ZUNECA PHARMACEUTICAL, AKRAM ARAIN AND/OR VENUS ARAIN, M.D.
DBA ZUNECA Moreover, respondent claimed that the drug CARBAMAZEPINE has one documented serious
PHARMACEUTICAL, Petitioners, v. NATRAPHARM, INC., Respondent.
This is a petition for review1 under Rule 45 of the 1997 Rules of Civil Procedure, as amended,
assailing the April 18, 2011 Decision2 and July 21, 2011 Resolution3 of the Court of Appeals (CA)
in the petition for certiorari docketed as CA-G.R. SP No. 103333 granting a permanent injunction
in favor of respondent Natrapharm, Inc. and against petitioner Zuneca Pharmaceutical.
The facts follow:
Respondent is an all-Filipino pharmaceutical company which manufactures and sells a medicine
bearing the generic name "CITICOLINE," which is indicated for heart and stroke patients. The
said medicine is marketed by respondent under its registered trademark "ZYNAPSE," which
respondent obtained from the Intellectual Property Office (IPO) on September 24, 2007 under
Certificate of Trademark Registration No. 4-2007-005596. With its registration, the trademark
"ZYNAPSE" enjoys protection for a term of 10 years from September 24, 2007.4
In addition, respondent obtained from the Bureau of Food and Drugs (BFAD) all necessary
permits and licenses to register, list and sell its "ZYNAPSE" medicine in its various forms and
dosages.5
Allegedly unknown to respondent, since 2003 or even as early as 2001, petitioners have been
selling a medicine imported from Lahore, Pakistan bearing the generic name
"CARBAMAZEPINE," an anti-convulsant indicated for epilepsy, under the brand name "ZYNAPS,"
which trademark is however not registered with the IPO. "ZYNAPS" is pronounced exactly like
"ZYNAPSE."6
Respondent further alleged that petitioners are selling their product "ZYNAPS"
CARBAMAZEPINE in numerous drugstores in the country where its own product "ZYNAPSE"
CITICOLINE is also being sold.7
and disfiguring side-effect called "Stevens-Johnson Syndrome," and that the sale of the
medicines "ZYNAPSE" and "ZYNAPS" in the same drugstores will give rise to medicine
switching.8
On October 30, 2007, respondent sent petitioners a cease-and-desist demand letter, pointing
out that
"ZYNAPSE" is the registered trademark of [respondent], and that as such owner, it has exclusive
trademark right under the law to the use thereof and prevent others from using identical or
confusingly similar marks, and that [petitioners] must stop the use of "ZYNAPS" for being nearly
identical to "ZYNAPSE"; and
Because there is confusing similarity between "ZYNAPSE" and "ZYNAPS," there is a danger of
medicine switching, with the patient on "ZYNAPSE" medication placed in a more injurious
situation given the Steven-Johnson Syndrome side effect of the "ZYNAPS" CARBAMAZEPINE.9
Petitioners refused to heed the above demand, claiming that they had prior use of the name
"ZYNAPS" since year 2003, having been issued by the BFAD a Certificate of Product Registration
(CPR) on April 15, 2003, which allowed them to sell CARBAMAZEPINE under the brand name
"ZYNAPS."10
On November 29, 2007, respondent filed a complaint against petitioners for trademark
infringement for violation of Republic Act (R.A.) No. 8293, or the Intellectual Property Code of
the Philippines (IPC), with prayer for a temporary restraining order (TRO) and/or writ of
preliminary injunction. To justify the TRO/writ of preliminary injunction, respondent cited
Section 12211 of R.A. No. 8293, under which the registration of "ZYNAPSE" gives it the exclusive
right to use the said name as well as to exclude others from using the same.12 In addition,
respondent argued that under Sections 13813 and 147.114 of the IPC, certificates of registration
are prima facie evidence of the registrant's ownership of the mark and of the registrant's
exclusive right to use the same.15 Respondent also invoked the case of Conrad and Company,
Inc. v. Court of Appeals16 where it was ruled that an invasion of a registered mark entitles the
holder of a certificate of registration thereof to injunctive relief.17
In their answer, petitioners argued that they enjoyed prior use in good faith of the brand name
"ZYNAPS," having submitted their application for CPR with the BFAD on October 2, 2001, with
the name "ZYNAPS" expressly indicated thereon. The CPR was issued to them on April 15,
2003.18 Moreover, petitioners averred that under Section 15919 of the IPC their right to use
the said mark is protected.20
In its December 21, 2007 Order,21 the Regional Trial Court (RTC) denied respondent's
application for a TRO, ruling that even if respondent was able to first register its mark
"ZYNAPSE" with the IPO in 2007, it is nevertheless defeated by the prior actual use by
petitioners of "ZYNAPS" in 2003.
