Provisional Remedies Cases_1st batch 1
1. THIRD DIVISION G.R. No. 197802, November 11, 2015
ZUNECA PHARMACEUTICAL, AKRAM ARAIN AND/OR VENUS
ARAIN, M.D. DBA ZUNECA PHARMACEUTICAL, Petitioners, v.
NATRAPHARM, INC., Respondent.
This is a petition for review1 under Rule 45 of the 1997 Rules
of Civil Procedure, as amended, assailing the April 18, 2011
Decision2 and July 21, 2011 Resolution3 of the Court of
Appeals (CA) in the petition for certiorari docketed as CA-G.R.
SP No. 103333 granting a permanent injunction in favor of
respondent Natrapharm, Inc. and against petitioner Zuneca
Pharmaceutical.
The facts follow:
Respondent is an all-Filipino pharmaceutical company which
manufactures and sells a medicine bearing the generic name
"CITICOLINE," which is indicated for heart and stroke patients.
The said medicine is marketed by respondent under its
registered trademark "ZYNAPSE," which respondent obtained
from the Intellectual Property Office (IPO) on September 24,
2007 under Certificate of Trademark Registration No. 4-2007-
005596. With its registration, the trademark "ZYNAPSE" enjoys
protection for a term of 10 years from September 24, 2007.4
In addition, respondent obtained from the Bureau of Food and
Drugs (BFAD) all necessary permits and licenses to register, list
and sell its "ZYNAPSE" medicine in its various forms and
dosages.5
Allegedly unknown to respondent, since 2003 or even as early
as 2001, petitioners have been selling a medicine imported
from Lahore, Pakistan bearing the generic name
"CARBAMAZEPINE," an anti-convulsant indicated for epilepsy,
under the brand name "ZYNAPS," which trademark is however
not registered with the IPO. "ZYNAPS" is pronounced exactly
like "ZYNAPSE."6
Respondent further alleged that petitioners are selling their
product "ZYNAPS" CARBAMAZEPINE in numerous drugstores
in the country where its own product "ZYNAPSE" CITICOLINE is
also being sold.7
Moreover, respondent claimed that the drug CARBAMAZEPINE
has one documented serious and disfiguring side-effect called
"Stevens-Johnson Syndrome," and that the sale of the
medicines "ZYNAPSE" and "ZYNAPS" in the same drugstores
will give rise to medicine switching.8
On October 30, 2007, respondent sent petitioners a cease-and-
desist demand letter, pointing out that:
"ZYNAPSE" is the registered trademark of [respondent], and
that as such owner, it has exclusive trademark right under the
law to the use thereof and prevent others from using identical
or confusingly similar marks, and that [petitioners] must stop
the use of "ZYNAPS" for being nearly identical to "ZYNAPSE";
and
Because there is confusing similarity between "ZYNAPSE" and
"ZYNAPS," there is a danger of medicine switching, with the
patient on "ZYNAPSE" medication placed in a more injurious
situation given the Steven-Johnson Syndrome side effect of the
"ZYNAPS" CARBAMAZEPINE.9
Petitioners refused to heed the above demand, claiming that
they had prior use of the name "ZYNAPS" since year 2003,
having been issued by the BFAD a Certificate of Product
Registration (CPR) on April 15, 2003, which allowed them to
sell CARBAMAZEPINE under the brand name "ZYNAPS."10
On November 29, 2007, respondent filed a complaint against
petitioners for trademark infringement for violation of
Republic Act (R.A.) No. 8293, or the Intellectual Property Code
of the Philippines (IPC), with prayer for a temporary restraining
order (TRO) and/or writ of preliminary injunction. To justify the
TRO/writ of preliminary injunction, respondent cited Section
12211 of R.A. No. 8293, under which the registration of
"ZYNAPSE" gives it the exclusive right to use the said name as
well as to exclude others from using the same.12 In addition,
respondent argued that under Sections 13813 and 147.114 of
the IPC, certificates of registration are prima facie evidence of
the registrant's ownership of the mark and of the registrant's
exclusive right to use the same.15 Respondent also invoked
the case of Conrad and Company, Inc. v. Court of Appeals16
where it was ruled that an invasion of a registered mark
entitles the holder of a certificate of registration thereof to
injunctive relief.17
In their answer, petitioners argued that they enjoyed prior use
in good faith of the brand name "ZYNAPS," having submitted
their application for CPR with the BFAD on October 2, 2001,
with the name "ZYNAPS" expressly indicated thereon. The CPR
was issued to them on April 15, 2003.18 Moreover, petitioners
averred that under Section 15919 of the IPC their right to use
the said mark is protected.20
In its December 21, 2007 Order,21 the Regional Trial Court
(RTC) denied respondent's application for a TRO, ruling that
even if respondent was able to first register its mark
"ZYNAPSE" with the IPO in 2007, it is nevertheless defeated by
the prior actual use by petitioners of "ZYNAPS" in 2003.

In its March 12, 2008 Order,22 the RTC denied the application
for a writ of preliminary injunction, reiterating the reasons
stated in the order denying the application for a TRO:
In this Court's objective evaluation, neither party is, at this
point, entitled to any injunctive solace. Plaintiff, while
admittedly the holder of a registered trademark under the IPC,
may not invoke ascendancy or superiority of its CTR [certificate
of trademark registration] over the CPR [certificate of product
registration of the BFAD] of the defendants, as the latter
certificate is, in the Court's opinion, evidence of its "prior use".
Parenthetically, the plaintiff would have been entitled to an
injunction as against any or all third persons in respect of its
registered mark under normal conditions, that is, in the event
wherein Section 159.1 would not be invoked by such third
person. Such is the case however in this litigation. Section 159
of the IPC explicitly curtails the registrant's rights by providing
for limitations on those rights as against a "prior user" under
Section 159.1 xxx.23
Via a petition for certiorari with an application for a TRO
and/or a writ of preliminary injunction, respondent questioned
before the CA the RTC's denial of the application for a writ of
preliminary injunction.
On June 17, 2008, the CA issued a Resolution24 denying
respondent's application for TRO and/or preliminary
injunction for lack of merit. The CA found no compelling reason
to grant the application for TRO and/or preliminary injunction
because there was no showing that respondent had a clear and
existing right that will be violated by petitioners. Respondent
moved for reconsideration but was denied by the CA in its July
31, 2008 Resolution.25cralawred
However, contrary to its earlier resolutions denying the
application for a TRO/preliminary injunction, the CA, in its April
18, 2011 Decision, upheld the allegations of respondent that it
is entitled to injunctive relief on the basis of its IPO registration
and permanently enjoined petitioners from the commercial
use of "ZYNAPS." The fallo of the CA Decision reads:
WHEREFORE, premises considered, the Petition for Certiorari
is GRANTED. The assailed Omnibus Order dated 12 March 2008
of the Regional Trial Court, Branch 93 of Quezon City in Civil
Case No. Q-07-61561 is REVERSED and SET ASIDE, and a new
one is entered permanently ENJOINING defendants-
respondents, their employees, agents, representatives,
dealers, retailers, and/or assigns, and any and all persons
acting in their behalf, from manufacturing, importing,
distributing, selling and/or advertising for sale, or otherwise
using in commerce, the anti-convulsant drug CARBAMAZEPINE
Provisional Remedies Cases_1st batch 2
under the brand name and mark "ZYNAPS," or using any other
name which is similar or confusingly similar to petitioner's
registered trademark "ZYNAPSE," including filing of application
for permits, license, or certificate of product registration with
the Food and Drug Administration and other government
agencies.
SO ORDERED.26 (Underscoring and additional emphasis
supplied)
Petitioners' motion for reconsideration was denied by the CA
in its Resolution dated July 21, 2011.
Hence, this petition for review.
On December 2, 2011, the RTC rendered a Decision27 on the
merits of the case. It found petitioners liable to respondent for
damages. Moreover, it enjoined the petitioners from using
"ZYNAPS" and ordered all materials related to it be disposed
outside the channel of commerce or destroyed without
compensation.28
Respondent moved to dismiss the present petition in view of
the December 2, 2011 RTC Decision which functions as a full
adjudication on the merits of the main issue of trademark
infringement. Respondent contended that the present petition
is moot and academic, it only involving an ancillary writ.29
Petitioners, on the other hand, opposed the motion to dismiss
arguing that the December 2, 2011 RTC Decision had not yet
attained finality, thus, the present petition had not yet been
rendered moot.
The two issues which need to be addressed are:
1) Whether the decision on the merits rendered the issues in
this case moot and academic? and
2) Whether the CA may order a permanent injunction in
deciding a petition for certiorari against the denial of an
application for a preliminary injunction issued by the RTC?
We hold that the issues raised in the instant petition have been
rendered moot and academic given the RTC's December 2,
2011 Decision on the merits of the case.
Rule 58 of the Rules of Court provides for both preliminary and
permanent injunction. Section 1, Rule 58 provides for the
definition of preliminary injunction:
SECTION 1. Preliminary injunction defined; classes. — A
preliminary injunction is an order granted at any stage of an

