DISMISSALS THAT OPERATE AS ADJUDICATIONS ON THE MERITS

(or bar refiling of the same action)

 Rule 16, Section 1 (f)

- res judicata
- prescription
 Rule 16, Section 1 (h) – extinguishment
 Rule 16, Section 1 (i) – unenforceability
 Rule 17, Section 3
- failure to appear on date of presentation of evidence
in chief
- failure to prosecute
- failure to comply with the Rules or any order of the
Court
 Rule 18, Section 5 – failure of plaintiff to appear at pre-trial
 Rule 18, Section 6 – failure of plaintiff to file pre-trial brief
 Rule 17, Section 1 (2-dismissal rule) – Second dismissal upon notice of plaintiff
 Rule 33, Section 1 – Order granting a demurrer to evidence
 Minute resolution of the SC dismissing a petition for review for lack of merit


1. Defaults
Rules of Court, RULE 9

Sec. 3. Default; declaration of.

If the defending party fails to answer within the time allowed therefor, the court shall, upon motion of the claiming party with notice
to the defending party, and proof of such failure, declare the defending party in default. Thereupon, the court shall proceed to
render judgment granting the claimant such relief as his pleading may warrant, unless the court in its discretion requires the
claimant to submit evidence. Such reception of evidence may be delegated to the clerk of court.

(a) EFFECT OF ORDER OF DEFAULT. - A party in default shall be entitled to notice of subsequent proceedings but not to take
part in the trial.
(b) RELIEF FROM ORDER OF DEFAULT. - A party declared in default may at any time after notice thereof and before judgment
file a motion under oath to set aside the order of default upon proper showing that his failure to answer was due to fraud,
accident, mistake or excusable negligence and that he has a meritorious defense. In such case, the order of default may be
set aside on such terms and conditions as the judge may impose in the interest of justice.

(c) EFFECT OF PARTIAL DEFAULT. - When a pleading asserting a claim states a common cause of action against several
defending parties, some of whom answer and the others fail to do so, the court shall try the case against all upon the answers
thus filed and render judgment upon the evidence presented.

(d) EXTENT OF RELIEF TO BE AWARDED. - A judgment rendered against a party in default shall not exceed the amount or be
different in kind from that prayed for nor award unliquidated damages.

(e) WHERE NO DEFAULTS ALLOWED. - If the defending party in an action for annulment or declaration of nullity of marriage or
for legal separation fails to answer, the court shall order the prosecuting attorney to investigate whether or not a collusion
between the parties exists, and if there is no collusion, to intervene for the State in order to see to it that the evidence
submitted is not fabricated.

 Sole ground for default declaration: failure of defendant to answer the complaint within prescribed period
 Cf: Judgment by default for refusal to make discovery needs no prior order of default
 Default declaration: only upon motion of party not in default

CASES:

CO v ACOSTA (1985)
In 1979 Pepsi Cola Bottling Co. issued 3 purchase orders to CTC Appliance Center, with Petitioner Rufino Co as its
proprietor, 12,000 units of refrigerators worth P35,322,900. P assigned his rights and interests to the 3 Pos to R
Refrigerations Industries Inc. Pepsi did not recognize the assignment. 10,000 units were delivered and paid. In 1981
Pepsi received the 1,000 units directly from R, worth P2,907,535. R demanded payment from Pepsi but Pepsi replied that
it is not bound by the assignment, and the value of the units received were set-off against debts of P. R demanded from P,
but latter refused and failed to pay. R filed case for sum of money with attachment before CFI Rizal against Pepsi and P. R
filed mtd against Pepsi in the light of the “joint release, waiver and/or quitclaim” signed by both. CFI granted mtd. R filed a
motion to declare P in default for having failed to file his answer. CFI granted motion and allowed R to present evidence
ex-parte. In 1983, CFI decided in favor of R. P filed petition for relief of judgment and petition for issuance of restraining
order while court issued writ of execution levying P’s real properties. Both petitions were denied. Hence, this petition for
certiorari.
Issue: WON P was in default. No.
Pepsi and P are indispensable parties to the case; they were sued under a common coa alleging that Pepsi received the
refrigerators w/o intent to pay but only to set-off the debts of P, while P refused to pay and whose debts were set-off by
means not coming from its own pockets; that both in concert with a view to victimize Rs made acts calculated to gain profit
from their loss; that both were guilty of conspiracy, connivance, unfair play, and foul tactics in employing fraud, bad faith,
and deceit. Lim Tanhu v. Ramolete is controlling: in all instances where a common coa is alleged against several Ds,
some of whom answer and the others do not, those in default acquire a vested right not only to own the defense
interposed in the answer of the co-defendants not only in default but also to expect a result of litigation totally common
with them in kind and in amount won favorable. It does not matter that the dismissal is upon the evidence presented by
the P himself or upon his mere desistence, for, in both contingencies, the lack of sufficient legal basis must be the cause.
The integrity of the common coa and the indispensability of all Ds do not permit any possibility of waiver only as to one or
some of them, w/o including all of them, and so, as a rule, withdrawal must be deemed to be a confession of weakness as
to all. This would preclude the concomitant hazard that p might resort to a stratagem that results in depriving ds every
opportunity to defend themselves.

LINA v CA (1985)
On March 31, 1982 P Northern Motors Inc. filed a case for a sum of money before CFI Rizal against D Alex Lina.
Summons were served on April 22, 1982. On May 8, 1982, when no answer or mtd was filed, P filed motion to declare D
in default. On May 19, 1982, D filed his opposition noting that he filed motion for extension of time to file answer on May 5,
1982. May 27, CFI declared D in default. May 28, D filed answer. CFI decided in favor of P. D’s motion to set aside
decision was denied. CA denied petition for certiorari.
Issue: WON D was properly declared in default. Yes.
Held: The granting of additional time within which to file an answer to a complaint is a matter largely addressed to the
sound decision of the tc. The remedies available to D in the CFI are:
(1) He may, at any time after discovery of default and before judgment, file a motion, under oath, to set aside the
order of default on the ground that his failure to answer was due to fraud, accident, mistake, or excusable
neglect, and that he has a meritorious defense; (R18 S3)
(2) If the judgment has already been rendered upon discovery but before the same has become final and
executory, he may file a motion for new trial under R37 S1(a);
(3) If D discovered the default after judgment has become final and executory, he may file a petition for relief under
R38 S2; and
(4) He may also appeal the judgment as contrary to evidence or to the law, even if no petition to set aside the order
of default has been presented by him (R41 S2).
Dissent by Melencio-Herrera: D’s motion for extension to file answer was already before the court when it declared D in
default. What is more, the answer had already been filed within the extended period requested when judgment by default
was rendered. Cases should be resolved by merits rather than technicalities; every litigant should be afforded the amplest
opportunity for the proper and just disposition of his cause.

