDY H. SALES." On
November 5, 1985, the court, through Judge (now CA Justice) Antonio
Martinez, issued a writ of preliminary attachment against the
defendants' properties (Annex J). Pursuant thereto, certain real and
personal properties of the defendants were attached.
Tropical Homes, Inc. filed a third-party claim to certain properties titled
in the name of Pedro Valdez. As the sheriff failed to act on the third-
party claim, the claimant filed on March 26, 1986, a motion to lift the
attachment on those properties. It was opposed by the petitioner. On
May 22, 1 986, respondent Judge Doroteo N. Caneba (who succeeded
Justice Martinez) denied the motion.
In the meantime, the defendants filed their answer to the complaint.
They admitted that they obtained loans from the petitioner to finance
their construction projects, namely, the DAP Building in Pasig, the
National Engineering Building in the U.P. Campus, and the UP Hostel
for Economics, also in U.P. Diliman, Quezon City.
On June 24, 1986, P.O. Valdez, Inc. and Pedro Valdez filed a motion to
discharge the attachment on the ground that there was no fraud in
contracting the loans, and if any fraud existed, it was in the
performance of the obligations. The motion was opposed by the
petitioner. It was denied by the lower court on November 19, 1986.
Valdez filed a motion for reconsideration. The petitioner opposed it.
Nevertheless, Judge Caeba granted the motion for reconsideration
and discharged the preliminary attachment on the properties of Pedro
O. Valdez and Remedios Valdez on the ground that their conjugal
properties may not be attached to answer for the debts of the
corporation which has a juridical personality distinct from its
incorporators. It held that "neither P.O. Valdez, Inc. and (sic) Pedro O.
Valdez can be faulted nor could they be charged of incurring
fraudulent acts in obtaining the loan agreement." (Annex K). It was
the petitioner's turn to file a motion for reconsideration, but without
success (Annex L).
Petitioner went to the Court of Appeals on a petition for certiorari and
prohibition alleging grave abuse of discretion on the part of the lower
court in lifting the writ of preliminary attachment on the properties of
the Valdez spouses (Annex K).
The Court of Appeals dismissed the petition on January 28, 1988
(Annex A). It affirmed the lower court's finding that there was no fraud
in contracting the debt. It observed that:
1. With respect to the shares of stock which the respondents pledged
as additional security for the loan, the decline in their value did not
mean that the private respondents entered into the loan transaction in
bad faith or with fraudulent intent. For the private respondents could
not have foreseen how the stocks would fare in the market. And if the
petitioner thought they were worthless at the time, it should have
rejected them as collateral.
2. With respect to the two parcels of land which were mortgaged to
the petitioner, the latter should also have declined to accept them as
collateral if it believed they were worth less than their supposed value.
3. With respect to the two postdated checks which bounced, the Court
of Appeals observed that since they were "sold" to the petitioner after
the loan had been granted to private respondents, their issuance did
not fraudulently induce the petitioner to grant the loan applied for.
They were "mere evidence of the private respondents" standing loan
obligation to the petitioner" or "mere collaterals for the loan granted
by the petitioner to the private respondents" (Annex A).
These factual conclusions of the Court of Appeals are binding on US
(Bernardo vs. Bernardo, 101 SCRA 351).
Furthermore, We have examined the grounds enumerated in the
petitioner's prayer for a writ of preliminary attachment, as reproduced
in the decision of the Court of Appeals, the petitioner having failed to
submit a copy of its complaint as an annex of its petition for certiorari.
The main thrust of the prayer for preliminary attachment is the alleged
misrepresentation of the debtor P.O. Valdez, Inc., in the Agreement for
Discounting Receivables and in the deeds of sale of said receivables.
(Annexes E, F, and G); that the two checks or receivables" issued by
Pedro Valdez were payment for "actual sales of its merchandise and/or
personalities made to its customers or otherwise arising from its other
legitimate business transactions" (par. a) and "that the receivables . . .
were genuine, valid and subsisting and represent bona fide sales of
merchandise and/or personalities made in the ordinary course of
business" (par. c).
It can hardly be doubted that those representations in petitioner's
printed deeds of sale were false. But false though they were, the
petitioners cannot claim to have been deceived or deluded by them
because it knew, or should have known , that the issuer of the checks,
Pedro O. Valdez, was not a "buyer" of the "merchandise and
personalities made in the ordinary course of business" by P.O. Valdez,
Inc. of which he was the president.
Since the petitioner failed to prove during the hearing of private
respondents' motion to lift the preliminary writ of attachment, that
P.O. Valdez, Inc. received from it independent consideration for the
"sale" of Pedro Valdez' checks to it, apart from the loans previously
extended to the corporations, We are constrained to affirm the finding
of the court of Appeals that Valdez's checks are "mere evidence of the
outstanding obligation of P.O. Valdez, Inc. to the petitioner." The
petition was not defrauded by their issuance for the loans had been
contracted and released to P.O. Valdez, Inc. long before the checks
were issued.
WHEREFORE, the petition for certiorari is denied for lack of merit.
SO ORDERED.

G.R. No. L-35990 June 17, 1981
ABOITIZ & COMPANY, INC., HONORABLE VICENTE N. CUSI
JR., Judge of the Court of First Instance of Davao, and the
PROVINCIAL SHERIFF OF DAVAO DEL SUR, petitioners,
vs.
COTABATO BUS COMPANY, INC., respondent.
The instant petition stemmed from Civil Case No. 7329 of the Court of
First Instance of Davao (Branch 1) in which a writ of preliminary
attachment was issued ex-parte by the Court on the strength of an
affidavit of merit attached to the verified complaint filed by petitioner
herein, Aboitiz & Co., Inc., on November 2, 1971, as plaintiff in said
case, for the collection of money in the sum of P 155,739.41, which
defendant therein, the respondent in the instant case, Cotabato Bus
Co., owed the said petitioner.
By virtue of the writ of preliminary attachment, the provincial sheriff
attached personal properties of the defendant bus company consisting
of some buses, machinery and equipment. The ground for the
issuance of the writ is, as alleged in the complaint and the affidavit of
merit executed by the Assistant Manager of petitioner, that the
defendant "has removed or disposed of its properties or assets, or is
about to do so, with intent to defraud its creditors."
Respondent company filed in the lower court an "Urgent Motion to
Dissolve or Quash Writ of Attachment" to which was attached an
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affidavit executed by its Assistant Manager, Baldovino Lagbao, alleging
among other things that "the Cotabato Bus Company has not been
selling or disposing of its properties, neither does it intend to do so,
much less to defraud its creditors; that also the Cotabato Bus
Company, Inc. has been acquiring and buying more assets". An
opposition and a supplemental opposition were filed to the urgent
motion. The lower court denied the motion stating in its Order that
"the testimony of Baldovino Lagbao, witness for the defendant,
corroborates the facts in the plaintiff's affidavit instead of disproving or
showing them to be untrue."
A motion for reconsideration was filed by the defendant bus company
but the lower court denied it. Hence, the defendant went to the Court
of Appeals on a petition for certiorari alleging grave abuse of discretion
on the part of herein respondent Judge, Hon. Vicente R. Cusi Jr. On
giving due course to the petition, the Court of Appeals issued a
restraining order restraining the trial court from enforcing further the
writ of attachment and from proceeding with the hearing of Civil Case
No. 7329. In its decision promulgated on October 3, 1971, the Court of
Appeals declared "null and void the order/writ of attachment dated
November 3, 1971 and the orders of December 2, 1971, as well as
that of December 11, 1971, ordered the release of the attached
properties, and made the restraining order originally issued
permanent.
The present recourse is an appeal by certiorari from the decision of the
Court of Appeals reversing the assailed orders of the Court of First
Instance of Davao, (Branch I), petitioner assigning against the lower
court the following errors:
ERROR I
THE COURT OF APPEALS ERRED IN HASTILY AND
PERFUNCTORILY RENDERING, ON OCTOBER 3,
1971, A DECISION WITHOUT CONSIDERING
MOST OF THE EVIDENCE SUCH THAT
l) EVEN AN IMPORTANT FACT, ESTABLISHED BY
DOCUMENTARY EVIDENCE AND NOT DENIED BY
RESPONDENT, IS MENTIONED ONLY AS A
"CLAIM" OF PETITIONER COMPANY;
2) THE DECISION CONTAINS NO DISCUSSION
AND APPRECIATION OF THE FACTS AS PROVED,
ASSEMBLED AND PRESENTED BY PETITIONER
COMPANY SHOWING IN THEIR TOTALITY
THAT RESPONDENT HAS REMOVED, DIVERTED
OR DISPOSED OF ITS BANK DEPOSITS, INCOME
AND OTHER LIQUID ASSETS WITH INTENT TO
DEFRAUD ITS CREDITORS, ESPECIALLY ITS
UNSECURED SUPPLIERS;
3) THE DECISION IGNORES THE SIGNIFICANCE
OF THE REFUSAL OF RESPONDENT TO PERMIT,
UNDER REP. ACT NO. 1405, THE METROPOLITAN
BANK & TRUST CO. TO BRING, IN COMPLIANCE
WITH A subpoena DUCES TECUM TO THE TRIAL
COURT ALL THE RECORDS OF RESPONDENT'S
DEPOSITS AND WITHDRAWALS UNDER ITS
CURRENT AND SAVINGS ACCOUNTS (NOW NIL)
FOR EXAMINATION BY PETITIONER COMPANY
FOR THE PURPOSE OF SHOWING DIRECTLY THE
REMOVAL, DIVERSION OR DISPOSAL OF
RESPONDENT'S DEPOSITS AND INCOME WITH
INTENT TO DEFRAUD ITS CREDITORS.
ERROR II
THE COURT OF APPEALS ERRED IN NOT
APPRECIATING THE FACTS THAT RESPONDENT'S
BANK DEPOSITS ARE NIL AS PROOF WHICH -
TOGETHER WITH RESPONDENT'S ADMISSION OF
AN INCOME OF FROM P10,000.00 to P 14,000.00
A DAY AND THE EVIDENCE THAT IT CANNOT
PRODUCE P 634.00 WITHOUT USING A
PERSONAL CHECK OF ITS PRESIDENT AND
MAJORITY STOCKHOLDER, AND OTHER
EVIDENCE SHOWS THE REMOVAL OR
CHANNELING OF ITS INCOME TO THE LATTER.
ERROR III
THE COURT OF APPEALS ERRED IN NOT
APPRECIATING THE RESCUE AND REMOVAL BY
RESPONDENT OF FIVE ATTACHED BUSES,
DURING THE DEPENDENCY OF ITS MOTION TO
DISSOLVE THE ATTACHMENT IN THE, TRIAL
COURT, AS A FURTHER ACT OF REMOVAL OF
PROPERTIES BY RESPONDENT WITH INTENT TO
DEFRAUD PETITIONER COMPANY, FOR WHOSE
BENEFIT SAID BUSES HAD BEEN ATTACHED.
The questions raised are mainly, if not solely, factual revolving on
whether respondent bus company has in fact removed its properties,
or is about to do so, in fraud of its creditors. This being so, the
findings of the Court of Appeals on said issues of facts are generally
considered conclusive and final, and should no longer be disturbed.
However, We gave due course to the petition because it raises also a
legal question of whether the writ of attachment was properly issued
upon a showing that defendant is on the verge of insolvency and may
no longer satisfy its just debts without issuing the writ. This may be
inferred from the emphasis laid by petitioner on the fact that even for
the measly amount of P 634.00 payment thereof was made with a
personal check of the respondent company's president and majority
stockholder, and its debts to several creditors, including secured ones
like the DBP, have remained unpaid, despite its supposed daily income
of an average of P 12,000.00, as declared by its assistant manager,
Baldovino Lagbao.
1

Going forthwith to this question of whether insolvency, which
petitioners in effect claims to have been proven by the evidence,
particularly by company's bank account which has been reduced to nil,
may be a ground for the issuance of a writ of attachment, the
respondent Court of Appeals correctly took its position in the negative
on the strength of the explicit ruling of this Court in Max Chamorro &
Co. vs. Philippine Ready Mix Concrete Company, Inc. and Hon. Manuel
P. Barcelona.
2

Petitioner, however, disclaims any intention of advancing the theory
that insolvency is a ground for the issuance of a writ of attachment
,
3
and insists that its evidence -is intended to prove his assertion that
respondent company has disposed, or is about to dispose, of its
properties, in fraud of its creditors. Aside from the reference petitioner
had made to respondent company's "nil" bank account, as if to show
removal of company's funds, petitioner also cited the alleged non-
payment of its other creditors, including secured creditors like the DBP
to which all its buses have been mortgaged, despite its daily income
averaging P12,000.00, and the rescue and removal of five attached
buses.
It is an undisputed fact that, as averred by petitioner itself, the several
buses attached are nearly junks. However, upon permission by the
sheriff, five of them were repaired, but they were substituted with five
buses which were also in the same condition as the five repaired ones
before the repair. This cannot be the removal intended as ground for
the issuance of a writ of attachment under section 1 (e), Rule 57, of
the Rules of Court. The repair of the five buses was evidently
motivated by a desire to serve the interest of the riding public, clearly
not to defraud its creditors, as there is no showing that they were not
put on the run after their repairs, as was the obvious purpose of their
substitution to be placed in running condition.
Moreover, as the buses were mortgaged to the DBP, their removal or
disposal as alleged by petitioner to provide the basis for its prayer for
the issuance of a writ of attachment should be very remote, if not nil.
If removal of the buses had in fact been committed, which seems to
exist only in petitioner's apprehensive imagination, the DBP should not
have failed to take proper court action, both civil and criminal, which
apparently has not been done.
The dwindling of respondent's bank account despite its daily income of
from P10,000.00 to P14,000.00 is easily explained by its having to
meet heavy operating expenses, which include salaries and wages of
employees and workers. If, indeed the income of the company were
PROVISIONAL REMEDIES Sec. 1-6 Rule 57 | 2014 SYLLABUS | 14

sufficiently profitable, it should not allow its buses to fall into disuse by
lack of repairs. It should also maintain a good credit standing with its
suppliers of equipment, and other needs of the company to keep its
business a going concern. Petitioner is only one of the suppliers.
It is, indeed, extremely hard to remove the buses, machinery and
other equipments which respondent company have to own and keep to
be able to engage and continue in the operation of its transportation
business. The sale or other form of disposition of any of this kind of
property is not difficult of detection or discovery, and strangely,
petitioner, has adduced no proof of any sale or transfer of any of
them, which should have been easily obtainable.
In the main, therefore, We find that the respondent Court of Appeals
has not committed any reversible error, much less grave abuse of
discretion, except that the restraining order issued by it should not
have included restraining the trial court from hearing the case,
altogether. Accordingly, the instant petition is hereby denied, but the
trial court is hereby ordered to immediately proceed with the hearing
of Civil Case No. 7329 and decide it in accordance with the law and the
evidence. No special pronouncement as to costs.
SO ORDERED.

G.R. No. L-29280 August 11, 1988
PEOPLE'S BANK AND TRUST COMPANY, plaintiff-appellee,
vs.
SYVEL'S INCORPORATED, ANTONIO Y. SYYAP and ANGEL Y
SYYAP, defendants-appellants.
This is an appeal from the decision dated May 16, 1968 rendered by
the Court of First Instance of Manila, Branch XII in Civil Case No.
68095, the decretal portion of which states:
IN VIEW OF THE FOREGOING, judgment is
rendered sentencing all the defendants to pay the
plaintiff jointly and severally the sum of
P601,633.01 with interest thereon at the rate of
11% per annum from June 17, 1967, until the
whole amount is paid, plus 10% of the total
amount due for attorney's fees and the costs of
suit. Should the defendants fail to pay the same to
the plaintiff, then it is ordered that all the effects,
materials and stocks covered by the chattel
mortgages be sold at public auction in conformity
with the Provisions of Sec. 14 of the Chattel
Mortgage Law, and the proceeds thereof applied
to satisfy the judgment herein rendered. The
counterclaim of the defendants, upon the evidence
presented and in the light of the authorities above
cited, is dismissed for lack of merit.
SO ORDERED
(pp. 89-90, Record on Appeal; p. 15, Rollo)
The facts of the case based on the statement of facts, made by the
trial court in its decision as cited in the briefs of both parties are as
follows:
This is an action for foreclosure of chattel
mortgage executed in favor of the plaintiff by the
defendant Syvel's Incorporated on its stocks of
goods, personal properties and other materials
owned by it and located at its stores or
warehouses at No. 406, Escolta, Manila; Nos. 764-
766 Rizal Avenue, Manila; Nos. 10-11 Cartimar
Avenue, Pasay City; No. 886 Nicanor Reyes, Sr.
(formerly Morayta), Manila; as evidenced by
Annex"A."The chattel mortgage was duly
registered in the corresponding registry of deeds
of Manila and Pasay City. The chattel mortgage
was in connection with a credit commercial line in
the amount of P900,000.00 granted the said
defendant corporation, the expiry date of which
was May 20, 1966. On May 20, 1965, defendants
Antonio V. Syyap and Angel Y. Syyap executed an
undertaking in favor of the plaintiff whereby they
both agreed to guarantee absolutely and
unconditionally and without the benefit of
excussion the full and prompt payment of any
indebtedness to be incurred on account of the said
credit line. Against the credit line granted the
defendant Syvel's Incorporated the latter drew
advances in the form of promissory notes which
are attached to the complaint as Annexes "C" to
"l." In view of the failure of the defendant
corporation to make payment in accordance with
the terms and conditions agreed upon in the
Commercial Credit Agreement the plaintiff started
to foreclose extrajudicially the chattel mortgage.
However, because of an attempt to have the
matter settled, the extra-judicial foreclosure was
not pushed thru. As no payment had been paid,
this case was even tually filed in this Court.
On petition of the plaintiff based on the affidavits
executed by Mr. Leopoldo R. Rivera, Assistant Vice
President of the plaintiff bank and Atty. Eduardo J.
Berenguer on January 12, 1967, to the effect,
among others, that the defendants are disposing
of their properties with intent to defraud their
creditors, particularly the plaintiff herein, a
preliminary writ of attachment was issued. As a
consequence of the issuance of the writ of
attachment, the defendants, in their answer to the
complaint set up a compulsory counterclaim for
damages.
After the filing of this case in this court and during
its pendency defendant Antonio v. Syyap proposed
to have the case settled amicably and to that end
a conference was held in which Mr. Antonio de las
Alas, Jr., Vice President of the Bank, plaintiff,
defendant Antonio V. Syyap and Atty. Mendoza
were present. Mr. Syyap requested that the
plaintiff dismiss this case because he did not want
to have the goodwill of Syvel's Incorporated
impaired, and offered to execute a real estate
mortgage on his real property located in Bacoor,
Cavite. Mr. De las Alas consented, and so the Real
Estate Mortgage, marked as Exhibit A, was
executed by the defendant Antonio V. Syyap and
his wife Margarita Bengco Syyap on June 22,
1967. In that deed of mortgage, defendant Syyap
admitted that as of June 16, 1967, the
indebtedness of Syvel's Incorporated was
P601,633.01, the breakdown of which is as
follows: P568,577.76 as principal and P33,055.25
as interest. Complying with the promise of the
plaintiff thru its Vice President to ask for the
dismissal of this case, a motion to dismiss this
case without prejudice was prepared, Exhibit C,
but the defendants did not want to agree if the
dismissal would mean also the dismissal of their
counterclaim Against the plaintiff. Hence, trial
proceeded.
As regards the liabilities of the defendants, there
is no dispute that a credit line to the maximum
amount of P900,000.00 was granted to the
defendant corporation on the guaranty of the
merchandise or stocks in goods of the said
corporation which were covered by chattel
mortgage duly registered as required by law.
There is likewise no dispute that the defendants
Syyap guaranteed absolutely and unconditionally
and without the benefit of excussion the full and
prompt payment of any indebtedness incurred by
PROVISIONAL REMEDIES Sec. 1-6 Rule 57 | 2014 SYLLABUS | 15

the defendant corporation under the credit line
granted it by the plaintiff. As of June 16, 1967, its
indebtedness was in the total amount of
P601,633.01. This was admitted by defendant
Antonio V. Syyap in the deed of real estate
mortgage executed by him. No part of the amount
has been paid by either of the defendants. Hence
their liabilities cannot be questioned. (pp. 3-6,
Brief for Appellee; p. 26, Rollo)
In their brief, appellants assign the following errors:
I
The lower court erred in not holding that the
obligation secured by the Chattel Mortgage sought
to be foreclosed in the above-entitled case was
novated by the subsequent execution between
appellee and appellant Antonio V, Syyap of a real
estate mortgage as additional collateral to the
obligation secured by said chattel mortgage.
II
The lower court erred in not dismissing the above-
entitled case and in finding appellants liable under
the complaint.
III
The lower court erred in not holding that the writ
of preliminary attachment is devoid of any legal
and factual basis whatsoever.
IV
The lower court erred in dismissing
appellants'counterclaim and in not holding
appellee liable to appellants for the consequent
damages arising out of a wrongful attachment.
(pp. 1-2, Brief for the Appellants, p. 25, Rollo)
Appellants admit that they are indebted to the appellee bank in the
amount of P601,633.01, breakdown of which is as follows:
P568,577.76 as principal and P33,055.25 as interest. After the filing of
the case and during its pendency, defendant Antonio V. Syyap
proposed to have the case amicably settled and for that purpose a
conference was held in which Mr. Antonio de las Alas, Jr., Vice
President of plaintiff People's Bank and Trust Company, defendant
Antonio V. Syyap and Atty. Mendoza were present. Mr. Syyap
requested that the plaintiff dismiss this case as he did not want to
have the goodwill of Syvel's Incorporated impaired, and offered to
execute a real estate mortgage on his real property located in Bacoor,
Cavite. Mr. de las Alas consented, and so the Real Estate Mortgage
(Exhibit "A") was executed by defendant Antonio Syyap and his wife
Margarita Bengco Syyap on June 22, 1967. Defendants did not agree
with plaintiffs motion to dismiss which included the dismissal of their
counterclaim and filed instead their own motion to dismiss (Record on
Appeal, pp. 68-72) on the ground that by the execution of said real
estate mortgage, the obligation secured by the chattel mortgage
subject of this case was novated, and therefore, appellee's cause of
action thereon was extinguished.
In an Order dated September 23, 1967, the motion was denied for not
being well founded (record on Appeal, p. 78).
Appellants contention is without merit.
Novation takes place when the object or principal condition of an
obligation is changed or altered. It is elementary that novation is never
presumed; it must be explicitly stated or there must be manifest
incompatibility between the old and the new obligations in every
aspect (Goni v. CA, 144 SCRA 223 [1986]; National Power Corp. v.
Dayrit, 125 SCRA 849 [1983]).
In the case at bar, there is nothing in the Real Estate Mortgage which
supports appellants'submission. The contract on its face does not show
the existence of an explicit novation nor incompatibility on every point
between the "old and the "new" agreements as the second contract
evidently indicates that the same was executed as new additional
security to the chattel mortgage previously entered into by the parties.
Moreover, records show that in the real estate mortgage, appellants
agreed that the chattel mortgage "shall remain in full force and shall
not be impaired by this (real estate) mortgage."
The pertinent provision of the contract is quoted as follows:
That the chattel mortgage executed by Syvel's
Inc. (Doc. No. 439, Book No. I, Series of 1965,
Notary Public Jose C. Merris, Manila); real estate
mortgage executed by Angel V. Syyap and Rita V.
Syyap (Doc. No. 441, Page No. 90, Book No. I,
Series of 1965, Notary Public Jose C. Merris,
Manila) shall remain in full force and shall not be
impaired by this mortgage (par. 5, Exhibit"A,"
Emphasis ours).
It is clear, therefore, that a novation was not intended. The real estate
mortgage was evidently taken as additional security for the
performance of the contract (Bank of P.I. v. Herrige, 47 Phil. 57).
In the determination of the legality of the writ of attachment by the
Court of First Instance of Manila, it is a well established rule that the
grant or denial of a writ of attachment rests upon the sound discretion
of the court. Records are bereft of any evidence that grave abuse of
discretion was committed by respondent judge in the issuance of the
writ of attachment.
Appellants contend that the affidavits of Messrs. Rivera and Berenguer
on which the lower court based the issuance of the writ of preliminary
attachment relied on the reports of credit investigators sent to the field
and not on the personal knowledge of the affiants. Such contention
deserves scant consideration. Evidence adduced during the trial
strongly shows that the witnesses have personal knowledge of the
facts stated in their affidavits in support of the application for the writ.
They testified that Syvel's Inc. had disposed of all the articles covered
by the chattel mortgage but had not remitted the proceeds to appellee
bank; that the Syvel's Stores at the Escolta, Rizal Avenue and Morayta
Street were no longer operated by appellants and that the latter were
disposing of their properties to defraud appellee bank. Such
testimonies and circumstances were given full credit by the trial court
in its decision (Brief for Appellee, p. 14). Hence, the attachment
sought on the ground of actual removal of property is justified where
there is physical removal thereof by the debtor, as shown by the
records (McTaggert v. Putnam Corset Co., 8 N.Y. S 800 cited in Moran,
Comments on the Rules of Court, 1970 Ed., Vol. 3, p. 7).
Besides, the actuations of appellants were clearly seen by the
witnesses who "saw a Fiat Bantam Car-Fiat Car, a small car and about
three or four persons hurrying; they were carrying goods coming from
the back portion of this store of Syvels at the Escolta, between 5:30
and 6:00 o'clock in the evening." (Record on Appeal, pp. 45-46).
Therefore, "the act of debtor (appellant) in taking his stock of goods
from the rear of his store at night, is sufficient to support an
attachment upon the ground of the fraudulent concealment of
property for the purpose of delaying and defrauding creditors." (4 Am.
Jur., 841 cited in Francisco, Revised Rules of Court, Second Edition,
1985, p. 24).
In any case, intent to defraud may be and usually is inferred from the
facts and circumstances of the case; it can rarely be proved by direct
evidence. It may be gleaned also from the statements and conduct of
the debtor, and in this connection, the principle may be applied that
every person is presumed to intend the natural consequences of his
acts (Francisco, Revised Rules of Court, supra, pp. 24-25), In fact the
trial court is impressed "that not only has the plaintiff acted in perfect
good faith but also on facts sufficient in themselves to convince an
ordinary man that the defendants were obviously trying to spirit away
a port;.on of the stocks of Syvel's Incorporated in order to render
ineffectual at least partially anyjudgment that may be rendered in
favor of the plaintiff." (Decision; Civil Case No. 68095; Record on
Appeal, pp. 88-89).
Appellants having failed to adduce evidence of bad faith or malice on
the part of appellee in the procurement of the writ of preliminary
PROVISIONAL REMEDIES Sec. 1-6 Rule 57 | 2014 SYLLABUS | 16

attachment, the claim of the former for damages is evidently negated.
In fact, the allegations in the appellee's complaint more than justify
the issuance of the writ of attachment.
PREMISES CONSIDERED, this appeal is DISMISSED for lack of merit
and the judgment appealed from is AFFIRMED.
SO ORDERED.

G.R. Nos. 65957-58 July 5, 1994
ELEAZAR V. ADLAWAN and ELENA S. ADLAWAN, petitioners,
vs.
Hon. Judge RAMON AM. TORRES, as Presiding Judge of Branch
6, Regional Trial Court Cebu City, ABOITIZ & COMPANY, INC.
and THE PROVINCIAL SHERIFFS OF CEBU, DAVAO, RIZAL and
METRO MANILA, Respectively, respondents.
This is a petitioner for certiorari and mandamus with preliminary
injunction or restraining order to nullify: (1) the Order dated
September 14, 1983 of respondent Judge Ramon Am. Torres of the
Regional Trial Court, Branch 6, Cebu City, in Civil Case No. CEB-1185
and the Order dated September 26, 1983 of Judge Emilio A. Jacinto of
Branch 23 of the same court in Civil Case No. CEB-1186, which
granted the motion for the issuance of writs of preliminary attachment
for the seizure of the property of petitioners by respondent Provincial
Sheriffs; and (2) the Order dated December 12, 1983 of respondent
Judge Ramon Am. Torres in the consolidated cases, Civil Case No.
CEB-1185 and Civil Case No. CEB-1186.
I
In a complaint dated April 24, 1982 filed with the Court of First
Instance of Cebu, now Regional Trial Court, (Civil Case No. R-21761),
respondent Aboitiz and Company, Inc. (Aboitiz) sought to collect from
petitioners a sum of money representing payments for: (1) the unpaid
amortizations of a loan; (2) technical and managerial services
rendered; and (3) the unpaid installments of the equipment provided
by respondent Aboitiz to petitioners (Rollo, p. 37).
Acting on the ex parte application for attachment, the Executive Judge
of the Court of First Instance of Cebu, issued on May 14, 1982, an
order directing the issuance of the writ of preliminary attachment
against the property of petitioners upon the filing by respondent
Aboitiz of an attachment bond.
Subsequently, the case was raffled to Branch 11 of the Court of First
Instance of Cebu, which issued a writ of attachment addressed to the
Provincial Sheriffs of Cebu and the City Sheriff of Davao City. It was
the Sheriff of Davao City who enforced the writ of attachment,
resulting in the seizure of heavy construction equipment, motor vehicle
spare parts, and other personal property with the aggregate value of
P15,000,000.00. The said court also granted the motion of respondent
Aboitiz to take possession and custody of the attached property of
petitioners and ordered the Provincial Sheriff of Davao to deliver the
property to respondent Aboitiz.
Petitioners moved for a bill of particulars and to set aside the ex
parte writ of attachment. Finding merit in the motion to set aside the
writ, Branch 11 ordered on July 6, 1982 the lifting of the writ and,
consequently, the discharge of the property levied upon.
Respondent Aboitiz filed an urgent ex parte motion, praying for the
stay of the July 6, 1982 Order for a period of 15 days for it to be able
to appeal the order. The motion was favorably acted upon.
However, on July 13, 1982, respondent Aboitiz filed a notice of
dismissal of its complaint in accordance with Section 1, Rule 17 of the
Revised Rules of Court. Consequently, Branch 11 issued an order
confirming the notice of dismissal, emphasizing that all orders of the
court issued prior to the filing of said notice of dismissal had been
rendered functus oficio, and considering all pending incidents in the
case as moot and academic.
Petitioner Eleazar Adlawan filed a motion praying that the July 6, 1982
Order be implemented and enforced. On December 20, however,
Branch 11 denied the motion on account of the filing by respondent
Aboitiz before Branch 16 of the Court of First Instance of Cebu in
Lapu-lapu City of an action for delivery of personal property (Civil Case
No. 619-L), and the filing by petitioner Eleazar Adlawan before Branch
10 of the same court of an action for damages in connection with the
seizure of his property under the writ of attachment.
In the replevin suit, Branch 16 ordered the seizure and delivery of the
property described in the complaint. Said property were later delivered
by the provincial sheriff to respondent Aboitiz. Alleging that while his
office was situated in Cebu City, Adlawan was a resident of Minglanilla,
and therefore, the Lapu-lapu City court should not entertain the action
for replevin. Petitioner Eleazar Adlawan filed an omnibus motion
praying for the reconsideration and dissolution of the writ of seizure,
the retrieval of the property seized, and the dismissal of the complaint.
He also averred that the property seized were in custodia legis by
virtue of the writ of attachment issued by Branch 11. His omnibus
motion was denied. Subsequently, he filed a motion for
reconsideration which was not granted.
The denial of his omnibus motion led petitioner Eleazar Adlawan to file
a petition for certiorari and mandamus in the Supreme Court (G.R. No.
63225). The Third Division of this Court ruled on April 3, 1990 that
since attachment is an ancillary remedy, the withdrawal of the
complaint left it with no leg to stand on. Thus, the Court disposed of
the case as follows:
WHEREFORE, in view of the foregoing, this Court
rules that the attached properties left in the
custody of private respondent Aboitiz and
Company, Inc. be returned to petitioner Eleazar V.
Adlawan without prejudice to the outcome of the
cases filed by both parties (Rollo, p. 324).
Respondent Aboitiz filed a motion for reconsideration of the decision,
contending that the replevin case was distinct and separate from the
case where the writ of attachment was issued. It argued that the writ
of replevin, therefore, remained in force as the Third Division of the
Supreme Court had not found it illegal. The motion was, however,
denied with finality in the Resolution of July 11, 1990.
Undaunted, respondent Aboitiz filed a second motion for
reconsideration with a prayer that the dispositive portion of the
decision be clarified. It asserted that because the writ of preliminary
attachment was different from the writ of replevin, we should rule that
the property subject of the latter writ should remain in custodia
legis of the court issuing the said writ.
In the Resolution dated September 10, 1990, the Third Division stated
that "the properties to be returned to petitioner are only those held by
private respondent (Aboitiz) by virtue of the writ of attachment which
has been declared non-existent." Accordingly, the dispositive portion of
the April 3, 1990 decision of the Third Division of this Court was
modified to read as follows:
WHEREFORE, in view of the foregoing, this Court
rules that the properties in the custody of the
private respondent Aboitiz & Company by virtue of
the writ of attachment issued in Civil Case No. R-
21761 be returned to the petitioner, but properties
in the custody of the private respondent by virtue
of the writ of replevin issued in Civil Case No. 619-
L be continued in custodia legis of said court
pending litigation therein.
The Decision in G.R. No. 63225 having become final and executory,
entry of judgment was made on November 15, 1990. This should have
terminated the controversy between petitioners and respondent Aboitiz
insofar as the Supreme Court was concerned, but that was not to be.
On September 9, 1983 respondent Aboitiz filed against petitioners two
complaints for collection of sums of money with prayers for the
issuance of writs of attachment in the Regional Trail Court, Branch 23,
Cebu City, docketed as Civil Cases Nos. CEB-1185 and CEB-1186. The
complaint in Civil Case No. CEB-1185 alleged that petitioner Eleazar
Adlawan (defendant therein) was awarded a contract for the
construction of the Tago Diversion Works for the Tago River Irrigation
Project by the National Irrigation Administration and that respondent
Aboitiz (plaintiff therein) loaned him money and equipment, which
PROVISIONAL REMEDIES Sec. 1-6 Rule 57 | 2014 SYLLABUS | 17

indebtedness as of June 30, 1983 totaled P13,430,259.14. Paragraph
16 of the complaint states:
16. That, in view of the enormous liabilities which
the defendants have with the plaintiff, defendants
executed a real estate mortgage covering eleven
(11) parcels of land in favor of Philippine
Commercial and Industrial Bank (PCIB) to secure a
P1,000,000.00 loan with said bank and was able
to remove, conceal and dispose of their properties,
obviously to defraud the plaintiff, . . . (Rollo, pp.
65-66).
The complaint in Civil Case No. CEB-1186 alleged that petitioner
Eleazar Adlawan (defendant therein) was awarded a contract for the
construction of the Lasang River Irrigation Project by the National
Irrigation Administration and that respondent Aboitiz (plaintiff therein)
loaned him money and equipment, which indebtedness as of June 30,
1983 totalled P5,370,672.08. Paragraph 15 of the complaint is similarly
worded as paragraph 16 of the complaint in Civil Case No. CEB-1185.
Civil Case No. CEB-1185 was raffled to the Regional Trial Court, Branch
6, presided by respondent Judge Ramon Am. Torres. On September
14, 1983, respondent Judge ordered the issuance of a writ of
attachment upon respondent Aboitiz' filing of a bond of P5,000,000.00.
Similarly, in Civil Case No. CEB-1186, which was raffled to Branch 23,
presiding Judge Emilio A. Jacinto ordered the issuance of a writ of
attachment upon the filing of a bond of P2,500,000.00. Accordingly, in
Civil Case No. CEB-1185, the Acting Provincial Sheriff of Cebu issued
separate writs dated September 26, 1983 addressed to the Sheriffs of
Cebu, Davao and Metro Manila. No writ of preliminary attachment was,
however, issued in Civil Case No. CEB-1186.
Petitioners then filed in Civil Cases Nos. CEB-1185 and CEB-1186
urgent motions to hold in abeyance the enforcement of the writs of
attachments. They alleged in the main that since their property had
been previously attached and said attachment was being questioned
before the Supreme Court in G.R. No. 63225, the filing of the two
cases, as well as the issuance of the writs of attachment, constituted
undue interference with the processes of this court in the then pending
petition involving the same property.
Upon motion of respondent Aboitiz, Branch 23 issued on October 13,
1983, an order directing the transfer to Branch 6 of Civil Case No. CEB-
1186 for consolidation with Civil Case No. CEB-1185.
Meanwhile, in its comment on petitioners' motion to withhold the
enforcement of the writs of attachment, respondent Aboitiz alleged
that the voluntary dismissal of Civil Case No. R-21761 under Section 1,
Rule 17 of the Revised Rules of Court was without prejudice to the
institution of another action based on the same subject matter. It
averred that the issuance of the writ of attachment was justified
because petitioners were intending to defraud respondent Aboitiz by
mortgaging 11 parcels of land to the Philippine Commercial and
Industrial Bank (PCIB) in consideration of the loan of P1,100,000.00,
thereby making PCIB a preferred creditor to the prejudice of
respondent Aboitiz, which had an exposure amounting to
P13,430,259.14.
Petitioners then filed a rejoinder to said comment, contending that
since the property subject of the writ of attachment have earlier been
attached or replevied, the same property were under custodia
legis and therefore could not be the subject of other writs of
attachment.
On December 12, 1983, respondent Judge issued an order finding no
merit in petitioners' motion for reconsideration and directing the
sheriffs of Cebu, Davao and Metro Manila "to proceed with the
enforcement and implementation of the writs of preliminary
attachment." Respondent Judge ruled that the writs of attachment
were issued on the basis of the supporting affidavits alleging that
petitioner had removed or disposed of their property with intent to
defraud respondent Aboitiz (Rollo, pp. 109-113).
On December 15, petitioners filed an ex parte motion praying: (1) that
the December 12, 1983 Order be set for hearing; (2) that they be
given 15 days within which to either file a motion for reconsideration
or elevate the matter to this Court or the then Intermediate Appellate
Court; and (3) that within the same 15-day period the implementation
or enforcement of the writs of attachment be held in abeyance.
On the same day, respondent Judge issued an order holding in
abeyance the enforcement of the writs of preliminary attachment in
order to afford petitioners an opportunity to seek their other remedies
(Rollo, p. 116).
On December 27, petitioners filed the instant petition
for certiorari and mandamus. They alleged that respondent Judge
gravely abused his discretion in ordering the issuance of the writs of
preliminary attachment inasmuch as the real estate mortgage
executed by them in favor of PCIB did not constitute fraudulent
removal, concealment or disposition of property. They argued that
granting the mortgage constituted removal or disposition of property,
it was not per se a ground for attachment lacking proof of intent to
defraud the creditors of the defendant.
Petitioners contended that in Civil Case No. 21761, Branch 11 had
ruled that the loan for which the mortgage was executed was
contracted in good faith, as it was necessary for them to continue their
business operations even after respondent Aboitiz had stopped giving
them financial aid.
Petitioners also contended that respondent Judge exceeded his
jurisdiction when he issued the Order of December 12, 1983, without
first hearing the parties on the motion for attachment and the motion
to dissolve the attachment. Moreover, they argued that respondent
Judge gravely abused his discretion in proceeding with the case,
notwithstanding that his attention had been called with regard to the
pendency of G.R. No. 63225 in this Court.
As prayed for by petitioners, we issued a temporary restraining order
on January 6, 1984 "enjoining the respondents from enforcing or
implementing the writs of preliminary attachment against the property
of petitioners, all dated September 26, 1983 and issued in Civil Cases
Nos. CEB 1185 and 1186" (Rollo, p. 118).
II
The resolution of this case centers on the issue of the legality of the
writ of attachment issued by respondent Judge in the consolidated
cases for collection of sums of money.
The affidavit submitted by respondent Aboitiz in support of its prayer
for the writ of attachment does not meet the requirements of Rule 57
of the Revised Rules of Court regarding the allegations on impending
fraudulent removal, concealment and disposition of defendant's
property. As held in Carpio v. Macadaeg, 9 SCRA 552 (1963), to justify
a preliminary attachment, the removal or disposal must have been
made with intent to defraud defendant's creditors. Proof of fraud is
mandated by paragraphs (d) and (e) of Section 1, Rule 57 of the
Revised Rules of Court on the grounds upon which attachment may
issue. Thus, the factual basis on defendant's intent to defraud must be
clearly alleged in the affidavit in support of the prayer for the writ of
attachment if not so specifically alleged in the verified complaint. The
affidavit submitted by respondent Aboitiz states:
REPUBLIC OF THE PHILIPPINES
CITY OF CEBU ...............) S.S.
I, ROMAN S. RONQUILLO, of legal age, married
and a resident of Cebu City, after being sworn in
accordance with law, hereby depose and say:
That I am the Vice-President of the plaintiff
corporation in the above-entitled case;
That a sufficient cause of action exists against the
defendants named therein because the said
defendants are indebted to the plaintiffs in the
amount of P13,430,259.14 exclusive of interests
thereon and damages claimed;
That the defendants have removed or disposed of
their properties with intent to defraud the plaintiff,
their creditor, because on May 27, 1982 they
executed a real estate mortgage in favor of
PROVISIONAL REMEDIES Sec. 1-6 Rule 57 | 2014 SYLLABUS | 18

Philippine Commercial and Industrial Bank (PCIB)
covering eleven (11) of their fifteen (15) parcels of
land in Cebu to secure a P1,000,000.00 loan with
the same bank;
That this action is one of those specifically
mentioned in Section 1, Rule 57 of the Rules of
Court, whereby a writ preliminary attachment may
lawfully issue because the action therein is one
against parties who have removed or disposed of
their properties with intent to defraud their
creditor, plaintiff herein;
That there is no sufficient security for the claims
sought to be enforced by the present action;
That the total amount due to the plaintiff in the
above-entitled case is P13,430,259.14, excluding
interests and claim for damages and is as much
the sum for which an order of attachment is
herein sought to be granted; above all legal
counter-claims on the part of the defendants.
IN VIEW WHEREOF, I hereunto set my hand this
24th day of August 1983 at Cebu City, Philippines.
(Sgd.)
RAMON S. RONQUILLO
It is evident from said affidavit that the prayer for attachment rests on
the mortgage by petitioners of 11 parcels of land in Cebu, which
encumbrance respondent Aboitiz considered as fraudulent concealment
of property to its prejudice. We find, however, that there is no factual
allegation which may constitute as a valid basis for the contention that
the mortgage was in fraud of respondent Aboitiz. As this Court said
in Jardine-Manila Finance, Inc. v. Court of Appeals, 171 SCRA 636
(1989), "[T]he general rule is that the affidavit is the foundation of the
writ, and if none be filed or one be filed which wholly fails to set out
some facts required by law to be stated therein, there is no jurisdiction
and the proceedings are null and void."
Bare allegation that an encumbrance of a property is in fraud of the
creditor does not suffice. Factual bases for such conclusion must be
clearly averred.
The execution of a mortgage in favor of another creditor is not
conceived by the Rules as one of the means of fraudulently disposing
of one's property. By mortgaging a piece of property, a debtor merely
subjects it to a lien but ownership thereof is not parted with.
Furthermore, the inability to pay one's creditors is not necessarily
synonymous with fraudulent intent not to honor an obligation (Insular
Bank of Asia & America, Inc. v. Court of Appeals, 190 SCRA 629
[1990]).
Consequently, when petitioners filed a motion for the reconsideration
of the order directing the issuance of the writ of attachment,
respondent Judge should have considered it as a motion for the
discharge of the attachment and should have conducted a hearing or
required submission of counter-affidavits from the petitioners, if only
to gather facts in support of the allegation of fraud (Jopillo, Jr. v. Court
of Appeals, 167 SCRA 247 [1988]). This is what Section 13 of Rule 57
mandates.
This procedure should be followed because, as the Court has time and
again said, attachment is a harsh, extraordinary and summary remedy
and the rules governing its issuance must be construed strictly against
the applicant. Verily, a writ of attachment can only be granted on
concrete and specific grounds and not on general averments quoting
perfunctorily the words of the Rules (D.P. Lub Oil Marketing Center,
Inc. v. Nicolas, 191 SCRA 423 [1990]).
The judge before whom the application is made exercises full
discretion in considering the supporting evidence proffered by the
applicant. One overriding consideration is that a writ of attachment is
substantially a writ of execution except that it emanates at the
beginning, instead of at the termination of the suit (Santos v. Aquino,
Jr., 205 SCRA 127 [1992]; Tay Chun Suy v. Court of Appeals, 212
SCRA 713 [1992]).
We need not discuss the issue of whether or not Civil Cases Nos. CEB-
1185 and CEB-1186 constituted undue interference with the
proceedings in G.R. No. 63225 in view of the entry of judgment in the
latter case.
WHEREFORE, the petition is GRANTED and the Temporary Restraining
Order issued on January 6, 1984 is made PERMANENT. Respondent
Judge or whoever is the presiding judge of the Regional Trial Court,
Branch 6, Cebu City, is DIRECTED to PROCEED with the resolution of
Civil Cases Nos. CEB-1185 and CEB-1186 with deliberate dispatch. SO
ORDERED.

G.R. No. L-37682 November 26, 1932
CLAUDE NEON LIGHTS, FEDERAL INC., U. S. A., petitioner,
vs.
PHILIPPINE ADVERTISING CORPORATION and FRANCISCO
SANTAMARIA, Judge of First Instance of Manila, respondents.
This case is to be determined upon the petition for writ
of certiorari and the demurrer thereto filed by the respondents. The
petition sets up two causes of action: one attacking the validity of a
writ of attachment issued by the respondent judge on the petition and
affidavit of the respondent Philippine Advertising Corporation, on April
6, 1932; the second, attacking the validity of the order of the
respondent judge issued the same day on the petition of the
respondent Philippine Advertising Corporation, appointing a receiver of
the property which was seized by the sheriff under said writ of
attachment.
On April 5, 1932, the respondent Philippine Advertising
Corporation filed suit against the petitioner in the Court of First
Instance of Manila, claiming P300,000 as damages for alleged breach
of the agency contract existing between the said respondent and the
petitioner. At the same time, said respondent filed in said court an
application for writ of attachment duly verified in which it is stated that
the defendant (petitioner herein) is a foreign corporation having its
principal place of business in the City of Washington, District of
Columbia. It is not alleged in said application that the defendant,
Claude Neon Lights, Inc. (the petitioner herein) was about to depart
from the Philippine Islands with intent to defraud its creditors or that it
was insolvent or had removed or disposed of its property or was about
to do so with intent to defraud its creditors. The only statutory ground
relied upon in the court below and in this court for the issuance of the
writ of attachment against the petitioner is paragraph 2 of section 424
of the Code of Civil Procedure, which provides that plaintiff may have
the property of the defendant attached "in an action against a
defendant not residing in the Philippine Islands".
On April 6, 1932, the respondent judge issued the writ of
attachment as prayed for, and the sheriff has attached all the
properties of the petitioner in the Philippine Islands. On the same date,
on the ex parte petition and nomination of the respondent, the
respondent judge appointed Manuel C. Grey receiver of said properties
of the petitioner, fixing his bond at P3,000.
Motions to dissolve said writ of attachment and receivership
were fled in the court below, supported by affidavits of the attorney in
fact for the petitioner in which it is recited, among other things, that
the petitioner is not indebted to the respondent in any sum whatever
nor has it in any way breached any contracts with the respondent or at
any time interfered in the management of its business in the Philippine
Islands as carried on by its agent, the respondent, and it has faithfully
complied with every condition of said contract; that the attachment of
the machinery and plants of the petitioner, as well as its other assets,
is highly prejudicial to it as it is unable to proceed with its business in
the Philippine Islands and irreparable loss will result to it unless such
attachment be raised; that the filing of said suit was malicious, without
foundation, and intended only to injure the petitioner and to
depreciate the value of its holdings in the Philippine Islands. It does
not appear that any answer was made to said motion in which said
allegations were denied or that any refuting evidence was offered.
PROVISIONAL REMEDIES Sec. 1-6 Rule 57 | 2014 SYLLABUS | 19

On June 20 1932, the court denied said motions to vacate the
attachment and receivership, declaring that the writ of attachment
conforms to section 424 of the Code of Civil Procedure.
The petitioner for certiorari prays that the writ of attachment
issued by the respondent judge on April 6, 1932, as well as the order
of the same date, appointing Manuel C. Grey receiver of the property
of the petitioner, be annulled.
The sufficiency of the application for the writ of attachment
assailed by the petitioner upon several grounds but we shall confine
ourselves to the consideration of the question whether or not
paragraph 2 of section 424 of the Code of Civil Procedure is applicable
to this petitioner.
The petitioner is a corporation duly organized under the laws of
the District of Columbia; it had complied with all the requirements of
the Philippine laws and the was duly licensed to do business in the
Philippine Islands on the date said writ of attachment was issues. The
petitioner was actively engaged in doing business in the Philippine
Islands and had considerable property therein, which consisted to its
manufacturing plant, machinery, merchandise and a large income
under valuable contracts, all of which property was in the possession
and under the control and management of the respondent Philippine
Advertising Corporation, as the agent of the petitioner, on the date
said attachment was levied. Considered from a practical and economic
viewpoint, its position in the business community was indistinguishable
from that of a domestic corporation.
Section 242 of the Code of Civil Procedure under which the
petitioner's property was attached, reads as follows:
Attachment. A plaintiff may, at the commencement
of his action, or at any time afterwards, have the property of
the defendant attached as security for the satisfaction of any
judgment that may be recovered, unless the defendant gives
security to pay such judgment, in the manner hereinafter
provided, in the following cases.
1. In all the cases mentioned in section four hundred and
twelve, providing for the arrest of a defendant. But the
plaintiff must make an election as to whether he will ask for
an order of arrest or an order of attachment; he shall not be
entitled to both orders;
2. In an action against a defendant not residing in the
Philippine Islands.
It may be observed at the outset that the words of section
424, supra, taken in their literal sense seem to refer to a physical
defendant who is capable of being "arrested" or who is "not residing in
the Philippine Islands". It is only by a fiction that it can be held that a
corporation is "not residing in the Philippine Islands". A corporation has
no home or residence in the sense in which those terms are applied to
natural persons. For practical purposes, a corporation is sometimes
said, in a metaphorical sense, to be "a resident" of a certain state or a
"citizen" of a certain country, which is usually the state or country by
which or under the laws of which it was created. But that fiction or
analogy between corporations and natural persons by no means
extends so far that it can be said that every statute applicable to
natural persons is applicable to corporations. Indeed, within the same
jurisdiction a corporation has been held to be a "citizen" of the state of
its creation for the purpose of determining the jurisdiction of the
Federal courts (Wisconsin vs. Pelican Insurance Co., 127 U. S., 265)
but not a "citizen" within the meaning of section 2 of article 4 of the
Constitution of the United States which provides that the citizens of
each state shall be entitled to all the privileges and immunities of
citizens of the several states (Paul vs. Virginia, 8 Wall., 169).
The question arises whether this petitioner, a foreign
corporation, shall, in a metaphorical sense, be deemed as "not residing
in the Philippine Islands" in the sense in which that expression would
apply to a natural person.
Having regard to the reason for the statute which is the
protection of the creditors of a non-resident, we are of the opinion that
there is not the same reason for subjecting a duly licensed foreign
corporation to the attachment of its property by a plaintiff under
section 424, paragraph 2, as may exist in the case of a natural person
not residing in the Philippine Islands. The law does not require the
latter, as it does the former, to appoint a resident agent for service of
process; nor to prove to the satisfaction of the Government before he
does business here, as the foreign corporation must prove, that he "is
solvent and in sound financial condition" (section 68, Act No. 1459, as
amended, the Corporation Law), or to produce evidence of "fair
dealing" (ibid.). He pays no license fee nor is his business subject at
any time to investigation by the Secretary of Finance and the
Governor-General; nor is his right to continue to do business revocable
by the Government (Cf. section 71, Act No. 1459 of the Corporation
Law). His books and papers are not liable to examination "at any time"
by the Attorney-General, the Insular Auditor, the Insular Treasurer, "or
any other officer of the Government" on the order of the Governor-
General (section 54, ibid.). He is not, like a foreign corporation "bound
by all laws, rules and regulations applicable to domestic corporations" .
. . (section 73, ibid.), which are designed to protect creditors and the
public. He can evade service of summons and other legal process, the
foreign corporation never. (Section 72, ibid.)
Corporations, as a rule, are less mobile than individuals. This is
a specially true of foreign corporations that are carrying on business by
proper authority in these Islands. They possess, as a rule, great capital
which is seeking lucrative and more or less permanent investment in
young and developing countries like our Philippines. Some of them
came here as far back as the Spanish regime and are still important
factors in our financial and industrial life. They are anything but "fly-
by-night" concerns. The latter, we believe, are effectually excluded
from our Islands both by our laws and by our geographical and
economic situation.
If, as we believe, section 424, paragraph 2, should not be held
applicable to foreign corporations duly licensed to do business in the
Philippine Islands both because the language and the reason of the
statute limit it to natural persons, we sustain and reinforce the
provisions of section 71 of the Corporation Law, Act No. 1459, which
provides in substance that if the Secretary of Finance or the Secretary
of Commerce and Communications and the Governor-General find a
duly licensed foreign corporation to be insolvent or that its continuance
in business will involve probable loss to its creditors, they may revoke
its license and "the Attorney-General shall take such proceedings as
may be proper to protect creditors and the public". Section 71, supra,
contemplates that the proceedings instituted by the Attorney-General
shall effect the protection of all creditors and the public equally.
Obviously, the benefit of that section will be minimized, if not entirely
defeated, if a creditor or a few creditors can obtain privileged liens by
writs of attachment based on the sole allegation, which is easily and
safely made, that the corporation is "not residing in the Philippine
Islands". (Cf. Kuenzle & Streiff vs. Villanueva, 41 Phil., 611.)lawphil.net
Paragraph 2 of section 424, supra does not apply to a domestic
corporation. Our laws and jurisprudence indicate a purpose to
assimilate foreign corporations, duly licensed to do business here, to
the status of domestic corporations. (Cf. Section 73, Act No. 1459, and
Marshall Wells Co. vs. Henry W. Elser & Co., 46 Phil., 70, 76; Yu Cong
Eng vs. Trinidad, 47 Phil., 385, 411.) We think it would be entirely out
of line with this policy should we make a discrimination against a
foreign corporation, like the petitioner, and subject its property to the
harsh writ of seizure by attachment when it has complied not only with
every requirement of law made especially of foreign corporations, but
in addition with every requirement of law made of domestic
corporations. (Section 73, supra.)
It is true that the majority of the states in the American Union
hold the contrary rule. But our situation is obviously very dissimilar
from that of a state in the American Union. There forty-eight states
and the central government, all creating corporations which do a
tremendous interstate business, are contiguous and separated by
imaginary lines. A higher degree of protection against irresponsible
corporations may be more necessary there than here. We have no
interstate business. Only the central government grants charters to
corporations. But even in the American Union there is a minority rule
which we regard as the better reasoned and the better suited to our
conditions, both geographical and economical, and more nearly in
harmony with the policy of our law both under the Spanish regime and
PROVISIONAL REMEDIES Sec. 1-6 Rule 57 | 2014 SYLLABUS | 20

since the American occupation. This minority rule is supported by the
following authorities: Brand vs. Auto Service Co. (New Jersey, 1907),
67 Atl., 19, 20; Mellor vs. Edward V. Hartford, Inc. (New Jersey, 1929),
146 Atl., 206; Charles Friend & Co. vs. Gold Smith & Co. (Illinois,
1923), 138 N. E., 185; Fullilove vs. Central State Bank (Louisiana,
1926), 107 So., 590.
In the present instance, a particularly monstrous result has
followed as s consequence of the granting of the writ attaching all of
the property of the petitioner on the sole allegation that it "is not
residing in the Philippine Islands". As the petitioner's business was a
going concern, which the sheriff, who levied the writ, obviously could
not manage, it became necessary on the same day for the court to
appoint a receiver. This receiver, as the demurrer admits, "was and is
an employee working under the president of the respondent Philippine
Advertising Corporation, so that to all intents and purposes, all the
property of the petitioner in the Philippine Islands was seized and
delivered into the hands of the respondent Philippine Advertising
Corporation."
The prayer of the petitioner is granted. The order and writ of
attachment complained of are annulled and set aside and the court
below is directed to vacate the order appointing Manuel C. Grey
receiver of the property of the petitioner and to require said Manuel C.
Grey to submit his final report at the earliest practicable date. Costs in
both instances to be borne by the respondent, Philippine Advertising
Corporation. So ordered.