action or proceeding prior to the judgment or final order,
requiring a party or a court, agency or a person to refrain from
a particular act or acts. It may also require the performance of
a particular act or acts, in which case it shall be known as a
preliminary mandatory injunction. (Emphasis supplied)
On the other hand, Section 9 of the same Rule defines a
permanent injunction in this wise:
SEC. 9. When final injunction granted. — If after the trial of the
action it appears that the applicant is entitled to have the act
or acts complained of permanently enjoined, the court shall
grant a final injunction perpetually restraining the party or
person enjoined from the commission or continuance of the
act or acts or confirming the preliminary mandatory injunction.
(Emphasis supplied)
A writ of preliminary injunction is generally based solely on
initial and incomplete evidence.30 The evidence submitted
during the hearing on an application for a writ of preliminary
injunction is not conclusive or complete for only a sampling is
needed to give the trial court an idea of the justification for the
preliminary injunction pending the decision of the case on the
merits.31 As such, the findings of fact and opinion of a court
when issuing the writ of preliminary injunction are
interlocutory in nature and made even before the trial on the
merits is commenced or terminated.32
By contrast a permanent injunction, based on Section 9, Rule
58 of the Rules of Court, forms part of the judgment on the
merits and it can only be properly ordered only on final
judgment. A permanent injunction may thus be granted after
a trial or hearing on the merits of the case and a decree
granting or refusing an injunction should not be entered until
after a hearing on the merits where a verified answer
containing denials is filed or where no answer is required, or a
rule to show cause is equivalent to an answer.33
As such a preliminary injunction, like any preliminary writ and
any interlocutory order, cannot survive the main case of which
it is an incident; because an ancillary writ of preliminary
injunction loses its force and effect after the decision in the
main petition.34
In Casilan v. Ybañez,35 this Court stated:
As things stand now, this Court can no longer interfere with the
preliminary injunctions issued by the Leyte court in its cases
Nos. 2985 and 2990, because such preliminary writs have
already been vacated, being superseded and replaced by the
permanent injunction ordered in the decision on the merits
rendered on 21 March 1962. And as to the permanent
Provisional Remedies Cases_1st batch 3
injunction, no action can be taken thereon without reviewing
the judgment on the merits, such injunction being but a
consequence of the pronouncement that the credits of
Tiongson and Montilla are entitled to priority over that of
Casilan. Since the court below had the power and right to
determine such question of preference, its judgment is not
without, nor in excess of, jurisdiction; and even assuming that
its findings are not correct, they would, at most, constitute
errors of law, and not abuses of discretion, correctible by
certiorari . The obvious remedy for petitioner Casilan was a
timely appeal from the judgment on the merits to the Court of
Appeals, the amount involved being less than P200,000. But
the judgment has become final and unappealable and can not
be set aside through certiorari proceedings. (Emphasis
supplied)
Here, this Court is being asked to determine whether the CA
erred by issuing a permanent injunction in a case which
questioned the propriety of the denial of an ancillary writ. But
with the RTC's December 2, 2011 Decision on the case for
"Injunction, Trademark Infringement, Damages and
Destruction," the issues raised in the instant petition have
been rendered moot and academic. We note that the case
brought to the CA on a petition for certiorari merely involved
the RTC's denial of respondent's application for a writ of
preliminary injunction, a mere ancillary writ. Since a decision
on the merits has already been rendered and which includes in
its disposition a permanent injunction, the proper remedy is an
appeal36 from the decision in the main case.
WHEREFORE, in light of all the foregoing, the petition is hereby
DENIED for being moot and academic.
SO ORDERED.

2. BF HOMES, INC. and THE PHILIPPINE WATERWORKS AND
CONSTRUCTION CORP. - vs - MANILA ELECTRIC COMPANY
G.R. No. 171624
December 6, 2010
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
DECISION
LEONARDO-DE CASTRO, J.:
This Petition for Review on Certiorari under Rule 45 of the
Rules of Court assails the Decision[1] dated October 27, 2005
of the Court of Appeals in CA-G.R. SP No. 82826, nullifying and
setting aside (1) the Order[2] dated November 21, 2003 of the
Regional Trial Court (RTC), Branch 202 of Las Pias City, in Civil
Case No. 03-0151, thereby dissolving the writ of injunction
against respondent Manila Electric Company (MERALCO); and
(2) the Resolution[3] dated February 7, 2006 of the Court of
Appeals denying the Motion for Reconsideration of petitioners
BF Homes, Inc. (BF Homes) and Philippine Waterworks and
Construction Corporation (PWCC).
MERALCO is a corporation duly organized and existing under
Philippine laws engaged in the distribution and sale of electric
power in Metro Manila. On the other hand, BF Homes and
PWCC are owners and operators of waterworks systems
delivering water to over 12,000 households and commercial
buildings in BF Homes subdivisions in Paraaque City, Las Pias
City, Caloocan City, and Quezon City. The water distributed in
the waterworks systems owned and operated by BF Homes
and PWCC is drawn from deep wells using pumps run by
electricity supplied by MERALCO.
On June 23, 2003, BF Homes and PWCC filed a Petition [With
Prayer for the Issuance of Writ of Preliminary Injunction and
for the Immediate Issuance of Restraining Order] against
MERALCO before the RTC, docketed as Civil Case No. 03-0151.
In their Petition before the RTC, BF Homes and PWCC invoked
their right to refund based on the ruling of this Court in
Republic v. Manila Electric Company[4]:
7. It is of judicial notice that on November 15, 2002, in G.R. No.
141314, entitled Republic of the Philippines vs. Manila Electric
Company, and G.R. No. 141369, entitled Lawyers Against
Monopoly and Poverty (LAMP) et al. vs. Manila Electric
Compnay (MERALCO), (both cases shall hereafter be referred
to as MERALCO Refund cases, for brevity), the Supreme Court
ordered MERALCO to refund its customers, which shall be
credited against the customers future consumption, the excess
average amount of P0.167 per kilowatt hour starting with the
customers billing cycles beginning February 1998. The
Provisional Remedies Cases_1st batch 4
dispositive portion of the Supreme Court Decision in the
MERALCO Refund cases reads:
WHEREFORE, in view of the foregoing, the instant petitions are
GRANTED and the decision of the Court of Appeals in C.A. G.R.
SP No. 46888 is REVERSED. Respondent MERALCO is
authorized to adopt a rate adjustment in the amount of P0.017
kilowatthour, effective with respect to MERALCOs billing cycles
beginning February 1994. Further, in accordance with the
decision of the ERB dated February 16, 1998, the excess
average amount of P0.167 per kilowatt hour starting with the
applicants billing cycles beginning February 1998 is ordered to
be refunded to MERALCOs customers or correspondingly
credited in their favor for future consumption.
x x x x.
8. The Motion for Reconsideration filed by MERALCO in the
MERALCO Refund cases was DENIED WITH FINALITY (the
uppercase letters were used by the Supreme Court) in the
Resolution of the Supreme Court dated April 9, 2003.
9. The amount that MERALCO was mandated to refund to [BF
Homes and PWCC] pursuant to the MERALCO Refund cases is
in the amount of P11,834,570.91.[5]
BF Homes and PWCC then alleged in their RTC Petition that:
10. On May 20, 2003, without giving any notice whatsoever,
MERALCO disconnected electric supply to [BF Homes and
PWCCs] sixteen (16) water pumps located in BF Homes in
Paraaque, Caloocan, and Quezon City, which thus disrupted
water supply in those areas.
11. On June 4, 2003, [BF Homes and PWCC] received by
facsimile transmission a letter from MERALCO, x x x, in which
MERALCO demanded to [BF Homes and PWCC] the payment
of electric bills amounting to P4,717,768.15.
12. [MERALCO] replied in a letter dated June 11, 2003, x x x,
requesting MERALCO to apply the P4,717,768.15 electric bill
against the P11,834,570.91 that MERALCO was ordered to
refund to [BF Homes and PWCC] pursuant to the MERALCO
Refund cases. x x x
13. Displaying the arrogance that has become its distinction,
MERALCO, in its letter dated June 16, 2003, x x x, denied [BF
Homes and PWCCs] request alleging that it has not yet come
up with the schedule for the refund of large amounts, such as
those of [BF Homes and PWCC].
14. Even while MERALCO was serving its reply-letter to [BF
Homes and PWCC], MERALCO, again, without giving any
notice, cut off power supply to [BF Homes and PWCCs] five (5)

water pumps located in BF Homes Paraaque and BF Resort
Village, in Pamplona, Las Pias City.
15. In its letter dated June 4, 2003 (Annex A), MERALCO
threatened to cut off electric power connections to all of [BF
Homes and PWCCs] water pumps if [BF Homes and PWCC]
failed to pay their bills demanded by MERALCO by June 20,
2003.[6]
BF Homes and PWCC thus cited the following causes of action
for their RTC Petition:
16. In refusing to apply [MERALCOs] electric bills against the
amounts that it was ordered to refund to [BF Homes and
PWCC] pursuant to the MERALCO Refund cases and in making
the implementation of the refund ordered by the Supreme
Court dependent upon its own will and caprice, MERALCO
acted with utmost bad faith.
17. [BF Homes and PWCC] are clearly entitled to the remedies
under the law to compel MERALCO to consider [BF Homes and
PWCCs] electric bills fully paid by the amounts which MERALCO
was ordered to refund to [BF Homes and PWCC] pursuant to
the MERALCO Refund cases, to enjoin MERALCO to reconnect
electric power to all of [BF Homes and PWCCs] water pumps,
and to order MERALCO to desist from further cutting off power
connection to [BF Homes and PWCCs] water pumps.
18. MERALCOs unjust and oppressive acts have cast dishonor
upon [BF Homes and PWCCs] good name and besmirched their
reputation for which [BF Homes and PWCC] should be
indemnified by way of moral damages in the amount of not
less than P1,000,000.00.
19. As an example for the public good, to dissuade others from
emulating MERALCOs unjust, oppressive and mercenary
conduct, MERALCO should be directed to pay [BF Homes and
PWCC] exemplary damages of at least P1,000,000.00.
20. MERALCOs oppressive and inequitable conduct forced [BF
Homes and PWCC] to engage the services of counsel to defend
their rights and thereby incur litigation expenses in the amount
of at least P500,000.00 for which [BF Homes and PWCC] should
be indemnified.[7]
BF Homes and PWCC additionally prayed that the RTC issue a
writ of preliminary injunction and restraining order
considering that:
21. As indicated in its letter dated June 4, 2003 (Annex A),
unless seasonably restrained, MERALCO will cut off electric
Provisional Remedies Cases_1st batch 5
power connections to all of [BF Homes and PWCCs] water
pumps on June 20, 2003.
22. Part of the reliefs herein prayed for is to restrain MERALCO
from cutting off electric power connections to [BF Homes and
PWCCs] water pumps.
23. Unless MERALCOS announced intention to cut off electric
power connections to [BF Homes and PWCCs] water pumps is
restrained, [BF Homes and PWCC] will suffer great and
irreparable injury because they would not [be] able to supply
water to their customers.
24. [BF Homes and PWCC] therefore pray that a writ for
preliminary injunction be issued upon posting of a bond in an
amount as will be determined by this Honorable Court.
25. [BF Homes and PWCC] further pray that, in the meantime
and immediately upon the filing of the above captioned
Petition, a restraining order be issued before the matter of
preliminary injunction can be heard.[8]
On August 15, 2003, MERALCO filed before the RTC its Answer
with Counterclaims and Opposition to the Application for Writ
of Preliminary Injunction[9] of BF Homes and PWCC.
According to MERALCO:
2.2. Both petitioners BF Homes, Incorporated and Philippine
Waterworks Corporation are admittedly the registered
customers of [MERALCO] by virtue of the service contracts
executed between them under which the latter undertook to
supply electric energy to the former for a fee. The following
twenty-three (23) Service Identification Nos. (SINs) are
registered under the name of BF Homes, Incorporated: x x x.
While the following twenty-one (21) Service Identification Nos.
(SINs) are registered under the name of Philippine Waterworks
Construction Corporation: x x x
xxxx
2.4. The service contracts as well as the terms and conditions
of [MERALCOs] service as approved by BOE [Board of Energy],
now ERC [Energy Regulatory Commission], provide in relevant
parts, that [BF Homes and PWCC] agree as follows:
DISCONTINUANCE OF SERVICE:
The Company reserves the right to discontinue service in case
the customer is in arrears in the payment of bills or for failure
to pay the adjusted bills in those cases where the meter
stopped or failed to register the correct amount of energy
consumed, or for failure to comply with any of these terms and
conditions, or in case of or to prevent fraud upon the