BOTICANO v CHU (1987)

P Eliseo Boticano’s Bedford truck, while properly parked at the shoulder of a national highway, was hit and bumped at the
rear by another truck owned by D Manuel Chu Jr. and driven by Jaime Sigua, co-d. D acknowledged ownership of truck
and agreed to pay expenses for the repair. D failed to comply w agreement, P filed complaint at the CFI Nueva Ecija for
damages. Summons as to JS was unserved as he was no longer connected with San Pedro Sawmill while summons for
MC was returned duly served thru wife Veronica at their house. P filed mtd case against JS and motion to declare D MC in
default for failure to file responsive pleadings w/in reglementary period. Motion granted. TC decided in P’s favor. D filed
notice of appeal and motion for extension of time to file record on appeal, opposed by P, but granted. CA set aside TC’s
judgment for lack of jurisdiction (improper service of summons).
Issue: (1) WON question of jurisdiction over person can be raised for the first time on appeal. No.
Failure to raise issue in the CFI at first opportunity is indicative of waiver of the defect. D also voluntarily submitted himself
to the court’s jurisdiction; under R14 S23, D’s voluntary appearance in the action shall be equivalent to service.
(2) WON D may appeal default judgment even if he has not asked RTC to set aside declaration of default. Yes.
If an appeal is made without first asking the RTC to set aside the declaration of default, and the appellate court sets aside
declaration, all he can get is a review of the RTC’s judgment of default w/o the opportunity of having the higher court
consider defense evidence for the simple reason that no evidence was adduced by him in the RTC (R41, s2, p3).
If D first asks the RTC to set aside the declaration of default and he prevails, the declaration will be set aside and he will
now have the opportunity to present his evidence in the RTC. Even if he loses in the RTC, his defense can be considered
when appeal is made to the CA. If his motion is denied, he will be entitled to all notices in the court proceedings and he
can file any pleading he may wish to file including notice of appeal (R13, s9).

DENSO v IAC (1987)

Nippondenso Bldg, owned by P Kayamanan Development Corp. and leased to Defendant and Respondent Denso Phil.
Inc. was razed by fire causing losses of P6.13M to R, P.682K to Nippondenso, and P1.75M to P. P filed action against D
for recovery of unpaid rentals from June 84 to March 85 of P471K, the cost of repair to the bldg, claiming that D was
bound to bear cost under the lease agreement. Summons was belatedly referred to D’s counsel prompting the latter to file
a motion for extension of time to file answer. Motion was denied on the ground that there was no proof of service that P
received a copy. P then filed ex-parte motion to declare D in default, which was granted. Evidence was received ex-parte
and decision was rendered in P’s favor. D filed motion for reconsideration of order and judgment. On Sept. 3, 1985, TC
set aside order of default and decision, but hearing was only for presentation of D’s evidence without right to cross-
examine P. D orally asked the court to reconsider on Oct. 24 and formally filed motion for reconsideration on Nov 4, 198,
but was denied by the Court on Nov 8 and Nov 12 respectively. D did not receive Nov 12 order until Jan 9, 1986, the last
day for the reception of evidence. Upon being shown the order, R asked for deferment of the hearing so that it can elevate
ruling to higher court. This was denied, and when D declared itself not ready to present evidence, the court revived
decision in favor of P. On petition for certiorari, IAC held that the right to cross-examine was deemed waived by R’s failure
to move for reconsideration until after 38 days, order sought already final, and D was guilty of laches.
Issues:
(1) WON the Sept. 3, 1985 order became final. No. WON D guilty of laches. No.
A final judgment is one that finally disposes a case; an order that does not is interlocutory. Unlike a final judgment which is
appealable, an interlocutory order may not be questioned on appeal except only as part of an appeal that may eventually
be taken from a final judgment. The order was interlocutory, in setting aside order of and judgment by default, it left the
case open for further proceedings before the TC, not the least was the reception of evidence. Therefore, it could not
become final, not appeal would lie except as part of an appeal from a subsequent final judgment on the merits, and a
motion for recon is not subject to the limiting 15-day period of appeal. 38 days is not an unreasonably long period to apply
laches, it is founded on equity and may be invoked only when they delay has worked a change in the conditions as would
render unjust or inequitable the grant of the relief sought. No perceivable prejudice would attach to P if D was allowed to
cross-examine the witnesses presented.
(2) WON the issue of D’s default was moot. No.
What the IAC considered to be moot, the issue of CFI’s denial of motion for extension of time and declaring D in default
lay precisely at the heart of the matter before it. Both orders were premised on the failure to comply with service of notice
of motions 3 days prior to hearing by D. But the rule on notice is not unqualifiedly applicable to all motions, and there are
motions that may be heard ex-parte, which include motions to file extension of time to plead. The reason is that they are
non-contentious and do not involve the substantial rights of the parties in the suit. D’s motion for extension was improperly
denied since it has been seasonably filed and there is no impediment to its being heard ex-parte. No pretense was made
that it was filed for delay, which would be belied by the fact that what was sought was the extension of the original
reglementary period and there are prima facie meritorious reasons for the extensions. The answer alleging defenses that
could defeat P’s claim was filed w/in period of extension prayed for.
(3) WON Judge abused discretion in disallowing cross-examination. Yes.