G.R. Nos. 79926-27 October 17, 1991
STATE INVESTMENT HOUSE, INC. and STATE FINANCING
CENTER, INC., petitioners,
vs.
CITIBANK, N.A., BANK OF AMERICA, NT & SA, HONGKONG &
SHANGHAI BANKING CORPORATION, and the COURT OF
APPEALS, respondents.
The chief question in the appeal at bar is whether or not foreign banks
licensed to do business in the Philippines, may be
considered "residents of the Philippine Islands" within the meaning of
Section 20 of the Insolvency Law (Act No. 1956, as amended, eff. May
20, 1909) reading in part as follows: 1
An adjudication of insolvency may be made on the
petition of three or more creditors, residents of
the Philippine Islands, whose credits or demands
accrued in the Philippine Islands, and the amount
of which credits or demands are in the aggregate
not less than one thousand pesos: Provided, that
none of said creditors has become a creditor by
assignment, however made, within thirty days
prior to the filing of said petition. Such petition
must be filed in the Court of First Instance of the
province or city in which the debtor resides or has
his principal place of business, and must be
verified by at least three (3) of the petitioners. . . .
The foreign banks involved in the controversy are Bank of America NT
and SA, Citibank N.A. and Hongkong and Shanghai Banking
Corporation. On December 11, 1981, they jointly filed with the Court of
First Instance of Rizal a petition for involuntary insolvency of
Consolidated Mines, Inc. (CMI), which they amended four days
later. 2 The case was docketed as Sp. Proc. No. 9263 and assigned to
Branch 28 of the Court.
The petition for involuntary insolvency alleged:
1) that CMI had obtained loans from the three petitioning banks, and
that as of November/December, 1981, its outstanding obligations were
as follows:
a) In favor of Bank of America
(BA) P15,297,367.67
(as of December 10, 1981)
US$ 4,175,831.88
(b) In favor of Citibank US$
4,920,548.85
(as of December 10, 1981)
c) In favor of Hongkong &
Shanghai Bank US$
5,389,434.12
(as of November 30, 1981);
P6,233,969.24
2) that in November, 1981, State Investment House, Inc. (SIHI) and
State Financing Center, Inc. (SFCI) had separately instituted actions
for collection of sums of money and damages in the Court of First
Instance of Rizal against CMI, docketed respectively as Civil Cases
Numbered 43588 and 43677; and that on application of said plaintiffs,
writs of preliminary attachment had been issued which were executed
on "the royalty/profit sharing payments due CMI from Benguet
Consolidated Mining, Inc;" and
3) that CMI had "committed specific acts of insolvency as provided in
Section 20 of the Insolvency Law, to wit:
xxx xxx xxx
5. that he (CMI) has suffered his (CMI's) property
to remain under attachment or legal process for
three days for the purpose of hindering or
delaying or defrauding his (CMI's) creditors;
xxx xxx xxx
11. that being a merchant or tradesman he (CMI)
has generally defaulted in the payment of his
(CMI's) current obligations for a period of thirty
days; . . .
The petition was opposed by State Investment House, Inc. (SIHI) and
State Financing Center, Inc. (SFCI). 3 It claimed that:
1) the three petitioner banks had come to court with unclean hands in
that they filed the petition for insolvency alleging the CMI was
defrauding its creditors, and they wished all creditors to share in its
assets although a few days earlier, they had "received for the
account of CMI substantial payments aggregating P10,800,000.00;"
2) the Court had no jurisdiction because the alleged acts of insolvency
were false: the writs of attachment against CMI had remained in force
because there were "just, valid and lawful grounds for the(ir)
issuance," and CMI was not a "merchant or tradesman" nor had it
"generally defaulted in the payment of (its) obligations for a period of
thirty days . . . ;"
3) the Court had no jurisdiction to take cognizance of the petition for
insolvency because petitioners are notresident creditors of CMI in
contemplation of the Insolvency Law; and
4) the Court has no power to set aside the attachment issued in favor
of intervenors-oppositors SIHI and SFCI.
CMI filed its Answer to the petition for insolvency, asserting in the
main that it was not insolvent, 4 and later filed a "Motion to Dismiss
Based on Affirmative Defense of Petitioner's Lack of Capacity to Sue,"
echoing the theory of SIHI and SFCI that the petitioner banks are not
"Philippine residents." 5 Resolution on the motion was "deferred until
after hearing of the case on the merits" it appearing to the Court that
the grounds therefor did not appear to be indubitable. 6
SIHI and SFCI filed their own Answer-in-Intervention, 7 and served on
the three petitioner banks requests for admission of certain facts in
accordance with Rule 26 of the Rules of Court, 8 receiving a response
only from Hongkong & Shanghai Bank. 9
SIHI and SFCI then filed a Motion for Summary Judgment dated May
23, 1983 "on the ground that, based on the pleadings and admissions
on record, the trial court had no jurisdiction to adjudicate CMI
insolvent since the petitioners (respondent foreign banks) are not
"resident creditors" of CMI as required under the Insolvency
Law."10 Oppositions to the motion were filed, 11 to which a reply was
submitted. 12
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The Regional Trial Court 13 found merit in the motion for summary
judgment. By Order dated October 10, 1983, it rendered "summary
judgment dismissing the . . . petition for lack of jurisdiction over the
subject matter, with costs against petitioners." 14 It ruled that on the
basis of the "facts on record, as shown in the pleadings, motions and
admissions of the parties, an insolvency court could "not acquire
jurisdiction to adjudicate the debtor as insolvent if the creditors
petitioning for adjudication of insolvency are not "residents" of the
Philippines" citing a decision of the California Supreme Court which
it declared "squarely applicable especially considering that one of the
sources of our Insolvency Law is the Insolvency Act of California of
1895 . . . " And it declared that since petitioners had been merely
licensed to do business in the Philippines, they could not be deemed
residents thereof.
The three foreign banks sought to take an appeal from the Order of
October 10, 1983. They filed a notice of appeal and a record on
appeal. 15 SIHI and SFCI moved to dismiss their appeal claiming it
was attempted out of time. The Trial Court denied the motion.
SIHI and SFCI filed with this Court a petition for certiorari and
prohibition (G.R. NO. 66449), impugning that denial. The Court
dismissed the petition and instead required the three banks to file a
petition for review in accordance with Rule 45 of the Rules of
Court. 16 This the banks did (their petition was docketed as G.R. No.
66804). However, by Resolution dated May 16, 1984, the court
referred the petition for review to the Intermediate Appellate Court,
where it was docketed as AC SP-03674. 17
In the meantime, the Trial Court approved on May 3, 1985 the banks'
record on appeal and transmitted it to this Court, where it was
recorded as UDK-6866. As might have been expected, this Court
required the banks to file a petition for review under Rule 45, but they
asked to be excused from doing so since they had already filed such a
petition, which had been referred to the Intermediate Appellate Court
and was there pending as AC-G.R. No. SP 03674, supra. This Court
then also referred UDK-6866 to the Intermediate Appellate Court
where it was docketed as AC-G.R. No. CV 07830.
Both referred cases, AC-G.R. No. SP 03674 and AC-G.R. No. CV 07830,
were consolidated by Resolution of the Court of Appeals dated April 9,
1986, and Decision thereon was promulgated on July 14, 1987 by the
Fifteenth Division of said Court. 18
The Appellate Court reversed the Trial Court's Order of October 10,
1983 and remanded the case to it for further proceedings. It ruled:
1) that the purpose of the Insolvency Law was "to convert the assets
of the bankrupt in cash for distribution among creditors, and then to
relieve the honest debtor from the weight of oppressive indebtedness
and permit him to start life anew, free from the obligations and
responsibilities consequent upon business misfortunes;" 19 and that it
was "crystal clear" that the law was "designed not only for the benefit
of the creditors but more importantly for the benefit of the debtor
himself," the object being "to provide not only for the suspension of
payments and the protection of creditors but also the discharge of
insolvent honest debtors to enable them to have a fresh start;"
2) that the Trial Court had placed "a very strained and restrictive
interpretation of the term "resident," as to exclude foreign banks which
have been operating in this country since the early part of the
century," and "the better approach . . . would have been to harmonize
the provisions . . . (of the Insolvency Law) with similar provisions of
other succeeding laws, like the Corporation Code of the Philippines, the
General Banking Act, the Offshore Banking Law and the National
Internal Revenue Code in connection with or related to their doing
business in the Philippines;"
3) that in light of said statutes, the three banks "are in truth and in
fact considered as "residents" of the Philippines for purposes of doing
business in the Philippines and even for taxation matters;"
4) that the banks had "complied with all the laws, rules and
regulations (for doing business in the country) and have been doing
business in the Philippines for many years now;" that the authority
granted to them by the Securities and Exchange Commission upon
orders of the Monetary Board "covers not only transacting banking
business . . . but likewise maintaining suits "for recovery of any debt,
claims or demand whatsoever," and that their petition for involuntary
insolvency was "nothing more than a suit aimed at recovering a debt
granted by them to Consolidated Mines, Inc., or at least a portion
thereof;"
4) that to deprive the foreign banks of their right to proceed against
their debtors through insolvency proceedings would "contravene the
basic standards of equity and fair play, . . . would discourage their
operations in economic development projects that create not only jobs
for our people but also opportunities for advancement as a nation;"
and
5) that the terms "residence" and "domicile" do not mean the same
thing, and that as regards a corporation, it is generally deemed an
"inhabitant" of the state under whose law it is incorporated, and has a
"residence" wherever it conducts its ordinary business, and may have
its legal "domicile" in one place and "residence" in another.
SIHI and SFCI moved for reconsideration and then, when rebuffed,
took an appeal to this Court. Here, they argue that the Appellate
Court's judgment should be reversed because it failed to declare that

1) the failure of the three foreign banks to allege under oath in their
petition for involuntary insolvency that they are Philippine residents,
wishing only to "be considered Philippine residents," is fatal to their
cause;
2) also fatal to their cause is their failure to prove, much less allege,
that under the domiciliary laws of the foreign banks, a Philippine
corporation is allowed the reciprocal right to petition for a debtor's
involuntary insolvency;
3) in fact and in law, the three banks are not Philippine residents
because:
a) corporations have domicile and residence only in the state
of their incorporation or in the place designated by law,
although for limited and exclusive purposes, other states
may consider them as residents;
b) juridical persons may not have residence separate from
their domicile;
4) actually, the non-resident status of the banks within the context of
the Insolvency Law is confirmed by other laws;
5) the license granted to the banks to do business in the Philippines
does not make them residents;
6) no substantive law explicitly grants foreign banks the power to
petition for the adjudication of the Philippine corporation as a
bankrupt;
7) the Monetary Board can not appoint a conservator or receiver for a
foreign bank or orders its liquidation having only the power to revoke
its license, subject to such proceedings as the Solicitor General may
thereafter deem proper to protect its creditors;
8) the foreign banks are not denied the right to collect their credits
against Philippine debtors, only the right to "petition for the harsh
remedy of involuntary insolvency" not being conceded to them;
9) said banks have come to court with unclean hands, their filing of
the petition for involuntary insolvency being an attempt to defeat
validly acquired rights of domestic corporations.
The concept of a foreign corporation under Section 123 of the
Corporation Code is of "one formed, organized or existing under laws
other than those of the Philippines and . . . (which) laws allow Filipino
citizens and corporations to do business . . . ." There is no question
that the three banks are foreign corporations in this sence, with
principal offices situated outside of the Philippines. There is no
question either that said banks have been licensed to do business in
this country and have in fact been doing business here for many years,
through branch offices or agencies, including "foreign currency deposit
units;" in fact, one of them, Hongkong & Shanghai Bank has been
doing business in the Philippines since as early as 1875.
PROVISIONAL REMEDIES Sec. 1-6 Rule 57 | 2014 SYLLABUS | 22

The issue is whether these Philippine branches or units may be
considered "residents of the Philippine Islands" as that term is used in
Section 20 of the Insolvency Law, supra, 20 or residents of the state
under the laws of which they were respectively incorporated. The
answer cannot be found in the Insolvency Law itself, which contains
no definition of the term, resident, or any clear indication of its
meaning. There are however other statutes, albeit of subsequent
enactment and effectivity, from which enlightening notions of the term
may be derived.
The National Internal Revenue Code declares that the term "'resident
foreign corporation' applies to a foreign corporation engaged in trade
or business within the Philippines," as distinguished from a " "non-
resident foreign corporation" . . . (which is one) not engaged in trade
or business within the Philippines." 21
The Offshore Banking Law, Presidential Decree No. 1034, states "that
branches, subsidiaries, affiliation, extension offices or any other units
of corporation or juridical person organized under the laws of any
foreign country operating in the Philippines shall be considered
residents of the Philippines." 22
The General Banking Act, Republic Act No. 337, places "branches and
agencies in the Philippines of foreign banks . . . (which are) called
Philippine branches," in the same category as "commercial banks,
savings associations, mortgage banks, development banks, rural
banks, stock savings and loan associations" (which have been formed
and organized under Philippine laws), making no distinction between
the former and the later in so far, as the terms "banking institutions"
and "bank" are used in the Act, 23 declaring on the contrary that in
"all matters not specifically covered by special provisions applicable
only to foreign banks, or their branches and agencies in the
Philippines, said foreign banks or their branches and agencies lawfully
doing business in the Philippines "shall be bound by all laws, rules, and
regulations applicable to domestic banking corporations of the same
class, except such laws, rules and regulations as provided for the
creation, formation, organization, or dissolution of corporations or as
fix the relation, liabilities, responsibilities, or duties of members,
stockholders or officers or corporations." 24
This Court itself has already had occasion to hold 25 that a foreign
corporation licitly doing business in the Philippines, which is a
defendant in a civil suit, may not be considered a non-resident within
the scope of the legal provision authorizing attachment against a
defendant not residing in the Philippine Islands;" 26 in other words, a
preliminary attachment may not be applied for and granted solely on
the asserted fact that the defendant is a foreign corporation authorized
to do business in the Philippines and is consequently and
necessarily, "a party who resides out of the Philippines."
Parenthetically, if it may not be considered as a party not residing in
the Philippines, or as a party who resides out of the country, then,
logically, it must be considered a party who does reside in the
Philippines, who is a resident of the country. Be this as it may, this
Court pointed out that:
. . . Our laws and jurisprudence indicate a purpose
to assimilate foreign corporations, duly licensed to
do business here, to the status of domestic
corporations. (Cf. Section 73, Act No. 1459, and
Marshall Wells Co. vs. Henry W. Elser & Co., 46
Phil. 70, 76; Yu; Cong Eng vs. Trinidad, 47 Phil.
385, 411) We think it would be entirely out of line
with this policy should we make a discrimination
against a foreign corporation, like the petitioner,
and subject its property to the harsh writ of
seizure by attachment when it has complied not
only with every requirement of law made specially
of foreign corporations, but in addition with every
requirement of law made of domestic
corporations. . . . .
Obviously, the assimilation of foreign corporations authorized to do
business in the Philippines "to the status ofdomestic corporations,"
subsumes their being found and operating as corporations,
hence, residing, in the country.
The same principle is recognized in American law: that the "residence
of a corporation, if it can be said to have a residence, is necessarily
where it exercises corporate functions . . . ;" that it is .considered as
dwelling "in the place where its business is done . . . ," as being
"located where its franchises are exercised . . . ," and as being
"present where it is engaged in the prosecution of the corporate
enterprise;" that a "foreign corporation licensed to do business in a
state is a resident of any country where it maintains an office or agent
for transaction of its usual and customary business for venue
purposes;" and that the "necessary element in its signification is
locality of existence." 27 Courts have held that "a domestic
corporation is regarded as having a residence within the state at any
place where it is engaged in the particulars of the corporate enterprise,
and not only at its chief place or home office;" 28 that "a corporation
may be domiciled in one state and resident in another; its legal domicil
in the state of its creation presents no impediment to its residence in a
real and practical sense in the state of its business activities." 29
The foregoing propositions are in accord with the dictionary concept of
residence as applied to juridical persons, a term which appears to
comprehend permanent as well as temporary residence.
The Court cannot thus accept the petitioners' theory that corporations
may not have a residence (i.e., the place where they operate and
transact business) separate from their domicile (i.e., the state of their
formation or organization), and that they may be considered by other
states as residents only for limited and exclusive purposes. Of course,
as petitioners correctly aver, it is not really the grant of a license to a
foreign corporation to do business in this country that makes it a
resident; the license merely gives legitimacy to its doing business here.
What effectively makes such a foreign corporation a resident
corporation in the Philippines is its actually being in the Philippines and
licitly doing business here, "locality of existence" being, to repeat, the
"necessary element in . . . (the) signification" of the term, resident
corporation.
Neither can the Court accept the theory that the omission by the banks
in their petition for involuntary insolvency of an explicit and categorical
statement that they are "residents of the Philippine Islands," is fatal to
their cause. In truth, in light of the concept of resident foreign
corporations just expounded, when they alleged in that petition that
they are foreign banking corporations, licensed to do business in the
Philippines, and actually doing business in this Country through branch
offices or agencies, they were in effect stating that they are resident
foreign corporations in the Philippines.
There is, of course, as petitioners argue, no substantive law explicitly
granting foreign banks the power to petition for the adjudication of a
Philippine corporation as a bankrupt. This is inconsequential, for
neither is there any legal provision expressly giving domestic banks the
same power, although their capacity to petition for insolvency can
scarcely be disputed and is not in truth disputed by petitioners. The
law plainly grants to a juridical person, whether it be a bank or not or
it be a foreign or domestic corporation, as to natural persons as well,
such a power to petition for the adjudication of bankruptcy of any
person, natural or juridical, provided that it is a resident corporation
and joins at least two other residents in presenting the petition to the
Bankruptcy Court.
The petitioners next argue that "Philippine law is emphatic that only
foreign corporations whose own laws give Philippine nationals
reciprocal rights may do business in the Philippines." As basis for the
argument they invoke Section 123 of the Corporation Code which,
however, does not formulate the proposition in the same way. Section
123 does not say, as petitioners assert, that it is required that the laws
under which foreign corporations are formed "give Philippine nationals,
reciprocal rights." What it does say is that the laws of the country or
state under which a foreign corporation is "formed, organized or
existing . . . allow Filipino citizens and corporations to do business in
its own country or state," which is not quite the same thing. Now, it
seems to the Court that there can be no serious debate about the fact
that the laws of the countries under which the three (3) respondent
banks were formed or organized (Hongkong and the United States) do
"allow Filipino citizens and corporations to do business" in their own
territory and jurisdiction. It also seems to the Court quite apparent
PROVISIONAL REMEDIES Sec. 1-6 Rule 57 | 2014 SYLLABUS | 23

that the Insolvency Law contains no requirement that the laws of the
state under which a foreign corporation has been formed or organized
should grant reciprocal rights to Philippine citizens to apply for
involuntary insolvency of a resident or citizen thereof. The petitioners'
point is thus not well taken and need not be belabored.
That the Monetary Board can not appoint a conservator or receiver for
a foreign bank or order its liquidation having only the power to revoke
its license, subject to such proceedings as the Solicitor General may
thereafter deem proper to protect its creditors, which is another point
that petitioners seek to make, is of no moment. It has no logical
connection to the matter of whether or not the foreign bank may
properly ask for a judicial declaration of the involuntary insolvency of a
domestic corporation, which is the issue at hand. The fact is, in any
event, that the law is not lacking in sanctions against foreign banks or
powerless to protect the latter's creditors.
The petitioners contend, too, that the respondent banks have come to
court with unclean hands, their filing of the petition for involuntary
insolvency being an attempt to defeat validly acquired rights of
domestic corporations. The Court wishes to simply point out that the
effects of the institution of bankruptcy proceedings on all the creditors
of the alleged bankrupt are clearly spelled out by the law, and will be
observed by the Insolvency Court regardless of whatever motives
apart from the desire to share in the assets of the insolvent in
satisfying its credits that the party instituting the proceedings might
have.
Still another argument put forth by the petitioners is that the three
banks' failure to incorporate their branches in the Philippines into new
banks in accordance with said Section 68 of the General Banking Act
connotes an intention on their part to continue as residents of their
respective states of incorporation and not to be regarded as residents
of the Philippines. The argument is based on an incomplete and
inaccurate quotation of the cited Section. What Section 68 required of
a "foreign bank presently having branches and agencies in the
Philippines, . . . within one year from the effectivity" of the General
Banking Act, was to comply with any of three (3) options, not merely
with one sole requirement. These three (3) options are the following:
1) (that singled out and quoted by the
petitioners, i.e.:) "incorporate its branch or
branches into a new bank in accordance with
Philippine laws . . . ; or
2) "assign capital permanently to the local branch
with the concurrent maintenance of a 'net due to'
head office account which shall include all net
amounts due to other branches outside the
Philippines in an amount which when added to the
assigned capital shall at all times be not less than
the minimum amount of capital accounts required
for domestic commercial banks under section
twenty-two of this Act;" or
3) "maintain a "net due to" head office account
which shall include all net amounts due to other
branches outside the Philippines, in an amount
which shall not be less than the minimum amount
of capital accounts required for domestic
commercial banks under section twenty-two of
this Act."
The less said about this argument then, the better.
The petitioners allege that three days before respondent banks filed
their petition for involuntary insolvency against CMI, they received
from the latter substantial payments on account in the aggregate
amount of P6,010,800.00, with the result that they were "preferred in
the distribution of CMI's assets thereby defrauding other creditors of
CMI." Non sequitur. It is in any case a circumstance that the
Bankruptcy Court may well take into consideration in determining the
manner and proportion by which the assets of the insolvent company
shall be distributed among its creditors; but it should not be
considered a ground for giving the petition for insolvency short shrift.
Moreover, the payment adverted to does not appear to be all that
large. The total liabilities of CMI to the three respondent banks as of
December, 1981 was P21,531,336.91, and US$14,485,814.85.
Converted into Philippine currency at the rate of P7.899 to the dollar,
the average rate of exchange during December, 1981, 30the dollar
account would be P114,423,451.50. Thus, the aggregate liabilities of
CMI to the banks, expressed in Philippine currency, was
P135,954,788.41 as of December, 1981, and therefore the payment to
them of P6,010,800.00 constituted only some 4.42% of the total
indebtedness.
WHEREFORE, the petition is DENIED and the challenged Decision of
the Court of Appeals is AFFIRMED in toto, with costs against the
petitioners.
SO ORDERED.

G.R. No. L-825 July 20, 1948
ROMAN MABANAG, plaintiff-appellant,
vs.
JOSEPH M. GALLEMORE, defendant-appellee.
This case, here on appeal from an order dismissal by the Court of First
Instance of Occidental Misamis, raises the question of the court's
jurisdiction. More specifically, the question is whether the action is in
personam or one in rem. The trial court opined that it is the first and
that it "has no authority nor jurisdiction to render judgment against
the herein defendant, Joseph M. Gallemore for being a non-resident.
The purpose of the action is to recover P735.18, an amount said to
have been paid by the plaintiff to the defendant for two parcels of land
whose sale was afterward annulled. The defendant is said to be
residing in Los Angeles, California, U. S. A. He has no property in the
Philippine except an alleged debt owing him by a resident of the
municipality of Occidental Misamis. This debt, upon petition of the
plaintiff, after the filing of the complaint and before the suit was
dismissed, was attached to the extent of plaintiff's claim for the
payment of which the action was brought. But the attachment was
dissolved in the same order dismissing the case.
It was Atty. Valeriano S. Kaamino who has amicus curi filed the
motion to dismiss and to set aside the attachment. There is no
appearance before this Court to oppose the appeal.
Section 2, Rule 5, of the Rules of Court provides:
If any of the defendants does not reside and is not found in
the Philippines, and the action effects the personal status of
the plaintiff, or any property of the defendant located in the
Philippines, the action may be commenced and tried in the
province where the plaintiff resides or the property, or any
portion thereof, is situated or found.
The Philippine leading cases in which this Rule, or its counterpart in
the former Code of Civil Procedure, section 377 and 395, were cited
and applied, are Banco Espaol-Filipino vs. Palanca, 37 Phil. 921,
and Slade Perkins vs. Dizon, 40 Off. Gaz., [3d Suppl.], No. 7, p. 216.
The gist of this Court's ruling in these cases, in so far as it is relevant
to the present issues, is given in I Moran's Comments on the Rules of
Court, 2d Ed., 105:
As a general rule, when the defendant is not residing and is
not found in the Philippines, the Philippine courts cannot try
any case against him because of the impossibility of
acquiring jurisdiction over his person, unless he voluntarily
appears in court. But, when the action affects the personal
status of the plaintiff residing in the Philippines, or is
intended to seize or dispose of any property, real or
personal, of the defendant, located in the Philippines, it may
be validly tried by the Philippine courts, for then, they have
jurisdiction over the res, i.e., the personal status of the
plaintiff or the property of the defendant, and their
jurisdiction over the person of the non-resident defendant is
not essential. Venue in such cases may be laid in the
province where the plaintiff whose personal status is in
question resides, or where the property of the defendant or
a part thereof involved in the litigation is located.
PROVISIONAL REMEDIES Sec. 1-6 Rule 57 | 2014 SYLLABUS | 24

Literally this Court said:
Jurisdiction over the property which is the subject of
litigation may result either from a seizure of the property
under legal process, whereby it is brought into the actual
custody of the law, or it may result from the institution of
legal proceedings wherein, under special provisions of law,
the power of the court over the property is recognized and
made effective. In the latter case the property, though at all
times within the potential power of the court, may never be
taken into actual custody at all. An illustration of the
jurisdiction acquired by actual seizure is found in attachment
proceedings, where the property is seized at the beginning
of the action, or some subsequent stage of its progress, and
held to abide the final event of the litigation. An illustration
of what we term potential jurisdiction over the res, is found
in the proceeding to register the title of land under our
system for the registration of land. Here the court, without
taking actual physical control over the property assumes, at
the instance of some person claiming to be owner, to
exercise a jurisdiction in rem over the property and to
adjudicate the title in favor of the petitioner against all the
world. (Banco Espaol-Filipino vs. Palanca, supra, 927-928.).
In an ordinary attachment proceeding, if the defendant is
not personally served, the preliminary seizure is to be
considered necessary in order to confer jurisdiction upon the
court. In this case the lien on the property is acquired by the
seizure; and the purpose of the proceeding is to subject the
property to that lien. If a lien already exists, whether created
by mortgage, contract, or statute, the preliminary seizure is
not necessary; and the court proceeds to enforce such lien
in the manner provided by law precisely as though the
property had been seized upon attachment. (Roller vs. Holly,
176 U.S., 398, 405; 44 Law. ed., 520.) It results that the
mere circumstance that in an attachment the property may
be seized at the inception of the proceedings, while in the
foreclosure suit it is not taken into legal custody until the
time comes for the sale, does not materially affect the
fundamental principle involved in both cases, which is that
the court is here exercising a jurisdiction over the property in
a proceeding directed essentially in rem. (Id., 929-930.).
When, however, the action relates to property located in the
Philippines, the Philippine courts may validly try the case,
upon the principles that a "State, through its tribunals, may
subject property situated within its limit owned by non-
residents to the payment of the demand of its own citizens
against them; and the exercise of this jurisdiction in no
respect infringes upon the sovereignty of the State were the
owners are domiciled. Every State owes protection to its
own citizens; and, when non-residents deal with them, it is a
legitimate and just exercise of authority to hold any
appropriate any property owned by such non-residents to
satisfy the claims of its citizens. It is in virtue of the State's
jurisdiction over the property of the non-resident situated
within its limits that its tribunals can inquire into the non-
resident's obligations to its own citizens, and the inquiry can
then be carried only to the extent necessary to control
disposition of the property. If the non-resident has no
property in the State, there is nothing upon which the
tribunals can adjudicate. (Slade Perkins vs. Dizon, 40 Off.
Gaz. [3d Supplement], No. 7, p. 216.).
A fuller statement of the principle whereunder attachment or
garnishment of property of a non-resident defendant confers
jurisdiction on the court in an otherwise personal action, appears in
two well known and authoritative works:
The main action in an attachment or garnishment suit is in
rem until jurisdiction of the defendant is secured. Thereafter,
it is in personam and also in rem, unless jurisdiction of the
res is lost as by dissolution of the attachment. If jurisdiction
of the defendant is acquired but jurisdiction of the res is lost,
it is then purely in personam. . . a proceeding against
property without jurisdiction of the person of the defendant
is in substance a proceeding in rem; and where there is
jurisdiction of the defendant, but the proceedings against
the property continues, that proceedings is none the less
necessarily in rem, although in form there is but a single
proceeding. (4 Am. Jur., 556-557.)
As the remedy is administered in some states, the theory of
an attachment, whether it is by process against or to subject
the property or effects of a resident or non-resident of the
state, is that it partakes essentially of the nature and
character of the proceeding in personam and not of a
proceeding in rem. And if the defendant appears the action
proceeds in accordance with the practice governing
proceedings in personam. But were the defendant fails to
appear in the action, the proceeding is to be considered as
one in the nature of a proceeding in rem. And where the
court acts directly on the property, the title thereof being
charged by the court without the intervention of the party,
the proceeding unquestionably is one in rem in the fullest
meaning of the term.
In attachment proceedings against a non-resident defendant
where personal service on him is lacking, it is elementary
that the court must obtain jurisdiction of the property of the
defendant. If no steps have been taken to acquire
jurisdiction of the defendant's person, and he has not
appeared and answered or otherwise submitted himself to
the jurisdiction of the court, the court is without jurisdiction
to render judgment until there has been a lawful seizure of
property owned by him within the jurisdiction of the court.
(2 R. C. L., 800-804.).
Tested by the foregoing decisions and authorities, the Court has
acquired jurisdiction of the case at bar by virtue of the attachment of
the defendant's credit. Those authorities and decisions, so plain and
comprehensive as to make any discussion unnecessary, are in
agreement that though no jurisdiction is obtained over the debtor's
person, the case may proceed to judgment if there is property in the
custody of the court that can be applied to its satisfaction.
It is our judgment that the court below erred in dismissing the case
and dissolving the attachment; and it is ordered that, upon petition of
the plaintiff, it issue a new writ of attachment and then proceed to
trial. The costs of this appeal will be charged to defendant and
appellee.

G.R. No. 115678 February 23, 2001
PHILIPPINES BANK OF COMMUNICATIONS, petitioner,
vs.
HON. COURT OF APPEALS and BERNARDINO
VILLANUEVA, respondents.
x ---------------------------------------- x
G.R. No. 119723 February 23, 2001
PHILIPPINE BANK OF COMMUNICATIONS, petitioner,
vs.
HON. COURT OF APPEALS and FILIPINAS TEXTILE MILLS,
INC., respondents.
YNARES-SANTIAGO, J.:
Before us are consolidated petitions for review both filed by Philippine
Bank of Communications; one against the May 24, 1994 Decision of
respondent Court of Appeals in CA-G.R. SP No. 32863
1
and the other
against its March 31, 1995 Decision in CA-G.R. SP No. 32762.
2
Both
Decisions set aside and nullified the August 11, 1993 Order
3
of the
Regional Trial Court of Manila, Branch 7, granting the issuance of a
writ of preliminary attachment in Civil Case No. 91-56711.
The case commenced with the filing by petitioner, on April 8, 1991, of
a Complaint against private respondent Bernardino Villanueva, private
respondent Filipinas Textile Mills and one Sochi Villanueva (now
deceased) before the Regional Trial Court of Manila. In the said
PROVISIONAL REMEDIES Sec. 1-6 Rule 57 | 2014 SYLLABUS | 25

Complaint, petitioner sought the payment of P2,244,926.30
representing the proceeds or value of various textile goods, the
purchase of which was covered by irrevocable letters of credit and
trust receipts executed by petitioner with private respondent Filipinas
Textile Mills as obligor; which, in turn, were covered by surety
agreements executed by private respondent Bernardino Villanueva and
Sochi Villanueva. In their Answer, private respondents admitted the
existence of the surety agreements and trust receipts but countered
that they had already made payments on the amount demanded and
that the interest and other charges imposed by petitioner were
onerous.
On May 31, 1993, petitioner filed a Motion for Attachment,
4
contending
that violation of the trust receipts law constitutes estafa, thus
providing ground for the issuance of a writ of preliminary attachment;
specifically under paragraphs "b" and "d," Section 1, Rule 57 of the
Revised Rules of Court. Petitioner further claimed that attachment was
necessary since private respondents were disposing of their properties
to its detriment as a creditor. Finally, petitioner offered to post a bond
for the issuance of such writ of attachment.
The Motion was duly opposed by private respondents and, after the
filing of a Reply thereto by petitioner, the lower court issued its August
11, 1993 Order for the issuance of a writ of preliminary attachment,
conditioned upon the filing of an attachment bond. Following the
denial of the Motion for Reconsideration filed by private respondent
Filipinas Textile Mills, both private respondents filed separate petitions
for certiorari before respondent Court assailing the order granting the
writ of preliminary attachment.1wphi1.nt
Both petitions were granted, albeit on different grounds. In CA-G.R. SP
No. 32762, respondent Court of Appeals ruled that the lower court was
guilty of grave abuse of discretion in not conducting a hearing on the
application for a writ of preliminary attachment and not requiring
petitioner to substantiate its allegations of fraud, embezzlement or
misappropriation. On the other hand, in CA-G.R. SP No. 32863,
respondent Court of Appeals found that the grounds cited by petitioner
in its Motion do not provide sufficient basis for the issuance of a writ of
preliminary attachment, they being mere general averments.
Respondent Court of appeals held that neither embezzlement,
misappropriation nor incipient fraud may be presumed; they must be
established in order for a writ of preliminary attachment to issue.
Hence, the instant consolidated
5
petitions charging that respondent
Court of Appeals erred in
"1. Holding that there was no sufficient basis for the
issuance of the writ of preliminary attachment in spite of the
allegations of fraud, embezzlement and misappropriation of
the proceeds or goods entrusted to the private respondents;
2. Disregarding the fact that the failure of FTMI and
Villanueva to remit the proceeds or return the goods
entrusted, in violation of private respondents' fiduciary duty
as entrustee, constitute embezzlement or misappropriation
which is a valid ground for the issuance of a writ of
preliminary attachment."
6

We find no merit in the instant petitions.
To begin with, we are in accord with respondent Court of Appeals in
CA-G.R. SP No. 32863 that the Motion for Attachment filed by
petitioner and its supporting affidavit did not sufficiently establish the
grounds relied upon in applying for the writ of preliminary attachment.
The Motion for Attachment of petitioner states that
1. The instant case is based on the failure of defendants as
entrustee to pay or remit the proceeds of the goods
entrusted by plaintiff to defendant as evidenced by the trust
receipts (Annexes "B", "C" and "D" of the complaint), nor to
return the goods entrusted thereto, in violation of their
fiduciary duty as agent or entrustee;
2. Under Section 13 of P.D. 115, as amended, violation of
the trust receipt law constitute(s) estafa (fraud and/or
deceit) punishable under Article 315 par. 1[b] of the Revised
Penal Code;
3. On account of the foregoing, there exist(s) valid ground
for the issuance of a writ of preliminary attachment under
Section 1 of Rule 57 of the Revised Rules of Court
particularly under sub-paragraphs "b" and "d", i.e. for
embezzlement or fraudulent misapplication or conversion of
money (proceeds) or property (goods entrusted) by an
agent (entrustee) in violation of his fiduciary duty as such,
and against a party who has been guilty of fraud in
contracting or incurring the debt or obligation;
4. The issuance of a writ of preliminary attachment is
likewise urgently necessary as there exist(s) no sufficient
security for the satisfaction of any judgment that may be
rendered against the defendants as the latter appears to
have disposed of their properties to the detriment of the
creditors like the herein plaintiff;
5. Herein plaintiff is willing to post a bond in the amount
fixed by this Honorable Court as a condition to the issuance
of a writ of preliminary attachment against the properties of
the defendants.
Section 1 (b) and (d), Rule 57 of the then controlling Revised Rules of
Court, provides, to wit
SECTION 1. Grounds upon which attachment may issue. A
plaintiff or any proper party may, at the commencement of
the action or at any time thereafter, have the property of the
adverse party attached as security for the satisfaction of any
judgment that may be recovered in the following cases:
x x x x x x x x x
(b) In an action for money or property embezzled or
fraudulently misapplied or converted to his us by a public
officer, or an officer of a corporation, or an attorney, factor,
broker, agent or clerk, in the course of his employment as
such, or by any other person in a fiduciary capacity, or for a
willful violation of duty;
x x x x x x x x x
(d) In an action against a party who has been guilty of fraud
in contracting the debt or incurring the obligation upon
which the action is brought, or in concealing or disposing of
the property for the taking, detention or conversion of which
the action is brought;
x x x x x x x x x
While the Motion refers to the transaction complained of as involving
trust receipts, the violation of the terms of which is qualified by law as
constituting estafa, it does not follow that a writ of attachment can
and should automatically issue. Petitioner cannot merely cite Section
1(b) and (d), Rule 57, of the Revised Rules of Court, as mere
reproduction of the rules, without more, cannot serve as good ground
for issuing a writ of attachment. An order of attachment cannot be
issued on a general averment, such as one ceremoniously quoting
from a pertinent rule.
7

The supporting Affidavit is even less instructive. It merely states, as
follows
I, DOMINGO S. AURE, of legal age, married, with address at
No. 214-216 Juan Luna Street, Binondo, Manila, after having
been sworn in accordance with law, do hereby depose and
say, THAT:
1. I am the Assistant Manager for Central Collection
Units Acquired Assets Section of the plaintiff, Philippine Bank
of Communications, and as such I have caused the
preparation of the above motion for issuance of a writ of
preliminary attachment;
2. I have read and understood its contents which are
true and correct of my own knowledge;
3. There exist(s) sufficient cause of action against the
defendants in the instant case;
PROVISIONAL REMEDIES Sec. 1-6 Rule 57 | 2014 SYLLABUS | 26

4. The instant case is one of those mentioned in Section
1 of Rule 57 of the Revised Rules of Court wherein a writ of
preliminary attachment may be issued against the
defendants, particularly subparagraphs "b" and "d" of said
section;
5. There is no other sufficient security for the claim
sought to be enforced by the instant case and the amount
due to herein plaintiff or the value of the property sought to
be recovered is as much as the sum for which the order for
attachment is granted, above all legal counterclaims.
Again, it lacks particulars upon which the court can discern whether or
not a writ of attachment should issue.
Petitioner cannot insist that its allegation that private respondents
failed to remit the proceeds of the sale of the entrusted goods nor to
return the same is sufficient for attachment to issue. We note that
petitioner anchors its application upon Section 1(d), Rule 57. This
particular provision was adequately explained in Liberty Insurance
Corporation v. Court of Appeals,
8
as follows
To sustain an attachment on this ground, it must be shown
that the debtor in contracting the debt or incurring the
obligation intended to defraud the creditor. The fraud must
relate to the execution of the agreement and must have
been the reason which induced the other party into giving
consent which he would not have otherwise given. To
constitute a ground for attachment in Section 1 (d), Rule 57
of the Rules of Court, fraud should be committed upon
contracting the obligation sued upon. A debt is
fraudulently contracted if at the time of contracting it
the debtor has a preconceived plan or intention not
to pay, as it is in this case. Fraud is a state of mind and
need not be proved by direct evidence but may be inferred
from the circumstances attendant in each case(Republic v.
Gonzales, 13 SCRA 633). (Emphasis ours)
We find an absence of factual allegations as to how the fraud alleged
by petitioner was committed. As correctly held by respondent Court of
Appeals, such fraudulent intent not to honor the admitted obligation
cannot be inferred from the debtor's inability to pay or to comply with
the obligations.
9
On the other hand, as stressed, above, fraud may be
gleaned from a preconceived plan or intention not to pay. This does
not appear to be so in the case at bar. In fact, it is alleged by private
respondents that out of the total P419,613.96 covered by the subject
trust receipts, the amount of P400,000.00 had already been paid,
leaving only P19,613.96 as balance. Hence, regardless of the
arguments regarding penalty and interest, it can hardly be said that
private respondents harbored a preconceived plan or intention not to
pay petitioner.
The Court of Appeals was correct, therefore, in its finding in CA-G.R.
SP No. 32863 that neither petitioner's Motion or its supporting Affidavit
provides sufficient basis for the issuance of the writ of attachment
prayed for.
We also agree with respondent Court of Appeals in CA-G.R. SP No.
32762 that the lower court should have conducted a hearing and
required private petitioner to substantiate its allegations of fraud,
embezzlement and misappropriation.
To reiterate, petitioner's Motion for Attachment fails to meet the
standard set in D.P. Lub Oil Marketing Center, Inc. v. Nicolas,
10
in
applications for attachment. In the said case, this Court cautioned
The petitioner's prayer for a writ of preliminary attachment
hinges on the allegations in paragraph 16 of the complaint
and paragraph 4 of the affidavit of Daniel Pe which are
couched in general terms devoid of particulars of time,
persons and places to support support such a serious
assertion that "defendants are disposing of their properties
in fraud of creditors." There is thus the necessity of giving to
the private respondents an opportunity to ventilate their side
in a hearing, in accordance with due process, in order to
determine the truthfulness of the allegations. But no hearing
was afforded to the private respondents the writ having
been issued ex parte. A writ of attachment can only be
granted on concrete and specific grounds and not on general
averments merely quoting the words of the rules.
As was frowned upon in D.P. Lub Oil Marketing Center, Inc.,
11
not only
was petitioner's application defective for having merely given general
averments; what is worse, there was no hearing to afford private
respondents an opportunity to ventilate their side, in accordance with
due process, in order to determine the truthfulness of the allegations
of petitioner. As already mentioned, private respondents claimed that
substantial payments were made on the proceeds of the trust receipts
sued upon. They also refuted the allegations of fraud, embezzlement
and misappropriation by averring that private respondent Filipinas
Textile Mills could not have done these as it had ceased its operations
starting in June of 1984 due to workers' strike. These are matters
which should have been addressed in a preliminary hearing to guide
the lower court to a judicious exercise of its discretion regarding the
attachment prayed for. On this score, respondent Court of Appeals was
correct in setting aside the issued writ of preliminary attachment.
Time and again, we have held that the rules on the issuance of a writ
of attachment must be construed strictly against the applicants. This
stringency is required because the remedy of attachment is harsh,
extraordinary and summary in nature. If all the requisites for the
granting of the writ are not present, then the court which issues it acts
in excess of its jurisdiction.
12

WHEREFORE, for the foregoing reasons, the instant petitions
are DENIED. The decision of the Court of Appeals in CA-G.R. SP No.
32863 and CA-G.R. SP No. 32762 are AFFIRMED. No pronouncement
as to costs.
SO ORDERED.

G.R. No. 175587 September 21, 2007
PHILIPPINE COMMERCIAL INTERNATIONAL BANK, Petitioner,
vs.
JOSEPH ANTHONY M. ALEJANDRO, Respondent.
This petition for review assails the May 31, 2006 Decision
1
of the Court
of Appeals in CA-G.R. CV No. 78200 affirming the August 30, 2000
Decision
2
of the Regional Trial Court of Makati, which granted
respondent Joseph Anthony M. Alejandros claim for damages arising
from petitioner Philippine Commercial International Banks (PCIB)
invalid garnishment of respondents deposits.
On October 23, 1997, petitioner filed against respondent a
complaint
3
for sum of money with prayer for the issuance of a writ of
preliminary attachment. Said complaint alleged that on September 10,
1997, respondent, a resident of Hong Kong, executed in favor of
petitioner a promissory note obligating himself to payP249,828,588.90
plus interest. In view of the fluctuations in the foreign exchange rates
which resulted in the insufficiency of the deposits assigned by
respondent as security for the loan, petitioner requested the latter to
put up additional security for the loan. Respondent, however, sought a
reconsideration of said request pointing out petitioners alleged
mishandling of his account due to its failure to carry out his instruction
to close his account as early as April 1997, when the prevailing rate of
exchange of the US Dollar to Japanese yen was
US$1.00:JPY127.50.
4
It appears that the amount of P249,828,588.90
was the consolidated amount of a series of yen loans granted by
petitioner to respondent during the months of February and April
1997.
5

In praying for the issuance of a writ of preliminary attachment under
Section 1 paragraphs (e) and (f) of Rule 57 of the Rules of Court,
petitioner alleged that (1) respondent fraudulently withdrew his
unassigned deposits notwithstanding his verbal promise to PCIB
Assistant Vice President Corazon B. Nepomuceno not to withdraw the
same prior to their assignment as security for the loan; and (2) that
respondent is not a resident of the Philippines. The application for the
issuance of a writ was supported with the affidavit of Nepomuceno.
6

On October 24, 1997, the trial court granted the application and issued
the writ ex parte
7
after petitioner posted a bond in the amount
PROVISIONAL REMEDIES Sec. 1-6 Rule 57 | 2014 SYLLABUS | 27

of P18,798,734.69, issued by Prudential Guarantee & Assurance Inc.,
under Bond No. HO-46764-97. On the same date, the bank deposits of
respondent with Rizal Commercial Banking Corporation (RCBC) were
garnished. On October 27, 1997, respondent, through counsel, filed a
manifestation informing the court that he is voluntarily submitting to
its jurisdiction.
8

Subsequently, respondent filed a motion to quash
9
the writ contending
that the withdrawal of his unassigned deposits was not fraudulent as it
was approved by petitioner. He also alleged that petitioner knew that
he maintains a permanent residence at Calle Victoria, Ciudad Regina,
Batasan Hills, Quezon City, and an office address in Makati City at the
Law Firm Romulo Mabanta Buenaventura Sayoc & De los
Angeles,
10
where he is a partner. In both addresses, petitioner
regularly communicated with him through its representatives.
Respondent added that he is the managing partner of the Hong Kong
branch of said Law Firm; that his stay in Hong Kong is only temporary;
and that he frequently travels back to the Philippines.
On December 24, 1997, the trial court issued an order quashing the
writ and holding that the withdrawal of respondents unassigned
deposits was not intended to defraud petitioner. It also found that the
representatives of petitioner personally transacted with respondent
through his home address in Quezon City and/or his office in Makati
City. It thus concluded that petitioner misrepresented and suppressed
the facts regarding respondents residence considering that it has
personal and official knowledge that for purposes of service of
summons, respondents residence and office addresses are located in
the Philippines. The dispositive portion of the courts decision is as
follows:
WHEREFORE, the URGENT MOTION TO QUASH, being meritorious, is
hereby GRANTED, and the ORDER of 24 October 1997 is hereby
RECONSIDERED and SET ASIDE and the WRIT OF attachment of the
same is hereby DISCHARGED.
SO ORDERED.
11

With the denial
12
of petitioners motion for reconsideration, it elevated
the case to the Court of Appeals (CA-G.R. SP No. 50748) via a petition
for certiorari. On May 10, 1999, the petition was dismissed for failure
to prove that the trial court abused its discretion in issuing the
aforesaid order.
13
Petitioner filed a motion for reconsideration but was
denied on October 28, 1999.
14
On petition with this Court, the case
was dismissed for late filing in a minute resolution (G.R. No. 140605)
dated January 19, 2000.
15
Petitioner filed a motion for reconsideration
but was likewise denied with finality on March 6, 2000.
16

Meanwhile, on May 20, 1998, respondent filed a claim for damages in
the amount of P25 Million
17
on the attachment bond (posted by
Prudential Guarantee & Assurance, Inc., under JCL(4) No. 01081, Bond
No. HO-46764-97) on account of the wrongful garnishment of his
deposits. He presented evidence showing that hisP150,000.00 RCBC
check payable to his counsel as attorneys fees, was dishonored by
reason of the garnishment of his deposits. He also testified that he is a
graduate of the Ateneo de Manila University in 1982 with a double
degree of Economics and Management Engineering and of the
University of the Philippines in 1987 with the degree of Bachelor of
Laws. Respondent likewise presented witnesses to prove that he is a
well known lawyer in the business community both in the Philippines
and in Hong Kong.
18
For its part, the lone witness presented by
petitioner was Nepomuceno who claimed that she acted in good faith
in alleging that respondent is a resident of Hong Kong.
19

On August 30, 2000, the trial court awarded damages to respondent in
the amount of P25 Million without specifying the basis thereof, thus:
WHEREFORE, premises above considered, and defendant having duly
established his claim in the amount ofP25,000,000.00, judgment is
hereby rendered ordering Prudential Guarantee & [Assurance] Co.,
which is solidarily liable with plaintiff to pay defendant the full amount
of bond under Prudential Guarantee & Assurance, Inc. JCL(4) No.
01081, [Bond No. HO-46764-97], dated 24 October 1997 in the
amount of P18,798,734.69. And, considering that the amount of the
bond is insufficient to fully satisfy the award for damages, plaintiff is
hereby ordered to pay defendant the amount of P6,201,265.31.
SO ORDERED.
20

The trial court denied petitioners motion for reconsideration on
October 24, 2000.
21

Petitioner elevated the case to the Court of Appeals which affirmed the
findings of the trial court. It held that in claiming that respondent was
not a resident of the Philippines, petitioner cannot be said to have
been in good faith considering that its knowledge of respondents
Philippine residence and office address goes into the very issue of the
trial courts jurisdiction which would have been defective had
respondent not voluntarily appeared before it.
The Court of Appeals, however, reduced the amount of damages
awarded to petitioner and specified their basis. The dispositive portion
of the decision of the Court of Appeals states:
WHEREFORE, the appeal is PARTIALLY GRANTED and the decision
appealed from is hereby MODIFIED. The award of damages in the
amount of P25,000,000.00 is deleted. In lieu thereof, Prudential
Guarantee & [Assurance, Inc.], which is solidarily liable with appellant
[herein petitioner], is ORDERED to pay appellee [herein
respondent] P2,000,000.00 as nominal damages; P5,000,000.00 as
moral damages; and P1,000,000.00 as attorneys fees, to be satisfied
against the attachment bond under Prudential Guarantee & Assurance,
Inc. JCL (4) No. 01081.
SO ORDERED.
22

Both parties moved for reconsideration. On November 21, 2006, the
Court of Appeals denied petitioners motion for reconsideration but
granted that of respondents by ordering petitioner to pay
additional P5Million as exemplary damages.
23