In its March 12, 2008 Order,22 the RTC denied the application for a writ of preliminary
injunction, reiterating the reasons stated in the order denying the application for a TRO:
In this Court's objective evaluation, neither party is, at this point, entitled to any injunctive
solace. Plaintiff, while admittedly the holder of a registered trademark under the IPC, may not
invoke ascendancy or superiority of its CTR [certificate of trademark registration] over the CPR
[certificate of product registration of the BFAD] of the defendants, as the latter certificate is, in
the Court's opinion, evidence of its "prior use". Parenthetically, the plaintiff would have been
entitled to an injunction as against any or all third persons in respect of its registered mark
under normal conditions, that is, in the event wherein Section 159.1 would not be invoked by
such third person. Such is the case however in this litigation. Section 159 of the IPC explicitly
curtails the registrant's rights by providing for limitations on those rights as against a "prior
user" under Section 159.1 xxx.23
Via a petition for certiorari with an application for a TRO and/or a writ of preliminary injunction,
respondent questioned before the CA the RTC's denial of the application for a writ of
preliminary injunction.
On June 17, 2008, the CA issued a Resolution24 denying respondent's application for TRO
and/or preliminary injunction for lack of merit. The CA found no compelling reason to grant the
application for TRO and/or preliminary injunction because there was no showing that
respondent had a clear and existing right that will be violated by petitioners. Respondent
moved for reconsideration but was denied by the CA in its July 31, 2008 Resolution.25cralawred
However, contrary to its earlier resolutions denying the application for a TRO/preliminary
injunction, the CA, in its April 18, 2011 Decision, upheld the allegations of respondent that it is
entitled to injunctive relief on the basis of its IPO registration and permanently enjoined
petitioners from the commercial use of "ZYNAPS." The fallo of the CA Decision reads:
WHEREFORE, premises considered, the Petition for Certiorari is GRANTED. The assailed
Omnibus Order dated 12 March 2008 of the Regional Trial Court, Branch 93 of Quezon City in
Civil Case No. Q-07-61561 is REVERSED and SET ASIDE, and a new one is entered permanently
ENJOINING defendants-respondents, their employees, agents, representatives, dealers,
retailers, and/or assigns, and any and all persons acting in their behalf, from manufacturing,
importing, distributing, selling and/or advertising for sale, or otherwise using in commerce, the
anti-convulsant drug CARBAMAZEPINE under the brand name and mark "ZYNAPS," or using any
other name which is similar or confusingly similar to petitioner's registered trademark
"ZYNAPSE," including filing of application for permits, license, or certificate of product
registration with the Food and Drug Administration and other government agencies.
SO ORDERED.26 (Underscoring and additional emphasis supplied)
Petitioners' motion for reconsideration was denied by the CA in its Resolution dated July 21,
2011.
Hence, this petition for review.
On December 2, 2011, the RTC rendered a Decision27 on the merits of the case. It found
petitioners liable to respondent for damages. Moreover, it enjoined the petitioners from using
"ZYNAPS" and ordered all materials related to it be disposed outside the channel of commerce
or destroyed without compensation.28
Respondent moved to dismiss the present petition in view of the December 2, 2011 RTC
Decision which functions as a full adjudication on the merits of the main issue of trademark
infringement. Respondent contended that the present petition is moot and academic, it only
involving an ancillary writ.29
Petitioners, on the other hand, opposed the motion to dismiss arguing that the December 2,
2011 RTC Decision had not yet attained finality, thus, the present petition had not yet been
rendered moot.
The two issues which need to be addressed are:
1) Whether the decision on the merits rendered the issues in this case moot and academic? and
2) Whether the CA may order a permanent injunction in deciding a petition for certiorari against
the denial of an application for a preliminary injunction issued by the RTC?
We hold that the issues raised in the instant petition have been rendered moot and academic
given the RTC's December 2, 2011 Decision on the merits of the case.
Rule 58 of the Rules of Court provides for both preliminary and permanent injunction. Section
1, Rule 58 provides for the definition of preliminary injunction:
SECTION 1. Preliminary injunction defined; classes. A preliminary injunction is an order
granted at any stage of an action or proceeding prior to the judgment or final order, requiring a
party or a court, agency or a person to refrain from a particular act or acts. It may also require
the performance of a particular act or acts, in which case it shall be known as a preliminary
mandatory injunction. (Emphasis supplied)
On the other hand, Section 9 of the same Rule defines a permanent injunction in this wise:
SEC. 9. When final injunction granted. If after the trial of the action it appears that the
applicant is entitled to have the act or acts complained of permanently enjoined, the court shall
grant a final injunction perpetually restraining the party or person enjoined from the
commission or continuance of the act or acts or confirming the preliminary mandatory
injunction. (Emphasis supplied)
A writ of preliminary injunction is generally based solely on initial and incomplete evidence.30
The evidence submitted during the hearing on an application for a writ of preliminary injunction
is not conclusive or complete for only a sampling is needed to give the trial court an idea of the
justification for the preliminary injunction pending the decision of the case on the merits.31 As
such, the findings of fact and opinion of a court when issuing the writ of preliminary injunction
are interlocutory in nature and made even before the trial on the merits is commenced or
terminated.32
By contrast a permanent injunction, based on Section 9, Rule 58 of the Rules of Court, forms
part of the judgment on the merits and it can only be properly ordered only on final judgment.