 Remedies from Default Order

 Opposition to motion to declare in default
 Motion to set aside default order- must be due to fraud, accident, mistake and excusable negligence
and accompanied by Affidavit of Merits
 But affidavit required only if improvidently declared in default, but not if illegally
declared in default (Prof. ARBautista)
 If default order set aside, it is as if there was no default. Defaulting party can still
cross-examine

 Remedies from Default Judgment

 Motion for new trial or reconsideration – only if there has been judgment by default
 Appeal from Default Judgment– after judgment rendered. Even if did not file motion to set aside default
order or default judgment (R41 S2: appeal by certiorari) or motion for new trial (Matute v CA)
1. Petition for relief from judgment – R 38. Use this if period to appeal has lapsed without
defendant’s fault or negligence.
2. Petition for certiorari – Order is interlocutory, so certiorari under R65 (but requires no available
plain, speedy and adequate remedy. Motion to Set aside Order of Default must no longer be
available )

 There must be lapse of time between Order of Default and Judgment by Default. (Tanchan v CA).
Defendant should have reasonable time to file motion to set aside default declaration

 Cannot grant judgment by default for annulment of marriage, judicial declaration of nullity and legal sep

IX. PROVISIONAL REMEDIES

 So that any judgment which plaintiff may recover will not become paper judgment or that defendant not
take advantage of pendency of litigation by significantly altering situation or parties
 Known as mesne process bec issued in interregnum between commencement of action and rendition of
judgment
 Aka auxiliary remedies

1. NOTICE OF LIS PENDENS

 Rules of Court, RULE 13

Sec. 14. Notice of lis pendens

In an action affecting the title or the right of possession of real property, the plaintiff and the defendant, when affirmative relief is
claimed in his answer, may record in the office of the registry of deeds of the province in which the property is situated a notice of
the pendency of the action. Said notice shall contain the names of the parties and the object of the action or defense, and a
description of the property in that province affected thereby. Only from the time of filing such notice for record shall a purchaser, or
encumbrancer of the property affected thereby, be deemed to have constructive notice of the pendency of the action, and only of
its pendency against the parties designated by their real names

The notice of lis pendens hereinabove mentioned may be cancelled only upon order of the court, after proper showing that the
notice is for the purpose of molesting the adverse party, or that it is not necessary to protect the rights of the party who caused it to
be recorded.

 Since fxn is to keep prop within power of court until final judgment, notice cannot be cancelled or removed
by filing of bond (Fernandez v CA)

Art. 1381 (4), Civil Code

The following contracts are rescissible:
x x x
(4) Those which refer to things under litigation if they have been entered into by the defendant without the knowledge
and approval of the litigants or of competent judicial authority;

CASE:

PO LAM v CA (2000)
This is a motion for reconsideration filed by spouses Roy Po Lam of the Court’s decision declaring them as transferees
pendente lite and not purchasers in good faith. Lim Kok Chong sold two lots to the Legazpi Avenue Hardware Company.
LKC’s brother, Felix Lim, filed a complaint to annul the deed of sale at the CFI Albay on the ground that it included his 3/14
pro-indiviso portion inherited. FL filed with the Register of Deeds of Albay a notice of lis pendens on the 2 lots. TC dropped
case against LKC and LAHCO declared absolute owner. TC ordered cancellation of the notice of lis pendens. Only the
notice inscribed on TCT 2580 was cancelled; that of 2581 remained uncancelled because the duplicate owner’s copy was
with the Continental Bank, having been mortgaged by LAHCO. FL appealed to the CA. Pending appeal, LAHCO sold the
2 lots to spouses Po Lam. They had notice on 2581 cancelled, FL did not move for the reinstatement of the notices.
CA affirmed decision of TC. FL filed motion for extension of time to file MFR. Granted, but his MFR was denied. Without
leave of court, FL filed a second MFR. This was acted upon favorably by the CA, by declaring that FL could redeem the
lots sold to LAHCO. FL filed motion for annotation, issuance of writ of execution, and deed of conveyance. All denied by
TC: Po Lam could not be bound since they were not impleaded. FL filed a complaint for reconveyance and annulment of
sale. RTC declared Po Lam as transferees pendent elite and not purchasers in good faith. Po Lam filed certiorari but was
denied by SC. Hence this MFR.
Issue: WON Po Lam spouses were purchasers pendent lite and in bad faith. No
Held: It must be pointed out that even if a notice of lis pendens was still subsisting at the time Ps bought the property from
LAHCO, there was also a court order ordering that the annotation be cancelled, as in fact, it was cancelled. Hence, Ps
cannot be considered as being aware of a flaw, since the alleged flaw, the notice of lis pendens, was already being
ordered cancelled at the time of purchase. The filing of the notice of lis pendens in effect (1) keeps the subject matter of
the litigation within the power of the court until the entry of the final judgment so as to prevent the defeat of the latter by
successive alienations; and (2) binds a purchaser of the land subject of the litigation to the judgment or decree that will be
promulgated thereon won such purchaser is bona fide; but (3) does not create a non-existent right or lien.
But it is not correct to speak of it as part of the doctrine of notice; the purchaser pendent lite is affected, not by notice, but
because the law does not allow litigating parties to give to others, pending the litigation, rights to the property in dispute as
to prejudice the opposite party. The doctrine rests upon public policy, not notice.

