Republic of the Philippines SUPREME COURT Manila THIRD DIVISION G.R. No.

125027 August 12, 2002

26, 1988, the trial court issued an Order of Preliminary Attachment6 against petitioner. The following day, the trial court issued a Writ of Preliminary Attachment. The trial court granted the request of its sheriff for assistance from their counterparts in RTC, Pampanga. Thus, on October 28, 1988, Sheriff Alfredo San Miguel of RTC Pampanga served on petitioners household help in San Fernando, Pampanga, the Notice of Levy with the Order, Affidavit and Bond.7 On November 7, 1988, petitioner filed an Urgent Motion to Discharge Attachment8 without submitting herself to the jurisdiction of the trial court. She pointed out that up to then, she had not been served a copy of the Complaint and the summons. Hence, petitioner claimed the court had not acquired jurisdiction over her person.9 In the hearing of the Urgent Motion to Discharge Attachment on November 11, 1988, private respondent sought and was granted a re-setting to December 9, 1988. On that date, private respondents counsel did not appear, so the Urgent Motion to Discharge Attachment was deemed submitted for resolution.10

ANITA MANGILA, petitioner, vs. COURT OF APPEALS and LORETA GUINA, respondents. CARPIO, J.: The Case This is a petition fore review on certiorari under Rule 45 of the Rules of Court, seeking to set aside the Decision1of the Court of Appeals affirming the Decision2 of the Regional Trial Court, Branch 108, Pasay City. The trial court upheld the writ of attachment and the declaration of default on petitioner while ordering her to pay private respondent P109,376.95 plus 18 percent interest per annum, 25 percent attorneys fees and costs of suit. The Facts Petitioner Anita Mangila ("petitioner" for brevity) is an exporter of sea foods and doing business under the name and style of Seafoods Products. Private respondent Loreta Guina ("private respondent" for brevity) is the President and General Manager of Air Swift International, a single registered proprietorship engaged in the freight forwarding business. Sometime in January 1988, petitioner contracted the freight forwarding services of private respondent for shipment of petitioners products, such as crabs, prawns and assorted fishes, to Guam (USA) where petitioner maintains an outlet. Petitioner agreed to pay private respondent cash on delivery. Private respondents invoice stipulates a charge of 18 percent interest per annum on all overdue accounts. In case of suit, the same invoice stipulates attorneys fees equivalent to 25 percent of the amount due plus costs of suit.3 On the first shipment, petitioner requested for seven days within which to pay private respondent. However, for the next three shipments, March 17, 24 and 31, 1988, petitioner failed to pay private respondent shipping charges amounting to P109, 376.95.4 Despite several demands, petitioner never paid private respondent. Thus, on June 10, 1988, private respondent filed Civil Case No. 5875 before the Regional Trial Court of Pasay City for collection of sum of money. On August 1, 1988, the sheriff filed his Sheriffs Return showing that summons was not served on petitioner. A woman found at petitioners house informed the sheriff that petitioner transferred her residence to Sto. Nio, Guagua, Pampanga. The sheriff found out further that petitioner had left the Philippines for Guam.5 Thus, on September 13, 1988, construing petitioners departure from the Philippines as done with intent to defraud her creditors, private respondent filed a Motion for Preliminary Attachment. On September

The trial court granted the Motion to Discharge Attachment on January 13, 1989 upon filing of petitioners counter-bond. The trial court, however, did not rule on the question of jurisdiction and on the validity of the writ of preliminary attachment. On December 26, 1988, private respondent applied for an alias summons, which the trial court issued on January 19, 1989.11 It was only on January 26, 1989 that summons was finally served on petitioner.12 On February 9, 1989, petitioner filed a Motion to Dismiss the Complaint on the ground of improper venue. Private respondents invoice for the freight forwarding service stipulates that "if court litigation becomes necessary to enforce collection xxx the agreed venue for such action is Makati, Metro Manila."13 Private respondent filed an Opposition asserting that although "Makati" appears as the stipulated venue, the same was merely an inadvertence by the printing press whose general manager executed an affidavit14 admitting such inadvertence. Moreover, private respondent claimed that petitioner knew that private respondent was holding office in Pasay City and not in Makati.15 The lower court, finding credence in private respondents assertion, denied the Motion to Dismiss and gave petitioner five days to file her Answer. Petitioner filed a Motion for Reconsideration but this too was denied. Petitioner filed her Answer16 on June 16, 1989, maintaining her contention that the venue was improperly laid. On June 26, 1989, the trial court issued an Order setting the pre-trial for July 18, 1989 at 8:30 a.m. and requiring the parties to submit their pre-trial briefs. Meanwhile, private respondent filed a Motion to Sell Attached Properties but the trial court denied the motion. On motion of petitioner, the trial court issued an Order resetting the pre-trial from July 18, 1989 to August 24, 1989 at 8:30 a.m.. On August 24, 1989, the day of the pre-trial, the trial court issued an Order 17 terminating the pre-trial and allowing the private respondent to present evidence ex-parte on September 12, 1989 at 8:30 a.m.. The Order stated that when the case was called for pre-trial at 8:31 a.m., only the counsel for private respondent appeared. Upon the trial courts second call 20 minutes later, petitioners counsel was still nowhere to be found. Thus, upon motion of private respondent, the pre-trial was considered terminated. On September 12, 1989, petitioner filed her Motion for Reconsideration of the Order terminating the pre-trial. Petitioner explained that her counsel arrived 5 minutes after the second call, as shown by the

transcript of stenographic notes, and was late because of heavy traffic. Petitioner claims that the lower court erred in allowing private respondent to present evidence ex-parte since there was no Order considering the petitioner as in default. Petitioner contends that the Order of August 24, 1989 did not state that petitioner was declared as in default but still the court allowed private respondent to present evidence ex-parte.18 On October 6, 1989, the trial court denied the Motion for Reconsideration and scheduled the presentation of private respondents evidence ex-parte on October 10, 1989.1wphi1.nt On October 10, 1989, petitioner filed an Omnibus Motion stating that the presentation of evidence exparte should be suspended because there was no declaration of petitioner as in default and petitioners counsel was not absent, but merely late. On October 18, 1989, the trial court denied the Omnibus Motion.19 On November 20, 1989, the petitioner received a copy of the Decision of November 10, 1989, ordering petitioner to pay respondent P109,376.95 plus 18 percent interest per annum, 25 percent attorneys fees and costs of suit. Private respondent filed a Motion for Execution Pending Appeal but the trial court denied the same. The Ruling of the Court of Appeals On December 15, 1995, the Court of Appeals rendered a decision affirming the decision of the trial court. The Court of Appeals upheld the validity of the issuance of the writ of attachment and sustained the filing of the action in the RTC of Pasay. The Court of Appeals also affirmed the declaration of default on petitioner and concluded that the trial court did not commit any reversible error. Petitioner filed a Motion for Reconsideration on January 5, 1996 but the Court of Appeals denied the same in a Resolution dated May 20, 1996. Hence, this petition. The Issues The issues raised by petitioner may be re-stated as follows: I. WHETHER RESPONDENT COURT ERRED IN NOT HOLDING THAT THE WRIT OF ATTACHMENT WAS IMPROPERLY ISSUED AND SERVED; II. WHETHER THERE WAS A VALID DECLARATION OF DEFAULT; III. WHETHER THERE WAS IMPROPER VENUE. IV.

WHETHER RESPONDENT COURT ERRED IN DECLARING THAT PETITIONER IS OBLIGED TO PAY P109, 376.95, PLUS ATTORNEYS FEES.20 The Ruling of the Court Improper Issuance and Service of Writ of Attachment Petitioner ascribes several errors to the issuance and implementation of the writ of attachment. Among petitioners arguments are: first, there was no ground for the issuance of the writ since the intent to defraud her creditors had not been established; second, the value of the properties levied exceeded the value of private respondents claim. However, the crux of petitioners arguments rests on the question of the validity of the writ of attachment. Because of failure to serve summons on her before or simultaneously with the writs implementation, petitioner claims that the trial court had not acquired jurisdiction over her person and thus the service of the writ is void. As a preliminary note, a distinction should be made between issuance and implementation of the writ of attachment. It is necessary to distinguish between the two to determine when jurisdiction over the person of the defendant should be acquired to validly implement the writ. This distinction is crucial in resolving whether there is merit in petitioners argument. This Court has long settled the issue of when jurisdiction over the person of the defendant should be acquired in cases where a party resorts to provisional remedies. A party to a suit may, at any time after filing the complaint, avail of the provisional remedies under the Rules of Court. Specifically, Rule 57 on preliminary attachment speaks of the grant of the remedy "at the commencement of the action or at any time thereafter."21 This phrase refers to the date of filing of the complaint which is the moment that marks "the commencement of the action." The reference plainly is to a time before summons is served on the defendant, or even before summons issues. In Davao Light & Power Co., Inc. v. Court of Appeals,22 this Court clarified the actual time when jurisdiction should be had: "It goes without saying that whatever be the acts done by the Court prior to the acquisition of jurisdiction over the person of defendant - issuance of summons, order of attachment and writ of attachment - 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 courts authority. Hence, when the sheriff or other proper officer commencesimplementation of the writ of attachment, it is essential that he serve on the defendant not only a copy of the applicants affidavit and attachment bond, and of the order of attachment, as explicitly required by Section 5 of Rule 57, but also the summons addressed to said defendant as well as a copy of the complaint xxx." (Emphasis supplied.) Furthermore, we have held that the grant of the provisional remedy of attachment involves three stages: first, the court issues the order granting the application; second, the writ of attachment issues pursuant to the order granting the writ; and third, the writ is implemented. For the initial two stages, it is not necessary that jurisdiction over the person of the defendant be first obtained. However, once the implementation of the writ commences, the court must have acquired jurisdiction over the defendant for without such jurisdiction, the court has no power and authority to act in any manner against the defendant. Any order issuing from the Court will not bind the defendant.23 In the instant case, the Writ of Preliminary Attachment was issued on September 27, 1988 and implemented on October 28, 1988. However, the alias summons was served only on

January 26, 1989 or almost three months after the implementation of the writ of attachment. The trial court had the authority to issue the Writ of Attachment on September 27 since a motion for its issuance can be filed "at the commencement of the action." However, on the day the writ was implemented, the trial court should have, previously or simultaneously with the implementation of the writ, acquired jurisdiction over the petitioner. Yet, as was shown in the records of the case, the summons was actually served on petitioner several months after the writ had been implemented. Private respondent, nevertheless, claims that the prior or contemporaneous service of summons contemplated in Section 5 of Rule 57 provides for exceptions. Among such exceptions are "where the summons could not be served personally or by substituted service despite diligent efforts or where the defendant is a resident temporarily absent therefrom x x x." Private respondent asserts that when she commenced this action, she tried to serve summons on petitioner but the latter could not be located at her customary address in Kamuning, Quezon City or at her new address in Guagua, Pampanga.24 Furthermore, respondent claims that petitioner was not even in Pampanga; rather, she was in Guam purportedly on a business trip. Private respondent never showed that she effected substituted service on petitioner after her personal service failed. Likewise, if it were true that private respondent could not ascertain the whereabouts of petitioner after a diligent inquiry, still she had some other recourse under the Rules of Civil Procedure. The rules provide for certain remedies in cases where personal service could not be effected on a party. Section 14, Rule 14 of the Rules of Court provides that whenever the defendants "whereabouts are unknown and cannot be ascertained by diligent inquiry, service may, by leave of court, be effected upon him by publication in a newspaper of general circulation x x x." Thus, if petitioners whereabouts could not be ascertained after the sheriff had served the summons at her given address, then respondent could have immediately asked the court for service of summons by publication on petitioner.25 Moreover, as private respondent also claims that petitioner was abroad at the time of the service of summons, this made petitioner a resident who is temporarily out of the country. This is the exact situation contemplated in Section 16,26 Rule 14 of the Rules of Civil Procedure, providing for service of summons by publication. In conclusion, we hold that the alias summons belatedly served on petitioner cannot be deemed to have cured the fatal defect in the enforcement of the writ. The trial court cannot enforce such a coercive process on petitioner without first obtaining jurisdiction over her person. The preliminary writ of attachment must be served after or simultaneous with the service of summons on the defendant whether by personal service, substituted service or by publication as warranted by the circumstances of the case.27 The subsequent service of summons does not confer a retroactive acquisition of jurisdiction over her person because the law does not allow for retroactivity of a belated service. Improper Venue Petitioner assails the filing of this case in the RTC of Pasay and points to a provision in private respondents invoice which contains the following: "3. If court litigation becomes necessary to enforce collection, an additional equivalent (sic) to 25% of the principal amount will be charged. The agreed venue for such action is Makati, Metro Manila, Philippines."28 Based on this provision, petitioner contends that the action should have been instituted in the RTC of Makati and to do otherwise would be a ground for the dismissal of the case.

We resolve to dismiss the case on the ground of improper venue but not for the reason stated by petitioner. The Rules of Court provide that parties to an action may agree in writing on the venue on which an action should be brought.29 However, a mere stipulation on the venue of an action is not enough to preclude parties from bringing a case in other venues.30 The parties must be able to show that such stipulation is exclusive. Thus, absent words that show the parties intention to restrict the filing of a suit in a particular place, courts will allow the filing of a case in any venue, as long as jurisdictional requirements are followed. Venue stipulations in a contract, while considered valid and enforceable, do not as a rule supersede the general rule set forth in Rule 4 of the Revised Rules of Court.31 In the absence of qualifying or restrictive words, they should be considered merely as an agreement on additional forum, not as limiting venue to the specified place.32 In the instant case, the stipulation does not limit the venue exclusively to Makati. There are no qualifying or restrictive words in the invoice that would evince the intention of the parties that Makati is the "only or exclusive" venue where the action could be instituted. We therefore agree with private respondent that Makati is not the only venue where this case could be filed. Nevertheless, we hold that Pasay is not the proper venue for this case. Under the 1997 Rules of Civil Procedure, the general rule is venue in personal actions is "where the defendant or any of the defendants resides or may be found, or where the plaintiff or any of the plaintiffs resides, at the election of the plaintiff."33 The exception to this rule is when the parties agree on an exclusive venue other than the places mentioned in the rules. But, as we have discussed, this exception is not applicable in this case. Hence, following the general rule, the instant case may be brought in the place of residence of the plaintiff or defendant, at the election of the plaintiff (private respondent herein). In the instant case, the residence of private respondent (plaintiff in the lower court) was not alleged in the complaint. Rather, what was alleged was the postal address of her sole proprietorship, Air Swift International. It was only when private respondent testified in court, after petitioner was declared in default, that she mentioned her residence to be in Better Living Subdivision, Paraaque City. In the earlier case of Sy v. Tyson Enterprises, Inc.,34 the reverse happened. The plaintiff in that case was Tyson Enterprises, Inc., a corporation owned and managed by Dominador Ti. The complaint, however, did not allege the office or place of business of the corporation, which was in Binondo, Manila. What was alleged was the residence of Dominador Ti, who lived in San Juan, Rizal. The case was filed in the Court of First Instance of Rizal, Pasig. The Court there held that the evident purpose of alleging the address of the corporations president and manager was to justify the filing of the suit in Rizal, Pasig instead of in Manila. Thus, the Court ruled that there was no question that venue was improperly laid in that case and held that the place of business of Tyson Enterpises, Inc. is considered as its residence for purposes of venue. Furthermore, the Court held that the residence of its president is not the residence of the corporation because a corporation has a personality separate and distinct from that of its officers and stockholders. In the instant case, it was established in the lower court that petitioner resides in San Fernando, Pampanga35while private respondent resides in Paraaque City.36 However, this case was brought in Pasay City, where the business of private respondent is found. This would have been permissible had private respondents business been a corporation, just like the case in Sy v. Tyson Enterprises, Inc. However, as admitted by private respondent in her Complaint37 in the lower court, her business is a sole proprietorship, and as such, does not have a separate juridical personality that could enable it to file a suit in court.38 In fact, there is no law authorizing sole proprietorships to file a suit in court.39 A sole proprietorship does not possess a juridical personality separate and distinct from the personality of the owner of the enterprise.40 The law merely recognizes the existence of a sole proprietorship as a form of business organization conducted for profit by a single individual and requires its proprietor or