A permanent injunction may thus be granted after a trial or hearing on the merits of the case
and a decree granting or refusing an injunction should not be entered until after a hearing on
the merits where a verified answer containing denials is filed or where no answer is required, or
a rule to show cause is equivalent to an answer.33
As such a preliminary injunction, like any preliminary writ and any interlocutory order, cannot
survive the main case of which it is an incident; because an ancillary writ of preliminary
injunction loses its force and effect after the decision in the main petition.34
In Casilan v. Ybaez,35 this Court stated:
As things stand now, this Court can no longer interfere with the preliminary injunctions issued
by the Leyte court in its cases Nos. 2985 and 2990, because such preliminary writs have already
been vacated, being superseded and replaced by the permanent injunction ordered in the
decision on the merits rendered on 21 March 1962. And as to the permanent injunction, no
action can be taken thereon without reviewing the judgment on the merits, such injunction
being but a consequence of the pronouncement that the credits of Tiongson and Montilla are
entitled to priority over that of Casilan. Since the court below had the power and right to
determine such question of preference, its judgment is not without, nor in excess of,
jurisdiction; and even assuming that its findings are not correct, they would, at most, constitute
errors of law, and not abuses of discretion, correctible by certiorari . The obvious remedy for
petitioner Casilan was a timely appeal from the judgment on the merits to the Court of Appeals,
the amount involved being less than P200,000. But the judgment has become final and
unappealable and can not be set aside through certiorari proceedings. (Emphasis supplied)
Here, this Court is being asked to determine whether the CA erred by issuing a permanent
injunction in a case which questioned the propriety of the denial of an ancillary writ. But with
the RTC's December 2, 2011 Decision on the case for "Injunction, Trademark Infringement,
Damages and Destruction," the issues raised in the instant petition have been rendered moot
and academic. We note that the case brought to the CA on a petition for certiorari merely
involved the RTC's denial of respondent's application for a writ of preliminary injunction, a mere
ancillary writ. Since a decision on the merits has already been rendered and which includes in
its disposition a permanent injunction, the proper remedy is an appeal36 from the decision in
the main case.
WHEREFORE, in light of all the foregoing, the petition is hereby DENIED for being moot and
academic.
SO ORDERED.
BF Homes, Inc. v. Manila Electric Co., 636 SCRA 495
MERALCO is a corporation duly organized and existing under Philippine laws engaged in the
distribution and sale of electric power in Metro Manila. On the other hand, BF Homes and
PWCC are owners and operators of waterworks systems delivering water to over 12,000
households and commercial buildings in BF Homes subdivisions in Paraaque City, Las Pias City,
Caloocan City, and Quezon City. The water distributed in the waterworks systems owned and
operated by BF Homes and PWCC is drawn from deep wells using pumps run by electricity
supplied by MERALCO.
On June 23, 2003, BF Homes and PWCC filed a Petition [With Prayer for the Issuance of Writ of
Preliminary Injunction and for the Immediate Issuance of Restraining Order] against MERALCO
before the RTC, docketed as Civil Case No. 03-0151.
In their Petition before the RTC, BF Homes and PWCC invoked their right to refund based on the
ruling of this Court in Republic v. Manila Electric Company[4]:
7. It is of judicial notice that on November 15, 2002, in G.R. No. 141314, entitled Republic of the
Philippines vs. Manila Electric Company, and G.R. No. 141369, entitled Lawyers Against
Monopoly and Poverty (LAMP) et al. vs. Manila Electric Compnay (MERALCO), (both cases shall
hereafter be referred to as MERALCO Refund cases, for brevity), the Supreme Court ordered
MERALCO to refund its customers, which shall be credited against the customers future
consumption, the excess average amount of P0.167 per kilowatt hour starting with the
customers billing cycles beginning February 1998. The dispositive portion of the Supreme Court
Decision in the MERALCO Refund cases reads:
WHEREFORE, in view of the foregoing, the instant petitions are GRANTED and the decision of
the Court of Appeals in C.A. G.R. SP No. 46888 is REVERSED. Respondent MERALCO is
authorized to adopt a rate adjustment in the amount of P0.017 kilowatthour, effective with
respect to MERALCOs billing cycles beginning February 1994. Further, in accordance with the
decision of the ERB dated February 16, 1998, the excess average amount of P0.167 per kilowatt
hour starting with the applicants billing cycles beginning February 1998 is ordered to be
refunded to MERALCOs customers or correspondingly credited in their favor for future
consumption.
x x x x.
8. The Motion for Reconsideration filed by MERALCO in the MERALCO Refund cases was DENIED
WITH FINALITY (the uppercase letters were used by the Supreme Court) in the Resolution of the
Supreme Court dated April 9, 2003.