2. PRELIMINARY ATTACHMENT

a) Art. 1387, CC

Art. 1387, Civil Code

All contracts by virtue of which the debtor alienates property by gratuitous title are presumed to have been entered into in
fraud of creditors, when the donor did not reserve sufficient property to pay all debts contracted before the donation.
Alienations by onerous title are also presumed fraudulent when made by persons against whom some judgment has been
issued. The decision or attachment need not refer to the property alienated, and need not have been obtained by the party
seeking the rescission.
In addition to these presumptions, the design to defraud creditors may be proved in any other manner recognized by the law
of evidence.
RULE 57 PRELIMINARY ATTACHMENT

1. Preliminary Attachment
a. Available even if the recovery of personal property is only an incidental relief sought in the action;
b. May be resorted to even if the personal property is in the custody of a third person;
c. Extends to all kinds of property, real or personal or incorporeal;
d. To recover possession of personal property unjustly detained, presupposes that the same is being concealed,
removed, or disposed of to prevent its being found or taken by the applicant;
e. Can still be resorted to even if the property is in custodia legis, as long as the property belongs to the
defendant, or is one in which he has proprietary interests, AND with permission of the court
f. Overdraft account with bank also can’t be attached bec that would be compelling defendant to borrow money
g. But in action to foreclose REM, prop not covered by mortgage may be attached if shown that mortgaged prop
insufficient to cover debt (Prof. ARBautista)

2. Grounds
a. Recovery of specified amount of money and damages, except moral or exemplary, where party is about to
depart from the Phils with intent to defraud creditors;
b. Action for money or property embezzled or for willful violation of duty by public officers, officers of corporation,
agent, or fiduciary;
c. Recovery of possession of property (both real and personal) unjustly detained, when the property is concealed
or disposed of to prevent is being found or taken;
d. Action against party guilty of fraud in contracting the debt or incurring the obligation or in the performance
thereof;
e. Action against party who is concealing or disposing of property, or is about to do so, with intent to defraud
creditors;
f. Action against party who is not a resident of the Phils and cannot be found therein or upon who service by
publication can be made.

 Imminent insolvency or insolvency itself is not ground

 Ground (f) on non-resident party applies only to natural persons
 Attachment can issue for ©, quasi-delicts, fraud

PROCEDURE IN PRELIMINARY ATTACHMENT

(1) Party files a motion for preliminary attachment in the court in which the action is pending, or in the CA or
SC. (Of course it goes without saying that the adverse party must have notice of the motion.)

Who: Any party, including:

 A defendant on his counterclaim;

 A co-party on his cross-claim;
 3rd party plaintiff on his 3rd party claim

When: at the commencement of the action, or at any time before entry of judgment

(2) Applicant (or some other person who personally knows the facts) must submit an affidavit stating, among
others that:

(a) His / her cause of action (which must be found to be existing and sufficient);
(b) The ground for the application is covered by the instances provided for in Rule 57, Sec. 1;
(c) There is no other sufficient security for the claim sought to be enforced by the action;
(d) The amount due to the applicant, or the value of the property the possession of which he is
entitled to recover, is as much as the sum for which the order is granted above all legal
counterclaims.

(3) Applicant must then give a bond executed to the adverse party in the amount fixed by the court in its order.

Conditions of the bond: The applicant will pay all the costs which may be adjudged to the adverse party
and all damages which he may sustain by reason of the attachment, if the court
shall finally adjudged that he (applicant) was not entitled to the writ.

(4) The court will proceed to hear the motion.

(5) The court will then decide on whether or not to grant the writ, and issue its order accordingly.
(6) If the court grants the writ, then the sheriff shall enforce the same without delay and with all reasonable
diligence.

(6.1) Notes: The property attached should:

(1) Be located in the Philippines;

(2) Belong to the party against whom the writ is issued;
(3) Not be exempt from execution;
(4) Be sufficient to satisfy the applicant’s demand
(not excessive);

(6.2) Enforcement of the writ must be preceded or contemporaneously accompanied by the following:

(1) Service of summons;

(2) A copy of the complaint;
(3) A copy of the application for attachment;
(4) A copy of the applicant’s affidavit and bond; and
(5) The order and writ of attachment.

(6.3) The exceptions to contemporaneous service of summons are:

(1) Where personal or substituted service of summons could not be effected

despite diligent efforts;
(2) The defendant is a resident of the Philippines temporarily absent therefrom;
(3) The defendant is a non-resident of the Philippines;
(4) The action is one in rem or quasi in rem

(7) After enforcing the writ, the sheriff must, without delay, make a return of the writ to the court which issued it.

The return must be accompanied by the following:

Full statement of proceedings under the writ;

Complete inventory of the property attached;
Counter-bond, if any, given by the party against whom attachment was issued.

(8) AT THIS POINT, the party whose property was attached, or his agent, may move for the discharge of
the attachment wholly or in part on the security given.
If garnishee does not deliver funds to attaching creditor, attaching creditor may obtain writ of execution or
file separate action, but garnishee cannot be punished for contempt (Tee Bi & Co. v Chartered Bank of India)

(9) The sheriff may then cause the judgment to be satisfied out of the property attached as follows:

MODES OF ATTACHING PROPERTY

Real property, or standing crops thereon or any interest therein

By filing a copy of the order with the Register of Deeds, together with a description of the property attached, and a
notice that it is attached; and

Leaving a copy of such order, description, and notice with the occupant of the property, if any, or with such other
person or his agent if found within the province.

Personal property capable of manual delivery

By taking and safely keeping it in his custody, and issuing the corresponding receipt therefor.

Stocks or shares of any corporation or company, or an interest therein

By leaving with the Pres. or managing agent thereof, a copy of the writ, and a notice stating that the stock or interest
is attached in pursuance of the writ

Debts and credits and other personal property not capable of manual delivery

By leaving with the debtor, or person having possession or control of the credits or other personal property, or his
agent a copy of the writ, and the proper notice

Interest in property belonging to the estate of a decedent

 By serving the executor or administrator or other personal representative of the decedent with a copy of the writ and
notice;

Filing a copy of the writ and notice with the clerk of the court in which the estate is being settled; and

Serving copies of the writ and notice upon the heir, legatee, or devisee concerned.

Property in custodia legis

By filing a copy of the writ with the proper court or quasi-judicial agency; and

Serving a notice of the attachment upon the custodian of the property.

ALL PROPERTIES EXEMPT FROM EXECUTION ARE THE PROPERTIES EXEMPT FROM ATTACHMENT. Even
property in custodia legis is allowed to be attached.