owner to secure licenses and permits, register its business name, and pay taxes to the national government.41 The law does not vest a separate legal personality on the sole proprietorship or empower it to file or defend an action in court.42 Thus, not being vested with legal personality to file this case, the sole proprietorship is not the plaintiff in this case but rather Loreta Guina in her personal capacity. In fact, the complaint in the lower court acknowledges in its caption that the plaintiff and defendant are Loreta Guina and Anita Mangila, respectively. The title of the petition before us does not state, and rightly so, Anita Mangila v. Air Swift International, but rather Anita Mangila v. Loreta Guina. Logically then, it is the residence of private respondent Guina, the proprietor with the juridical personality, which should be considered as one of the proper venues for this case. All these considered, private respondent should have filed this case either in San Fernando, Pampanga (petitioners residence) or Paraaque (private respondents residence). Since private respondent (complainant below) filed this case in Pasay, we hold that the case should be dismissed on the ground of improper venue. Although petitioner filed an Urgent Motion to Discharge Attachment in the lower court, petitioner expressly stated that she was filing the motion without submitting to the jurisdiction of the court. At that time, petitioner had not been served the summons and a copy of the complaint.43 Thereafter, petitioner timely filed a Motion to Dismiss44 on the ground of improper venue. Rule 16, Section 1 of the Rules of Court provides that a motion to dismiss may be filed "[W]ithin the time for but before filing the answer to the complaint or pleading asserting a claim." Petitioner even raised the issue of improper venue in his Answer45 as a special and affirmative defense. Petitioner also continued to raise the issue of improper venue in her Petition for Review46 before this Court. We thus hold that the dismissal of this case on the ground of improper venue is warranted. The rules on venue, like other procedural rules, are designed to insure a just and orderly administration of justice or the impartial and evenhanded determination of every action and proceeding. Obviously, this objective will not be attained if the plaintiff is given unrestricted freedom to choose where to file the complaint or petition.47 We find no reason to rule on the other issues raised by petitioner.1wphi1.nt WHEREFORE, the petition is GRANTED on the grounds of improper venue and invalidity of the service of the writ of attachment. The decision of the Court of Appeals and the order of respondent judge denying the motion to dismiss are REVERSED and SET ASIDE. Civil Case No. 5875 is hereby dismissed without prejudice to refiling it in the proper venue. The attached properties of petitioner are ordered returned to her immediately. SO ORDERED. Puno, Panganiban, and JJ., concur. Sandoval-Gutierrez, J., On leave.

Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G.R. No. L-35951 August 31, 1977 PIONEER INSURANCE & SURETY CORP. AND HADJI ESMAYATEN LUCMAN, petitionersappellants, vs. THE HON. AGAPITO HONTANOSAS, JUDGE OF THE COURT OF FIRST INSTANCE OF CEBU, BRANCH XI AND THE SPOUSES BEN UY RODRIGUEZ, respondents-appellees. Eriberto D. Ignacio for appellant. Francisco E.F. Remotigue & Hilario G. Davide, Jr. for private respondent.

motion for withdrawal was granted by the Court Thereafter, the respondents-appellees Rodriguez spouses filed a complaint for damages on February 15, 1971 against Pioneer Insurance & Surety Corp. and Allied Overseas (the Hongkong-based corporation), docketed as Civil Case No. R-12069, Court of First Instance of Cebu presided by respondent judge lion Agapito Hontanosas, the complaint praying that Rodriguez be declared as not in any manner indebted to the defendant Allied Overseas Commercial Co. and that Pioneer Insurance & Surety Corp. be held liable for damages, attorneys foes and expenses of litigation by reason of the and malicious attachment issued by the Manila Court. Defendant Pioneer Insurance and Surety Corp. filed its manner to the complaint (Civil Case No. R12069) alleging affirmative and special defenses. With respect to the other defendant Allied Overseas Commercial Co., summons was (coursed thru the Philippine Consulate General in Honkong which turned it down as it had no authority to serve the process under the Rules of Court. On April 27, 1971, defendant Pioneer Insurance & Surety Corp. filed a motion for a preliminary hearing of its affirmative defenses of lack of cause of action and bar by prior judgment and/or abandonment, which are grounds for a motion to dismiss. This was denied by the respondent Judge in his Order dated May 15, 1971, so also was the motion for reconsideration per its Order of June 2, 1971. On May 5, 1971, the case was called for pre-trial. Plaintiffs with counsel attended; defendant Pioneer Insurance & Surety Corp. thru counsel was present The other defendant, Allied Overseas Commercial Co was not yet summoned, hence absent. The parties manifested failure to settle the case amicably, thus the Court set the trial of the case on the merits for June 11, 1971. A petition for certiorari and prohibition was then filed by Pioneer Insurance and Surety Corp. on August 3, 1971 in the Court of Appeals, CA-G.R. No. 00369-R (Record on Appeal, p. 133) with prayer to enjoin a hearing scheduled on August 7, 1971, alleging that respondent Judge committed grave abuse of discretion amounting to lack and/or excess of jurisdiction in lending the motion for preliminary hearing. The Court of Appeals In its Resolution dated August 7, 1971 distributed this petition for certiorari. Record on Appeal, pp. 133-137) An amended complaint was now submitted to ad admitted by the Court on August 14, 1971 by impleading left petitioner-appellant Hadji Esmayaten Lucman as additional, defendant., making allegations tending show confabulation between the new defendant, and the foreign-based corporation to collect a non-existing debt. To the amended complaint, Pioneer Insurance & Surety Corp filed its answer. Lucman having been impleaded as assignee defendant Allied Overseas Commercial filed a motion to dismiss on the ground of auter action pendant, that is an action pending in the Court of First Instance of Rizal, Civil Case No. 14351 between the same parties with the same allegation and defences of counterclaims. On November 25, 1971, respondent Judge denied the motion to dismiss, whereupon Lucman filed his answer to the amended complaint. Upon an ex parte motion of Rodriguez, the Court declared Lucman in default in its Order of January 10, 1972 and thereafter promulgated a decision dated January 28, 1972 against Lucman only, ordering him to pay damage,- in the amount of P150,000.00; declaring that Rodriguez was no in any manner indebted to Lucman or to Allied Overseas Commercial Co and that the Metropolitan Bank & Trust Co. (Cebu Branch) Check No. CB2169 (xerox copy marked Exhibit M issued iv Rodriguez to pay the indebtedness was a forgery. Lucman moved on February 11, 1972 to set aside the order of default and to admit the answer earlier filed by him to the amended complaint. On February 21. 1972, respondent Judge set aside the order of default against Lucman including the decision against him, the dispositive portion of which order reads as follows: WHEREFORE, the Order of Default dated January 10, 1972 as well as the decision (Re: Hadji Esmayaten Lucman) dated January 28, 1972, are hereby reconsidered

GUERRERO, J: We reverse the decision of the Court of Appeals 1 promulgated, on October 30, 1972 in CA-G.R. No. 00951-R entitled "Pioneer Insurance & Surety Corp., et al., petitioners, vs. Hon Judge Agapito Hontanosas, et al., respondents," which decision had denied for lack of merit the petition filed therein for certiorari. prohibition and/or mandamus with preliminary injunction seeking to nullify the order of default of February 29, 1972 and the decision of March 9, 1972 in Civil Case No. R-12069, entitled "Ben Rodriguez, et al. vs. Allied Overseas Commercial Co., et al." issued by the respondent Presiding Judge of the Court of First Instance of Cebu. The case commenced on October 12, 1970 when Allied Overseas Commercial Co., Ltd., a foreign corporation domiciled in Hongkong, filed in the Court of First Instance of Manila a complaint against the respondent-appellee Ben Uy Rodriguez for the collection of a sum of money arising out of a transaction between them in the amount of P450,533.00, the agreed peso equivalent of the HK$418,279.60 balance unpaid. Plaintiff therein having prayed for the issuance of a writ of preliminary attachment, the game was granted by the Court against Rodriguez upon the filing by said plaintiff of a bond in the amount of P450,000.00, which petitioner-appellant Pioneer Insurance & Surety Corp. duly posted. The corresponding levy in attachment was made by annotation on the properties of Rodriguez which consisted of 4 pieces of lots; notices of garnishment on different Cebu banks turned out negative, while personal properties found at the Rodriguez residence, although attached, were, however, not removed therefrom. A motion to dismiss the complaint was thereupon filed by Rodriguez, followed by an application for damages against the bond, praying that he be permitted to present evidence of damages he sustained by reason of the wrongful attachment, and to enforce said claim against the surety on its bond, alleging further that otherwise his claim against the bond will forever be barred as said claim cannot be the subject of an independent civil action under Sec. 20, Rule 57 of the Rules of Court. The court iii its order of December 22, 1970 dismissed the complaint on the ground of improper venue since defendant Rodriguez was a resident of Cebu, and lifted the writ of preliminary attachment setting. the hearing on the claim for damages against the bond on January 14, 1971. With the intention of filing a separate civil action in the Court t T of Firs instance of Cebu, respondentappellee Rodriguez withdrew his claim for damages against Pioneer Insurance and Surety Corp., which

and set aside. Let the hearing of this case on the merits be scheduled as previously set for February 28, 1972 at 8:30 o'clock in the morning. The parties thru their respective counsels are to be immediately notified of this order. The Clerk of Court is directed to notify defendant Hadji Esmayaten Lucman thru counsel Atty. Eriberto D. Ignacio At Rm. 414, Madrigal Bldg., Escolta, Manila by telegram. SO ORDERED. Cebu City, Philippines, February 21, 1972. ( S G D . ) A G A P I T O H O N T A N O S A S J U D G E ( R e c o r d o n A p Counsel for the petitioners received the telegram notices on February 21, 1972; and on February 23, 1972 counsel filed an urgent motion for postponement of the pre-trial, claiming that he was not aware of any such pre-trial having been previously set for February 28, 1972 in the morning, as indeed no such pre-trial can as yet be set as the issues with respect to the amended complaint are not yet fully joined since plaintiffs have not answered the compulsory conterclaims separately set up by the defendants in said summons to theforeign corporations Allied Overseas Commercial Co. Ltd. of Hongkong, nor have

p e a l , p p . 2 9 7 2 9 8 ) Forthwith, the clerk of court sent the telegram notices in the following wise: YOUR MOTION SET ASIDE ORDER, DEFAULT AND DECLARE PROCEEDINGS NULL AND VOID RE CIVIL CASE BEN RODGIGUEZ ET AL VERSUS HADJI ESMAYATEN LUCMAN GRANTED STOP PRETRIAL SHALL PROCEED AS PREVIOUSLY SCHEDULED FEBRARY 28 1972 MORNING ( R e c o r d o n A p p e a l , p . 2 9 8 )

plaintiffs asked that said foreign corporation be dropped from the amended complaint; that counsel has a hearing in Manila of a criminal case which is of intransferable character, and prayed that the pretrial be set at some other date in March preferably either March 22 or 23, 1972 at 9:00 a.m. which were the only free dates for the month of March 1972 in the calendar of the counsel. (Record on Appeal, pp. 301-303) Apparently, the above urgent motion for postponement although sent through registered airmail special delivery and received by the Dispatching Section of the Post Office of Cebu on February 28, 1972 (Resolution, Court of Appeals, Recrod on Appeal, pp. 365-366) was not received by the Court for on February 28, 1972 when the case was called, an order was issued by the Court postponing the pre-trial of the case to March 20, 1972 in ivew of the absence of the defendants and counsel notwithstanding notices of hearing and telegrams sent to them, on the condition that should defendants be found that as to plaintiffs will be allowed to present their evidence and the defendants will be declared in default for failure to appear at the pre-trial. (Record on Appeal, pp. 304-305) Upon verification from the radio Communications of the Philippines that the telegrams mentioned above were delivered and received by the addresses on February 21, 1972, the Court on February 29, 1972 declared the defendants in default and allowed the plaintiffs to present their evidence in support of their complaint before the Clerk of Court. (Record on Appeal, pp. 306-307). The evidence was thereupon presented and on March 9, 1977 the respondent Judge promulgated his Decision declaring that the plaintiff Rodriguez is not in any manner indebted to defendant Lucman or to Allied Overseas Commercial Co., declaring the personal check of the plaintiff to be a forgery; that the attachment of the properties of plaintiff in the Manila case was wrongfu; amd malicious, and ordering defendant Pioneer Insurance and Surety Co. to pay P350,000.00 as moral damages, P50,000.00 as exemplary damages and P50,000.00 for expenses of litigation in Manila. Defendant Lucman was also ordered to pay plaintiffs the sum of P50,000,00 as exemplary damages and P30,000.00 as attorney's fees. Within 30 days reglementary period to perfect the appeal, defendants Pioneer Insurance & Surety Corp. and Hadji Esmayaten Lucman filed the Notice of Appeal and the Original record on Appeal, the latter ordered corrected and amended but finally approved by the Court on July 31, 1972. Meanwhile, petitioner's filed on April 4, 1972 before the Court of Appeals a petition for certiorari, prohibition and/or mandamus with preliminary injunction CA-G.R. No. 00951-R) seeking to nullify the order of default of February 29, 1972 and the Decision of March 9, 1972 of respondent Judge, to command said Judge to elevate the records of the case for review and to prohibit him from enforcing his decision and from taking further action in the case, No. 12069. On April 13, 1972, the Court of Appeals promulgated its resolution dismissing the petition aforestated and ruled among others as follows: Furthermore, petitioners instant remedy is not proper because of their own admission that appeal is available from the decision of respondent Judge (Discussion, pp. 12-13 of their Petition). This is shown by the handwriting at the upper right hand corner of Annex R (Decision) when they received the decision on March 25, 1972 and the period to appeal will expire on April 24, 1972. We are not, therefore, convinced that the remedy of appeal is inadequate, considering that whatever errors respondent Judge might have committed can be assigned as specific errors on appeal. It has been consistently held that certiorari is not available where the remedy of appeal is present . The petition having been given due course, the respondents herein answered the same, and on October 30, 1972, the Court of Appeals rendered its Decision denying the petition for lack of merit, and held among others, thus Finally we are not also convinced that the remedy of appeal is inadequate under the circumstances obtaining in the principal cue Whatever errors respondent Judge might have committed in his order or judgment may be assigned as specific errors in their appeal. This Court can review any all such errors of fact and law in the appeal.

On a motion for reconsideration, the Court of Appeals reconsidered the resolution cited above, and issued another resolution dated July 25, 1972 giving due course to the petition and required the respondents to answer the petition (not a motion to dismiss), and among others, stated, to wit: Upon this fact alone, we believe as petitioners contend that although appeal is available, such remedy is not sufficiently speedy and adequate to cure the defects in the proceedings therein or to remedy the disadvantageous position of Petitioners because, since they were deprived of raising any issue or defense that they have in the respondent court by reason of the order of default, they cannot raise said issues or defenses for the first time on appeal.

( R e c o

( R o l l o ,

Sec. 3. Allows the ocurt to render judgment on the pleading or summary judgment as justice require. Sec. 4 directs that a reocrd of the pre-trial results be made; and Sec. 5 requires the court to prepare a pre-trial calendar of cases for consideration as above provided, and that upon the submission of the last pleading in a particular case, it shall be the duty of the clerk of court to place case in the pre-trial calendar.