Company. Before disconnection is made in the case of, or to
prevent fraud, the Company may adjust the bill of said
customer accordingly and if the adjusted bill is not paid, the
Company may disconnect the same. (Emphasis supplied)
2.5. This contractual right of [MERALCO] to discontinue electric
service for default in the payment of its regular bills is
sanctioned and approved by the rules and regulations of ERB
(now the ERC). This right is necessary and reasonable means to
properly protect and enable [MERALCO] to perform and
discharge its legal and contractual obligation under its
legislative franchise and the law. Cutting off service for non-
payment by the customers of the regular monthly electric bills
is the only practical way a public utility, such as [MERALCO],
can ensure and maintain efficient service in accordance with
the terms and conditions of its legislative franchise and the
law.
xxxx
2.14. Instead of paying their unpaid electric bills and before
[MERALCO] could effect its legal and contractual right to
disconnect [BF Homes and PWCCs] electric services, [BF Homes
and PWCC] filed the instant petition to avoid payment of
[MERALCOs] valid and legal claim for regular monthly electric
bills.
2.15. [BF Homes and PWCCs] unpaid regular bills totaled
P6,551,969.55 covering the May and June 2003 electric bills. x
xx
xxxx
2.17. [BF Homes and PWCC] knew that [MERALCO] is already
in the process of implementing the decision of the Supreme
Court as to the refund case. But this refund has to be
implemented in accordance with the guidelines and schedule
to be approved by the ERC. Thus [BF Homes and PWCCs] filing
of the instant petition is merely to evade payment of their
unpaid electric bills to [MERALCO].[10]
Hence, MERALCO sought the dismissal of the RTC Petition of
BF Homes and PWCC on the following grounds:
3.1 The Honorable Court has no jurisdiction to award the relief
prayed for by [BF Homes and PWCC] because:
a) The petition is in effect preempting or defeating the
power of the ERC to implement the decision of the Supreme
Court.
b) [MERALCO] is a utility company whose business activity
is wholly regulated by the ERC. The latter, being the regulatory
agency of the government having the authority over the
Provisional Remedies Cases_1st batch 6
respondent, is the one tasked to approve the guidelines,
schedules and details of the refund.
c) The decision of the Supreme Court, dated November 15,
2002, clearly states that respondent is directed to make the
refund to its customers in accordance with the decision of the
ERC (formerly ERB) dated February 16, 1998. Hence,
[MERALCO] has to wait for the schedule and details of the
refund to be approved by the ERC before it can comply with
the Supreme Court decision.
3.2. [MERALCO] has the right to disconnect the electric
service to [BF Homes and PWCC] in that:
a) The service contracts between [MERALCO] and [BF Homes
and PWCC] expressly authorize the former to discontinue and
disconnect electric services of the latter for their failure to pay
the regular electric bills rendered.
b) It is [MERALCOs] legal duty as a public utility to furnish its
service to the general public without arbitrary discrimination
and, consequently, [MERALCO] is obligated to discontinue and
disconnect electric services to [BF Homes and PWCC] for their
refusal or failure to pay the electric energy actually used by
them.[11]
For its compulsory counterclaims, MERALCO prayed that the
RTC orders BF Homes and PWCC to pay MERALCO
P6,551,969.55 as actual damages (representing the unpaid
electric bills of BF Homes and PWCC for May and June 2003),
P1,500,000.00 as exemplary damages, P1,500,000.00 as moral
damages, and P1,000,000.00 as attorneys fees.
Lastly, MERALCO opposed the application for writ of
preliminary injunction of BF Homes and PWCC because:
I
[MERALCO] HAS THE LEGAL AND CONTRACTUAL RIGHT TO
DEMAND PAYMENT OF THE ELECTRIC BILLS AND, IN CASE OF
NON-PAYMENT, TO DISCONTINUE THE ELECTRIC SERVICES OF
[BF HOMES and PWCC]
II
[BF HOMES and PWCC] HAVE NO CLEAR RIGHT WHICH
WARRANTS PROTECTION BY INJUNCTIVE PROCESS
After hearing,[12] the RTC issued an Order on November 21,
2003 granting the application of BF Homes and PWCC for the
issuance of a writ of preliminary injunction. The RTC found that
the records showed that all requisites for the issuance of said
writ were sufficiently satisfied by BF Homes and PWCC. The
RTC stated in its Order:

Albeit, this Court respects the right of a public utility company
like MERALCO, being a grantee of a legislative franchise under
Republic Act No. 9029, to collect overdue payments from its
subscribers or customers for their respective consumption of
electric energy, such right must, however, succumb to the
paramount substantial and constitutional rights of the public
to the usage and enjoyment of waters in their community.
Thus, there is an urgent need for the issuance of a writ of
preliminary injunction in order to prevent social unrest in the
community for having been deprived of the use and enjoyment
of waters flowing through [BF Homes and PWCCs] water
pumps.[13]
The RTC decreed in the end:
WHEREFORE, in the light of the foregoing, [BF Homes and
PWCCs] prayer for the issuance of a writ of preliminary
injunction is hereby GRANTED. Respondent Manila Electric
Company is permanently restrained from proceeding with its
announced intention to cut-off electric power connection to
[BF Homes and PWCCs] water pumps unless otherwise
ordered by this Court. Further, [BF Homes and PWCC] are
hereby ordered to post a bond in the amount of P500,000 to
answer for whatever injury or damage that may be caused by
reason of the preliminary injunction.[14]
The Motion for Reconsideration of MERALCO of the
aforementioned Order was denied by the RTC in another Order
issued on January 9, 2004.[15] The RTC reiterated its earlier
finding that all the requisites for the proper issuance of an
injunction had been fully complied with by BF Homes and
PWCC, thus:
Records indubitably show that all the requisites for the proper
issuance of an injunction have been fully complied with in the
instant case.
It should be noted that a disconnection of power supply would
obviously cause irreparable injury because the pumps that
supply water to the BF community will be without electricity,
thereby rendering said community without water. Water is a
basic and endemic necessity of life. This is why its enjoyment
and use has been constitutionally safeguarded and protected.
Likewise, a community without water might create social
unrest, which situation this Court has the mandate to prevent.
There is an urgent and paramount necessity for the issuance of
the injunctive writ to prevent serious damage to the
guaranteed rights of [BF Homes and PWCC] and the residents
of the community to use and enjoy water.[16]
The RTC resolved the issue on jurisdiction raised by MERALCO,
as follows:
Provisional Remedies Cases_1st batch 7
As to the jurisdictional issue raised by respondent MERALCO,
it can be gleaned from a re-evaluation and re-assessment of
the records that this Court has jurisdiction to delve into the
case. This Court gave both parties the opportunity to be heard
as they introduced evidence on the propriety of the issuance
of the injunctive writ. It is well-settled that no grave abuse of
discretion could be attributed to its issuance where a party was
not deprived of its day in court as it was heard and had
exhaustively presented all its arguments and defenses.
(National Mines and Allied Workers Union vs. Valero, 132 SCRA
578, 1984.)[17]
Aggrieved, MERALCO filed with the Court of Appeals a Petition
for Certiorari under Rule 65 of the Rules of Court, docketed as
CA-G.R. SP No. 82826. MERALCO sought the reversal of the RTC
Orders dated November 21, 2003 and January 9, 2004 granting
a writ of preliminary injunction in favor of BF Homes and
PWCC. MERALCO asserted that the RTC had no jurisdiction
over the application of BF Homes and PWCC for issuance of
such a writ.
In its Decision dated October 27, 2005, the Court of Appeals
agreed with MERALCO that the RTC had no jurisdiction to issue
a writ of preliminary injunction in Civil Case No. 03-0151, as
said trial court had no jurisdiction over the subject matter of
the case to begin with. It ratiocinated in this wise:
For one, it cannot be gainsaid that the ERC has original and
exclusive jurisdiction over the case. Explicitly, Section 43(u) of
Republic Act No. 9136, otherwise known as the Electric Power
Industry Reform Act, (RA 9136), states that the ERC shall have
the original and exclusive jurisdiction over all cases contesting
rates, fees, fines and penalties imposed by the ERC in the
exercise of its powers, functions and responsibilities and over
all cases involving disputes between and among participants or
players in the energy sector. Section 4(o) of Rule 3 of the
Implementing Rules and Regulations of RA 9136 likewise
provides that the ERC shall also be empowered to issue such
other rules that are essential in the discharge of its functions
as an independent quasi-judicial body.
For another, the respondent judge, instead of presiding over
the case, should have dismissed the same and yielded
jurisdiction to the ERC pursuant to the doctrine of primary
jurisdiction. It is plain error on the part of the respondent judge
to determine, preliminary or otherwise, a controversy
involving a question which is within the jurisdiction of an
administrative tribunal, especially so where the question
demands the exercise of sound administrative discretion.
Needless to state, the doctrine of primary jurisdiction applies
where the administrative agency, as in the case of ERC,