Hence, the instant petition.
At the outset, it must be noted that the ruling of the trial court that
petitioner is not entitled to a writ of attachment because respondent is
a resident of the Philippines and that his act of withdrawing his
deposits with petitioner was without intent to defraud, can no longer
be passed upon by this Court. More importantly, the conclusions of the
court that petitioner bank misrepresented that respondent was residing
out of the Philippines and suppressed the fact that respondent has a
permanent residence in Metro Manila where he may be served with
summons, are now beyond the power of this Court to review having
been the subject of a final and executory order. Said findings were
sustained by the Court of Appeals in CA-G.R. SP No. 50784 and by this
Court in G.R. No. 140605. The rule on conclusiveness of judgment,
which obtains under the premises, precludes the relitigation of a
particular fact or issue in another action between the same parties
even if based on a different claim or cause of action. The judgment in
the prior action operates as estoppel as to those matters in issue or
points controverted, upon the determination of which the finding or
judgment was rendered. The previous judgment is conclusive in the
second case, as to those matters actually and directly controverted
and determined.
24
Hence, the issues of misrepresentation by petitioner
and the residence of respondent for purposes of service of summons
can no longer be questioned by petitioner in this case.
The core issue for resolution is whether petitioner bank is liable for
damages for the improper issuance of the writ of attachment against
respondent.
We rule in the affirmative.
Notwithstanding the final judgment that petitioner is guilty of
misrepresentation and suppression of a material fact, the latter
contends that it acted in good faith. Petitioner also contends that even
if respondent is considered a resident of the Philippines, attachment is
still proper under Section 1, paragraph (f), Rule 57 of the Rules of
Court since he (respondent) is a resident who is temporarily out of the
Philippines upon whom service of summons may be effected by
publication.
Petitioners contentions are without merit.
While the final order of the trial court which quashed the writ did not
categorically use the word "bad faith" in characterizing the
representations of petitioner, the tenor of said order evidently
PROVISIONAL REMEDIES Sec. 1-6 Rule 57 | 2014 SYLLABUS | 28

considers the latter to have acted in bad faith by resorting to a
deliberate strategy to mislead the court. Thus
In the hearings of the motion, and oral arguments of counsels before
the Court, it appears that plaintiff BANK through its contracting officers
Vice President Corazon B. Nepomuceno and Executive Vice President
Jose Ramon F. Revilla, personally transacted with defendant mainly
through defendants permanent residence in METRO-MANILA, either in
defendants home address in Quezon City or his main business address
at the Romulo Mabanta Buenaventura Sayoc & Delos Angeles in
MAKATI and while at times follow ups were made through defendants
temporary home and business addresses in Hongkong. It is therefore
clear that plaintiff could not deny their personal and official knowledge
that defendants permanent and official residence for purposes of
service of summons is in the Philippines. In fact, this finding is further
confirmed by the letter of Mr. JOHN GOKONGWEI, JR. Chairman,
Executive Committee of plaintiff BANK, in his letter dated 6 October
1997 on the subject loan to defendant of the same law firm was
addressed to the ROMULO LAW FIRM in MAKATI.
[Anent the] second ground of attachment x x x [t]he Court finds that
the amount withdrawn was not part of defendants peso deposits
assigned with the bank to secure the loan and as proof that the
withdrawal was not intended to defraud plaintiff as creditor is that
plaintiff approved and allowed said withdrawals. It is even noted that
when the Court granted the prayer for attachment it was mainly on the
first ground under Section 1(f) of Rule 57 of the 1997 Rules of Civil
Procedure, that defendant resides out of the Philippines.
On the above findings, it is obvious that plaintiff already knew from the
beginning the deficiency of its second ground for attachment [i.e.,]
disposing properties with intent to defraud his creditors, and therefore
plaintiff had to resort to this misrepresentation that defendant was
residing out of the Philippines and suppressed the fact that defendants
permanent residence is in METRO MANILA where he could be served
with summons.
On the above findings, and mainly on the misrepresentations made by
plaintiff on the grounds for the issuance of the attachment in the
verified complaint, the Court concludes that defendant has duly proven
its grounds in the MOTION and that plaintiff is not entitled to the
attachment.
25

Petitioner is therefore barred by the principle of conclusiveness of
judgment from again invoking good faith in the application for the
issuance of the writ. Similarly, in the case of Hanil Development Co.,
Ltd. v. Court of Appeals,
26
the Court debunked the claim of good faith
by a party who maliciously sought the issuance of a writ of
attachment, the bad faith of said party having been previously
determined in a final decision which voided the assailed writ. Thus
Apropos the Application for Judgment on the Attachment Bond,
Escobar claims in its petition that the award of attorneys fees and
injunction bond premium in favor of Hanil is [contrary] to law and
jurisprudence. It contends that no malice or bad faith may be imputed
to it in procuring the writ.
Escobars protestation is now too late in the day. The question of the
illegality of the attachment and Escobars bad faith in obtaining it has
long been settled in one of the earlier incidents of this case. The Court
of Appeals, in its decision rendered on February 3, 1983 in C.A.-G.R.
No. SP-14512, voided the challenged writ, having been issued with
grave abuse of discretion. Escobars bad faith in procuring the writ
cannot be doubted. Its Petition for the Issuance of Preliminary
Attachment made such damning allegations that: Hanil was already
able to secure a complete release of its final collection from the
MPWH; it has moved out some of its heavy equipments for unknown
destination, and it may leave the country anytime. Worse, its Ex
Parte Motion to Resolve Petition alleged that "after personal
verification by (Escobar) of (Hanils) equipment in Cagayan de Oro
City, it appears that the equipments were no longer existing from their
compound." All these allegations of Escobar were found to be totally
baseless and untrue.
Even assuming that the trial court did not make a categorical
pronouncement of misrepresentation and suppression of material facts
on the part of petitioner, the factual backdrop of this case does not
support petitioners claim of good faith. The facts and circumstances
omitted are highly material and relevant to the grant or denial of writ
of attachment applied for.
Finally, there is no merit in petitioners contention that respondent can
be considered a resident who is temporarily out of the Philippines upon
whom service of summons may be effected by publication, and
therefore qualifies as among those against whom a writ of attachment
may be issued under Section 1, paragraph (f), Rule 57 of the Rules of
Court which provides:
(f) In an action against a party x x x on whom summons may be
served by publication.
In so arguing, petitioner attempts to give the impression that although
it erroneously invoked the ground that respondent does not reside in
the Philippines, it should not be made to pay damages because it is in
fact entitled to a writ of attachment had it invoked the proper ground
under Rule 57. However, even on this alternative ground, petitioner is
still not entitled to the issuance of a writ of attachment.
The circumstances under which a writ of preliminary attachment may
be issued are set forth in Section 1, Rule 57 of the Rules of Court, to
wit:
SEC. 1. Grounds upon which attachment may issue. At the
commencement of the action or at any time before entry of judgment,
a plaintiff or any proper party may have the property of the adverse
party attached as security for the satisfaction of any judgment that
may be recovered in the following cases:
(a) In an action for the recovery of a specified amount of
money or damages, other than moral and exemplary, on a
cause of action arising from law, contract, quasi-contract,
delict or quasi-delict against a party who is about to depart
from the Philippines with intent to defraud his creditors;
(b) In an action for money or property embezzled or
fraudulently misapplied or converted to his own use by a
public officer, or an officer of a corporation or an attorney,
factor, broker, agent, or clerk, in the course of his
employment as such, or by any other person in a fiduciary
capacity, or for a willful violation of duty;
(c) In an action to recover the possession of personal
property unjustly or fraudulently taken, detained, or
converted, when the property, or any part thereof, has been
concealed, removed, or disposed of to prevent its being
found or taken by the applicant or an authorized person;
(d) In an action against a party who has been guilty of a
fraud in contracting the debt or incurring the obligation upon
which the action is brought, or in the performance thereof;
(e) In an action against a party who has removed or
disposed of his property, or is about to do so, with intent to
defraud his creditors;
(f) In an action against a party who resides out of the
Philippines, or on whom summons may be served by
publication.
The purposes of preliminary attachment are: (1) to seize the property
of the debtor in advance of final judgment and to hold it for purposes
of satisfying said judgment, as in the grounds stated in paragraphs (a)
to (e) of Section 1, Rule 57 of the Rules of Court; or (2) to acquire
jurisdiction over the action by actual or constructive seizure of the
property in those instances where personal or substituted service of
summons on the defendant cannot be effected, as in paragraph (f) of
the same provision.
27

Corollarily, in actions in personam, such as the instant case for
collection of sum of money,
28
summons must be served by personal or
substituted service, otherwise the court will not acquire jurisdiction
over the defendant. In case the defendant does not reside and is not
found in the Philippines (and hence personal and substituted service
cannot be effected), the remedy of the plaintiff in order for the court
to acquire jurisdiction to try the case is to convert the action into a
proceeding in rem or quasi in rem by attaching the property of the
PROVISIONAL REMEDIES Sec. 1-6 Rule 57 | 2014 SYLLABUS | 29

defendant.
29
Thus, in order to acquire jurisdiction in actions in
personam where defendant resides out of and is not found in the
Philippines, it becomes a matter of course for the court to convert the
action into a proceeding in rem or quasi in rem by attaching the
defendants property. The service of summons in this case (which may
be by publication coupled with the sending by registered mail of the
copy of the summons and the court order to the last known address of
the defendant), is no longer for the purpose of acquiring jurisdiction
but for compliance with the requirements of due process.
30

However, where the defendant is a resident who is temporarily out of
the Philippines, attachment of his/her property in an action in
personam, is not always necessary in order for the court to acquire
jurisdiction to hear the case.
Section 16, Rule 14 of the Rules of Court reads:
Sec. 16. Residents temporarily out of the Philippines. When an action
is commenced against a defendant who ordinarily resides within the
Philippines, but who is temporarily out of it, service may, by leave of
court, be also effected out of the Philippines, as under the preceding
section.
The preceding section referred to in the above provision is Section 15
which provides for extraterritorial service (a) personal service out of
the Philippines, (b) publication coupled with the sending by registered
mail of the copy of the summons and the court order to the last known
address of the defendant; or (c) in any other manner which the court
may deem sufficient.
In Montalban v. Maximo,
31
however, the Court held that substituted
service of summons (under the present Section 7, Rule 14 of the Rules
of Court) is the normal mode of service of summons that will confer
jurisdiction on the court over the person of residents temporarily out of
the Philippines. Meaning, service of summons may be effected by (a)
leaving copies of the summons at the defendants residence with some
person of suitable discretion residing therein, or (b) by leaving copies
at the defendants office or regular place of business with some
competent person in charge thereof.
32
Hence, the court may acquire
jurisdiction over an action in personam by mere substituted service
without need of attaching the property of the defendant.
The rationale in providing for substituted service as the normal mode
of service for residents temporarily out of the Philippines, was
expounded in Montalban v. Maximo,
33
in this wise:
A man temporarily absent from this country leaves a definite place of
residence, a dwelling where he lives, a local base, so to speak, to
which any inquiry about him may be directed and where he is bound
to return. Where one temporarily absents himself, he leaves his affairs
in the hands of one who may be reasonably expected to act in his
place and stead; to do all that is necessary to protect his interests; and
to communicate with him from time to time any incident of importance
that may affect him or his business or his affairs. It is usual for such a
man to leave at his home or with his business associates information
as to where he may be contacted in the event a question that affects
him crops up.
Thus, in actions in personam against residents temporarily out of the
Philippines, the court need not always attach the defendants property
in order to have authority to try the case. Where the plaintiff seeks to
attach the defendants property and to resort to the concomitant
service of summons by publication, the same must be with prior leave,
precisely because, if the sole purpose of the attachment is for the
court to acquire jurisdiction, the latter must determine whether from
the allegations in the complaint, substituted service (to persons of
suitable discretion at the defendants residence or to a competent
person in charge of his office or regular place of business) will suffice,
or whether there is a need to attach the property of the defendant and
resort to service of summons by publication in order for the court to
acquire jurisdiction over the case and to comply with the requirements
of due process.
In the instant case, it must be stressed that the writ was issued by the
trial court mainly on the representation of petitioner that respondent is
not a resident of the Philippines.
34
Obviously, the trial courts issuance
of the writ was for the sole purpose of acquiring jurisdiction to hear
and decide the case. Had the allegations in the complaint disclosed
that respondent has a residence in Quezon City and an office in Makati
City, the trial court, if only for the purpose of acquiring jurisdiction,
could have served summons by substituted service on the said
addresses, instead of attaching the property of the defendant. The
rules on the application of a writ of attachment must be strictly
construed in favor of the defendant. For attachment is harsh,
extraordinary, and summary in nature; it is a rigorous remedy which
exposes the debtor to humiliation and annoyance.
35
It should be
resorted to only when necessary and as a last remedy.
It is clear from the foregoing that even on the allegation that
respondent is a resident temporarily out of the Philippines, petitioner is
still not entitled to a writ of attachment because the trial court could
acquire jurisdiction over the case by substituted service instead of
attaching the property of the defendant. The misrepresentation of
petitioner that respondent does not reside in the Philippines and its
omission of his local addresses was thus a deliberate move to ensure
that the application for the writ will be granted.
In light of the foregoing, the Court of Appeals properly sustained the
finding of the trial court that petitioner is liable for damages for the
wrongful issuance of a writ of attachment against respondent.
Anent the actual damages, the Court of Appeals is correct in not
awarding the same inasmuch as the respondent failed to establish the
amount garnished by petitioner. It is a well settled rule that one who
has been injured by a wrongful attachment can recover damages for
the actual loss resulting therefrom. But for such losses to be
recoverable, they must constitute actual damages duly established by
competent proofs, which are, however, wanting in the present case.
36

Nevertheless, nominal damages may be awarded to a plaintiff whose
right has been violated or invaded by the defendant, for the purpose
of vindicating or recognizing that right, and not for indemnifying the
plaintiff for any loss suffered by him. Its award is thus not for the
purpose of indemnification for a loss but for the recognition and
vindication of a right. Indeed, nominal damages are damages in name
only and not in fact.
37
They are recoverable where some injury has
been done but the pecuniary value of the damage is not shown by
evidence and are thus subject to the discretion of the court according
to the circumstances of the case.
38

In this case, the award of nominal damages is proper considering that
the right of respondent to use his money has been violated by its
garnishment. The amount of nominal damages must, however, be
reduced from P2 million to P50,000.00 considering the short period of
2 months during which the writ was in effect as well as the lack of
evidence as to the amount garnished.1wphi1
Likewise, the award of attorneys fees is proper when a party is
compelled to incur expenses to lift a wrongfully issued writ of
attachment. The basis of the award thereof is also the amount of
money garnished, and the length of time respondents have been
deprived of the use of their money by reason of the wrongful
attachment.
39
It may also be based upon (1) the amount and the
character of the services rendered; (2) the labor, time and trouble
involved; (3) the nature and importance of the litigation and business
in which the services were rendered; (4) the responsibility imposed;
(5) the amount of money and the value of the property affected by the
controversy or involved in the employment; (6) the skill and the
experience called for in the performance of the services; (7) the
professional character and the social standing of the attorney; (8) the
results secured, it being a recognized rule that an attorney may
properly charge a much larger fee when it is contingent than when it is
not.
40

All the aforementioned weighed, and considering the short period of
time it took to have the writ lifted, the favorable decisions of the
courts below, the absence of evidence as to the professional character
and the social standing of the attorney handling the case and the
amount garnished, the award of attorneys fees should be fixed not
at P1 Million, but only at P200,000.00.
The courts below correctly awarded moral damages on account of
petitioners misrepresentation and bad faith; however, we find the
award in the amount of P5 Million excessive. Moral damages are to be
PROVISIONAL REMEDIES Sec. 1-6 Rule 57 | 2014 SYLLABUS | 30

fixed upon the discretion of the court taking into consideration the
educational, social and financial standing of the parties.
41
Moral
damages are not intended to enrich a complainant at the expense of a
defendant.
42
They are awarded only to enable the injured party to
obtain means, diversion or amusements that will serve to obviate the
moral suffering he has undergone, by reason of petitioners culpable
action. Moral damages must be commensurate with the loss or injury
suffered. Hence, the award of moral damages is reduced
to P500,000.00.
Considering petitioners bad faith in securing the writ of attachment,
we sustain the award of exemplary damages by way of example or
correction for public good. This should deter parties in litigations from
resorting to baseless and preposterous allegations to obtain writs of
attachments. While as a general rule, the liability on the attachment
bond is limited to actual (or in some cases, temperate or nominal)
damages, exemplary damages may be recovered where the
attachment was established to be maliciously sued out.
43
Nevertheless,
the award of exemplary damages in this case should be reduced
from P5M to P500,000.00.
Finally, contrary to the claim of petitioner, the instant case for
damages by reason of the invalid issuance of the writ, survives the
dismissal of the main case for sum of money. Suffice it to state that
the claim for damages arising from such wrongful attachment may
arise and be decided separately from the merits of the main action.
44

WHEREFORE, the petition is PARTIALLY GRANTED. The May 31, 2006
Decision of the Court of Appeals in CA-G.R. CV No. 78200 is AFFIRMED
with MODIFICATIONS. As modified, petitioner Philippine Commercial
International Bank is ordered to pay respondent Joseph Anthony M.
Alejandro the following amounts: P50,000.00 as nominal
damages, P200,000.00 as attorneys fees; and P500,000.00 as moral
damages, and P500,000.00 as exemplary damages, to be satisfied
against the attachment bond issued by Prudential Guarantee &
Assurance Inc.,
45
under JCL (4) No. 01081, Bond No. HO-46764-97.
No pronouncement as to costs.
SO ORDERED.

G.R. No. 171124 February 13, 2008
ALEJANDRO NG WEE, petitioner,
vs.
MANUEL TANKIANSEE, respondent.
D E C I S I O N
NACHURA, J.:
Before the Court is a petition for review on certiorari under Rule 45 of
the Rules of Court assailing the September 14, 2005 Decision
1
of the
Court of Appeals (CA) in CA-G.R. SP No. 90130 and its January 6, 2006
Resolution
2
denying the motion for reconsideration thereof.
The facts are undisputed. Petitioner Alejandro Ng Wee, a valued client
of Westmont Bank (now United Overseas Bank), made several money
placements totaling P210,595,991.62 with the bank's affiliate,
Westmont Investment Corporation (Wincorp), a domestic entity
engaged in the business of an investment house with the authority and
license to extend credit.
3

Sometime in February 2000, petitioner received disturbing news on
Wincorp's financial condition prompting him to inquire about and
investigate the company's operations and transactions with its
borrowers. He then discovered that the company extended a loan
equal to his total money placement to a corporation [Power Merge]
with a subscribed capital of only P37.5M. This credit facility originated
from another loan of about P1.5B extended by Wincorp to another
corporation [Hottick Holdings]. When the latter defaulted in its
obligation, Wincorp instituted a case against it and its surety.
Settlement was, however, reached in which Hottick's president, Luis
Juan L. Virata (Virata), assumed the obligation of the surety.
4

Under the scheme agreed upon by Wincorp and Hottick's president,
petitioner's money placements were transferred without his knowledge
and consent to the loan account of Power Merge through an
agreement that virtually freed the latter of any liability. Allegedly,
through the false representations of Wincorp and its officers and
directors, petitioner was enticed to roll over his placements so that
Wincorp could loan the same to Virata/Power Merge.
5

Finding that Virata purportedly used Power Merge as a conduit and
connived with Wincorp's officers and directors to fraudulently obtain
for his benefit without any intention of paying the said placements,
petitioner instituted, on October 19, 2000, Civil Case No. 00-99006 for
damages with the Regional Trial Court (RTC) of Manila.
6
One of the
defendants impleaded in the complaint is herein respondent Manuel
Tankiansee, Vice-Chairman and Director of Wincorp.
7

On October 26, 2000, on the basis of the allegations in the complaint
and the October 12, 2000 Affidavit
8
of petitioner, the trial court
ordered the issuance of a writ of preliminary attachment against the
properties not exempt from execution of all the defendants in the civil
case subject, among others, to petitioner's filing of a P50M-bond.
9
The
writ was, consequently, issued on November 6, 2000.
10

Arguing that the writ was improperly issued and that the bond
furnished was grossly insufficient, respondent, on December 22, 2000,
moved for the discharge of the attachment.
11
The other defendants
likewise filed similar motions.
12
On October 23, 2001, the RTC, in an
Omnibus Order,
13
denied all the motions for the discharge of the
attachment. The defendants, including respondent herein, filed their
respective motions for reconsideration
14
but the trial court denied the
same on October 14, 2002.
15

Incidentally, while respondent opted not to question anymore the said
orders, his co-defendants, Virata and UEM-MARA Philippines
Corporation (UEM-MARA), assailed the same via certiorari under Rule
65 before the CA [docketed as CA-G.R. SP No. 74610]. The appellate
court, however, denied the certiorari petition on August 21,
2003,
16
and the motion for reconsideration thereof on March 16,
2004.
17
In a petition for review on certiorari before this Court, in G.R.
No. 162928, we denied the petition and affirmed the CA rulings on
May 19, 2004 for Virata's and UEM-MARA's failure to sufficiently show
that the appellate court committed any reversible error.
18
We
subsequently denied the petition with finality on August 23, 2004.
19

On September 30, 2004, respondent filed before the trial court another
Motion to Discharge Attachment,
20
re-pleading the grounds he raised
in his first motion but raising the following additional grounds: (1) that
he was not present in Wincorp's board meetings approving the
questionable transactions;
21
and (2) that he could not have connived
with Wincorp and the other defendants because he and Pearlbank
Securities, Inc., in which he is a major stockholder, filed cases against
the company as they were also victimized by its fraudulent schemes.
22

Ruling that the grounds raised were already passed upon by it in the
previous orders affirmed by the CA and this Court, and that the
additional grounds were respondent's affirmative defenses that
properly pertained to the merits of the case, the trial court denied the
motion in its January 6, 2005 Order.
23

With the denial of its motion for reconsideration,
24
respondent filed
a certiorari petition before the CA docketed as CA-G.R. SP No. 90130.
On September 14, 2005, the appellate court rendered the assailed
Decision
25
reversing and setting aside the aforementioned orders of
the trial court and lifting the November 6, 2000 Writ of Preliminary
Attachment
26
to the extent that it concerned respondent's properties.
Petitioner moved for the reconsideration of the said ruling, but the CA
denied the same in its January 6, 2006 Resolution.
27

Thus, petitioner filed the instant petition on the following grounds:
A.
IT IS RESPECTFULLY SUBMITTED THAT THE COURT OF
APPEALS SHOULD NOT HAVE GIVEN DUE COURSE TO THE
PETITION FOR CERTIORARI FILED BY RESPONDENT, SINCE
IT MERELY RAISED ERRORS IN JUDGMENT, WHICH, UNDER
PREVAILING JURISPRUDENCE, ARE NOT THE PROPER
SUBJECTS OF A WRIT OF CERTIORARI.
B.
PROVISIONAL REMEDIES Sec. 1-6 Rule 57 | 2014 SYLLABUS | 31

MOREOVER, IT IS RESPECTFULLY SUBMITTED THAT THE
COURT OF APPEALS COMMITTED SERIOUS LEGAL ERROR
IN RESOLVING FAVORABLY THE GROUNDS ALLEGED BY
RESPONDENT IN HIS PETITION AND (SIC) LIFTING THE
WRIT OF PRELIMINARY ATTACHMENT, SINCE THESE
GROUNDS ALREADY RELATE TO THE MERITS OF CIVIL
CASE NO. 00-99006 WHICH, UNDER PREVAILING
JURISPRUDENCE, CANNOT BE USED AS BASIS (SIC) FOR
DISCHARGING A WRIT OF PRELIMINARY ATTACHMENT.
C.
LIKEWISE, IT IS RESPECTFULLY SUBMITTED THAT THE
COURT OF APPEALS ERRED IN SUSTAINING THE ERRORS
IN JUDGMENT ALLEGED BY RESPONDENT, NOT ONLY
BECAUSE THESE ARE BELIED BY THE VERY DOCUMENTS HE
SUBMITTED AS PROOF OF SUCH ERRORS, BUT ALSO
BECAUSE THESE HAD EARLIER BEEN RESOLVED WITH
FINALITY BY THE LOWER COURT.
28

For his part, respondent counters, among others, that the general and
sweeping allegation of fraud against respondent in petitioner's
affidavit-respondent as an officer and director of Wincorp allegedly
connived with the other defendants to defraud petitioner-is not
sufficient basis for the trial court to order the attachment of
respondent's properties. Nowhere in the said affidavit does petitioner
mention the name of respondent and any specific act committed by
the latter to defraud the former. A writ of attachment can only be
granted on concrete and specific grounds and not on general
averments quoting perfunctorily the words of the Rules. Connivance
cannot also be based on mere association but must be particularly
alleged and established as a fact. Respondent further contends that
the trial court, in resolving the Motion to Discharge Attachment, need
not actually delve into the merits of the case. All that the court has to
examine are the allegations in the complaint and the supporting
affidavit. Petitioner cannot also rely on the decisions of the appellate
court in CA-G.R. SP No. 74610 and this Court in G.R. No. 162928 to
support his claim because respondent is not a party to the said
cases.
29

We agree with respondent's contentions and deny the petition.
In the case at bench, the basis of petitioner's application for the
issuance of the writ of preliminary attachment against the properties of
respondent is Section 1(d) of Rule 57 of the Rules of Court which
pertinently reads:
Section 1. Grounds upon which attachment may issue.-At
the commencement of the action or at any time before entry
of judgment, a plaintiff or any proper party may have the
property of the adverse party attached as security for the
satisfaction of any judgment that may be recovered in the
following cases:
x x x x
(d) In an action against a party who has been guilty of a
fraud in contracting the debt or incurring the obligation upon
which the action is brought, or in the performance thereof.
For a writ of attachment to issue under this rule, the applicant must
sufficiently show the factual circumstances of the alleged fraud
because fraudulent intent cannot be inferred from the debtor's mere
non-payment of the debt or failure to comply with his obligation.
30
The
applicant must then be able to demonstrate that the debtor has
intended to defraud the creditor.
31
In Liberty Insurance Corporation v.
Court of Appeals,
32
we explained as follows:
To sustain an attachment on this ground, it must be shown
that the debtor in contracting the debt or incurring the
obligation intended to defraud the creditor. The fraud must
relate to the execution of the agreement and must have
been the reason which induced the other party into giving
consent which he would not have otherwise given. To
constitute a ground for attachment in Section 1 (d), Rule 57
of the Rules of Court, fraud should be committed upon
contracting the obligation sued upon. A debt is fraudulently
contracted if at the time of contracting it the debtor has a
preconceived plan or intention not to pay, as it is in this
case. Fraud is a state of mind and need not be proved by
direct evidence but may be inferred from the circumstances
attendant in each case.
33

In the instant case, petitioner's October 12, 2000 Affidavit
34
is bereft of
any factual statement that respondent committed a fraud. The affidavit
narrated only the alleged fraudulent transaction between Wincorp and
Virata and/or Power Merge, which, by the way, explains why this
Court, in G.R. No. 162928, affirmed the writ of attachment issued
against the latter. As to the participation of respondent in the said
transaction, the affidavit merely states that respondent, an officer and
director of Wincorp, connived with the other defendants in the civil
case to defraud petitioner of his money placements. No other factual
averment or circumstance details how respondent committed a fraud
or how he connived with the other defendants to commit a fraud in the
transaction sued upon. In other words, petitioner has not shown any
specific act or deed to support the allegation that respondent is guilty
of fraud.
The affidavit, being the foundation of the writ,
35
must contain such
particulars as to how the fraud imputed to respondent was committed
for the court to decide whether or not to issue the writ.
36
Absent any
statement of other factual circumstances to show that respondent, at
the time of contracting the obligation, had a preconceived plan or
intention not to pay, or without any showing of how respondent
committed the alleged fraud, the general averment in the affidavit that
respondent is an officer and director of Wincorp who allegedly
connived with the other defendants to commit a fraud, is insufficient to
support the issuance of a writ of preliminary attachment.
37
In the
application for the writ under the said ground, compelling is the need
to give a hint about what constituted the fraud and how it was
perpetrated
38
because established is the rule that fraud is never
presumed.
39
Verily, the mere fact that respondent is an officer and
director of the company does not necessarily give rise to the inference
that he committed a fraud or that he connived with the other
defendants to commit a fraud. While under certain circumstances,
courts may treat a corporation as a mere aggroupment of persons, to
whom liability will directly attach, this is only done when the
wrongdoing has been clearly and convincingly established.
40

Let it be stressed that the provisional remedy of preliminary
attachment is harsh and rigorous for it exposes the debtor to
humiliation and annoyance.
41
The rules governing its issuance are,
therefore, strictly construed against the applicant,
42
such that if the
requisites for its grant are not shown to be all present, the court shall
refrain from issuing it, for, otherwise, the court which issues it acts in
excess of its jurisdiction.
43
Likewise, the writ should not be abused to
cause unnecessary prejudice. If it is wrongfully issued on the basis of
false or insufficient allegations, it should at once be corrected.
44

Considering, therefore, that, in this case, petitioner has not fully
satisfied the legal obligation to show the specific acts constitutive of
the alleged fraud committed by respondent, the trial court acted in
excess of its jurisdiction when it issued the writ of preliminary
attachment against the properties of respondent.
We are not unmindful of the rule enunciated in G.B. Inc., etc. v.
Sanchez, et al.,
45
that
[t]he merits of the main action are not triable in a motion to
discharge an attachment otherwise an applicant for the
dissolution could force a trial of the merits of the case on his
motion.
46

However, the principle finds no application here because petitioner has
not yet fulfilled the requirements set by the Rules of Court for the
issuance of the writ against the properties of respondent.
47
The evil
sought to be prevented by the said ruling will not arise, because the
propriety or impropriety of the issuance of the writ in this case can be
determined by simply reading the complaint and the affidavit in
support of the application.
Furthermore, our ruling in G.R. No. 162928, to the effect that the writ
of attachment is properly issued insofar as it concerns the properties of
Virata and UEM-MARA, does not affect respondent herein, for, as
correctly ruled by the CA, respondent is "never a party thereto."
48
Also,
PROVISIONAL REMEDIES Sec. 1-6 Rule 57 | 2014 SYLLABUS | 32

he is not in the same situation as Virata and UEM-MARA since, as
aforesaid, while petitioner's affidavit detailed the alleged fraudulent
scheme perpetrated by Virata and/or Power Merge, only a general
allegation of fraud was made against respondent.
We state, in closing, that our ruling herein deals only with the writ of
preliminary attachment issued against the properties of respondent-it
does not concern the other parties in the civil case, nor affect the trial
court's resolution on the merits of the aforesaid civil case.
WHEREFORE, premises considered, the petition is DENIED. The
September 14, 2005 Decision and the January 6, 2006 Resolution of
the Court of Appeals in CA-G.R. SP No. 90130 are AFFIRMED.
SO ORDERED.

SECTION 2. Issuance and Contents of order. An order of
attachment may be issued either ex parte or upon motion with notice
and hearing by the court in which the action is pending, or by the
Court of Appeals or the Supreme Court, and must require the sheriff of
the court to attach so much of the property in the Philippines of the
party against whom it is issued, not exempt from execution, as may be
sufficient to satisfy the applicants demand, unless such party makes
deposit or gives a bond as hereinafter provided in the amount equal to
that fixed in the order, which may be the amount sufficient to satisfy
the applicants demand or the value of the property to be attached as
stated by the applicant, exclusive of costs. Several writs may be issued
at the same time to the sheriffs of the courts of different judicial
regions.
G.R. No. 84034 December 22, 1988
ALBERTO SIEVERT, petitioner,
vs.
COURT OF APPEALS, HON. JUDGE ARTEMON D. LUNA and
AURELIO CAMPOSANO, respondents.
FELICIANO, J.:
On 18 May 1988 petitioner Alberto Sievert a citizen and resident of the
Philippines received by mail a Petition for Issuance of a Preliminary
Attachment filed with the Regional Trial Court of Manila Branch 32 in
Civil Case No. 88-44346. Petitioner had not previously received any
summons and any copy of a complaint against him in Civil Case No.
88-44346.
On the day set for hearing of the Petition for a Preliminary Writ of
Attachment, petitioner's counsel went before the trial court and
entered a special appearance for the limited purpose of objecting to
the jurisdiction of the court. He simultaneously filed a written objection
to the jurisdiction of the trial court to hear or act upon the Petition for
Issuance of a Preliminary Writ of Attachment. In this written objection,
petitioner prayed for denial of that Petition for lack of jurisdiction over
the person of the petitioner (defendant therein) upon the ground that
since no summons had been served upon him in the main case, no
jurisdiction over the person of the petitioner had been acquired by the
trial court.
The trial court denied the petitioner's objection and issued in open
court an order which, in relevant part, read as follows:
Under Section 1, Rule 57, Rules of Court, it is clear
that a plaintiff or any proper party may "... at the
commencement of the action or at any time
thereafter, have the property of the adverse party
attached as the security for the satisfaction of any
judgment ..." This rule would overrule the
contention that this Court has no jurisdiction to act
on the application, although if counsel for
defendant so desire, she is given five (5) days
from today within which to submit her further
position why the writ should not be issued, upon
the receipt of which or expiration of the period,
the pending incident shall be considered submitted
for resolution. (Underscoring in the original)
1

Thereupon, on the same day, petitioner filed a Petition for certiorari
with the Court of Appeals. On 13 July 1988, the respondent appellate
court rendered a decision, notable principally for its brevity, dismissing
the Petition. The relevant portion of the Court of Appeals' decision is
quoted below:
The grounds raised in this petition state that the
court a quo had not acquired jurisdiction over
defendant (now petitioner) since no summons had
been served on him, and that respondent Judge
had committed a grave abuse of discretion in
issuing the questioned order without jurisdiction.
In short, the issue presented to us is whether
respondent Judge may issue a writ of preliminary
attachment against petitioner before summons is
served on the latter.
We rule for respondent Judge.
Under Sec. 1, Rule 57, it is clear that, at the
commencement of the action, a party may have
the property of the adverse party attached as
security. The resolution of this issue depends,
therefore, on what is meant by "Commencement
of the action." Moran, citing American
jurisprudence on this point, stated thus:
"Commencement of action. Action is
commenced by filing of the complaint, even
though summons is not issued until a later date."
(Comment on the Rules of Court, Vol. I, p. 150,
1979). Thus, a writ of preliminary attachment may
issue upon filing of the complaint even before
issuance of the summons.
WHEREFORE, for lack of merit, the petition is
hereby denied and, accordingly, dismissed.
(Emphasis supplied)
2

The petitioner is now before this Court on a Petition for Review on
Certiorari, assailing the above-quoted decision of the Court of Appeals.
The petitioner assigns two (2) errors:
1. The proceedings taken and the order issued on
plaintiffs petition for attachment prior to the
service of summons on the defendant were
contrary to law and jurisprudence and violated the
defendant's right to due process.
2. The Court of Appeals committed a grave abuse
of discretion amounting to lack of jurisdiction in
ruling that a writ of preliminary attachment may
issue upon filing of the complaint even prior to
issuance of the summons.
3

The two (2) assignments of error relate to the single issue which we
perceive to be at stake here, that is, whether a court which has not
acquired jurisdiction over the person of the defendant in the main
case, may bind such defendant or his property by issuing a writ of
preliminary attachment.
Both the trial court and the Court of Appeals held that the defendant
may be bound by a writ of preliminary attachment even before
summons together with a copy of the complaint in the main case has
been validly served upon him.
We are unable to agree with the respondent courts.
There is no question that a writ of preliminary attachment may be
applied for a plaintiff "at the commencement of the action or at any
time thereafter" in the cases enumerated in Section 1 of Rule 57 of the
Revised Rules of Court. The issue posed in this case, however, is not
to be resolved by determining when an action may be regarded as
having been commenced, a point in time which, in any case,
is not necessarily fixed and Identical regardless of the specific purpose
for which the deter. nation is to be made. The critical time which must
be Identified is, rather, when the trial court acquires authority under
law to act coercively against the defendant or his property in a
proceeding in attachment. We believe and so hold that critical time is
PROVISIONAL REMEDIES Sec. 1-6 Rule 57 | 2014 SYLLABUS | 33

the time of the vesting of jurisdiction in the court over the person of
the defendant in the main case.
Attachment is an ancillary remedy. It is not sought for its own
sake but rather to enable the attaching party to realize upon
relief sought and expected to be granted in the main or
principal action .
4
A court which has not acquired jurisdiction
over the person of defendant, cannot bind that defendant
whether in the main case or in any ancillary proceeding such
as attachment proceedings. The service of a petition for
preliminary attachment without the prior or simultaneous
service of summons and a copy of the complaint in the main
case and that is what happened in this case does not of
course confer jurisdiction upon the issuing court over the
person of the defendant.
Ordinarily, the prayer in a petition for a writ of preliminary attachment
is embodied or incorporated in the main complaint itself as one of the
forms of relief sought in such complaint. Thus, valid service of
summons and a copy of the complaint will in such case vest
jurisdiction in the court over the defendant both for purposes of the
main case and for purposes of the ancillary remedy of attachment. In
such case, notice of the main case is at the same time notice of the
auxiliary proceeding in attachment. Where, however, the petition for a
writ of preliminary attachment is embodied in a discrete pleading, such
petition must be served either simultaneously with service of
summons and a copy of the main complaint, or after jurisdiction over
the defendant has already been acquired by such service of summons.
Notice of the separate attachment petition is not notice of the main
action. Put a little differently, jurisdiction whether ratione personae or
ratione materiae in an attachment proceeding is ancillary to jurisdiction
ratione personae or ratione materiae in the main action against the
defendant. If a court has no jurisdiction over the subject matter or
over the person of the defendant in the principal action, it simply has
no jurisdiction to issue a writ of preliminary attachment against the
defendant or his property.
It is basic that the requirements of the Rules of Court for issuance of
preliminary attachment must be strictly and faithfully complied with in
view of the nature of this provisional remedy. In Salas v. Adil,
5
this
Court described preliminary attachment as
a rigorous remedy which exposes the debtor to
humiliation and annoyance, such [that] it should
not be abused as to cause unnecessary
prejudice. It is, therefore; the duty of the court,
before issuing the writ, to ensure that all the
requisites of the law have been complied with;
otherwise the judge acts in excess of his
jurisdiction and the writ so issued shall be null and
void. (Emphasis supplied )
6

The above words apply with greater force in respect of that most
fundamental of requisites, the jurisdiction of the court issuing
attachment over the person of the defendant.
In the case at bar, the want of jurisdiction of the trial court to proceed
in the main case against the defendant is quite clear. It is not disputed
that neither service of summons with a copy of the complaint nor
voluntary appearance of petitioner Sievert was had in this case. Yet,
the trial court proceeded to hear the petition for issuance of the writ.
This is reversible error and must be corrected on certiorari.
WHEREFORE, the Petition for Review on certiorari is GRANTED due
course and the Order of the trial court dated 20 May 1988 and the
Decision of the Court of Appeals dated 13 July 1988 are hereby SET
ASIDE and ANNULLED. No pronouncement as to costs.
SO ORDERED.
EN BANC
G.R. No. 93262 December 29, 1991
DAVAO LIGHT & POWER CO., INC., petitioner,
vs.
THE COURT OF APPEALS, QUEENSLAND HOTEL or MOTEL or
QUEENSLAND TOURIST INN, and TEODORICO
ADARNA, respondents.
NARVASA, J.:p
Subject of the appellate proceedings at bar is the decision of the Court
of Appeals in CA-G.R. Sp. No. 1967 entitled "Queensland Hotel,
Inc., etc. and Adarna v. Davao Light & Power Co., Inc.," promulgated
on May 4, 1990.1 That decision nullified and set aside the writ of
preliminary attachment issued by the Regional Trial Court of Davao
City 2 in Civil Case No. 19513-89 on application of the plaintiff (Davao
Light & Power Co.), before the service of summons on the defendants
(herein respondents Queensland Co., Inc. and Adarna).
Following is the chronology of the undisputed material facts culled
from the Appellate Tribunal's judgment of May 4, 1990.
1. On May 2, 1989 Davao Light & Power Co., Inc. (hereafter, simply
Davao Light) filed a verified complaint for recovery of a sum of money
and damages against Queensland Hotel, etc. and Teodorico Adarna
(docketed as Civil Case No. 19513-89). The complaint contained an ex
parte application for a writ of preliminary attachment.
2. On May 3, 1989 Judge Nartatez, to whose branch the case was
assigned by raffle, issued an Order granting theex parte application
and fixing the attachment bond at P4,600,513.37.
3. On May 11, 1989 the attachment bond having been submitted by
Davao Light, the writ of attachment issued.
4. On May 12, 1989, the summons and a copy of the complaint, as
well as the writ of attachment and a copy of the attachment bond,
were served on defendants Queensland and Adarna; and pursuant to
the writ, the sheriff seized properties belonging to the latter.
5. On September 6, 1989, defendants Queensland and Adarna filed a
motion to discharge the attachment for lack of jurisdiction to issue the
same because at the time the order of attachment was promulgated
(May 3, 1989) and the attachment writ issued (May 11, 1989), the
Trial Court had not yet acquired jurisdiction over the cause and over
the persons of the defendants.
6. On September 14, 1989, Davao Light filed an opposition to the
motion to discharge attachment.
7. On September 19, 1989, the Trial Court issued an Order denying
the motion to discharge.
This Order of September 19, 1989 was successfully challenged by
Queensland and Adarna in a special civil action of certiorari instituted
by them in the Court of Appeals. The Order was, as aforestated,
annulled by the Court of Appeals in its Decision of May 4, 1990. The
Appellate Court's decision closed with the following disposition:
. . . the Orders dated May 3, 1989 granting the
issuance of a writ of preliminary attachment,
dated September 19, 1989 denying the motion to
discharge attachment; dated November 7, 1989
denying petitioner's motion for reconsideration; as
well as all other orders emanating therefrom,
specially the Writ of Attachment dated May 11,
1989 and Notice of Levy on Preliminary
Attachment dated May 11, 1989, are hereby
declared null and void and the attachment hereby
ordered DISCHARGED.
The Appellate Tribunal declared that
. . . While it is true that a prayer for the issuance
of a writ of preliminary attachment may be
included m the complaint, as is usually done, it is
likewise true that the Court does not acquire
jurisdiction over the person of the defendant until
he is duly summoned or voluntarily appears, and
adding the phrase that it be issued "ex parte"
does not confer said jurisdiction before actual
summons had been made, nor retroact jurisdiction
upon summons being made. . . .
PROVISIONAL REMEDIES Sec. 1-6 Rule 57 | 2014 SYLLABUS | 34

It went on to say, citing Sievert v. Court of Appeals, 3 that
"in a proceedings in attachment," the "critical time which
must be identified is . . . when the trial court acquires
authority under law to act coercively against the defendant
or his property . . .;" and that "the critical time is the of the
vesting of jurisdiction in the court over the person of the
defendant in the main case."
Reversal of this Decision of the Court of Appeals of May 4, 1990 is
what Davao Light seeks in the present appellate proceedings.
The question is whether or not a writ of preliminary attachment may
issue ex parte against a defendant before acquisition of jurisdiction of
the latter's person by service of summons or his voluntary submission
to the Court's authority.
The Court rules that the question must be answered in the affirmative
and that consequently, the petition for review will have to be granted.
It is incorrect to theorize that after an action or proceeding has been
commenced and jurisdiction over the person of the plaintiff has been
vested in the court, but before the acquisition of jurisdiction over the
person of the defendant (either by service of summons or his voluntary
submission to the court's authority), nothing can be validly done by the
plaintiff or the court. It is wrong to assume that the validity of acts
done during this period should be defendant on, or held in suspension
until, the actual obtention of jurisdiction over the defendant's person.
The obtention by the court of jurisdiction over the person of the
defendant is one thing; quite another is the acquisition of jurisdiction
over the person of the plaintiff or over the subject-matter or nature of
the action, or the res or object hereof.
An action or proceeding is commenced by the filing of the complaint or
other initiatory pleading. 4 By that act, the jurisdiction of the court
over the subject matter or nature of the action or proceeding is
invoked or called into activity; 5 and it is thus that the court acquires
jurisdiction over said subject matter or nature of the action. 6 And it is
by that self-same act of the plaintiff (or petitioner) of filing the
complaint (or other appropriate pleading) by which he signifies his
submission to the court's power and authority that jurisdiction is
acquired by the court over his person. 7 On the other hand,
jurisdiction over the person of the defendant is obtained, as above
stated, by the service of summons or other coercive process upon him
or by his voluntary submission to the authority of the court. 8
The events that follow the filing of the complaint as a matter of routine
are well known. After the complaint is filed, summons issues to the
defendant, the summons is then transmitted to the sheriff, and finally,
service of the summons is effected on the defendant in any of the
ways authorized by the Rules of Court. There is thus ordinarily some
appreciable interval of time between the day of the filing of the
complaint and the day of service of summons of the defendant. During
this period, different acts may be done by the plaintiff or by the Court,
which are unquestionable validity and propriety. Among these, for
example, are the appointment of a guardian ad litem, 9 the grant of
authority to the plaintiff to prosecute the suit as a pauper
litigant, 10 the amendment of the complaint by the plaintiff as a
matter of right without leave of court, 11 authorization by the Court of
service of summons by publication, 12 the dismissal of the action by
the plaintiff on mere notice. 13
This, too, is true with regard to the provisional remedies of preliminary
attachment, preliminary injunction, receivership or replevin. 14 They
may be validly and properly applied for and granted even before the
defendant is summoned or is heard from.
A preliminary attachment may be defined, paraphrasing the Rules of
Court, as the provisional remedy in virtue of which a plaintiff or other
party may, at the commencement of the action or at any time
thereafter, have the property of the adverse party taken into the
custody of the court as security for the satisfaction of any judgment
that may be recovered. 15 It is a remedy which is purely statutory in
respect of which the law requires a strict construction of the provisions
granting it. 16 Withal no principle, statutory or jurisprudential,
prohibits its issuance by any court before acquisition of jurisdiction
over the person of the defendant.
Rule 57 in fact speaks of the grant of the remedy "at the
commencement of the action or at any time thereafter." 17The phase,
"at the commencement of the action," obviously refers to the date of
the filing of the complaint which, as above pointed out, is the date
that marks "the commencement of the action;" 18 and the reference
plainly is to a time before summons is served on the defendant, or
even before summons issues. What the rule is saying quite clearly is
that after an action is properly commenced by the filing of the
complaint and the payment of all requisite docket and other fees
the plaintiff may apply for and obtain a writ of preliminary attachment
upon fulfillment of the pertinent requisites laid down by law, and that
he may do so at any time, either before or after service of summons
on the defendant. And this indeed, has been the immemorial practice
sanctioned by the courts: for the plaintiff or other proper party to
incorporate the application for attachment in the complaint or other
appropriate pleading (counter-claim, cross-claim, third-party claim)
and for the Trial Court to issue the writ ex-parteat the commencement
of the action if it finds the application otherwise sufficient in form and
substance.
In Toledo v. Burgos, 19 this Court ruled that a hearing on a motion or
application for preliminary attachment is not generally necessary
unless otherwise directed by the Trial Court in its discretion. 20 And
in Filinvest Credit Corporation v. Relova, 21 the Court declared that
"(n)othing in the Rules of Court makes notice and hearing
indispensable and mandatory requisites for the issuance of a writ of
attachment." The only pre-requisite is that the Court be satisfied, upon
consideration of "the affidavit of the applicant or of some other person
who personally knows the facts, that a sufficient cause of action exists,
that the case is one of those mentioned in Section 1 . . . (Rule 57),
that there is no other sufficient security for the claim sought to be
enforced by the action, and that 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 order (of attachment) is
granted above all legal counterclaims." 22 If the court be so satisfied,
the "order of attachment shall be granted," 23 and the writ shall issue
upon the applicant's posting of "a bond executed to the adverse party
in an amount to be fixed by the judge, not exceeding the plaintiffs
claim, conditioned that the latter will pay all the 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." 24
In Mindanao Savings & Loan Association, Inc. v. Court of
Appeals, decided on April 18, 1989, 25 this Court had occasion to
emphasize the postulate that no hearing is required on an application
for preliminary attachment, with notice to the defendant, for the
reason that this "would defeat the objective of the remedy . . . (since
the) time which such a hearing would take, could be enough to enable
the defendant to abscond or dispose of his property before a writ of
attachment issues." As observed by a former member of this
Court, 26 such a procedure would warn absconding debtors-
defendants of the commencement of the suit against them and the
probable seizure of their properties, and thus give them the advantage
of time to hide their assets, leaving the creditor-plaintiff holding the
proverbial empty bag; it would place the creditor-applicant in danger
of losing any security for a favorable judgment and thus give him only
an illusory victory.
Withal, ample modes of recourse against a preliminary attachment are
secured by law to the defendant. The relative ease with which a
preliminary attachment may be obtained is matched and paralleled by
the relative facility with which the attachment may legitimately be
prevented or frustrated. These modes of recourse against preliminary
attachments granted by Rule 57 were discussed at some length by the
separate opinion in Mindanao Savings & Loans Asso. Inc. v. CA., supra.
That separate opinion stressed that there are two (2) ways of
discharging an attachment: first, by the posting of a counterbond;
and second, by a showing of its improper or irregular issuance.
1.0. The submission of a counterbond is an efficacious mode of lifting
an attachment already enforced against property, or even
of preventing its enforcement altogether.
PROVISIONAL REMEDIES Sec. 1-6 Rule 57 | 2014 SYLLABUS | 35