Unquestionably, p present Rules make pre-trial mandatory. And the reason for making pre-trial the mandatory is that pre-trial conferences bring the parteis together, thus making possible an amicable . settlement or doing away with at least the non-essentials of a case from the beginning. (Borja vs. Roxas, 73 Phil. 647). 1 3 8 Philippine jurisprudence has laid down the legal doctrine that while it is true that it is mandatory for ) the parties and their attorneys to appear before the trial court for a pre-trial conference to to consider inter alia the possibility of an amicable settlement, the rule wa sby no means intended as an implacable bludgeon but as a tool to assist the trial court in the orderly and expeditious conduct of trial. The rule is addressed to the sound discretion of the trial court (Rice and Corn Administration vs. Ong Ante, et. al., G.R. No. L-30558, Oct. 4, 1971). Both client and counsel must appear at the pre-trial. this is mandatory. Failure of the client to appear is a ground for dismissal. (American Ins. Co. vs. Republic 1967D Phil. 63; Home Ins. Co. vs. United States Lines Co., 1967D Phil. 401, cited in Saulog vs. Custombuilt Manufacturing Corp. No. L-29612, Nov. 15, 1968; Taroma v. Sayo, L-37296, Oct. 30, 1975 (67 SCRA 508). In the case of Insurance Co. of the North America vs. Republic, et. al., G.R. No.L-26794, Nov. 15, 1967, 21 SCRA 887, the Supreme Court, speaking thru Justice Bengzon, held that Sec. 1, Rule 20 of the Rules requries the court to hold a pre-trial before the case is heard and since in this case, a pre-trial has already been had, the fact that an amended complaint was later filed, did not necessitate another pretrial. it would have been impractical, useless and time-consuming to call another pre-trial. Under the rules of pleading and practice, the answer ordinarily is the last pleading, but when the defendant's answer contrains a counterclaim, plaintiff's answer to it is the last pleading. When the defendant's answer has a cross-claim, the answer or the cross-defendant to it sit he last pleading. Where the plaintiff's answer to a counterclaim contains a counterclaim constains a counter-claim agains the opposing party or a cross-claim against a co-defendant, the answer of the opposing party to the counterclaim or the answer of the co-defendant to the cross-claim is the last pleading. And where the plaintiff files a reply alleging facts in denial or avoidance of new matter by way of defense in the answer, such reply constitutes the last pleading. (Francisco, the Revised Rules of Court, Vo. II, pp. 2-3). The above citations and authorites are the ground rules upon which the conflictings claims of the opposing partie's may be resolved and decided. First, the legality of the order of default dated February 29, 1971 and the decision dated March 9, 1972. there is spread out in the Record on Appeal, pp. 92-93 that on May 5, 1971, a pre-trial. was conducted by the court between the plaintiff Ben Uy Rodriguez spouses and the defendant Pioneer Insurance & Surety Corp. The record or results of said pre-trial is found in the ordr of the court dated May 5, 1971, which states: When this case was called for pre-trial today, the plaintiffs and their counsel, Atty. Hilario Davide Jr. appeared. On the other hand, the defendant Pioneer Insurance & Surety Corp. represented by its counsel, Atty. Amando Ignacio also appeared. When asked by the court if there is any possibility of settling this case amicably, the counsel for the defendant answered in the negative. Both counsels agreed that the only issue to the resolved bu the Court is whether the bonding company is laible or not, and if so, how much?

Petitioners filed a motion for reconsideration which was denied, hence this appeal by certiorari from the decision of the Court of Appeals and is now before Us being assailed and faulted on three principal issues: 1. the illegality of th order of the default and the decision arising therefrom; 2. the inadequacy of the remedy of appeal; and 3. the lack of jurisdiction of the Court in the principal case. The petitioner's main thrust in this legal attack is directed to the other dated February 29, 1972 declaring defendants (now the petitioners) in default at the second pre-trial hearing and allowing the plaintiffs (the present private respondents) to present evidence ex parte before the Clerk of Court, which evidence uncotradicted and unrebutted was lifted almost en toto as the basis of the decision granting damages so enormous and so huge in amount as to exceed the bounds of reason and fairness. The procedure for the pre-trial of a case is laid down by Rule 20, Revised Rules of court, which provides, to wit: Sec. 1. Pre-trial mandatory. In any action, after the last pleading has been filed, the ourt shall direct the parties and their attorneys to appear before it for a conference to consider': (a) The possibility of an amicable settlement or of a submission to arbitration; (b) The simplification of the issues; (c) The necessity or desirability of amendments to the pleadings; (d) The possibility of obtaining stipulations or admissions of facts and of documents to avoid unnecessary proofs; (e) The limitation of the number of witnesses; (f) The advisability of a preliminary reference of isues to a commissioner, (g) Such other matters as may aid in the prompt disposition of the action. Sec. 2. Failure to appear at pre-trial conference. A party who fails to appear at a pre-trial conference may be non-suited or considered as in default.

Atty. Hilario Davide, Jr. caused the markings of the following exhibit. Exhibit "A-pre-trial", the finanacial report of Ben Rodriguez as of December 31, 1969; and Exhibit "B-pre-trial", the affidavit of handwriting expert Perfecto Espina, and thereafter he reserved his right to mark additinal exhibits during the trial on the merits. The counsel for the defendant also reserved his right to object to the Exhibits of the plaintiffs and mark his exhibits during the trial on the merits of the case. Both counsels are given ten (10) days from today within which to file their simulatteneous memoranda or authorities in support of the motion for preliminary hearing and its objection thereto. and thereafter his incident will be resolved by the Court. Following agreement of the partiesm, the trial on the the merits of this case is set for June 11, 1971 at 8:30 o'clock in the moring. The parties thru their respective counsels are notified in open court of this order. SO ORDERED. Cebu City, Philippines, May 5, 1971. S G D . ) A G A P I T O H O N T A N O S A S The defendant Pioneer Insurance & Surety Corp. having complied with the order of the Court to appear and attend this pre-trial, and had manifested its opposition to settling the case amicably, said party may no longer be compelled to attend a second pre-trial hearing, and neither may it be punished by the court by its orde declaring said defendant as in default. The mandatory character of a pre-trial nad the serious consequences confronting the parties in the event that each party fails to attend the same must impose a strict application of the Rule such that where we find no authority for the the Court to call another pre-trial hearing, as in fact there is none in said Rule, the conclusion is inescapable that the respondent Judge committed a grave and serious abuse of discretion and acted in excess of jurisdiction in declaring defedant Pioneer Insurance & Surety Corp. "as in default" for failure to attend the second pre-trial called by the Judge on February 29, 1972. In other words, there is nothing in the Rules that empowers or has called a first pre-trial duly attended by tha prties, and lacking such authority, the court perforce lack the autority to declare a failure to prosecute on the part of the plaintiff for failing to attend such second pre-trial; it also lack the authority to declare the defendant "as in default" by reason of the latter's failure to be present at the said second pre-trial. It serves no purpose for the court to call again another pre-trial where the parties had previously agreed to disagree, where the issues had been joined and where the court itself had been satisfied that a hearing on the merits is the next step to conduct as int he instant case where the court, after the pretrial on May 5, 1971, set he trial of the case on its merits for June 11, 1971. Indeed, a second pre-trial is impractical, useless and time-consuming. We have not lost sight of the fact that when the first pre-trial was called and conducted, the party litigants were the Ben Uy Rodriguez spouses as plaintiffs, while Pioneer Insurance & Surety Corp. and Allied Overseas Commercial Co. (although not yet summoned) were the defendants, whereas at the time the second pre-trial was called, the original complaint had been amended to implead Hadji Esmayaten Lucman as additional defendant. The amendment of the complaint to implead Lucman J did not, however, alter the impracticability, the uselessness and the absence of authority to call a second U pretrial hearing since the amended complaint merely impleaded Lucman as the assignee of the original defendant AlliedD Overseas Commercial Co. and no additional cause of action was alleged; the prayer was the same and the amount of damages sought was the same as that in the original complaint.

( R e c o r d o n A p p e a l , p . 9 3 )

Second, the prematureness of the pre-trial called on February 28, 1972, assuming that there was need to have another pre-trial. The records (Record on Appeal, p. 293) show that the notice of the clerk of court setting the case for pre-trial on February 28, 1972 was issued and dated February 7, 1972. As of this date, February 7,1972, the complaint had been amended on August 27, 1971 by impleading the defendant Hadji Esmayaten Lucman who filed his answer on December 24, 1971, interposing therein a compulsory counterclaim. (Record on Appeal, pp. 239-240). Before this date of February 7, 1972, the court had already promulgated the Decision dated January 28, 1972 as against Lucman only. Likewise, as of February 7, 1972, defendant Pioneer Insurance & Surety Corp. had also filed its answer to the amended complaint, interposing too a compulsory counterclaim. But as of February 7, 1972, the plaintiffs have not yet filed their answer to the compulsory counterclaims of the defendants (which is necessarily the last pleading to be filed in order that the case is ready and ripe for the pre-trial). It was only on February 22, 1972 that plaintiffs made their reply to the answer, and their answer to the compulsory, counterclaim of defendant Lucman 'Record on Appeal, pp. 299- 301). The records do not disclose any reply of the plaintiffs to the answer of Pioneer Insurance & Surety Corp., nor any answer to the compulsory counterclaim of the Corp. The above state of the case as far as the pleadings are concerned clearly and manifestly show that the case was not yet ready for pre-trial, that it was as yet premature because the last pleading had not yet been filed by the plaintiffs. Even the state of the pleadings as of February 21, 1972 when the telegrams were sent notifying the parties of the pre-trial for February 28, 1972 reveals the prematureness of calendaring the case pre-trial. As of February 21, 1972, the complaint was already amended to implead Lucman who submitted his answer with compulsory counterclaim. but plaintiffs had not yet filed their reply and their answer to the counterclaim, because the records indicate that the plaintiffs' answer to the counterclaim, because the records indicate that the plaintiffs' answer to the counterclaim is dated February 22, 1972. (Record on Appeal, pp. 299-301). And to the compulsory counterclaim of defendant Pioneer Insurance & Surety Corp., plaintiffs made no answer whatsoever. Third, the notices given by the clerk of court thru telegrams on February 21, 1972 notifying the parties of the pre-trial on February 28, 1972 were insufficient, in law and jurisprudence. We have careffully noted the telegraphic notices sent by the clerk of court and we find this omission which is fatal to the respondents' cause: no telegram was sent to the defendant Pioneer Insurance & Surety Corp. The telegram was sent to the counsel of this defendant, but none to the defendant itself. The Court had directed the clerk of court to send notice by telegram to the parties for the February 28 pre-trial. The clerk did send the telegram to Atty. Eriberto Ignacio, counsel for Pioneer Insurance & Surety Corp., but omitted and failed to send telegram to the party itself, the corporation, as required strictly by law. Notice to the counsel is not enough. We reiterate that this failure is a jurisdictional defect. Reading the order of the court dated february 29, it appears in black and white (Record on Appeal, pp. 306-307, Annex W, Rollo, p. 194) that only two telegraphic messages were sent by the clerk of court, thus (1) the message addressed to Atty. Eriberto Ignacio delivered to the given address at 3:45 P.M. the same day it was filed but the signature of he recipient was unreadable; (2) the other message addressed to Hadji Esmayaten Lucman per RCPI San Juan also delivered on the same day, February 21, 1972 and personally 4eceived by the addressee himself. This was the offficial advice received by the Court from the Radio Communications of the Philippines thru which the telegrams were wired. This is also confirmed by the Order of the Court dated April 11, 1972 denying the defendant's Urgent Motion for Reconsideration. The other states. Per advice from the Radio Communications of the Philippines, Inc. these two messages were received by the addressees, Atty. Eriberto Ignacio and Hadji Esmayaten Lucman on the same day it was filed, that is on February 21, 1972.

Decidedly, there was no telegram sent to party defendant Pioneer Insurance & Surety Corp., informing it of the February 28 pre-trial hearng. The reason for requiring the presence of the party who must be notified is explained in the case of Home Insurance Co. vs. United Lines Co. (L-25593, November 15, 1967, 21 SCRA 863), where the Court, speaking thru Justice Bengzon, said that: A party who fails to appear at a pre-trial conference may be non-suited or considered as in default. This shows the purpose of the Rules to compel the parties to appear personally before the court to reach, if possible, a compromise. Accordingly the court is given the discretion to dismiss the case should plaintiff not appear at the pre-trial. Fourth, the denial of the motion for postponement was a grave abuse of discretion. We grant the court the discretion to postpone any hearing, pre-trial or on the merits of the case, but the exercise of discretion must be based on reasonable grounds. The motion (Record on Appeal, pp. 301-303) had alleged grounds which are meritorious and not frivolous nor intended for delay, which are 1. no formal order of the court scheduling the February 28 pre-trial had been received; 2. pre-trial cannot be had as yet be set as the issues are not yet fully joined; 3. counsel has a hearing previously set in Manila in a criminal case which was of an intransferable character. We are also concede that counsel may not presume nor take for granted that his motion for postponement and the proposed setting to March 22 or 23, 1972 will be granted by the court but where the court had actually postponed the hearing on February 28, 1972 due to the absence of the defendants and their counsel, and scheduled the pre-trial to March 20, 1972 at 8:30 o'clock in the morning (Record on Appeal, pp. 304-306), we find no reason nor fairness in the court's order of February 29, 1972 finding defendants as in default since the pre-trial was moved to a later date in March as prayed in the motion. The motion for postponement was received on February 28, 1972 at the Cebu Post Office, as shown in the postmarks on the envelope (photographed on p. 322, record on Appeal) but was not immediately delivered to the court although the envelope bore the words, "registered Air Mail/Special Delivery with Return Card." If the letter containing the moton was not yet delivered to the Court the next day, February 29, 1972 when the court made the order declaring defendants in default, this was clearly a postal neglect and omission to perform its duty, not attributable to defendants, The Court, in the exercise of wise discretion, could have restored their standing in court and given them an even chance to face their opponents. For refusing to set aside said order of default and the decision, we hold the Court of Appeals in reversible error therefor. The respondent Court of Appeals has ignored established rulings of the Supreme Court in Pineda vs. Court of Appeals, 67 SCRA 228, that a party may not be declared in default for future to attend the pre-trial where only his counsel was notified of the pre-trial schedule; in Sta. Maria, Jr. vs. Court of Appeals, 45 SCRA 596 that a pre-trial is unnecessary where the case could not be settled and that the fact that an amended complaint was later filed with leave of court did not, undue the circumstances, necessitate another pre-trial; and in Pineda vs. Court of Appeals, 67 SCRA 288 that Courys should be liberal in setting asiode default judgment. At this juncture, it is necessary to emphasize once more the pronouncement of this Court speaking through Justice Teehankee in Taroma vs. sayo, 67 SCRA 509, pp. 512-513, that: For the guidelines of the bench and bar, therefore, the Court in reaffirminf the ruling that notice of pre-trial must be served separately upon the party and his counsel of record, retates that while service of such notice to party may be made directly to the party, it is best that the trial courts uniformly serve such notice to party through or care of his counsel of the obligation of notifying the party of the date, time and palce of the pre-trial conference and assuring that the party either appear thereat or deliver to counsel a written authority to represent the party with power to compromise the case, with the warning that a party who fails to do so may be non-suited or declared in default.