9. The amount that MERALCO was mandated to refund to [BF Homes and PWCC] pursuant to
the MERALCO Refund cases is in the amount of P11,834,570.91.[5
BF Homes and PWCC then alleged in their RTC Petition that:
10. On May 20, 2003, without giving any notice whatsoever, MERALCO disconnected electric
supply to [BF Homes and PWCCs] sixteen (16) water pumps located in BF Homes in Paraaque,
Caloocan, and Quezon City, which thus disrupted water supply in those areas.
11. On June 4, 2003, [BF Homes and PWCC] received by facsimile transmission a letter from
MERALCO, x x x, in which MERALCO demanded to [BF Homes and PWCC] the payment of
electric bills amounting to P4,717,768.15.
12. [MERALCO] replied in a letter dated June 11, 2003, x x x, requesting MERALCO to apply the
P4,717,768.15 electric bill against the P11,834,570.91 that MERALCO was ordered to refund to
[BF Homes and PWCC] pursuant to the MERALCO Refund cases. x x x
13. Displaying the arrogance that has become its distinction, MERALCO, in its letter dated June
16, 2003, x x x, denied [BF Homes and PWCCs] request alleging that it has not yet come up with
the schedule for the refund of large amounts, such as those of [BF Homes and PWCC].
14. Even while MERALCO was serving its reply-letter to [BF Homes and PWCC], MERALCO, again,
without giving any notice, cut off power supply to [BF Homes and PWCCs] five (5) water pumps
located in BF Homes Paraaque and BF Resort Village, in Pamplona, Las Pias City.
15. In its letter dated June 4, 2003 (Annex A), MERALCO threatened to cut off electric power
connections to all of [BF Homes and PWCCs] water pumps if [BF Homes and PWCC] failed to pay
their bills demanded by MERALCO by June 20, 2003.[6]
BF Homes and PWCC thus cited the following causes of action for their RTC Petition:
16. In refusing to apply [MERALCOs] electric bills against the amounts that it was ordered to
refund to [BF Homes and PWCC] pursuant to the MERALCO Refund cases and in making the
implementation of the refund ordered by the Supreme Court dependent upon its own will and
caprice, MERALCO acted with utmost bad faith.
17. [BF Homes and PWCC] are clearly entitled to the remedies under the law to compel
MERALCO to consider [BF Homes and PWCCs] electric bills fully paid by the amounts which
MERALCO was ordered to refund to [BF Homes and PWCC] pursuant to the MERALCO Refund
cases, to enjoin MERALCO to reconnect electric power to all of [BF Homes and PWCCs] water
pumps, and to order MERALCO to desist from further cutting off power connection to [BF
Homes and PWCCs] water pumps.
18. MERALCOs unjust and oppressive acts have cast dishonor upon [BF Homes and PWCCs]
good name and besmirched their reputation for which [BF Homes and PWCC] should be
indemnified by way of moral damages in the amount of not less than P1,000,000.00.
19. As an example for the public good, to dissuade others from emulating MERALCOs unjust,
oppressive and mercenary conduct, MERALCO should be directed to pay [BF Homes and PWCC]
exemplary damages of at least P1,000,000.00.
20. MERALCOs oppressive and inequitable conduct forced [BF Homes and PWCC] to engage the
services of counsel to defend their rights and thereby incur litigation expenses in the amount of
at least P500,000.00 for which [BF Homes and PWCC] should be indemnified.[7]
BF Homes and PWCC additionally prayed that the RTC issue a writ of preliminary injunction and
restraining order considering that:
21. As indicated in its letter dated June 4, 2003 (Annex A), unless seasonably restrained,
MERALCO will cut off electric power connections to all of [BF Homes and PWCCs] water pumps
on June 20, 2003.
22. Part of the reliefs herein prayed for is to restrain MERALCO from cutting off electric power
connections to [BF Homes and PWCCs] water pumps.
23. Unless MERALCOS announced intention to cut off electric power connections to [BF Homes
and PWCCs] water pumps is restrained, [BF Homes and PWCC] will suffer great and irreparable
injury because they would not [be] able to supply water to their customers.
24. [BF Homes and PWCC] therefore pray that a writ for preliminary injunction be issued upon
posting of a bond in an amount as will be determined by this Honorable Court.
25. [BF Homes and PWCC] further pray that, in the meantime and immediately upon the filing
of the above captioned Petition, a restraining order be issued before the matter of preliminary
injunction can be heard.[8]
On August 15, 2003, MERALCO filed before the RTC its Answer with Counterclaims and
Opposition to the Application for Writ of Preliminary Injunction[9] of BF Homes and PWCC.