exercises its quasi-judicial and adjudicatory function. Thus, in
cases involving specialized disputes, the practice has been to
refer the same to an administrative agency of special
competence pursuant to the doctrine of primary jurisdiction.
The courts will not determine a controversy involving a
question which is within the jurisdiction of the administrative
tribunal prior to the resolution of that question by the
administrative tribunal, where the question demands the
exercise of sound administrative discretion requiring the
special knowledge, experience and services of the
administrative tribunal to determine technical and intricate
matters of fact, and a uniformity of ruling is essential to comply
with the premises of the regulatory statute administered.
Verily, the cause of action of [BF Homes and PWCC] against
[MERALCO] originates from the Meralco Refund Decision as it
involves the perceived right of the former to compel the latter
to set-off or apply their refund to their present electric bill. The
issue delves into the right of the private respondents to collect
their refund without submitting to the approved schedule of
the ERC, and in effect give unto themselves preferential right
over other equally situated consumers of [MERALCO].
Perforce, the ERC, as can be gleaned from the afore-stated
legal provisions, has primary, original and exclusive jurisdiction
over the said controversy.
Indeed, the respondent judge glaringly erred in enjoining the
right of [MERALCO] to disconnect its services to [BF Homes and
PWCC] on the premise that the court has jurisdiction to apply
the provisions on compensation or set-off in this case.
Although [MERALCO] recognizes the right of [BF Homes and
PWCC] to the refund as provided in the Meralco Refund
Decision, it is the ERC which has the authority to implement
the same according to its approved schedule, it being a dispute
arising from the exercise of its jurisdiction.
Moreover, it bears to stress that the Meralco Refund Decision
was brought into fore by the Decision dated 16 February 1998
of the ERC (then Energy Regulatory Board) granting refund to
[MERALCOs] consumers. Being the agency of origin, the ERC
has the jurisdiction to execute the same. Besides, as stated, it
is empowered to promulgate rules that are essential in the
discharge of its functions as an independent quasi-judicial
body.[18]
The dispositive portion of the judgment of the appellate court
reads:
WHEREFORE, the foregoing considered, the instant petition is
hereby GRANTED and the assailed Orders REVERSED and SET
ASIDE. Accordingly, the writ of injunction against [MERALCO]
is hereby DISSOLVED. No costs.[19]
Provisional Remedies Cases_1st batch 8
In a Resolution dated February 7, 2006, the Court of Appeals
denied the Motion for Reconsideration of BF Homes and PWCC
for failing to raise new and persuasive and meritorious
arguments.
Now, BF Homes and PWCC come before this Court via the
instant Petition, raising the following assignment of errors:
1. The Court of Appeals ERRED in saying that the respondent
judge committed grave abuse of discretion by issuing the
disputed writ of injunction pending the merits of the case
including the issue of subject matter jurisdiction.
2. The Court of Appeals ERRED in saying that the ERC under
the doctrine of primary jurisdiction has the original and
EXCLUSIVE jurisdiction to take cognizance of a petition for
injunction to prevent electrical disconnection to a customer
entitled to a refund.
3. The Court of Appeals ERRED in NOT SAYING that the ERC
as a quasi-judicial body under RA 9136 has no power to issue
any injunctive relief or remedy to prevent disconnection.
4. The Court of Appeals ERRED in not resolving the issue as to
the violation of MERALCO of a standing injunction order while
the case remains undecided.[20]
At the core of the Petition is the issue of whether jurisdiction
over the subject matter of Civil Case No. 03-0151 lies with the
RTC or the Energy Regulatory Commission (ERC). If it is with the
RTC, then the said trial court also has jurisdiction to issue the
writ of preliminary injunction against MERALCO. If it is with the
ERC, then the RTC also has no jurisdiction to act on any
incidents in Civil Case No. 03-0151, including the application
for issuance of a writ of preliminary injunction of BF Homes
and PWCC therein.
BF Homes and PWCC argued that due to the threat of
MERALCO to disconnect electric services, BF Homes and PWCC
had no other recourse but to seek an injunctive remedy from
the RTC under its general jurisdiction. The merits of Civil Case
No. 03-0151 was not yet in issue, only the propriety of issuing
a writ of preliminary injunction to prevent an irreparable
injury. Even granting that the RTC has no jurisdiction over the
subject matter of Civil Case No. 03-0151, the ERC by enabling
law has no injunctive power to prevent the disconnection by
MERALCO of electric services to BF Homes and PWCC.
The Petition has no merit.
Settled is the rule that jurisdiction is conferred only by the
Constitution or the law.[21] Republic v. Court of Appeals[22]

also enunciated that only a statute can confer jurisdiction on
courts and administrative agencies.
Related to the foregoing and equally well-settled is the rule
that the nature of an action and the subject matter thereof, as
well as which court or agency of the government has
jurisdiction over the same, are determined by the material
allegations of the complaint in relation to the law involved and
the character of the reliefs prayed for, whether or not the
complainant/plaintiff is entitled to any or all of such reliefs. A
prayer or demand for relief is not part of the petition of the
cause of action; nor does it enlarge the cause of action stated
or change the legal effect of what is alleged. In determining
which body has jurisdiction over a case, the better policy is to
consider not only the status or relationship of the parties but
also the nature of the action that is the subject of their
controversy.[23]
In Manila Electric Company v. Energy Regulatory Board,[24]
the Court traced the legislative history of the regulatory
agencies which preceded the ERC, presenting a summary of
these agencies, the statutes or issuances that created them,
and the extent of the jurisdiction conferred upon them, viz:
1. The first regulatory body, the Board of Rate Regulation
(BRR), was created by virtue of Act No. 1779. Its regulatory
mandate under Section 5 of the law was limited to fixing or
regulating rates of every public service corporation.
2. In 1913, Act No. 2307 created the Board of Public Utility
Commissioners (BPUC) to take over the functions of the BRR.
By express provision of Act No. 2307, the BPUC was vested
with jurisdiction, supervision and control over all public
utilities and their properties and franchises.
3. On November 7, 1936, Commonwealth Act (C.A.) No. 146,
or the Public Service Act (PSA), was passed creating the Public
Service Commission (PSC) to replace the BPUC. Like the BPUC,
the PSC was expressly granted jurisdiction, supervision and
control over public services, with the concomitant authority of
calling on the public force to exercise its power, to wit:
SEC. 13. Except as otherwise provided herein, the Commission
shall have general supervision and regulation of, jurisdiction
and control over, all public utilities, and also over their
property, property rights, equipment, facilities and franchises
so far as may be necessary for the purpose of carrying out the
provisions of this Act, and in the exercise of its authority it shall
have the necessary powers and the aid of the public force x x
x.
Provisional Remedies Cases_1st batch 9
Section 14 of C.A. No. 146 defines the term public service or
public utility as including every individual, copartnership,
association, corporation or joint-stock company, . . . that now
or hereafter may own, operate, manage or control within the
Philippines, for hire or compensation, any common carrier, x x
x, electric light, heat, power, x x x, when owned, operated and
managed for public use or service within the Philippines x x x.
Under the succeeding Section 17(a), the PSC has the power
even without prior hearing
(a) To investigate, upon its own initiative, or upon complaint in
writing, any matter concerning any public service as regards
matters under its jurisdiction; to require any public service to
furnish safe, adequate and proper service as the public interest
may require and warrant, to enforce compliance with any
standard, rule, regulation, order or other requirement of this
Act or of the Commission, x x x.
4. Then came Presidential Decree (P.D.) No. 1, reorganizing the
national government and implementing the Integrated
Reorganization Plan. Under the reorganization plan,
jurisdiction, supervision and control over public services
related to electric light, and power heretofore vested in the
PSC were transferred to the Board of Power and Waterworks
(BOPW).
Later, P.D. No. 1206 abolished the BOPW. Its powers and
function relative to power utilities, including its authority to
grant provisional relief, were transferred to the newly-created
Board of Energy (BOE).
5. On May 8, 1987, then President Corazon C. Aquino issued
E.O. No. 172 reconstituting the BOE into the ERB, transferring
the formers functions and powers under P.D. No. 1206 to the
latter and consolidating in and entrusting on the ERB all the
regulatory and adjudicatory functions covering the energy
sector. Section 14 of E.O. No. 172 states that (T)he applicable
provisions of [C.A.] No. 146, as amended, otherwise known as
the Public Service Act; x x x and [P.D.] No. 1206, as amended,
creating the Department of Energy, shall continue to have full
force and effect, except insofar as inconsistent with this
Order.[25]
Thereafter, on June 8, 2001, Republic Act No. 9136, known as
the Electric Power Industry Reform Act of 2001 (EPIRA), was
enacted, providing a framework for restructuring the electric
power industry. One of the avowed purposes of the EPIRA is to
establish a strong and purely independent regulatory body.
The Energy Regulatory Board (ERB) was abolished and its
powers and functions not inconsistent with the provision of
the EPIRA were expressly transferred to the ERC.[26]

The powers and functions of the ERB not inconsistent with the
EPIRA were transferred to the ERC by virtue of Sections 44 and
80 of the EPIRA, which read:
Sec. 44. Transfer of Powers and Functions. The powers and
functions of the Energy Regulatory Board not inconsistent with
the provisions of this Act are hereby transferred to the ERC.
The foregoing transfer of powers and functions shall include all
applicable funds and appropriations, records, equipment,
property and personnel as may be necessary.
Sec. 80. Applicability and Repealing Clause. The applicability
provisions of Commonwealth Act No. 146, as amended,
otherwise known as the Public Service Act. Republic Act 6395,
as amended, revising the charter of NPC; Presidential Decree
269, as amended, referred to as the National Electrification
Decree; Republic Act 7638, otherwise known as the
Department of Energy Act of 1992; Executive Order 172, as
amended, creating the ERB; Republic Act 7832 otherwise
known as the Anti-Electricity and Electric Transmission
Lines/Materials Pilferage Act of 1994; shall continue to have
full force and effect except insofar as they are inconsistent
with this Act.
The provisions with respect to electric power of Section 11(c)
of Republic Act 7916, as amended, and Section 5(f) of Republic
Act 7227, are hereby repealed or modified accordingly.
Presidential Decree No. 40 and all laws, decrees, rules and
regulations, or portions thereof, inconsistent with this Act are
hereby repealed or modified accordingly.
In addition to the foregoing, the EPIRA also conferred new
powers upon the ERC under Section 43, among which are:
SEC. 43. Functions of the ERC. The ERC shall promote
competition, encourage market development, ensure
customer choice and penalize abuse of market power in the
restructured electricity industry. In appropriate cases, the ERC
is authorized to issue cease and desist order after due notice
and hearing. Towards this end, it shall be responsible for the
following key functions in the restructured industry:
xxxx
(f) In the public interest, establish and enforce a methodology
for setting transmission and distribution wheeling rates and
retail rates for the captive market of a distribution utility,
taking into account all relevant considerations, including the
efficiency or inefficiency of the regulated entities. The rates
must be such as to allow the recovery of just and reasonable
costs and a reasonable return on rate base (RORB) to enable
the entity to operate viably. The ERC may adopt alternative
Provisional Remedies Cases_1st batch 10
forms of internationally-accepted rate-setting methodology as
it may deem appropriate. The rate-setting methodology so
adopted and applied must ensure a reasonable price of
electricity. The rates prescribed shall be non-discriminatory. To
achieve this objective and to ensure the complete removal of
cross subsidies, the cap on the recoverable rate of system
losses prescribed in Section 10 of Republic Act No. 7832, is
hereby amended and shall be replaced by caps which shall be
determined by the ERC based on load density, sales mix, cost
of service, delivery voltage and other technical considerations
it may promulgate. The ERC shall determine such form of rate-
setting methodology, which shall promote efficiency. x x x.
xxxx
(u) The ERC shall have the original and exclusive jurisdiction
over all cases contesting rates, fees, fines and penalties
imposed by the ERC in the exercise of the abovementioned
powers, functions and responsibilities and over all cases
involving disputes between and among participants or players
in the energy sector.
All notices of hearings to be conducted by the ERC for the
purpose of fixing rates or fees shall be published at least twice
for two successive weeks in two (2) newspapers of nationwide
circulation.
A careful review of the material allegations of BF Homes and
PWCC in their Petition before the RTC reveals that the very
subject matter thereof is the off-setting of the amount of
refund they are supposed to receive from MERALCO against
the electric bills they are to pay to the same company. This is
squarely within the primary jurisdiction of the ERC.
The right of BF Homes and PWCC to refund, on which their
claim for off-setting depends, originated from the MERALCO
Refund cases. In said cases, the Court (1) authorized MERALCO
to adopt a rate adjustment in the amount of P0.017 per
kilowatthour, effective with respect to its billing cycles
beginning February 1994; and (2) ordered MERALCO to refund
to its customers or credit in said customers favor for future
consumption P0.167 per kilowatthour, starting with the
customers billing cycles that begin February 1998, in
accordance with the ERB Decision dated February 16, 1998.
It bears to stress that in the MERALCO Refund cases, this Court
only affirmed the February 16, 1998 Decision of the ERB
(predecessor of the ERC) fixing the just and reasonable rate for
the electric services of MERALCO and granting refund to
MERALCO consumers of the amount they overpaid. Said
Decision was rendered by the ERB in the exercise of its
jurisdiction to determine and fix the just and reasonable rate
of power utilities such as MERALCO.