The second point at issue is whether the remedy of ordinary appeal in the case is palin, speedy and adequate such that the writ of certiorari will not lie. We have adverted to previously that the Court of Appeals in its extended Resolution dated July 25, 1972 ruled that although appeal was available, such remedy is not sufficiently speedy and adequate to cure the defects in the proceedings therein or to remedy the disadvantageous position of petitioners because, since they were deprived of raising any issue or defense that they have in the respondent court by reason of the order of default, they cannot raise said issue or defense for the first time on appeal. Yet, on October 30, 1972, the Court in its decision held that the remedy of appeal is not inadequate in that whatever errors respondent Judge might have committed in his order or judgment may be assigned as specific errors in their appeal before said tribunal, and that it can review any errors of fact and of law in the appeal. This conflicting stand of the Court of Appeals issuing from the same case is as difficult to resolve as it is to reconcile them. We have but to rule on them. hold one to be correct and dislodge the other as an error. On general principles, the writ of certiorari will lie where there is no appeal, nor any plain, speedy and adequate remedy in the ordinary course of law. The existence of an appeal is a bar to writ of certiorari where such appeal is in itself a sufficient and adequate remedy, in that it will promptly relieve the petitioner from the injurious effects of the order or judgment complained of. (Silvestre v. Torres, 57 Philippines 885, 890; Pachoco v. Tumangday L-14500, May 25, 1960; Lopez et al. v. Alvendia, et al. L20697, Dec. 24, 1964). Courts ordinarily do not deny the writ if the result would be to deprive a party of his substantial rights and leave him without remedy, and in those instances wherein the lower court has acted without jurisdiction over the subject matter, or where the order or judgment complained of is a patent nullity, courts have gone even as far as to disregard completely the question of petitioner's fault, the reason being, undoubtedly, that acts performed with absolute want of jurisdiction over the subject matter are void ab initio and cannot be validated by consent, express or implied, of the parties. (Moran, Comments on the Rules of Court, Vol. 3, 1970 ed., pp. 169-170). There are numerous cases where the Supreme Court has granted the writ notwithstanding the existence of an appeal. Thus, the Supreme Court to avoid future litigations, passed upon a petition for certiorari though the proper remedy was appeal. Writs have been granted despite the existence of the remedy of appeal where public welfare and the advancement of public policy so dictate, the broader interests of justice so require, or where the orders complained of were found to be completely null and void, or that the appeal was not considered the appropriate remedy. (Fernando v. Varquez, No. L-26417, Jan. 30, 1970) As to what is an adequate remedy, it has been defined as "a remedy which is equally beneficial, speedy and sufficient, not merely a remedy which at some time in the future will bring about a revival of the judgment of the lower court complained of in the certiorari proceeding, but a remedy which will promptly relieve the petitioner from the injurious effects of that judgment and the acts of the inferior court or tribunal." (Silvestre v. Torres, 57 Phil. 885, 11 CJ., p. 113) Now to the case at bar, We find here a number of special facts and circumstances which addresses themselves to the wise discretion of this court with such force to induce Us to grant the writ in order to prevent a total or partial failure of justice, to redress or prevent the wrong done. We are satisfied that petitioners are cornered into a desperate position where they have been ordered to pay damages over and above the amount of the bond posted for the attachment of private respondents' properties as ordered by the decision of the court based on evidence presented ex parte by reason of the order of default, and more than that, plaintiff Rodriguez is relieved from civil liability on an inexplicable and unprecedented finding that the plaintiffs' check was a forgery, (when the check exhibited was only a xerox copy of the original, which original was in the records of the case filed in the court of First instance of Rizal, Civil Case No. 14499 entitled "Hadji Esmayaten Lucman vs. Benjamin Rodriguez, et al.," (Record on Appeal, pp. 49-55). Again, the conflicting notices as to the hearing ordered, pre-trial in one and on the merits in the other, is not the doing of the petitioners of their standing in court was in effect a failure of justice. Petitioners can no longer present their evidence to rebut the claim of damages, or reduce the unconscionable and excessive damages or question the release of plaintiff's debt, for the same may not be submitted nor raised for the first time on appeal. We, therefore, hold that the Court of Appeals erred in holding that the appeal is adequate. The court erred in ignoring the doctrine laid

down in Omico v. Villegas, 63 SCRA 285, that appeal is not an adequate remedy where party is illegally declared in default. Petitioners assail the jurisdiction of the court of First Instance of Cebu in Civil Case No. 12069-R filed by the Rodriguez spouses, seeking damages for the alleged malicious and unlawful is2suance of the writ of preliminary attachment against the latter's properties granted by the Court of First Instance of Manila upon the posting of a security bond in the amount of P450,000.00 given by the petitioner Pioneer Insurance & Surety Corp. The petitioners contend that under See. 20, Rule 57 of the Revised Rules of Court, the claim for damages against a bond in an alleged wrongful attachment can only be prosecuted in the same court where the bond was filed and the attachment issued. Rule 57, Sec. 20 of the Revised Rules of Court provides, to wit: Claim for damages on account of illegal attachment. If the judgment on the action be in favor of the party against whom attachment was issued, he may recover, upon the bond given or deposit made by the attaching creditor, any damages resulting from the attachment. Such damages may be awarded only upon application and after proper hearing, and shall be included in the final judgment. The application must be filed before the trial or before appeal is perfected or before the judgment becomes executory, with due notice to the attaching creditor and his surety or sureties, setting forth the facts shaking his right if damages and the amount thereof. xxx xxx xxx On the other hand, the private respondents argue that the above rule is not applicable to the case at bar, citing Moran, Vol. Rules of Court, 1963 pp. 51-52, to wit: ... the rule that a claim for damages arising from the issuance of a wit of attachment, injunction, receivership and replevin should be presented in the same action is not applicable where the principal case has been dismissed for lack of Jurisdiction and no claim for damages could therefore have beer presented in said case. The position of the petitioners is correct. The ruling in the case of Santos vs. Court of Appeals, et al., 95 Phil. 360 advanced by respondents to support their stand, is not controlling here, or We find that no claim for damages against the surety bond in support of a preliminary. attachment was ever presented or filed. The latest decisions of this Court in Ty Tion et al., vs. Marsman & Co., et al., L-17229, July 31, 1962, 5 SCRA 761 reiterating the rulings in Del Rosario vs. Nava, 50 O.G. 4189; Estioco vs. Hamada, L- 11079, May 21, 1958; Neva Espa;a vs. Montelibano, 58 Phil, 807; Tan Suyco vs. Javier, 21 Phil. 82; Raymundo vs. Carpio, 33 Phil. 894; Santos v. Moir,36 Phil. 350; lay down the proper and pertinent rule that the claim for damages against a bond in an aleged wrongful attachment can only be prosecuted in the same court where the bond was filed and the attachment issued. Moreover, the records show that private respondent Rodriguez filed an Application for Damages Against Bond dated December 3, 1970 (Record on Appeal, pp. 77-81) praying that Wherefore, it is respectfully prayed that in the event the motion to dismiss and the motion to discharge attachment were granted, the defendant be allowed to present evidence to prove damages sustained by him by reason of the attachment against the Pioneer Insurance & Surety Corp. in a hearing that may be conducted for the purpose with due notice to the plaintiff and the surety, and that after due notice and hearing judgment be rendered against the Pioneer Insurance and Surety Corp. for such amount of damages as may be proved and established for defendant.

The defendant further prays for such other reliefs and remedies consistent with law, justice and equity. Cebu City, December 3, 1970. The Court of First Instance of Manila in its order dated Dcember 22, 1970, after dismissing the complaint and lifting the writ of preliminary attachment, ordered that the hearing of the application for damages against the bond be set aside on January 14, 1971 at 8:30 a.m. (Record on Appeal, pp. 82-86) In other words, defendant Rodriguez sought that judgment be rendered against the surety for such amount of damages as may be proved or established by him, and was granted by the court the opportunity to prove damages against the bond of the surety company. He even cited the very provision of the Revised Rules of Court, Rule 57, Sec. 20 to justify his application, and the cases supporting his application, for otherwise his claim will forever be barred. In effect, at this point in time, defendant Rodriguez waived the lack of jurisdiction on his person, be seeking an affirmative relief from the court, which he cannot now complain before this Court. Thus, Francisco, in his Revised Rules of Court, Vol. 1, p. 130 citing 21 C.J.S. writes that: Objections to lack of jurisdiction of the person, and other objections to jurisdiction not based on the contention that there is an absolute want of jurisdiction of the subject matter, are waived by invoking the court's jurisdiction, as by a counterclaim, consent, or voluntary submission, to jurisdiction, or conduct amounting to a general appearance. In Soriano v. Palacio, 12 SCRA 557, this Court held that even if jurisdiction was not originally acquired by the Court over the defendant due to allegedly defective services of summons, still when the latter filed a motion for reconsideration of the judgment by default, he is considered to have submitted to said court's jurisdiction. We agree with the petitioners that the Court of Appeals erred in not dismissing the complaint with respect to the petitioner Pioneer Insurance & Surety Corp., over which respondent-appellee Judge had not acquired jurisdiction pursuant to Sec. 20, Rule 57 of the Revised Rules of the Court. IN VIEW OF THE FOREGOING, the judgment of the Court of Appeals is reversed and another one is entered declaring the order of default dated February 29, 1972 and the decision rendered by the respondent Judge on March 9, 1972 null and void, holding that the Court of First Instance of Cebu lacks jurisdiction to hear and determine the claim for damages arising from the alleged wrongful attachment issued by the Court of First Instance of Manila and ordering the dismissal of that case (Civil Case No. 12069 of the Court of First Instance of Cebu), as well as the pending of the judgment herein annuled in the Court of Appeals which has been rendered moot. Petition granted. SO ORDERED. Teehankee, (Chairman), Makasiar, Martin and Fernandez, JJ., concur. Mu;oz Palma, J., took no part.

Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G.R. No. 158997 October 6, 2008

xxx Section 22, on the other hand, reads: Section 22. Lien on the Properties of the Lessee Upon the termination of this Contract or the expiration of the Lease Period without the rentals, charges and/or damages, if any, being fully paid or settled, the LESSOR shall have the right to retain possession of the properties of the LESSEE used or situated in the Leased Premises and the LESSEE hereby authorizes the LESSOR to offset the prevailing value thereof as appraised by the LESSOR against any unpaid rentals, charges and/or damages. If the LESSOR does not want to use said properties, it may instead sell the same to third parties and apply the proceeds thereof against any unpaid rentals, charges and/or damages. Tirreno began to default in its lease payments in 1999. By July 2000, Tirreno was already in arrears byP5,027,337.91. FBDC and Tirreno entered into a settlement agreement on 8 August 2000. Despite the execution of the settlement agreement, FBDC found need to send Tirreno a written notice of termination dated 19 September 2000 due to Tirreno's alleged failure to settle its outstanding obligations. On 29 September 2000, FBDC entered and occupied the leased premises. FBDC also appropriated the equipment and properties left by Tirreno pursuant to Section 22 of their Contract of Lease as partial payment for Tirreno's outstanding obligations. Tirreno filed an action for forcible entry against FBDC before the Municipal Trial Court of Taguig. Tirreno also filed a complaint for specific performance with a prayer for the issuance of a temporary restraining order and/or a writ of preliminary injunction against FBDC before the Regional Trial Court (RTC) of Pasig City. The RTC of Pasig City dismissed Tirreno's complaint for forum-shopping. On 4 March 2002, Yllas Lending Corporation and Jose S. Lauraya, in his official capacity as President, (respondents) caused the sheriff of Branch 59 of the trial court to serve an alias writ of seizure against FBDC. On the same day, FBDC served on the sheriff an affidavit of title and third party claim. FBDC found out that on 27 September 2001, respondents filed a complaint for Foreclosure of Chattel Mortgage with Replevin, docketed as Civil Case No. 01-1452, against Tirreno, Eloisa Poblete Todaro (Eloisa), and Antonio D. Todaro (Antonio), in their personal and individual capacities, and in Eloisa's official capacity as President. In their complaint, respondents alleged that they lent a total of P1.5 million to Tirreno, Eloisa, and Antonio. On 9 November 2000, Tirreno, Eloisa and Antonio executed a Deed of Chattel Mortgage in favor of respondents as security for the loan. The following properties are covered by the Chattel Mortgage: a. Furniture, Fixtures and Equipment of Savoia Ristorante and La Strega Bar, a restaurant owned and managed by [Tirreno], inclusive of the leasehold right of [Tirreno] over its rented building where [the] same is presently located. b. Goodwill over the aforesaid restaurant, including its business name, business sign, logo, and any and all interest therein. c. Eighteen (18) items of paintings made by Florentine Master, Gino Tili, which are fixtures in the above-named restaurant. The details and descriptions of the above items are specified in Annex "A" which is hereto attached and forms as an integral part of this Chattel Mortgage instrument.4 In the Deed of Chattel Mortgage, Tirreno, Eloisa, and Antonio made the following warranties to respondents: 1. WARRANTIES: The MORTGAGOR hereby declares and warrants that:

FORT BONIFACIO DEVELOPMENT CORPORATION petitioner, vs. YLLAS LENDING CORPORATION and JOSE S. LAURAYA, in his official capacity as President, respondents. DECISION CARPIO, J.: The Case This is a petition for review on certiorari1 of the Orders issued on 7 March 20032 and 3 July 20033 by Branch 59 of the Regional Trial Court of Makati City (trial court) in Civil Case No. 01-1452. The trial court's orders dismissed Fort Bonifacio Development Corporation's (FBDC) third party claim and denied FBDC's Motion to Intervene and Admit Complaint in Intervention. The Facts On 24 April 1998, FBDC executed a lease contract in favor of Tirreno, Inc. (Tirreno) over a unit at the Entertainment Center - Phase 1 of the Bonifacio Global City in Taguig, Metro Manila. The parties had the lease contract notarized on the day of its execution. Tirreno used the leased premises for Savoia Ristorante and La Strega Bar. Two provisions in the lease contract are pertinent to the present case: Section 20, which is about the consequences in case of default of the lessee, and Section 22, which is about the lien on the properties of the lease. The pertinent portion of Section 20 reads: Section 20. Default of the Lessee 20.1 The LESSEE shall be deemed to be in default within the meaning of this Contract in case: (i) The LESSEE fails to fully pay on time any rental, utility and service charge or other financial obligation of the LESSEE under this Contract; xxx 20.2 Without prejudice to any of the rights of the LESSOR under this Contract, in case of default of the LESSEE, the lessor shall have the right to: (i) Terminate this Contract immediately upon written notice to the LESSEE, without need of any judicial action or declaration;

a. The MORTGAGOR is the absolute owner of the above named properties subject of this mortgage, free from all liens and encumbrances. b. There exist no transaction or documents affecting the same previously presented for, and/or pending transaction.5 Despite FBDC's service upon him of an affidavit of title and third party claim, the sheriff proceeded with the seizure of certain items from FBDC's premises. The sheriff's partial return indicated the seizure of the following items from FBDC: A. FIXTURES (2) - Smaller Murano Chandeliers (1) - Main Murano Chandelier B. EQUIPMENT (13) - Uni-Air Split Type 2HP Air Cond. (2) - Uni-Air Split Type 1HP Air Cond. (3) - Uni-Air Window Type 2HP Air Cond. (56) - Chairs (1) - Table (2) - boxes - Kitchen equipments [sic]6 The sheriff delivered the seized properties to respondents. FBDC questioned the propriety of the seizure and delivery of the properties to respondents without an indemnity bond before the trial court. FBDC argued that when respondents and Tirreno entered into the chattel mortgage agreement on 9 November 2000, Tirreno no longer owned the mortgaged properties as FBDC already enforced its lien on 29 September 2000. In ruling on FBDC's motion for leave to intervene and to admit complaint in intervention, the trial court stated the facts as follows: Before this Court are two pending incidents, to wit: 1) [FBDC's] Third-Party Claim over the properties of [Tirreno] which were seized and delivered by the sheriff of this Court to [respondents]; and 2) FBDC's Motion to Intervene and to Admit Complaint in Intervention. Third party claimant, FBDC, anchors its claim over the subject properties on Sections 20.2(i) and 22 of the Contract of Lease executed by [FBDC] with Tirreno. Pursuant to said Contract of Lease, FBDC took possession of the leased premises and proceeded to sell to third parties the properties found therein and appropriated the proceeds thereof to pay the unpaid lease rentals of [Tirreno]. FBDC, likewise filed a Motion to Admit its Complaint-in-Intervention.