1.1. When property has already been seized under attachment, the
attachment may be discharged upon counterbond in accordance with
Section 12 of Rule 57.
Sec. 12. Discharge of attachment upon giving
counterbond. At any time after an order of
attachment has been granted, the party whose
property has been attached or the person
appearing in his behalf, may, upon reasonable
notice to the applicant, apply to the judge who
granted the order, or to the judge of the court in
which the action is pending, for an order
discharging the attachment wholly or in part on
the security given . . . in an amount equal to the
value of the property attached as determined by
the judge to secure the payment of any judgment
that the attaching creditor may recover in the
action. . . .
1.2. But even before actual levy on property, seizure under attachment
may be prevented also upon counterbond. The defendant need not
wait until his property is seized before seeking the discharge of the
attachment by a counterbond. This is made possible by Section 5 of
Rule 57.
Sec. 5. Manner of attaching property. The
officer executing the order shall without delay
attach, to await judgment and execution in the
action, all the properties of the party against
whom the order is issued in the province, not
exempt from execution, or so much thereof as
may be sufficient to satisfy the applicant's
demand, unless the former makes a deposit with
the clerk or judge of the court from which the
order issued, or gives a counter-bond executed to
the applicant, in an amount sufficient to satisfy
such demand besides costs, or in an amount equal
to the value of the property which is about to be
attached, to secure payment to the applicant of
any judgment which he may recover in the
action. . . . (Emphasis supplied)
2.0. Aside from the filing of a counterbond, a preliminary attachment
may also be lifted or discharged on the ground that it has been
irregularly or improperly issued, in accordance with Section 13 of Rule
57. Like the first, this second mode of lifting an attachment may be
resorted to even before any property has been levied on. Indeed, it
may be availed of after property has been released from a levy on
attachment, as is made clear by said Section 13, viz.:
Sec. 13. Discharge of attachment for improper or
irregular issuance. The party whose property
has been attached may also, at any time
either BEFORE or AFTER the release of the
attached property, or before any attachment shall
have been actually levied, upon reasonable notice
to the attaching creditor, apply to the judge who
granted the order, or to the judge of the court in
which the action is pending, for an order to
discharge the attachment on the ground that the
same was improperly or irregularly issued. If the
motion be made on affidavits on the part of the
party whose property has been attached, but not
otherwise, the attaching creditor may oppose the
same by counter-affidavits or other evidence in
addition to that on which the attachment was
made. . . . (Emphasis supplied)
This is so because "(a)s pointed out in Calderon v. I.A.C., 155 SCRA
531 (1987), The attachment debtor cannot be deemed to have waived
any defect in the issuance of the attachment writ by simply availing
himself of one way of discharging the attachment writ, instead of the
other. Moreover, the filing of a counterbond is a speedier way of
discharging the attachment writ maliciously sought out by the
attaching creditor instead of the other way, which, in most instances .
. . would require presentation of evidence in a fullblown trial on the
merits, and cannot easily be settled in a pending incident of the
case." 27
It may not be amiss to here reiterate other related principles dealt with
in Mindanao Savings & Loans Asso. Inc. v.C.A., supra., 28 to wit:
(a) When an attachment may not be dissolved by
a showing of its irregular or improper issuance:
. . . (W)hen the preliminary attachment is issued
upon a ground which is at the same time the
applicant's cause of action; e.g., "an action for
money or property embezzled or fraudulently
misapplied or converted to his own use by a public
officer, or an officer of a corporation, or an
attorney, factor, broker, agent, or clerk, in the
course of his employment as such, or by any other
person in a fiduciary capacity, or for a willful
violation of duty." (Sec. 1 [b], Rule 57), or "an
action against a party who has been guilty of
fraud m contracting the debt or incurring the
obligation upon which the action is brought" (Sec.
1 [d], Rule 57), the defendant is not allowed to
file a motion to dissolve the attachment under
Section 13 of Rule 57 by offering to show the
falsity of the factual averments in the plaintiff's
application and affidavits on which the writ was
based and consequently that the writ based
thereon had been improperly or irregularly issued
(SEE Benitez v. I.A.C., 154 SCRA 41) the reason
being that the hearing on such a motion for
dissolution of the writ would be tantamount to a
trial of the merits of the action. In other words,
the merits of the action would be ventilated at a
mere hearing of a motion, instead of at the
regular trial. Therefore, when the writ of
attachment is of this nature, the only way it can
be dissolved is by a counterbond (G.B. Inc. v.
Sanchez, 98 Phil. 886).
(b) Effect of the dissolution of a preliminary attachment on the
plaintiffs attachment bond:
. . . The dissolution of the preliminary attachment
upon security given, or a showing of its irregular
or improper issuance, does not of course operate
to discharge the sureties on plaintiff's own
attachment bond. The reason is simple. That bond
is "executed to the adverse party, . . . conditioned
that the . . . (applicant) will pay all the 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" (SEC. 4,
Rule 57). Hence, until that determination is made,
as to the applicant's entitlement to the
attachment, his bond must stand and cannot be
with-drawn.
With respect to the other provisional remedies, i.e., preliminary
injunction (Rule 58), receivership (Rule 59), replevin or delivery of
personal property (Rule 60), the rule is the same: they may also
issue ex parte. 29
It goes without saying that whatever be the acts done by the Court
prior to the acquisition of jurisdiction over the person of defendant, as
above indicated issuance of summons, order of attachment and writ
of attachment (and/or appointments of guardian ad litem, or grant of
authority to the plaintiff to prosecute the suit as a pauper litigant, or
amendment of the complaint by the plaintiff as a matter of right
without leave of court 30 and however valid and proper they might
otherwise be, these do not and cannot bind and affect the defendant
until and unless jurisdiction over his person is eventually obtained by
the court, either by service on him of summons or other coercive
process or his voluntary submission to the court's authority. Hence,
when the sheriff or other proper officer commences implementation of
PROVISIONAL REMEDIES Sec. 1-6 Rule 57 | 2014 SYLLABUS | 36

the writ of attachment, it is essential that he serve on the defendant
not only a copy of the applicant's affidavit and attachment bond, and
of the order of attachment, as explicity required by Section 5 of Rule
57, but also the summons addressed to said defendant as well as a
copy of the complaint and order for appointment of guardian ad
litem, if any, as also explicity directed by Section 3, Rule 14 of the
Rules of Court. Service of all such documents is indispensable not only
for the acquisition of jurisdiction over the person of the defendant, but
also upon considerations of fairness, to apprise the defendant of the
complaint against him, of the issuance of a writ of preliminary
attachment and the grounds therefor and thus accord him the
opportunity to prevent attachment of his property by the posting of a
counterbond in an amount equal to the plaintiff's claim in the
complaint pursuant to Section 5 (or Section 12), Rule 57, or dissolving
it by causing dismissal of the complaint itself on any of the grounds set
forth in Rule 16, or demonstrating the insufficiency of the applicant's
affidavit or bond in accordance with Section 13, Rule 57.
It was on account of the failure to comply with this fundamental
requirement of service of summons and the other documents above
indicated that writs of attachment issued by the Trial Court ex
parte were struck down by this Court's Third Division in two (2) cases,
namely: Sievert v. Court of Appeals, 31 and BAC Manufacturing and
Sales Corporation v. Court of Appeals, et al. 32 In contrast to the case
at bar where the summons and a copy of the complaint, as well as
the order and writ of attachment and the attachment bond were
served on the defendant in Sievert, levy on attachment was
attempted notwithstanding that only the petition for issuance of the
writ of preliminary attachment was served on the defendant, without
any prior or accompanying summons and copy of the complaint; and
in BAC Manufacturing and Sales Corporation, neither the summons nor
the order granting the preliminary attachment or the writ of
attachment itself was served on the defendant "before or at the time
the levy was made."
For the guidance of all concerned, the Court reiterates and reaffirms
the proposition that writs of attachment may properly issue ex
parte provided that the Court is satisfied that the relevant requisites
therefor have been fulfilled by the applicant, although it may, in its
discretion, require prior hearing on the application with notice to the
defendant; but that levy on property pursuant to the writ thus issued
may not be validly effected unless preceded, or contemporaneously
accompanied, by service on the defendant of summons, a copy of the
complaint (and of the appointment of guardian ad litem, if any), the
application for attachment (if not incorporated in but submitted
separately from the complaint), the order of attachment, and the
plaintiff's attachment bond.
WHEREFORE, the petition is GRANTED; the challenged decision of the
Court of Appeals is hereby REVERSED, and the order and writ of
attachment issued by Hon. Milagros C. Nartatez, Presiding Judge of
Branch 8, Regional Trial Court of Davao City in Civil Case No. 19513-89
against Queensland Hotel or Motel or Queensland Tourist Inn and
Teodorico Adarna are hereby REINSTATED. Costs against private
respondents.
SO ORDERED.
G.R. No. 102448 August 5, 1992
RICARDO CUARTERO, petitioner,
vs.
COURT OF APPEALS, ROBERTO EVANGELISTA and FELICIA
EVANGELISTA, respondents.
This is a petition for review on certiorari seeking to annul the decision
of the Court of Appeals promulgated on June 27, 1991 as well as the
subsequent resolution dated October 22, 1991 denying the motion for
reconsideration in CA-G.R. SP No. 23199 entitled "Spouses Roberto
and Felicia Evangelista v. Honorable Cezar C. Peralejo, Presiding Judge
Regional Trial Court of Quezon City, Branch 98, and Ricardo Cuartero,"
which nullified the orders of the trial court dated August 24, 1990 and
October 4, 1990 and cancelled the writ of preliminary attachment
issued on September 19, 1990.
Following are the series of events giving rise to the present
controversy.
On August 20, 1990, petitioner Ricardo Cuartero filed a complaint
before the Regional Trial Court of Quezon City against the private
respondents, Evangelista spouses, for a sum of money plus damages
with a prayer for the issuance of a writ of preliminary attachment. The
complaint was docketed as Civil Case No. Q-90-6471.
On August 24, 1990, the lower court issued an order granting ex-
parte the petitioner's prayer for the issuance of a writ of preliminary
attachment.
On September 19, 1990, the writ of preliminary attachment was issued
pursuant to the trial court's order dated August 24, 1990. On the same
day, the summons for the spouses Evangelista was likewise prepared.
The following day, that is, on September 20, 1990, a copy of the writ
of preliminary attachment, the order dated August 24, 1990, the
summons and the complaint were all simultaneously served upon the
private respondents at their residence. Immediately thereafter, Deputy
Sheriff Ernesto L. Sula levied, attached and pulled out the properties in
compliance with the court's directive to attach all the properties of
private respondents not exempt from execution, or so much thereof as
may be sufficient to satisfy the petitioner's principal claim in the
amount of P2,171,794.91.
Subsequently, the spouses Evangelista filed motion to set aside the
order dated August 24, 1990 and discharge the writ of preliminary
attachment for having been irregularly and improperly issued. On
October 4, 1990, the lower court denied the motion for lack of merit.
Private respondents, then, filed a special civil action for certiorari with
the Court of Appeals questioning the orders of the lower court dated
August 24, 1990 and October 4, 1990 with a prayer for a restraining
order or writ of preliminary injunction to enjoin the judge from taking
further proceedings below.
In a Resolution dated October 31, 1990, the Court of Appeals resolved
not to grant the prayer for restraining order or writ of preliminary
injunction, there being no clear showing that the spouses Evangelista
were entitled thereto.
On June 27, 1991, the Court of Appeals granted the petition
for certiorari and rendered the questioned decision. The motion for
reconsideration filed by herein petitioner Cuartero was denied for lack
of merit in a resolution dated October 22, 1991. Hence, the present
recourse to this Court.
The petitioner raises the following assignment of errors:
I
THE COURT OF APPEALS ERRED AND
COMMITTED A GRAVE ABUSE OF DISCRETION,
AMOUNTING TO LACK OF JURISDICTION WHEN
IT HELD THAT THE REGIONAL TRIAL COURT DID
NOT ACQUIRE JURISDICTION OVER
RESPONDENT SPOUSES.
II
THE COURT OF APPEALS ERRED AND ACTED
WITH GRAVE ABUSE OF DISCRETION WHEN IT
HELD THAT THE REGIONAL TRIAL COURT COULD
NOT VALIDLY ISSUE THE SUBJECT WRIT OF
PRELIMINARY ATTACHMENT WHICH IS AN
ANCILLARY REMEDY. (Rollo, p. 13)
The Court of Appeals' decision is grounded on its finding that the trial
court did not acquire any jurisdiction over the person of the
defendants (private respondents herein). It declared that:
. . . the want of jurisdiction of the trial court to
proceed in the main case as well as the ancillary
remedy of attachment is quite clear. It is not
disputed that neither service of summons with a
copy of the complaint nor voluntary appearance of
petitioners was had in this case before the trial
court issued the assailed order dated August 24,
1990, as well as the writ of preliminary
attachment dated September 19, 1990. This is
PROVISIONAL REMEDIES Sec. 1-6 Rule 57 | 2014 SYLLABUS | 37

reversible error and must be corrected
on certiorari. (Rollo, p. 24)
The appellate tribunal relied on the case of Sievert v. Court of Appeals,
168 SCRA 692 (1988) in arriving at the foregoing conclusion. It stated
that:
Valid service of summons and a copy of the
complaint vest jurisdiction in the court over the
defendant both for the purpose of the main case
and for purposes of the ancillary remedy of
attachment and a court which has not acquired
jurisdiction over the person of defendant, cannot
bind the defendant whether in the main case or in
any ancillary proceeding such as attachment
proceedings (Sievert v. Court of Appeals, 168
SCRA 692). (Rollo, p. 24)
The private respondents, in their comment, adopted and reiterated the
aforementioned ruling of the Court of Appeals. They added that aside
from the want of jurisdiction, no proper ground also existed for the
issuance of the writ of preliminary attachment. They stress that the
fraud in contracting the debt or incurring the obligation upon which the
action is brought which comprises a ground for attachment must have
already been intended at the inception of the contract. According to
them, there was no intent to defraud the petitioner when the
postdated checks were issued inasmuch as the latter was aware that
the same were not yet funded and that they were issued only for
purposes of creating an evidence to prove a pre-existing obligation.
Another point which the private respondents raised in their comment is
the alleged violation of their constitutionally guaranteed right to due
process when the writ was issued without notice and hearing.
In the later case of Davao Light and Power Co., Inc. v. Court of
Appeals, G.R. No. 93262, November 29, 1991, we had occasion to deal
with certain misconceptions which may have arisen from
our Sievert ruling. The question which was resolved in the Davao
Light case is whether or not a writ of preliminary attachment may
issue ex-parteagainst a defendant before the court acquires jurisdiction
over the latter's person by service of summons or his voluntary
submission to the court's authority. The Court answered in the
affirmative. This should have clarified the matter but apparently
another ruling is necessary.
A writ of preliminary attachment is defined as a provisional remedy
issued upon order of the court where an action is pending to be levied
upon the property or properties of the defendant therein, the same to
be held thereafter by the sheriff as security for the satisfaction of
whatever judgment might be secured in said action by the attaching
creditor against the defendant (Adlawan v. Tomol, 184 SCRA 31
[1990] citing Virata v. Aquino, 53 SCRA 30-31 [1973]).
Under section 3, Rule 57 of the Rules of Court, the only requisites for
the issuance of the writ are the affidavit and bond of the applicant. As
has been expressly ruled in BF Homes, Inc. v. Court of Appeals, 190
SCRA 262 (1990), citing Mindanao Savings and Loan Association, Inc.
v. Court of Appeals, 172 SCRA 480 (1989), no notice to the adverse
party or hearing of the application is required inasmuch as the time
which the hearing will take could be enough to enable the defendant
to abscond or dispose of his property before a writ of attachment
issues. In such a case, a hearing would render nugatory the purpose
of this provisional remedy. The ruling remains good law. There is,
thus, no merit in the private respondents' claim of violation of their
constitutionally guaranteed right to due process.
The writ of preliminary attachment can be applied for and granted at
the commencement of the action or at any time thereafter (Section 1,
Rule 57, Rules of Court). In Davao Light and Power, Co., Inc. v. Court
of Appeals, supra, the phrase "at the commencement of the action" is
interpreted as referring to the date of the filing of the complaint which
is a time before summons is served on the defendant or even before
summons issues. The Court added that
. . . after an action is properly commenced by
filing of the complaint and the payment of all
requisite docket and other fees the plaintiff may
apply and obtain a writ of preliminary attachment
upon the fulfillment of the pertinent requisites laid
down by law, and that he may do so at any time,
either before or after service of summons on the
defendant. And this, indeed, has been the
immemorial practice sanctioned by the courts: for
the plaintiff or other proper party to incorporate
the application for attachment in the complaint or
other appropriate pleading (counter-claim, cross-
claim, third-party-claim) and for the Trial Court to
issue the writ ex-parte at the commencement of
the action if it finds the application otherwise
sufficient in form and substance.
The Court also pointed out that:
. . . It is incorrect to theorize that after an action
or proceeding has been commenced and
jurisdiction over the person of the plaintiff has
been vested in the Court, but before acquisition of
jurisdiction over the person of the
defendant (either by service of summons or his
voluntary submission to the Court's authority),
nothing can be validly done by the plaintiff or the
Court. It is wrong to assume that the validity of
acts done during the period should be dependent
on, or held in suspension until, the actual
obtention of jurisdiction over the defendants
person. The obtention by the court of jurisdiction
over the person of the defendant is one thing;
quite another is the acquisition of jurisdiction over
the person of the plaintiff or over the subject
matter or nature of the action, or the res or object
thereof.
It is clear from our pronouncements that a writ of preliminary
attachment may issue even before summons is served upon the
defendant. However, we have likewise ruled that the writ cannot bind
and affect the defendant. However, we have likewise ruled that the
writ cannot bind and affect the defendant until jurisdiction over his
person is eventually obtained. Therefore, it is required that when the
proper officer commences implementation of the writ of attachment,
service of summons should be simultaneously made.
It must be emphasized that the grant of the provisional remedy of
attachment practically involves three stages: first, the court issues the
order granting the application; second, the writ of attachment issues
pursuant to the order granting the writ; and third, the writ is
implemented. For the initial two stages, it is not necessary that
jurisdiction over the person of the defendant should first be obtained.
However, once the implementation commences, it is required that the
court must have acquired jurisdiction over the defendant for without
such jurisdiction, the court has no power and authority to act in any
manner against the defendant. Any order issuing from the Court will
not bind the defendant.
In Sievert v. Court of Appeals, supra, cited by the Court of Appeals in
its questioned decision, the writ of attachment issued ex-parte was
struck down because when the writ of attachment was being
implemented, no jurisdiction over the person of the defendant had as
yet been obtained. The court had failed to serve the summons to the
defendant.
The circumstances in Sievert are different from those in the case at
bar. When the writ of attachment was served on the spouses
Evangelista, the summons and copy of the complaint were also
simultaneously served.
It is appropriate to reiterate this Court's exposition in the Davao Light
and Power case cited earlier, to wit:
. . . writs of attachment may properly issue ex-
parte provided that the Court is satisfied that the
relevant requisites therefore have been fulfilled by
the applicant, although it may, in its discretion,
require prior hearing on the application with notice
to the defendant, but that levy on property
PROVISIONAL REMEDIES Sec. 1-6 Rule 57 | 2014 SYLLABUS | 38

pursuant to the writ thus issued may not be validly
effected unless preceded, or contemporaneously
accompanied by service on the defendant of
summons, a copy of the complaint (and of the
appointment of guardian ad litem, if any), the
application for attachment (if not incorporated in
but submitted separately from the complaint), the
order of attachment, and the plaintiff's attachment
bond.
The question as to whether a proper ground existed for the issuance
of the writ is a question of fact the determination of which can only be
had in appropriate proceedings conducted for the purpose (Peroxide
Philippines Corporation V. Court of Appeals, 199 SCRA 882 [1991]). It
must be noted that the spouses Evangelista's motion to discharge the
writ of preliminary attachment was denied by the lower court for lack
of merit. There is no showing that there was an abuse of discretion on
the part of the lower court in denying the motion.
Moreover, an attachment may not be dissolved by a showing of its
irregular or improper issuance if it is upon a ground which is at the
same time the applicant's cause of action in the main case since an
anomalous situation would result if the issues of the main case would
be ventilated and resolved in a mere hearing of a motion (Davao Light
and Power Co., Inc. v. Court of Appeals, supra, The Consolidated Bank
and Trust Corp. (Solidbank) v. Court of Appeals, 197 SCRA 663
[1991]).
In the present case, one of the allegations in petitioner's complaint
below is that the defendant spouses induced the plaintiff to grant the
loan by issuing postdated checks to cover the installment payments
and a separate set of postdated cheeks for payment of the stipulated
interest (Annex "B"). The issue of fraud, then, is clearly within the
competence of the lower court in the main action.
WHEREFORE, premises considered, the Court hereby GRANTS the
petition. The challenged decision of the Court of Appeals is REVERSED,
and the order and writ of attachment issued by Hon. Cezar C. Peralejo,
Presiding Judge of Branch 98, Regional Trial Court of Quezon City
against spouses Evangelista are hereby REINSTATED. No
pronouncement as to costs.
SO ORDERED.
G.R. No. L-46009 May 14, 1979
RICARDO T. SALAS and MARIA SALAS, petitioners,
vs.
HON. MIDPANTAO L. ADIL, as Judge of Branch II, Court of
First Instance of Iloilo, ROSITA BEDRO and BENITA
YU, respondents.
Certiorari to nullify the Order of Attachment of May 13, 1977, as well
as the Writ of Attachment dated May 16, 1977, issued by respondent
Judge in Civil Case No. 10770 of the Court of First Instance of Iloilo,
entitled "Rosita Bedro and Benita Yu v. Spouses Ricardo T. Salas and
Maria Salas, et al.
On September 10, 1976, respondents Rosita Bedro and Benita Yu filed
the afore-mentioned civil action with the Court of First Instance of
Iloilo against herein petitioners Ricardo T. Salas and Maria Salas, the
Philippine Commercial & Industrial Bank, in its capacity as
Administrator of the Testate Estate of the deceased Charles Newton
Hodges, and Avelina A. Magno, in her capacity as Administratrix of the
Testate Estate of the deceased Linnie Jane Hodge to annul the deed of
sale of Lot No. 5 executed by administrators of the Hodges Estate in
favor of the Spouses Ricardo T. Salas and Maria Salas and for
damages. The action for annulment was predicated upon the averment
that Lot No. 5, being a subdivision road, is intend for public use and
cannot be sold or disposed of by the Hodges Estate. The claim for
damages was based on the assertion that after defendant spouses
purchased Lots Nos. 2 and 3, they also purchased Lot No. 5 and
thereafter "erected wooden posts, laid and plastered at the door of the
house on Lot No. 3, with braces of hardwood, lumber and plywood
nailed to the post", thereby preventing Rosita Bedro and Benita Yu
from using the road on the afore-mentioned lot, Lot No. 5, and that as
a result of such obstruction, private respondents Rosita Bedro and
Benita Yu sustained actual damages in the amount of P114,000.00,
plus the sum of Pl,000.00 as damages daily from June 30, 1976 due to
the stoppage in the construction of their commercial buildings on Lot
No. 3, and moral damages in the amount of P200,000.00.
In their answer to the complaint, the Salas spouses, after specifically
denying the material allegations in the complaint, stated that Lot No. 5
had been registered in the name of the C. N. Hodges as their exclusive
private property and was never subjected to any servitude or
easement of right of way in favor of any person; that any occupants of
Lots Nos. 2 and 3 have direct access to Bonifacio Drive, a National
Highway, hence, Lot No. 5 is neither needed nor required for the
egress or ingress of the occupants thereof; and that private
respondents, as a matter of fact, since 1964 had excluded and
separated completely their property (Lots Nos. 2 and 3) from Lot No. 5
by building a concrete wall on the boundary thereon without providing
any gate as entrance or exit towards Lot No. 5; and that private
respondents have no personality to question the validity of the deed of
sale over Lot No. 5 since they were not parties to the same and the
sale was duly approved by the probate court.
In a motion dated May 12, 1977, private respondents filed a Motion for
Attachment, alleging, among others, that the case was "for annulment
of a deed of sale and recovery of damages" and that the defendants
have removed or disposed of their properties or are about to do so
with intent to defraud their creditors especially the plaintiffs in this
case.
On May 13, 1977, respondent Judge issued ex-parte a Writ of
Attachment "against the properties of the defendants particularly Lots
Nos. 1 and 4 of Psc-2157 less the building standing thereon upon the
plaintiffs filing a bond in the amount of P200,000.00 subject to the
approval of this Court." After a surety bond in the amount of
P200,000.00, executed on May 11, 1977 by the Central Surety and
Insurance Company as surety was filed, the writ itself was issued by
respondent Judge on May 16, 1977, directing the Sheriff to attach the
properties above-mentioned. On May 17, 1977, the Deputy Sheriff of
Iloilo levied upon the aforesaid properties of petitioners.
Contending that respondent Judge gravely abused his discretion in
issuing the said Writ of Attachment, petitioners filed the present
petition.
In certiorari proceedings, the cardinal rule is that the court must be
given the opportunity to correct itself, Thus, for the special civil action
of certiorari to prosper, there must be no appeal nor any plain, speedy
and adequate remedy in the ordinary course of law. Petitioners,
therefore, must exhaust all available remedies in the lower court
before filing a petition for certiorari, otherwise the petition shall be
held to be premature.
In the instant case, it appears that petitioners have adequate remedy
under the law. They could have filed an application with the court a
quo for the discharge of the attachment for improper or irregular
issuance under section 13, Rule 57, of the Revised Rules of Court,
which provides the following
SEC. 13. Discharge of attachment for improper or
irregular issuance. The party whose property
has been attached may also, at any time either
before or after the release of the attached
property, or before any attachment shall have
been actually levied, upon reasonable notice to
the attaching creditor, apply to the judge
who Salas vs. Adil granted the order, or to the
judge of the court in which the action is pending,
for an order to discharge the attachment on the
ground that the same was improperly or
irregularly issued. If the motion be made on
affidavits on the part of the party whose property
has been attached, but not otherwise, the
attaching creditor may oppose the same by
counter-affidavits or other evidence in addition to
that on which the attachment was made. After
hearing, the judge shall order the discharge of the
attachment if it appears that it was improperly or
PROVISIONAL REMEDIES Sec. 1-6 Rule 57 | 2014 SYLLABUS | 39

irregularly issued and the defect is not cured
forthwith.
Considering that petitioners have not availed of this remedy, the
instant petition is premature.
We deem it necessary, however, for the guidance of respondent Court
and of the parties, to stress herein the nature of attachment as an
extraordinary provisional remedy.
A preliminary attachment is a rigorous remedy, which exposes the
debtor to humiliation and annoyance, such it should not be abused as
to cause unnecessary prejudice. It is, therefore, the duty of the court,
before issuing the writ, to ensure that all the requisites of the law have
been complied with; otherwise the judge acts in excess of his
jurisdiction and the so issued shall be null and void .
1

In Carpio v. Macadaeg,
2
this Court said:
Respondent Judge should not have issued the two
writs of preliminary attachment (Annexes C and C-
1) on Abaya's simple allegation that the petitioner
was about to dispose of his property, thereby
leaving no security for the satisfaction of any
judgment. Mere removal or disposal of property,
by itself, is not ground for issuance of preliminary
attachment, notwithstanding absence of any
security for the satisfaction of any judgment
against the defendant. The removal or disposal, to
justify preliminary attachment, must have been
made with intent to defraud defendant's creditors.
Respondent Judge in fact corrected himself. Acting
on petitioner's motion to discharge attachment
and apparently believing the correctness of the
grounds alleged therein, he set aside the orders of
attachment (Order of March 11, 1960, Annex F)
But reversing himself again, he set aside his order
of March 11, 1960 (Annex K, dated March 29,
1960). This he did apparently on Abaya's
contention that petitioner was about to remove or
dispose of his property in order to defraud his
creditors, as examples of which disposals he
pointed to the alleged sale of the horses and of
petitioner's office furniture. ... These averments of
fraudulent disposals were controverted by
petitioner who ... reiterated the defenses against
preliminary attachment which he had previously
enumerated in his petition to discharge the two
orders of attachment. Thus the question of
fraudulent disposal was put in issue; and
respondent Judge, before issuing the pre
attachment anew, should have given the parties
opportunity to prove their respective claims or, at
the very least should have provided petitioner with
the chance to show that he had not been
disposing of his property in fraud of creditors.
(citing National Coconut Corporation v. Pecson L-
4296, Feb. 25, 1952, Villongco v. Panlilio, 6214,
Nov. 20, 1953).
And in Garcia v. Reyes,
3
considering the allegation that the debtors
were removing or disposing of some of their properties with intent to
defraud their creditors, 'this Court said that "(a)ll in all due process
would seem to require that both parties further ventilate their
respective contentions in a hearing that could indeed reveal the truth.
Fairness would be served thereby, the demand of reason satisfied."
Considering the gravity of the allegation that herein petitioners have
removed or disposed of their properties or are about to do so with
intent to defraud their creditors, and further considering that the
affidavit in support of the pre attachment merely states such ground in
general terms, without specific allegations of lances to show the
reason why plaintiffs believe that defendants are disposing of their
properties in fraud of creditors, it was incumbent upon respondent
Judge to give notice to petitioners and to allow wherein evidence is
them to present their position at a to be received. Moreover, it appears
from the records that private respondents are claiming unliquidated
damages, including moral damages, from petitioners. The authorities
agree that the writ of attachment is not available 'm a suit for
damages where the amount claimed is contingent or unliquidated.
We think, however, that a rule sufficient for the
determination of this case has been suggested
and acted upon, and that the remedy does not
exist where unliquidated damages were
demanded. ... In Warwick v. Chase, 23 Md 161, it
is said: 'It is necessary that the standard for
ascertaining the amount of damages claimed
should not only appear, but that it should be fixed
and certain, and in no degree dependent on facts
either speculative or Uncertain ... The general rule
is, that unliquidated damages, ... cannot be
recovered by attachment, unless the contract
affords a certain measure or standard for
ascertaining the amount of the damages ...
4

Further.
The statute authorizing the issuance of the writ of
garnishment and that relating to the issuance of
the writ of attachment ... have not been construed
as authorizing the writs to be issued when the
plaintiff's suit is technically an action for debt.
Neither of the writs may be issued when the suit is
for damages for tort, but they may be issued
when the plaintiff's claim arises out of contract
either express or implied, and the demand is
liquidated, that is, the amount of the claim is not
contingent, is capable of being definitely
ascertained by the usual means of evidence, and
does not rest in the discretion of the jury.
5

WHEREFORE, the instant petition is hereby DENIED, in order to enable
petitioners to move before respondent Court for the discharge of the
attachment on the ground of its improper and irregular issuance,
pursuant to section 13, Rule 57, of the Revised Rules of Court, and for
the aforesaid Court to act thereon in accordance with the foregoing.
G.R. No. 40054 September 14, 1933
LA GRANJA, INC., petitioner,
vs.
FELIX SAMSON, Judge of First Instance of Cagayan, CHUA
BIAN, CHUA YU LEE and CHUA KI,respondents.
In this original petition for mandamus filed by the corporate entity, La
Granja, Inc., against Felix Samson, as Judge of the Court of First
Instance of Cagayan, Chua Bian, Chua Yu Lee and Chua Ki, the
petitioner herein, for the reasons stated in its petition, prays that a writ
of mandamus be issued against the respondent Judge compelling him
to issue a writ of attachment against the properties of the other
respondents herein, who are defendants in civil case No. 1888 of the
Court of First Instance of Cagayan. The pertinent facts necessary for
the solution of the questions raised in the present case are as follows:
On July 5, 1932, the petitioner herein, La Granja, Inc., filed a
complaint in the Court of First Instance of Cagayan, against Chua Bian,
Chua Yu Lee and Chua Ki, for the recovery of the sum of P2,418.18
with interest thereon at the rate of 12 per cent per annum, which case
was docketed as civil case No. 1888. The plaintiff at the same time,
also prayed for the issuance of an order of attachment against the
aforementioned defendants' property and accompanied said complaint
with an affidavit of the manager of the aforesaid petitioner, La Granja,
Inc., wherein it was alleged among other essential things, that the said
defendants have disposed or are disposing of their properties in favor
of the Asiatic Petroleum Co., with intent to defraud their creditors. The
respondent judge, wishing to ascertain or convince himself of the truth
of the alleged disposal, required the petitioner herein to present
evidence to substantiate its allegation, before granting its petition.
Inasmuch as the petitioner refused to comply with the court's
requirement, alleging as its ground that was not obliged to do so, the
respondent judge dismissed said petition for an order of attachment.
PROVISIONAL REMEDIES Sec. 1-6 Rule 57 | 2014 SYLLABUS | 40

The only question to decide in the present case is whether or not the
mere filing of an affidavit executed in due form is sufficient to compel
a judge to issue an order of attachment.
Section 426 of the Code of Civil procedure provides the following:
SEC. 426. Granting order of attachment. A judge or
justice of the peace shall grant an order of attachment when
it is made to appear to the judge or justice of the peace by
the affidavit of the plaintiff, or of some other person who
knows the facts, that a sufficient cause of action exists, and
that the case is one of those mentioned in section four
hundred and twenty-four, and that there is no other
sufficient security for the claim sought to be enforced by the
action, and that the amount due to the plaintiff above all
legal set-offs or counterclaims is as much as the sum for
which the order is granted.
It will be seen that the legal provision just cited orders the granting of
a writ of attachment when it has been made to appear by affidavit that
the facts mentioned by law as sufficient to warrant the issuance
thereof, exist. Although the law requires nothing more than the
affidavit as a means of establishing the existence of such facts,
nevertheless, such affidavit must be sufficient to convince the court of
their existence, the court being justified in rejecting the affidavit if it
does not serve this purpose and in denying the petition for an order of
attachment. The affidavit filed by the petitioner, La Granja, Inc., must
not have satisfied the respondent judge inasmuch as he desired to
ascertain or convince himself of the truth of the facts alleged therein
by requiring evidence to substantiate them. The sufficiency or
insufficiency of an affidavit depends upon the amount of credit given it
by the judge, and its acceptance or rejection, upon his sound
discretion.
Hence, the respondent judge, in requiring the presentation of evidence
to establish the truth of the allegation of the affidavit that the
defendants had disposed or were disposing of their property to
defraud their creditors, has done nothing more than exercise his sound
discretion in determining the sufficiency of the affidavit.
In view of the foregoing considerations, we are of the opinion and so
hold that the mere filing of an affidavit executed in due form is not
sufficient to compel a judge to issue an order of attachment, but it is
necessary that by such affidavit it be made to appear to the court that
there exists sufficient cause for the issuance thereof, the determination
of such sufficiency being discretionary on the part of the court.
Wherefore, the petition for a writ of mandamus is hereby denied and
the same is dismissed, with costs against the petitioner. So ordered.

SECTION 3. Affidavit and bond required. An order of
attachment shall be granted only when it appears by the affidavit of
the applicant, or of some other person who personally knows the facts,
that a sufficient cause of action exists, that the case is one of those
mentioned in Section 1 hereof, that there is no other sufficient security
for the claim, sought to be enforced by the action, and that 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 order is granted above all legal counterclaims. The
affidavit, and the bond required by the next succeeding section, must
be duly filed with the court before the order issues.
G.R. No. L-45720 December 29, 1937
VENTURA GUZMAN, petitioner,
vs.
ALFREDO CATOLICO and SIMEON RAMOS, Judge of First
Instance of Isabela, respondents.
This is a petition filed by Ventura Guzman, praying this court, after
proper proceedings, to render judgment declaring illegal and void and
setting aside the writ of preliminary attachment issued by the
respondent judge, Honorable Simeon Ramos, as judge of the Court of
First Instance of Isabela, and ordering the dissolution thereof.
The pertinent facts necessary for the resolution of the legal question
raised in the present case are as follows:
On March 8, 1937, the respondent Alfredo Catolico brought an action
against the herein petitioner Ventura Guzman in the Court of First
Instance of Isabela, for the recovery from the latter of the amount of
his fees for services rendered by him as attorney, praying, at the same
time, for the issuance of a writ of preliminary attachment against all of
the properties adjudicated to said petitioner in special proceedings No.
179 of said court. As grounds for the issuance of said writ of
preliminary attachment, he alleged: "That the herein defendant is
trying to sell and dispose of the properties adjudicated to him, with
intention to defraud his creditors, particularly the herein plaintiff,
thereby rendering illusory the judgment that may be rendered against
him, inasmuch as he has no other properties outside the same to
answer for the fees the court may fix in favor of the plaintiff, this case
being one of those mentioned by the Code of Civil Procedure
warranting the issuance of a writ of preliminary attachment"
(paragraph 8 of the complaint there appears the following affidavits:
"I, Alfredo Catolico, of age, married and resident of Tuguegarao,
Cagayan, after being duly sworn, declare: That I am the same plaintiff
in this case; that I have prepared and read the same (complaint) and
that all the allegations thereof are certain and true, to the best of
knowledge and belief."
In view of the said complaint and affidavit, the respondent judge, on
March 10, 1937, issued an order granting the petition and ordering the
issuance of a writ of preliminary attachment, after the filing of the
corresponding bond by the plaintiff.
On April 15, 1937, said defendant Ventura Guzman filed a motion for
the cancellation of said writ of preliminary attachment on the ground
that it had been improperly, irregularly and illegally issued, there being
no allegation, either in the complaint or in the affidavit solemnizing it,
that there is no other sufficient security for the claim sought to be
enforced by the action; that the amount due to the plaintiff, above the
legal set-off and counterclaim, is as much as the sum of which the
preliminary attachment has been granted, and that the affidavit of the
plaintiff is base in mere information and belief.
Said motion was denied by the respondent judge in an order of July
10, 1937.
The only question to be decided in this case is whether or not the
requisites prescribed by law for the issuance of a writ of preliminary
attachment have been complied with.
Section 426 of the Code of the Civil Procedure provides that "A judge
or justice of the peace shall grant an order of attachment when it is
made to appear to the judge or justice of the peace by the affidavit of
the plaintiff, or of some other person who knows the facts, that a
sufficient cause of action exists, and that the case is one of those
mentioned in section four hundred and twenty-four, and that there is
no other sufficient security for the claim sought to be enforced by the
action, and that the amount due to the plaintiff above all legal set-offs
or counterclaims is as much as the sum for which the order is
granted."
The petitioner, in attacking the legality and validity of the writ of
preliminary attachment, which is the subject matter of this petition,
relies on the alleged lack of an allegation in the complaint or in the
affidavit to the effect "that there is no sufficient security for the claim
sought to be enforced by the action and that the amount alleged to be
due to the plaintiff above all legal set-offs and counterclaims is as
much as the sum for which the writ has been granted", and on the fact
that the affidavit is based on mere information and belief of the
plaintiff.
With respect to the last requisites just stated above, the affidavit is not
defective because in it the therein plaintiff and herein respondent
Alfredo Catolico states "that all the allegations thereof are certain and
true, to the best of my knowledge and belief", and not that they are so
according to his information and belief.
As to the other two requisites, there is no allegation, either in the
complaint or in affidavit solemnizing it, to the effect that there is no
other sufficient security for the claim which the plaintiff seeks to
enforce by his action, and that the amount due him from the
defendant, above all legal set-offs and counterclaims, is as much as
the sum for which the writ of preliminary attachment has been
PROVISIONAL REMEDIES Sec. 1-6 Rule 57 | 2014 SYLLABUS | 41

granted. Now then, does the omission of these two requisites
constitute a defect preventing a judge of the Court of First Instance
from issuing a writ of preliminary attachment?lawphil.net
Attachment is a juridical institution which has for its purpose to secure
the outcome of the trial, that is, the satisfaction of the pecuniary
obligation really contracted by a person or believed to have been
contracted by him, either by virtue of a civil obligation emanating from
contract or law, or by virtue of some crime or misdemeanor that he
might have committed, and the writ issued, granting it, is executed by
attaching and safely keeping all the movable property of the
defendant, or so much thereof as may be sufficient to satisfy the
plaintiff's demands (sec. 428, Act No. 190), or by filing a copy of said
writ with the register of deeds for the province in which the real
property is situated, whether standing upon the records in the name of
the defendant or not appearing at all upon the record, which
constitutes a limitation of ownership or the right to enjoy or dispose of
a thing without further limitations than those established by law (art.
348, Civil Code), since the owner of the property attached cannot
dispose of the same free of all liens and encumbrances. The law
authorizing the issuance of a writ of preliminary attachment should,
therefore, be construed strictly in favor of the judge should require
that all the requisites prescribed by law be complied with, without
which a judge acquires no jurisdiction to issue the writ. If he does so
in spite of noncompliance with said requisites, he acts in excess of his
jurisdiction and with the writ so issued by him will be null and void.
The jurisdiction of attachment proceedings being a special
one, it cannot be legitimately exercised unless the attaching
creditor pursues substantially the essential requirements of
the statute, and the court can act only under the special
power limited by the statute and according to the forms of
procedures it prescribes. . . . (6 C. J., 88, paragraph 121.)
Where the statutes requires the affidavit to show that
defendant is indebted to plaintiff in an amount specified, or
that the latter is entitled to recover such an amount, over
and above all legal payments, set-offs, or counterclaims,
compliance with this requirement is essential to confer
jurisdiction to issue the writ. (6 C. J., 132,
paragraph 201.)
An affidavit is fatally defective where it fails to comply, at
least substantially, with a statutory requirement that is shall
state that the indebtedness for which the action is brought
has not been secured by any mortgage or lien upon real or
personal property, or any pledge of personal property, or, if
so secured, that the security has become valueless. . . . (6
C. J., 146, paragraph 231.)
For the foregoing consideration, this court is of the opinion and so
holds that failure to allege in a complaint or in the affidavit solemnizing
it, or in a separate one, the requisites prescribed by section 426 of the
Code of Civil Procedure for the issuance of a writ of preliminary
attachment that there is no other sufficient security for the claim
sought to be enforced by the action, and that the amount due to the
plaintiff above all legal set-offs or counterclaims is as much as the sum
for which the order is sought, renders a writ of preliminary
attachments issued against the property of a defendant fatally
defective, and the judge issuing it acts in excess of his jurisdiction.
Wherefore, the writ of certiorari applied for is granted, and the writ of
preliminary attachment issued by the respondent judge in civil case
No. 1460 of the Court of First Instance of Isabela, wherein the herein
respondent Alfredo Catolico is plaintiff and the herein petitioner
Ventura Guzman is defendant, is declared null and void, with costs to
respondent Alfredo Catolico. So ordered.
G.R. No. 55272 April 10, 1989
JARDINE-MANILA FINANCE, INC., petitioner,
vs.
COURT OF APPEALS, IMPACT CORPORATION, RICARDO DE
LEON and EDUARDO DE LEON, respondents.
This is a petition for review on certiorari seeking to reverse and set
aside: (a) the August 29, 1980 decision of the Court of Appeals 1 in
Special Proceedings CA-G.R. No. SP-09972-R entitled "Impact
Corporation, et al. v. Hon. Buenaventura Guerrero, etc., et al."
annulling the order and the writ of attachment issued by the Court of
First Instance of Rizal in Civil Case No. 34617 entitled "Jardine-Manila
Finance, Inc. v. Impact Corporation, et al." 2 and (b) the Resolution
dated October 7, 1980 denying herein petitioners motion for
reconsideration. 3
On September 28, 1979, petitioner Jardine-Manila Finance, Inc.
(JARDINE) filed a complaint in the then Court of First Instance (CFI) of
Rizal, docketed as Civil Case No. 34617, against private respondents
Impact Corporation (IMPACT), Ricardo de Leon and Eduardo de Leon,
to collect various sums of money allegedly due from therein defendant
IMPACT under a credit accomodation by way of a discounting line
agreement. 4 Herein private respondents Ricardo de Leon and
Eduardo de Leon were included as defendants by virtue of their
undertaking covered by a Surety Agreement under which they bound
themselves jointly and severally with defendant IMPACT to pay herein
petitioner all of IMPACT's obligations under the aforesaid agreement. 5
It was alleged that in April and May 1979, IMPACT assigned its
receivables to JARDINE on the condition that IMPACT was to collect
them on their due dates from their issuers and remit the collected
amounts to JARDINE and/or repurchase the assigned
receivables; 6 but despite the fact that IMPACT had collected the
amounts due on said receivables, it failed or refused to turn over the
amounts so collected to JARDINE.
JARDINE thus demanded payment of P 1,000,212.64, the total amount
due under said various deeds of assignment, plus interest of P
16,614.64 as of September 6, 1979 and 25 % of the aforesaid amount
as attorney's fees, exemplary damages and other expenses of
litigation.
Likewise contained in said complaint is petitioner's application for a
writ of preliminary attachment against private respondents. The
allegations in support of said petition for a writ of preliminary
attachment are quoted in full:
Special Allegations for Preliminary Attachment
A. The foregoing allegations are hereby repleaded
and made integral parts hereof.
B. The defendant corporation at the time of the
execution of the aforesaid deeds of assignment
had reservation not to remit to plaintiff the
proceeds of the receivables assigned to plaintiff as
confirmed by their refusal to remit the same to
plaintiff although the issuers of the receivables
assigned to plaintiff had already paid to defendant
corporation their obligations on said receivables to
the latter.
C. Defendants Ricardo de Leon and Eduardo de
Leon who are likewise officers of defendant
corporation in order to elicit plaintiffs approval to
enter into said deeds of assignment with
defendant corporation, executed the aforesaid
surety agreement (Annex L), likewise, with
reservation in their minds not to honor their
obligations under the same as what they actually
did when they refused to pay the obligations of
defendant corporation to plaintiff pursuant to the
provisions of said surety agreement. (Annex L)
D. Defendant corporation, Ricardo de Leon and
Eduardo de Leon have no visible other sufficient
security for the claim sought to be enforced by
this action of plaintiff other than their real and
personal properties which are located in Metro
Manila and in the province of Rizal, Province of
Nueva Ecija or elsewhere. (Emphasis supplied)
E. Plaintiffs action against defendant corporation is
based upon documents and therefrom a sufficient
cause of action exists.
PROVISIONAL REMEDIES Sec. 1-6 Rule 57 | 2014 SYLLABUS | 42

F. Plaintiff is willing to post a bond in an amount
to be fixed by the Honorable Court, not exceeding
plaintiffs claim which will be conditioned to the
effect that plaintiff will pay all the costs which may
be adjudged to the adverse party and all damages
which they may sustain by reason of attachment,
if the Honorable Court should finally adjudge that
the applicant plaintiff is not entitled thereto.7
On the basis of the foregoing allegations, the lower court granted
JARDINE's petition for the issuance of a writ of preliminary attachment
on October 16, 1979. 8
On October 19, 1979, therein defendants filed a motion to set aside
the writ of preliminary attachment. They also submitted to the court a
quo a memorandum in support of their motion to dissolve the
attachment contending that the grounds alleged by the plaintiff in its
application for a writ of attachment are not among the grounds
specified under Section 1 of Rule 57; that the defendants have other
sufficient security; that there was no affidavit of merit to support the
application for attachment as required by Section 3 of Rule 57 and that
the verification of the complaint was defective as it did not state that
the amount due to the plaintiff above all legal set-ups or counterclaims
is as much as the sum for which the order is sought. 9
JARDINE opposed the motion arguing that the mental reservation of
defendants at the time of the execution of the deeds of assignment
constituted fraud; that such fraud was further confirmed by the fact
that defendants actually failed to remit the proceeds of the collection
of receivables assigned by them; that defendants failed to disclose to
the plaintiff the fact that they had already collected the receivables
assigned by them; that the amounts collected by defendant
corporation were received by defendants in trust for plaintiff and
defendant corporation appropriated for itself said collection. 10
On November 7, 1979, the trial court denied defendant's motion to
annul the writ of preliminary attachment. Thereupon, defendant
Impact Corporation went to the appellate court on a petition for
certiorari seeking to annul said writ. 11
The findings of the Court of Appeals are as follows:
To our mind there is no question that the
allegations of the complaint proper which were
repleaded and made integral part of the
application for preliminary attachment (paragraph
A) made out a case of conversion or
misappropriation of property held in trust which is
the subject of the complaint for the allegations
stated that IMPACT had assigned to JARDINE
certain receivables with the understanding that it
was to collect the same from the issuers of said
receivables and deliver the amounts collected to
JARDINE, but in spite of the fact that IMPACT had
actually collected said amounts, it failed to turn
over said receivables to JARDINE. There was,
therefore, in the allegations of said complaint true
conversion of the amounts received by defendant
in trust for plaintiff. Defendants in their motion to
discharge the attachment and the memorandum
filed by them in support of said motion had in
effect, admitted the conversion of the amounts
collected by defendant IMPACT, but justified the
use of said amounts to meet its operational
expenses to prevent a complete shutdown of its
operations.
While we find that the grounds alleged by plaintiff,
the herein private respondent, to support its
application for preliminary attachment are among
those enumerated in Section 1 of Rule 57 as
grounds upon which an attachment may be
issued, we are constrained nonetheless to rule
against the regularity or legality of the attachment
issued by respondent Court because there was no
allegation made by plaintiff in its application for
the issuance of a writ of attachment to the effect
'that there is no sufficient security for the claim
sought to be enforced, by the action, and the
amount due to the applicant or the value of the
property on the basis of which is entitled to
recover, is as much as the sum for which the
order is granted above all legal counterclaims, a
requirement for the granting of an order of
attachment under Section 3 of Rule 57. 12
Thus, on August 29, 1980, the Court of Appeals annulled the assailed
writ of attachment for having been issued improperly and irregularly,
the dispositive portion of which reads:
IN VIEW OF THE FOREGOING, the petition to
annul the order and the writ of attachment issued
by respondent Court is hereby GRANTED and
judgment is rendered declaring said order and writ
of attachment null and void for having been issued
improperly and regularly. The restraining order
issued by this Court on November 9, 1979
restraining respondents from enforcing the writ of
attachment issued by respondent Judge on
October 16, 1979 is hereby made PERMANENT.
With costs against private respondents. 13
Hence this recourse.
Reduced to bare essentials, the records show that in the exercise of its
discretion, the lower court found justification in the issuance of the
attachment. On the other hand, the Court of Appeals while in accord
with the lower court that a sufficient cause of action exists for
petitioner and that the ground for its application for attachment is one
of those mentioned in Section 1, Rule 57 of the Rules of Court, found
the issuance of the attachment irregular or illegal in the absence of the
following allegations in the application for attachment: (1) that "there
is no sufficient security for the claim sought to be enforced by the
action; and (2) that the amount due to the applicant or the value of
the property on the basis of which he is entitled to recover, is as much
as the sum for which the order is granted above all legal
counterclaims."
Ultimately, the issue therefore, is whether or not non-compliance with
the formal requirements invalidate the writ of attachment.
On both counts, petitioner admits not having used the exact words of
the Rules in making the requisite allegations, but nonetheless it alleged
that it presented ultimate and specific facts, first-in showing that there
is indeed no other sufficient security for the claim sought to be
enforced as shown in paragraph D of the Complaint earlier quoted;
and second-while it did not specifically state that the sum due is above
all legal counterclaims, such conclusion of fact is no longer necessary
in the face of actual proof in the answer which did not carry any
counterclaim. In fine, petitioner stresses that mere forms must not be
given more weight than substance. 14
In excusing the deficiencies of its application for a writ of preliminary
attachment, petitioner relies heavily on the case of De Borja v.
Platon, 15 where this Court sustained the writ of attachment issued by
the lower court in favor of the defendants based on the counterclaim
of the latter despite the lack of allegations in the affidavit attached to
the petition for the issuance of the writ of attachment that the amount
due the counterclaim was as much as the sum for which the order is
granted above all legal counterclaims.
It will be noted however, that the trial court found that the
counterclaim of the defendants exceeded the claims of the plaintiff.
Thus, this Court held that "as the trial court had before it the evidence
adduced by both sides, the petition for a writ of preliminary
attachment having been filed four years after the trial court had
begun, we presume that the lower court having in mind such evidence,
ordered the attachment accordingly." 16
In sharp contrast, in the case at bar, where the records undeniably
reveal that: (1) the complaint was filed on September 28, 1979; 17 (2)
the writ of preliminary attachment was issued on October 16,
1979; 18 (3) the motion to annul preliminary attachment dated
PROVISIONAL REMEDIES Sec. 1-6 Rule 57 | 2014 SYLLABUS | 43

October 19, 1979 was filed on the same day; 19 (4) the answer of
defendant IMPACT dated October 30, 1979 20 was received by the
RTC Pasig only on November 5, 1979, 21 it is evident that the
questioned writ was issued ex parte; and at a time when the Court a
quo had yet no basis for concluding that the amount due to petitioner
is as much as the sum for which the order is granted above all legal
counterclaims.
It is therefore, readily apparent that the conclusions in the De
Borja case cannot be applied to the case at bar. In fact even
petitioner's plea for liberality as it vigorously invokes the doctrine on
said case which refused "to sanction that formalism and that
technicality which are discountenanced by the modern laws of
procedure" is an obvious misreading of the ruling of this Court which
states:
On the first point, we believe a writ of preliminary
attachment may be issued in favor of a defendant
who sets up a counterclaim. For the purpose of
the protection afforded by such attachment, it is
immaterial whether the defendants Borja and wife
simply presented a counterclaim or brought a
separate civil action against Jose de Borja, plaintiff
in the previous case and petitioner herein. To lay
down a subtle distinction would be to sanction
that formalism and that technicality which are
discountenanced by the modern laws of procedure
for the sake of speedy and substantial justice. . .
. 22
as a liberal approach to the required allegations in the application for a
writ of preliminary attachment when what this Court actually allowed
was the presentation of a counterclaim by the defendant instead of a
separate civil action in compliance with one of the basic requirements
for the issuance of said writ.
The authority to issue an attachment, like the jurisdiction of the court
over such proceedings rests on express statutory provisions and unless
there is authority in the statute, there is no power to issue the writ,
and such authority as the statute confers must be strictly
construed.23 In fact, "(E)ven where liberal construction is the rule, the
statute or the right to attachment thereby granted may not be
extended by judicial interpretation beyond the meaning conveyed by
the words of the statute." 24 Petitioner's application for a writ of
preliminary attachment must therefore be scrutinized and assessed by
the requisites and conditions specifically prescribed by law for the
issuance of such writ.
Section 3, Rule 57 of the Revised Rules of Court governs the issuance
of a writ of attachment, to wit:
Sec. 3. Affidavit and bond required.-An order of
attachment shall be granted only when it is made
to appear by the affidavit of the applicant or some
other person who personally knows of the facts,
that a sufficient cause of action exists, that the
case is one of those mentioned in section 1
hereof, that there is no sufficient security for the
claim sought to be enforced by the action, and
that the amount due to 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
order is granted above all legal counterclaims.
The stringent conditions for the issuance of the writ have been echoed
in all subsequent cases, even as late asK.O. Glass Construction Co.
Inc. vs. Valenzuela, 25 wherein the writ of preliminary attachment
issued was annulled and set aside on the findings that while the
plaintiff "may have stated in his affidavit that a sufficient cause of
action exists against the defendant Kenneth O. Glass, he did not state
therein that the case is one of those mentioned in Section 1 hereof;
that there is no other sufficient security for the claim sought to be
enforced by the action; and that the amount due to the applicant is as
much as the sum for which the order is granted above all legal
counterclaims."
More specifically, it has been held that the failure to allege in the
affidavit the requisites prescribed for the issuance of the writ of
preliminary attachment, renders the writ of preliminary attachment
issued against the property of the defendant fatally defective, and the
judge issuing it is deemed to have acted in excess of his
jurisdiction. 26 In fact, in such cases, the defect cannot even be cured
by amendment. 27
Since the attachment is a harsh and rigorous remedy which exposes
the debtor to humiliation and annoyance, the rule authorizing its
issuance must be strictly construed in favor of defendant. It is the duty
of the court before issuing the writ to ensure that all the requisites of
the law have been complied with. 28 Otherwise, a judge acquires no
jurisdiction to issue the writ.
The general rule is that the affidavit is the foundation of the writ, and
if none be filed or one be filed which wholly fails to set out some facts
required by law to be stated therein, there is no jurisdiction and the
proceedings are null and void. Thus, while not unmindful of the fact
that the property seized under the writ and brought into court is what
the court finally exercises jurisdiction over, the court cannot subscribe
to the proposition that the steps pointed out by statutes to obtain such
writ are inconsequential, and in no sense jurisdictional. 29
Considering that petitioner's application for the subject writ of
preliminary attachment did not fully comply with the requisites
prescribed by law, said writ is, as it is hereby declared null and void
and of no effect whatsoever.
This conclusion renders a discussion of petitioner's other argument
unnecessary.
WHEREFORE, the decision of the Court of Appeals dated August 29,
1980 is hereby AFFIRMED. Costs against petitioner.
SO ORDERED.
G.R. No. L-61754 August 17, 1989
ROBERTO TING, and DOLORES TING, petitioners,
vs.
HON. AUGUSTO E. VILLARIN, FELICIANO GERVACIO,
FERDINAND J. GUERRERO, and CONSOLIDATED BANK &
TRUST COMPANY, respondents.
On September 17, 1981, private respondent Consolidated Bank and
Trust Company (hereinafter "Consolidated Bank") filed a
complaint
1
for a sum of money with prayer for a writ of preliminary
attachment against Perlon Textile Mills and its directors.
Roberto Ting, a director, was impleaded with his wife Dolores Lim
Ting. The complaint recites that the wife was impleaded as a party
defendant in order to bind their conjugal partnership of gains which
allegedly benefitted from the transactions subject of the complaint.
The, spouses Ting are the present petitioners.
Consolidated Bank actually sued on two (2) causes of action. The first
was targeted at recovering on several promissory notes the amount of
P2,972,955.51, allegedly obtained for the defendant corporation by its
duly authorized officers Lu Cheng Peng, Teng See, and Roberto Ting.
These officers allegedly signed the promissory notes in their personal
and official capacities thereby binding themselves jointly and severally
to Consolidated Bank for the payment of the promissory notes.
The second cause of action dwells on several violations of trust receipt
agreements which the defendant corporation executed in favor of
Consolidated Bank. The defendant corporation's faithful compliance
with the trust receipt agreements appears to have been secured by the
continuing guaranty of defendants Liu Suy Lin Angelo Leonar, and Lu
Cheng Peng.
In support of the application for preliminary attachment, Consolidated
Bank averred the ground of "fraud in contracting an obligation" thus
16. Defendants are guilty of fraud in contracting
their obligations more specifically illustrated by
their violation of the trust receipt agreement which
is a ground defined under Sec. 1, Rule 57 of the
PROVISIONAL REMEDIES Sec. 1-6 Rule 57 | 2014 SYLLABUS | 44

Rules of Court for the issuance of a writ of
preliminary attachment.
2

On September 23, 1981, acting on the application for a writ of
attachment by Consolidated Bank, the respondent judge issued the
orders under question, to wit:
xxx xxx xxx
We, therefore, command you [Deputy Sheriffs
Feliciano Gervacio and Ferdinand J. Guerrero] that
you attach the estate, real and personal, of the
said defendants Perlon Textile Mills, Inc., Lu
Cheng Peng and Spouse; Teng See @ Teng Tik
Hua and Spouse; Spouses Roberto Ting and
Dolores Lim Ting; Angelo Leonor and Spouse, Liu
Suy Lin and Spouse, and Yap Chi and Spouse,
within your province to the value of said demands,
and costs of suit, and that you keep safely the
same according to the Rules of Court, unless the
defendant gives security to pay such judgment
as may be recovered in this action in the manner
provided for by the Rules of Court; and that you
return immediately this order after executing the
same with a full statement of your proceedings
and a complete inventory of the properties
attached.
3