 2 Kinds of attachment
1) Attachment proper- actual physical custody for tangible things
2) Garnishment- when intangible prop not taken into custody but merely impounded
- essentially is notice of sequestration

CONNECTICUT v DOEHR (1991)

Giovanni filed for attachment on Doehr’s house for a civil action for assault and battery. Under Connecticut law,
prejudgment attachment of real estate allowed without prior notice or prior hearing. Required to be verified under oath but
bond not required. The judge found probable cause in Giovanni’s cause of action and ordered attachment.
Held:
Attachment ordinarily clouds title, impairs the ability to sell or otherwise alienate the prop, taints any credit
rating, reduces the chance of obtaining a home equity loan or addl mortgage and can even place existing mortgage in
technical default where there is an insecurity clause. Hence, even temporary or partial impairments to prop rights are
sufficient to merit DP protection.
Cannot have attachment merely because plaintiff believes defendant is liable, or there’s facially valid complaint
bec claim might fail to convince jury. Unlike determining existence of debt, issue does not concern ordinarily
uncomplicated matters that lend themselves to documentary proof. A later hearing might negate the presence of probable
cause, but this does not cure temporary deprivation.
Also, no allegation that Doehr was about to transfer or encumber real prop. A preattachment hearing without at
least requiring some exigent circumstance does not meet reqts of DP.

NORTH GEORGIA FINISHING v DI-CHEM (1975)

Plaintiffs in Georgia are entitled to process of garnishment. Requirements: affidavit before some officer authorized or the
clerk of court, reason to apprehend the loss, bond in 2x the amount sworn to be due. Dichem sued North Georgia, and
filed for garnishment. North Georgia filed bond to pay any final judgment, so the judge discharged the garnishment.
Precedents: Sniadach v Family Finance Corp: can’t garnish wages; Fuentes v Shevin: invalid seizure bec no notice or
hearing or judicial order
Held:
Invalid statute. Writ issued by clerk court without notice or opportunity for an early hearing and without
participation of judicial officer. Affidavit of creditor or his attorney need not have personal knowledge of the facts, as it
needs only conclusory allegations. Writ issuable by clerk of court, and does not need judge. Without bond, defendant
cannot challenge the garnishment. There’s still probability of irreparable injury despite double bond.
Rule 57. Preliminary Attachment
(a) When may be issued –

 Sec. 1. Grounds upon which attachment may issue.

At the commencement of the action or at any time before entry of judgment, a plaintiff or any proper party may have the
property of the adverse party attached as security for the satisfaction of any judgment that may be recovered in the
following cases:
(a) In an action for the recovery of a specified amount of money or damages, other than moral and exemplary, on a
cause of action arising from law, contract, quasi-contract, delict or quasi-delict against a party who is about to depart
from the Philippines with intent to defraud his creditors;
(b) In an action for money or property embezzled or fraudulently misapplied or converted to his own use by a public
officer, or an officer of a corporation, or an attorney, factor, broker agent, or clerk, in the course of his employment as
such, or by other person in a fiduciary capacity, or for a willful violation of duty;
(c) In an action to recover the possession of property unjustly or fraudulently taken, detained or converted, when the
property, or any part thereof, has been concealed, removed, or disposed of to prevent its being found or taken by the
applicant or an authorized person;
(d) In an action against a party who has been guilty of a fraud in contracting the debt or incurring the obligation upon
which the action is brought, or in the performance thereof;
(e) In an action against a party who has removed or disposed of his property, or is about to do so, with intent to defraud
his creditors; or
(f) In an action against a party who does not reside and is not found in the Philippines, or on whom summons may be
served by publication.

 Imminent insolvency or insolvency itself is not ground

 Ground (f) on non-resident party applies only to natural persons
 Attachment can issue for ©, quasi-delicts, fraud

(b) Who may issue

 Sec. 2. Issuance and contents of order.

An order of attachment may be issued either ex parte or upon motion with notice and hearing by the court in which the
action is pending, or by the Court of Appeals or the Supreme Court, and must require the sheriff of the court to attach so
much of the property in the Philippines of the party against whom it is issued, not exempt from execution, as may be
sufficient to satisfy the applicant's demand, unless such party makes deposit or gives a bond as hereinafter provided in an
amount equal to that fixed in the order, which may be the amount sufficient to satisfy the applicant's demand or the value
of the property to be attached as stated by the applicant, exclusive of costs. Several writs may be issued at the same time
to the sheriffs of the courts of different judicial regions.

(c) Requirements for Issuance

 Sec. 3. Affidavit and bond required.

An order of attachment shall be granted only when it appears by the affidavit of the applicant, or of some other person
who personally knows the facts, that a sufficient cause of action exists, that the case is one of those mentioned in section
1 hereof, that there is no other sufficient security for the claim sought to be enforced by the action, and
that the amount due to the applicant, or the value of the property the possession of which he is entitled to recover, is as
much as the sum for which the order is granted above all legal counterclaims. The affidavit, and the bond required by the
next succeeding section, must be duly filed with the court before the order issues.

 If claim for unliquidated damages, attachment may not issue because applicant cannot swear on amount
 Applicant’s bond, aka attachment bond

 Sec. 4. Condition of applicant's bond.

The party applying for the order must thereafter give a bond executed to the adverse party in the amount fixed by the
court in its order granting the issuance of the writ, conditioned that the latter will pay all the costs which may be adjudged
to the adverse party and all damages which he may sustain by reason of the attachment, if the court shall finally adjudge
that the applicant was not entitled there to.

What may be attached

 Sec. 5. Manner of attaching property.

The sheriff enforcing the writ shall without delay and with all reasonable diligence attach, to await judgment and execution
in the action, only so much of the property in the Philippines of the party against whom the writ is issued, not exempt from
execution, as may be sufficient to satisfy the applicant's demand,
unless the former makes a deposit with the court from which the writ is issued, or gives a counterbond executed to the
applicant, in an amount equal to the bond fixed by the court in the order of attachment or to the value of the property to be
attached, exclusive of costs.
No levy on attachment pursuant to the writ issued under section 2 hereof shall be enforced unless it is preceded, or
contemporaneously accompanied, by service of summons, together with a copy of the complaint, the application for
attachment, the applicant's affidavit and bond, and the order and writ of attachment, on the defendant within the
Philippines.
The requirement of prior or contemporaneous service of summons shall not apply
1) where the summons could not be served personally or by substituted service despite diligent efforts, or
2) the defendant is a resident of the Philippines temporarily absent therefrom, or
3) the defendant is a non-resident of the Philippines, or
4) the action is one in rem or quasi in rem.