In Opposition to the third-party claim and the motion to intervene, [respondents] posit that the basis of [FBDC's] third party claim being anchored on the aforesaid Contract [of] Lease is baseless. [Respondents] contend that the stipulation of the contract of lease partakes of a pledge which is void under Article 2088 of the Civil Code for being pactum commissorium. xxx By reason of the failure of [Tirreno] to pay its lease rental and fees due in the amount of P5,027,337.91, after having notified [Tirreno] of the termination of the lease, x x x FBDC took possession of [Tirreno.'s] properties found in the premises and sold those which were not of use to it. Meanwhile, [respondents], as mortgagee of said properties, filed an action for foreclosure of the chattel mortgage with replevin and caused the seizure of the same properties which [FBDC] took and appropriated in payment of [Tirreno's] unpaid lease rentals.7 The Ruling of the Trial Court In its order dated 7 March 2003, the trial court stated that the present case raises the questions of who has a better right over the properties of Tirreno and whether FBDC has a right to intervene in respondents' complaint for foreclosure of chattel mortgage. In deciding against FBDC, the trial court declared that Section 22 of the lease contract between FBDC and Tirreno is void under Article 2088 of the Civil Code.8 The trial court stated that Section 22 of the lease contract pledges the properties found in the leased premises as security for the payment of the unpaid rentals. Moreover, Section 22 provides for the automatic appropriation of the properties owned by Tirreno in the event of its default in the payment of monthly rentals to FBDC. Since Section 22 is void, it cannot vest title of ownership over the seized properties. Therefore, FBDC cannot assert that its right is superior to respondents, who are the mortgagees of the disputed properties. The trial court quoted from Bayer Phils. v. Agana9 to justify its ruling that FBDC should have filed a separate complaint against respondents instead of filing a motion to intervene. The trial court quoted from Bayer as follows: In other words, construing Section 17 of Rule 39 of the Revised Rules of Court (now Section 16 of the 1997 Rules on Civil Procedure), the rights of third-party claimants over certain properties levied upon by the sheriff to satisfy the judgment may not be taken up in the case where such claims are presented but in a separate and independent action instituted by the claimants.10 The dispositive portion of the trial court's decision reads: WHEREFORE, premises considered, [FBDC's] Third Party Claim is hereby DISMISSED. Likewise, the Motion to Intervene and Admit Complaint in Intervention is DENIED.11 FBDC filed a motion for reconsideration on 9 May 2003. The trial court denied FBDC's motion for reconsideration in an order dated 3 July 2003. FBDC filed the present petition before this Court to review pure questions of law. The Issues FBDC alleges that the trial court erred in the following:

1. Dismissing FBDC's third party claim upon the trial court's erroneous interpretation that FBDC has no right of ownership over the subject properties because Section 22 of the contract of lease is void for being a pledge and a pactum commissorium; 2. Denying FBDC intervention on the ground that its proper remedy as third party claimant over the subject properties is to file a separate action; and 3. Depriving FBDC of its properties without due process of law when the trial court erroneously dismissed FBDC's third party claim, denied FBDC's intervention, and did not require the posting of an indemnity bond for FBDC's protection.12 The Ruling of the Court The petition has merit. Taking of Lessee's Properties without Judicial Intervention We reproduce Section 22 of the Lease Contract below for easy reference: Section 22. Lien on the Properties of the Lessee Upon the termination of this Contract or the expiration of the Lease Period without the rentals, charges and/or damages, if any, being fully paid or settled, the LESSOR shall have the right to retain possession of the properties of the LESSEE used or situated in the Leased Premises and the LESSEE hereby authorizes the LESSOR to offset the prevailing value thereof as appraised by the LESSOR against any unpaid rentals, charges and/or damages. If the LESSOR does not want to use said properties, it may instead sell the same to third parties and apply the proceeds thereof against any unpaid rentals, charges and/or damages. Respondents, as well as the trial court, contend that Section 22 constitutes a pactum commissorium, a void stipulation in a pledge contract. FBDC, on the other hand, states that Section 22 is merely a dacion en pago. Articles 2085 and 2093 of the Civil Code enumerate the requisites essential to a contract of pledge: (1) the pledge is constituted to secure the fulfillment of a principal obligation; (2) the pledgor is the absolute owner of the thing pledged; (3) the persons constituting the pledge have the free disposal of their property or have legal authorization for the purpose; and (4) the thing pledged is placed in the possession of the creditor, or of a third person by common agreement. Article 2088 of the Civil Code prohibits the creditor from appropriating or disposing the things pledged, and any contrary stipulation is void. On the other hand, Article 1245 of the Civil Code defines dacion en pago, or dation in payment, as the alienation of property to the creditor in satisfaction of a debt in money. Dacion en pago is governed by the law on sales.Philippine National Bank v. Pineda13 held that dation in payment requires delivery and transmission of ownership of a thing owned by the debtor to the creditor as an accepted equivalent of the performance of the obligation. There is no dation in payment when there is no transfer of ownership in the creditor's favor, as when the possession of the thing is merely given to the creditor by way of security. Section 22, as worded, gives FBDC a means to collect payment from Tirreno in case of termination of the lease contract or the expiration of the lease period and there are unpaid rentals, charges, or damages. The existence of a contract of pledge, however, does not arise just because FBDC has means

of collecting past due rent from Tirreno other than direct payment. The trial court concluded that Section 22 constitutes a pledge because of the presence of the first three requisites of a pledge: Tirreno's properties in the leased premises secure Tirreno's lease payments; Tirreno is the absolute owner of the said properties; and the persons representing Tirreno have legal authority to constitute the pledge. However, the fourth requisite, that the thing pledged is placed in the possession of the creditor, is absent. There is non-compliance with the fourth requisite even if Tirreno's personal properties are found in FBDC's real property. Tirreno's personal properties are in FBDC's real property because of the Contract of Lease, which gives Tirreno possession of the personal properties. Since Section 22 is not a contract of pledge, there is no pactum commissorium. FBDC admits that it took Tirreno's properties from the leased premises without judicial intervention after terminating the Contract of Lease in accordance with Section 20.2. FBDC further justifies its action by stating that Section 22 is a forfeiture clause in the Contract of Lease and that Section 22 gives FBDC a remedy against Tirreno's failure to comply with its obligations. FBDC claims that Section 22 authorizes FBDC to take whatever properties that Tirreno left to pay off Tirreno's obligations. We agree with FBDC. A lease contract may be terminated without judicial intervention. Consing v. Jamandre upheld the validity of a contractually-stipulated termination clause: This stipulation is in the nature of a resolutory condition, for upon the exercise by the [lessor] of his right to take possession of the leased property, the contract is deemed terminated. This kind of contractual stipulation is not illegal, there being nothing in the law proscribing such kind of agreement. xxx Judicial permission to cancel the agreement was not, therefore necessary because of the express stipulation in the contract of [lease] that the [lessor], in case of failure of the [lessee] to comply with the terms and conditions thereof, can take-over the possession of the leased premises, thereby cancelling the contract of sub-lease. Resort to judicial action is necessary only in the absence of a special provision granting the power of cancellation.14 A lease contract may contain a forfeiture clause. Country Bankers Insurance Corp. v. Court of Appeals upheld the validity of a forfeiture clause as follows: A provision which calls for the forfeiture of the remaining deposit still in the possession of the lessor, without prejudice to any other obligation still owing, in the event of the termination or cancellation of the agreement by reason of the lessee's violation of any of the terms and conditions of the agreement is a penal clause that may be validly entered into. A penal clause is an accessory obligation which the parties attach to a principal obligation for the purpose of insuring the performance thereof by imposing on the debtor a special prestation (generally consisting in the payment of a sum of money) in case the obligation is not fulfilled or is irregularly or inadequately fulfilled.15 In Country Bankers, we allowed the forfeiture of the lessee's advance deposit of lease payment. Such a deposit may also be construed as a guarantee of payment, and thus answerable for any unpaid rent or charges still outstanding at any termination of the lease. In the same manner, we allow FBDC's forfeiture of Tirreno's properties in the leased premises. By agreement between FBDC and Tirreno, the properties are answerable for any unpaid rent or charges at any termination of the lease. Such agreement is not contrary to law, morals, good customs, or public policy. Forfeiture of the properties is the only security that FBDC may apply in case of Tirreno's default in its obligations.

Intervention versus Separate Action Respondents posit that the right to intervene, although permissible, is not an absolute right. Respondents agree with the trial court's ruling that FBDC's proper remedy is not intervention but the filing of a separate action. Moreover, respondents allege that FBDC was accorded by the trial court of the opportunity to defend its claim of ownership in court through pleadings and hearings set for the purpose. FBDC, on the other hand, insists that a third party claimant may vindicate his rights over properties taken in an action for replevin by intervening in the replevin action itself. We agree with FBDC. Both the trial court and respondents relied on our ruling in Bayer Phils. v. Agana to justify their opposition to FBDC's intervention and to insist on FBDC's filing of a separate action. In Bayer, we declared that the rights of third party claimants over certain properties levied upon by the sheriff to satisfy the judgment may not be taken up in the case where such claims are presented, but in a separate and independent action instituted by the claimants. However, both respondents and the trial court overlooked the circumstances behind the ruling in Bayer, which makes the Bayer ruling inapplicable to the present case. The third party in Bayer filed his claim during execution; in the present case, FBDC filed for intervention during the trial. The timing of the filing of the third party claim is important because the timing determines the remedies that a third party is allowed to file. A third party claimant under Section 16 of Rule 39 (Execution, Satisfaction and Effect of Judgments)17 of the 1997 Rules of Civil Procedure may vindicate his claim to the property in a separate action, because intervention is no longer allowed as judgment has already been rendered. A third party claimant under Section 14 of Rule 57 (Preliminary Attachment)18 of the 1997 Rules of Civil Procedure, on the other hand, may vindicate his claim to the property by intervention because he has a legal interest in the matter in litigation.19 We allow FBDC's intervention in the present case because FBDC satisfied the requirements of Section 1, Rule 19 (Intervention) of the 1997 Rules of Civil Procedure, which reads as follows: Section 1. Who may intervene. - A person who has a legal interest in the matter in litigation, or in the success of either of the parties, or an interest against both, or is so situated as to be adversely affected by a distribution or other disposition of property in the custody of the court or of an officer thereof may, with leave of court, be allowed to intervene in the action. The court shall consider whether or not the intervention will unduly delay or prejudice the adjudication of the rights of the original parties, and whether or not the intervenor's rights may be fully protected in a separate proceeding. Although intervention is not mandatory, nothing in the Rules proscribes intervention. The trial court's objection against FBDC's intervention has been set aside by our ruling that Section 22 of the lease contract is not pactum commissorium. Indeed, contrary to respondents' contentions, we ruled in BA Finance Corporation v. Court of Appeals that where the mortgagee's right to the possession of the specific property is evident, the action need only be maintained against the possessor of the property. However, where the mortgagee's right to possession is put to great doubt, as when a contending party might contest the legal bases for mortgagee's cause of action or an adverse and independent claim of ownership or right of possession is raised by the contending party, it could become essential to have other persons involved and accordingly impleaded for a complete determination and resolution of the controversy. Thus: A chattel mortgagee, unlike a pledgee, need not be in, nor entitled to, the possession of the property, unless and until the mortgagor defaults and the mortgagee thereupon seeks to foreclose thereon. Since the mortgagee's right of possession is conditioned upon the actual default which itself may be controverted, the inclusion of other parties, like the debtor or the
16

mortgagor himself, may be required in order to allow a full and conclusive determination of the case. When the mortgagee seeks a replevin in order to effect the eventual foreclosure of the mortgage, it is not only the existence of, but also the mortgagor's default on, the chattel mortgage that, among other things, can properly uphold the right to replevy the property. The burden to establish a valid justification for that action lies with the plaintiff [mortgagee]. An adverse possessor, who is not the mortgagor, cannot just be deprived of his possession, let alone be bound by the terms of the chattel mortgage contract, simply because the mortgagee brings up an action for replevin.20 (Emphasis added) FBDC exercised its lien to Tirreno's properties even before respondents and Tirreno executed their Deed of Chattel Mortgage. FBDC is adversely affected by the disposition of the properties seized by the sheriff. Moreover, FBDC's intervention in the present case will result in a complete adjudication of the issues brought about by Tirreno's creation of multiple liens on the same properties and subsequent default in its obligations. Sheriff's Indemnity Bond FBDC laments the failure of the trial court to require respondents to file an indemnity bond for FBDC's protection. The trial court, on the other hand, did not mention the indemnity bond in its Orders dated 7 March 2003 and 3 July 2003. Pursuant to Section 14 of Rule 57, the sheriff is not obligated to turn over to respondents the properties subject of this case in view of respondents' failure to file a bond. The bond in Section 14 of Rule 57 (proceedings where property is claimed by third person) is different from the bond in Section 3 of the same rule (affidavit and bond). Under Section 14 of Rule 57, the purpose of the bond is to indemnify the sheriff against any claim by the intervenor to the property seized or for damages arising from such seizure, which the sheriff was making and for which the sheriff was directly responsible to the third party. Section 3, Rule 57, on the other hand, refers to the attachment bond to assure the return of defendant's personal property or the payment of damages to the defendant if the plaintiff's action to recover possession of the same property fails, in order to protect the plaintiff's right of possession of said property, or prevent the defendant from destroying the same during the pendency of the suit. Because of the absence of the indemnity bond in the present case, FBDC may also hold the sheriff for damages for the taking or keeping of the properties seized from FBDC. WHEREFORE, we GRANT the petition. We SET ASIDE the Orders dated 7 March 2003 and 3 July 2003 of Branch 59 of the Regional Trial Court of Makati City in Civil Case No. 01-1452 dismissing Fort Bonifacio Development Corporation's Third Party Claim and denying Fort Bonifacio Development Corporation's Motion to Intervene and Admit Complaint in Intervention. We REINSTATE Fort Bonifacio Development Corporation's Third Party Claim andGRANT its Motion to Intervene and Admit Complaint in Intervention. Fort Bonifacio Development Corporation may hold the Sheriff liable for the seizure and delivery of the properties subject of this case because of the lack of an indemnity bond. SO ORDERED.

Republic of the Philippines SUPREME COURT Manila THIRD DIVISION

motion with counterbond was filed. On July 13, 1994, the trial court issued an order, the decretal portion of which reads, to wit: 10 WHEREFORE, and in view of the foregoing, the counterbond of the defendant, is hereby approved. The Sheriff is hereby ordered to release to the defendant the attached vehicle bearing Motor No. 6D-57-51813 with Plate No. UV BBR-127. Respondent refused to comply with the said order. Instead, he released the passenger jeep to Ignacio after the latter had executed a receipt therefor together with an undertaking that he would produce the jeep whenever required by the court. Respondent justified such release by saying that the court had no storage building that would protect the jeep from damage or loss. 11 Despite the pendency of a motion for contempt 12 filed by complainant against respondent, the case was dismissed 13 on August 31, 1994 because jurisdiction over the case had been transferred to the municipal trial court as mandated by Republic Act No. 7691 which expanded said court's jurisdiction. After receipt of respondent's Comment dated April 20, 1996, the Court referred the case to the Office of the Court Administrator for evaluation, report and recommendation. In a memorandum to the Chief Justice dated August 29, 1996, Acting Court Administrator Reynaldo L. Suarez recommended a finding of guilt and suspension of respondent for six (6) months without pay. 14 Issue The main issue in this case is whether respondent sheriff is administratively liable for failing to release the property under custodia legis to the complainant in accordance with the order of the regional trial court. Respondent sheriff contends that his act of not taking into his official custody the attached property was not unlawful but was in fact reasonable because the court had no facility for its storage. That it could no longer be returned to complainant's possession in accordance with the court's order was not his fault but that of the attaching creditor who had violated his obligation to produce the same whenever required by the court. He offers "to pay a fine in the discretion of the Honorable Court as he has not benefited any pecuniary interest (sic)." 15 The Court's Ruling Respondent's contentions are without merit. We agree with the Court Administrator that respondent should be held administratively liable. First Issue: Manner of Attachment

A.M. No. P-96-1184 March 24, 1997 NATIONAL BUREAU OF INVESTIGATION and SANTIAGO N. SALVADOR, complainants, vs. RODOLFO G. TULIAO, Sheriff IV of the RTC of Cauayan, Isabela, Branch 20, respondent.