On March 3, 1982, acting on the petitioners' Motion to Quash
Attachment, the respondent judge issued a second order, to wit:
xxx xxx xxx
Acting on defendants Roberto and Dolores Ting's
motion to quasi attachment and plaintiffs'
opposition thereto, it appearing from plaintiffs'
allegations that the alleged fraud was effected
through the collective action of the defendants,
the court finds the motion to be without sufficient
merit.
4

xxx xxx xxx
On July 19, 1982, acting on the petitioners' motion for reconsideration,
the respondent judge issued the last disputed order the dispositive
portion of which states:
xxx xxx xxx
WHEREFORE, under the circumstances, and
finding no sufficient justification for the
reconsideration of the order of March 3, 1982, the
motion for reconsideration is hereby DENIED.
5

xxx xxx xxx
The petitioners came to this Court via a petition for certiorari. They are
questioning the writ of preliminary attachment principally on the
ground that the application therefor hinges on "fraud in contracting"
the trust receipt agreements under the second cause of action.
On the other hand, the petitioners are impleaded in the complaint
merely under the first cause of action. Moreover, the petitioners
challenge the writ of preliminary attachment issued because, in effect,
it pierced the veil of corporate fiction. The petitioners explain that the
corporation alone should be held liable for the violation of the trust
receipt agreements.
Finally, the petitioners ask that the writ of preliminary attachment be
struck down by this Court because it authorized an attachment over
the petitioners' conjugal partnership property.
We agree with the petitioners.
The complaint did not provide for a sufficient basis for the issuance of
a writ of preliminary attachment. It is not enough for the complaint to
ritualistic ally cite, as here, that the defendants are "guilty of fraud in
contracting an obligation." An order of attachment cannot be issued on
a general averment, such as one ceremoniously quoting from a
pertinent rule.
6
The need for a recitation of factual circumstances that
support the application becomes more compelling here considering
that the ground relied upon is "fraud in contracting an obligation." The
complaint utterly failed to even give a hint about what constituted the
fraud and how it was perpetrated. Fraud cannot be presumed.
7

The respondent judge thus failed in this duty to ensure that, before
issuing the writ of preliminary attachment, all the requisites of the law
have been complied with. He acted in excess of his jurisdiction and the
writ he so issued is thus null and void.
8

What is more, the respondent judge plainly ignored that, as correctly
pointed out by the petitioners, the application for preliminary
attachment rests on "fraud in contracting" the trust receipt
agreements. The complaint itself, save for the unwarranted sweeping
reference to "defendants," alleged that only Consolidated Bank, as
principals, and Liu Suy Lin Angelo Leonar, and Lu Cheng Peng, as
guarantors, were privy to the trust receipt agreements under the
second cause of action. Petitioner Roberto Ting's involvement is limited
only to the promissory notes under the first cause of action. The
complaint thus relevantly alleges
FIRST CAUSE OF ACTION
7. On March 15, 1979, defendant corporation,
through its duly authorized officers Lu Cheng
Peng, Tang See and Roberto Ting obtained from
plaintiff loan accommodations in the amount of
P2,972,955.51 and as evidence thereof, the
aforementioned defendants in their personal and
official capacities executed promissory notes
undertaking therein jointly and severally with the
corporation to pay plaintiff the above-mentioned
amount with interest ....
SECOND CAUSE OF ACTION
8. On different occasions in 1978-1979,
defendants applied to plaintiff for the opening of
numerous letters of credit to finance its purchase
of goods from various suppliers.
xxx xxx xxx
ALLEGATIONS COMMON TO ALL CAUSES OF
ACTION
12. In order to secure the credit accommodations
obtained and all those that the defendant Perlon
Textile Mills, Inc. may thereafter obtain from
plaintiff, defendants Liu Suy Lin Angelo Leonar
and Lu Cheng Peng executed a continuing
guaranty ... .
9

The sweeping nature of the attachment order probably stemmed from
the respondent judge's failure to detect that the two (2) causes of
action had been misproperly joined. Joinder of causes of action is,
among others, subject to the rules on joinder of parties.
10
And the
rule on joinder of parties is enunciated in Sec. 6, Rule 3, Revised Rules
of Court, thus
Sec. 6. Permissive joinder of parties. All persons
... against whom any right to relief in respect to or
arising out of the same transaction or series
transactions is alleged to exist, whether jointly,
severally, or in the alternative, may, except as
otherwise provided in these rules ... be joined as
defendants in one complaint, where any question
of law or fact common to all such ... defendants
may arise in the action ... .
Here, the two causes of action arose from different transactions. There
was no "series of transactions" to speak of. But above all, the
complaint can conceivably affect adversely petitioner Roberto Ting
under the first cause of action only but not in the second cause of
action.
11

That the attachment ordered by the respondent judge called for the
sheriffs to "attach the estate, real and personal of ... Spouses Roberto
Ting and Dolores Lim Ting" (Order of September 23, 1981) likewise
PROVISIONAL REMEDIES Sec. 1-6 Rule 57 | 2014 SYLLABUS | 45

gives cause for this Court to strike it down for being null and void. The
attached property of the spouses Ting are conjugal, the same cannot
be validly brought under the painful process of attachment because:
(a) First, the wife Dolores was impleaded merely
because of the fact that she is the spouse of
Roberto;
(b) Second, the conjugal partnership cannot
possibly be benefitted (again, here, Consolidated
Bank's allegation that the act of the husband
redounded to the benefit of the conjugal
partnership is mere "book form" when the
husband binds himself, as guarantor, because this
act does not conserve or augment conjugal funds
but instead threatens to dissipate them
12
by
unnecessary and unwarranted risks to the
partnership's financial stability. When the husband
assumes the obligation of a guarantor, the
presumption that he acts, as administrator, for the
benefit of the conjugal partnership, is lost.
WHEREFORE, the petition is hereby GRANTED. The questioned Orders,
dated September 23, 1981, March 3, 1982, and July 19,1982, of the
respondent judge, and the levy on attachment made by the deputy
sheriffs against the parcel of land covered by TCT No. T-7232 and
registered in the names of the petitioners, are declared NULL AND
VOID.
Costs against the private respondent.
SO ORDERED.
G.R. No. 38284 September 17, 1933
GUILLERMO A. CU UNJIENG and MARIANO CU
UNJIENG, petitioners,
vs.
LEONARD S. GODDARD, acting as Judge of First Instance of
Manila, and HONGKONG & SHANGHAI BANKING
CORPORATION, respondents.
Original action for certiorari praying that a writ of attachment levied
against the properties of the petitioners and defendants in a civil
action in the Court of First Instance of Manila, brought by respondent
Hongkong & Shanghai Banking Corporation, be declared null and void.
In that civil action it was alleged in substance that the defendants, the
petitioners in this proceeding, entered into a fraudulent conspiracy or
combination with one Fernandez, by which the conspirators would
hypothecate and pledge forged securities of various kinds with the
various banking institutions and other commercial firms of the City of
Manila, and pursuant to said fraudulent conspiracy, secured credit with
the bank, and the plaintiff was defrauded by the defendants and
Fernandez in the sum of P1,411,312.80. Simultaneously with the filing
of the complaint, plaintiffs asked for a writ of attachment, which was
granted.
The affidavit filed at the time reads:
AFFIDAVIT
B.C.M. Johnston, of legal age and resident of the City of
Manila, being duly sworn, states:
That he is the Manager of the Hongkong and Shanghai
Banking Corporation, the plaintiff in the above-entitled
cause, and that he knows that there exists a cause of action
in favor of said plaintiff and against the defendants, as
appears in the complaint on file in this case, reference to
which is hereby made as an integral part of this affidavit;
That the complaint is one for the recovery of money on a
cause of action arising from a fraud; and
That, as set out in the complaint, the defendants in said
cause have been guilty of fraud in contracting the debt in
incurring the obligation upon which this action is brought.
(Sgd.) B.C.M. JOHNSTON
About one week thereafter, on October 20, 1931, petitioners herein
filed a motion to discharge the attachment on the ground that it had
been improperly and irregularly issued, which motion contains eight
paragraphs.
Paragraph (4) alleges that the affidavit was defective in that it fails to
state that there is no other sufficient security for the claim sought to
be enforced by the action and that the amount due the plaintiff
involves as much as the sum for which the order of attachment was
granted, while paragraph (5) alleges that the affidavit for attachment
fails to estate that the allegations contained in the unverified complaint
to which it refers are true and that likewise the affidavit fails to estate
that affiant knows the facts.
Shortly after the hearing to discharge the attachment had begun,
plaintiff asked leave to file an amended affidavit in support of its
petition for a writ of attachment.
After oral and written arguments, the respondent judge on November
25, 1931, entered an order admitting the amended affidavit of
attachment. The amended affidavit consists of three pages and is
admitted to be in full compliance with the provisions of section 426 of
the Code of Civil Procedure, which sets out what must be shown to the
court before a writ of attachment shall issue.
Further proceedings were had in the trial court, and on March 4 and
April 11, 1932, it entered an order refusing on the showing so far
made to dissolve the attachment. On October 4, 1932, these
proceedings were instituted, based on the two propositions (1) that an
affidavit of attachment cannot be amended and (2) that if a cause of
action arises ex delicto, it is not within the terms of our attachment
statutes.
Respondents claim that petitioners had not exhausted their rights in
the trial court and that if the petitioner regarded the order of April 11
as a final order, petitioners are guilty of laches by waiting until October
before filing a complaint.
Without considering the minor questions raised by respondents, we
believe it is for the best interests of all concerned to dispose of the
case on the points raised by petitioners.
As to whether amendments should be admitted, respondents rely upon
section 110 of the Code of Civil Procedure, which reads:
SEC. 110. Amendments in General. The court shall, in
furtherance of justice, and on such terms, if any, as may be
proper, allow a party to amend any pleading or proceeding
and at any stage of the action, in either the Court of first
Instance or the Supreme Court, by adding or striking out the
name of any party, either plaintiff or defendant, or by
correcting a mistake in the name of a party, or a mistaken or
inadequate allegation or description in any other respect, so
that the actual merits of the controversy may speedily be
determined, without regard to technicalities, and in the most
expeditious and inexpensive manner. The court may also,
upon like terms, allow an answer or other pleading to be
made after the time limited by the rules of the court for
filing the same. Orders of the court upon the matters
provided in this section shall be made upon motion filed in
this court, and after notice to the adverse party, and an
opportunity to be heard." and claim it should read in
connection with section 2 of the same Code:
SEC. 2. Construction of Code. The provisions of this Code
and the proceedings under it, shall be liberally construed, in
order to promote its object and assist the parties in
obtaining speedy justice.
This court has held in the case of Central Capiz vs. Salas (43 Phil.,
930), that section 2 applies to applications for writs of attachment and
that the affidavit may be read in connection with the complaint.
In the original affidavit, affiant did not swear on information and relief
but expressly on knowledge. It is also clear from the affidavit that the
PROVISIONAL REMEDIES Sec. 1-6 Rule 57 | 2014 SYLLABUS | 46

ground on which the attachment was sought to be secured, is
paragraph 4 of section 412 of the Code of Civil Procedure. It is
defective in (a) that there is no allegation, either in the affidavit or the
complaint, that there was no other sufficient security for the claim
sought to be enforced by the action and (b) that the amount due to
the plaintiff above all legal set-offs or counterclaims is as much as the
sum for which the order is granted. The claim of petitioners that the
original affidavit is defective is virtually admitted by respondents by
their having filed a amended affidavit and by their insistence upon
their right to amend.
Our section 110 of the Code of Civil Procedure is based on section 473
of the California Code of Civil Procedure and is a general statute
authorizing, in the discretion of the court, any amendment, in the
further interest of justice, of pleadings or procedure at any stage of
the action. Proceedings in the Court of First Instance to discharge the
attachment were taken under section 441 of the Code of Civil
Procedure, which reads:
SEC. 441. Discharge of Attachment on Motion. The
defendant may also at any time either before or after the
release of the attachment property, or before any
attachment shall have been actually levied, upon reasonable
notice to the plaintiff, apply to the judge or justice of the
peace who granted the order of attachment, or to the judge
of the court in which the action is pending, for an order to
discharge the attachment on the ground that the same was
improperly or irregularly issued. If the motion be made on
affidavits on the part of the defendant, but not otherwise,
the plaintiff may oppose the same by affidavits or other
evidence in addition to those on which the attachment was
made.
If upon such application it satisfactorily appears that the writ
of attachment was improperly or irregularly issued, it must
be discharged.
The corresponding sections of the California Code, namely section 556,
557, and 558, read:
SEC. 556. When a motion to discharge attachment may be
made, and upon what grounds. The defendant may also
at any time, either before or after the release of the
attached property, or before any attachment shall have been
actually levied, apply, on motion, upon reasonable notice to
the plaintiff, to the court in which the action is brought, or to
a judge thereof, that the writ of attachment be discharged
on the ground that the same was improperly or irregularly
issued.
SEC. 557. When motion made on affidavit, it may be
opposed by affidavit. If the motion be made upon
affidavits on the part of the defendant, but not otherwise,
the plaintiff may oppose the same by affidavits or other
evidence, in addition to those on which the attachment was
made.
SEC. 558. When writ must be discharged. If upon such
application it satisfactorily appears that the writ of
attachment was improperly or irregularly issued it must be
discharged; provided that such attachment shall not be
discharged if at or before the hearing of such application,
the writ of attachment, or the affidavit, or undertaking upon
which such attachment was based shall be amended and
made to conform to the provisions of this chapter.
In a long line of decisions from Castle Bros., Wolf & Sons vs. Go-Juno
(7 Phil., 144), where it was said:
Inasmuch as this section 95 is taken bodily from the
California Code of Procedure, we feel justified in following
the decisions of the Supreme Court of California in the
interpretation of the same.
to Pando vs. Kette and Sellner (54 Phil., 683), where this court uses
the following language:
The provision of our Code of Civil Procedure having been
adopted from section 692 of the California Code, it must be
understood that our law was promulgated with the
construction placed upon it by the State of California."
Where a provision of the Code of Civil Procedure has been
adopted bodily from one of the States of the Union, we have
followed the rule that it was undoubtedly the intention of the
Legislature to promulgate the law with the construction that
had already been placed upon it.
At the time sections 110 and 114 were adopted, the similar provisions
of the California Code had already been construed by the Supreme
Court of California. In Winters vs. Pearson (72 Cal., 553), that court
used the following language:
On a motion to discharge a writ of attachment, on the
ground that it was improperly or irregularly issued, the
affidavit on which the writ was issued is not amendable.
This, in our opinion, is in accordance with section 558 of the
Code of Civil Procedure, which provides that the writ was
improperly or irregularly issued, it must be discharged.
To allow the affidavit to be made good by amendment, and
upon such action refused to discharge the writ, would, in our
judgment, violate the requirements of the section just above
cited.
In Tibbet vs. Tom Sue (122 Cal., 206), the court followed Winters vs.
Pearson, saying:
Respondent asks the privilege of amending the undertaking,
if it be held defective by this court. From such relief he
invokes section 473 of the Code of Civil Procedure, wherein
amendments are allowed to pleadings or proceedings in
furtherance of justice. In speaking as to an application to
discharge a writ of attachment, the Code says: "If upon such
application it satisfactorily appears that the writ of
attachment was improperly or irregularly issued, it must be
discharged." (Code Civ. Proc., sec. 558.) This section is
specific and expressly directed to the subject of
attachments. It must be held to control and limit the general
provisions of the aforesaid section 473. The lawmaking body
has declared what shall be the action of the court under the
circumstances here presented, and such action demands
that the writ should be discharged. It is said inWinters vs.
Pearson (72 Cal., 553), that the affidavit on attachment is
not amendable. The undertaking upon attachment stands
upon the same ground.
The facts that California in 1909 changed the law by permitting
amendments of a defective affidavit for attachment under certain
specified circumstances, does not affect this case, as our Legislature
has allowed the law to stand unchanged.
It therefore allows that where the affidavit for attachment is fatally
defective, the attachment must be held to have been improperly or
irregularly issued and must be discharged, and such fatal defect
cannot be cured by amendment. The writ of attachment in this case
should therefore have been discharged.
In view of the above views, the second ground for the discharge of the
writ of attachment presented by petitioners herein, is reserved for
discussion in another case.
The writ of certiorari herein prayed for must be granted. So ordered.
Avancea, C.J., Street, Malcolm, Villa-Real, Abad Santos, and Butte,
JJ., concur.


IMPERIAL, J.:
Petitioners brought this certiorari proceeding to annul the writ of
attachment issued by the Court of First Instance of Manila on October
14, 1931, as well as the orders of November 25, 1931, March 4 and
April 11, 1932, granting the admission of an amended affidavit and
denying the motion to dissolve the attachment, respectively.
PROVISIONAL REMEDIES Sec. 1-6 Rule 57 | 2014 SYLLABUS | 47

It is the purpose of this opinion to show: (a) That the averments of the
complaint, which were made integral part of the affidavit supporting
the petition for the issuance of the writ of attachment, meet
substantially the requirements of the statute on attachment; (b) that
the affidavit on which the petition for attachment was based is
sufficient and has substantially complied with the grounds required by
section 426 of the Code of Civil Procedure, and (c) that the respondent
judge did not act in excess of his jurisdiction when issued the writ of
attachment and denied the motion for dissolution.
The complaint filed in the civil action in which the writ of attachment
was issued contains, among others, the following allegations:
III
That during the years 1930 and 1931, the said defendants
entered into a fraudulent conspiracy or combination with one
Rafael Fernandez, who has been adjudicated an involuntary
insolvent by the Court of First Instance of Manila, and for
that reason is not made a defendant in this action, pursuant
to which fraudulent conspiracy and combination, it was
agreed that the said Fernandez, or the said Fernandez, or
the said defendant Guillermo A. Cu Unjieng, or the said
Mariano Cu Unjieng should hypothecate and pledge forged
share certificates, forged warehouse receipts, and forged
securities of other kinds, in large amounts, with various
banking institutions and other commercial firms of the City
of Manila, with a view to a division of the proceeds among
the said fraudulent conspirators.
IV
That pursuant to said fraudulent combination and conspiracy
the said Guillermo A. Cu Unjieng employed a forger to forge
the signatures of the proper officers on a large number of
warehouse receipts and share certificates of the Pampanga
Sugar Development Company, Inc., a corporation organized
under the laws of the Philippine Islands, and operating a
large sugar central in the Province of Pampanga, Philippine
Islands, after the said Rafael Fernandez, pursuant to said
fraudulent combination and conspiracy, had caused a large
number of said share certificates and warehouse receipts to
be printed in blank, for the purpose of having them so
forged.
V
That pursuant to said fraudulent combination and
conspiracy, the said defendants, Guillermo and Mariano Cu
Unjieng and the said Rafael Fernandez pledged and
hypothecated said forged share certificates and said forged
warehouse receipts in large amounts with various banking
institutions and commercial firms of the City of Manila, using
the proceeds in some cases for the purpose of taking up the
forged certificates and warehouse receipts so pledged and
hypothecated in other cases, so as to continue the scheme
for the longest in other time, and in other cases, dividing
among themselves the proceeds of the loans obtained on
the security of said forged share certificates and forged
warehouse receipts so fraudulently pledged and
hypothecated.
VI
That pursuant to said fraudulent conspiracy and
combination, the said Rafael Fernandez, at various dates, on
and after June 16th, 1931, pledged and hypothecated
various forged warehouse receipts and promissory notes to
the plaintiff herein, as security for loans in account current
granted said Fernandez by the plaintiff in reliance therein,
on which there was a total debit balance due of
P1,411,312.80, on the date of the adjudication of Fernandez
as an insolvent, that is, on the 1st day of August, 1931,
together with interest at 9 per cent per annum on
P1,010,886.96 thereof from the 1st day of July, 1931, and
interest on the balance at the rate of 9 per cent per annum
from July 8, 1931.
VII
That of the amounts so obtained by the said Fernandez from
this plaintiff by the fraudulent pledging and hypothecation of
said forged warehouse receipts and promissory notes,
pursuant to said fraudulent combination and conspiracy, as
hereinbefore alleged, said Fernandez, pursuant to said
combination and conspiracy, paid directly to the defendant
herein, Guilermo A. Cu Unjieng, sums aggregating P325,000;
to the defendant herein, Mariano Cu Unjieng, the sum of
P10,000; caused other large amounts to be paid said
defendants indirectly through other banking institutions in
the City of Manila; and utilized the balance in covering
overdrafts and loans obtained in his name with other
banking institutions in the City of Manila, on the security of
forged share certificates, warehouse receipts and other
forged securities the proceeds of which were divided
between him and the defendants herein pursuant to said
fraudulent combination and conspiracy.
VIII
That as a result of said fraudulent conspiracy and
combination, between the defendants herein and the said
insolvent, Rafael Fernandez, and the pledging and
hypothecation by said Fernandez of said forged warehouse
receipts and promissory notes with the plaintiff herein, the
said plaintiff has been defrauded by the defendants herein
and by the said Fernandez in the sum of P1,411,312.80,
with interest on P1,010,886.96 thereof at the rate of 9 per
cent per annum from July 1, 1931, and with interest on the
balance thereof at the rate of 9 per cent per annum from
July 8, 1931.
The affidavit above referred to read as follows:
AFFIDAVIT
B.C.M. Johnston, of legal age and a resident of the City of
Manila, being duly sworn states:
That he is the Manager of the Hongkong & Shanghai
Banking Corporation, the plaintiff in the above entitled
cause, and that he knows that there exists a cause of action
in favor of the said plaintiff and against the defendant, as
appears in the complaint on file in this case, reference to
which is hereby made as an integral part of this affidavit.
That the complaint is one for the recovery of money on a
cause of action arising from a fraud: and
That as set out in the complaint, the defendant in said cause
has been guilty of fraud in contracting the debt and in
incurring the obligation upon this action is brought.
(Sgd.) B.C.M. JOHNSTON
Subscribed and sworn to before me this 11th day of July,
1931, affiant exhibiting to me his cedula certificate No. F-
14401, issued at Manila, P.I., January 19, 1931.
Doc. No. 420 (Sgd.) "DOMINGO A. GUEVARA
Page 71 Notary Public
Book III Until December 31, 1932
Section 426 of Act No. 190 provides:
SEC. 426. Granting order of attachment. A judge or
justice of the peace shall grant an order of attachment when
it is made to appear to the judge or justice of the peace by
the affidavit of the plaintiff, or of some other person who
knows the facts, that a sufficient cause of action exists, and
that the case is one of those mentioned in section four
hundred and twenty-four, and that there is no other
sufficient security for the claim sought to be enforced by the
action, and that the amount due to the plaintiff above all
legal set-offs or counterclaims is as much as the sum for
which the order is granted.
PROVISIONAL REMEDIES Sec. 1-6 Rule 57 | 2014 SYLLABUS | 48

From a perusal of said section it is obvious that the law does not
require conclusive evidence to establish the requisites necessary in
order a justice or judge may issue a writ of attachment; all what the
law requires is the presentation of prima facie evidence which shows
the existence of said grounds. This is the reason why it calls for
affidavit in lieu of other material and competent evidence.
As alleged in the affidavit affiant made a part of his statement all
material and necessary averments contained in the complaint
undoubtedly for the purpose of making a complete narration of the
facts and at the same time to avoid superfluous repetition. In
substance, it was alleged in the complaint that the defendants in the
civil action were guilty of fraud at the time they incurred in the
obligations set forth and that Rafael Fernandez secured from the
plaintiff the amount of over P1,000,000, which is the subject matter of
the action, thru conspiracy and collusion with the defendants-
petitioners, having delivered said Fernandez warehouse receipts and
shares certificates which were forged and valueless.
It is argued that the original affidavit was fatally defective because it
failed to recite: (1) That the plaintiff in the action has no other
sufficient security for the claims sought to be enforced, and (2) that
the amount due it above all legal set-offs or counterclaims is as much
as the sum for which the order is prayed for. While it may be conceded
that the original affidavit as well as the complaint are lacking of such
specific averments, still from the above quoted allegations the facts
can be reasonably inferred, If the action was brought by plaintiff to
recover the amount of over P1,000,000 which it lost in the manner
above described and if it is especially alleged that the security given by
the defendants became valueless because they were all forged it is
hard to conceived how one could not deduce the inference that no
other security has been given the plaintiff with the exception of those
especifically alleged in the complaint. The same inference was
undoubtedly gathered by the respondent judge when he granted the
attachment upon said original affidavit and as far as I am concerned I
believed he did not exceed in the exercise of the jurisdiction conferred
upon him by the law. As to the other ground, the same thing could be
said.
In deciding this case I believe technicalities of law should be
overlooked in order to attain the ends of justice. If the main action
fails the petitioners, as defendants, will get compensation for any
damages or injury they may have suffered upon the bond given by
plaintiff-respondent, while should the action prosper and the
attachment is already quashed plaintiff would not get anything so
much so as there are other creditors who are claiming big amounts
from the same defendants.
Based on the foregoing reasons I dissent from the majority's decision
and I am of the opinion that the liberal construction of the statute on
attachment should have been applied in this particular instance and
the petition denied.

G.R. No. 135830 September 30, 2005
JUAN DE DIOS CARLOS, Petitioners,
vs.
FELICIDAD SANDOVAL, also known as FELICIDAD S. VDA. DE
CARLOS or FELICIDAD S. CARLOS or FELICIDAD SANDOVAL
DE CARLOS, and TEOFILO CARLOS II, Respondent.
x-------------------------------------------------------------------x
G.R. No. 136035
SIDDCOR (now MEGA PACIFIC) INSURANCE
CORPORATION, Petitioners,
vs.
FELICIAD SANDOVAL VDA. DE CARLOS and TEOFILO CARLOS
II, Respondent.
x------------------------------------------------------------------x
G.R. No. 137743
SIDDCOR (now MEGA PACIFIC) INSURANCE
CORPORATION, Petitioners,
vs.
HON. COURT OF APPEALS (FORMER SPECIAL FOURTH
DIVISION), HON. ALBERTO L. LERMA and/or the REGIONAL
TRIAL COURT OF THE CITY OF MUNTINLUPA, BRANCH 256,
FELICIDAD SANDOVAL, also known as FELICIDAD S. VDA. DE
CARLOS OR FELICIDAD S. CARLOS OR FELICIDAD SANDOVAL
CARLOS OR FELICIDAD SANDOVAL VDA. DE CARLOS and
TEOFILO CARLOS II, Respondent.
These consolidated petitions emanated from a civil case filed by Juan
de Dios Carlos ("Carlos") against respondents Felicidad Sandoval
("Sandoval") and Teofilo Carlos II (Teofilo II) docketed with the
Regional Trial Court (RTC) of Muntinlupa City as Civil Case No. 95-135.
In his Complaint before the RTC, Carlos asserted that he was the sole
surviving compulsory heir of his parents, Felix B. Carlos and Felipa
Elemia,
1
who had acquired during their marriage, six parcels of land
(subject properties). His brother, Teofilo ("Teofilo"), died intestate in
1992. At the time of his death, Teofilo was apparently married to
Sandoval, and cohabiting with her and their child, respondent Teofilo
II. Nonetheless, Carlos alleged in his Complaint that Teofilo and
Sandoval were not validly married as they had not obtained any
marriage license.
2
Furthermore, Carlos also asserted that Teofilo II
could not be considered as Teofilos child. As a result, Carlos concluded
that he was also the sole heir of his brother Teofilo, since the latter
had died without leaving any heirs.
Carlos also claimed that Teofilo, prior to their father Felixs death in
1963, developed a scheme to save the elder Carloss estate from
inheritance taxes. Under the scheme, the properties of the father
would be transferred to Teofilo who would, in turn, see to it that the
shares of the legal heirs are protected and delivered to them. Felix
assented to the plan, and the subject properties were transferred in
the name of Teofilo. After Teofilos death, Carlos entered into certain
agreements with Sandoval in connection with the subject properties.
Carlos did so, believing that the latter was the lawful wife of his
brother Teofilo. Subsequently though, Carlos discovered that Sandoval
and his brother were never validly married, as their marriage was
contracted without a marriage license.
3

Carlos now sought to nullify these agreements with Sandoval for want
of consideration, the premise for these contracts being non-existent.
Thus, Carlos prayed of the RTC to declare the alleged marriage
between Teofilo and Sandoval void ab initio, provided that Teofilo died
without issue, order that new titles covering the subject properties be
issued in the name of Carlos, and require Sandoval to restitute Carlos
in the amount ofP18,924,800.00.
4

Carlos likewise prayed for the issuance of the provisional relief of
preliminary attachment. The RTC issued anOrder dated 7 September
1995 granting the prayer for preliminary attachment, and on 15
September 1995, a writ of preliminary attachment. Carlos posted a
bond for P20,000,000.00 issued by herein petitioner
SIDDCOR Insurance Corporation (SIDDCOR).
5
Shortly thereafter,
a Notice of Garnishment was served upon the Philippine National Bank
(PNB) over the deposit accounts maintained by respondents.
Respondents filed an Urgent Motion to Discharge the Writ of
Attachment, which was opposed by Carlos. On 4 December 1995, the
RTC rendered an order denying the motion. This caused respondents
to file a Petition for Certiorari with the Court of Appeals, seeking to set
aside the RTC order granting the writ of preliminary attachment
denying the motion for the discharge of the writ. This case was
docketed as CA-G.R. SP No. 39267.
6

On 27 February 1996, the Court of Appeals Second Division
promulgated its Decision in CA-G.R. SP No. 39267,wherein it granted
the Petition for Certiorari and ordered the discharge and dissolution of
the Writ of Attachment and Notice of Garnishment.
7
The Court of
Appeals found that there was no sufficient cause of action to warrant
the preliminary attachment, since Carlos had merely alleged general
averments in order to support his prayer.
8
Carlos elevated the said
Decision to this Court by way of Petition for Review on
Certiorari, which was docketed as G.R. No. L-125717. In
a Resolution dated 21 October 1996, the Court denied
Carloss Petition, and thus the Court of Appeals Decision ordering the
PROVISIONAL REMEDIES Sec. 1-6 Rule 57 | 2014 SYLLABUS | 49

dissolution of the Writ of Attachment and Notice of Garnishment
became final.
In the meantime, the hearing on Carloss Complaint ensued before the
RTC. Respondents duly filed their Answerand thereafter filed a Motion
for Summary Judgment. Carlos opposed the motion and countered
with his ownMotion for Summary Judgment. On 8 April 1996, the RTC
rendered a summary judgment in favor of Carlos. Carloss victory was
wholesale, with the RTC making the following pronouncements:
1. Declaring the marriage between defendant Felicidad Sandoval and
Teofilo Carlos solemnized at Silang, Cavite, on May 14, 1962,
evidenced by the Marriage Contract submitted in this case, null and
void ab initio for lack of the requisite marriage license;
2. Declaring that the defendant minor, Teofilo S. Carlos II, is not the
natural, illegitimate, or legally adopted child of the late Teofilo E.
Carlos;
3. Ordering defendant Sandoval to pay and restitute to plaintiff the
sum of P18,924,800.00, together with the interest thereon at the legal
rate from date of filing of the instant complaint until fully paid;
4. Declaring plaintiff as the sole and exclusive owner of the parcel of
land, less the portion adjudicated to the plaintiffs in Civil Case No.
11975, covered by TCT No. 139061 of the Register of Deeds of Makati
City, and ordering said Register of Deeds to cancel said title and to
issue another title in the sole name of plaintiff herein;
5. Declaring the Contract, Annex K of the Complaint, between plaintiff
and defendant Sandoval null and void, and ordering the Register of
Deeds of Makati City to cancel TCT No. 139058 in the name of Teofilo
Carlos, and to issue another title in the sole name of the plaintiff
herein;
6. Declaring the Contract, Annex M of the Complaint, between plaintiff
and defendant Sandoval null and void;
7. Ordering the cancellation of TCT No. 210877 in the names of
defendant Sandoval and defendant minor Teofilo S. Carlos II and
ordering the Register of Deeds of Manila to issue another title in the
exclusive name of plaintiff herein.
8. Ordering the cancellation of TCT No. 210878 in the names of
defendant Sandoval and defendant minor Teofilo S. Carlos II and
ordering the Register of Deeds of Manila to issue another title in the
sole name of plaintiff herein.
9

Upon promulgation of the Summary Judgment, Carlos moved before
the RTC for execution pending appeal. The RTC granted the motion for
execution pending appeal upon the filing of a bond.
10
On 27 May 1996,
the RTC issued a Writ of Execution.
Meanwhile, respondents filed a Motion for Reconsideration of the
Summary Judgment, which was denied in anOrder dated 20 May 1996.
Respondents then appealed the RTC Decision to the Court of Appeals,
wherein such appeal was docketed as CA-G.R. CV No. 53229. The case
was raffled to the appellate courts Fourteenth Division for completion
of records. Sandoval and Carlos also filed a Petition for Certiorari with
Temporary Restraining Order dated 2 June 1996. This special civil
action primarily attacked the allowance of execution pending appeal,
and prayed for the annulment of the Order granting execution pending
appeal, and of the Writ of Execution
On 10 December 1996, in CA-G.R. CV No. 53229, respondents filed
a Motion for Judgment On the Attachment Bond. They noted that the
Court of Appeals had already ruled that the Writ of Preliminary
Attachment issued by the RTC was improperly granted and that
its Decision, as affirmed by the Supreme Court, had attained finality.
Accordingly, they were entitled to damages under Section 20, Rule 57
of the then Rules of Civil Procedure, which governed claims for
damages on account of unlawful attachment. In support of their
allegation of damages, they cite the Notice of Garnishment served on
PNB Malolos Branch, where Felicidad Carlos maintained
deposits amounting to P15,546,121.98.
11
Also presented in support of
the motion was a Notice of Delivery/Payment by the RTC Sheriff,
directing the PNB Malolos Branch to deliver the amounts previously
garnished by virtue of the Writ of Execution dated 27 May
1996;
12
a Manifestation filed by PNB dated 19 July 1996 in CA-G.R. SP
No. 40819, stating that PNB had already delivered to the RTC Sheriff
on 27 June 1996 the amount of P15,384,509.98 drawn against the
accounts of Carlos; and a Certification to the same effect issued by the
PNB Malolos Branch. In an Addendum to Motion for Judgment on the
Attachment Bond, respondents additionally prayed for moral and
exemplary damages.
13

After various pleadings were duly filed by the parties, the Court of
Appeals Special Fourth Division issued aResolution dated 23 March
1998, certifying that all the necessary pleadings have been filed, and
that the case may already be referred to the Raffle Committee for
assignment to a ponente for study and report. The
sameResolution likewise denied without elaboration a Motion to
Dismiss on the ground of forum-shopping filed earlier by Carlos.
14

On such denial, Carlos filed a Motion for Reconsideration. Respondents
likewise filed a Motion for Partial Reconsideration dated 17 April 1998,
arguing that under the Revised Internal Rules of the Court of Appeals
(RIRCA), the case may be re-raffled for assignment for study and
report only after there is a resolution that the case is deemed
submitted for decision.
15
They pointed out that re-raffle could not yet
be effected, as there were still pending incidents, particularly the
motions for reconsideration of Carlos and themselves, as well as
the Motion for Judgment on Attachment Bond.
On 26 June 1998, the Court of Appeals Former Special Fourth Division
promulgated two resolutions.
16
The first, in response to Carloss Motion
for Reconsideration, again denied Carloss Motion to Dismiss the
Appeal and Motion for Suspension, but explained the reasons for such
denial.
The second resolution is at the center of the present petitions. The
assailed Resolution agreed with respondents that it was first necessary
to resolve the pending incidents before the case could be re-raffled for
study and report. Accordingly, the Court of Appeals
proceeded to rule on these pending incidents. While the first resolution
dwelt on the pending motions filed by Carlos, this Resolution tackled
the other matter left unresolved, the Motion for Judgment on
Attachment Bond. The Court of Appeals found the claim for damages
meritorious, citing the earlier decisions ruling that Carlos was not
entitled to the preliminary attachment. Invoking Section 20, Rule 57 of
the Rules of Court, as well as jurisprudence,
17
the Court of Appeals
ruled that it was not necessary for the determination of damages on
the injunction bond to await the decision on appeal.
The Court of Appeals then proceeded to determine to what damages
respondents were entitled to. In ruling that the award of actual
damages was warranted, the court noted:
It is also not disputed that the PNB, on June 27, 1996, issued two
managers checks: MC No. 938541 forP4,932,621.09 and MC 938542
for P10,451,888.89 payable to the order of "Luis C. Bucayon II, Sheriff
IV, RTC, Branch 256, Muntinlupa", duly received by the latter in the
total amount of PESOS FIFTEEN MILLION THREE HUNDRED EIGHTY
FOUR THOUSAND FIVE HUNDRED NINE & 98/100 (P15,384,509.98),
drawn against the accounts of Ms. Felicidad Sandoval Vda. de Carlos
which were earlier garnished for the satisfaction of the above-
mentioned writ of attachment (Annex "E", Motion for Judgment on the
Attachment Bond, pp. 7-8)
18

. . . .
The contention of [Carlos] that the writ of attachment was not
implemented falls flat on the face of the manifestation of PNB that the
delivery of the garnished P15,384,509.98 to him was effected through
the sheriff.
19

The Court of Appeals found that moral and exemplary damages were
not warranted, there being no malice in pursuing the attachment. The
appellate court also found the claim of P2,000,000.00 for attorneys
fees as excessive, and reduced the sum by half. Correspondingly, the
dispositive portion of the assailed Resolution reads:
WHEREFORE, premises considered, judgment is hereby rendered
against the attachment bond, ordering SIDDCOR INSURANCE
CORPORATION and plaintiff-appellee to pay defendants-appellants,
PROVISIONAL REMEDIES Sec. 1-6 Rule 57 | 2014 SYLLABUS | 50

jointly and severally, the sum of P15,384,509.98 and 12% interest per
annum from June 27, 1996 when the unlawful garnishment was
effected until fully paid and P1,000,000.00 as attorneys fees with 6%
interest thereon from the trial courts decision on April 8, 1986 until
fully paid.
SO ORDERED.
20

Both Carlos and SIDDCOR filed their respective motions for
reconsideration of the Resolution. For their part, respondents filed
a Motion for Immediate Execution dated 7 August 1998 in regard to
the Resolution of 26 June 1998 awarding them damages.
In the Resolution dated 10 October 1998,
21
the Court of Appeals
denied the motions for reconsideration and granted the Motion for
Immediate Execution. In granting the Motion for Immediate Execution,
the Court of Appeals cited the reasons that the appeal to be
undertaken from the 26 June 1998 Resolution was patently dilatory;
that there were no material and substantial defenses against the
motion for judgment on the attachment bond, rendering the appeal
pro-forma and dilatory; that Sandoval was of advanced age and might
not enjoy the fruits of the judgment on the attachment bond; and that
immediate execution would end her suffering due to the arbitrary
garnishment of her account pursuant to an improper attachment.
22

In its Motion for Reconsideration, SIDDCOR explicitly assailed the
allowance of the Motion for Immediate Execution.
23
This was denied by
the Court of Appeals in a Resolution dated 22 December 1998.
24

From these antecedents, the following petitions were filed before this
Court:
G.R. No. 135830
This Appeal by Certiorari with Prayer for Temporary Restraining
Order/Preliminary Injunction dated 26 October 1998 filed by Carlos
assailed the two resolutions of the Court of Appeals both dated 26
June 1998, as well as theResolution of 10 October 1998, which denied
Carloss motion for reconsideration. Carlos argues that the Court of
Appeals, through the Former Special Fourth Division, could not have
resolved the Motion for Judgment on the Attachment Bond since the
case had not yet been re-raffled under the two-raffle system for study
and report; that the Court of Appeals erred in resolving the motion
without conducting any hearing; that the Court of Appeals had no
jurisdiction over the motion as the docketing fees had not yet been
filed; that the motion for judgment, which did not contain any
certification against forum-shopping, was an application subject to the
requirements of certification against forum-shopping; that there was
no supporting evidence to support the award of damages; and that the
Court of Appeals committed grave abuse of discretion in denying
the Motion for Reconsideration without adverting to specific reasons
mentioned for the denial of each issue.
25

Carlos likewise ascribes grave abuse of discretion to the Court of
Appeals in its other Resolution dated 26 June 1998 for its refusal to
dismiss CA-G.R. CV No. 53229 on the ground of forum-shopping,
adding that the appellate court should have deferred resolution of
the Motion for Judgment on the Attachment Bond considering the
prejudicial question raised in Carloss motion to dismiss the main case
on the ground of forum-shopping.
G.R. No. 136035
This concerns a Petition for Review filed by SIDDCOR, likewise
challenging the Resolution of 26 June 1998 of the Court of Appeals
and the 10 October 1998 Resolution wherein Siddcors Motion for
Reconsideration, among others, was denied. Siddcor argues therein
that the Court of Appeals erred in ruling on the motion for damages
without awaiting judgment in the main case; granting that damages
may be awarded, these should encompass only such damages incurred
during the pendency of the appeal; and that a hearing was necessary
to prove the claim for damages and the appellate court erred in
granting the award for damages despite lack of hearing.
G.R. No. 137743
The third petition for adjudication, a Petition for Certiorari under Rule
65 with Prayer for Temporary Restraining Order or Preliminary
Injunction, was also filed by SIDDCOR. This petition, dated 8 March
1999, specifically assails the allowance by the Court of Appeals of the
immediate execution of the award of damages, made through the
resolutions dated 10 October 1998 and 22 December 1998.
SIDDCOR hereunder argues that Section 2, Rule 39 of the Rules of
Civil Procedure requires that execution of a judgment or final order
pending appeal may be made only on motion of the prevailing party
and may be made "even before the expiration of the period to
appeal."
26
Respondents had argued in their Motion for Immediate
Execution that the judgment sought to be executed (that on the
attachment bond) was interlocutory and not appealable, yet cited
rulings on execution pending appeal under Section 2, Rule 39 in
support of their position. SIDDCOR cites this inconsistency as proof of
a change of theory on the part of respondents which could not be
done for the theories are incompatible. Such being the case, SIDDCOR
argues, the Court of Appeals gravely abused its discretion in granting
immediate execution since respondents had filed its motion on the
premise that the award on the judgment bond was interlocutory and
not appealable. SIDDCOR also claims that the judgment on the
attachment bond is not interlocutory, citing Stronghold Insurance Co.,
Inc. v. Court of Appeals
27
wherein it was ruled that such indeed
constitutes a final and appealable order.
SIDDCOR points out that no hearing was conducted on the Motion for
Immediate Execution despite the requirement in Section 2, Rule 39
that "discretionary execution may only issue upon good reasons to be
stated in a special order after due hearing." SIDDCOR likewise notes
that the motion granting immediate execution was granted in the very
same resolution which had denied the motion for reconsideration of
the resolution sought to be immediately executed. For SIDDCOR, such
constituted a denial of procedural due process insofar as its statutory
right to appeal was concerned, as the resolution that it intended to
appeal from was already the subject of immediate execution.
Finally, SIDDCOR contests the special reasons cited by the Court of
Appeals in granting the Motion for Immediate Execution.
Facts Arising Subsequent to the Filing of Instant Petitions
On 7 May 1999, the Court of Appeals issued a Writ of
Execution directing the enforcement of the judgment on the
attachment bond.
28
However, in a Resolution dated 9 June 1999, this
Court through the First Division issued aTemporary Restraining Order,
enjoining the enforcement of the said Writ of Execution.
On 15 October 2002, the Court of Appeals First Division rendered
a Decision
29
on the merits of CA-G.R. CV No. 53229, setting aside
the Summary Judgment and ordering the remand of the case for
further proceedings.
30
Both parties filed their respective motions for
reconsideration.
31
In addition, Carlos filed a motion to inhibit the
author of the assailed decision, Justice Rebecca de Guia-
Salvador,
32
who thereafter agreed to inhibit herself.
33
Then on 7
August 2003, the Court of Appeals Former First Division issued
a Resolution deferring action on the motions for reconsideration in
light of the temporary restraining order issued by this Court until the
resolution of the present petitions.
The factual background may be complicated, but the court need only
concern itself with the propriety of the judgment on the attachment
bond and the subsequent moves to secure immediate execution of
such judgment. Should this Court be called upon to tackle the merits
of the original action, Carloss complaint, it shall be in the review of the
final resolution of the Court of Appeals in CA-G.R. CV No. 53229.
Consolidation of Issues in
G.R. Nos. 135830 and 136035
The petitions in G.R. Nos. 135830 and 136035 are concerned with the
award of damages on the attachment bond. They may be treated
separately from the petition in G.R. No. 137743, which relates to the
immediate execution of the said award.
We consolidate the main issues in G.R. Nos. 135830 and 136035, as
follows: (1) whether the assailed judgment on the attachment bond
could have been rendered, as it was, prior to the adjudication of the
main case; (2) whether the Court of Appeals properly complied with
PROVISIONAL REMEDIES Sec. 1-6 Rule 57 | 2014 SYLLABUS | 51

the hearing requirement under Section 20, Rule 57 prior to its
judgment on the attachment bond; and (3) whether the Court of
Appeals properly ascertained the amount of damages it awarded in the
judgment on the attachment bond.
Resolving these issues requires the determination of the proper scope
and import of Section 20, Rule 57 of the 1997 Rules of Civil Procedure.
The provision governs the disposal of claims for damages on account
of improper, irregular or excessive attachment.
SECTION 20. Claim for damages on account of improper, irregular or
excessive attachment.An application for damages on account of
improper, irregular or excessive attachment must be filed before the
trial or before appeal is perfected or before the judgment becomes
executory, with due notice to the attaching obligee or his surety or
sureties, setting forth the facts showing his right to damages and the
amount thereof. Such damages may be awarded only after
proper hearing and shall be included in the judgment on the
main case.
If the judgment of the appellate court be favorable to the party against
whom the attachment was issued, he must claim damages sustained
during the pendency of the appeal by filing an application in the
appellate court with notice to the party in whose favor the attachment
was issued or his surety or sureties, before the judgment of the
appellate court becomes executory. The appellate court may allow the
application to be heard and decided by the trial court.
Nothing herein contained shall prevent the party against whom the
attachment was issued from recovering in the same action the
damages awarded to him from any property of the attaching obligee
not exempt from execution should the bond or deposit given by the
latter be insufficient or fail to fully satisfy the award. (Emphasis
supplied.)
Section 20 essentially allows the application to be filed at any time
before the judgment becomes executory. It should be filed in the same
case that is the main action, and cannot be instituted separately.
34
It
should be filed with the court having jurisdiction over the case at the
time of the application.
35
The remedy provided by law is exclusive and
by failing to file a motion for the determination of the damages on
time and while the judgment is still under the control of the court, the
claimant loses his right to damages.
36

There is no question in this case that the Motion for Judgment on the
Attachment Bond filed by respondents on 10 December 1996 was
properly filed since it was filed with the Court of Appeals during the
pendency of the appeal in the main case and also as an incident
thereto. The core questions though lie in the proper interpretation of
the condition under Section 20, Rule 57 that reads: "Such damages
may be awarded only after proper hearing and shall be included in the
judgment on the main case." Petitioners assert that there was no
proper hearing on the application for damages and that the Court of
Appeals had wrongfully acted on the application in that it resolved it
prior to the rendition of the main judgment.
"Such Damages May Be Awarded
Only After Proper Hearing."
We first discuss whether the "proper hearing" requirement under
Section 20, Rule 57 had been satisfied prior to the award by the Court
of Appeals of damages on the attachment bond.
Section 20 of Rule 57 requires that there be a "proper hearing" before
the application for damages on the attachment bond may be granted.
The hearing requirement ties with the indispensable demand of
procedural due process. Due notice to the adverse party and its surety
setting forth the facts supporting the applicant's right to damages and
the amount thereof under the bond is essential. No judgment for
damages may be entered and executed against the surety without
giving it an opportunity to be heard as to the reality or reasonableness
of the damages resulting from the wrongful issuance of the writ.
37

In Paramount Insurance v. Court of Appeals,
38
the Court held that
under the rule, it was neither mandatory nor fatal that there should be
a separate hearing in order that damages upon the bond can be
claimed, ascertained and awarded.
39
What is necessary only is for the
attaching party and his surety or sureties to be duly notified and given
the opportunity to be heard.
40

In this case, both Carlos and SIDDCOR were duly notified by the
appellate court of the Motion for Judgment on the Attachment
Bond and were required to file their respective comments
thereto.
41
Carlos and SIDDCOR filed their respective comments in
opposition to private
respondents motion.
42
Clearly, all the relevant parties had been
afforded the bare right to be heard on the matter.
Concededly, the facts of this case differ from that in Paramount,
wherein the award of damages was predicated under Section 8, Rule
58, and the trial on the merits included the claim for damages on the
attachment bond. The Court did note therein that the counsel of the
surety was present during the hearings.
43
In this case, unlike
inParamount, there were no open court hearings conducted by the
Court of Appeals, and it is precisely this absence that the petitioners
assert as fatal.
Plainly, there is no express requirement under the rule that the hearing
be done in open court, or that the parties be allowed to confront
adverse witnesses to the claim of damages on the bond. The proper
scope of the hearing requirement was explained
before Paramount in Peroxide Philippines Corp. v. Court of
Appeals,
44
thus:
. . . [It] is undeniable that when the attachment is challenged for
having been illegally or improperly issued, there must be a hearing
with the burden of proof to sustain the writ being on the attaching
creditor. That hearing embraces not only the right to present evidence
but also a reasonable opportunity to know the claims of the opposing
parties and meet them. The right to submit arguments implies that
opportunity, otherwise the right would be a barren one. It means a fair
and open hearing.
From this pronouncement, we can discern that the "proper hearing"
contemplated would not merely encompass the right of the parties to
submit their respective positions, but also to present evidence in
support of their claims, and to rebut the submissions and evidence of
the adverse party. This is especially crucial considering that the
necessary elements to be established in an application for damages
are essentially factual: namely, the fact of damage or injury, and the
quantifiable amount of damages sustained. Such matters cannot be
established on the mere say-so of the applicant, but require
evidentiary support. At the same time, there was no equivocal
statement from the Court in Peroxide that the hearing required under
the rule should be a full-blown hearing on the merits
In this case, we rule that the demands of a "proper hearing" were
satisfied as of the time the Court of Appeals rendered its assailed
judgment on the attachment bond. The circumstances in this case that
we consider particularly telling are the settled premises that the
judicial finding on the wrongfulness of the attachment was then
already conclusive and beyond review, and that the amount of actual
damages sustained was likewise indubitable as it indeed could be
found in the official case record in CA-G.R. CV No. 53229. As a result,
petitioners would have been precluded from either raising the defenses
that the preliminary attachment was valid or disputing the amount of
actual damages sustained by reason of the garnishment. The only
matter of controversy that could be litigable through the traditional
hearing would be the matter of moral and exemplary damages, but the
Court of Appeals appropriately chose not to award such damages.
Moreover, petitioners were afforded the opportunity to counter the
arguments extended by the respondents. They fully availed of that
right by submitting their respective comments/oppositions. In fine, the
due process guarantee has been satisfied in this case.
It should be noted that this case poses a situation different from what
is normally contemplated under Section 20, Rule 57wherein the very
wrongfulness of the attachment remains one of the issues in
contention in the main case. In such a case, there would be a greater
demand for a more extensive hearing on the application of damages.
The modality of hearing should remain within the discretion of the
court having jurisdiction to hear the application for damages. The only
PROVISIONAL REMEDIES Sec. 1-6 Rule 57 | 2014 SYLLABUS | 52

demand, concordant to due process, would be the satisfaction of the
right to be heard, to present evidence, and to rebut the evidence and
arguments of the opposing party.
Some disquisition is necessary on whether or not, as petitioners
submit, a full-blown hearing in open court is compulsory under Section
20, Rule 57. To impose this as a mandatory requirement would
ultimately prove too onerous to our judicial system. Perhaps such a
demand would be less burdensome on the regional trial courts, which,
as a matter of routine, receive testimonial or documentary evidence
offered de novo, and to formulate conclusions on the admissibility and
credibility of the same.
However, a different situation applies if it is the Court of Appeals or
the Supreme Court before which the application for damages is filed.
Both these courts, which are capacitated to receive and act on such
actions, are generally not triers of facts, and do not, in the course of
daily routine, conduct hearings. It is partly for such reason that Section
20, Rule 57 authorizes these appellate courts to refer the application
for damages to the trial court for hearing and decision. The trial courts
are functionally attuned to ascertain and evaluate at the first instance
the necessary factual premises that would establish the right to
damages. Still, reference of the application for damages to the trial
court is discretionary on the part of the appellate courts. The latter,
despite their traditional appellate jurisdiction and review function, are
still empowered under Section 20 to rule on the application for
damages, notwithstanding the factual dimension such question
presents.
To impose as mandatory on the Court of Appeals or the Supreme
Court to hear the application for damages through full-blown hearings
in open court is supremely unwise and beyond the demands of Section
20, Rule 57. The effect would be unduly disruptive on the daily
workflow of appellate courts such as the Court of Appeals and the
Supreme Court, which rarely conduct open court hearings. Neither
could the Court see what is so markedly special about an application
for damages, fact-oriented as it may be, that would require it to be
heard by the appellate courts in open court when no such mandatory
rule applies to other judicial matters for resolution that are also factual
in nature.
For example, the review of death penalty convictions by the Court of
Appeals and the Supreme Court necessitates a thorough evaluation of
the evidence presented, notwithstanding the prior factual appreciation
made by the trial court.
45
Notwithstanding the factual nature of the
questions involved, there is no rule requiring the Court of Appeals or
the Supreme Court to call death penalty cases for hearing or oral
argument. If no such mandatory rule for hearing is imposed on the
appellate courts when the supreme penalty of death is involved, why
then should an exceptional rule be imposed in the case for the
relatively insignificant application for damages on the attachment
bond?
If open court hearings are ever resorted to by appellate courts, such
result from the exercise of discretion rather than by imposition by
statute or procedural rule. Indeed, there is no existing statute,
procedural rule, or jurisprudential fiat that makes it mandatory on the
Court of Appeals or the Supreme Court to conduct an open-court
hearing on any matter for resolution. There is nothing demonstrably
urgent with an application for damages under Section 20, Rule 57 that
would necessitate this Court to adopt an unprecedented rule
mandating itself or the Court of Appeals to conduct full-blown open
court hearings on a particular type of action.
This pronouncement does not contradict our ruling in Hanil
Development v. IAC,
46
which Carlos interprets as requiring the Court of
Appeals to conduct a proper hearing on an application for damages on
the attachment bond. Hanil concerned the refusal by the Intermediate
Appellate Court (now Court of Appeals) to take cognizance of the
application for damages on the attachment bond, such refusal being
reversed by the Court, which ruled that the Intermediate Appellate
Court (IAC) had jurisdiction to accept and rule on such application.
While the Court therein recognized that the IAC was empowered to try
cases and conduct hearings, or otherwise perform acts necessary to
resolve factual issues in cases,
47
it did not require the appellate court
to conduct a hearing in open court, but merely to reinstate the
application for damages.
Admittedly, the dispositive portion of Hanil required the Court of
Appeals to conduct hearings on the application for damages,
48
but
nowhere in the decision was a general rule laid down mandating the
appellate court to conduct such hearings in open court. The
ascertainment of the need to conduct full-blown hearings is best left to
the discretion of the appellate court which chooses to hear the
application. At the same time, the Court cautions the appellate courts
to carefully exercise their discretion in determining the need for open-
court hearings on the application for damages on the attachment
bond. The Court does not sanction the indolent award of damages on
the attachment bond by the appellate court without affording the
adverse party and the bonding company concerned the opportunity to
present their sides and adduce evidence in their behalf, or on the basis
of unsubstantiated evidence.
"And Shall be Included in the
Judgment on the Main Case"
Section 20, Rule 57 does state that the award of damages shall
be included in the judgment on the main case, and seemingly indicates
that it should not be rendered prior to the adjudication of the main
case.
The rule, which guarantees a right to damages incurred by reason of
wrongful attachment, has long been recognized in this
jurisdiction.
49
Under Section 20, Rule 57 of the 1964 Rules of Court, it
was provided that there must be first a judgment on the action in
favor of the party against whom attachment was issued before
damages can be claimed by such party.
50
The Court however
subsequently clarified that under the rule, "recovery for damages may
be had by the party thus prejudiced by the wrongful attachment, even
if the judgment be adverse to him."
51