 Prop subject of litigation or claimed by plaintiff cannot be attached bec such attachment would be pre-
emptive of the judgment.
EXCEPTION: interest of attachment defendant in property under judicial administration
 Overdraft account with bank also can’t be attached bec would be compelling defendant to borrow money
 But in action to foreclose REM, prop not covered by mortgage may be attached if shown that mortgaged
prop insufficient to cover debt
 NOTE: unlike execution debtor, attachment defendant cannot direct sheriff which prop should be attached
 How writ implemented

 Sec. 6. Sheriff's return.

After enforcing the writ, the sheriff must likewise without delay make a return thereon to the court from which the writ
issued, with a full statement of his proceedings under the writ and a complete inventory of the property attached, together
with any counter-bond given by the party against whom attachment is issued, and serve copies thereof on the applicant.

 Sec. 7. Attachment of real and personal property; recording thereof.

Real and personal property shall be attached by the sheriff executing the writ in the following manner:

(a) Real property, or growing crops thereon, or any interest therein, standing upon the record of the registry of deed of
the province in the name of the party against whom attachment is issued, or not appearing at all upon such records,
or belonging to the party against whom attachment is issued and held by any other person, or standing on the
records of the registry of deeds in the name of any other person, by FILING WITH THE REGISTRY OF DEEDS A
COPY OF THE ORDER, together with a description of the property attached, and a notice that it is attached, or that
such real property and any interest therein held by or standing in the name of such other person are attached, and by
leaving a copy of such order, description, and notice with the occupant of the property, if any, or with such other
person or his agent if found within the province. Where the property has been brought under the operation of either
the Land Registration Act or the Property Registration Decree, the notice shall contain a reference to the number of
the certificate of title, the volume and page in the registration book where the certificate is registered, and the
registered owner or owners thereof.
The registrar of deed must index attachments filed under this section in the names of the applicant, the adverse
party, or the person by whom the property is held or in whose name it stands in the records. If the attachment is not
claimed on the entire area of the land covered by the certificate of title, a description sufficiently accurate for the
identification of the land or interest to be affected shall be included in the registration of such attachment;

(b) Personal property capable of manual delivery, by taking and safely keeping it in his custody, after issuing the
corresponding receipt therefor;

(c) Stocks or shares, or an interest in stocks or shares, of any corporation or company, by leaving with the president or
managing agent thereof, a copy of the writ, and a notice stating that the stock or interest of the party against whom
the attachment is issued is attached in pursuance of such writ;

(d) Debts and credits, including bank deposits, financial interest, royalties, commissions, and other personal property not
capable of manual delivery, by leaving with the person owing such debts, or having in his possession or under his
control, such credits or other personal property, or with his agent, a copy of the writ, and notice that the debts owing
by him to the party against whom attachment is issued, and the credits and other personal property in his
possession, or under his control, belonging to said party, are attached in pursuance of such writ;

(e) The interest of the party against whom attachment is issued in property belonging to the estate of the decedent,
whether as heir, legatee, or devisee, by serving the executor or administrator or other personal representative of the
decedent with a copy of the writ and notice that said interest is attached. A copy of said writ of attachment and of said
notice shall also be filed in the office of the clerk of the court in which said estate is being settled and served upon the
heir, legatee or devisee concerned.
If the property sought to be attached is in custodia legis, a copy of the writ of attachment shall be filed with the proper
court or quasi-judicial agency, and notice of the attachment served upon the custodian of such property.

 2 Kinds of attachment
1) Attachment proper- actual physical custody for tangible things
2) Garnishment- when intangible prop not taken into custody but merely impounded
- essentially is notice of sequestration

 Sec. 8. Effect of attachment of debts, credits and all other similar personal property.
All persons having in their possession or under their control any credits or other similar personal property belonging to the
party against whom attachment is issued, or owing any debts to him, at the time of service upon them of the copy of the
writ of attachment and notice as provided in the last preceding section, shall be liable to the applicant for the amount of
such credits, debts or other similar personal property, until the attachment is discharged, or any judgment recovered by
him is satisfied, unless such property is delivered or transferred, or such debts are paid, to the clerk, sheriff, or other
proper officer of the court issuing the attachment.

 Sec. 9. Effect of attachment of interest in property belonging to the estate of a decedent.

The attachment of the interest of an heir, legatee, or devisee in the property belonging to the estate of a decedent shall
not impair the power of the executor, administrator, or other personal representative of the decedent over such property
for the purpose of administration. Such personal representative, however, shall report the attachment to the court when
any petition for distribution is filed, and in the order made upon such petition, distribution may be awarded to such heir,
legatee, or devisee, but the property attached shall be ordered delivered to the sheriff making the levy, subject to the claim
of such heir, legatee, or devisee, or any person claiming under him.

 If garnishee does not deliver funds to attaching creditor, attaching creditor may obtain writ of execution or
file separate action, but garnishee cannot be punished for contempt (Tee Bi & Co. v Chartered Bank of
India)

 Sec. 10. Examination of party whose property is attached and persons indebted to him or controlling his
property; delivery of property to sheriff.
Any person owing debts to the party whose property is attached or having in his possession or under his control any credit
or other personal property belonging to such party, may be required to attend before the court in which the action is
pending, or before a commissioner appointed by the court, and be examined on oath respecting the same. The party
whose property is attached may also be required to attend for the purpose of giving information respecting his property,
and may be examined on oath. The court may, after such examination, order personal property capable of manual delivery
belonging to him, in the possession of the person so required to attend before the court, to be delivered to the clerk of the
court or sheriff on such terms as may be just, having reference to any lien thereon or claim against the same, to await the
judgment in the action.