PANGANIBAN, J.: Sheriffs play an important role in the administration of justice. They form an integral part thereof because they are called upon to serve court writs, execute all processes, and carry into effect the orders of the court with due care and utmost diligence. 1 As agents of the law, high standards are expected of them. In the present case, respondent sheriff failed to live up to these standards. A complaint against Respondent Deputy Provincial Sheriff Rodolfo G. Tuliao of the Regional Trial Court of Cauayan, Isabela, Branch 20 was filed by Santiago N. Salvador before the Tuguegarao Sub-Office (TUGSO) of the National Bureau of Investigation ("NBI"). 2 An investigation was conducted by Agentin-Charge Franklin Javier and Agent Raul A. Ancheta. On November 24, 1994, complainant gave his statement 3 to Agent Paul Gino Rivera. Invoking his right to remain silent, respondent sheriff refused to "submit himself to custodial investigation" before Agent Javier. Instead, he submitted a Compliance 4 dated July 22, 1995 and an Answer 5 dated August 4, 1995. After the investigation, Agents Javier and Ancheta recommended, inter alia, the filing of an administrative case with the Office of the Court Administrator. 6 Atty. Gerarda G. Galang, Chief of the NBI Legal and Evaluation Division, concurred with said recommendation. 7 On November 13, 1995, Director Mariano M. Mison of the NBI transmitted to this Court a copy of the evaluation with the recommendation that appropriate action be taken against respondent. 8 Hence, this administrative complaint now before us. The Facts Complainant Salvador bought a passenger jeep from Lito G. Ignacio to be paid in monthly installments of P7,000.00 with a down payment of P50,000.00. After remitting the down payment, complainant diligently paid all monthly amortizations until March 1994 when, in the absence of Ignacio, the complainant was forced to pay to an unnamed brother of the seller the amounts due for the months of April and May 1994. However, the brother failed to remit said amount to the seller; thus, the latter filed with the Regional Trial Court of Cauayan, Isabela, Branch 20 9 a suit for collection docketed as Civil Case No. 20-757, entitled Pisces Motor Works, Represented by Lito D. Ignacio vs. Santiago Salvador. Subsequently, an order was issued by the RTC directing respondent sheriff to attach the passenger jeep. Complainant, through counsel, filed a motion to discharge attachment upon filing of a counterbond for the release of the vehicle in his favor. Due to some defects in the aforementioned motion, a second

This Court finds respondent sheriff's manner of attachment irregular and his reason therefor totally unacceptable. Rule 57 of the Rules of Court provides: 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, . . . xxx xxx xxx

Sec. 7. Attachment of real and personal property, recording thereof Properties shall be attached by the officer executing the order in the following manner: xxx xxx xxx (c) Personal property capable of manual delivery, by taking and safely keeping it in his capacity, after issuing the corresponding receipt therefor; xxx xxx xxx Clearly, respondent's act of leaving the passenger jeep in the possession and control of the creditor did not satisfy the foregoing requirements of the Rules; neither did it conform to the plainly worded RTC order. The note in the receipt that imposed on Ignacio the obligation to produce the same whenever required by the court was no compliance either, because it did not establish that the property was in respondent sheriff's substantial presence and possession. Respondent fell short of his obligation to take and safely keep the attached property "in his capacity." He cannot feign ignorance of this duty as he himself correctly cited an early decision of this Court explaining a sheriff's duty in attachment, as follows: 16 . . . A verbal declaration of seizure or service of a writ of attachment is not sufficient. There must be an actual taking of possession and placing of the attached property under the control of the officer or someone representing him. (Hollister vs. Goodale, 8 Conn., 332, 21 Am. Dec., 674; Jones vs. Howard, 99 Ga., 451, 59 Am. St. Rep., 231.) We believe that . . . to constitute a valid levy of an attachment, the officer levying it must take actual possession of the property attached as far as . . . practicable (under the circumstances). He must put himself in (a) position to, and must assert and, in fact, enforce a dominion over the property adverse to and exclusive of the attachment debtor, and such property must be in his substantial presence and possession. (Corniff vs. Cook, 95 Ga., 61, 51 Am. St. Rep., 55, 61.) Of course, this does not mean that the attaching officer may not, under an arrangement satisfactory to himself, put anyone in possession of the property for the purpose of guarding it, but he can not in this way relieve himself from liability to the parties interested in said attachment. That Ignacio was able to move the passenger jeep to an unknown location is further proof that respondent sheriff had not taken and safely kept it in his substantial presence, possession and control. His claim that the regional trial court did not have any storage facility to house said property is no justification. He could have deposited it in a bonded warehouse. 17 Contrary to respondent sheriff's contention, compelling the attaching creditor to release the property in question was not in order, because the proper remedy provided by the Rules of Court was for the party whose property had been attached to apply for the discharge of the attachment by filing a counterbond. 18 The effect of this remedy is the delivery of possession of the attached property to the party giving the counterbond. The attaching creditor was not authorized to have possession of the attached property, contrary to the insistence of respondent sheriff. Second Issue: Liability of a Sheriff A court employee should keep in mind that he is an integral part of that organ of the government that is involved in the sacred task of administering justice. His conduct and behavior should perforce be

circumscribed with the heavy burden of responsibility and must at all times be characterized by propriety and decorum. 19 Section 4(c) of Republic Act No. 6713 requires of every public official and employee justness and sincerity in the discharge and execution of official duties. It exacts from him at all times respect for the rights of others and proscribes him from dispensing or extending undue favors on account of his office. The Court in Chan vs. Castillo held: 20 Every officer or employee in the judiciary is duty bound to obey the orders and processes of the court without the least delay (Pascual vs. Duncan, 216 SCRA 786 [1992]), . . . Leaving the attached property in the possession of the attaching creditor makes a farce of the attachment. This is not compliance with the issuing court's order. When a writ is placed in the hands of a sheriff, it is his duty, in the absence of any instructions to the contrary, to proceed with reasonable celerity and promptness to execute it according to its mandate. 21 He is supposed to execute the order of the court strictly to the letter. 22 If he fails to comply, he is liable to the person in whose favor the process or writ runs. 23 Respondent's pretense of having acted in utmost good faith for the preservation of the attached property is hardly credible because there was no reason for his having acted thus. In sum, he is unable to satisfactorily explain why he failed to take such movable in his control. By acceding to the request of Ignacio, respondent sheriff actually extended an undue favor which prejudiced the complainant as well as the orderly administration of justice. He exceeded his powers which were limited to the faithful execution of the court's orders and service of its processes. 24 His prerogatives did not give him any discretion to determine who among the parties was entitled to possession of the attacked property. That he exerted efforts in going to the creditor's residence in Tuguegarao, Cagayan to obtain possession of the attached property was an act of compliance with the writ of attachment. This action, belated as it was, did not mitigate his liability. Much less did it exculpate him from penalty. IN VIEW OF THE FOREGOING, respondent sheriff is hereby found administratively liable as charged and isSUSPENDED for six (6) months without pay with a warning that the commission of the same or similar acts in the future shall be dealt with more severely by this Court. SO ORDERED. Narvasa, C.J., Davide, Jr., Melo and Francisco, JJ., concur.

Republic of the Philippines SUPREME COURT Manila SECOND DIVISION

the items and merchandise pointed to by the Ting family as having been taken from the Mansion Emporium and nearby bodega which are as follows: a) 329 boxes of "GE" Flat Iron, each box containing 6 pcs. each; b) 229 boxes of Magnetic Blank Tapes with 48 pcs. each;

G.R. No. 83897 November 9, 1990 c) 239 boxes of floor polishers marked "Sanyo" ESTEBAN B. UY JR. and NILO S. CABANG, petitioners, vs. THE HONORABLE COURT OF APPEALS, WILSON TING, and YU HON. respondents. E.P. Mallari & Associates for petitioners. Elpidio G. Navarro for private respondents. On April 12, 1982, a third party claim was filed by Wilson Ting and Yu Hon (private respondents herein) in the same Civil Case No. Q-34782, addressed to petitioner Cabang asserting ownership over the properties attached at No. 65 Speaker Perez St., Quezon City (other than those attached at No. 296 Palanca St., Manila). The third party claim specifically enumerated the properties, as reflected in the Partial Sheriffs Return dated April 1 3, 1 982, belonging to the plaintiffs (private respondents herein). On the same day that petitioner Cabang filed his Partial Sheriffs Return (April 19, 1982) the third party claimants and Yu filed a motion to dissolve the aforementioned writ of preliminary attachment in the same Civil Case No. Q34782; alleging among others, that being the absolute owners of the personal properties listed in their third party claim which were illegally seized from them they were willing to file a counterbond for the return thereof; which motion was opposed by plaintiff Uy. On April 29, 1982, then CFI Judge Jose P. Castro rendered judgment by default in said Civil Case No. Q-34782 in favor of plaintiff Uy. Meanwhile, on May 5, 1982, third party claimants Wilson Ting and Yu Hon filed a complaint for Damages with application for preliminary injunction against Esteban Uy and Nilo Cabang (co-petitioners herein) in the then Court of First Instance of Rizal, Branch 52, Quezon City ('the court a quo' for short) which case was docketed as Civil Case No. Q-35128 ('the second case' for short). The complaint alleged inter alia that the plaintiffs are the owners of the personal properties reflected in the Partial Sheriffs Return dated April 13, 1983 which have been attached and seized by defendant Cabang. In this second civil case, the court a quo (then presided over by CFI Judge Concepcion B. Buencamino) issued an order on May 5, 1982, stating among other things, the following: Considering that it will take time before this Court could act upon said prayers for the issuance of a Writ of Preliminary Injunction, the parties are hereby ordered to maintain the STATUS QUO in this case with respect to the properties attached and subject of this action alleged to belong to the plaintiffs" (Rollo, p. 133) Meanwhile, in the first case, where a judgment by default had been rendered, the first court issued an order striking off from the records all pleadings filed by the third party claimants. d) 54 boxes of floor polishers marked "Ronson" xxx xxx xxx

PARAS, J.: This is a petition for review on certiorari seeking to reverse the decision ** which dismissed CA-G.R. No. SP-05659 for certiorari and Prohibition with Preliminary Injunction and/or Restraining Order filed by petitioner seeking to annul and set aside the two Orders dated August 24, 1982 and October 10, 1983 issued by the then Court of First Instance of Rizal Branch LII *** (now Regional Trial Court of Quezon City Branch XCLVll ****) in Civil Case No. Q-35128, granting a writ of preliminary attachment and directing the sheriff assigned therein to attach the properties of defendants Uy and Cabang (herein petitioners); and denying defendants' motion to dismiss. The antecedent facts of the case as found by the Court of Appeals are as follows: On March 24, 1982, Esteban B. Uy, Jr. (herein petitioner) filed a complaint against Sy Yuk Tat for sum of money, damages, with preliminary attachment, docketed as Civil Case No. Q-34782 ("the first case" for short) in the then Court of First Instance of Rizal, Branch LII, Quezon City (the case was later assigned to the Regional Trial Court of Quezon City, Branch XCVII now presided over by respondent Judge). On the same day, upon plaintiff filing a bond of P232,780.00 said court issued a writ of preliminary attachment and appointed Deputy Sheriff Nilo S. Cabang (co-petitioner herein) as Special Sheriff to implement the writ. On April 6, 1982, the same court issued a break-open order upon motion filed by petitioner Uy. On the following day, April 7, 1982, petitioner Cabang began to implement the writ of preliminary attachment as the Special Sheriff on the case. On April 19, 1982, petitioner Cabang filed a Partial Sheriffs Return, stating, inter alia: xxx xxx xxx That in the afternoon of April 12, 1982, the undersigned together with Atty. Lupino Lazaro, plaintiff's counsel and the members of the same team proceeded to No. 65 Speaker Perez St., Quezon City, and effected a physical and actual count of

With respect to the case in the court a quo, defendants Uy and Cabang filed their answer with counterclaim. Meanwhile, in the first case, plaintiff Uy on June 7, 1982, filed an ex-parte motion for writ of execution which was granted the following day, June 8, 1982. On the same day (June 7, 1982) that plaintiff Uy filed his exparte motion for writ of execution he and Cabang filed a motion to quash or dissolve status quo order in the case a quo as defendants therein on the ground that the court "has no jurisdiction to interfere with properties under custodia legis on orders of a court of co-equal and co-ordinate jurisdiction" and that plaintiffs' complaint is not for recovery of properties in question. On June 24, 1982, plaintiff Uy in the first case filed his ex parte motion to authorize Sheriff to sell the attached properties enumerated in Sheriff Cabang's partial return filed on April 19, 1982, on the ground that the properties under custodia legis were perishable especially those taken from No. 65 Speaker Perez, Quezon City. Subsequently, on July 2, 1982, in the case a quo the court denied defendants', Uy and Cabang, motion to quash or dissolve the status quo order. Meanwhile, the first case on July 12, 1982, Cabang filed another partial sheriffs return this time stating among others that the judgment in that case had been partially satisfied, and that in the public auction sale held on July 6, 1982, certain personal properties had been sold to plaintiff Esteban Uy, Jr., the winning bidder for P15,000.00 while the other properties were sold in the amount of P200,000.00 in cash with Bernabe Ortiz of No. 97 Industrial Avenue, Northern Hill, Malabon Manila as the highest bidder. Back to the case a quo, on August 23, 1982, plaintiffs Ting and Yu Hon filed a motion for preliminary attachment alleging this ground: "In the case at bar, which, is one 'to recover possession of personal properties unjustly detained, ... the property... has been ... removed ... (and) disposed of to prevent its being found or taken by the applicant or an officer" and/or said defendants are guilty of fraud in disposing of the property for the taking, (or) detention ... of which the action is brought (Sec. 1(c) and (d), Rule 57, Rules of Court) Acting on such motion the court a quo, on August 24, 1 982, issued the disputed order granting the writ of preliminary attachment prayed for by the plaintiffs (Wilson Ting and Yu Hon), stating that: Let a writ of preliminary attachment issue upon the plaintiffs putting up a bond in the amount of P1,430,070.00, which shall be furnished to each of the

defendants with copies of the verified application therewith, and the sheriff assigned to this court, Danilo Del Mundo, shall forthwith attach such properties of the defendants not exempt from execution, sufficient to satisfy the applicants' demand. (Rollo, p. 247) On August 31, 1982, in the same case a quo, defendant Uy filed an urgent motion to quash and/or dissolve preliminary attachment which motion was opposed by plaintiffs Ting and Yu Hon. About half a year later, on February 21, 1982, in the case a quo, defendant Uy filed a motion for preliminary hearing on affirmative defenses as motion to dismiss. Following an exchange of subsequent papers between the parties, the court a quo issued the other disputed order which denied defendant Uy's motion to dismiss on October 10, 1983. The motion to quash was also denied by the court a quo on December 9, 1983. Defendant Uy filed a motion for reconsideration on both Orders. Finally, on February 15, 1985, respondent Judge issued two Orders denying both motions for reconsideration. (CA decision, Rollo, p. 109-122) Thereafter, petitioners Esteban Uy, Jr. and Nilo Cabang filed with the Court of Appeals a petition for Certiorari and Prohibition with prayer for a Writ of Preliminary Injunction or a Restraining Order to annul and set aside the two orders issued by the then CFI of Rizal Branch 52. In its decision, the Court of Appeals dismissed the petition, the dispositive portion of which reads: WHEREFORE, finding respondent Judge not to have committed a grave abuse of discretion amounting to lack or excess of jurisdiction in issuing the order dated August 24, 1982, denying petitioners' motion to quash the writ of preliminary attachment, and the order dated October 10, 1983, denying petitioners' motion to dismiss the complaint a quo, we hereby deny the instant petition, and therefore dismiss the same. No pronouncement as to cost. (Rollo, pp. 132-133) Hence, the instant petition. In the resolution of October 16, 1989, the Court gave due course to the petition and required both parties to submit simultaneous memoranda within thirty days from notice (Rollo, p. 190). Private respondents filed their memorandum on December 6, 1989 (Ibid., p. 192) while petitioners filed their memorandum on January 5, 1990 (Ibid., p. 208) The main issue in this case is whether or not properties levied and seized by virtue of a writ of attachment and later by a writ of execution, were under custodia legis and therefore not subject to the jurisdiction of another co-equal court where a third party claimant claimed ownership of the same properties. The issue has long been laid to rest in the case of Manila Herald Publishing Co. Inc. v. Ramos (88 Phil. 94 [1951]) where the Court filed that while it is true that property in custody of the law may not be interfered with, without the permission of the proper court, this rule is confined to cases where the property belongs to the defendant or one in which the defendant has proprietary interests. But when the Sheriff, acting beyond the bounds of his office seizes a stranger's property, the rule does not apply and interference with his custody is not interference with another court's order of attachment.