Presently, the ERC has original and exclusive jurisdiction under
Rule 43(u) of the EPIRA over all cases contesting rates, fees,
fines, and penalties imposed by the ERC in the exercise of its
powers, functions and responsibilities, and over all cases
involving disputes between and among participants or players
in the energy sector. Section 4(o) of the EPIRA Implementing
Rules and Regulation provides that the ERC shall also be
empowered to issue such other rules that are essential in the
discharge of its functions as in independent quasi-judicial
body.
Indubitably, the ERC is the regulatory agency of the
government having the authority and supervision over
MERALCO. Thus, the task to approve the guidelines, schedules,
and details of the refund by MERALCO to its consumers, to
implement the judgment of this Court in the MERALCO Refund
cases, also falls upon the ERC. By filing their Petition before the
RTC, BF Homes and PWCC intend to collect their refund
without submitting to the approved schedule of the ERC, and
in effect, enjoy preferential right over the other equally
situated MERALCO consumers.
Administrative agencies, like the ERC, are tribunals of limited
jurisdiction and, as such, could wield only such as are
specifically granted to them by the enabling statutes. In
relation thereto is the doctrine of primary jurisdiction involving
matters that demand the special competence of
administrative agencies even if the question involved is also
judicial in nature. Courts cannot and will not resolve a
controversy involving a question within the jurisdiction of an
administrative tribunal, especially when the question demands
the sound exercise of administrative discretion requiring
special knowledge, experience and services of the
administrative tribunal to determine technical and intricate
matters of fact. The court cannot arrogate into itself the
authority to resolve a controversy, the jurisdiction of which is
initially lodged with the administrative body of special
competence.[27]
Since the RTC had no jurisdiction over the Petition of BF Homes
and PWCC in Civil Case No. 03-0151, then it was also devoid of
any authority to act on the application of BF Homes and PWCC
for the issuance of a writ of preliminary injunction contained
in the same Petition. The ancillary and provisional remedy of
preliminary injunction cannot exist except only as an incident
of an independent action or proceeding.[28]
Incidentally, BF Homes and PWCC seemed to have lost sight of
Section 8 of Executive Order No. 172 which explicitly vested on
the ERB, as an incident of its principal function, the authority
to grant provisional relief, thus:
Provisional Remedies Cases_1st batch 11
Section 8. Authority to Grant Provisional Relief. The Board
may, upon the filing of an application, petition or complaint or
at any stage thereafter and without prior hearing, on the basis
of supporting papers duly verified or authenticated, grant
provisional relief on motion of a party in the case or on its own
initiative, without prejudice to a final decision after hearing,
should the Board find that the pleadings, together with such
affidavits, documents and other evidence which may be
submitted in support of the motion, substantially support the
provisional order: Provided, That the Board shall immediately
schedule and conduct a hearing thereon within thirty (30) days
thereafter, upon publication and notice to all affected parties.
The aforequoted provision is still applicable to the ERC as it
succeeded the ERB, by virtue of Section 80 of the EPIRA. A writ
of preliminary injunction is one such provisional relief which a
party in a case before the ERC may move for.
Lastly, the Court herein already declared that the RTC not only
lacked the jurisdiction to issue the writ of preliminary
injunction against MERALCO, but that the RTC actually had no
jurisdiction at all over the subject matter of the Petition of BF
Homes and PWCC in Civil Case No. 03-0151. Therefore, in
addition to the dissolution of the writ of preliminary injunction
issued by the RTC, the Court also deems it appropriate to
already order the dismissal of the Petition of BF Homes and
PWCC in Civil Case No. 03-0151 for lack of jurisdiction of the
RTC over the subject matter of the same. Although only the
matter of the writ of preliminary injunction was brought
before this Court in the instant Petition, the Court is already
taking cognizance of the issue on the jurisdiction of the RTC
over the subject matter of the Petition. The Court may motu
proprio consider the issue of jurisdiction. The Court has
discretion to determine whether the RTC validly acquired
jurisdiction over Civil Case No. 03-0151 since, to reiterate,
jurisdiction over the subject matter is conferred only by law.
Jurisdiction over the subject matter cannot be acquired
through, or waived by, any act or omission of the parties.
Neither would the active participation of the parties nor
estoppel operate to confer jurisdiction on the RTC where the
latter has none over a cause of action.[29] Indeed, when a
court has no jurisdiction over the subject matter, the only
power it has is to dismiss the action.[30]
WHEREFORE, the instant Petition for Review is DENIED.

3. G.R. No. 203240, March 18, 2015
NORTHERN ISLANDS, CO., INC., Petitioner, v. SPOUSES
DENNIS AND CHERYLIN* GARCIA, DOING BUSINESS UNDER
THE NAME AND STYLE “ECOLAMP MULTI RESOURCES,”,
Respondents.
DECISION
PERLAS-BERNABE, J.:
Assailed in this petition for review on certiorari1 are the
Decision2 dated January 19, 2012 and the Resolution3 dated
August 24, 2012 of the Court of Appeals (CA) in CA-G.R. SP No.
97448, ordering the Regional Trial Court of Quezon City,
Branch 215 (RTC) to appoint a commissioner to determine the
value of the attached properties of respondents Spouses
Dennis and Cherylin Garcia (respondents), and to discharge
any excessive attachment found thereby.
The Facts
On September 23, 2005, petitioner Northern Islands Co., Inc.
(petitioner) filed a Complaint4 with application for a writ of
preliminary attachment, before the RTC against respondents,
docketed as Civil Case No. Q-05-53699 (Main Case), which was
subsequently amended5 on October 25, 2005.6 It alleged that:
(a) from March to July 2004, petitioner caused the delivery to
respondents of various appliances in the aggregate amount of
P8,040,825.17;7 (b) the goods were transported, shipped, and
delivered by Sulpicio Lines, Inc., and were accepted in good
order and condition by respondents’ representatives;8 (c) the
parties agreed that the goods delivered were payable within
120 days, and that the unpaid amounts would earn interest at
a rate of eighteen percent (18%) per annum;9 (d) however, the
value of the goods were not paid by respondents despite
repeated demands;10 and (e) respondents fraudulently
asserted that petitioner had no proof that they had indeed
received the quantity of the subject goods.11
In connection with the application for a writ of preliminary
attachment, petitioner posted a bond, through Visayan Surety
and Insurance Corporation, in the amount of ?8,040,825.17.
On November 7, 2005, the RTC issued the writ sought for.12
Instead of filing an answer, respondents filed on November 11,
2001, an Urgent Motion for Extension of Time to File Proper
Pleading and Motion for Discovery (Production and
Inspection)13 (November 11, 2001 Motion), asking the RTC to
allow them to photocopy and personally examine the original
invoices, delivery cargo receipts, and bills of lading attached to
the Amended Complaint, claiming that they could not “come
Provisional Remedies Cases_1st batch 12
up with an intelligent answer” without being presented with
the originals of such documents.14
Thereafter, or on January 11, 2006, respondents filed a Motion
to Discharge Excess Attachment,15 alleging that the
attachment previously ordered by the RTC exceeded by
P9,232,564.56 given that the estimated value of the attached
properties, including the garnished bank accounts, as assessed
by their appraiser, Gaudioso W. Lapaz (Lapaz), amounted to
P17,273,409.73, while the attachment bond is only in the
amount of P8,040,825.17.16
In an Order17 dated February 28, 2006, the RTC denied the
November 11, 2001 Motion, and, instead, directed
respondents to file their answer, which the latter complied
with through the filing of their Answer Ad Cautelam Ex
Abudante with Compulsory Counterclaim18 on April 3, 2006.
Despite this, respondents again filed a Motion for Leave of
Court to File Motion for Discovery (Production and
Inspection)19 (Motion for Discovery) on April 7, 2006.20
The RTC Ruling
In an Order21 dated June 21, 2006, the RTC, among others,
denied the Motion to Discharge Excess Attachment, finding
that the appraisal made by Lapaz was not reflective of the true
valuation of the properties, adding too that the bond posted
by petitioner stands as sufficient security for whatever
damages respondents may sustain by reason of the
attachment.22
On the other hand, the RTC granted the Motion for Discovery
in accordance with Rule 27 of the Rules of Court, despite
petitioner’s claim that it did not have the originals of the
documents being sought.23
However, no production or inspection was conducted on July
10, 2006 as the RTC directed since respondents received the
copy of the above order only on July 11, 2006.24
On July 25, 2006, respondents filed a Motion for Partial
Reconsideration of the Order dated June 21, 2006, specifically
assailing the denial of their Motion to Discharge Excess
Attachment. In this relation, they prayed that the RTC refer to
a commissioner, pursuant to Rule 32 of the Rules of Court, the
factual determination of the total aggregate amount of
respondents’ attached properties so as to ascertain if the
attachment was excessive. Also, they prayed that the order for
production and inspection be modified and that petitioner be
ordered to produce the original documents anew for their
inspection and copying. 25