The language used in the 1997 revision of the Rules of Civil Procedure
leaves no doubt that there is no longer need for a favorable judgment
in favor of the party against whom attachment was issued in order
that damages may be awarded. It is indubitable that even a party who
loses the action in main but is able to establish a right to damages by
reason of improper, irregular, or excessive attachment may be entitled
to damages. This bolsters the notion that the claim for damages
arising from such wrongful attachment may arise and be decided
separately from the merits of the main action. As noted by the Court
in Philippine Charter Insurance Corp. v. Court of Appeals:
52

The surety does not, to be sure, become liable on its bond simply
because judgment is subsequently rendered against the party who
obtained the preliminary attachment. The surety becomes liable
only when and if "the court shall finally adjudge that the
applicant was not entitled to the attachment." This is so
regardless of the nature and character of the judgment on the
merits of the principal claims, counterclaims or cross-claims,
etc. asserted by the parties against each other. Indeed, since
an applicant's cause of action may be entirely different from
the ground relied upon by him for a preliminary attachment, it
may well be that although the evidence warrants judgment in
favor of said applicant, the proofs may nevertheless also
establish that said applicant's proferred ground for
attachment was inexistent or specious and hence, the writ
should not have issued at all; i.e., he was not entitled thereto in
the first place. In that event, the final verdict should logically award to
the applicant the relief sought in his basic pleading, but at the same
time sentence himusually on the basis of a counterclaimto pay
damages caused to his adversary by the wrongful attachment.
[Emphasis supplied.]
Moreover, a separate ruleSection 8, Rule 58 covers instances when
it is the trial court that awards damages upon the bond for preliminary
injunction of the adverse party. Tellingly, it requires that the amount of
damages to be awarded be claimed, ascertained, and awarded under
the same procedure prescribed in Section 20 of Rule 57.
In this case, we are confronted with a situation wherein the
determination that the attachment was wrongful did not come from
PROVISIONAL REMEDIES Sec. 1-6 Rule 57 | 2014 SYLLABUS | 53

the trial court, or any court having jurisdiction over the main action. It
was rendered by the Court of Appeals in the exercise of its certiorari
jurisdiction in the original action reviewing the propriety of the
issuance of the Writ of Preliminary Attachment against the private
respondents. Said ruling attained finality when it was affirmed by this
Court.
The courts are thus bound to respect the conclusiveness of this final
judgment, deeming as it does the allowance by the RTC of preliminary
attachment as improper. This conclusion is no longer subject to
review, even by the court called upon to resolve the application for
damages on the attachment bond. The only matter left for
adjudication is the proper amount of damages.
Nevertheless, Section 20, Rule 57 explicitly provides that the award for
damages be included in the judgment on the main case. This point
was apparently not lost on the Court of Appeals when it rendered
its Resolution dated 23 March 1998, certifying that the case may now
be referred to the Raffle Committee for assignment to a ponente. The
appellate court stated therein: "The Resolution of defendants-
appellants motion for judgment on the attachment may be
incorporated in the decision by the ponente for study and
report,"
53
and such observation is in conformity with Section 20.
However, this reasoning was assailed by respondents, who argued that
the motion for judgment on the attachment bond was a pending
incident that should be decided before the case can be re-raffled to
a ponente for decision. Respondents may be generally correct on the
point that a case can only be deemed submitted for decision only after
all pending incidents are resolved. Yet since Section 20, Rule 57
provides that their application for damages on the attachment bond
"shall be included in the judgment on the main case," it is clear that
the award for damages need not be resolved before the case is
submitted for decision, but should instead be resolved and included in
the judgment on the main case, or the decision on the Appeal by
Certiorari filed by the respondents.
Thus, the action of the Court of Appeals in resolving the application for
damages even before the main judgment was issued does not conform
to Section 20, Rule 57. However, the special particular circumstances
of this case lead us to rule that such error is not mortal to the award
of damages.
As noted earlier, the award of damages was made after a proper
hearing had occurred wherein all the concerned parties had been given
the opportunity to present their arguments and evidence in support
and in rebuttal of the application for damages. The premature award
of damages does not negate the fact that the parties were accorded
due process, and indeed availed of their right to be heard.
Moreover, we are compelled to appreciate the particular circumstance
in this case that the right of private respondents to acquire relief
through the award of damages on account of the wrongful preliminary
attachment has been conclusively affirmed by the highest court of the
land. This differs from the normal situation under Section 20, Rule 57
wherein the court having jurisdiction over the main action is still
required to ascertain whether the applicant actually has a right to
damages. To mandatorily require that the award of damages be
included in the judgment in the main case makes all the sense if the
right to damages would be ascertained at the same time the main
judgment is made. However, when the said right is already made
viable by reason of a final judgment which is no longer subject to
review, there should be no unnecessary impediments to its immediate
implementation.
And finally, any ruling on our part voiding the award of damages solely
for the reason that it was not included in the judgment on the main
case, and remanding the motion to the Court of Appeals for proper
adjudication together with the main case may exhibit fealty to the
letter of the procedural rule, but not its avowed aims of promoting a
just and speedy disposition of every action and proceeding. After all, if
we were to compel the Court of Appeals to decide again on the
application for damages and incorporate its ruling in the judgment on
the main action, the appellate court will be examining exactly the same
evidence and applying exactly the same rules as it already did when it
issued the assailed resolution awarding damages on the bond. This
would be unnecessarily redundant especially considering that the
Supreme Court had already affirmed that there was wrongful
attachment in this case.
There is also the fact that remanding the question of damages, singly
for the purpose of adhering to the letter of the procedural rule, would
further prolong the resolution of the main case, which has been with
the Court of Appeals for more than nine years now.
54
Our Rules of
Court precisely requires liberal construction of the procedural rules to
promote the objective of securing a just, speedy and inexpensive
disposition of every action and proceeding.
55
With this precept, all the
more justification is supplied for allowing the award for damages
despite its apparent prematurity, if it is in all other respects proper.
The same reasons apply in resolving the question of whether the Court
of Appeals could have decided the Motion for Judgment on the
Attachment Bond considering that the case had not yet been re-raffled
under the two-raffle system for study and report. Under Section 5,
Rule 3 of the RIRCA, a case filed with the Court of Appeals undergoes
two raffles for assignment to a particular Justice. The first raffle is
made for completion of records.
56
Afterwards, "all raffled appealed
cases, the records of which have been completed and submitted for
decision, shall be re-raffled for assignment to a Justice for study and
report."
57

The fact that Section 20, Rule 57 provides that the award of damages
on the attachment bond "shall be included in the judgment on the
main case" necessarily implies that it is to be made only after the case
has been re-raffled for study and report, and concurrently decided with
the judgment of the ponente in the main case. Again, the Court of
Appeals failed to consider Section 20, Rule 57 when it acted upon the
application even before the second raffle was made.
Had Section 20, Rule 57 been faithfully complied with, a different
Justice of the Court of Appeals would have penned the ruling on the
application for damages, in accordance with the RIRCA. Yet this
circumstance does not outweigh the other considerations earlier
mentioned that would warrant a liberal interpretation of the procedural
rules in favor of respondents. The parties had adduced all their
arguments and evidence before the Court of Appeals, and indeed,
these were appreciated on first instance by Justice Demetria, who
eventually penned the assailed resolutions. There was already a final
determination that the attachment was wrongful. And any delay
brought about by requiring that it be the ponencia, determined after
the second raffle, who decides the application for damages may
bear pro forma adherence to the letter of the rule, but would only
cause the delay of the resolution of this long-pending case. Procedural
rules are designed, and must therefore be so interpreted as, to give
effect to lawful and valid claims and not to frustrate them.
58

Even SIDDCOR acknowledges that there are recognized instances
where the award of damages or judgment on the attachment bond
may not be included in the decision on the main case, such as if the
main case was dismissed for lack of jurisdiction and no claim for
damages could have been presented in the main case.
59

Scope of Damages
Properly Awardable
Next, we examine the particular award of damages made in this case,
consisting of P15,384,509.98, plus interest, as well as P1,000,000.00
as attorneys fees. There seems to be no dispute that the former
amount constituted the amount drawn against the account of Sandoval
by reason of the writ of execution issued by the trial court on 27 May
1996. This fact was confirmed by the PNB, in its Manifestation dated
19 July 1996, confirming the garnishment.
Respondents burden in proving damages in this case was considerably
lessened by the fact that there was already a final judgment, no longer
subject to review, that the preliminary attachment allowed by the trial
court was indeed wrongful. Hence, all that was necessary to be proved
was the amount of damage actually sustained by respondents by
reason of the wrongful attachment. It is unquestioned that by virtue of
the writ of preliminary attachment, a Notice of Garnishment was
served upon the PNB over deposit accounts maintained by
respondents. Said Notice of Garnishment placed under the control of
PROVISIONAL REMEDIES Sec. 1-6 Rule 57 | 2014 SYLLABUS | 54

the RTC all the accounts maintained by respondents, and prevented
the transfer or disposition of these accounts.
60
Then the
subsequent Writ of Execution dated 27 May 1996 ordered the delivery
to Carlos of these accounts earlier subjected to garnishment.
61

Clearly, the amount of actual pecuniary loss sustained by respondents
has been well established. TheManifestation submitted by the PNB
further affirmed the actual amount seized by Carlos, an amount which
could not have been acquired had it not been for the writ of
preliminary attachment which was wrongfully issued.
Carlos lamely argues in his petition that there was no concrete or
supporting evidence to justify the amount of actual damages, a claim
that is belied by the official case records. The more substantive
argument is presented by SIDDCOR, which submits that any damages
that may be awarded to respondents can include only those that were
incurred, if any, during the pendency of the appeal. But this contention
is belied by Section 4, Rule 57 of the 1997 Rules of Civil Procedure,
which provides that the bond issued for preliminary attachment is
conditioned that the applicant "will pay all the 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."
62

The case Paramount Insurance Corp. v. Court of Appeals
63
is
instructive. It discusses the scope of the bond executed by upon an
application for preliminary injunction,
64
which similarly covers "all
damages which [may be] sustain[ed] by reason of the injunction or
temporary restraining order if the court should finally decide that the
applicant was not entitled thereto."
65
The surety in that case claimed
that it could be liable "only to the amount of damages accruing from
the time the injunction bond was issued until the termination of the
case, and not from the time the suit was commenced."
66
In rebutting
this claim, the Court ruled:
. . . . Rule 58, Section 4(b), provides that a bond is executed in favor
of the party enjoined to answer for all damages which he may sustain
by reason of the injunction. This Court already had occasion to rule on
this matter in Mendoza v. Cruz, where it held that "(t)he injunction
bond is intended as a security for damages in case it is finally decided
that the injunction ought not to have been granted. It is designed to
cover all damages which the party enjoined can possibly
suffer. Its principal purpose is to protect the enjoined party
against loss or damage by reason of an injunction." No
distinction was made as to when the damages should have
been incurred.
67

Our ruling in Philippine Charter Insurance Corp. v. Court of Appeals,
relied upon by the Court of Appeals, squarely applies to this case:
Under the circumstances, too, there can be no gainsaying the suretys
full awareness of its undertakings under its bond: that, as the law puts
it: "the plaintiff will pay all costs which may be adjudged to the
defendant(s), and all damages which may be sustained by reason of
the attachment, if the same shall finally be adjudged to have been
wrongful and without cause," and that those damages plainly
comprehended not only those sustained during the trial of the action
but also those during the pendency of the appeal. This is the law, and
this is how the surety's liability should be understood. The surety's
liability may be enforced whether the application for damages for
wrongful attachment be submitted in the original proceedings before
the Trial Court, or on appeal, so long as the judgment has not become
executory. The surety's liability is not and cannot be limited to
the damages caused by the improper attachment only during
the pendency of the appeal. That would be absurd. The plain
and patent intendment of the law is that the surety shall
answer for all damages that the party may suffer as a result of
the illicit attachment, for all the time that the attachment was
in force; from levy to dissolution. . . .
The fact that the second paragraph of the rule speaks only of
"damages sustained during the pendency of the appeal" is of
no moment; it obviously proceeds from the assumption in the
first paragraph that the award for the damages suffered
during the pendency of the case in the trial court was in fact
"included in the final judgment" (or applied for therein before the
appeal was perfected or the judgment became executory); hence, it
states that the damages additionally suffered thereafter, i.e., during
the pendency of the appeal, should be claimed before the judgment of
the appellate tribunal becomes executory. It however bears
repeating that where. as in the case at bar, the judgment of
the Trial Court has expressly or impliedly sustained the
attachment and thus has given rise to no occasion to speak of,
much less, file an application for damages for wrongful
attachment, and it is only in the decision of the Court of
Appeals that the attachment is declared wrongful and that the
applicant "was not entitled thereto," the rule is, as it should
be, that it is entirely proper at this time for the application for
damages for such wrongful attachment to be filedi.e., for all
the damages sustained thereby, during all the time that it was
in force, not only during the pendency of the appeal. . . .
68

The rule is thus well-settled that the bond issued upon an application
for preliminary attachment answers for all damages, incurred at
whatever stage, which are sustained by reason of the attachment. The
award of actual damages by the Court of Appeals is thus proper in
amount. However, we disagree that the rate of legal interest be
counted from the date of the "unlawful garnishment," or on 27 June
1996. Properly, interest should start to accrue only from the moment it
had been finally determined that the attachment was unlawful, since it
is on that basis that the right to damages comes to existence. In this
case, legal interest commences from the date the Court of Appeals
decision in CA-G.R. SP No. 39267 became final, by reason of its
affirmation by this Court.
The award of attorneys fees in the amount of P1,000,000.00 is also
questioned before this Court, considering that the Court of Appeals did
not award moral or exemplary damages. The general rule may be that
an award of attorneys fees should be deleted where the award of
moral and exemplary damages are eliminated.
69
Nonetheless, attorneys
fees may be awarded under the Civil Code where the court deems it
just and equitable that attorneys fees and expenses of litigation
should be recovered,
70
even if moral and exemplary damages are
unavailing.
71

Particularly, the Court has recognized as just and equitable that
attorney's fees be awarded when a party is compelled to incur
expenses to lift a wrongfully issued writ of attachment.
72
The amount
of money garnished, and the length of time respondents have been
deprived from use of their money by reason of the wrongful
attachment, all militate towards a finding that attorneys fees are just
and equitable under the circumstances. However, we deem the
amount of P1,000,000.00 as excessive, and modify the award of
attorneys fees to P500,000.00 which represents merely approximately
three percent of the actual damages suffered by and awarded to
respondents. We also delete the imposition of legal interest made by
the Court of Appeals on the awarded attorneys fees.
Other Issues Raised in G.R. No. 135830
The issues raised in G.R. No. 136035 have been dispensed with, and
the remaining issues in G.R. No. 135830 are relatively minor. There is
no need to dwell at length on them.
Carlos insists that respondents were liable to have paid docket fees
upon filing of their Motion for Judgment on Attachment Bond, on the
theory that they claimed therein for the first time the alleged damages
resulting from the dissolved attachment. The said motion is
characterized as an initiatory proceeding because it is claimed therein
for the first time, the damages arising from the attachment. In the
same vein, Carlos argues that the absence of a certification against
forum-shopping attached to the motion renders the said motion as
fatal. Again, it is pointed out that initiatory pleadings must contain the
said certification against forum-shopping.
Our ruling in Santo Tomas University Hospital v. Surla
73
is instructive.
It was argued therein that the requirement of the certification against
forum-shopping, as contained in Administrative Circular No. 04-
94,
74
covered compulsory counterclaims. The Court ruled otherwise:
It bears stressing, once again, that the real office of Administrative
Circular No. 04-94, made effective on 01 April 1994, is to curb the
malpractice commonly referred to also as forum-shopping. . . . The
PROVISIONAL REMEDIES Sec. 1-6 Rule 57 | 2014 SYLLABUS | 55

language of the circular distinctly suggests that it is primarily intended
to cover an initiatory pleading or an incipient application of a party
asserting a claim for relief.
It should not be too difficult, the foregoing rationale of the
circular aptly taken, to sustain the view that the circular in
question has not, in fact, been contemplated to include a kind
of claim which, by its very nature as being auxiliary to the
proceeding in the suit and as deriving its substantive and
jurisdictional support therefrom, can only be appropriately
pleaded in the answer and not remain outstanding for
independent resolution except by the court where the main
case pends. Prescinding from the foregoing, the proviso in the
second paragraph of Section 5, Rule 8, of the 1997 Rules of Civil
Procedure, i.e., that the violation of the anti-forum shopping rule "shall
not be curable by mere amendment . . . but shall be cause for the
dismissal of the case without prejudice," being predicated on the
applicability of the need for a certification against forum
shopping, obviously does not include a claim which cannot be
independently set up.
75
(Emphasis supplied.)
It is clear that under Section 20, Rule 57, the application for damages
on the attachment bond cannot be independently set up, but must be
filed in the main case, before the judgment therein becomes final and
executory. Santo Tomas squarely applies in determining that no
certification against forum-shopping was required in the Motion for
Judgment on the Attachment Bond. The same reasoning also sustains
a ruling that neither legal fees were required for the filing of the said
motion. Section 1, Rule 141 of the Rules of Court provides that legal
fees are prescribed upon the filing of the pleading or other application
which initiates an action or proceeding.
76
Since the said application for
judgment on the attachment bond cannot be considered as an
initiatory pleading, as it cannot be independently set up from the main
action, it is not likewise chargeable with legal fees.
As to the issue relating to the other Resolution dated 26 June 1998
denying the motion to dismiss appeal on the ground of forum-
shopping, we find Carloss arguments as unmeritorious. Forum-
shopping allegedly existed because petitioners had filed two cases
before the Court of Appeals, CA-G.R. CV No. 53229, and
the Petition for Certiorari with Temporary Restraining Order dated 2
June 1996 attacking the allowance of execution pending appeal.
Evidently, the two causes of action in these two petitions are different,
CA-G.R. CV No. 53229 being an appeal from the Summary
Judgment rendered by the RTC, and the second petition assailing the
subsequent allowance by the RTC of execution pending appeal. There
is no identity between these two causes of action that would warrant a
finding of forum-shopping.
Issues Raised in G.R. No. 137743
To recount, respondents, having obtained a favorable decision on
their Motion for Judgment on the Attachment Bond, filed a Motion for
Immediate Execution of the award of damages. This was granted by
the Court of Appeals in its Resolution dated 16 October 1998, said
resolution now specifically assailed by SIDDCOR in G.R. No. 137743.
In their Motion for Immediate Execution, respondents theory in
seeking the immediate execution of the award of damages was that
said award was not subject to appeal, the ruling thereupon being an
interlocutory order.
77
This position was not adopted by the Court of
Appeals in its 16 October 1998 Resolution, which was otherwise
favorably disposed to respondents. Instead, the Court of Appeals
predicated the immediate execution on the following grounds: (1) that
the judicial finding that the writ of preliminary attachment was
wrongful was already final and beyond review; (2) there were no
material and substantial defenses against the motion for the issuance
of the judgment bond; (3) Sandoval was elderly and sickly, without
means of livelihood and may not be able to enjoy the fruits of the
judgment on the attachment bond; (4) that immediate execution
would end her suffering caused by the arbitrary garnishment of her
PNB account.
There is no doubt that a judgment on the attachment bond is a final
and appealable order. As stated earlier, it is, under normal course,
included in the main judgment, which in turn is final and appealable.
Respondents admit that they had erred in earlier characterizing the
said judgment as an interlocutory order. Still, SIDDCOR argues that
such earlier error is fatal, and that the Court of Appeals abused its
discretion in ruling on the motion on a theory different from that urged
on by respondents.
By no means could respondents be deemed as estopped from
changing their legal theory, since the rule on estoppel applies to
questions of fact and not questions of law.
78
Moreover, courts are
empowered to decide cases even if the parties raise legal rationales
other than that which would actually apply in the case. The basis of
whether respondents are entitled to immediate execution arises from
law, particularly Section 2(a), Rule 39 of the Rules of Court, and not
solely on whatever allegations may be raised by the movant.
Thus, we find no grave abuse of discretion on the part of the Court of
Appeals, even though it allowed execution pending appeal on a legal
basis different from that originally adduced by respondents. After all,
the reasoning ultimately employed by the appellate court is correct,
and it hardly would be judicious to require the lower court to adhere to
the movants erroneous ratiocination and preclude the proper
application of the law.
We need not review in length the justification of the Court of Appeals
in allowing execution pending appeal. The standard set under Section
2(a), Rule 39 merely requires "good reasons," a "special order," and
"due hearing." Due hearing would not require a hearing in open court,
but simply the right to be heard, which SIDDCOR availed of when it
filed its opposition to the motion for immediate execution.
The Resolution dated 16 October 1998 satisfies the "special order"
requirement, and it does enumerate at length the "good reasons" for
allowing execution pending appeal. As to the appreciation of "good
reasons," we simply note that the advanced age alone of Sandoval
would have sufficiently justified execution pending appeal, pursuant to
the well-settled jurisprudential rule.
79
The wrongfulness of the
attachment, and the length of time respondents have been deprived of
their money by reason of the wrongful attachment further justifies
execution pending appeal under these circumstances.
WHEREFORE, the petitions are DISMISSED. The Temporary
Restraining Order issued in the Resolution dated 9 June 1999 is hereby
LIFTED. The assailed Resolution of the Court of Appeals Special Fourth
Division dated 26 June 1998 is AFFIRMED with the MODIFICATIONS
that the legal interest on the award of actual damages should
commence from the date of the finality of the Decision of the Court of
Appeals in CA G.R. SP No. 39267 and that the award of attorneys fees
is in the amount of P500,000. Costs against petitioners.
SO ORDERED.

SALGADO v CA March 26, 1984

G.R. No. 175587 September 21, 2007
PHILIPPINE COMMERCIAL INTERNATIONAL BANK, Petitioner,
vs.
JOSEPH ANTHONY M. ALEJANDRO, Respondent.
D E C I S I O N
YNARES-SANTIAGO, J.:
This petition for review assails the May 31, 2006 Decision
1
of the Court
of Appeals in CA-G.R. CV No. 78200 affirming the August 30, 2000
Decision
2
of the Regional Trial Court of Makati, which granted
respondent Joseph Anthony M. Alejandros claim for damages arising
from petitioner Philippine Commercial International Banks (PCIB)
invalid garnishment of respondents deposits.
On October 23, 1997, petitioner filed against respondent a
complaint
3
for sum of money with prayer for the issuance of a writ of
preliminary attachment. Said complaint alleged that on September 10,
1997, respondent, a resident of Hong Kong, executed in favor of
petitioner a promissory note obligating himself to payP249,828,588.90
plus interest. In view of the fluctuations in the foreign exchange rates
PROVISIONAL REMEDIES Sec. 1-6 Rule 57 | 2014 SYLLABUS | 56

which resulted in the insufficiency of the deposits assigned by
respondent as security for the loan, petitioner requested the latter to
put up additional security for the loan. Respondent, however, sought a
reconsideration of said request pointing out petitioners alleged
mishandling of his account due to its failure to carry out his instruction
to close his account as early as April 1997, when the prevailing rate of
exchange of the US Dollar to Japanese yen was
US$1.00:JPY127.50.
4
It appears that the amount of P249,828,588.90
was the consolidated amount of a series of yen loans granted by
petitioner to respondent during the months of February and April
1997.
5

In praying for the issuance of a writ of preliminary attachment under
Section 1 paragraphs (e) and (f) of Rule 57 of the Rules of Court,
petitioner alleged that (1) respondent fraudulently withdrew his
unassigned deposits notwithstanding his verbal promise to PCIB
Assistant Vice President Corazon B. Nepomuceno not to withdraw the
same prior to their assignment as security for the loan; and (2) that
respondent is not a resident of the Philippines. The application for the
issuance of a writ was supported with the affidavit of Nepomuceno.
6

On October 24, 1997, the trial court granted the application and issued
the writ ex parte
7
after petitioner posted a bond in the amount
of P18,798,734.69, issued by Prudential Guarantee & Assurance Inc.,
under Bond No. HO-46764-97. On the same date, the bank deposits of
respondent with Rizal Commercial Banking Corporation (RCBC) were
garnished. On October 27, 1997, respondent, through counsel, filed a
manifestation informing the court that he is voluntarily submitting to
its jurisdiction.
8

Subsequently, respondent filed a motion to quash
9
the writ contending
that the withdrawal of his unassigned deposits was not fraudulent as it
was approved by petitioner. He also alleged that petitioner knew that
he maintains a permanent residence at Calle Victoria, Ciudad Regina,
Batasan Hills, Quezon City, and an office address in Makati City at the
Law Firm Romulo Mabanta Buenaventura Sayoc & De los
Angeles,
10
where he is a partner. In both addresses, petitioner
regularly communicated with him through its representatives.
Respondent added that he is the managing partner of the Hong Kong
branch of said Law Firm; that his stay in Hong Kong is only temporary;
and that he frequently travels back to the Philippines.
On December 24, 1997, the trial court issued an order quashing the
writ and holding that the withdrawal of respondents unassigned
deposits was not intended to defraud petitioner. It also found that the
representatives of petitioner personally transacted with respondent
through his home address in Quezon City and/or his office in Makati
City. It thus concluded that petitioner misrepresented and suppressed
the facts regarding respondents residence considering that it has
personal and official knowledge that for purposes of service of
summons, respondents residence and office addresses are located in
the Philippines. The dispositive portion of the courts decision is as
follows:
WHEREFORE, the URGENT MOTION TO QUASH, being meritorious, is
hereby GRANTED, and the ORDER of 24 October 1997 is hereby
RECONSIDERED and SET ASIDE and the WRIT OF attachment of the
same is hereby DISCHARGED.
SO ORDERED.
11

With the denial
12
of petitioners motion for reconsideration, it elevated
the case to the Court of Appeals (CA-G.R. SP No. 50748) via a petition
for certiorari. On May 10, 1999, the petition was dismissed for failure
to prove that the trial court abused its discretion in issuing the
aforesaid order.
13
Petitioner filed a motion for reconsideration but was
denied on October 28, 1999.
14
On petition with this Court, the case
was dismissed for late filing in a minute resolution (G.R. No. 140605)
dated January 19, 2000.
15
Petitioner filed a motion for reconsideration
but was likewise denied with finality on March 6, 2000.
16

Meanwhile, on May 20, 1998, respondent filed a claim for damages in
the amount of P25 Million
17
on the attachment bond (posted by
Prudential Guarantee & Assurance, Inc., under JCL(4) No. 01081, Bond
No. HO-46764-97) on account of the wrongful garnishment of his
deposits. He presented evidence showing that hisP150,000.00 RCBC
check payable to his counsel as attorneys fees, was dishonored by
reason of the garnishment of his deposits. He also testified that he is a
graduate of the Ateneo de Manila University in 1982 with a double
degree of Economics and Management Engineering and of the
University of the Philippines in 1987 with the degree of Bachelor of
Laws. Respondent likewise presented witnesses to prove that he is a
well known lawyer in the business community both in the Philippines
and in Hong Kong.
18
For its part, the lone witness presented by
petitioner was Nepomuceno who claimed that she acted in good faith
in alleging that respondent is a resident of Hong Kong.
19

On August 30, 2000, the trial court awarded damages to respondent in
the amount of P25 Million without specifying the basis thereof, thus:
WHEREFORE, premises above considered, and defendant having duly
established his claim in the amount ofP25,000,000.00, judgment is
hereby rendered ordering Prudential Guarantee & [Assurance] Co.,
which is solidarily liable with plaintiff to pay defendant the full amount
of bond under Prudential Guarantee & Assurance, Inc. JCL(4) No.
01081, [Bond No. HO-46764-97], dated 24 October 1997 in the
amount of P18,798,734.69. And, considering that the amount of the
bond is insufficient to fully satisfy the award for damages, plaintiff is
hereby ordered to pay defendant the amount of P6,201,265.31.
SO ORDERED.
20

The trial court denied petitioners motion for reconsideration on
October 24, 2000.
21

Petitioner elevated the case to the Court of Appeals which affirmed the
findings of the trial court. It held that in claiming that respondent was
not a resident of the Philippines, petitioner cannot be said to have
been in good faith considering that its knowledge of respondents
Philippine residence and office address goes into the very issue of the
trial courts jurisdiction which would have been defective had
respondent not voluntarily appeared before it.
The Court of Appeals, however, reduced the amount of damages
awarded to petitioner and specified their basis. The dispositive portion
of the decision of the Court of Appeals states:
WHEREFORE, the appeal is PARTIALLY GRANTED and the decision
appealed from is hereby MODIFIED. The award of damages in the
amount of P25,000,000.00 is deleted. In lieu thereof, Prudential
Guarantee & [Assurance, Inc.], which is solidarily liable with appellant
[herein petitioner], is ORDERED to pay appellee [herein
respondent] P2,000,000.00 as nominal damages; P5,000,000.00 as
moral damages; and P1,000,000.00 as attorneys fees, to be satisfied
against the attachment bond under Prudential Guarantee & Assurance,
Inc. JCL (4) No. 01081.
SO ORDERED.
22

Both parties moved for reconsideration. On November 21, 2006, the
Court of Appeals denied petitioners motion for reconsideration but
granted that of respondents by ordering petitioner to pay
additional P5Million as exemplary damages.
23

Hence, the instant petition.
At the outset, it must be noted that the ruling of the trial court that
petitioner is not entitled to a writ of attachment because respondent is
a resident of the Philippines and that his act of withdrawing his
deposits with petitioner was without intent to defraud, can no longer
be passed upon by this Court. More importantly, the conclusions of the
court that petitioner bank misrepresented that respondent was residing
out of the Philippines and suppressed the fact that respondent has a
permanent residence in Metro Manila where he may be served with
summons, are now beyond the power of this Court to review having
been the subject of a final and executory order. Said findings were
sustained by the Court of Appeals in CA-G.R. SP No. 50784 and by this
Court in G.R. No. 140605. The rule on conclusiveness of judgment,
which obtains under the premises, precludes the relitigation of a
particular fact or issue in another action between the same parties
even if based on a different claim or cause of action. The judgment in
the prior action operates as estoppel as to those matters in issue or
points controverted, upon the determination of which the finding or
judgment was rendered. The previous judgment is conclusive in the
second case, as to those matters actually and directly controverted
PROVISIONAL REMEDIES Sec. 1-6 Rule 57 | 2014 SYLLABUS | 57

and determined.
24
Hence, the issues of misrepresentation by petitioner
and the residence of respondent for purposes of service of summons
can no longer be questioned by petitioner in this case.
The core issue for resolution is whether petitioner bank is liable for
damages for the improper issuance of the writ of attachment against
respondent.
We rule in the affirmative.
Notwithstanding the final judgment that petitioner is guilty of
misrepresentation and suppression of a material fact, the latter
contends that it acted in good faith. Petitioner also contends that even
if respondent is considered a resident of the Philippines, attachment is
still proper under Section 1, paragraph (f), Rule 57 of the Rules of
Court since he (respondent) is a resident who is temporarily out of the
Philippines upon whom service of summons may be effected by
publication.
Petitioners contentions are without merit.
While the final order of the trial court which quashed the writ did not
categorically use the word "bad faith" in characterizing the
representations of petitioner, the tenor of said order evidently
considers the latter to have acted in bad faith by resorting to a
deliberate strategy to mislead the court. Thus
In the hearings of the motion, and oral arguments of counsels before
the Court, it appears that plaintiff BANK through its contracting officers
Vice President Corazon B. Nepomuceno and Executive Vice President
Jose Ramon F. Revilla, personally transacted with defendant mainly
through defendants permanent residence in METRO-MANILA, either in
defendants home address in Quezon City or his main business address
at the Romulo Mabanta Buenaventura Sayoc & Delos Angeles in
MAKATI and while at times follow ups were made through defendants
temporary home and business addresses in Hongkong. It is therefore
clear that plaintiff could not deny their personal and official knowledge
that defendants permanent and official residence for purposes of
service of summons is in the Philippines. In fact, this finding is further
confirmed by the letter of Mr. JOHN GOKONGWEI, JR. Chairman,
Executive Committee of plaintiff BANK, in his letter dated 6 October
1997 on the subject loan to defendant of the same law firm was
addressed to the ROMULO LAW FIRM in MAKATI.
[Anent the] second ground of attachment x x x [t]he Court finds that
the amount withdrawn was not part of defendants peso deposits
assigned with the bank to secure the loan and as proof that the
withdrawal was not intended to defraud plaintiff as creditor is that
plaintiff approved and allowed said withdrawals. It is even noted that
when the Court granted the prayer for attachment it was mainly on the
first ground under Section 1(f) of Rule 57 of the 1997 Rules of Civil
Procedure, that defendant resides out of the Philippines.
On the above findings, it is obvious that plaintiff already knew from the
beginning the deficiency of its second ground for attachment [i.e.,]
disposing properties with intent to defraud his creditors, and therefore
plaintiff had to resort to this misrepresentation that defendant was
residing out of the Philippines and suppressed the fact that defendants
permanent residence is in METRO MANILA where he could be served
with summons.
On the above findings, and mainly on the misrepresentations made by
plaintiff on the grounds for the issuance of the attachment in the
verified complaint, the Court concludes that defendant has duly proven
its grounds in the MOTION and that plaintiff is not entitled to the
attachment.
25

Petitioner is therefore barred by the principle of conclusiveness of
judgment from again invoking good faith in the application for the
issuance of the writ. Similarly, in the case of Hanil Development Co.,
Ltd. v. Court of Appeals,
26
the Court debunked the claim of good faith
by a party who maliciously sought the issuance of a writ of
attachment, the bad faith of said party having been previously
determined in a final decision which voided the assailed writ. Thus
Apropos the Application for Judgment on the Attachment Bond,
Escobar claims in its petition that the award of attorneys fees and
injunction bond premium in favor of Hanil is [contrary] to law and
jurisprudence. It contends that no malice or bad faith may be imputed
to it in procuring the writ.
Escobars protestation is now too late in the day. The question of the
illegality of the attachment and Escobars bad faith in obtaining it has
long been settled in one of the earlier incidents of this case. The Court
of Appeals, in its decision rendered on February 3, 1983 in C.A.-G.R.
No. SP-14512, voided the challenged writ, having been issued with
grave abuse of discretion. Escobars bad faith in procuring the writ
cannot be doubted. Its Petition for the Issuance of Preliminary
Attachment made such damning allegations that: Hanil was already
able to secure a complete release of its final collection from the
MPWH; it has moved out some of its heavy equipments for unknown
destination, and it may leave the country anytime. Worse, its Ex
Parte Motion to Resolve Petition alleged that "after personal
verification by (Escobar) of (Hanils) equipment in Cagayan de Oro
City, it appears that the equipments were no longer existing from their
compound." All these allegations of Escobar were found to be totally
baseless and untrue.
Even assuming that the trial court did not make a categorical
pronouncement of misrepresentation and suppression of material facts
on the part of petitioner, the factual backdrop of this case does not
support petitioners claim of good faith. The facts and circumstances
omitted are highly material and relevant to the grant or denial of writ
of attachment applied for.
Finally, there is no merit in petitioners contention that respondent can
be considered a resident who is temporarily out of the Philippines upon
whom service of summons may be effected by publication, and
therefore qualifies as among those against whom a writ of attachment
may be issued under Section 1, paragraph (f), Rule 57 of the Rules of
Court which provides:
(f) In an action against a party x x x on whom summons may be
served by publication.
In so arguing, petitioner attempts to give the impression that although
it erroneously invoked the ground that respondent does not reside in
the Philippines, it should not be made to pay damages because it is in
fact entitled to a writ of attachment had it invoked the proper ground
under Rule 57. However, even on this alternative ground, petitioner is
still not entitled to the issuance of a writ of attachment.
The circumstances under which a writ of preliminary attachment may
be issued are set forth in Section 1, Rule 57 of the Rules of Court, to
wit:
SEC. 1. Grounds upon which attachment may issue. At the
commencement of the action or at any time before entry of judgment,
a plaintiff or any proper party may have the property of the adverse
party attached as security for the satisfaction of any judgment that
may be recovered in the following cases:
(a) In an action for the recovery of a specified amount of
money or damages, other than moral and exemplary, on a
cause of action arising from law, contract, quasi-contract,
delict or quasi-delict against a party who is about to depart
from the Philippines with intent to defraud his creditors;
(b) In an action for money or property embezzled or
fraudulently misapplied or converted to his own use by a
public officer, or an officer of a corporation or an attorney,
factor, broker, agent, or clerk, in the course of his
employment as such, or by any other person in a fiduciary
capacity, or for a willful violation of duty;
(c) In an action to recover the possession of personal
property unjustly or fraudulently taken, detained, or
converted, when the property, or any part thereof, has been
concealed, removed, or disposed of to prevent its being
found or taken by the applicant or an authorized person;
(d) In an action against a party who has been guilty of a
fraud in contracting the debt or incurring the obligation upon
which the action is brought, or in the performance thereof;
PROVISIONAL REMEDIES Sec. 1-6 Rule 57 | 2014 SYLLABUS | 58

(e) In an action against a party who has removed or
disposed of his property, or is about to do so, with intent to
defraud his creditors;
(f) In an action against a party who resides out of the
Philippines, or on whom summons may be served by
publication.
The purposes of preliminary attachment are: (1) to seize the property
of the debtor in advance of final judgment and to hold it for purposes
of satisfying said judgment, as in the grounds stated in paragraphs (a)
to (e) of Section 1, Rule 57 of the Rules of Court; or (2) to acquire
jurisdiction over the action by actual or constructive seizure of the
property in those instances where personal or substituted service of
summons on the defendant cannot be effected, as in paragraph (f) of
the same provision.
27

Corollarily, in actions in personam, such as the instant case for
collection of sum of money,
28
summons must be served by personal or
substituted service, otherwise the court will not acquire jurisdiction
over the defendant. In case the defendant does not reside and is not
found in the Philippines (and hence personal and substituted service
cannot be effected), the remedy of the plaintiff in order for the court
to acquire jurisdiction to try the case is to convert the action into a
proceeding in rem or quasi in rem by attaching the property of the
defendant.
29
Thus, in order to acquire jurisdiction in actions in
personam where defendant resides out of and is not found in the
Philippines, it becomes a matter of course for the court to convert the
action into a proceeding in rem or quasi in rem by attaching the
defendants property. The service of summons in this case (which may
be by publication coupled with the sending by registered mail of the
copy of the summons and the court order to the last known address of
the defendant), is no longer for the purpose of acquiring jurisdiction
but for compliance with the requirements of due process.
30

However, where the defendant is a resident who is temporarily out of
the Philippines, attachment of his/her property in an action in
personam, is not always necessary in order for the court to acquire
jurisdiction to hear the case.
Section 16, Rule 14 of the Rules of Court reads:
Sec. 16. Residents temporarily out of the Philippines. When an action
is commenced against a defendant who ordinarily resides within the
Philippines, but who is temporarily out of it, service may, by leave of
court, be also effected out of the Philippines, as under the preceding
section.
The preceding section referred to in the above provision is Section 15
which provides for extraterritorial service (a) personal service out of
the Philippines, (b) publication coupled with the sending by registered
mail of the copy of the summons and the court order to the last known
address of the defendant; or (c) in any other manner which the court
may deem sufficient.
In Montalban v. Maximo,
31
however, the Court held that substituted
service of summons (under the present Section 7, Rule 14 of the Rules
of Court) is the normal mode of service of summons that will confer
jurisdiction on the court over the person of residents temporarily out of
the Philippines. Meaning, service of summons may be effected by (a)
leaving copies of the summons at the defendants residence with some
person of suitable discretion residing therein, or (b) by leaving copies
at the defendants office or regular place of business with some
competent person in charge thereof.
32
Hence, the court may acquire
jurisdiction over an action in personam by mere substituted service
without need of attaching the property of the defendant.
The rationale in providing for substituted service as the normal mode
of service for residents temporarily out of the Philippines, was
expounded in Montalban v. Maximo,
33
in this wise:
A man temporarily absent from this country leaves a definite place of
residence, a dwelling where he lives, a local base, so to speak, to
which any inquiry about him may be directed and where he is bound
to return. Where one temporarily absents himself, he leaves his affairs
in the hands of one who may be reasonably expected to act in his
place and stead; to do all that is necessary to protect his interests; and
to communicate with him from time to time any incident of importance
that may affect him or his business or his affairs. It is usual for such a
man to leave at his home or with his business associates information
as to where he may be contacted in the event a question that affects
him crops up.
Thus, in actions in personam against residents temporarily out of the
Philippines, the court need not always attach the defendants property
in order to have authority to try the case. Where the plaintiff seeks to
attach the defendants property and to resort to the concomitant
service of summons by publication, the same must be with prior leave,
precisely because, if the sole purpose of the attachment is for the
court to acquire jurisdiction, the latter must determine whether from
the allegations in the complaint, substituted service (to persons of
suitable discretion at the defendants residence or to a competent
person in charge of his office or regular place of business) will suffice,
or whether there is a need to attach the property of the defendant and
resort to service of summons by publication in order for the court to
acquire jurisdiction over the case and to comply with the requirements
of due process.
In the instant case, it must be stressed that the writ was issued by the
trial court mainly on the representation of petitioner that respondent is
not a resident of the Philippines.
34
Obviously, the trial courts issuance
of the writ was for the sole purpose of acquiring jurisdiction to hear
and decide the case. Had the allegations in the complaint disclosed
that respondent has a residence in Quezon City and an office in Makati
City, the trial court, if only for the purpose of acquiring jurisdiction,
could have served summons by substituted service on the said
addresses, instead of attaching the property of the defendant. The
rules on the application of a writ of attachment must be strictly
construed in favor of the defendant. For attachment is harsh,
extraordinary, and summary in nature; it is a rigorous remedy which
exposes the debtor to humiliation and annoyance.
35
It should be
resorted to only when necessary and as a last remedy.
It is clear from the foregoing that even on the allegation that
respondent is a resident temporarily out of the Philippines, petitioner is
still not entitled to a writ of attachment because the trial court could
acquire jurisdiction over the case by substituted service instead of
attaching the property of the defendant. The misrepresentation of
petitioner that respondent does not reside in the Philippines and its
omission of his local addresses was thus a deliberate move to ensure
that the application for the writ will be granted.
In light of the foregoing, the Court of Appeals properly sustained the
finding of the trial court that petitioner is liable for damages for the
wrongful issuance of a writ of attachment against respondent.
Anent the actual damages, the Court of Appeals is correct in not
awarding the same inasmuch as the respondent failed to establish the
amount garnished by petitioner. It is a well settled rule that one who
has been injured by a wrongful attachment can recover damages for
the actual loss resulting therefrom. But for such losses to be
recoverable, they must constitute actual damages duly established by
competent proofs, which are, however, wanting in the present case.
36

Nevertheless, nominal damages may be awarded to a plaintiff whose
right has been violated or invaded by the defendant, for the purpose
of vindicating or recognizing that right, and not for indemnifying the
plaintiff for any loss suffered by him. Its award is thus not for the
purpose of indemnification for a loss but for the recognition and
vindication of a right. Indeed, nominal damages are damages in name
only and not in fact.
37
They are recoverable where some injury has
been done but the pecuniary value of the damage is not shown by
evidence and are thus subject to the discretion of the court according
to the circumstances of the case.
38

In this case, the award of nominal damages is proper considering that
the right of respondent to use his money has been violated by its
garnishment. The amount of nominal damages must, however, be
reduced from P2 million to P50,000.00 considering the short period of
2 months during which the writ was in effect as well as the lack of
evidence as to the amount garnished.1wphi1
Likewise, the award of attorneys fees is proper when a party is
compelled to incur expenses to lift a wrongfully issued writ of
attachment. The basis of the award thereof is also the amount of
PROVISIONAL REMEDIES Sec. 1-6 Rule 57 | 2014 SYLLABUS | 59

money garnished, and the length of time respondents have been
deprived of the use of their money by reason of the wrongful
attachment.
39
It may also be based upon (1) the amount and the
character of the services rendered; (2) the labor, time and trouble
involved; (3) the nature and importance of the litigation and business
in which the services were rendered; (4) the responsibility imposed;
(5) the amount of money and the value of the property affected by the
controversy or involved in the employment; (6) the skill and the
experience called for in the performance of the services; (7) the
professional character and the social standing of the attorney; (8) the
results secured, it being a recognized rule that an attorney may
properly charge a much larger fee when it is contingent than when it is
not.
40

All the aforementioned weighed, and considering the short period of
time it took to have the writ lifted, the favorable decisions of the
courts below, the absence of evidence as to the professional character
and the social standing of the attorney handling the case and the
amount garnished, the award of attorneys fees should be fixed not
at P1 Million, but only at P200,000.00.
The courts below correctly awarded moral damages on account of
petitioners misrepresentation and bad faith; however, we find the
award in the amount of P5 Million excessive. Moral damages are to be
fixed upon the discretion of the court taking into consideration the
educational, social and financial standing of the parties.
41
Moral
damages are not intended to enrich a complainant at the expense of a
defendant.
42
They are awarded only to enable the injured party to
obtain means, diversion or amusements that will serve to obviate the
moral suffering he has undergone, by reason of petitioners culpable
action. Moral damages must be commensurate with the loss or injury
suffered. Hence, the award of moral damages is reduced
to P500,000.00.
Considering petitioners bad faith in securing the writ of attachment,
we sustain the award of exemplary damages by way of example or
correction for public good. This should deter parties in litigations from
resorting to baseless and preposterous allegations to obtain writs of
attachments. While as a general rule, the liability on the attachment
bond is limited to actual (or in some cases, temperate or nominal)
damages, exemplary damages may be recovered where the
attachment was established to be maliciously sued out.
43
Nevertheless,
the award of exemplary damages in this case should be reduced
from P5M to P500,000.00.
Finally, contrary to the claim of petitioner, the instant case for
damages by reason of the invalid issuance of the writ, survives the
dismissal of the main case for sum of money. Suffice it to state that
the claim for damages arising from such wrongful attachment may
arise and be decided separately from the merits of the main action.
44