Under the circumstances, this Court categorically stated: It has been seen that a separate action by the third party who claims to be the owner of the property attached is appropriate. If this is so, it must be admitted that the judge trying such action may render judgment ordering the sheriff or whoever has in possession of the attached property to deliver it to the plaintiff claimant or desist from seizing it. It follows further that the court may make an interlocutory order, upon the filing of such bond as may be necessary, to release the property pending final adjudication of the title. Jurisdiction over an action includes jurisdiction on interlocutory matter incidental to the cause and deemed necessary to preserve the subject matter of the suit or protect the parties' interests. This is self-evident. (Manila Herald Publishing Co. Inc. v. Ramos, supra). The foregoing ruling was reiterated in the later case of Traders Royal Bank v. IAC (133 SCRA 141 [1984]) and even more recently in the case of Escovilla v. C.A. G.R. No. 84497, November 6, 1989, where this Court stressed: The power of the court in the execution of judgments extends only over properties unquestionably belonging to the judgment debtor. The levy by the sheriff of a property by virtue of a writ of attachment may be considered as made under the authority of the court only when the property levied upon belongs to the defendant. If he attaches properties other than those of the defendant, he acts beyond the limits of this authority. The court issuing a writ of execution is supposed to enforce its authority only over properties of the judgment debtor. Should a third party appear to claim the property levied upon by the sheriff, the procedure laid down by the Rules is that such claim should be the subject of a separate and independent action. Neither can petitioner complain that they were denied their day in court when the Regional Trial Court issued a writ of preliminary attachment without hearing as it is well settled that its issuance may be made by the court ex parte. As clearly explained by this Court, no grave abuse of discretion can be ascribed to respondent Judge in the issuance of a writ of attachment without notice to petitioners as there is nothing in the Rules of Court which makes notice and hearing indispensable and mandatory requisites in its issuance. (Filinvest Credit Corp. v. Relova, 117 SCRA 420 [1982]; Belisle Investment & Finance Co. Inc. v. State Investment House, Inc. 151 SCRA 631 [1987]; Toledo v. Burgos, 168 SCRA 513 [1988]). In addition, petitioner's motion to quash or discharge the questioned attachment in the court a quo is in effect a motion for reconsideration which cured any defect of absence of notice. (Dormitorio v. Fernandez, 72 SCRA 388 [1976]). Estoppel is likewise unavailing in the case at bar by the mere fact that private respondent Ting (complainant in the court a quo) pointed the items and merchandise taken from the Mansion House and nearby Bodega which were levied and hauled by Special Sheriff Cabang, where in the report of said Sheriff made earlier on April 6, 1982, he stated that on the same occasion referred to in his Partial Return, private respondents denied Sy Yuk Tat's ownership over the goods in question. (Rollo, pp. 203204). In like manner, the sale of the disputed properties at the public auction, in satisfaction of a judgment of a co-equal court does not render the case moot and academic. The undeviating ruling of this Court in such cases is that attachment and sale of properties belonging to a third person is void because such properties cannot be attached and sold at public auction for the purpose of enforcing a judgment against the judgment debtor. (Orosco v. Nepomuceno, 57 Phil. 1007 [1932-33]). The other issues in this case deserve scant consideration.

On the issue of the expiration of the restraining order, there is no argument that the life span of the status quoorder automatically expires on the 20th day and no judicial declaration to that effect is necessary (Paras v. Roura, 163 SCRA 1 [1988]). But such fact is of no consequence in so far as the propriety of the questioned attachment is concerned. As found by the Court of Appeals, the grounds invoked by respondents for said attachment did not depend at all upon the continuing efficacy of the restraining order. As to petitioner's contention that the complaint filed by private respondent in the lower court is merely seeking an ancillary remedy of injunction which is not a cause of action itself, the Court of Appeals correctly observed that the object of private respondents' complaint is injunction although the ancillary remedy of preliminary injunction was also prayed for during the pendency of the proceeding. Finally, the non-joinder of the husband of private respondent, Yu Hon as well as her failure to verify the complaint does not warrant dismissal of the complaint for they are mere formal requirements which could be immediately cured without prejudice to the rights of the petitioners. This Court frowns on the resort to technicalities to defeat substantial justice. Thus, the Court states that the rules of procedure are intended to promote not to defeat substantial justice, and therefore, they should not be applied in a very rigid and technical sense. (Angel v. Inopiquez, G.R. 66712, January 13, 1989). Again on another occasion where an appeal should have been dismissed for non-compliance with the Rules, the Court relaxed the rigid interpretation of the Rules holding that a straight-jacket application will do more injustice. (Pan-Am Airways v. Espiritu, 69 SCRA 45 [1976]). PREMISES CONSIDERED, the petition is hereby DENIED and the assailed decision of the Court of Appeals is hereby AFFIRMED. SO ORDERED. Melencio-Herrera (Chairperson), Padilla, Sarmiento and Regalado, JJ., concur. Republic of the Philippines SUPREME COURT Manila FIRST DIVISION

G.R. Nos. 65957-58 July 5, 1994 ELEAZAR V. ADLAWAN and ELENA S. ADLAWAN, petitioners, vs. Hon. Judge RAMON AM. TORRES, as Presiding Judge of Branch 6, Regional Trial Court Cebu City, ABOITIZ & COMPANY, INC. and THE PROVINCIAL SHERIFFS OF CEBU, DAVAO, RIZAL and METRO MANILA, Respectively, respondents. Pablo P. Garcia for petitioners. Isaias P. Dicdican and Sylva G. Aguirre-Paderanga for Aboitiz & Co., Inc.

QUIASON, J.:

This is a petitioner for certiorari and mandamus with preliminary injunction or restraining order to nullify: (1) the Order dated September 14, 1983 of respondent Judge Ramon Am. Torres of the Regional Trial Court, Branch 6, Cebu City, in Civil Case No. CEB-1185 and the Order dated September 26, 1983 of Judge Emilio A. Jacinto of Branch 23 of the same court in Civil Case No. CEB-1186, which granted the motion for the issuance of writs of preliminary attachment for the seizure of the property of petitioners by respondent Provincial Sheriffs; and (2) the Order dated December 12, 1983 of respondent Judge Ramon Am. Torres in the consolidated cases, Civil Case No. CEB-1185 and Civil Case No. CEB-1186. I In a complaint dated April 24, 1982 filed with the Court of First Instance of Cebu, now Regional Trial Court, (Civil Case No. R-21761), respondent Aboitiz and Company, Inc. (Aboitiz) sought to collect from petitioners a sum of money representing payments for: (1) the unpaid amortizations of a loan; (2) technical and managerial services rendered; and (3) the unpaid installments of the equipment provided by respondent Aboitiz to petitioners (Rollo, p. 37). Acting on the ex parte application for attachment, the Executive Judge of the Court of First Instance of Cebu, issued on May 14, 1982, an order directing the issuance of the writ of preliminary attachment against the property of petitioners upon the filing by respondent Aboitiz of an attachment bond. Subsequently, the case was raffled to Branch 11 of the Court of First Instance of Cebu, which issued a writ of attachment addressed to the Provincial Sheriffs of Cebu and the City Sheriff of Davao City. It was the Sheriff of Davao City who enforced the writ of attachment, resulting in the seizure of heavy construction equipment, motor vehicle spare parts, and other personal property with the aggregate value of P15,000,000.00. The said court also granted the motion of respondent Aboitiz to take possession and custody of the attached property of petitioners and ordered the Provincial Sheriff of Davao to deliver the property to respondent Aboitiz. Petitioners moved for a bill of particulars and to set aside the ex parte writ of attachment. Finding merit in the motion to set aside the writ, Branch 11 ordered on July 6, 1982 the lifting of the writ and, consequently, the discharge of the property levied upon. Respondent Aboitiz filed an urgent ex parte motion, praying for the stay of the July 6, 1982 Order for a period of 15 days for it to be able to appeal the order. The motion was favorably acted upon. However, on July 13, 1982, respondent Aboitiz filed a notice of dismissal of its complaint in accordance with Section 1, Rule 17 of the Revised Rules of Court. Consequently, Branch 11 issued an order confirming the notice of dismissal, emphasizing that all orders of the court issued prior to the filing of said notice of dismissal had been rendered functus oficio, and considering all pending incidents in the case as moot and academic. Petitioner Eleazar Adlawan filed a motion praying that the July 6, 1982 Order be implemented and enforced. On December 20, however, Branch 11 denied the motion on account of the filing by respondent Aboitiz before Branch 16 of the Court of First Instance of Cebu in Lapu-lapu City of an action for delivery of personal property (Civil Case No. 619-L), and the filing by petitioner Eleazar Adlawan before Branch 10 of the same court of an action for damages in connection with the seizure of his property under the writ of attachment. In the replevin suit, Branch 16 ordered the seizure and delivery of the property described in the complaint. Said property were later delivered by the provincial sheriff to respondent Aboitiz. Alleging that while his office was situated in Cebu City, Adlawan was a resident of Minglanilla, and therefore, the Lapu-lapu City court should not entertain the action for replevin. Petitioner Eleazar Adlawan filed an omnibus motion praying for the reconsideration and dissolution of the writ of seizure, the retrieval of the property seized, and the dismissal of the complaint. He also averred that the property seized were in custodia legis by virtue of the writ of attachment issued by Branch 11. His omnibus motion was denied. Subsequently, he filed a motion for reconsideration which was not granted.

The denial of his omnibus motion led petitioner Eleazar Adlawan to file a petition for certiorari and mandamus in the Supreme Court (G.R. No. 63225). The Third Division of this Court ruled on April 3, 1990 that since attachment is an ancillary remedy, the withdrawal of the complaint left it with no leg to stand on. Thus, the Court disposed of the case as follows: WHEREFORE, in view of the foregoing, this Court rules that the attached properties left in the custody of private respondent Aboitiz and Company, Inc. be returned to petitioner Eleazar V. Adlawan without prejudice to the outcome of the cases filed by both parties (Rollo, p. 324). Respondent Aboitiz filed a motion for reconsideration of the decision, contending that the replevin case was distinct and separate from the case where the writ of attachment was issued. It argued that the writ of replevin, therefore, remained in force as the Third Division of the Supreme Court had not found it illegal. The motion was, however, denied with finality in the Resolution of July 11, 1990. Undaunted, respondent Aboitiz filed a second motion for reconsideration with a prayer that the dispositive portion of the decision be clarified. It asserted that because the writ of preliminary attachment was different from the writ of replevin, we should rule that the property subject of the latter writ should remain in custodia legis of the court issuing the said writ. In the Resolution dated September 10, 1990, the Third Division stated that "the properties to be returned to petitioner are only those held by private respondent (Aboitiz) by virtue of the writ of attachment which has been declared non-existent." Accordingly, the dispositive portion of the April 3, 1990 decision of the Third Division of this Court was modified to read as follows: WHEREFORE, in view of the foregoing, this Court rules that the properties in the custody of the private respondent Aboitiz & Company by virtue of the writ of attachment issued in Civil Case No. R-21761 be returned to the petitioner, but properties in the custody of the private respondent by virtue of the writ of replevin issued in Civil Case No. 619-L be continued in custodia legis of said court pending litigation therein. The Decision in G.R. No. 63225 having become final and executory, entry of judgment was made on November 15, 1990. This should have terminated the controversy between petitioners and respondent Aboitiz insofar as the Supreme Court was concerned, but that was not to be. On September 9, 1983 respondent Aboitiz filed against petitioners two complaints for collection of sums of money with prayers for the issuance of writs of attachment in the Regional Trail Court, Branch 23, Cebu City, docketed as Civil Cases Nos. CEB-1185 and CEB-1186. The complaint in Civil Case No. CEB-1185 alleged that petitioner Eleazar Adlawan (defendant therein) was awarded a contract for the construction of the Tago Diversion Works for the Tago River Irrigation Project by the National Irrigation Administration and that respondent Aboitiz (plaintiff therein) loaned him money and equipment, which indebtedness as of June 30, 1983 totaled P13,430,259.14. Paragraph 16 of the complaint states: 16. That, in view of the enormous liabilities which the defendants have with the plaintiff, defendants executed a real estate mortgage covering eleven (11) parcels of land in favor of Philippine Commercial and Industrial Bank (PCIB) to secure a P1,000,000.00 loan with said bank and was able to remove, conceal and dispose of their properties, obviously to defraud the plaintiff, . . . (Rollo, pp. 65-66). The complaint in Civil Case No. CEB-1186 alleged that petitioner Eleazar Adlawan (defendant therein) was awarded a contract for the construction of the Lasang River Irrigation Project by the National Irrigation Administration and that respondent Aboitiz (plaintiff therein) loaned him money and equipment, which indebtedness as of June 30, 1983 totalled P5,370,672.08. Paragraph 15 of the complaint is similarly worded as paragraph 16 of the complaint in Civil Case No. CEB-1185.