The foregoing motion was, however, denied by the RTC in an
Order26 dated August 23, 2006 for lack of merit. Thus,
respondents elevated the matter to the CA via petition for
certiorari and mandamus,27 docketed as CA-G.R. SP No. 97448
(Certiorari Case).
In the interim, the RTC rendered a Decision28 dated
September 21, 2011 in the Main Case. Essentially, it dismissed
petitioner’s Amended Complaint due to the absence of any
evidence to prove that respondents had agreed to the pricing
of the subject goods.29
The RTC’s September 21, 2011 Decision was later appealed30 by
petitioner before the CA on October 27, 2011. Finding that the Notice
of Appeal was seasonably filed, with the payment of the appropriate
docket fees, the RTC, in an Order31 dated January 25, 2012, ordered
the elevation of the entire records of the Main Case to the CA. The
appeal was then raffled to the CA’s Eighth Division, and docketed as
CA-G.R. CV No. 98237. On the other hand, records do not show that
respondents filed any appeal.32
The CA Ruling in the Certiorari Case
Meanwhile, the CA, in a Decision33 dated January 19, 2012, partly
granted the certiorari petition of respondents, ordering the RTC to
appoint a commissioner as provided under Rule 32 of the Rules of
Court as well as the subsequent discharge of any excess attachment
if so found therein, and, on the other hand, denying respondents’
Motion for Discovery.34
It held that: (a) on the issue of attachment, trial by commissioners
under Rule 32 of the Rules of Court was proper so that the parties
may finally settle their conflicting valuations;35 and (b) on the matter
of discovery, petitioner could not be compelled to produce the
originals sought by respondents for inspection since they were not in
the former’s possession.36
Aggrieved, petitioner filed a Motion for Partial Reconsideration37 on
February 13, 2012 but was, however, denied in a Resolution38 dated
August 24, 2012, hence, the present petition.
The Issues Before the Court
The issues presented for the Court’s resolution are: (a) whether the
RTC had lost jurisdiction over the matter of the preliminary
attachment after petitioner appealed the decision in the Main Case,
and thereafter ordered the transmittal of the records to the CA; and
(b) whether the CA erred in ordering the appointment of a
commissioner and the subsequent discharge of any excess
attachment found by said commissioner.
The Court’s Ruling
The petition is meritorious.
Provisional Remedies Cases_1st batch 13
Section 9, Rule 41 of the Rules of Court provides that in appeals by
notice of appeal, the court loses jurisdiction over the case upon the
perfection of the appeals filed in due time and the expiration of the
time to appeal of the other parties.
In this case, petitioner had duly perfected its appeal of the RTC’s
September 21, 2011 Decision resolving the Main Case through the
timely filing of its Notice of Appeal dated October 27, 2011, together
with the payment of the appropriate docket fees. The RTC, in an
Order39 dated January 25, 2012, had actually confirmed this fact, and
thereby ordered the elevation of the entire records to the CA.
Meanwhile, records do not show that respondents filed any appeal,
resulting in the lapse of its own period to appeal therefrom. Thus,
based on Section 9, Rule 41, it cannot be seriously doubted that the
RTC had already lost jurisdiction over the Main Case.
With the RTC’s loss of jurisdiction over the Main Case necessarily
comes its loss of jurisdiction over all matters merely ancillary thereto.
Thus, the propriety of conducting a trial by commissioners in order to
determine the excessiveness of the subject preliminary attachment,
being a mere ancillary matter to the Main Case, is now mooted by its
supervening appeal in CA-G.R. CV No. 98237.
Note that in Sps. Olib v. Judge Pastoral,40 the Court, in view of the
nature of a preliminary attachment, definitively ruled that the
attachment itself cannot be the subject of a separate action
independent of the principal action because the attachment was only
an incident of such action, viz.:
Attachment is defined as a provisional remedy by which the property
of an adverse party is taken into legal custody, either at the
commencement of an action or at any time thereafter, as a security
for the satisfaction of any judgment that may be recovered by the
plaintiff or any proper party.
It is an auxiliary remedy and cannot have an independent existence
apart from the main suit or claim instituted by the plaintiff against the
defendant. Being merely ancillary to a principal proceeding, the
attachment must fail if the suit itself cannot be maintained as the
purpose of the writ can no longer be justified.
The consequence is that where the main action is appealed, the
attachment which may have been issued as an incident of that action,
is also considered appealed and so also removed from the jurisdiction
of the court a quo. The attachment itself cannot be the subject of a
separate action independent of the principal action because the
attachment was only an incident of such action.41 (Emphases
supplied)
That being said, it is now unnecessary to discuss the other issues
raised herein. In fine, the petition is granted and the assailed CA
rulings are set aside.
WHEREFORE, the petition is GRANTED. The Decision dated January
19, 2012 and the Resolution dated August 24, 2012 of the Court of
Appeals in CA-G.R. SP No. 97448 are hereby SET ASIDE.
SO ORDERED.

4. SECOND DIVISION
[G.R. No. 133303. February 17, 2005]
BERNARDO VALDEVIESO, petitioner, vs. CANDELARIO
DAMALERIO AND AUREA C. DAMALERIO, respondents.
DECISION
CHICO-NAZARIO, J.:
Before this Court is a Petition for Review under Rule 45 of the
Rules of Court, seeking to set aside the 25 September 1997
Decision and the 10 February 1998 Resolution of the Court of
Appeals in CA-G.R. SP No. 43082 entitled, Candelario
Damalerio and Aurea Damalerio v. Honorable Antonio S.
Alano, et al.[1]
There is no dispute as to the following facts:
On 05 December 1995, Bernardo Valdevieso (petitioner)
bought from spouses Lorenzo and Elenita Uy a parcel of land
consisting of 10,000 square meters, more or less, located at Bo.
Tambler, General Santos City, and covered by Transfer
Certificate of Title (TCT) No. T-30586.[2]
The deed of sale was not registered, nor was the title of the
land transferred to petitioner.[3]
On 07 December 1995, the said property was immediately
declared by petitioner for taxation purposes as Tax Declaration
No. l6205 with the City Assessors Office.[4]
It came to pass that on 19 April 1996, spouses Candelario and
Aurea Damalerio (respondents) filed with the Regional Trial
Court (RTC) of General Santos City, a complaint for a sum of
money against spouses Lorenzo and Elenita Uy docketed as
Civil Case No. 5748 with application for the issuance of a Writ
of Preliminary Attachment.[5]
On 23 April 1996, the trial court issued a Writ of Preliminary
Attachment by virtue of which the property, then still in the
name of Lorenzo Uy but which had already been sold to
petitioner, was levied. The levy was duly recorded in the
Register of Deeds of General Santos City and annotated upon
TCT No. T-30586.[6]
On 06 June 1996, TCT No. T-30586 in the name of Lorenzo Uy
was cancelled and, in lieu thereof, TCT No. T-74439 was issued
in the name of petitioner.[7] This new TCT carried with it the
attachment in favor of respondents.
On 14 August 1996, petitioner filed a third-party claim in Civil
Case No. 5748 to discharge or annul the attachment levied on
the property covered by TCT No. T-74439 on the ground that
Provisional Remedies Cases_1st batch 14
the said property belongs to him and no longer to Lorenzo and
Elenita Uy.[8]
In a resolution dated 21 October 1996, the trial court ruled for
the petitioner.[9] Citing Manliguez v. Court of Appeals[10] and
Santos v. Bayhon,[11] it held that the levy of the property by
virtue of attachment is lawful only when the levied property
indubitably belongs to the defendant. Applying the rulings in
the cited cases, it opined that although defendant Lorenzo Uy
remained the registered owner of the property attached, yet
the fact was that he was no longer the owner thereof as it was
already sold earlier to petitioner, hence, the writ of
attachment was unlawful.
Respondents sought reconsideration thereof which was
denied by the trial court in a resolution dated 03 January
1997.[12]
From the unfavorable resolution of the trial court in the third-
party claim, respondents appealed to the Court of Appeals.
The appellate court reversed the resolution and by judgment
promulgated on 25 September 1997, it declared that an
attachment or levy of execution, though posterior to the sale,
but if registered before the sale is registered, takes precedence
over the sale.[13] The writ of attachment in favor of the
respondents, being recorded ahead of the sale to petitioner,
will therefore take precedence.
Petitioner moved for reconsideration but this was denied by
the Court of Appeals in its Resolution of 10 February 1998.[14]
Hence, this Petition for Review on Certiorari.
The sole issue in this case is whether or not a registered writ of
attachment on the land is a superior lien over that of an earlier
unregistered deed of sale.
Petitioner maintains that he has a superior right over the
questioned property because when the same was attached on
23 April 1996, this property was no longer owned by spouses
Uy against whom attachment was issued as it was already sold
to petitioner on 05 December 1995. The ownership thereof
was already transferred to petitioner pursuant to Article
1477[15] in relation to Article 1498[16] of the Civil Code.
Dismissing the allegation that he slept on his rights by not
immediately registering at least an adverse claim based on his
deed of sale, petitioner avers that he promptly worked out for
the transfer of registration in his name. The slight delay in the
registration, he claims was not due to his fault but attributable
to the process involved in the registration of property such as
the issuance of the Department of Agrarian Reform clearance