WHEREFORE, the petition is PARTIALLY GRANTED. The May 31, 2006
Decision of the Court of Appeals in CA-G.R. CV No. 78200 is AFFIRMED
with MODIFICATIONS. As modified, petitioner Philippine Commercial
International Bank is ordered to pay respondent Joseph Anthony M.
Alejandro the following amounts: P50,000.00 as nominal
damages, P200,000.00 as attorneys fees; and P500,000.00 as moral
damages, and P500,000.00 as exemplary damages, to be satisfied
against the attachment bond issued by Prudential Guarantee &
Assurance Inc.,
45
under JCL (4) No. 01081, Bond No. HO-46764-97.
No pronouncement as to costs.
G.R. No. 167741 July 12, 2007
REPUBLIC OF THE PHILIPPINES, Petitioner,
vs.
MAJ. GEN. CARLOS FLORES GARCIA, CLARITA DEPAKAKIBO
GARCIA, IAN CARL DEPAKAKIBO GARCIA, JUAN PAULO
DEPAKAKIBO GARCIA, TIMOTHY DEPAKAKIBO GARCIA and
THE SANDIGANBAYAN (FOURTH DIVISION), Respondents.
D E C I S I O N
CORONA, J.:
This petition for certiorari1 assails the January 14, 2005 and March 2,
2005 resolutions2 of the Fourth Division of the Sandiganbayan in Civil
Case No. 0193 entitled Republic of the Philippines v. Maj. Gen. Carlos
Flores Garcia, Clarita Depakakibo Garcia, Ian Carl Depakakibo Garcia,
Juan Paulo Depakakibo Garcia and Timothy Mark Depakakibo Garcia.
Civil Case No. 0193 was a petition for forfeiture of unlawfully acquired
properties, with a verified urgent ex-parte application for the issuance
of a writ of preliminary attachment, filed by the Republic of the
Philippines against Maj. Gen. Carlos F. Garcia, his wife3 and
children4 in the Sandiganbayan on October 27, 2004. In praying for
the issuance of a writ of preliminary attachment, the Republic
maintained that, as a sovereign political entity, it was exempt from
filing the required attachment bond.
On October 29, 2004, the Sandiganbayan issued a resolution ordering
the issuance of a writ of preliminary attachment against the properties
of the Garcias upon the filing by the Republic of a P1 million
attachment bond.5On November 2, 2004, the Republic posted the
required attachment bond to avoid any delay in the issuance of the
writ as well as to promptly protect and secure its claim.
On December 7, 2004, the Republic filed a motion for partial
reconsideration of the October 29, 2004 resolution claiming that it was
exempt from filing an attachment bond and praying for the release
thereof.
In a resolution dated January 14, 2005, the Sandiganbayan ruled that
there was nothing in the Rules of Court that exempted the Republic
from filing an attachment bond. It reexamined Tolentino v.
Carlos6 which was invoked by the Republic to justify its claimed
exemption. That case was decided under the old Code of Civil
Procedure enacted more than a century ago.
The Sandiganbayan denied the Republics motion. Reconsideration was
also denied in a resolution dated March 2, 2005.
As already stated, these two resolutions (January 14, 2005 and March
2, 2005) are the subject of the present petition.
Did the Sandiganbayan commit grave abuse of discretion when it
rejected the Republics claim of exemption from the filing of an
attachment bond? Yes.
Sections 3 and 4, Rule 57 of the Rules of Court provide:
Sec. 3. Affidavit and bond required. An order of attachment shall be
granted only when it appears by the affidavit of the applicant, or of
some other person who personally knows the facts, that a sufficient
cause of action exists, that the case is one of those mentioned in
section 1 hereof, that there is no other sufficient security for the claim
sought to be enforced by the action, and that the amount due to
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 order is
granted above all legal counterclaims. The affidavit, and the bond
required by the next succeeding section, must be duly filed
with the court before the order issues.
Sec. 4. Condition of applicants bond. The party applying for the
order must thereafter give a bond executed to the adverse
party in the amount fixed by the court in its order granting the
issuance of the writ, conditioned that the latter will pay all the 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. (emphasis
supplied)
Under these provisions, before a writ of attachment may issue, a bond
must first be filed to answer for all costs which may be adjudged to
the adverse party and for the damages he may sustain by reason of
the attachment. However, this rule does not cover the State.
In Tolentino,7 this Court declared that the State as represented by the
government is exempt from filing an attachment bond on the theory
that it is always solvent.
2. Section 427 of the Code of Civil Procedure provides that before the
issuance of a writ of attachment, the applicant therefor or any person
in his name, should file a bond in favor of the defendant for an amount
not less than P400 nor more than the amount of the claim, answerable
for damages in case it is shown that the attachment was obtained
PROVISIONAL REMEDIES Sec. 1-6 Rule 57 | 2014 SYLLABUS | 60

illegally or without sufficient cause; but in the case at bar the one
who applied for and obtained the attachment is the
Commonwealth of the Philippines, as plaintiff, and under the
theory that the State is always solvent it was not bound to
post the required bond and the respondent judge did not exceed
his jurisdiction in exempting it from such requirement. x x
x8 (emphasis supplied)
In other words, the issuance of a writ of preliminary attachment is
conditioned on the filing of a bond unless the applicant is the State.
Where the State is the applicant, the filing of the attachment bond is
excused.9
The attachment bond is contingent on and answerable for all costs
which may be adjudged to the adverse party and all damages which
he may sustain by reason of the attachment should the court finally
rule that the applicant is not entitled to the writ of attachment. Thus, it
is a security for the payment of the costs and damages to which the
adverse party may be entitled in case there is a subsequent finding
that the applicant is not entitled to the writ. The Republic of the
Philippines need not give this security as it is presumed to be always
solvent and able to meet its obligations.
The Sandiganbayan thus erred when it disregarded the foregoing
presumption and instead ruled that the Republic should file an
attachment bond. The error was not simply an error of judgment but
grave abuse of discretion.
There is grave abuse of discretion when an act is done contrary to the
Constitution, the law or jurisprudence.10Here, the Sandiganbayans
January 14, 2005 resolution was clearly contrary to Tolentino.
Worse, the Sandiganbayan transgressed the Constitution and
arrogated upon itself a power that it did not by law possess. All courts
must take their bearings from the decisions and rulings of this
Court. Tolentino has not been superseded or reversed. Thus, it is
existing jurisprudence and continues to form an important part of our
legal system.11 Surprisingly, the Sandiganbayan declared
that Tolentino "need(ed) to be carefully reexamined in the light of the
changes that the rule on attachment ha(d) undergone through the
years."12 According to the court a quo:
[Tolentino] was decided by the Supreme Court employing the old Code
of Civil Procedure (Act No. 190) which was enacted by the Philippine
Commission on August 7, 1901 or more than a century ago.
That was then, this is now. The provisions of the old Code of Civil
Procedure governing attachment have been substantially modified in
the subsequent Rules of Court. In fact, Rule 57 of the present 1997
Rules of Civil Procedure is an expanded modification of the provisions
of the old Code of Civil Procedure governing attachment. Unlike the old
Code of Civil Procedure, the present 1997 Rules of Civil Procedure is
noticeably explicit in its requirement that the party applying for an
order of attachment should file a bond.
On this, Article VIII, Section 4(3) of the Constitution provides:
(3) Cases or matters heard by a division shall be decided or resolved
with the concurrence of majority of the Members who actually took
part in the deliberations on the issues in the case and voted thereon,
and in no case without the concurrence of at least three of such
Members. When the required number is not obtained, the case shall be
decided en banc; Provided, that no doctrine or principle of law
laid down by the court in a decision rendered en banc or in
division may be modified or reversed except by the court
sitting en banc. (emphasis supplied)
The Constitution mandates that only this Court sitting en banc may
modify or reverse a doctrine or principle of law laid down by the Court
in a decision rendered en banc or in division. Any court, the
Sandiganbayan included, which renders a decision in violation of this
constitutional precept exceeds its jurisdiction.
Therefore, the Sandiganbayan could not have validly "reexamined,"
much less reversed, Tolentino. By doing something it could not validly
do, the Sandiganbayan acted ultra vires and committed grave abuse of
discretion.
The fact was, the revisions of the Rules of Court on attachment,
particularly those pertaining to the filing of an attachment bond, did
not quash Tolentino.
Tolentino applied Sec. 247 of Act No. 190 which provided:
Sec. 247. Obligation for damages in case of attachment. Before the
order is made, the party applying for it, or some person on his
behalf, must execute to the defendant an obligation in an
amount to be fixed by the judge, or justice of the peace, and
with sufficient surety to be approved by him, which obligation shall
be for a sum not less than two hundred dollars, and not exceeding the
amount claimed by the plaintiff, that the plaintiff will pay all the costs
which may be adjudged to the defendant, and all damages which he
may sustain by reason of the attachment, if the same shall finally be
adjudged to have been wrongful or without sufficient cause. (emphasis
supplied)
Contrary to the pronouncement of the Sandiganbayan, Section 247 of
Act No. 190 explicitly required the execution of an attachment bond
before a writ of preliminary attachment could be issued.
The relevant provisions of Act No. 190 on attachment were later
substantially adopted as Sections 313 and 4, Rule 59 of the 1940 Rules
of Court.
Sec. 3. Order issued only when affidavit and bond filed. An order of
attachment shall be granted only when it is made to appear by the
affidavit of the plaintiff, or of some other person who personally knows
the facts, that the case is one of those mentioned in section 1 hereof,
that there is no other sufficient security for the claim sought to be
enforced by the action, and that the amount due to the plaintiff, or the
value of the property which he is entitled to recover possession of, is
as much as the sum for which the order is granted above all legal
counterclaims; which affidavit, and the bond required by the next
succeeding section, must be duly filed with the clerk or judge
of the court before the order issues. (emphasis supplied)
Sec. 4. Bond required from plaintiff. The party applying for the order
must give a bond executed to the defendant in an amount to be fixed
by the judge, not exceeding the plaintiffs claim, that the plaintiff will
pay all the costs which may be adjudged to the defendant and all
damages which he may sustain by reason of the attachment, if the
court shall finally adjudge that the plaintiff was not entitled thereto.
And with the promulgation of the 1964 Rules of Court, the rules on
attachment were renumbered as Rule 57, remaining substantially the
same:
Sec. 3. Affidavit and bond required. An order of attachment shall be
granted only when it appears by the affidavit of the applicant, or of
some other person who personally knows the facts, that a sufficient
cause of action exists, that the case is one of those mentioned in
section 1 hereof, that there is no other sufficient security for the claim
sought to be enforced by the action, and that the amount due to
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 order is
granted above all legal counterclaims. The affidavit, and the bond
required by the next succeeding section, must be duly filed
with the clerk or judge of the court before the order issues.
(emphasis supplied)
Sec. 4. Condition of applicants bond. The party applying for the
order must thereafter give a bond executed to the adverse party in an
amount to be fixed by the judge, not exceeding the applicants
claim, conditioned that the latter will pay all the 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.
Clearly, the filing of an attachment bond before the issuance of a writ
of preliminary attachment was expressly required under the relevant
provisions of both the 1940 and 1964 Rules of Court.
Commentaries on Sections 3 and 4 of the 1964 Rules of Court
uniformly cited Tolentino. They stated that the government is exempt
from filing an attachment bond14 and that the State need not file an
PROVISIONAL REMEDIES Sec. 1-6 Rule 57 | 2014 SYLLABUS | 61

attachment bond.15
Where the Republic of the Philippines as a party to an action asks for a
writ of attachment against the properties of a defendant, it need not
furnish a bond. This is so because the State is presumed to be
solvent.16
When plaintiff is the Republic of the Philippines, it need not file a bond
when it applies for a preliminary attachment. This is on the premise
that the State is solvent.17
And then again, we note the significant fact that Sections 3 and 4,
Rule 57 of the 1964 Rules of Court were substantially incorporated as
Sections 3 and 4, Rule 57 of the present (1997) Rules of
Court.18 There is thus no reason why the Republic should be made to
file an attachment bond.1avvphi1
In fact, in Spouses Badillo v. Hon. Tayag,19 a fairly recent case, this
Court declared that, when the State litigates, it is not required to put
up a bond for damages or even an appeal bond because it is presumed
to be solvent. In other words, the State is not required to file a bond
because it is capable of paying its obligations.20
The pronouncement in Spouses Badillo applies in this case even
if Spouses Badillo involved the filing of a supersedeas bond. The
pronouncement that the State "is not required to put up a bond for
damages or even an appeal bond" is general enough to encompass
attachment bonds. Moreover, the purpose of an attachment bond (to
answer for all costs and damages which the adverse party may sustain
by reason of the attachment if the court finally rules that the applicant
is not entitled to the writ) and a supersedeas bond (to answer for
damages to the winning party in case the appeal is found frivolous) is
essentially the same.1awphil.zw+
In filing forfeiture cases against erring public officials and employees,
the Office of the Ombudsman performs the States sovereign functions
of enforcing laws, guarding and protecting the integrity of the public
service and addressing the problem of corruption in the bureaucracy.
The filing of an application for the issuance of a writ of preliminary
attachment is a necessary incident in forfeiture cases. It is needed to
protect the interest of the government and to prevent the removal,
concealment and disposition of properties in the hands of unscrupulous
public officers. Otherwise, even if the government subsequently wins
the case, it will be left holding an empty bag.
Accordingly, the petition is hereby GRANTED. The January 14, 2005
and March 2, 2005 resolutions of the Sandiganbayan
are REVERSED and SET ASIDE. The Republic of the Philippines is
declared exempt from the payment or filing of an attachment bond for
the issuance of a writ of preliminary attachment issued in Civil Case
No. 0193. The Sandiganbayan is hereby ordered to release
the P1,000,000 bond posted by the Republic of the Philippines to the
Office of the Ombudsman.
SO ORDERED.
SECTION 4. Condition of Applicants bond. The party applying
for the order must thereafter give a bond executed to the adverse
party in the amount fixed by the court in its order granting the
issuance of the writ, conditioned that the latter will pay all the 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.
A.M. No. RTJ-93-1008 November 14, 1994
TERESITA P. ARELLANO, petitioner,
vs.
JUDGE NAPOLEON R. FLOJO, FELINO BANGALAN, Clerk of
Court III, HERMINIO DEL CASTILLO, RTC-OCC.; LUCINO JOVE,
Deputy Sheriff, respondents.
Teresita P. Arellano, defendant in Civil Case No. 11-1041 then pending
before Branch 6 of the Regional Trial Court of the Second Judicial
Region and stationed in Aparri, Cagayan, filed a verified complaint for
neglect of duty, misconduct, bias, and partiality against
(a) Judge Napoleon R. Flojo, then Presiding Judge of the
aforementioned Branch 6, now assigned as Presiding Judge of Branch
2 of the Regional Trial Court of Manila, for having irregularly issued an
order dated January 21, 1986 for the issuance of a writ of attachment
in the said case on the same date despite the lack of legal basis
therefor.
(b) Felino Bangalan, then Acting Clerk of Court III, of the Aparri RTC
(now Presiding Judge, MTC, Branch 1, Aparri, Cagayan) for issuing the
writ of attachment in the said case despite the failure of the plaintiffs
to post the required attachment bond of P100,000.00 and for
deliberately delaying the issuance of service of summons to the
defendant in that although the case was filed on January 21, 1986, the
defendant (complainant herein) was served summons only on May 13,
1986 or four (4) months thereafter, and that she was not even
furnished a copy of the Order authorizing the issuance of a writ of
attachment, the so-called attachment bond, as well as the writ of
attachment itself.
(c) Herminio del Castillo, Branch Clerk of Court of the Aparri RTC for
deliberately delaying the issuance of service of summons on the
defendant.
(d) Luciano Jove, Deputy Sheriff, Aparri, Cagayan for seizing a
vehicle not owned by the defendant and entrusting the custody thereof
to Sheriff Guards Rodolfo Auringan and Dioniso Co., Jr., instead of
personally keeping it under his custody, resulting in the said vehicle
being cannibalized to the damage and prejudice of the complainant
and the heirs of the late Ruperto Arellano.
The complaint against Clerk of Court Herminio del Castillo was
dismissed for lack of merit by the Court in its Resolution dated June
28, 1993, as he did not appear to have had any participation in the
issuance and service of summons on the defendant in the
aforementioned civil case (pp. 42-43, Rollo.)
With respect to Judge Napoleon R. Flojo, inasmuch as the charges
against him were mere reiterations of the charges filed by the
same complainant in A.M. Case No. RTJ-86-52 which had been earlier
dismissed for lack of merit by the Court en banc on March 24, 1987,
the instant complaint against him was likewise dismissed in the
resolution of the Court dated November 8, 1993
(p. 83, Rollo).
Thereafter, the case was referred to Justice Ramon A. Barcelona of the
Court of Appeals, for investigation, report, and recommendation in
regard to the remaining respondents.
Justice Barcelona finds Judge Bangalan (then Clerk of Court III) guilty
of negligence for (1) having issued the writ of attachment on January
21, 1986 in spite of the applicants' failure to post an acceptable bond
as required under Section 4, Rule 57 of the Rules of Court for what
appears in the record is only a promissory note in the form of an
affidavit executed by Victor Suguitan, Andres Langaman, and Mariano
Retreta; having caused the implementation through Sheriff Jove, of
the said writ of attachment on January 23, 1986, knowingly fully well
that no summons had as yet been issued and served as of said date
upon defendant therein in violation of Section 5, Rule 57 of the Rules
of Court and Section 3, Rule 14 of the same rules.
As for Sheriff Jove, Justice Barcelona found that in serving the writ of
attachment, the sheriff did not serve the same on the defendant but
on somebody whom he suspected only as holding the property of the
complainant. He failed to verify the ownership of the cargo truck he
attached. To compound the sheriff's failure to exercise diligence in the
execution of the writ of attachment, he surrendered the custody of the
property to the two alleged guards instead of depositing the same in a
bonded warehouse.
Finding both Judge Bangalan and Sheriff Jove remiss in the
performance of their duties, Justice Barcelona recommends that they
each be suspended for one (1) month (not chargeable to their
accumulated leave) without pay. However, this Court is of the opinion
and thus hereby holds that a fine of P5,000.00 each for Judge
Bangalan and Sheriff Jove is the commensurate penalty for the
irregularity that attended the civil case below. In this respect, we
PROVISIONAL REMEDIES Sec. 1-6 Rule 57 | 2014 SYLLABUS | 62

agree with the factual findings and analysis of the Office of the Court
Administrator, thus:
Indeed, he issued the Writ of Attachment although
the plaintiffs have not yet posted the required
attachment bond. It is explicitly stated in his
Comment that what was filed was merely an
undertaking. The fact that the "Undertaking" was
subscribed by the branch clerk of court does not
necessarily follow that it carried the imprimatur of
the presiding judge thereof. As a lawyer,
respondent Bangalan, who is now a Judge should
have known the glaring distinctions between a
plain undertaking and a real attachment bond.
The difference between the two is not that hard to
discern. As ruled by Judge Ernesto A. Talamayan
in his order of April 23, 1993 (Rollo, pp. 18-19), no
bond can be confiscated to answer for the
damages sustained by defendants. He discovered
that only a promissory note in the form of an
affidavit executed by the bondsmen denominated
as an attachment bond appears on the record.
Had respondent Bangalan carefully examined the
undertaking filed before he issued the writ of
attachment, such a situation could have been
obviated. Where a statute authorizing attachment
requires, as a condition to the issuance of the writ,
that a bond shall be given by plaintiff to indemnify
defendant for any loss or injury resulting from the
attachment in case it proves to be wrongful, a
failure to give such bond is fatal, and an
attachment issued without the necessary bond is
invalid (7 C.J.S. 326). However, we do not find
that the delay in the issuance and service of
summons was deliberately done to prejudice the
defendant. Bad faith cannot be inferred by the
mere fact of delay considering that it was issued
by the Office of the Clerk of Court and not by the
branch clerk to whom the case was already
assigned.
For seizing a vehicle which is not owned by the
defendant, respondent Sheriff Jove may be held
administratively liable. Although his actuation may
not have been tainted with bad faith or malice, he
failed to exercise due prudence in attaching the
truck. He should have verified first if the truck he
seized was owned by the judgment debtor,
especially in this case where it was found in the
possession of a person other than its real owner.
Consequently, the writ of attachment was ordered
dissolved in the Decision of Judge Tumacder dated
August 9, 1989 (Rollo, pp. 25 to 41) as the
property attached does not belong to the
judgment debtor but to her father, Ruperto
Arellano. A sheriff incurs liability if he wrongfully
levies upon the property of a third person (47 Am
Jr 857). A sheriff has no authority to attach the
property of any person under execution except
that of the judgment debtor. If he does so, the
writ of execution affords him no justification, for
the action is not in obedience to the mandate of
the writ (Codesal and Ocampo vs. Ascue, 38 Phil.
902). The sheriff maybe liable for enforcing
execution on property belonging to a third party
(Sec. 17, Rule 39, Rules of Court). However, he
cannot be faulted for entrusting the custody
thereof to the sheriff guards considering that he
can not physically keep the cargo truck under his
custody. His stand is sustained by the Court in its
Order of October 10, 1989 (Rollo, pp. 110 to 111),
holding the two (2) sheriff guards liable for the
cannibalism of the truck.
(pp. 132-133. Rollo)
WHEREFORE, premises considered, Judge Felino Bangalan and Sheriff
Lucinio Jove are hereby each fined the amount of FIVE THOUSAND
PESOS (P5,000.00), with the severe warning that a repetition of the
same or similar acts in the future will be dealt with more severely.
SO ORDERED.
G.R. No. 74696 November 11, 1987
JOSE D. CALDERON, petitioner,
vs.
THE INTERMEDIATE APPELLATE COURT, GEORGE SCHULZE,
GEORGE SCHULZE, JR., ANTONIO C. AMOR, MANUEL A. MOZO,
and VICTOR M. NALUZ, respondents.
G. R. No. 73916 November 11, 1987
FIRST INTEGRATED BONDING AND INSURANCE COMPANY,
INC., petitioner,
vs.
THE INTERMEDIATE APPELLATE COURT, GEORGE SCHULZE,
ANTONIO C. AMOR, MANUEL A. MOZO and VICTOR M.
NALUZ, respondents.
For review on certiorari is respondent appellate Court's decision 1 in
AC-G.R. No. 01420, which affirmed the Regional Trial Court's
decision
2
appealed from holding the plaintiff Jose D. Calderon
(petitioner herein) and his bondsman the Integrated Bonding and
Insurance Company, Inc., jointly and severally liable to pay defendants
(private respondents herein), damages caused by the filing by
Calderon of the allegedly unwarranted suit and the wrongful and
malicious attachment of private respondents' properties.
The facts of the case are briefly as follows:
On November 2, 1976, petitioner Calderon purchased from the private
respondents the following: the Luzon Brokerage Corporation (LBC for
brevity) and its five (5) affiliate companies, namely, Luzon Air Freight,
Inc., Luzon Port Terminals Services, Inc., Luzon (GS) Warehousing
Corporation, GS Industrial Management Corporation, and GS Luzon
Trucking Corporation. Twenty one (21) days thereafter or on
November 23, 1976, the Bureau of Customs suspended the operations
of LBC for failure to pay the amount of P1,475,840.00 representing
customs taxes and duties incurred prior to the execution of the sale. In
order to lift the suspension Calderon paid the sum of P606,430.00 to
the Bureau of Customs.
On October 27, 1977, Calderon filed a complaint against private
respondents to recover said amount of P1,475,840.00, with damages
by reason of breach of warranty. In the same complaint, the petitioner
prayed for a preliminary attachment, alleging: that private respondents
had deliberately and willfully concealed from his knowledge such
staggering liability of the LBC for the purpose of misleading him into
buying the six aforesaid companies; and that private respondent
Schulze is about to depart from the Philippines in order to defraud his
creditors.
To support the petition for preliminary attachment, the petitioner
posted a surety bond of P1,475,840.00. On October 28, 1977, the trial
court issued a writ of preliminary attachment, whereupon properties of
the private respondents were attached and their bank deposits were
garnished.
On November 10, 1977, petitioner Calderon filed an amended
complaint, alleging that while the liabilities of LBC are reflected in its
books, the aforesaid amount was fraudulently withdrawn and
misappropriated by private respondent Schulze. (pp. 7-18, Rollo)
On the other hand, private respondents claimed: that the amount of
P1,475,840.00 due to the Bureau of Customs represents the duties
and taxes payable out of the advanced payments made by LBC's client,
Philippine Refining Company (PRC, for brevity) in August, September
and October, 1976, and in the first and second weeks of November
1976, after Calderon himself had taken control of the management of
LBC (Exhibit A); that these deposit payments were properly recorded
in the books of the corporation and existing as part of the corporate
funds; that from the first week of June, 1976 up to October 30, 1976,
PROVISIONAL REMEDIES Sec. 1-6 Rule 57 | 2014 SYLLABUS | 63

private respondent Schulze fully disclose and explained to Calderon
that these customer's advanced deposit payments (including those of
the PRC) are to be paid to the Bureau of Customs when their
corresponding customs taxes and duties become due; that during this
phase of the negotiation, Calderon and his representatives inspected
and studied the corporate books and records at will and learned the
daily operations and management of LBC; that the petitioner did not
pay out of his own pocket but out of the LBC funds the said amount of
P606,430,30 demanded by the Bureau of Customs, as evidenced by a
manager's check No. FEBTC 25092 (Exhibits 9, 10, 11 & 38) and
another facility negotiated with the Insular Bank of Asia and America
(Exhibit K-2); and that private respondents are setting up a
counterclaim for actual, moral and exemplary damages as well as
attorney's fees, as a consequence of the filing of the baseless suit and
the wrongful and malicious attachment of their properties, (pp. 217-
221, Rollo)
On November 17, 1977, private respondents filed a counterbond,
whereupon the trial court issued an order directing the sheriff to return
all real and personal properties already levied upon and to lift the
notices of garnishment issued in connection with the said attachment
(Annex B, p. 42, Rollo).
After trial, the trial court dismissed the complaint, holding Calderon
and his surety First integrated Bonding and Insurance Co., Inc., jointly
and severally liable to pay the damages prayed for by the private
respondents.
Said decision was affirmed on appeal, although slightly modified in the
sense that the award of moral and exemplary damages in favor of
private respondents Schulze and Amor was reduced. The dispositive
portion of the judgment of affirmance and modification reads:
WHEREFORE, the judgment of the lower court is
modified as follows:
To defendant-appellee George Schulze:
P650,000.00 as moral damages and
P200,000.00 as exemplary damages.
To defendant-appellee Antonio C. Amor:
P150,000.00 as moral damages and
P30,000.00 as exemplary damages,
An other dispositions in the judgment appealed
from, including the dismissal of the amended
complainant are hereby affirmed in toto.
SO ORDERED.
In his petition, petitioner Calderon asserts, among other things, that
the court below erred:
I
IN HOLDING THAT THE PETITIONER FAILED TO
ESTABLISH HIS CLAIMS.
II
IN HOLDING THAT THE PRELIMINARY
ATTACHMENT HAD BEEN WRONGFULLY AND
MALICIOUSLY SUED OUT.
III
IN HOLDING THAT THE PETITIONER IS LIABLE
NOT ONLY FOR ACTUAL DAMAGES BUT MORAL
AND EX-EXEMPLARY DAMAGES AS WELL.
On the other hand, petitioner Insurance Company raises the following
issues:
I
WHETHER OR NOT THE PETITIONER SURETY IS
LIABLE FOR DAMAGES ON ITS CONTRACTED
SURETYSHIP NOTWITHSTANDING THE
DISSOLUTION OF THE WRIT OF PRELIMINARY
ATTACHMENT, AS A CON. SEQUENCE OF THE
FILING OF THE DEFENDANT'S COUNTER- BOND,
WHEREBY LEVIED PROPERTIES WERE ORDERED
BY THE COURT RETURNED TO PRIVATE
RESPONDENTS AND THE NOTICES OF
GARNISHMENT ISSUED IN CONNECTION
THEREWITH ORDERED LIFTED.
II
WHETHER OR NOT THE SUBSEQUENT FILING BY
PRIVATE RESPONDENTS OF A COUNTER-BOND
TO DISCHARGE THE WRIT OF PRELIMINARY
ATTACHMENT CONSTITUTE A WAIVER ON ANY
DEFECT IN THE ISSUANCE OF THE ATTACHMENT
WRIT.
III
WHETHER OR NOT A SURETY IS A GUARANTOR
OF THE EXISTENCE OF A GOOD CAUSE OF
ACTION IN THE COMPLAINT.
The petition is devoid of merit.
Whether or not the amount of P1,475,840.00 was duly disclosed as an
outstanding liability of LBC or was misappropriated by private
respondent Schulze is purely a factual issue. That Calderon was clearly
in bad faith when he asked for the attachment is indicated by the fact
that he failed to appear in court to support his charge of
misappropriation by Schulze, and in effect, preventing his being cross-
examined, no document on the charges was presented by him.
What the Appellate Court found in this regard need not be further
elaborated upon. The Appellate Court ruled:
... The record shows that appellant Calderon failed
to produce any evidence in support of his sworn
charge that appellee Schulze had deliberately and
willfully concealed the liabilities of Luzon
Brokerage Corporation. Neither did appellant
Calderon prove his sworn charges that appellee
Schulze had maliciously and fraudulently
withdrawn and misappropriated the amount of
Pl,475,840.00 and that an the defendants had
maliciously and fraudulently concealed and
withheld from him this alleged liability of Luzon
Brokerage Corporation in breach of the contract-
warranty that said corporation had no obligations
or liabilities except those appearing in the books
and records of the said corporation. Indeed,
appellant Calderon never appeared in the trial
court to substantiate the charges in his verified
complaints and in his affidavit to support his
petition for the issuance of a writ of attachment.
He distanced himself from the appellees and
avoided cross-examination regarding his sworn
allegations. ...
... But even though appellant Calderon failed to
prove his serious charges of fraud, malice and bad
faith, the appellees took it upon themselves to
show that they did not conceal or withhold from
appellant's knowledge the deposits made by
Philippine Refining Co., Inc. with Luzon Brokerage
Corporation and that they did not withdraw and
misappropriate the deposits made by Philippine
Refining Co., Inc. with Luzon Brokerage
Corporation.
The books and records of Luzon Brokerage
Corporation on which the Financial Statement of
Luzon Brokerage Corporation, as of October 31,
1976 was prepared by the auditing firm retained
by appellant Calderon himself (Exhibit 1), disclose
that the liabilities of Luzon Brokerage Corporation
in the total amount of P4,574,498.32 appear
under the heading 'Customers Deposit' (Exhibit 1-
A) this amount includes the deposit of Philippine
Refining Co., Inc. in the sum of Pl,475,840.00.
PROVISIONAL REMEDIES Sec. 1-6 Rule 57 | 2014 SYLLABUS | 64

But appellant Calderon contends that this financial
statement was dated February 4, 1977 (see
Exhibit 1-C). There is nothing commendable in this
argument because the bases of the financial
statement were the books, records and documents
of Luzon Brokerage Corporation for the period
ending October 31, 1976, which were all turned
over to and examined by appellant Calderon and
his executive, legal and financial staffs. There is
also no merit in the contention of appellant
Calderon that the appellees have tampered the
books of Luzon Brokerage Corporation because
there is no proof to back this charge, let alone the
fact that appellant Calderon did not even present
the said books to support his charge.
As stated above, the amount of customers'
deposits in the sum of P4,574,498.32 includes the
deposits of Philippine Refining Co., Inc. (Exhibits
46-A, 46-B, 46-C, 46-D, 46-E, 46-F, 46-G, 46-H,
46-1, 46-J, t.s.n. July 23, 1980, pp. 12-13, 14-15).
The amounts deposited by Philippine Refining Co.,
Inc. on various dates with Luzon Brokerage
Corporation made before the execution of the sale
were all entered in three other corporate books of
Luzon Brokerage Corporation namely, the Cash
Receipts Register (Exhibits 39-A-1 to 39-K-1 and
39-A-1-B to 39-K-1-B), the Journal Vouchers
(Exhibits 42 to 46 and 42-A to 43- A), and the
Customer's Deposit Ledger (Exhibit 46-A to 46-J)
... .
Thus, the claim of appellant Calderon that the
deposits made by Philippine Refining Co., Inc. with
Luzon Brokerage Corporation of P406,430.00 on
August 24, 1976 (Exhibit N P53,640.00 on October
13, 1976 (Exhibit 0), P406,430.00 on September
8, 1976 (Exhibit P P199,508.00 on September 24,
1976 (Exhibit Q P52,738.00 on October 22, 1976
(Exhibit R and P264,436.00 on October 7, 1976
(Exhibit S) were not entered in the books of Luzon
Brokerage Corporation, is completely without
merit. ... (pp. 85-87, Rollo)
It is evident from the foregoing that the attachment was maliciously
sued out and that as already pointed out Schulze was not in bad faith.
While as a general rule, the liability on the attachment bond is limited
to actual damages, moral and exemplary damages may be recovered
where the attachment was alleged to be maliciously sued out and
established to be so. (Lazatin vs. Twano et al,
L-12736, July 31, 1961).
In the instant case, the issues of wrongful and malicious suing out of
the writ of preliminary attachment were joined not only in private
respondents' motion to discharge the attachment but also in their
answer to the amended complaint (p. 38, Rollo). The trial court
observed that the books and records of Luzon Brokerage Corporation
disclose that the liabilities of the said corporation in the total amount
of P4,574,498.32 appear under the heading "Customs Deposit" (Exhibit
1-A) and this amount includes the deposit of Philippine Refining Co.,
Inc. in the sum of P1,475,840.00 (p. 26, Rollo). On the other hand,
plaintiff never appeared in court, and failed to produce any evidence to
substantiate his charges (p. 26, Rollo).
Well settled is the rule that the factual findings of the trial court are
entitled to great weight and respect on appeal, especially when
established by unrebutted testimonial and documentary evidence, as in
this case.
Anent the petition of the surety, We say the following:
Specifically, petitioner surety contends that the dissolution of the
attachment extinguishes its obligation under the bond, for the basis of
its liability, which is wrongful attachment, no longer exists, the
attachment bond having been rendered void and ineffective, by virtue
of Section 12, Rule 57 of the Rules of Court. (p. 5, Petition)
While Section 12, Rule 57 of the Rules of Court provides that upon the
filing of a counterbond, the attachment is discharged or dissolved,
nowhere is it provided that the attachment bond is rendered void and
ineffective upon the filing of counterbond.
The liability of the attachment bond is defined in Section 4, Rule 57 of
the Rules of Court, as follows:
Sec. 4. Condition of applicant's bond. The party
applying for the order must give a bond executed
to the adverse party in an amount to be fixed by
the judge, not exceeding the applicant's claim,
conditioned that the latter will pay all the 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.
It is clear from the above provision that the responsibility of the surety
arises "if the court shall finally adjudge that the plaintiff was not
entitled thereto." In Rocco vs. Meads, 96 Phil. Reports 884, we held
that the liability attaches if the plaintiff is not entitled to the
attachment because the requirements entitling him to the writ are
wanting, or if the plaintiff has no right to the attachment because the
facts stated in his affidavit, or some of them, are untrue. It is,
therefore, evident that upon the dismissal of an attachment wrongfully
issued, the surety is liable for damages as a direct result of said
attachment.
Equally untenable is the Surety's contention that by filing a
counterbond, private respondents waived any defect or flaw in the
issuance of the attachment writ, for they could have sought, without
need of filing any counterbond, the discharge of the attachment if the
same was improperly or irregularly issued, as provided in Section 13,
Rule 57 of the Rules of Court.
Whether the attachment was discharged by either of the two (2) ways
indicated in the law, i.e., by filing a counterbond or by showing that
the order of attachment was improperly or irregularly issued, the
liability of the surety on the attachment bond subsists because the
final reckoning is when "the Court shall finally adjudge that the
attaching creditor was not entitled" to the issuance of the attachment
writ in the first place.
The attachment debtor cannot be deemed to have waived any defect
in the issuance of the attachment writ by simply availing himself of one
way of discharging the attachment writ, instead of the other.
Moreover, the filing of a counterbond is a speedier way of discharging
the attachment writ maliciously sought out by the attaching creditor
instead of the other way, which, in most instances like in the present
case, would require presentation of evidence in a full-blown trial on the
merits and cannot easily be settled in a pending incident of the case.
We believe, however, that in the light of the factual situation in this
case, the damages awarded by the Intermediate Appellate Court are
rather excessive. They must be reduced.
WHEREFORE, the judgment of said Appellate Court is
hereby modified as follows: Both petitioner Calderon and petitioner
First Integrated Bonding and Insurance Company, Inc. are hereby
ordered to give jointly and severally:
1. Respondent George Schulze, P250,000.00 as
moral damages and P50,000.00 as exemplary
damages; and
2. Respondent Antonio C. Amor, P50,000.00 as
moral damages and P10,000.00 as exemplary
damages.
The rest of the judgment of the Intermediate Appellate Court is hereby
AFFIRMED.
SO ORDERED.

SECTION 5. Manner of attaching property. The sheriff
enforcing the writ shall without delay and with all reasonable diligence
attach, to await judgment and execution in the action, only so much of
PROVISIONAL REMEDIES Sec. 1-6 Rule 57 | 2014 SYLLABUS | 65

the property in the Philippines of the party against whom the writ is
issued, not exempt from execution, as may be sufficient to satisfy the
applicants demand, unless the former makes a deposit with the court
from which the writ is issued, or gives a counter-bond executed to the
applicant, in an amount equal to the bond fixed by the court in the
order of attachment or to the value of the property to be attached,
exclusive of costs. No levy on attachment pursuant to the writ issued
under Section 2 hereof shall be enforced unless it is preceded, or
contemporaneously accompanied, by service of summons, together
with a copy of the complaint, the application for attachment, the
applicants affidavit and bond, and the order and writ of attachment,
on the defendants within the Philippines.

The requirement of prior or contemporaneous service of summons
shall not apply where the summons could not be served personally or
by substituted service despite diligent efforts, or the defendant is a
resident of the Philippines temporarily absent therefrom, or the
defendant is a non-resident of the Philippines, or the action is one in
rem or quasi in rem.
EN BANC
G.R. No. L-39596 March 23, 1934
"CONSULTA" No. 1013 OF THE REGISTER OF DEEDS OF
TAYABAS. GOTAUCO & CO., applicant-appellant,
vs.
THE REGISTER OF DEEDS OF TAYABAS, oppositor-appellee.
BUTTE, J.:
This is an appeal from a judgment of the Fourth Branch of the Court of
First Instance of Manila in a consultasubmitted by the register of deeds
of Tayabas.
Our decision upon this appeal has been facilitated because both the
appellant and the appellee, the latter being represented by the
Solicitor-General, agreed that the judgment should be reversed.
On August 12, 1932, when Exhibits A and B were presented to the
register, by which a levy of execution against the judgment
debtor, Rafael Vilar was made on fifteen contracts of land described in
Exhibit B and registered in the name of Florentino Vilar, the register
properly denied the inscription of said levy of execution because the
title to the lands was in the name of Florentino Vilar and no evidence
was submitted that Rafael Vilar had any present or possible future
interest in the land. On September 17, 1932, there was presented to
him a copy of a petition filed in the Court of First Instance of the
province, entitled, "Intestado del Finado Florentino Vilar", from which
he could properly infer that Florentino Vilar was dead and that the
judgment debtor Rafael Vilar is one of the heirs of the deceased
Florentino Vilar. Although the value of the participation of Rafael Vilar
in the estate of Florentino Vilar was indeterminable before the final
liquidation of the estate, nevertheless, the right of participation in the
estate and the lands thereof may be attached and sold. The real test
was laid down by this court in the case ofReyes vs. Grey (21 Phil., 73,
76), namely: Does the judgment debtor hold such a beneficial interest
in the property that he can sell or otherwise dispose of it for value?
Nothing appears in this record to indicate that Rafael Vilar being sui
juris could not dispose of his interest or share as heir in the estate of
Florentina Vilar. Having this right, he could by a conveyance defeat pro
tanto the provisions of section 450 of the Code of Civil Procedure and
thus deprive the judgment creditor of the benefit of a lawful execution.
(See also Consulta No. 441 de los Abogados de Smith, Bell & Co., 48
Phil., 656, 664, 665.)
On October 12, 1932, with the knowledge which he them had, the
register should have accepted and inscribed Exhibit A, B and D.
The judgment in this consulta is reversed without special
pronouncement as to costs.

G.R. No. 107303 February 21, 1994
EMMANUEL C. OATE and ECON HOLDINGS
CORPORATION, petitioners,
vs.
HON. ZUES C. ABROGAR, as Presiding Judge of Branch 150 of
the Regional Trial Court of Makati, and SUN LIFE ASSURANCE
COMPANY OF CANADA, respondents.
G.R. No. 107491 February 21, 1994
BRUNNER DEVELOPMENT CORPORATION, petitioner,
vs.
HON. ZUES C. ABROGAR, as Presiding Judge of Branch 150 of
the Regional Trial Court of Makati, and SUN LIFE ASSURANCE
COMPANY OF CANADA, respondents.
NOCON, J.:
These are separate petitions for certiorari with a prayer for temporary
restraining order filed by Emmanuel C. Oate and Econ Holdings
Corporation (in G.R. No. 107303), and Brunner Development
Corporation (in G.R. No. 107491), both of which assail several orders
issued by respondent Judge Zues C. Abrogar in Civil Case No. 91-3506.
The pertinent facts are as follows: On December 23, 1991, respondent
Sun Life Assurance Company of Canada (Sun Life, for brevity) filed a
complaint for a sum of money with a prayer for the immediate
issuance of a writ of attachment against petitioners, and Noel L. Dio,
which was docketed as Civil Case No. 91-3506 and raffled to Branch
150 of the RTC Makati, presided over by respondent Judge. The
following day, December 24, 1991, respondent Judge issued an order
granting the issuance of a writ of attachment, and the writ was
actually issued on December 27, 1991.
On January 3, 1992, upon Sun Life's ex-parte motion, the trial court
amended the writ of attachment to reflect the alleged amount of the
indebtedness. That same day, Deputy Sheriff Arturo C. Flores,
accompanied by a representative of Sun Life, attempted to serve
summons and a copy of the amended writ of attachment upon
petitioners at their known office address at 108 Aguirre St., Makati but
was not able to do so since there was no responsible officer to receive
the same.
1
Nonetheless, Sheriff Flores proceeded, over a period of
several days, to serve notices of garnishment upon several commercial
banks and financial institutions, and levied on attachment a
condominium unit and a real property belonging to petitioner Oate.
Summons was eventually served upon petitioners on January 9, 1992,
while defendant Dio was served with summons on January 16, 1992.
On January 21, 1992, petitioners filed an "Urgent Motion to
Discharge/Dissolve Writ of Attachment." That same day, Sun Life filed
an ex-parte motion to examine the books of accounts and ledgers of
petitioner Brunner Development Corporation (Brunner, for brevity) at
the Urban Bank, Legaspi Village Branch, and to obtain copies thereof,
which motion was granted by respondent Judge. The examination of
said account took place on January 23, 1992. Petitioners filed a motion
to nullify the proceedings taken thereat since they were not present.
On January 30, 1992, petitioners and their co-defendants filed a
memorandum in support of the motion to discharge attachment. Also
on that same day, Sun Life filed another motion for examination of
bank accounts, this time seeking the examination of Account No. 0041-
0277-03 with the Bank of Philippine Islands (BPI) which,
incidentally, petitioners claim not to be owned by them and the
records of Philippine National Bank (PNB) with regard to checks
payable to Brunner. Sun Life asked the court to order both banks to
comply with the notice of garnishment.
On February 6, 1992, respondent Judge issued an order (1) denying
petitioners' and the co-defendants' motion to discharge the amended
writ of attachment, (2) approving Sun Life's additional attachment, (3)
granting Sun Life's motion to examine the BPI account, and (4)
denying petitioners' motion to nullify the proceedings of January 23,
1992.
On March 12, 1992, petitioners filed a motion for reconsideration of
the February 6, 1992 order. On September 6, 1992, respondent Judge
denied the motion for reconsideration.
Hence, the instant petitions. Petitioners' basic argument is that
respondent Judge had acted with grave abuse of discretion amounting
PROVISIONAL REMEDIES Sec. 1-6 Rule 57 | 2014 SYLLABUS | 66

to lack or in excess of jurisdiction in (1) issuing ex parte the original
and amended writs of preliminary attachment and the corresponding
notices of garnishment and levy on attachment since the trial court
had not yet acquired jurisdiction over them; and (2) allowing the
examination of the bank records though no notice was given to them.
We find both petitions unmeritorious.
Petitioners initially argue that respondent Judge erred in granting Sun
Life's prayer for a writ of preliminary attachment on the ground that
the trial court had not acquired jurisdiction over them. This argument
is clearly unavailing since it is well-settled that a writ of preliminary
attachment may be validly applied for and granted even before the
defendant is summoned or is heard from.
2
The rationale behind this
rule was stated by the Court in this wise:
A preliminary attachment may be defined,
paraphrasing the Rules of Court, as the provisional
remedy in virtue of which a plaintiff or other
proper party may, at the commencement of the
action or any time thereafter, have the property of
the adverse party taken into the custody of the
court as security for the satisfaction of any
judgment that may be recovered. It is a remedy
which is purely statutory in respect of which the
law requires a strict construction of the provisions
granting it. Withal no principle, statutory or
jurisprudential, prohibits its issuance by any court
before acquisition of jurisdiction over the person
of the defendant.
Rule 57 in fact speaks of the grant of the remedy
"at the commencement of the action or at any
time thereafter." The phrase "at the
commencement of the action," obviously refers to
the date of the filing of the complaint which, as
abovepointed out, its the date that marks "the
commencement of the action;" and the reference
plainly is to a time before summons is served on
the defendant or even before summons issues.
What the rule is saying quite clearly is that after
an action is properly
commenced by the filing of the complaint and
the payment of all requisite docket and other fees
the plaintiff may apply for and obtain a writ of
preliminary attachment upon fulfillment of the
pertinent requisites laid down by law, and that he
may do so at any time, either before or after
service of summons on the defendant. And this
indeed, has been the immemorial practice
sanctioned by the courts: for the plaintiff or other
proper party to incorporate the application for
attachment in the complaint or other appropriate
pleading (counterclaim, cross-claim, third-party
claim) and for the Trial Court to issue the writ ex-
parte at the commencement of the action if it
finds the application otherwise sufficient in form
and substance.
3

Petitioners then contended that the writ should have been discharged
since the ground on which it was issued fraud in contracting the
obligation was not present. This cannot be considered a ground for
lifting the writ since this delves into the very complaint of the Sun Life.
As this Court stated in Cuatro v. Court of Appeals:
4

Moreover, an attachment may not be dissolved by
a showing of its irregular or improper issuance if it
is upon a ground which is at the same time the
applicant's cause of action in the main case since
an anomalous situation would result if the issues
of the main case would be ventilated and resolved
in a mere hearing of the motion (Davao Light and
Power Co., Inc. vs. Court of Appeals, supra, The
Consolidated Bank and Trust Corp. (Solidbank) vs.
Court of Appeals, 197 SCRA 663 [1991]).
In the present case, one of the allegation in
petitioner's complaint below is that the defendant
spouses induced the plaintiff to grant the loan by
issuing postdated checks to cover the installment
payments and a separate set of postdated checks
for payment of the stipulated interest (Annex "B").
The issue of fraud, then, is clearly within the
competence of the lower court in the main
action.
5

The fact that a criminal complaint for estafa filed by Sun Life against
the petitioners was dismissed by the Provincial Prosecutor of Rizal for
Makati on April 21, 1992 and was upheld by the Provincial Prosecutor
on July 13, 1992 is of no moment since the same can be indicative
only of the absence of criminal liability, but not of civil liability. Besides,
Sun Life had elevated the case for review to the Department of Justice,
where the case is presently pending.
Finally, petitioners argue that the enforcement of the writ was invalid
since it undisputedly preceded the actual service of summons by six
days at most. Petitioners cite the decisions in Sievert vs. Court of
Appeals, et al.
6
andBAC Manufacturing and Sales Corp. vs. Court of
Appeals, et al.,
7
wherein this Court held that enforcement of the writ
of attachment can not bind the defendant in view of the failure of the
trial court to acquire jurisdiction over the defendant through either
summons or his voluntary appearance.
We do not agree entirely with petitioners. True, this Court had held in
a recent decision that the enforcement of writ of attachment may not
validly be effected until and unless proceeded or contemporaneously
accompanied by service of summons.
8

But we must distinguish the case at bar from the Sievert and BAC
Manufacturing cases. In those two cases,summons was never served
upon the defendants. The plaintiffs therein did not even attempt to
cause service of summons upon the defendants, right up to the time
the cases went up to this Court. This is not true in the case at bar. The
records reveal that Sheriff Flores and Sun Life did attempt a
contemporaneous service of both summons and the writ of attachment
on January 3, 1992, but we stymied by the absence of a responsible
officer in petitioners' offices. Note is taken of the fact that petitioners
Oate and Econ Holdings admitted in their answer
9
that the offices of
both Brunner Development Corporation and Econ Holdings were
located at the same address and that petitioner Oate is the President
of Econ Holdings while petitioner Dio is the President of Brunner
Development Corporation as well as a stockholder and director of Econ
Holdings.
Thus, an exception to the established rule on the enforcement of the
writ of attachment can be made where a previous attempt to serve the
summons and the writ of attachment failed due to factors beyond the
control of either the plaintiff or the process server, provided that such
service is effected within a reasonable period thereafter.
Several reasons can be given for the exception. First, there is a
possibility that a defendant, having been alerted of plaintiffs action by
the attempted service of summons and the writ of attachment, would
put his properties beyond the reach of the plaintiff while the latter is
trying to serve the summons and the writ anew. By the time the
plaintiff may have caused the service of summons and the writ, there
might not be any property of the defendant left to attach.
Second, the court eventually acquired jurisdiction over the petitioners
six days later. To nullify the notices of garnishment issued prior thereto
would again open the possibility that petitioners would transfer the
garnished monies while Sun Life applied for new notices of
garnishment.
Third, the ease by which a writ of attachment can be obtained is
counter-balanced by the ease by which the same can be discharged:
the defendant can either make a cash deposit or post a counter-bond
equivalent to the value of the property attached.
10
The petitioners
herein tried to have the writ of attachment discharged by posting a
counter-bond, the same was denied by respondent Judge on the
ground that the amount of the counter-bond was less than that of Sun
Life's bond.
PROVISIONAL REMEDIES Sec. 1-6 Rule 57 | 2014 SYLLABUS | 67

II.
Petitioners' second ground assail the acts of respondent Judge in
allowing the examination of Urban Banks' records and in ordering that
the examination of the bank records of BPI and PNB as invalid since no
notice of said examinations were ever given them. Sun Life grounded
its requests for the examination of the bank accounts on Section 10,
Rule 57 of the Rules of Court, which provided, to wit:
Sec. 10. Examination of party whose property is
attached and persons indebted to him or
controlling his property; delivery of property to
officer. Any person owing debts to the party
whose property is attached or having in his
possession or under his control any credit or other
personal property belonging to such party, may be
required to attend before the court in which the
action is pending, or before a commissioner
appointed by the court and be examined on oath
respecting the same. The party whose property is
attached may also be required to attend for the
purpose of giving information respecting his
property, and may be examined on oath. The
court may, after such examination, order personal
property capable of manual delivery belonging to
him, in the possession of the person so required to
attend before the court, to be delivered to the
clerk or court, sheriff, or other proper officer on
such terms as may be just, having reference to
any lien thereon or claim against the same, to
await the judgment in the action.
It is clear from the foregoing provision that notice need only be given
to the garnishee, but the person who is holding property or credits
belonging to the defendant. The provision does not require that notice
be furnished the defendant himself, except when there is a need to
examine said defendant "for the purpose of giving information
respecting his property.
Furthermore, Section 10 Rule 57 is not incompatible with Republic Act
No. 1405, as amended, "An Act Prohibiting Disclosure or Inquiry Into,
Deposits With Any Banking Institution and Providing Penalty
Therefore," for Section 2 therefore provides an exception "in cases
where the money deposited or invested is the subject matter of the
litigation."
The examination of the bank records is not a fishing expedition, but
rather a method by which Sun Life could trace the proceeds of the
check it paid to petitioners.
WHEREFORE, the instant petitions are hereby DISMISSED. The
temporary restraining order issued on June 28, 1993 is hereby lifted.
SO ORDERED.
EN BANC
G.R. No. 107303 February 23, 1995
EMMANUEL C. OATE and ECON HOLDINGS CORPORATION,
petitioners,
vs.
HON. ZEUS C. ABROGAR, as Presiding Judge of Branch 150 of
the Regional Trial Court of Makati, and SUN LIFE ASSURANCE
COMPANY OF CANADA, respondents.
BRUNNER DEVELOPMENT CORPORATION, petitioner,
vs.
HON. ZEUS C. ABROGAR, as Presiding Judge of Branch 150 of
the Regional Trial Court of Makati, and SUN LIFE ASSURANCE
COMPANY OF CANADA, respondents.
R E S O L U T I O N

MENDOZA, J.:
These are motions separately filed by petitioners, seeking
reconsideration of the decision of the Second Division holding that
although the levy on attachment of petitioners' properties had been
made before the trial court acquired jurisdiction over them, the
subsequent service of summons on them cured the invalidity of the
attachment.
The motions were referred to the Court en banc in view of the fact
that in another decision rendered by the Third Division on the same
question, it was held that the subsequent acquisition of jurisdiction
over the person of a defendant does not render valid the previous
attachment of his property.
1
The Court en banc accepted the referral
and now issues this resolution.
Petitioners maintain that, in accordance with prior decisions of this
Court, the attachment of their properties was void because the trial
court had not at that time acquired jurisdiction over them and that the
subsequent service of summons on them did not cure the invalidity of
the levy. They further contend that the examination of the books and
ledgers of the Bank of the Philippine Islands (BPI), the Philippine
National Bank (PNB) and the Urban Bank was a "fishing expedition"
which the trial court should not have authorized because petitioner
Emmanuel C. Oate, whose accounts were examined, was not a
signatory to any of the documents evidencing the transaction between
Sun Life Assurance of Canada (Sun Life) and Brunner Development
Corporation (Brunner).
On the other hand private respondent Sun Life stresses the fact that
the trial court eventuallyacquired jurisdiction over petitioners and
contends that this cured the invalidity of the attachment of petitioners'
properties. With respect to the second contention of petitioners,
private respondent argues that the examination of petitioner Oate's
bank account was justified because it was he who signed checks
transferring huge amounts from Brunner's account in the Urban Bank
to the PNB and the BPI.
I
At the outset, it should be stated that the Court does not in the least
doubt the validity of the writ of attachment issued in these cases. The
fact that a criminal complaint for estafa which Sun Life had filed
against petitioner Oate and Noel L. Dio, president of Brunner, was
dismissed by the Office of the Provincial Prosecutor is immaterial to the
resolution of the motions for reconsideration. In the first place, the
dismissal, although later affirmed by the Department of Justice, is
pending reconsideration. In the second place, since the issue in the
case below is precisely whether petitioners were guilty of fraud in
contracting their obligation, resolution of the question must await the
trial of the main case.
However, we find petitioners' contention respecting the validity of the
attachment of their properties to be well taken. We hold that the
attachment of petitioners' properties prior to the acquisition of
jurisdiction by the respondent court is void and that the subsequent
service of summons on petitioners did not cure the invalidity of such
attachment. The records show that before the summons and the
complaint were served on petitioners Oate and Econ Holdings
Corporation (Econ) on January 9, 1992, Deputy Sheriff Arturo C. Flores
had already served on January 3, 1992 notices of garnishment on the
PNB Head office
2
and on all its Metro Manila branches and an A.B
capital.
3
In addition he made other levies before the service of
summons on petitioners, to wit:
On January 6, 1992, he served notices of garnishment on the Urban
Bank Head Office and all its Metro Manila branches,
4
and on the BPI.
5

On the same day, he levied on attachment Oate's condominium
unit at the Amorsolo Apartments Condominium Project, covered by
Condominium Certificate of Title No. S-1758.
6

On January 7, 1992, he served notice of garnishment on the Union
Bank of the Philippines.
7

On January 8, 1992, he attached Oate's lot, consisting of 1,256
square meters, at the Ayala-Alabang Subdivision, Alabang, Muntinlupa,
covered by TCT No. 112673.
8

First. The Deputy Sheriff claims that he had tried to serve the
summons with a copy of the complaint on petitioners on January 3,
1992 but that there was no one in the offices of petitioners on whom
PROVISIONAL REMEDIES Sec. 1-6 Rule 57 | 2014 SYLLABUS | 68

he could make a service. This is denied by petitioners who claim that
their office was always open and that Adeliza M. Jaranilla, Econ's Chief
Accountant who eventually received summons on behalf of Oate and
Econ, was present that day. Whatever the truth is, the fact is that no
other attempt was made by the sheriff to serve the summons except
on January 9, 1992, in the case of Oate and Econ, and on January
16, 1992, in the case of Dio. Meantime, he made several levies,
which indicates a predisposition to serve the writ of attachment in
anticipation of the eventual acquisition by the court of jurisdiction over
petitioners.
Second. Private respondent invokes the ruling in Davao Light & Power
Co. v. Court of Appeals 9 in support of its contention that the
subsequent acquisition of jurisdiction by the court cured the defect in
the proceedings for attachment. It cites the following portion of the
decision in Davao Light and Power, written by Justice, now Chief
Justice, Narvasa:
It goes without saying that whatever be the acts
done by the Court prior to the acquisition of
jurisdiction over the person of the defendant, as
above indicated issuance of summons, order of
attachment and writ of attachment (and/or
appointment of guardian ad litem, or grant of
authority to the plaintiff to prosecute the suit as a
pauper litigant, or amendment of the complaint by
the plaintiff as a matter of right without leave of
court and however valid and proper they might
otherwise be, these do not and cannot bind and
affect the defendant until and unless jurisdiction
over his person iseventually obtained by the court,
either by service on him of summons or other
coercive process or his voluntary submission to
the court's authority. Hence, when the sheriff or
other proper officer commences implementation of
the writ of attachment, it is essential that he serve
on the defendant not only a copy of the
applicant's affidavit and attachment bond, and of
the order of attachment, as explicitly required by
Section 5 of Rule 57, but also the summons
addressed to said defendant as well as a copy of
the complaint and order for appointment of
guardian ad litem, if any, as also explicitly directed
by Section 3, Rule 14 of the Rules of
Court.
10

It is clear from the above excerpt, however, that while the petition for
a writ of preliminary attachment may be granted and the writ
itself issued before the defendant is summoned, the writ of attachment
cannot be implemented until jurisdiction over the person of the
defendant is obtained. As this Court explained, "levy on property
pursuant to the writ thus issued may not be validly effected unless
preceded, or contemporaneously accompanied, by service on the
defendant of summons, a copy of the complaint (and of the
appointment of guardian ad litem, if any), the application for
attachment (if not incorporated in but submitted separately from the
complaint), the order of attachment, and the plaintiff's attachment
bond."
11

Further clarification on this point was made in Cuartero v. Court of
Appeals,
12
in which it was held:
It must be emphasized that the grant of the
provisional remedy of attachment practically
involves three stages; first, the court issues the
order granting the application; second, the writ of
attachment issues pursuant to the order granting
the writ; and third, the writ is implemented. For
the initial two stages, it is not necessary that
jurisdiction over the person of the defendant
should first be obtained. However, once the
implementation commences, it is required that the
court must have acquired jurisdiction over the
defendant for without such jurisdiction, the court
has no power and authority to act in any manner
against the defendant. Any order issuing from the
Court will not bind the defendant.
Private respondent argues that the case of Cuartero itself provides for
an exception as shown in the statement that "the court [in issuing the
writ of preliminary attachment] cannot bind and affect the defendant
until jurisdiction is eventually obtained" and that since petitioners were
subsequently served with summons, no question can be raised against
the validity of the attachment of petitioners' properties before such
service.
The statement in question has been taken out of context. The full
statement reads:
It is clear from our pronouncements that a writ of
preliminary attachment may issue even before
summons is served upon the defendant. However,
we have likewise ruled that the writ cannot bind
and affect the defendant until jurisdiction over his
person is eventually obtained. Therefore, it is
required that when proper officer commences
implementation of the writ of attachment service
of summons should be simultaneously made.
13