Civil Case No. CEB-1185 was raffled to the Regional Trial Court, Branch 6, presided by respondent Judge Ramon Am. Torres. On September 14, 1983, respondent Judge ordered the issuance of a writ of attachment upon respondent Aboitiz' filing of a bond of P5,000,000.00. Similarly, in Civil Case No. CEB-1186, which was raffled to Branch 23, presiding Judge Emilio A. Jacinto ordered the issuance of a writ of attachment upon the filing of a bond of P2,500,000.00. Accordingly, in Civil Case No. CEB-1185, the Acting Provincial Sheriff of Cebu issued separate writs dated September 26, 1983 addressed to the Sheriffs of Cebu, Davao and Metro Manila. No writ of preliminary attachment was, however, issued in Civil Case No. CEB-1186. Petitioners then filed in Civil Cases Nos. CEB-1185 and CEB-1186 urgent motions to hold in abeyance the enforcement of the writs of attachments. They alleged in the main that since their property had been previously attached and said attachment was being questioned before the Supreme Court in G.R. No. 63225, the filing of the two cases, as well as the issuance of the writs of attachment, constituted undue interference with the processes of this court in the then pending petition involving the same property. Upon motion of respondent Aboitiz, Branch 23 issued on October 13, 1983, an order directing the transfer to Branch 6 of Civil Case No. CEB-1186 for consolidation with Civil Case No. CEB-1185. Meanwhile, in its comment on petitioners' motion to withhold the enforcement of the writs of attachment, respondent Aboitiz alleged that the voluntary dismissal of Civil Case No. R-21761 under Section 1, Rule 17 of the Revised Rules of Court was without prejudice to the institution of another action based on the same subject matter. It averred that the issuance of the writ of attachment was justified because petitioners were intending to defraud respondent Aboitiz by mortgaging 11 parcels of land to the Philippine Commercial and Industrial Bank (PCIB) in consideration of the loan of P1,100,000.00, thereby making PCIB a preferred creditor to the prejudice of respondent Aboitiz, which had an exposure amounting to P13,430,259.14. Petitioners then filed a rejoinder to said comment, contending that since the property subject of the writ of attachment have earlier been attached or replevied, the same property were under custodia legis and therefore could not be the subject of other writs of attachment. On December 12, 1983, respondent Judge issued an order finding no merit in petitioners' motion for reconsideration and directing the sheriffs of Cebu, Davao and Metro Manila "to proceed with the enforcement and implementation of the writs of preliminary attachment." Respondent Judge ruled that the writs of attachment were issued on the basis of the supporting affidavits alleging that petitioner had removed or disposed of their property with intent to defraud respondent Aboitiz (Rollo, pp. 109113). On December 15, petitioners filed an ex parte motion praying: (1) that the December 12, 1983 Order be set for hearing; (2) that they be given 15 days within which to either file a motion for reconsideration or elevate the matter to this Court or the then Intermediate Appellate Court; and (3) that within the same 15-day period the implementation or enforcement of the writs of attachment be held in abeyance. On the same day, respondent Judge issued an order holding in abeyance the enforcement of the writs of preliminary attachment in order to afford petitioners an opportunity to seek their other remedies (Rollo, p. 116). On December 27, petitioners filed the instant petition for certiorari and mandamus. They alleged that respondent Judge gravely abused his discretion in ordering the issuance of the writs of preliminary attachment inasmuch as the real estate mortgage executed by them in favor of PCIB did not constitute fraudulent removal, concealment or disposition of property. They argued that granting the mortgage constituted removal or disposition of property, it was not per se a ground for attachment lacking proof of intent to defraud the creditors of the defendant.

Petitioners contended that in Civil Case No. 21761, Branch 11 had ruled that the loan for which the mortgage was executed was contracted in good faith, as it was necessary for them to continue their business operations even after respondent Aboitiz had stopped giving them financial aid. Petitioners also contended that respondent Judge exceeded his jurisdiction when he issued the Order of December 12, 1983, without first hearing the parties on the motion for attachment and the motion to dissolve the attachment. Moreover, they argued that respondent Judge gravely abused his discretion in proceeding with the case, notwithstanding that his attention had been called with regard to the pendency of G.R. No. 63225 in this Court. As prayed for by petitioners, we issued a temporary restraining order on January 6, 1984 "enjoining the respondents from enforcing or implementing the writs of preliminary attachment against the property of petitioners, all dated September 26, 1983 and issued in Civil Cases Nos. CEB 1185 and 1186" (Rollo, p. 118). II The resolution of this case centers on the issue of the legality of the writ of attachment issued by respondent Judge in the consolidated cases for collection of sums of money. The affidavit submitted by respondent Aboitiz in support of its prayer for the writ of attachment does not meet the requirements of Rule 57 of the Revised Rules of Court regarding the allegations on impending fraudulent removal, concealment and disposition of defendant's property. As held in Carpio v. Macadaeg, 9 SCRA 552 (1963), to justify a preliminary attachment, the removal or disposal must have been made with intent to defraud defendant's creditors. Proof of fraud is mandated by paragraphs (d) and (e) of Section 1, Rule 57 of the Revised Rules of Court on the grounds upon which attachment may issue. Thus, the factual basis on defendant's intent to defraud must be clearly alleged in the affidavit in support of the prayer for the writ of attachment if not so specifically alleged in the verified complaint. The affidavit submitted by respondent Aboitiz states: REPUBLIC OF THE PHILIPPINES CITY OF CEBU ...............) S.S. I, ROMAN S. RONQUILLO, of legal age, married and a resident of Cebu City, after being sworn in accordance with law, hereby depose and say: That I am the Vice-President of the plaintiff corporation in the above-entitled case; That a sufficient cause of action exists against the defendants named therein because the said defendants are indebted to the plaintiffs in the amount of P13,430,259.14 exclusive of interests thereon and damages claimed; That the defendants have removed or disposed of their properties with intent to defraud the plaintiff, their creditor, because on May 27, 1982 they executed a real estate mortgage in favor of Philippine Commercial and Industrial Bank (PCIB) covering eleven (11) of their fifteen (15) parcels of land in Cebu to secure a P1,000,000.00 loan with the same bank; That this action is one of those specifically mentioned in Section 1, Rule 57 of the Rules of Court, whereby a writ preliminary attachment may lawfully issue because the action therein is one against parties who have removed or disposed of their properties with intent to defraud their creditor, plaintiff herein;

That there is no sufficient security for the claims sought to be enforced by the present action; That the total amount due to the plaintiff in the above-entitled case is P13,430,259.14, excluding interests and claim for damages and is as much the sum for which an order of attachment is herein sought to be granted; above all legal counter-claims on the part of the defendants. IN VIEW WHEREOF, I hereunto set my hand this 24th day of August 1983 at Cebu City, Philippines.

Bare allegation that an encumbrance of a property is in fraud of the creditor does not suffice. Factual bases for such conclusion must be clearly averred. The execution of a mortgage in favor of another creditor is not conceived by the Rules as one of the means of fraudulently disposing of one's property. By mortgaging a piece of property, a debtor merely subjects it to a lien but ownership thereof is not parted with. Furthermore, the inability to pay one's creditors is not necessarily synonymous with fraudulent intent not to honor an obligation (Insular Bank of Asia & America, Inc. v. Court of Appeals, 190 SCRA 629 [1990]). Consequently, when petitioners filed a (motion for the reconsideration of the order directing the issuance of the writ of attachment, respondent S Judge should have considered it as a motion for the discharge of the attachment and should have conducted a hearing or required submission of counter-affidavits from g the petitioners, if only to gather facts in support of the allegation of fraud (Jopillo, Jr. v. Court of d Appeals, 167 SCRA 247 [1988]). This is what Section 13 of Rule 57 mandates. . ) This procedure should be followed because, as the Court has time and again said, attachment is a R harsh, extraordinary and summary remedy and the rules governing its issuance must be construed A strictly against the applicant. Verily, a writ of attachment can only be granted on concrete and specific M grounds and not on general averments quoting perfunctorily the words of the Rules (D.P. Lub Oil O Marketing Center, Inc. v. Nicolas, 191 SCRA 423 [1990]). N S The judge before whom the application is made exercises full discretion in considering the supporting . evidence proffered by the applicant. One overriding consideration is that a writ of attachment is substantially a writ of execution except that it emanates at the beginning, instead of at the termination R of the suit (Santos v. Aquino, Jr., 205 SCRA 127 [1992]; Tay Chun Suy v. Court of Appeals, 212 SCRA 713 O [1992]). N Q We need not discuss the issue of whether or not Civil Cases Nos. CEB-1185 and CEB-1186 constituted U undue interference with the proceedings in G.R. No. 63225 in view of the entry of judgment in the latter I case. L L O WHEREFORE, the petition is GRANTED and the Temporary Restraining Order issued on January 6, 1984 is made PERMANENT. Respondent Judge or whoever is the presiding judge of the Regional Trial Court, A Branch 6, Cebu City, is DIRECTED to PROCEED with the resolution of Civil Cases Nos. CEB-1185 and f CEB-1186 with deliberate dispatch. f i SO ORDERED. a n t Cruz, Davide, Jr., Bellosillo and Kapunan, JJ., concur.

(Rollo, pp. 171-172) It is evident from said affidavit that the prayer for attachment rests on the mortgage by petitioners of 11 parcels of land in Cebu, which encumbrance respondent Aboitiz considered as fraudulent concealment of property to its prejudice. We find, however, that there is no factual allegation which may constitute as a valid basis for the contention that the mortgage was in fraud of respondent Aboitiz. As this Court said in Jardine-Manila Finance, Inc. v. Court of Appeals, 171 SCRA 636 (1989), "[T]he general rule is that the affidavit is the foundation of the writ, and if none be filed or one be filed which wholly fails to set out some facts required by law to be stated therein, there is no jurisdiction and the proceedings are null and void."

Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. L-17797 November 29, 1963

Petitioner seeks annulment of the order of October 24, 1960 ordering him to file an additional bond of P6,000; the order of November 25, 1960 denying his motion for reconsideration of the order of October 24; and the order of the same date authorizing the sale of the garnished goods, on the ground that in issuing them respondent Judge acted without jurisdiction and/or with grave abuse of discretion. Respondent Judge should not have issued the two writs of preliminary attachment (Annexes C and C-1) on Abaya's simple allegation that the petitioner was about to dispose of his property, thereby leaving no security for the satisfaction of any judgment.1 Mere removal or disposal of property, by itself, is not ground for issuance of preliminary attachment, notwithstanding absence of any security for the satisfaction of any judgment against the defendant. The removal or disposal, to justify preliminary attachment, must have been made with intent to defraud defendant's creditors.2 Respondent Judge in fact corrected himself. Acting on petitioner's motion to discharge attachment and apparently believing the correctness of the grounds alleged therein,3 he set aside the orders of attachment (Order of March 11, 1960, Annex F). But reversing himself again, he set aside his order of March 11, 1960 (Annex K, dated March 29, 1960.4 This he did apparently on Abaya's contention that petitioner was about to remove or dispose of his property in order to defraud his creditors, as examples of which disposals he pointed to the alleged sale of the horses and of petitioner's office furniture (Abaya's motion for reconsideration dated March 15, 1960, Annex H). These averments of fraudulent disposals were controverted by petitioner who, in his opposition to Abaya's motions for reconsideration (Annex J), reiterated the defenses against preliminary attachment which he had previously enumerated in his petition to discharge the two orders of attachment. Thus the question of fraudulent disposal was put in issue; and respondent Judge, before issuing the preliminary attachment anew, should have given the parties opportunity to prove their respective claims or, at the very least, should have provided petitioner with the chance to show that he had not been disposing of his property in fraud of creditors.5 But for much more than the above reason, respondent Judge should not have again ordered the issuance of the writ of preliminary attachment since Abaya never made any affidavit as required by Rule 59, Rules of Court, which states that: SEC. 3. Order issued only when affidavit and bond filed An order of attachment shall be granted when it is made to appear by the affidavit of the plaintiff, or of some other person who personally knows the facts, that a sufficient cause of action exists, that the case is one of those mentioned in section 1 hereof, that there is no other sufficient security for the claim sought to be enforced by the action, and that the amount due to the plaintiff, or the value of the property which he is entitled to recover the possession of, is as much as the sum for which the order is granted above all legal counterclaims; which affidavit, and the bond required by the next succeeding section, must be duly filed with the clerk or judge of the court before the order issues. For the purposes of issuance of preliminary attachment, the affidavit (Annex B-1) attached to Abaya's motion therefor (Annex B), as we have said, is not sufficient, and it does not appear that he ever executed another affidavit that complies with the above section. None appears attached either to his motion for reconsideration dated March 15, 1960 (Annex H) or to his motion for reconsideration dated March 16, 1960 (Annex I), upon which the order of attachment (Annex K) was based. Having construed that the preliminary attachment should not have been ordered, we believe it is no longer necessary to discuss the subsequent actuations of respondent Judge which were all based on the erroneous assumption that his order of March 29, 1960 was valid (Annex K). WHEREFORE, the order of March 29, 1960 and all succeeding orders of respondent Judge with respect to said preliminary attachment, are hereby declared null and void; the attached properties are ordered released; and the preliminary injunction issued by this Court is made permanent. Costs against respondent Abaya.

ISABELO CARPIO, petitioner, vs. HON. HIGINIO MACADAEG, as presiding Judge of Branch X, Court of First Instance of Manila; OSCAR C. ABAYA, Provincial Sheriff of Rizal and City Sheriff of Manila, respondents. W. S. Fajardo and J. P. Cortez for petitioner. O.C. Baria and F. Manalo for respondents. MAKALINTAL, J.: Isabelo Carpio filed this petition for certiorari and prohibition to annul and stop implementation of respondent Judge's orders of October 24 and November 25, 1960, directing the sale of five race horses and goods previously attached upon motion of respondent Oscar Abaya. We issued a writ of preliminary injunction to restrain the sale, with instructions to respondent Sheriff of Rizal to allow the daily training of the said horses and their participation in races whenever they were included in the racing programs. On January 17, 1960 respondent Oscar Abaya filed a complaint against petitioner for the recovery of various sums aggregating P25,000 (Civil Case No. 42450, C.F.I. Manila). Before summons was served, and upon ex partemotion of respondent Abaya (Annex B), respondent Judge issued two orders of attachment dated February 8 (Annex C-1) and February 10, 1960 (Annex C), pursuant to which the Sheriff of Manila garnished goods consisting of hardware imported by petitioner, and the Sheriff of Rizal seized petitioner's five racing horses named Mohamad, Mohamad's Pride, Magic Spell, Nashua and Sirius. On February 12, 1960 petitioner filed an urgent petition to discharge the orders of attachment (Annex 1). Acting thereon, respondent Judge, on March 11, 1960, set aside the two orders of February 8 and 10, 1960 (Annex F). Upon two motions of respondent Abaya (Annexes H and 1), respondent Judge, on March 29, 1960, set aside his order of March 11, 1960 (Annex K). Though no new petition was filed for issuance of a writ of attachment and no new order or alias writ of attachment was issued, respondent Sheriff of Manila garnished the aforementioned goods and respondent Sheriff of Rizal attached the five racing horses. Upon petition of respondent Abaya (Annex L), respondent Judge issued an order directing the sale at public auction of the five racing horses (Annex M). However, the sale was halted by petitioner's putting up a bond of P4,000 and the horses were released to him by respondent Sheriff of Rizal. Upon motion of respondent Abaya (Annex R), respondent Judge, on October 24, 1960, ordered the increase of the bond to P10,000, and ordered respondent Sheriff of Rizal to proceed with the sale of the horses should petitioner failed to file the additional bond of P6,000 (Annex S). Motions filed by petitioner seeking reconsideration of the said order of October 24 were denied by respondent Judge on November 25, 1960 (Annex X). So, respondent Sheriff of Rizal advertised the sale at public auction of the five racing horses. Upon motion of respondent Abaya (Annex T), and despite the opposition of petitioner(Annex U), respondent Judge, on the same day November 25 issued an order authorizing the sale of the garnished goods (Annex Z).

Bengzon, C.J., Padilla, Bautista Angelo, Concepcion, Barrera, Paredes, Dizon and Regala, JJ., concur.

Footnotes
1 See Abaya's motion for issuance of writ of preliminary attachment dated February 6, 1960 (Annex B) and the affidavit attached thereto (Annex B-1).

Sec. 1 (e), Rule 59, Rules of Court.

3 Petitioner claimed therein that the two orders of attachment were irregular and improper because (1) in his affidavit, Abaya failed to aver that the removal or disposal of property had been in fraud of creditors; (2) that petitioner could not have removed or disposed of his properties since they have already been all attached by Abaya in another action between them, Civil Case No. 41984, C.F.I. Manila; and (3) that Abaya had no valid cause of action against him because the promissory notes upon which he based his action had been liquidated and paid. (Petition to discharge orders of attachment and affidavit, Annexes 1 and A to petitioner's memorandum.)

Note, however, that while this order set aside the order of March 11, 1960 (which set aside both orders of attachment), it ordered only the provincial sheriff of Rizal "to proceed with the attachment of the horses," without directing the sheriff of Manila to garnish the goods again.
5

National Coconut Corporation v. Pecson, L-4296, Feb. 25, 1952; Villongco v. Panlilio, L-6214, Nov. 20, 1953.