According to MERALCO:
2.2. Both petitioners BF Homes, Incorporated and Philippine Waterworks Corporation are
admittedly the registered customers of [MERALCO] by virtue of the service contracts executed
between them under which the latter undertook to supply electric energy to the former for a
fee. The following twenty-three (23) Service Identification Nos. (SINs) are registered under the
name of BF Homes, Incorporated: x x x. While the following twenty-one (21) Service
Identification Nos. (SINs) are registered under the name of Philippine Waterworks Construction
Corporation: x x x
xxxx
2.4. The service contracts as well as the terms and conditions of [MERALCOs] service as
approved by BOE [Board of Energy], now ERC [Energy Regulatory Commission], provide in
relevant parts, that [BF Homes and PWCC] agree as follows:
DISCONTINUANCE OF SERVICE:
The Company reserves the right to discontinue service in case the customer is in arrears in the 2.15. [BF Homes and PWCCs] unpaid regular bills totaled P6,551,969.55 covering the May and
payment of bills or for failure to pay the adjusted bills in those cases where the meter stopped June 2003 electric bills. x x x
or failed to register the correct amount of energy consumed, or for failure to comply with any of
these terms and conditions, or in case of or to prevent fraud upon the Company. Before
disconnection is made in the case of, or to prevent fraud, the Company may adjust the bill of xxxx
said customer accordingly and if the adjusted bill is not paid, the Company may disconnect the
same. (Emphasis supplied)

2.5. This contractual right of [MERALCO] to discontinue electric service for default in the
payment of its regular bills is sanctioned and approved by the rules and regulations of ERB (now
the ERC). This right is necessary and reasonable means to properly protect and enable
[MERALCO] to perform and discharge its legal and contractual obligation under its legislative
franchise and the law. Cutting off service for non-payment by the customers of the regular
monthly electric bills is the only practical way a public utility, such as [MERALCO], can ensure
and maintain efficient service in accordance with the terms and conditions of its legislative
franchise and the law.
2.17. [BF Homes and PWCC] knew that [MERALCO] is already in the process of implementing
the decision of the Supreme Court as to the refund case. But this refund has to be implemented
in accordance with the guidelines and schedule to be approved by the ERC. Thus [BF Homes and
PWCCs] filing of the instant petition is merely to evade payment of their unpaid electric bills to
[MERALCO].[10]
Hence, MERALCO sought the dismissal of the RTC Petition of BF Homes and PWCC on the
following grounds:

xxxx
3.1 The Honorable Court has no jurisdiction to award the relief prayed for by [BF Homes and
PWCC] because:
2.14. Instead of paying their unpaid electric bills and before [MERALCO] could effect its legal
and contractual right to disconnect [BF Homes and PWCCs] electric services, [BF Homes and
PWCC] filed the instant petition to avoid payment of [MERALCOs] valid and legal claim for a) The petition is in effect preempting or defeating the power of the ERC to implement the
regular monthly electric bills. decision of the Supreme Court.
b) [MERALCO] is a utility company whose business activity is wholly regulated by the ERC. For its compulsory counterclaims, MERALCO prayed that the RTC orders BF Homes and PWCC to
The latter, being the regulatory agency of the government having the authority over the pay MERALCO P6,551,969.55 as actual damages (representing the unpaid electric bills of BF
respondent, is the one tasked to approve the guidelines, schedules and details of the refund. Homes and PWCC for May and June 2003), P1,500,000.00 as exemplary damages,
P1,500,000.00 as moral damages, and P1,000,000.00 as attorneys fees.

c) The decision of the Supreme Court, dated November 15, 2002, clearly states that
respondent is directed to make the refund to its customers in accordance with the decision of Lastly, MERALCO opposed the application for writ of preliminary injunction of BF Homes and
the ERC (formerly ERB) dated February 16, 1998. Hence, [MERALCO] has to wait for the PWCC because:
schedule and details of the refund to be approved by the ERC before it can comply with the
Supreme Court decision.
I

3.2. [MERALCO] has the right to disconnect the electric service to [BF Homes and PWCC]
in that: [MERALCO] HAS THE LEGAL AND CONTRACTUAL RIGHT TO DEMAND PAYMENT OF THE ELECTRIC
BILLS AND, IN CASE OF NON-PAYMENT, TO DISCONTINUE THE ELECTRIC SERVICES OF [BF HOMES
and PWCC]
a) The service contracts between [MERALCO] and [BF Homes and PWCC] expressly authorize
the former to discontinue and disconnect electric services of the latter for their failure to pay
the regular electric bills rendered. II

b) It is [MERALCOs] legal duty as a public utility to furnish its service to the general public [BF HOMES and PWCC] HAVE NO CLEAR RIGHT WHICH WARRANTS PROTECTION BY INJUNCTIVE
without arbitrary discrimination and, consequently, [MERALCO] is obligated to discontinue and PROCESS
disconnect electric services to [BF Homes and PWCC] for their refusal or failure to pay the
electric energy actually used by them.[11]

After hearing,[12] the RTC issued an Order on November 21, 2003 granting the application of BF
Homes and PWCC for the issuance of a writ of preliminary injunction. The RTC found that the
records showed that all requisites for the issuance of said writ were sufficiently satisfied by BF
Homes and PWCC. The RTC stated in its Order:
Albeit, this Court respects the right of a public utility company like MERALCO, being a grantee of
a legislative franchise under Republic Act No. 9029, to collect overdue payments from its
subscribers or customers for their respective consumption of electric energy, such right must,
however, succumb to the paramount substantial and constitutional rights of the public to the
usage and enjoyment of waters in their community. Thus, there is an urgent need for the
issuance of a writ of preliminary injunction in order to prevent social unrest in the community
for having been deprived of the use and enjoyment of waters flowing through [BF Homes and
PWCCs] water pumps.[13]
The RTC decreed in the end:
WHEREFORE, in the light of the foregoing, [BF Homes and PWCCs] prayer for the issuance of a
writ of preliminary injunction is hereby GRANTED. Respondent Manila Electric Company is
permanently restrained from proceeding with its announced intention to cut-off electric power
connection to [BF Homes and PWCCs] water pumps unless otherwise ordered by this Court.