 Sec. 11. When attached property may be sold after levy on attachment and before entry of judgment.
Whenever it shall be made to appear to the court in which the action is pending, upon hearing with notice to both parties,
that the property attached is perishable, or that the interests of all the parties to the action will be will be subserved by the
sale thereof, the court may order such property to be sold at public auction in such manner as it may direct, and the
proceeds of such sale to be deposited in court to abide the judgment in the action.

 Sec. 15. Satisfaction of judgment out of property attached; return of sheriff.

If judgment be recovered by the attaching party and execution issue thereon, the sheriff may cause the judgment to be
satisfied out of the property attached, if it be sufficient for that purpose in the following manner:
(a) By paying to the judgment obligee the proceeds of all sales of perishable or other property sold in pursuance of the
order of the court, or so much as shall be necessary to satisfy the judgment;
(b) If any balance remains due, by selling so much of the property, real or personal, as may be necessary to satisfy the
balance, if enough for that purpose remain in the sheriff's hands, or in those of the clerk of the court;
(c) By collecting from all persons having in their possession credits belonging to the judgment obligor, or owing debts to
the latter at the time of the attachment of such credits or debts, the amount of such credits and debts as determined
by the court in the action, and stated in the judgment, and paying the proceeds of such collection over to the
judgment obligee.
The sheriff shall forthwith make a return in writing to the court of his proceedings under this section and furnish the parties
with copies thereof.

 Sec. 16. Balance due collected upon an execution; excess delivered to judgment obligor.
After realizing upon all the property attached, including the proceeds of any debts or credits collected, and applying the
proceeds to the satisfaction of the judgment, less the expenses of proceedings upon the judgment, any balance shall
remain due, the sheriff must proceed to collect such balance as upon ordinary execution. Whenever the judgment shall
have been paid, the sheriff, upon reasonable demand, must return to the judgment obligor the attached property
remaining in his hands, and any proceeds of the sale of the property attached not applied to the judgment.

 Sec. 17. Recovery upon the counter-bond.

When the judgment has become executory, the surety or sureties on any counter-bond given pursuant to the provisions of
this Rule to secure the payment of the judgment shall become charged on such counter-bond and bound to pay the
judgment obligee upon demand the amount due under the judgment, which amount may be recovered from such surety or
sureties after notice and summary hearing in the same action.

 Sec. 18. Disposition of money deposited.

Where the party against whom attachment had been issued has deposited money instead of giving counter-bond, it shall
be applied under the direction of the court to the satisfaction of any judgment rendered in favor of the attaching party, and
after satisfying the judgment the balance shall be rendered to the depositor or his assignee. If the judgment is in favor of
the party against whom attachment was issued, the whole sum deposited must be refunded to him or his assignee.

 Sec. 19. Disposition of attached property where judgment is for party against whom attachment was issued.
If judgment be rendered against the attaching party, all the proceeds of sales and money collected or received by the
sheriff, under the order of attachment, and all property attached remaining in any such officer's hands, shall be delivered
to the party against whom attachment was issued, and the order of attachment discharged.

Quashal of writ
 Sec. 12. Discharge of attachment upon giving counterbond.
After a writ of attachment has been enforced, the party whose property has been attached, or the person appearing on his
behalf, may move for the discharge of the attachment wholly or in part on the security given. The court shall, after due
notice and hearing, order the discharge of the attachment if the movant makes a cash deposit, or files a counter-bond
executed to the attaching party with the clerk of the court where the application is made, in an amount equal to that fixed
by the court in the order of attachment, exclusive of costs. But if the attachment is sought to be discharged with respect to
a particular property, the counter-bond shall be equal to the value of that property as determined by the court. In either
case, the cash deposit or the counter-bond shall secure the payment of any judgment that the attaching party may recover
in the action. A notice of the deposit shall forthwith be served on the attaching party. Upon the discharge of an attachment
in accordance with the provisions of this section, the property attached, or the proceeds of any sale thereof, shall be
delivered to the party making the deposit or giving the counter-bond, or to the person appearing on his behalf, the deposit
or counter-bond aforesaid standing in place of the property so released. Should such counterbond for any reason be
found to be or become insufficient, and the party furnishing the same fail to file an additional counter-bond, the attaching
party may apply for a new order of attachment.

 Sec. 13. Discharge of attachment on other grounds.

The party whose property has been ordered attached may file a motion with the court in which the action is pending,
before or after levy or even after the release of the attached property, for an order to set aside or discharge the attachment
on the ground that the same was improperly or irregularly issued or enforced, or that the bond is insufficient. If the
attachment is excessive, the discharge shall be limited to the excess. If the motion be made on affidavits on the part of the
movant but not otherwise, the attaching party may oppose the motion by counter-affidavits or other evidence in addition to
that on which the attachment was made. After due notice and hearing, the court shall order the setting aside or the
corresponding discharge of the attachment if it appears that
1) it was improperly or irregularly issued or enforced, or that
2) the bond is insufficient, or that
3) the attachment is excessive, and the defect is not cured forthwith.

 Discharge of attachment can’t be sought on ground that attaching plaintiff has no cause of action bec that
would advance trial on merits (Benitez v IAC)

CASE:

BRITISH ASSURANCE v IAC (1987)

Scywin sued Varian to collect money, attaching properties of Varian upon posting of bond. Counterbond posted by
Varian with Phil British Assurance as surety. Judgment v Varian. Pending appeal, IAC ordered execution. Since Varian
failed to deliver previously attached properties, IAC ordered Phil British to pay.
Held:
Counterbond can secure decision, even if pending appeal. R57 S5 and S12 says that counterbond to
secure payment of any judgment. S17: when execution be unsatisfied, it is only then that payment of the judgment
shall be charged on such counterbond.
 Rules of Court, RULE 57
Sec. 12. Discharge of attachment upon giving counterbond.
After a writ of attachment has been enforced, the party whose property has been attached, or the person appearing on his behalf,
may move for the discharge of the attachment wholly or in part on the security given. The court shall, after due notice and hearing,
order the discharge of the attachment if the movant makes a cash deposit, or files a counter-bond executed to the attaching party
with the clerk of the court where the application is made, in an amount equal to that fixed by the court in the order of attachment,
exclusive of costs. But if the attachment is sought to be discharged with respect to a particular property, the counter-bond shall be
equal to the value of that property as determined by the court. In either case, the cash deposit or the counter-bond shall secure the
payment of any judgment that the attaching party may recover in the action. A notice of the deposit shall forthwith be served on the
attaching party. Upon the discharge of an attachment in accordance with the provisions of this section, the property attached, or
the proceeds of any sale thereof, shall be delivered to the party making the deposit or giving the counter-bond, or to the person
appearing on his behalf, the deposit or counter-bond aforesaid standing in place of the property so released. Should such
counterbond for any reason be found to be or become insufficient, and the party furnishing the same fail to file an additional
counter-bond, the attaching party may apply for a new order of attachment.