Indeed, as this Court through its First Division has ruled on facts
similar to those in these cases, the attachment of properties before the
service of summons on the defendant is invalid, even though the court
later acquires jurisdiction over the defendant.
14
At the very least,
then, the writ of attachment must be served simultaneously with the
service of summons before the writ may be enforced. As the properties
of the petitioners were attached by the sheriff before he had served
the summons on them, the levies made must be considered void.
Third. Nor can the attachment of petitioners' properties before the
service of summons on them was made be justified an the ground that
unless the writ was then enforced, petitioners would be alerted and
might dispose of their properties before summons could be served on
them.
The Rules of Court do not require that issuance of the writ be kept a
secret until it can be enforced. Otherwise in no case may the service of
summons on the defendant precede the levy on attachment. To the
contrary, Rule 57, 13 allows the defendant to move to discharge the
attachment even before any attachment is actually levied upon, thus
negating any inference that before its enforcement, the issuance of the
writ must be kept secret. Rule 57,
13 provides:
Sec. 13. Discharge of attachment for improper or
irregular issuance. The party whose property
has been attached may also, at any time either
before or after the release of the attached
property, or before any attachment shall have
been actually levied, upon reasonable notice to
the attaching creditor, apply to the judge who
granted the order, or to the judge of the court in
which the action is pending, for an order to
discharge the attachment on the ground that the
same was improperly or irregularly issued. . . .
(Emphasis added).
As this Court pointed out in Davao Light and Power,
15
the lifting of an
attachment "may be resorted to even before any property has been
levied on."
It is indeed true that proceedings for the issuance of a writ of
attachment are generally ex parte. InMindanao Savings and Loans
Ass'n v. Court of Appeals
16
it was held that no hearing is required for
the issuance of a writ of attachment because this "would defeat the
objective of the remedy [because] the time which such hearing would
take could be enough to enable the defendant to abscond or dispose
of his property before a writ of attachment issues." It is not, however,
notice to defendant that is sought to be avoided but the "time which
such hearing would take" because of the possibility that defendant
may delay the hearing to be able to dispose of his properties. On the
contrary there may in fact be a need for a hearing before the writ is
issued as where the issue of fraudulent disposal of property is
PROVISIONAL REMEDIES Sec. 1-6 Rule 57 | 2014 SYLLABUS | 69

raised.
17
It is not true that there should be no hearing lest a
defendant learns of the application for attachment and he remove's his
properties before the writ can be enforced.
On the other hand, to authorize the attachment of property even
before jurisdiction over the person of the defendant is acquired
through the service of summons or his voluntary appearance could
lead to abuse. It is entirely possible that the defendant may not know
of the filing of a case against him and consequently may not be able to
take steps to protect his interests.
Nor may sheriff's failure to abide by the law be excused on the pretext
that after all the court later acquired jurisdiction over petitioners. More
important than the need for insuring success in the enforcement of the
writ is the need for affirming a principle by insisting on that "most
fundamental of all requisites the jurisdiction of the court issuing
attachment over the person of the defendant."
18
It may be that the
same result would follow from requiring that a new writ be served all
over again. The symbolic significance of such an act, however, is that
it would affirm our commitment to the rule of law.
19

II
We likewise find petitioners' second contention to be meritorious. The
records show that, on January 21, 1992, respondent judge ordered the
examination of the books of accounts and ledgers of Brunner at the
Urban Bank, Legaspi Village branch, and on January 30, 199 the
records of account of petitioner Oate at the BPI, even as he ordered
the PNB to produce the records regarding certain checks deposited in
it.
First. Sun Life defends these court orders on the ground that the
money paid by it to Brunner was subsequently withdrawn from the
Urban Bank after it had been deposited by Brunner and then
transferred to BPI and to the unnamed account in the petitioner
Oate's account in the BPI and to the unnamed account in the PNB.
The issue before the trial court, however, concerns the nature of the
transaction between petitioner Brunner and Sun Life. In its complaint,
Sun Life alleges that Oate, in his personal capacity and as president
of Econ, offered to sell to Sun Life P46,990,000.00 worth of treasury
bills owned by Econ and Brunner at the discounted price of
P39,526,500.82; that on November 27, 1991, Sun Life paid the price
by means of a check payable to Brunner; that Brunner, through its
president Noel L. Dio, issued to it a receipt with undertaking to
deliver the treasury bills to Sun Life; and that on December 4, 1991,
Brunner and Dio delivered instead a promissory note, dated
November 27, 1991, in which it was made to appear that the
transaction was a money placement instead of sale of treasury bills.
Thus the issue is whether the money paid to Brunner was the
consideration for the sale of treasury bills, as Sun Life claims, or
whether it was money intended for placement, as petitioners allege.
Petitioners do not deny receipt of P39,526,500.82 from Sun Life.
Hence, whether the transaction is considered a sale or money
placement does not make the money the "subject matter of litigation"
within the meaning of 2 of Republic Act No. 1405 which prohibits the
disclosure or inquiry into bank deposits except "in cases where the
money deposited or invested is the subject matter of litigation." Nor
will it matter whether the money was "swindled" as Sun Life contends.
Second. The examination of bank books and records cannot be
justified under Rule 57, 10. This provision states:
Sec. 10. Examination of party whose property is
attached and persons indebted to him or
controlling his property; delivery of property to
officer. Any person owing debts to the party
whose property is attached or having in his
possession or under his control any credit or other
personal property belonging to such party, may be
required to attend before the court in which the
action is pending, or before a commissioner
appointed by the court, and be examined on oath
respecting the same. The party whose property is
attached may also be required to attend for the
purpose of giving information respecting his
property, and may be examined on oath. The
court may, after such examination, order personal
property capable of manual delivery belonging to
him, in the possession of the person so required to
attend before the court, to be delivered to the
clerk of the court, sheriff, or other proper officer
on such terms as may be just, having reference to
any lien thereon or claims against the same, to
await the judgment in the action.
Since, as already stated, the attachment of petitioners' properties was
invalid, the examination ordered in connection with such attachment
must likewise be considered invalid. Under Rule 57, 10, as quoted
above, such examination is only proper where the property of the
person examined has been validly attached.
WHEREFORE, the decision dated February 21, 1994 is RECONSIDERED
and SET ASIDE and another one is rendered GRANTING the petitions
for certiorari and SETTING ASIDE the orders dated February 26, 1992
and September 9, 1992, insofar as they authorize the attachment of
petitioners' properties and the examination of bank books and records
pertaining to their accounts, and ORDERING respondent Judge Zeus C.
Abrogar
(1) forthwith to issue an alias writ of attachment upon the same bond
furnished by respondent Sun Life Assurance Company of Canada;
(2) direct the sheriff to lift the levy under the original writ of
attachment and simultaneously levy on the same properties pursuant
to the alias writ so issued; and
(3) take such steps as may be necessary to insure that there will be no
intervening period between the lifting of the original attachment and
the subsequent levy under the alias writ.
Petitioners may file the necessary counterbond to prevent subsequent
levy or to dissolve the attachment after such levy.
SO ORDERED.
G.R. No. 106989 May 10, 1994
H.B. ZACHRY COMPANY INTERNATIONAL, petitioner,
vs.
HON. COURT OF and VINNEL-BELVOIR
CORPORATION, respondents.
G.R. No. 107124 May 10, 1994
VINNEL-BELVOIR CORPORATION, petitioner,
vs.
THE COURT OF APPEALS and H.B. ZACHRY COMPANY
INTERNATIONAL, respondents.
DAVIDE, JR., J.:
Challenged in these petitions for review, which were ordered
consolidated on 9 December 1992,
1
is the decision of the Court of
Appeals in CA-G.R. SP No. 24174,
2
promulgated on 1 July 1992, the
dispositive portion of which reads:
WHEREFORE, premises considered, this Petition
for Certiorari and Prohibition is hereby granted in
so far as it prayed for the dissolution of the writ of
preliminary attachment inasmuch as it was issued
prior to the service of summons and a copy of the
complaint on petitioner. The writ of preliminary
attachment issued by respondent Court on March
21, 1990 is hereby ordered lifted and dissolved as
having been issued in grave abuse of discretion by
respondent Court.
With respect to the issue of whether or not parties
should submit the instant dispute [to] arbitration,
We hereby order public respondent to conduct a
hearing for the determination of the proper
interpretation of the provisions of the Subcontract
Agreement.
No pronouncement as to costs.
3

PROVISIONAL REMEDIES Sec. 1-6 Rule 57 | 2014 SYLLABUS | 70

and its 2 September 1992 Resolution
4
which denied the motion for
partial reconsideration of H.B. Zachry Company International
(hereinafter Zachry) and the motion for reconsideration of Vinnel-
Belvoir Corporation (hereinafter VBC).
The pleadings of the parties and the challenged decision disclose the
following material facts:
On 17 July 1987, VBC entered into a written Subcontract
Agreement
5
with Zachry, a foreign corporation. The latter had been
engaged by the United States Navy to design and construct 264 Family
Housing Units at the US Naval Base at Subic, Zambales. Under the
agreement, specifically under Section 3 on Payment, VBC was to
perform all the construction work on the housing project and would be
paid "for the performance of the work the sum of Six Million Four
Hundred Sixty-eight Thousand U.S. Dollars (U.S. $6,468,000.00),
subject to additions and deductions for changes as hereinafter
provided." This "lump sum price is based on CONTRACTOR'S proposal,
dated 21 May 1987 (including drawings), submitted to OWNER for
Alternate Design-Apartments." It was also provided "that substantial
differences between the proposal and the final drawings and
Specification approved by the OWNER may be grounds for an
equitable adjustment in price and/or time of performance if requested
by either party in accordance with Section 6 [on] Changes."
6
Section
27 of the agreement reads:
Section 27. DISPUTES PROCEDURE
A. In case of any dispute, except those that are
specifically provided for in this SUBCONTRACT,
between the SUBCONTRACTOR and the
CONTRACTOR, the SUBCONTRACTOR agrees to
be bound to the CONTRACTOR to the same extent
that the CONTRACTOR is bound to the OWNER by
the terms of the GENERAL CONTRACT and by any
and all decisions or determinations made
thereunder by the party or boards so authorized in
the GENERAL CONTRACT. The SUBCONTRACTOR,
on items or issues relating or attributable to the
SUBCONTRACTOR, also agrees to be bound to the
CONTRACTOR to the same extent that the
CONTRACTOR is bound to the OWNER by the final
decision of a court of competent jurisdiction,
whether or not the SUBCONTRACTOR is a party to
such proceeding. If such a dispute is prosecuted
or defended by the CONTRACTOR against the
OWNER under the terms of the GENERAL
CONTRACT or in court action, the
SUBCONTRACTOR agrees to furnish all
documents, statements, witnesses and other
information required by the CONTRACTOR for
such purpose. It is expressly understood that as to
any and all work done and agreed to be done by
the CONTRACTOR and as to any and all materials,
equipment or services furnished or agreed to be
furnished by the SUBCONTRACTOR, and as to any
and all damages incurred by the
SUBCONTRACTOR in connection with this
SUBCONTRACT, the CONTRACTOR shall not be
liable to the SUBCONTRACTOR to any greater
extent than the OWNER is liable to and pays the
CONTRACTOR for the use and benefit of the
SUBCONTRACTOR for such claims, except those
claims arising from acts of the CONTRACTOR. No
dispute shall interfere with the progress of the
WORK and the SUBCONTRACTOR agrees to
proceed with his WORK as directed, despite any
disputes it may have with the CONTRACTOR, the
OWNER, or other parties.
B. If at any time any controversy should arise
between the CONTRACTOR and the
SUBCONTRACTOR, with respect to any matter or
thing involved in, related to or arising out of this
SUBCONTRACT, which controversy is not
controlled or determined by subparagraph 27.A.
above or other provisions in this SUBCONTRACT,
then said controversy shall be decided as follows:
1. The SUBCONTRACTOR shall be conclusively
bound and abide by the CONTRACTOR'S written
decision respecting said controversy, unless the
SUBCONTRACTOR shall commence arbitration
proceedings as hereinafter provided within thirty
(30) days following receipt of such written
decision.
2. If the SUBCONTRACTOR decides to appeal from
the written decision of the CONTRACTOR, then
the controversy shall be decided by arbitration in
accordance with the then current rules of the
Construction Industry Arbitration Rules of the
American Arbitration Association, and the
arbitration decision shall be final and binding on
both parties; provided, however, that proceedings
before the American Arbitration Association shall
be commenced by the SUBCONTRACTOR not later
than thirty (30) days following the CONTRACTOR'S
written decision pursuant to subparagraph 27.B.1
above. If the SUBCONTRACTOR does not file a
demand for arbitration with the American
Arbitration Association and CONTRACTOR within
this thirty (30) day period, then the
CONTRACTOR'S written decision is final and
binding.
3. This agreement to arbitrate shall be specifically
enforceable.
7

When VBC had almost completed the project, Zachry complained of
the quality of work, making it a reason for its decision to take over the
management of the project, which paragraph c, Section 7 of the
Subcontract Agreement authorized. However, prior to such take-over,
the parties executed on 18 December 1989 a Supplemental
Agreement,
8
pertinent portions of which read as follows:
2. All funds for progress as computed by the
schedule of prices under the subcontract will be
retained by ZACHRY to insure sufficiency of funds
to finish the lump sum project as scoped by the
subcontract. However, one month after the date
of this agreement, when ZACHRY shall have
determined the cost to complete the subcontract,
ZACHRY shall as appropriate, release to VBC the
corresponding portion of the amounts retained.
xxx xxx xxx
7. All costs incurred by ZACHRY chargeable to VBC
under the subcontract from the date of the
takeover to complete the scope of the subcontract
will be to the account of VBC and/or its sureties.
Zachry will advise both VBC and its sureties on a
periodic basis as to progress and accumulated
costs.
xxx xxx xxx
9. VBC will be invited to participate in negotiations
with the Navy in Change Orders concerning its
scope of work. VBC will accept as final, without
recourse against ZACHRY the Navy's decision
regarding its interest in these Change Orders or
modifications.
In accordance with the above conditions, VBC submitted to Zachry on
10 January 1990 a detailed computation of the cost to complete the
subcontract on the housing project. According to VBC's computation,
there remains a balance of $1,103,000.00 due in its favor as of 18
January 1990. This amount includes the sum of $200,000.00 allegedly
withheld by Zachry and the labor escalation adjustment granted earlier
by the US Navy in the amount of $282,000.00 due VBC. Zachry,
however, not only refused to acknowledge the indebtedness but
PROVISIONAL REMEDIES Sec. 1-6 Rule 57 | 2014 SYLLABUS | 71

continually failed to submit to VBC a statement of accumulated costs,
as a result of which VBC was prevented from checking the accuracy of
the said costs. On 2 March 1990, VBC wrote Zachry a letter demanding
compliance with its obligations.
9
Zachry still failed to do so. VBC made
representations to pursue its claim, including a formal claim with the
Officer-in-Charge of Construction, NAVFAC Contracts, Southwest
Pacific,
10
which also failed.
Hence, on 20 March 1990, VBC filed a Complaint
11
with the Regional
Trial Court (RTC) of Makati against Zachry for the collection of the
payments due it with a prayer for a writ of preliminary attachment
over Zachry's bank account in Subic Base and over the remaining
thirty-one undelivered housing units which were to be turned over to
the US Navy by Zachry on 30 March 1990. The case was docketed as
Civil Case No. 90-772 and was raffled to Branch 142 of the said court
presided over by Judge Salvador P. de Guzman, Jr. Paragraph 2 of the
Complaint alleges that defendant Zachry "is a foreign corporation with
address at 527 Longwood Street, San Antonio, Texas, U.S.A. and has
some of its officers working at U.S. Naval Base, Subic Bay, Zambales
where it may be served with summons."
On 21 March 1990, the trial court issued an order granting the
application for the issuance of the writ of preliminary attachment and
fixing the attachment bond at P24,266,000.00.
12
VBC put up the
required bond and on 26 March 1990, the trial court issued the writ of
attachment,
13
which was served, together with the summons, a copy
of the complaint with annexes, the bond, and a copy of the order of
attachment, on 27 March 1990 in the manner described in the Sheriff's
Partial Return
14
of 29 March 1990:
upon defendant H.B. Zachry Company
(International) at its field office in U.S. Naval Base,
Subic Bay, Zambales thru Ruby Apostol who
acknowledged receipt thereof. Mr. James M. Cupit,
defendant's authorized officer was in their Manila
office at the time of service.
The return further states:
That on March 28, 1990, the undersigned sheriff
went to the office of defendant H. B. Zachry
Company (International) at c/o A.M. Oreta & Co.
at 5th Floor, Ermita Building, Arquiza corner
Alhambra streets, Ermita, Manila to serve the
Court's processes but was informed by Atty. Felix
Lobiro of A.M. Oreta & Co., that defendant H.B.
Zachry Company has its own office at Room 600,
6th Floor of the same building (Ermita Building).
However, said defendant's office was closed and
defendant company (ZACHRY) only holds office
during Mondays and Tuesdays of the week as per
information gathered from the adjacent office.
On 27 March 1990, VBC filed an Amended Complaint
15
in Civil Case
No. 90-772 to implead as additional defendants the US Navy Treasury
Office-Subic Naval Base and Captain A.L. Wynn, an officer of the US
Navy, against whom VBC prayed for a restraining order or preliminary
injunction to restrain the latter from preparing the treasury warrant
checks to be paid to Zachry and the former from signing the said
checks and to restrain both from making any further payments to
Zachry. It also amended paragraph 2 on the status and circumstances
of Zachry as follows:
2. Defendant, H.B. Zachry Co. (International) . . .
is a foreign corporation with address at 527
Longwood Street, San Antonio, Texas, U.S.A. and
may be served with summons and all other legal
processes at the following addresses: a) H.B.
Zachry Company (International), U.S. Naval Base,
Subic Bay, Zambales; and b) H.B. Zachry
Company (International) c/o A.M. Oreta & Co., 5th
Floor Ermita Building, Arquiza corner Alhambra
Streets, Ermita, Manila, through its authorized
officer James C. Cupit.
16

On 6 April 1990, Zachry filed a motion to dismiss the complaint
17
on
the ground of lack of jurisdiction over its person because the summons
was not validly served on it. It alleges that it is a foreign corporation
duly licensed on 13 November 1989 by the Securities and Exchange
Commission to do business in the Philippines
18
and, pursuant to
Section 128 of the Corporation Code of the Philippines, had appointed
Atty. Lucas Nunag
19
as its resident agent on whom any summons and
legal processes against it may be served. Atty. Nunag's address is at
the 10th Floor, Shell House, 156 Valero St., Makati, Metro Manila.
Summons and a copy of the Amended Complaint were served on 24
April 1990 on Zachry through Atty. Nunag as shown in the sheriff's
return dated 24 April 1990.
20

On 26 April 1990, VBC filed a Manifestation
21
to inform the court of
the above service of summons on Zachry which it claimed rendered
moot and academic the motion to dismiss.
On 24 May 1990, Zachry filed an Omnibus Motion
22
(a) to dismiss the
complaint for lack of jurisdiction over its person since the subsequent
service of summons did not cure the jurisdictional defect it earlier
pointed out and, in the alternative, to dismiss the case or suspend the
proceedings therein for failure of the plaintiff to submit the controversy
in question to arbitration as provided for in its contract with Zachry;
and (b) to dissolve the writ of attachment of 26 March 1990 "for
having been issued without jurisdiction, having been issued prior to
the service of summons." The arbitration provision referred to is
Section 27.B of the Subcontract Agreement quoted earlier. In support
of its alternative prayer for the suspension of proceedings, it cited
Section 7 of R.A. No. 876, otherwise known as the Arbitration Act
which provides:
Sec. 7. Stay of Civil Action If any suit or
proceeding be brought upon an issue, arising out
of an agreement providing for the arbitration
thereof, the Court in which such suit or proceeding
is pending, upon being satisfied that the issue
involved in such suit or proceeding is referable to
arbitration, shall stay the action or proceeding
until an arbitration has been had in accordance
with the terms of the agreement. . . .
This provision is almost identical with Section 3 of the United States
Arbitration Act.
As to the invalidity of the writ of attachment, Zachry avails of the
decision in Sievert vs. Court of Appeals
23
wherein this Court said:
Attachment is an ancillary remedy. It is not sought
for its own sake but rather to enable the attaching
party to realize upon relief sought and expected to
be granted in the main or principal action. A court
which has not acquired jurisdiction over the
person of the defendant, cannot bind that
defendant whether in the main case or in any
ancillary proceeding such as attachment
proceedings. The service of a petition for
preliminary attachment without the prior or
simultaneous service of summons and a copy of
the complaint in the main case and that is what
happened in this casedoes not of course confer
jurisdiction upon the issuing court over the person
of the defendant.
24

VBC opposed the Omnibus Motion. Pleadings related to the Omnibus
Motion were subsequently filed.
25

In its Order of 19 September 1990,
26
the trial court resolved the
Omnibus Motion and the related incidents by declaring that "the merits
of the case can only [be] reached after due presentation of evidence."
Hence, it denied the motion and directed the defendants to file their
answer within the period provided by law.
On 8 October 1990, Zachry filed a motion for the reconsideration
27
of
the above order assailing the court's inaction on the second and third
issues raised in its Omnibus Motion, viz., the necessity of arbitration
and the invalidity of the writ of attachment. VBC opposed the
motion.
28
On 9 January 1991, the court issued an order denying the
motion for reconsideration by ruling that the writ of preliminary
attachment was regularly issued and that the violations of the
PROVISIONAL REMEDIES Sec. 1-6 Rule 57 | 2014 SYLLABUS | 72

Subcontract Agreement can be "tranced [sic] only after the case is
heard on the merits."
Dissatisfied with the denial, Zachry filed with the Court of Appeals on
14 February 1991 a petition forcertiorari and prohibition,
29
which was
docketed as CA-G.R. SP No. 24174. Zachry contends therein that:
1. The proceedings before respondent trial court
should be suspended, pending submission of the
dispute to arbitration pursuant to Section 27-B of
the Subcontract Agreement;
2. Alternatively, the complaint should be
dismissed, pending arbitration pursuant to Section
27-B of the Subcontract Agreement;
3. As a third alternative, the complaint should be
dismissed, because the dispute has been resolved
with finality under Section 27-B of the Subcontract
Agreement; and
4. The writ of preliminary attachment should be
dissolved, as having been outside, or in excess of
respondent court's jurisdiction, having been issued
prior to the service of summons on petitioner.
It then prays that (a) the orders of the trial court of 19 September
1990 and 9 January 1991 be annulled for having been issued without
or in excess of jurisdiction or with grave abuse of discretion; and (b)
the trial court be directed to immediately suspend the proceedings in
Civil Case No. 90-772 pending arbitration proceedings in accordance
with the terms of Section 27.B of the Subcontract Agreement or,
alternatively, to dismiss the amended complaint and dissolve the writ
of attachment. It also prays for the issuance of a temporary restraining
order and a writ of preliminary injunction to restrain the trial court
from proceeding further in Civil Case No. 90-772.
On 18 February 1991, the Court of Appeals issued a temporary
restraining order.
30

On 1 July 1991, the Court of Appeals promulgated the challenged
decision
31
dissolving the writ of preliminary attachment issued by the
trial court and ordering it to conduct a hearing to determine the proper
interpretation of the provisions of the Subcontract Agreement. As to
the writ of attachment, the Court of Appeals held that summons was
served on Zachry only on 24 April 1990; hence, applyingSievert vs.
Court of Appeals,
32
the trial court "had no authority yet to act
coercively against the defendant" when it issued the writ of
attachment on 21 March 1990. As to arbitration, it ruled:
We are of the reasoned opinion that unlike in the
factual situation in the cases cited by petitioner,
the contract involved in the case at bar is, with
respect to its arbitration clause, vogue [sic] and
uncertain. Section 27.B which is the provision
upon which petitioner anchors its claims is
ambiguous in its terminology when it states that
"if at anytime any controversy should arise
between the contractor and the subcontractor . . .
which controversy is not controlled or determined
by Section 27.A above or other provision of this
subcontract . . . ." This provision states that only
when a controversy arises between the contractor
and the subcontractor which is not covered by
Section 27.A or any provision of the Subcontract
Agreement will the parties submit to arbitration.
As to what controversies fall under Section 27.B, it
is not clear from a mere perusal of the provisions.
It is therefore not correct for petitioner to say that
any and all dispute arising between the
contracting parties should be resolved by
arbitration prior to a filing of a suit in court.
33

VBC and Zachry filed a motion for reconsideration and a partial motion
for reconsideration, respectively.
34
The former urged the Court of
Appeals to consider the decision of this Court of 29 November 1991
in Davao Light & Power Co. vs. Court of Appeals
35
wherein this Court
ruled that a writ of preliminary attachment may be issued ex-
parte prior to the service of summons and a copy of the complaint on
the defendants. On the other hand, Zachry insists that "[t]here is
nothing 'vague' or 'ambiguous about' " the provision on dispute
procedures set forth in Subsections 27.B.1 to 27.B.3 of the Subcontract
Agreement.
In its Resolution of 2 September 1992,
36
the Court of Appeals denied
the above motions of the parties.
Hence, these petitions which were given due course in this Court's
Resolution of 8 March 1993.
37

In G.R. No. 106989, petitioner Zachry reiterates all the issues it raised
before the Court of Appeals, except that regarding the validity of the
writ of attachment which was decided in its favor.
In G.R. No. 107124, petitioner VBC raises the following issues:
A. WHETHER THE ISSUANCE OF THE WRIT OF
PRELIMINARY ATTACHMENT PRIOR TO THE
SERVICE OF THE SUMMONS AND A COPY OF THE
AMENDED COMPLAINT ON THE RESPONDENT IS
VALID.
B. WHETHER RESORT TO ARBITRATION PRIOR
TO FILING A SUIT IN COURT IS REQUIRED BY
THE SUBCONTRACT AGREEMENT UNDER THE
FACTS OBTAINING IN THE PRESENT CASES.
As to the first issue, VBC takes refuge in the ruling in Davao Light &
Power Co. vs. Court of Appeals
38
and argues that the issuance of the
writ of attachment on 21 March 1990, although before the service of
the summons, was valid. Its issuance and implementation are two
different and separate things; the first is not affected by any defect in
the implementation which may be corrected. Moreover,
assumingarguendo that the initial service of summons was defective, it
was cured by the numerous pleadings thereafter filed. Finally,
whatever doubts existed on the effectiveness of the implementation of
the writ was erased by its re-service on the resident agent of Zachry.
As to the issue on arbitration, VBC maintains that arbitration is not
required under the facts obtaining in the present case because the
applicable provision of the Subcontract Agreement is Section 3 on
Payment and not Section 27.B on Arbitration. Zachry's fraudulent
actuations and gross violation of the Subcontract Agreement render
prior resort to arbitration futile and useless. The preliminary
attachment, which was essential to secure the interest of the
petitioner, could not have been obtained through arbitration
proceedings.
Zachry, in its Comment,
39
contends that pursuant to the Sievert and
Davao Light rulings, the issuance of the writ of attachment before the
service of summons on Zachry's resident agent was invalid and that
the various pleadings filed by the parties did not cure its invalidity. It
argues that the arbitration procedure is set forth in Section 27.B of the
Subcontract Agreement. It further maintains that pursuant to General
Insurance vs. Union Insurance,
40
the alleged fraudulent actuations
which relate to the merits of the case may be properly addressed to
the arbitrators and that there is no merit to the claim that arbitration
would be useless since the arbitration proceeding would be presided
over by an independent and competent arbitral tribunal.
The issues in these petitions are properly defined by VBC in G.R. No.
107124.
We find for petitioner VBC.
It was error for the Court of Appeals to declare, on the ground of
grave abuse of discretion, the nullity of the writ of attachment issued
by the trial court on 21 March 1990. In the first place, the writ was in
fact issued only on 26 March 1990 and served, together with the
summons, copy of the complaint, the Order of 21 March 1990, and the
bond, on 27 March 1990 on Zachry at its field office in Subic Bay,
Zambales, through one Ruby Apostol. What the Court of Appeals
referred to as having been issued on 21 March 1990 is the order
granting the application for the issuance of a writ of preliminary
attachment upon the posting of a bond of P24,266,000.00.
41
In the
second place, even granting arguendo that the Court of Appeals had
PROVISIONAL REMEDIES Sec. 1-6 Rule 57 | 2014 SYLLABUS | 73

indeed in mind the 26 March 1990 writ of attachment, its issuance, as
well as the issuance of the 21 March 1990 Order, did not suffer from
any procedural or jurisdictional defect; the trial court could validly
issue both.
However, the writ of attachment cannot be validly enforced through
the levy of Zachry's property before the court had acquired jurisdiction
over Zachry's person either through its voluntary appearance or the
valid service of summons upon it.
42
To put it in another way, a
distinction should be made between the issuance and
the enforcement of the writ. The trial court has unlimited power to
issue the writ upon the commencement of the action even before it
acquires jurisdiction over the person of the defendant, but
enforcement thereof can only be validly done after it shall have
acquired such jurisdiction. This is the rule enunciated in Davao Light &
Power Co. vs. Court of
Appeals.
43
In that case, this Court stated:
The question is whether or not a writ of
preliminary attachment may issue ex parte against
a defendant before acquisition of jurisdiction of
the latter's person by service of summons or his
voluntary submission to the Court's authority.
The Court rules that the question must be
answered in the affirmative and that consequently,
the petition for review will have to be granted.
It is incorrect to theorize that after an action or
proceeding has been commenced and jurisdiction
over the person of the plaintiff has been vested in
the court, but before the acquisition of jurisdiction
over the person of the defendant (either by
service of summons or his voluntary submission to
the court's authority), nothing can be validly done
by the plaintiff or the court. It is wrong to assume
that the validity of acts done during this period
should be dependent on, or held in suspension
until, the actual obtention of jurisdiction over the
defendant's person. The obtention by the court of
jurisdiction over the person of the defendant is
one thing; quite another is the acquisition of
jurisdiction over the person of the plaintiff or over
the subject-matter or nature of the action, or the
res or object thereof.
44

xxx xxx xxx
A preliminary attachment may be defined,
paraphrasing the Rules of Court, as the provisional
remedy in virtue of which a plaintiff or other
proper party may, at the commencement of the
action or at any time thereafter, have the property
of the adverse party taken into the custody of the
court as security for the satisfaction of any
judgment that may be recovered. It is a remedy
which is purely statutory in respect of which the
law requires a strict construction of the provisions
granting it. Withal no principle, statutory or
jurisprudential, prohibits its issuance by any court
before acquisition of jurisdiction over the person
of the defendant.
Rule 57 in fact speaks of the grant of the remedy
"at the commencement of the action or at any
time thereafter." The phrase "at the
commencement of the action," obviously refers to
the date of the filing of the complaint which, as
above pointed out, is the date that marks "the
commencement of the action;" and the reference
plainly is to a time before summons is served on
the defendant, or even before summons issues.
What the rule is saying quite clearly is that after
an action is properly commenced by the filing
of the complaint and the payment of all requisite
docket and other fees the plaintiff may apply
for and obtain a writ of preliminary attachment
upon fulfillment of the pertinent requisites laid
down by law, and that he may do so at any time,
either before or after service of summons on the
defendant. And this indeed, has been the
immemorial practice sanctioned by the courts: for
the plaintiff or other proper party to incorporate
the application for attachment in the complaint or
other appropriate pleading (counterclaim, cross-
claim, third-party claim) and for the Trial Court to
issue the writ ex-parte at the commencement of
the action if it finds the application otherwise
sufficient in form and substance.
45

xxx xxx xxx
It goes without saying that whatever be the acts
done by the Court prior to the acquisition of
jurisdiction over the person of the defendant, as
above indicated issuance of summons, order of
attachment and writ of attachment (and/or
appointment of guardian ad litem, or grant of
authority to the plaintiff to prosecute the suit as a
pauper litigant, or amendment of the complaint by
the plaintiff as a matter of right without leave of
court) and however valid and proper they might
otherwise be, these do not and cannot bind and
affect the defendant until and unless jurisdiction
over his person is eventually obtained by the
court, either by service on him of summons or
other coercive process or his voluntary submission
to the court's authority. Hence, when the sheriff or
other proper officer commences implementation of
the writ of attachment, it is essential that he serve
on the defendant not only a copy of the
applicant's affidavit and attachment bond, and of
the order of attachment, as explicitly required by
Section 5 of Rule 57, but also the summons
addressed to said defendant as well as a copy of
the complaint and order for appointment of
guardian ad litem, if any, as also explicitly directed
by Section 3, Rule 14 of the Rules of Court.
Service of all such documents is indispensable not
only for the acquisition of jurisdiction over the
person of the defendant, but also upon
considerations of fairness, to apprise the
defendant of the complaint against him, of the
issuance of a writ of preliminary attachment and
the grounds therefor and thus accord him the
opportunity to prevent attachment of his property
by the posting of a counterbond in an amount
equal to the plaintiff's claim in the complaint
pursuant to Section 5 (or Section 12), Rule 57, or
dissolving it by causing dismissal of the complaint
itself on any of the grounds set forth in Rule 16, or
demonstrating the insufficiency of the applicant's
affidavit or bond in accordance with Section 13,
Rule 57.
46

xxx xxx xxx
For the guidance of all concerned, the Court
reiterates and reaffirms the proposition that writs
of attachment may properly issue ex
parte provided that the Court is satisfied that the
relevant requisites therefor have been fulfilled by
the applicant, although it may, in its discretion,
require prior hearing on the application with notice
to the defendant; but that levy on property
pursuant to the writ thus issued may not be validly
effected unless preceded, or contemporaneously
accompanied, by service on the defendant of
summons, a copy of the complaint (and of the
appointment of guardian ad litem, if any), the
application for attachment (if not incorporated in
PROVISIONAL REMEDIES Sec. 1-6 Rule 57 | 2014 SYLLABUS | 74

but submitted separately from the complaint), the
order of attachment, and the plaintiff's attachment
bond.
47

We reiterated the rule laid down in Davao Light in the subsequent case
of Cuartero vs. Court of Appeals
48
wherein we stated:
It must be emphasized that the grant of the
provisional remedy of attachment practically
involves three stages: first, the court issues the
order granting the application; second, the writ of
attachment issues pursuant to the order granting
the writ; and third, the writ is implemented. For
the initial two stages, it is not necessary that
jurisdiction over the person of the defendant
should first be obtained. However, once the
implementation commences, it is required that the
court must have acquired jurisdiction over the
person of the defendant for without such
jurisdiction, the court has no power and authority
to act in any manner against the defendant. Any
order issuing from the Court will not bind the
defendant.
The validity then of the order granting the application for a writ of
preliminary attachment on 21 March 1990 and of the issuance of the
writ of preliminary attachment on 26 March 1990 is beyond dispute.
However, the enforcement of the preliminary attachment on 27 March
1990, although simultaneous with the service of the summons and a
copy of the complaint, did not bind Zachry because the service of the
summons was not validly made. When a foreign corporation has
designated a person to receive service of summons pursuant to the
Corporation Code, that designation is exclusive and service of
summons on any other person is inefficacious.
49
The valid service of
summons and a copy of the amended complaint was only made upon
it on 24 April 1990, and it was only then that the trial court acquired
jurisdiction over Zachry's person. Accordingly, the levy on attachment
made by the sheriff on 27 April 1990 was invalid. However, the writ of
preliminary attachment may be validly served anew.
As to the second issue of arbitration, we find that although the order
of the trial court denying the motion to dismiss did not clearly state so,
it is evident that the trial court perceived the ground of the motion to
be not indubitable; hence, it could defer its resolution thereon until the
trial of the case. In deciding a motion to dismiss, Section 3, Rule 16 of
the Rules of Court grants the court four options: (1) to deny the
motion, (2) to grant the motion, (3) to allow amendment of pleadings,
or (4) to defer the hearing and determination of the motion until the
trial, if the ground alleged therein does not appear to be indubitable.
Under the fourth option, the court is under no obligation to
immediately hold a hearing on the motion; it is vested with discretion
to defer such hearing and the determination of the motion until the
trial of the case.
50
The lack of indubitability of the ground involved in
Zachry's motion to dismiss is confirmed by the Court of Appeals when
it declared:
Section 27. B which is the provision upon which
petitioner [Zachry] anchors its claim is ambiguous
in its terminology when it states that "if at any
time any controversy should arise between the
contractor and the subcontractor . . . which
controversy is not controlled or determined by
Section 27.A above or other provisions of this
subcontract' . . . . This provision states that only
when a controversy arises between the contractor
and subcontractor which is not covered by Section
27.A or any provision of the Subcontract will the
parties submit to arbitration. As to what
controversies fall under Section 27.B, it is not clear
from a mere perusal of the provisions.
Indeed, the parties could not even agree on what controversies fall
within Section 27.B, and, perhaps, rightly so because the said Section
27.B excludes controversies controlled or determined by Section 27.A
and other provisions of the Subcontract Agreement, which are
themselves unclear. For that reason, VBC insists that its cause of
action in Civil Case No. 90-772 is based on Section 3 of the
Subcontract Agreement. It may further be emphasized that VBC's
complaint was precipitated by Zachry's refusal to comply with the
Supplemental Agreement. Evidently, Section 3 of the Subcontract
Agreement and the Supplemental Agreement are excluded by Section
27.B. The trial court was, therefore, correct in denying Zachry's motion
to dismiss.
However, we cannot give our assent to the Court of Appeals' order
directing the trial court to conduct a hearing for the determination of
the proper interpretation of the provisions of the Subcontract
Agreement. It would re-open the motion to dismiss which, upon the
trial court's exercise of its discretion, was properly denied for lack of
indubitability of the ground invoked and thereby unduly interfere
with the trial court's discretion. The proper interpretation could only be
done by the trial court after presentation of evidence during trial on
the merits pursuant to the tenor of its order denying the motion to
dismiss. If the trial court should find that, indeed, arbitration is in
order, then it could apply Section 7 of R.A. No. 876 which reads as
follows:
Sec. 7. Stay of civil action. If any suit or
proceeding be brought upon an issue arising out
of an agreement providing for the arbitration
thereof, the court in which such suit or proceeding
is pending, upon being satisfied that the issue
involved in such suit or proceeding is referable to
arbitration, shall stay the action or proceeding
until an arbitration has been had in accordance
with the terms of the agreement: Provided, That
the applicant for the stay is not in default in
proceeding with such arbitration.
WHEREFORE, the petition in G.R. No. 107124 is GRANTED while that
in G.R. No. 106989 is DENIED for lack of merit. The challenged
Decision of 1 July 1992 and Resolution of 2 September 1992 are
hereby SET ASIDE. The orders of Branch 142 of the Regional Trial
Court of Makati in Civil Case No. 90-772 of 19 September 1990
denying the motion to dismiss and of 8 October 1990 denying the
motion to reconsider the former are REINSTATED. However, the
service of the writ of preliminary attachment on 26 March 1990 is
hereby declared invalid. The writ may, nevertheless, be served anew.
No pronouncement as to costs. SO ORDERED.

SECTION 6. Sheriffs return. After enforcing the writ, the sheriff
must likewise without delay make a return thereon to the court from
which the writ is issued, with a full statement of his proceedings under
the writ and a complete inventory of the property attached, together
with any counter-bond given by the party against whom attachment is
issued, and serve copies thereof on the applicant.
G.R. No. L-42594 October 18, 1979
ELIGIO ROQUE and RODRIGO G. MALONJAO, petitioners,
vs.
HON. COURT OF APPEALS, HON. JUDGE CARLOS L. SUNDIAM,
(CFI-Manila, Branch XXVIII) ASSOCIATED BANKING
CORPORATION FIL-EASTERN WOOD INDUSTRIES, INC., CITY
SHERIFF OF MANILA, DEPUTY SHERIFFS ADRIEL GARCIA and
BENJAMIN GARVIDA, respondents.

MELENCIO-HERRERA, J.:
Treating this Petition as a special civil action for Certiorari, we affirm
the Decision of the Court of Appeals denying petitioners' prayer to set
aside the trial Court Order, dated April 14, 1975, to surrender the
barge in question under pain of contempt, and its subsequent Orders
denying their Motion for Reconsideration.
There is no dispute as to the following background facts:
On January 31, 1973, respondent Associated Banking Corporation (the
Bank, for short) instituted an action, Civil Case No. 89692, in the Court
of First Instance of Manila, Branch XXVIII, respondent Judge,
presiding, against private respondent Fil-Eastern Wood Industries, Inc.
PROVISIONAL REMEDIES Sec. 1-6 Rule 57 | 2014 SYLLABUS | 75

(Fil-Eastern, for brevity), a domestic corporation, for recovery of a sum
of money.
Upon ex-parte application by the Bank for a Writ of Preliminary
Attachment, respondent Judge, after the filing and approval of the
required bond of P220,000.00, issued, on February 4, 1974, an Order
of Attachment commanding the Sheriff to attach the estate, real and
personal, of Fil-Eastern.
1

On February 7, 1974, the Sheriff's "Notice of Levy Pursuant to the Writ
of Attachment" was registered in the Office of the Commander of the
First Coast Guard, District of Manila,
2
pursuant to Sec. 805 of the
Tariff and Customs Code, as amended by Presidential Decree No. 34,
requiring the registration of documents affecting titles of vessels with
that entity. The said notice read, "levy is hereby made upon all the
rights, titles, interest, shares and participation which the defendant Fil-
Eastern Wood Industries, Inc. has or might have over a sea vessel or
barge named Fil-Eastern V.
It appears that prior to the issuance of said Writ of Attachment, Fil-
Eastern had delivered the barge to the Cotabato Visayan Development
Corporation sometime in April, 1973, for repair. The job was
completed in June 1973, but Fil-Eastern failed to pay the cost of
repairs of P261,190.59. Pursuant to the provisions of Article 2112
3
in
relation to Article 1731
4
of the Civil Code, the Cotabato Visayan
Development Corporation proceeded before Notary Public Clemente R.
Gonzales of Manila to the sale of said barge. In the public auction sale
conducted by said Notary Public on April 24, 1974, petitioner Eligio
Roque acquired the barge as the highest bidder, and was accordingly
issued a Certificate of Sale by the Notary Public. On the same date, the
Cotabato Visayan Development Corporation issued an Affidavit of
Release of mechanic's lien against Fil-Eastern. The Certificate of Sale
was received in the office of the Philippine Coast Guard on May 3,
1974.
5
It wag not until December 24, 1974, however, that Certificate
of Ownership No. 8647, a Certificate. of Philippine Register, a
Certificate of Change of Name of Vessel from Fil-Eastern V" to
"Satellite I I, " as well as a Coastwise License, were issued to Roque by
the Philippine Coast Guard.
6
These muniments of title were issued
only after counsel for Eligio Roque had assured the Philippine Coast
Guard, in a letter dated November 13, 1974, that "without touching on
the merit of the preference of our client's claim in relation to the levy
registered by other claimants, such levy is not in any manner a legal
obstacle to the registration of the vessels in our client's
name."
7
Acting thereon, the Acting Commandant of the Philippine
Coast Guard in a letter dated November 23, 1974, authorized the
issuance of a new certificate of registration annotating thereon any
levy validly registered against said vessel(s)."
8
However, neither the
Certificate of Ownership nor the Certificate of Philippine Register
appended as Annexes "C" and "D", respectively, to petitioners' Urgent
Manifestation and Motion filed before the lower Court
9
carry that
annotation.
On August 29, 1974, the Bank filed a "Motion for the Issuance of
Another Writ of Attachment" stating that at the time of the issuance of
the Writ on February 4, 1974, the barge in question could not be
located within the jurisdiction of the trial Court. having been anchored
somewhere in the Visayas, and that actual levy on the barge could not
be made as "the original Order of attachment is allegedly in the
possession of the Branch Deputy Sheriff appointed by the Honorable
Court, who has not reported to the office since August 26, 1974, and,
therefore, could not implement the writ."
10
On the same date, August
29, 1974, the trial Court (Judge Rafael S. Sison, presiding) denied the
issuance of another Writ (apparently ' v because it was deemed
unnecessary), but instead ordered the Deputy Sheriff of Branch XXVIII
to coordinate with the City Sheriff of Manila in the implementation of
the Writ previously issued.
11
On August 30, 1974, Deputy Sheriff
Garvida actually seized and levied upon the vessel.
On October 7, 1974, respondent Bank and respondent Fil-Eastern
submitted a Compromise Agreement whereby Fil-Eastern bound itself
to pay to the Bank the principal amount of P200,000.00, with 1417,9
interest, plus other amounts stated therein. On October 9, 1974,
respondent Judge approved the Agreement and rendered judgment
accordingly. On November 6, 1974, the Bank moved for the issuance
of a Writ of Execution for failure of Fil-Eastern to make payments
within the period stipulated in the Compromise Agreement.
Meanwhile, without prior authority from Deputy Sheriff Garvida the
barge in question was "spirited away" to Bacolod City by a certain
Captain Marcelino Agito, who claimed to have been given the right to
use the same by Fil-Eastern.
12

On January 6, 1975, respondent Judge issued an Order requiring Capt.
Marcelino Agito, in coordination with Deputy Sheriff Benjamin E.
Garvida to bring back to Manila the barge in question.
13

On March 7, 1975, respondent Judge issued a Writ of Execution and
ordered the sale of the barge at public auction, as follows:
ORDER
The Decision rendered by this Court under date of
October 9, 1974 having already become final and
executory, let a Writ of Execution be issued to be
enforced by Sheriff Adriel V. Garcia by conducting
an auction sale on the vessel placed under
attachment. The satisfaction of the judgment in
this case shall be given preference and the
payment of the third party claim of Alfredo H.
Maligaya for and in behalf of Leonardo M. Canoso
shall be satisfied from whatever remaining
proceeds of the auction sale on the aforedsaid
vessel, if there be any.
SO ORDERED.
14

On April 7, 1975, Capt. Marcelino Aguito and Deputy Sheriff Benjamin
Garvida filed a Manifestation stating that petitioner Rodrigo Malonjao,
acting for and in behalf of his co-petitioner Eligio Roque, refused to-
surrender the barge on the ground I d that Eligio Roque is now the
new owner, having acquired the same by purchase at public auction,
and praying that petitioners, and all persons claiming under them, be
directed to surrender the barge to the custody of the Court through its
duly authorized representative.
On April 14, 1975, respondent Judge issued the following Order:
Upon motion filed by Capt. Marcelino Agito and
Deputy Sheriff Benjamin Garvida and considering
the absence of a formal claim with this Court filed
by Eulogio Roque, personally or through counsel,
relative to the barge SATELLITE II, EX-FIL-
EASTERN V', subject of the writ of Attachment
issued by this Court on February 7, 1974, and in
order to prevent further delay in the
implementation of the Order of this Court dated
March 7, 1975, Rodrigo Malonjao and Eulogio
Roque and an persons claiming right under them
over the aforesaid vessel, including those acting
under their direction or supervision, are hereby
ordered under pain of being cited in contempt of
Court to forthwith surrender possession of the
above said vessel to Sheriff Adriel V. Garcia so
that the latter may be able to implement fully and
expeditiously the aforesaid Order of this Court
dated March 7, 1975. ...
15

On April 24, 1975, petitioners filed before the trial Court an Urgent
Manifestation and Motion seeking to set aside the Order of April 14,
1975, claiming that Roque is now the new owner of the barge having
acquired the same at a public auction sale arising from a mechanic's
lien. The Motion was denied by respondent Judge on the ground that
the records belied petitioners' claim that the auction sale occurred very
much ahead of the notice of levy. Petitioners' first and second Motion
for Reconsideration were similarly denied. On July 16, 1975,
respondent Deputy Sheriff Adriel V. Garcia submitted a report
informing the Court that the barge in question had been turned over to
him and was anchored along Pasig River, under guard.
On August 28, 1975, petitioners sought relief from the Court of
Appeals by filing a "Petition for certiorari and Prohibition with
Preliminary Injunction and Preliminary Mandatory Injunction" assailing
PROVISIONAL REMEDIES Sec. 1-6 Rule 57 | 2014 SYLLABUS | 76

and asking to vacate the Orders issued in Civil Case No. 89692 by
respondent Judge as well as the Writs, notices and other processes
emanating therefrom. The Court of Appeals, * in denying the Petition
in its Decision promulgated on November 24, 1975, ruled that
certiorari did not lie as petitioner was not without sufficient and
adequate remedy to obtain relief from the damaging effects of the
Orders complained of.
Petitioner filed the present Petition on March 1, 1976 before this Court,
claiming that they are purchasers in good faith and for valuable
consideration, having actually paid the total amount of P354,689.00 to
the Cotabato Visayan Development Corporation for three barges, one
of which is the barge in question. They have also raised the following
legal issues:
1. The decision of the respondent Court of Appeals
sustaining the challenged orders, writs and other
processes issued by the respondent Judge is
contrary to the provisions of Art. 1731 in relation
to Art. 2112 of the New Civil Code and to the
ruling laid down in Bank of P.I. vs. Walter A.
Smith' & Co., 55 Phil. 533 and Bachrach Motor Co.
vs. Mendoza, 43 Phil. 410.
2. If the levy and/or attachment by the sheriff of
the barge in question are illegal, will herein
petitioner be required to avail of Section 14, Rule
57 and/or Section 17, Rule 39 of the Revised
Rules of Court?
On July 19, 1976, we issued a Restraining Order enjoining respondents
from proceeding with the projected sale at public auction of the barge,
subject of this litigation. We also declared the case submitted for
decision. On January 18, 1977, the Bank filed a Motion for Authority to
Sell the barge under attachment. This was opposed, however, by
petitioners and we resolved to defer resolution until decision on the
merits is rendered.
On May 31, 1979, the Bank filed a Motion for Early Resolution, but the
same was agendaed only on September 24, 1979. We take note of the
BANK's contention that ever since the Sheriff took custody of the
vessel on July 16, 1975, the same has been lying Idle, moored at the
Muelle de la Industrial, Pasig River, exposed to the elements, and has
deteriorated rapidly, hence the need for early resolution. It should be
reiterated that this is a special civil action for Certiorari, the main
requisites for the issuance of which Writ are: 1) that the Writ be
directed against a tribunal, board or officer exercising judicial
functions; 2) that such tribunal, board or officer has acted without or
in excess of jurisdiction or with grave abuse of discretion; and 3) that
there is no appeal, nor any plain, speedy and adequate remedy in the
ordinary course of law.
16
While the first requisite has been met, the
second-hand the third have not.
We agree with the findings of the Court of Appeals that petitioners
were not without any plain, speedy and adequate remedy in the
ordinary course of law. For one, upon the issuance of the Order, dated
August 29, 1974, commanding the implementation of the Writ of
Attachment, petitioners could have availed themselves of the remedy
provided for in Section 14, Rule 57 of the Rules of Court, which reads:
If the property taken be claimed by any person
other than the party against whom attachment
had been issued or his agent, and such person
makes an affidavit of his title thereto or right to
the possession thereof, stating the grounds of
such right or title, and serves such affidavit upon
the officer while the latter has possession of the
property, and a copy thereof upon the attaching
creditor, the officer shall not be bound to keep the
property under attachment, unless the attaching
creditor or his agent, on demand of the said
officer, secures him against such claim by a bond
in a sum not greater than the value of the
property attached. ...
For another, when respondent Sheriff seized the vessel in question to
be sold at public auction in accordance with the Order of execution of
March 7, 1975, petitioner could have availed of the remedy under
Section 17, Rule 39 of the Rules of Court which provides:
If the property levied on be claimed by any other
person than the Judgment debtor or his agent,
and such person make an affidavit of his title
thereto or right to the possession thereof, stating
the grounds of such right or title, and serve the
same upon the officer making the levy, and a copy
thereof upon the judgment creditor, the officer
shall not be bound to keep the property, unless
such judgment creditor or his agent, on demand
of the officer, indemnify the officer against such
claim by a bond in a sum not greater than the
value of the property levied on. ...
Petitioner Eligio Roque argues, however, that he could not avail of the
foregoing Rules inasmuch as the vessel was not in the actual custody
of the Sheriff nor of the Court, since the supposed levy by the Sheriff
on February 7, 1974 was a mere paper levy which, in legal
contemplation, is no levy at an. It is a fact that respondent Sheriff
could not effect seizure immediately, first, because the barge could
nowhere be found in this vicinity, and subsequently when found,
because petitioners would not deliver possession to the Sheriff. It was
not until the trial Court granted the Sheriff's Motion praying for an
Order directing petitioners or their agents to surrender the barge to
the custody of the Court, that the Sheriff was able to take physical
custody. As a general rule, however, a levy of an attachment upon
personal property may be either actual or constructive.
17
In this case,
levy had been constructively made by the registration of the same with
the Philippine Coast Guard on February 7, 1974. Constructive
possession should be held sufficient where actual possession is not
feasible,
18
particularly when it was followed up by the actual seizure
of the property as soon as that could possibly be effected.
Petitioners further argue that the levy was illegal because the Writ was
implemented more than sixty days after its issuance so that they need
not have complied with Section 14, Rule 57, supra. The Rules do not
provide any lifetime for a Writ of Attachment unlike a Writ of
Execution. But even granting that a Writ of Attachment is valid for only
sixty days, yet, since there was constructive levy within that period the
fact that actual seizure was effected only thereafter cannot affect the
validity of that levy.
Neither can it be said that respondent Judge committed grave abuse of
discretion in issuing the challenged Order of April 14, 1975, supra,
whereby it commanded the immediate implementation of the Order of
execution of March 7, 1975 and ordered petitioners to surrender
possession of the barge to the Sheriff under pain of contempt. A trial
Court is enjoined by law to bring about a prompt dispatch of the
controversy pending before it. As it was, it took the trial Court more
than a year to cause the enforcement of its Writs and processes.
Moreover, its Decision of October 9, 1974 had become final and
executory, and execution then became purely a ministerial phase of
adjudication. It had no jurisdiction to pass upon petitioners' claim of
ownership not only because trial in that, case had already been
terminated but also considering that petitioners were not parties in the
case below nor had they filed any third-party claim for the
enforcement of their rights.
Verily, petitioners' remedy was to ventilate their claims of ownership in
a separate and independent reivindicatory action, as even then
suggested by the Court of Appeals. That was the arena where the
question of preferential rights, if any, impliedly raised in the first
assigned error, could have been fully threshed out.
...a third person claiming to be the owner of the
property attached or levied upon is required to file
a separate or independent action to determine
whether the property should answer for the claim
of the attaching or judgment creditor instead of
being allowed to raise that issue in the case where
the writ of attachment or execution was issued
(Sec. 17, Rule 39 and sec. 14, Rule 57, Rules of
Court; Bayer Philippines, Inc. vs. Agana, L-38701,
April 8, 1975, 63 SCRA 355).
19

PROVISIONAL REMEDIES Sec. 1-6 Rule 57 | 2014 SYLLABUS | 77

In the interest of justice, petitioners can still file an independent civil
action to establish their ownership over the barge, if they have not yet
done so.
WHEREFORE, in the absence of jurisdictional errors, this Petition is
dismissed, and the Restraining Order, heretofore issued, hereby lifted
effective immediately.
No costs.
SO ORDERED.