Further, [BF Homes and PWCC] are hereby ordered to post a bond in the amount of P500,000 to
answer for whatever injury or damage that may be caused by reason of the preliminary
injunction.[14]
The Motion for Reconsideration of MERALCO of the aforementioned Order was denied by the
RTC in another Order issued on January 9, 2004.[15] The RTC reiterated its earlier finding that
all the requisites for the proper issuance of an injunction had been fully complied with by BF
Homes and PWCC, thus:
Records indubitably show that all the requisites for the proper issuance of an injunction have
been fully complied with in the instant case.
It should be noted that a disconnection of power supply would obviously cause irreparable
injury because the pumps that supply water to the BF community will be without electricity,
thereby rendering said community without water. Water is a basic and endemic necessity of life.
This is why its enjoyment and use has been constitutionally safeguarded and protected.
Likewise, a community without water might create social unrest, which situation this Court has
the mandate to prevent. There is an urgent and paramount necessity for the issuance of the
injunctive writ to prevent serious damage to the guaranteed rights of [BF Homes and PWCC]
and the residents of the community to use and enjoy water.[16]
The RTC resolved the issue on jurisdiction raised by MERALCO, as follows:
As to the jurisdictional issue raised by respondent MERALCO, it can be gleaned from a re-
evaluation and re-assessment of the records that this Court has jurisdiction to delve into the
case. This Court gave both parties the opportunity to be heard as they introduced evidence on
the propriety of the issuance of the injunctive writ. It is well-settled that no grave abuse of
discretion could be attributed to its issuance where a party was not deprived of its day in court
as it was heard and had exhaustively presented all its arguments and defenses. (National Mines
and Allied Workers Union vs. Valero, 132 SCRA 578, 1984.)[17]
Aggrieved, MERALCO filed with the Court of Appeals a Petition for Certiorari under Rule 65 of
the Rules of Court, docketed as CA-G.R. SP No. 82826. MERALCO sought the reversal of the RTC
Orders dated November 21, 2003 and January 9, 2004 granting a writ of preliminary injunction
in favor of BF Homes and PWCC. MERALCO asserted that the RTC had no jurisdiction over the
application of BF Homes and PWCC for issuance of such a writ.
In its Decision dated October 27, 2005, the Court of Appeals agreed with MERALCO that the RTC
had no jurisdiction to issue a writ of preliminary injunction in Civil Case No. 03-0151, as said
trial court had no jurisdiction over the subject matter of the case to begin with. It ratiocinated in
this wise:
For one, it cannot be gainsaid that the ERC has original and exclusive jurisdiction over the case.
Explicitly, Section 43(u) of Republic Act No. 9136, otherwise known as the Electric Power
Industry Reform Act, (RA 9136), states that the ERC shall have the original and exclusive
jurisdiction over all cases contesting rates, fees, fines and penalties imposed by the ERC in the
exercise of its powers, functions and responsibilities and over all cases involving disputes
between and among participants or players in the energy sector. Section 4(o) of Rule 3 of the
Implementing Rules and Regulations of RA 9136 likewise provides that the ERC shall also be
empowered to issue such other rules that are essential in the discharge of its functions as an
independent quasi-judicial body.
For another, the respondent judge, instead of presiding over the case, should have dismissed
the same and yielded jurisdiction to the ERC pursuant to the doctrine of primary jurisdiction. It
is plain error on the part of the respondent judge to determine, preliminary or otherwise, a
controversy involving a question which is within the jurisdiction of an administrative tribunal,
especially so where the question demands the exercise of sound administrative discretion.