which was effected only after compliance with several
requirements.
Considering the peculiar facts and circumstances obtaining in
this case, petitioner submits it would be in accord with justice
and equity to declare him as having a superior right to the
disputed property than the respondents.
Respondents maintain the contrary view. They aver that
registration of a deed of sale is the operative act which binds
the land and creates a lien thereon. Before the registration of
the deed, the property is not bound insofar as third persons
are concerned. Since the writ of attachment in favor of
respondents was registered earlier than the deed of sale to
petitioner, respondents were of the belief that their registered
writ of attachment on the subject property enjoys preference
and priority over petitioners earlier unregistered deed of sale
over the same property. They also contend that Articles 1477
and 1498 of the Civil Code as cited by petitioner are not
applicable to the case because said provisions apply only as
between the parties to the deed of sale. These provisions do not apply
to, nor bind, third parties, like respondents, because what affects or
binds third parties is the registration of the instrument in the Register
of Deeds. Furthermore, respondents argue that petitioner cannot
invoke equity in his favor unless the following conditions are met: (a)
the absence of specific provision of a law on the matter; and (b) if the
person who invokes it is not guilty of delay. Both conditions have not
been met, however, since there is a law on the subject matter, i.e.,
Section 51 of Presidential Decree No. 1529, and that petitioner
allegedly slept on his rights by not immediately registering an adverse
claim based on his deed of sale.
We agree with the respondents.
The law applicable to the facts of this case is Section 51 of P.D. No.
1529. Said Section provides:
Sec. 51. Conveyance and other dealings by registered owner. - An
owner of registered land may convey, mortgage, lease, charge, or
otherwise deal with the same in accordance with existing laws. He
may use such forms of deeds, mortgages, leases or other voluntary
instruments as are sufficient in law. But no deed, mortgage, lease, or
other voluntary instrument, except a will purporting to convey or
affect registered land, shall take effect as a conveyance or bind the
land, but shall operate only as a contract between the parties and as
evidence of authority to the Register of Deeds to make registration.
The act of registration shall be the operative act to convey or affect
the land insofar as third persons are concerned, and in all cases under
this Decree, the registration shall be made in the office of the Register
of Deeds for the province or city where the land lies.
It is to be noted that though the subject land was deeded to petitioner
as early as 05 December 1995, it was not until 06 June 1996 that the
conveyance was registered, and, during that interregnum, the land
Provisional Remedies Cases_1st batch 15
was subjected to a levy on attachment. It should also be observed
that, at the time of the attachment of the property on 23 April 1996,
the spouses Uy were still the registered owners of said property.
Under the cited law, the execution of the deed of sale in favor of
petitioner was not enough as a succeeding step had to be taken,
which was the registration of the sale from the spouses Uy to him.
Insofar as third persons are concerned, what validly transfers or
conveys a persons interest in real property is the registration of the
deed. Thus, when petitioner bought the property on 05 December
1995, it was, at that point, no more than a private transaction
between him and the spouses Uy. It needed to be registered before it
could bind third parties, including respondents. When the registration
finally took place on 06 June 1996, it was already too late because, by
then, the levy in favor of respondents, pursuant to the preliminary
attachment ordered by the General Santos City RTC, had already been
annotated on the title.
The settled rule is that levy on attachment, duly registered, takes
preference over a prior unregistered sale.[17] This result is a
necessary consequence of the fact that the property involved was
duly covered by the Torrens system which works under the
fundamental principle that registration is the operative act which
gives validity to the transfer or creates a lien upon the land.[18]
The preference created by the levy on attachment is not diminished
even by the subsequent registration of the prior sale. This is so
because an attachment is a proceeding in rem.[19] It is against the
particular property, enforceable against the whole world. The
attaching creditor acquires a specific lien on the attached property
which nothing can subsequently destroy except the very dissolution
of the attachment or levy itself.[20] Such a proceeding, in effect,
means that the property attached is an indebted thing and a virtual
condemnation of it to pay the owners debt.[21] The lien continues
until the debt is paid, or sale is had under execution issued on the
judgment, or until the judgment is satisfied, or the attachment
discharged or vacated in some manner provided by law.
Thus, in the registry, the attachment in favor of respondents
appeared in the nature of a real lien when petitioner had his purchase
recorded. The effect of the notation of said lien was to subject and
subordinate the right of petitioner, as purchaser, to the lien.
Petitioner acquired ownership of the land only from the date of the
recording of his title in the register, and the right of ownership which
he inscribed was not absolute but a limited right, subject to a prior
registered lien of respondents, a right which is preferred and superior
to that of petitioner.[22]
Anent petitioners reliance on the rulings laid down in Manliguez v.
Court of Appeals and Santos v. Bayhon, we find the same to be
misplaced. These cases did not deal at all with the dilemma at hand,
i.e. the question of whether or not a registered writ of attachment on
land is superior to that of an earlier unregistered deed of sale. In
Santos, what was involved were machinery and pieces of equipment
which were executed upon pursuant to the favorable ruling of the
National Labor Relations Commission. A third party claimed that the
machinery were already sold to her, but it does not appear in the facts
of the case if such sale was ever registered. Manliguez is similar to

Santos, except that the former involved buildings and improvements
on a piece of land. To stress, in both cited cases, the registration of
the sale, if any, of the subject properties was never in issue.
As to petitioners invocation of equity, we cannot, at this instance,
yield to such principle in the presence of a law clearly applicable to
the case. We reiterate that this Court, while aware of its equity
jurisdiction, is first and foremost, a court of law.[23] While equity
might tilt on the side of one party, the same cannot be enforced so as
to overrule positive provisions of law in favor of the other.[24] Equity
cannot supplant or contravene the law.[25] The rule must stand no
matter how harsh it may seem. Dura lex sed lex.
WHEREFORE, the appealed Decision of the Court of Appeals in CA-
G.R. SP No. 43082 dated 25 September 1997, and its Resolution dated
10 February 1998, are hereby AFFIRMED. No costs.
SO ORDERED.
5. SECOND DIVISION
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.
Guillermo E. Aragones for petitioner.
Ruben V. Lopez for respondent Antonio D. Pinzon.
CONCEPCION, JR., J.:
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
Provisional Remedies Cases_1st batch 16
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:
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.
Provisional Remedies Cases_1st batch 17
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 said defendant. Plaintiff also avers under
oath that there is no sufficient security for his claim against the
defendant in 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 said defendants. Plaintiff also avers under oath that
there is no sufficient security for his claim against the
defendants 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 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.
Provisional Remedies Cases_1st batch 18
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:
 Provisional Remedies Cases_1st batch 19

Footnotes
Section 12. Discharge of attachment upon giving
counterbond.—At any time after an order of attachment has 1 Rollo, p. 10.
2 Id., p. 18.
been granted, the party whose property has been attached, or
3 Id, p. 20.
the person appearing on his behalf, may upon reasonable 4 Id, p. 23.
notice to the applicant, apply to the judge who granted the 5 Id, p. 31.
order, or to the judge of the court in which the action is 6 Id, p. 35.
7 Id, p. 39.
pending, for an order discharging the attachment wholly or in
8 Par. 13, Petition, Rollo, p. 7.
part on the security given. The judge shall, after hearing, order 9 Rollo, p. 49.
the discharge of the attachment if a cash deposit is made or a 10 Id., p. 18.
counterbond executed to the attaching creditor is filed, on 11 Id., p. 13.
behalf of the adverse party, with the clerk or judge of the court 12 Id., pp, 26-27.
where the application is made, in an amount equal to the value 13 Id, p. 17.
of the property attached as determined by the judge, to secure 14 Guzman vs. Catolico, 65 PhiL 257.
the payment of any judgment that the attaching creditor may 15 G.B.,Inc.vs. Sanchez,98 Phil. 886, 891.
recover in the action. Upon the filing of such counter-bond,
copy thereof shall forthwith be served on the attaching The Lawphil Project - Arellano Law Foundation
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.

Barredo (Chairman), Guerrero, Abad Santos, De Castro and

Escolin, JJ., concur.

Aquino, J., concur in the result.


6. THIRD DIVISION
G.R. No. 175587
PHILIPPINE COMMERCIAL INTERNATIONAL BANK,
Petitioner, - vs- JOSEPH ANTHONY M. ALEJANDRO,
Respondent.
Promulgated: September 21, 2007
x ------------------------------------------------------------------------------ x
DECISION
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 pay P249,828,588.90 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]
Provisional Remedies Cases_1st batch 20
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 his P150,000.00 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 of
P25,000,000.00, 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.
Provisional Remedies Cases_1st batch 21
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 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.
Provisional Remedies Cases_1st batch 22
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,
Provisional Remedies Cases_1st batch 23
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 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
Provisional Remedies Cases_1st batch 24
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.
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 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
Provisional Remedies Cases_1st batch 25
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.
CONSUELO YNARES-SANTIAGO
Associate Justice
[1] Rollo, pp. 199-220. Penned by Associate Justice Magdangal M. De Leon and concurred in by Associate Justices Conrado M.
Vasquez, Jr. and Mariano C. Del Castillo.
[2] Record on appeal, vol. 1, pp. 357-365.
[3] Id. at 13-16.
[4] Id. at 40.
[5] Id. at 34-35.
[6] Id. at 17.
[7] Id. at 22-28.
[8] TSN, vol. II, set I, pp. 633-639.
[9] Record on appeal, vol. I, pp. 30-38.
[10] Also spelled as Delos Angeles in some parts of the records and rollo.
[11] Id. at 67-69. Penned by Judge Fernando V. Gorospe, Jr.
[12] Id. at 128.
[13] Rollo, pp. 328-334. The Decision was penned by Associate Justice Hector L. Hofilea and concurred in by Associate Justices
Bernardo P. Abesamis and Presbitero J. Velasco, Jr. (now a member of this Court).
[14] Id. at 335-336.
[15] Id. at 337.
[16] Id. at 338.
[17] Record on appeal, vol. I, pp. 73-78.
[18] Id. at 359-361.
[19] Id. at 362.
[20] Id. at 365. Penned by Judge Fernando V. Gorospe, Jr.
[21] Id. at 392-394.
[22] Rollo, p. 220.
[23] Id. at 223-225.
[24] Tan v. Court of Appeals, G.R. No. 142401, August 20, 2001, 363 SCRA 444, 445 and 449-450.
[25] Record on appeal, Vol. II, pp. 67-68.
[26] G.R. Nos. 113176 & 113342, July 30, 2001, 362 SCRA 1, 15.
[27] Herrera, Remedial Law, vol. III, pp. 2 and 8; Regalado, Remedial Law Compendium, vol. I, ninth revised edition, p. 678.
[28] Obaa v. Court of Appeals, G.R. No. 78635, April 27, 1989, 172 SCRA 866, 874.
[29] Consolidated Plywood Industries, Inc. v. Breva, G.R. No. L-82811, October 18, 1988, 166 SCRA 589, 593-594; Obaa v.
Court of Appeals, supra at 874.
[30] Sahagun v. Court of Appeals, G.R. No. 78328, June 3, 1991, 198 SCRA 44, 54.
[31] 131 Phil. 154, 165-166 (1968).
[32] The pronouncement of the Court in Castillo v. Court of First Instance of Bulacan, Branch IV (G.R. No. L-55869, February
20, 1984, 127 SCRA 632) that with respect to residents temporarily out of the Philippines, non-compliance with the modes of
service under Section 17 (now Section 15, i.e., service of summons out of the Philippines by personal service, or by publication
in a newspaper of general circulation), is a denial of due process and renders the proceedings void, does not mean that said
modes of service are exclusive. Substituted service of summons is still the normal mode of service for residents temporarily
out of the Philippines. The declaration of nullity of the proceedings in the said case was by reason of the defective substituted
service of summons to a person not authorized to receive the same being a mere overseer of the lessee in the conjugal
property of the defendant, and not because substituted service of summons per se is not among the valid modes of service
upon a resident temporarily out of the country.
[33] Supra at 164-165.
[34] The pertinent portion of the December 24, 1997 Order of the trial court, provides:
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.
[35] Jardine-Manila Finance, Inc. v. Court of Appeals, G.R. No. 55272, April 10, 1989, 171 SCRA 636, 645.
[36] Philippine Commercial International Bank v. Intermediate Appellate Court, G.R. No. 73610, April 19, 1991, 196 SCRA 29,
36-37.
[37] Almeda v. Cario, G.R. No. 152143, January 13, 2003, 395 SCRA 144, 149-150.
[38] Robes-Francisco Realty & Development Corporation v. Court of First Instance of Rizal, (Branch XXXIV), G.R. No. L-41093,
October 30, 1978, 86 SCRA 59, 64; Pedrosa v. Court of Appeals, G.R. No. 118680, March 5, 2001, 353 SCRA 620, 630-631.
[39] Carlos v. Sandoval, G.R. No. 135830, September 30, 2005, 471 SCRA 266, 300.
[40] Prudential Bank v. Court of Appeals, G.R. No. 125536, March 16, 2000, 328 SCRA 264, 272.
[41] Philippine Commercial International Bank v. Intermediate Appellate Court, supra at 38-39.
[42] Filinvest Credit Coporation v. Intermediate Appellate Court, G.R. No. L-65935, September 30, 1988, 166 SCRA 155, 165-
166.
[43] Hanil Development Co., Ltd. v. Court of Appeals, supra note 26 at 16.
[44] Carlos v. Sandoval, supra at 290-291.
[45] The surety, Prudential Guarantee & Assurance, Inc., was duly notified of respondents application for damages (Record
on appeal, p. 78) pursuant to Section 20, Rule 57 of the Rules of Court.
===========================