Sec. 13. Discharge of attachment on other grounds.

The party whose property has been ordered attached may file a motion with the court in which the action is pending, before or after
levy or even after the release of the attached property, for an order to set aside or discharge the attachment on the ground that the
same was improperly or irregularly issued or enforced, or that the bond is insufficient. If the attachment is excessive, the discharge
shall be limited to the excess. If the motion be made on affidavits on the part of the movant but not otherwise, the attaching party
may oppose the motion by counter-affidavits or other evidence in addition to that on which the attachment was made. After due
notice and hearing, the court shall order the setting aside or the corresponding discharge of the attachment if it appears that it was
improperly or irregularly issued or enforced, or that the bond is insufficient, or that the attachment is excessive, and the defect is
not cured forthwith.

(g) Third-party claims

Rules of Court, RULE 57
Sec. 14. Proceedings where property claimed by third person.
If the property attached is claimed by any person other than the party against whom attachment had been issued or his agent, and
such person makes an affidavit of his title thereto, or right to the possession thereof, stating the grounds of such right or title, and
serves such affidavit upon the sheriff while the latter has possession of the attached party, and a copy thereof upon the attaching
party, the sheriff shall not be bound to keep the property under attachment, unless the attaching party or his agent, on demand of
the sheriff, shall file a bond approved by the court to indemnify the third-party claimant in a sum not less than the value of the
property levied upon. In case of disagreement as to such value, the same shall be decided by the court issuing the writ of
attachment. No claim for damages for the taking or keeping of the property may be enforced against the bond unless the action
therefor is filed within one hundred twenty (120) days from the date of the filing of the bond.
The sheriff shall not be liable for damages for the taking or keeping of such property, to any such third-party claimant, if such bond
shall be filed.
Nothing herein contained such prevent such claimant or any third person from vindicating his claim to the property, or prevent the
attaching party from claiming damages against a third-party claimant who filed a frivolous or plainly spurious claim, in the same or
a separate action.
When the writ of attachment is issued in favor of the Republic of the Philippines, or any officer duly representing it, the filing of such
bond shall not be required, and in case the sheriff is sued for damages as a result of the attachment, he shall be represented by
the Solicitor General, and if held liable therefor, the actual damages adjudged by the court shall be paid by the National Treasurer
out of the funds to be appropriated for the purpose.

 Aka sheriff’s bond/ indemnity bond- filed by plaintiff

 Remedies of 3rd party claimant- cumulative
1) 3rd party claim or terceria
2) Intervene in main action – not available in execution
3) Reivindicatory action - separate action v sheriff and attaching creditor for recovery of attached
prop. Obtain prelim injunc to enjoin sheriff from attaching
4) If real prop covered by Torrens system, file petition under Prop Regn Decree to cancel
annotation of attachment on ground of error or mistake
5) Damages – recover against sheriff’s bond within 120 days from filing bond (Prof. ARBautista)

(h) Remedies in case of illegal attachment

 Rules of Court, RULE 57
Sec. 20. Claim for damages on account of improper, irregular or excessive attachment.
An application for damages on account of improper, irregular or excessive attachment must be filed before the trial or before
appeal is perfected or before the judgment becomes executory, with due notice to the attaching party and his surety or sureties,
setting forth the facts showing his right to damages and the amount thereof. Such damages may be awarded only after proper
hearing and shall be included in the judgment on the main case.
If the judgment of the appellate court be favorable to the party against whom the attachment was issued, he must claim damages
sustained during the pendency of the appeal by filing an application in the appellate court, with notice to the party in whose favor
the attachment was issued or his surety or sureties, before the judgment of the appellate court becomes executory. The appellate
court may allow the application to be heard and decided by the trial court.
Nothing herein contained shall prevent the party against whom the attachment was issued from recovering in the same action the
damages awarded to him from any property of the attaching party not exempt from execution should the bond or deposit given by
the latter be insufficient or fail to fully satisfy the award.

 Recoverable damages: actual and moral. Malice or BF are needed only if claiming moral damages.
 Unlike prelim injunction, can recover beyond amt of attachment bond
 General rule: Claim for damages in main action before final judgment.
EXCEPTION: If main action dismissed for lack of jurisdiction or improper venue
 This provision applies only for recovery against attachment bond. Therefore, can recover on counterbond
even after judgment is final and executory

CASES:

INTL CONTAINER TERMINAL SERVICES v CA (1992)

Sharp sued Phil Ports Authority and ITCSI for prelim injunction to stop the negotiation and awarding of a contract to ICTSI.
CFI granted prelim injunction upon posting by Sharp of bond issued by its bonding company. ICTSI filed compulsory
counterclaim v Sharp. Case dismissed on PPA’s and ICTSI’s motion. ICTSI gave notice to bonding company that it was
claiming damages vs Sharp for revoked injunction.
Held:
Court laid down the following principles:
 Damages from prelim attachment, injunction, appointment of receiver or seizure of personal prop, the
payment of which is secured by judicial bond, must be claimed and ascertained in same action with due
notice to surety.
If surety given due notice, he is bound by judgment that may be enforced against principal. Wit of execution may issue
against surety
 If no notice given to surety, judgment vs surety cannot be executed without giving surety an opportunity to
be heard. Hearing will be summary and limited to such new defense (ie. not previously set up by principal).
 Application for damages and notice must be anytime before judgment becomes final and executory.