Needless to state, the doctrine of primary jurisdiction applies where the administrative agency,
as in the case of ERC, exercises its quasi-judicial and adjudicatory function. Thus, in cases
involving specialized disputes, the practice has been to refer the same to an administrative
agency of special competence pursuant to the doctrine of primary jurisdiction. The courts will
not determine a controversy involving a question which is within the jurisdiction of the
administrative tribunal prior to the resolution of that question by the administrative tribunal,
where the question demands the exercise of sound administrative discretion requiring the
special knowledge, experience and services of the administrative tribunal to determine
technical and intricate matters of fact, and a uniformity of ruling is essential to comply with the
premises of the regulatory statute administered.
Verily, the cause of action of [BF Homes and PWCC] against [MERALCO] originates from the
Meralco Refund Decision as it involves the perceived right of the former to compel the latter to
set-off or apply their refund to their present electric bill. The issue delves into the right of the
private respondents to collect their refund without submitting to the approved schedule of the
ERC, and in effect give unto themselves preferential right over other equally situated consumers
of [MERALCO]. Perforce, the ERC, as can be gleaned from the afore-stated legal provisions, has
primary, original and exclusive jurisdiction over the said controversy.
Indeed, the respondent judge glaringly erred in enjoining the right of [MERALCO] to disconnect
its services to [BF Homes and PWCC] on the premise that the court has jurisdiction to apply the
provisions on compensation or set-off in this case. Although [MERALCO] recognizes the right of
[BF Homes and PWCC] to the refund as provided in the Meralco Refund Decision, it is the ERC
which has the authority to implement the same according to its approved schedule, it being a
dispute arising from the exercise of its jurisdiction.
Moreover, it bears to stress that the Meralco Refund Decision was brought into fore by the
Decision dated 16 February 1998 of the ERC (then Energy Regulatory Board) granting refund to
[MERALCOs] consumers. Being the agency of origin, the ERC has the jurisdiction to execute the
same. Besides, as stated, it is empowered to promulgate rules that are essential in the discharge
of its functions as an independent quasi-judicial body.[18]
The dispositive portion of the judgment of the appellate court reads:
WHEREFORE, the foregoing considered, the instant petition is hereby GRANTED and the
assailed Orders REVERSED and SET ASIDE. Accordingly, the writ of injunction against [MERALCO]
is hereby DISSOLVED. No costs.[19]
In a Resolution dated February 7, 2006, the Court of Appeals denied the Motion for
Reconsideration of BF Homes and PWCC for failing to raise new and persuasive and meritorious
arguments.
Now, BF Homes and PWCC come before this Court via the instant Petition, raising the following
assignment of errors:
1. The Court of Appeals ERRED in saying that the respondent judge committed grave abuse of
discretion by issuing the disputed writ of injunction pending the merits of the case including the
issue of subject matter jurisdiction.
2. The Court of Appeals ERRED in saying that the ERC under the doctrine of primary
jurisdiction has the original and EXCLUSIVE jurisdiction to take cognizance of a petition for
injunction to prevent electrical disconnection to a customer entitled to a refund.
3. The Court of Appeals ERRED in NOT SAYING that the ERC as a quasi-judicial body under RA
9136 has no power to issue any injunctive relief or remedy to prevent disconnection.
4. The Court of Appeals ERRED in not resolving the issue as to the violation of MERALCO of a
standing injunction order while the case remains undecided.[20]
At the core of the Petition is the issue of whether jurisdiction over the subject matter of Civil
Case No. 03-0151 lies with the RTC or the Energy Regulatory Commission (ERC). If it is with the
RTC, then the said trial court also has jurisdiction to issue the writ of preliminary injunction
against MERALCO. If it is with the ERC, then the RTC also has no jurisdiction to act on any
incidents in Civil Case No. 03-0151, including the application for issuance of a writ of
preliminary injunction of BF Homes and PWCC therein.
BF Homes and PWCC argued that due to the threat of MERALCO to disconnect electric services,
BF Homes and PWCC had no other recourse but to seek an injunctive remedy from the RTC
under its general jurisdiction. The merits of Civil Case No. 03-0151 was not yet in issue, only the
propriety of issuing a writ of preliminary injunction to prevent an irreparable injury. Even
granting that the RTC has no jurisdiction over the subject matter of Civil Case No. 03-0151, the
ERC by enabling law has no injunctive power to prevent the disconnection by MERALCO of
electric services to BF Homes and PWCC.
The Petition has no merit.
Settled is the rule that jurisdiction is conferred only by the Constitution or the law.[21] Republic
v. Court of Appeals[22] also enunciated that only a statute can confer jurisdiction on courts and
administrative agencies.