7. EN BANC
G.R. No. 93262 December 29, 1991
DAVAO LIGHT & POWER CO., INC. 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 the ex
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.
Provisional Remedies Cases_1st batch 26
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. . . .
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
Provisional Remedies Cases_1st batch 27
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." 17
The 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-parte at 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 Cases_1st batch 28
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:
Provisional Remedies Cases_1st batch 29
. . . 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 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
 Provisional Remedies Cases_1st batch 30

12 Sec. 16 or 17, Rule 14.

the order and writ of attachment and the attachment bond were
served on the defendant — in Sievert, levy on attachment was 13 Sec. 1, Rule 17.

attempted notwithstanding that only the petition for issuance of the 14 Rules 57, 58, 59 and 60, respectively; SEE footnote 29, infra.

writ of preliminary attachment was served on the defendant, without 15 Sec. 1, Rule 57, Rules of Court. Another definition, given in 4 Words and Phrases 727 (1940), citing cases, is
that it is "a provisional remedy, auxiliary or incidental to the main action, whereby the debtor's property capable of being
any prior or accompanying summons and copy of the complaint; and taken under levy and execution is placed under custody of the law pending the determination of the cause, to secure the
payment of any judgment that may be recovered therein."
in BAC Manufacturing and Sales Corporation, neither the summons
nor the order granting the preliminary attachment or the writ of 16 SEE Salas v. Adil, 90 SCRA 125, cited in Sievert v. C.A., 168 SCRA 698.

attachment itself was served on the defendant "before or at the time 17 Sec. 1.

the levy was made." 18 SEE footnote 6, supra.

19 168 SCRA 513 (Dec. 19, 1988). In this case, this Court ultimately ruled that the application for preliminary
attachment ex parte should have been denied because the fundamental requisites under Rule 57, Section 1 did not exist, and
For the guidance of all concerned, the Court reiterates and reaffirms not because ex parte applications are per se illegal.
the proposition that writs of attachment may properly issue ex parte 20 La Granja, Inc. v. Samson, 58 Phil. 378, 380.
provided that the Court is satisfied that the relevant requisites
21 117 SCRA 420, 428-429, cited in Francisco, op cit., 1985 ed., "Provisional Remedies," pp. 31-32.
therefor have been fulfilled by the applicant, although it may, in its
22 Sec. 3, Rule 57.
discretion, require prior hearing on the application with notice to the
23 Id., SEE Central Capiz v. Salas, 43 Phil. 930, 931.
defendant; but that levy on property pursuant to the writ thus issued
may not be validly effected unless preceded, or contemporaneously 24 Sec. 4, Rule 57.

accompanied, by service on the defendant of summons, a copy of the 25 172 SCRA 480, 484 (April 18, 1989), per Griño-Aquino, J., citing Belisle Investment & Finance Co., Inc. v. State
Investment House, Inc. 72927, June 30, 1987; Filinvest Credit Corp. v. Relova, 117 SCRA 420).
complaint (and of the appointment of guardian ad litem, if any), the
26 Hon. Abraham F. Sarmiento, who retired on October 9, 1991.
application for attachment (if not incorporated in but submitted
27 172 SCRA 480, 488.
separately from the complaint), the order of attachment, and the
plaintiff's attachment bond. 28 At pp. 488-489.

WHEREFORE, the petition is GRANTED; the challenged decision of the 29 (1) Sec. 5, Rule 58 declares that while, generally, "No preliminary injunction shall appear be
granted without notice to the defendant," nevertheless, "If it shall appear from the facts shown by affidavits or by the verified
Court of Appeals is hereby REVERSED, and the order and writ of complaint that great or irreparable injury would result to the applicant before the matter can be heard on notice, the judge
to whom the application for preliminary injunction was made, may issue a restaining order to be effective only for a period
attachment issued by Hon. Milagros C. Nartatez, Presiding Judge of of twenty days from date of its issuance. . . .
Branch 8, Regional Trial Court of Davao City in Civil Case No. 19513- (2) Sec. 3, Rule 59 provides that, "if a receiver be appointed upon an ex parte application, the court, before
89 against Queensland Hotel or Motel or Queensland Tourist Inn and making the order, may require the person applying for such appointment to file a bond executed to the party against whom
the application is presented in an amount to be fixed by the court to the effect that the applicant will pay such party all
Teodorico Adarna are hereby REINSTATED. Costs against private damages he may sustain by reason of the appointment of such receiver in case the applicant shall have procured such
appointment without sufficient cause . . .
respondents.
(3) And Rule 60 provides that "Whenever the complaint in an action prays for the recovery of possession of
personal property, the plaintiff may, at the commencement of action or at any time before answer, apply for an order for the
delivery of such property to him . . ." (Sec. 1); and upon compliance by the plaintiff with the prescribed requisites (affidavit
SO ORDERED. and bond [Sec. 2]), the judge . . . shall issue an order describing the property alleged to be wrongfully detained, and requiring
the sheriff or other proper officer . . . forthwith to take such property into his custody" (Sec. 3).
Melencio-Herrera, Gutierrez, Jr., Cruz, Paras, Feliciano, Padilla, Bidin, Griño-Aquino, Medialdea, Regalado and Romero, JJ.,
concur. 30 SEE footnotes 9 to 13, supra.

Fernan, C.J., is on leave. 31 168 SCRA 692 (1988).

Davide, Jr., J., took no part.
32 G.R. No. 96784, Aug. 2, 1991.

# Footnotes

1 Jorge S. Imperial, J., ponente; Reynato J. Puno and Artemon Luna, JJ., concurring.

2 Branch 8, presided over by Hon. Milagros C. Nartatez.

3 G.R. No. 84034, Dec. 22, 1988, 168 SCRA 692 (1988).

4 Sec. 6, Rule 2, Rules of Court.

N.B. The action is not deemed commenced, however, and will not be deemed to interrupt the running of the
period of prescription, unless and until the docket and other court fees are fully paid. SEE Manchester Development
Corporation v. Court of Appeals, 149 SCRA 562 (1987); Sun Insurance Office, Ltd., et al. v. Asuncion, et al., G.R. No. 79937-38,
Feb. 13, 1989; Tacay v. Regional Trial Court of Tagum, G.R. No. 88075-77, Dec. 20, 1989; Ayala Corporation, et al. v. Madayag,
G.R. No. 88421, Jan. 30, 1990; Hodges v. Court of Appeals, G.R. No. 87617, April 6, 1990; SEE also Lacson v. Luis Reyes, etc.,
G.R. No. 86250, Feb. 26, 1990; Sapugay v. Court of Appeals, G.R. No. 86791, March 21, 1990.

5 Moran, Comments on the Rules, 1979 ed. Vol. 1, p. 54, citing Caluag v. Pecson, 82 Phil. 8; Francisco, The
Revised Rules of Court, 1973 ed., Vol. 1, p. 120; Feria, Civil Procedure, 1969 ed., pp. 17-18.

6 Defined as the power to hear and determine cases of the general class to which the proceedings in question
belong **, conferred by the sovereign authority which organizes the court and defines its powers. Francisco, The Revised
Rules of Court, 1973 ed., Vol. I, p. 117, citing Reyes v. Diaz, 73 Phil. 484, 486.

7 Feria, op cit., p. 19, citing Manila Railroad Co. v. Attorney General, 20 Phil. 523, King Mau Wu v. Sycip, 94
Phil. 784, and 21 C.J.S., 122; Moran, op cit., p. 55, citing M.R.R. Co. v. Attorney-General, 20 Phil. 523 (in turn citing Ayers v.
Watson, 133 U.S. 594), and Toledano v. Severino, 78 Phil. 783; Francisco, op cit., p. 125 citing, additionally, 21 C.J.S., 122.

8 Feria, op cit., p. 20, citing 21 C.J.S., 123; Pennoyer v. Neff, 95 U.S. 714, Banco Español-Filipino v. Palanca, 37
Phil. 921, and Perkins v. Dizon, 69 Phil. 186; Moran, op cit., citing Banco Español-Filipino v. Palanca, 37 Phil. 921, Infante v.
Toledo, 44 Phil. 834, and Nilo v. Romero, L-15195, March 29, 1961; Francisco, op cit., p. 126; citing Sharruf v. Bubla, et al., No.
L-17029, Sept. 30, 1964.

9 Sec. 5, Rule 3.

10 Sec. 22, Rule 3.

11 Sec. 2, Rule 10.