Related to the foregoing and equally well-settled is the rule that the nature of an action and the
subject matter thereof, as well as which court or agency of the government has jurisdiction over
the same, are determined by the material allegations of the complaint in relation to the law
involved and the character of the reliefs prayed for, whether or not the complainant/plaintiff is
entitled to any or all of such reliefs. A prayer or demand for relief is not part of the petition of
the cause of action; nor does it enlarge the cause of action stated or change the legal effect of
what is alleged. In determining which body has jurisdiction over a case, the better policy is to
consider not only the status or relationship of the parties but also the nature of the action that
is the subject of their controversy.[23]
In Manila Electric Company v. Energy Regulatory Board,[24] the Court traced the legislative
history of the regulatory agencies which preceded the ERC, presenting a summary of these
agencies, the statutes or issuances that created them, and the extent of the jurisdiction
conferred upon them, viz:
1. The first regulatory body, the Board of Rate Regulation (BRR), was created by virtue of Act No.
1779. Its regulatory mandate under Section 5 of the law was limited to fixing or regulating rates
of every public service corporation.
2. In 1913, Act No. 2307 created the Board of Public Utility Commissioners (BPUC) to take over
the functions of the BRR. By express provision of Act No. 2307, the BPUC was vested with
jurisdiction, supervision and control over all public utilities and their properties and franchises.
3. On November 7, 1936, Commonwealth Act (C.A.) No. 146, or the Public Service Act (PSA),
was passed creating the Public Service Commission (PSC) to replace the BPUC. Like the BPUC,
the PSC was expressly granted jurisdiction, supervision and control over public services, with
the concomitant authority of calling on the public force to exercise its power, to wit:
SEC. 13. Except as otherwise provided herein, the Commission shall have general supervision
and regulation of, jurisdiction and control over, all public utilities, and also over their property,
property rights, equipment, facilities and franchises so far as may be necessary for the purpose
of carrying out the provisions of this Act, and in the exercise of its authority it shall have the
necessary powers and the aid of the public force x x x.
Section 14 of C.A. No. 146 defines the term public service or public utility as including every
individual, copartnership, association, corporation or joint-stock company, . . . that now or
hereafter may own, operate, manage or control within the Philippines, for hire or
compensation, any common carrier, x x x, electric light, heat, power, x x x, when owned,
operated and managed for public use or service within the Philippines x x x. Under the
succeeding Section 17(a), the PSC has the power even without prior hearing
(a) To investigate, upon its own initiative, or upon complaint in writing, any matter concerning
any public service as regards matters under its jurisdiction; to require any public service to
furnish safe, adequate and proper service as the public interest may require and warrant, to
enforce compliance with any standard, rule, regulation, order or other requirement of this Act
or of the Commission, x x x.
4. Then came Presidential Decree (P.D.) No. 1, reorganizing the national government and
implementing the Integrated Reorganization Plan. Under the reorganization plan, jurisdiction,
supervision and control over public services related to electric light, and power heretofore
vested in the PSC were transferred to the Board of Power and Waterworks (BOPW).
Later, P.D. No. 1206 abolished the BOPW. Its powers and function relative to power utilities,
including its authority to grant provisional relief, were transferred to the newly-created Board of
Energy (BOE).
5. On May 8, 1987, then President Corazon C. Aquino issued E.O. No. 172 reconstituting the BOE
into the ERB, transferring the formers functions and powers under P.D. No. 1206 to the latter
and consolidating in and entrusting on the ERB all the regulatory and adjudicatory functions
covering the energy sector. Section 14 of E.O. No. 172 states that (T)he applicable provisions of
[C.A.] No. 146, as amended, otherwise known as the Public Service Act; x x x and [P.D.] No.
1206, as amended, creating the Department of Energy, shall continue to have full force and
effect, except insofar as inconsistent with this Order.[25]
Thereafter, on June 8, 2001, Republic Act No. 9136, known as the Electric Power Industry
Reform Act of 2001 (EPIRA), was enacted, providing a framework for restructuring the electric
power industry. One of the avowed purposes of the EPIRA is to establish a strong and purely
independent regulatory body. The Energy Regulatory Board (ERB) was abolished and its powers
and functions not inconsistent with the provision of the EPIRA were expressly transferred to the
ERC.[26]
The powers and functions of the ERB not inconsistent with the EPIRA were transferred to the
ERC by virtue of Sections 44 and 80 of the EPIRA, which read:
Sec. 44. Transfer of Powers and Functions. The powers and functions of the Energy Regulatory
Board not inconsistent with the provisions of this Act are hereby transferred to the ERC. The
foregoing transfer of powers and functions shall include all applicable funds and appropriations,
records, equipment, property and personnel as may be necessary.
Sec. 80. Applicability and Repealing Clause. The applicability provisions of Commonwealth Act
No. 146, as amended, otherwise known as the Public Service Act. Republic Act 6395, as
amended, revising the charter of NPC; Presidential Decree 269, as amended, referred to as the
National Electrification Decree; Republic Act 7638, otherwise known as the Department of
Energy Act of 1992; Executive Order 172, as amended, creating the ERB; Republic Act 7832
otherwise known as the Anti-Electricity and Electric Transmission Lines/Materials Pilferage Act
of 1994; shall continue to have full force and effect except insofar as they are inconsistent with
this Act.
The provisions with respect to electric power of Section 11(c) of Republic Act 7916, as
amended, and Section 5(f) of Republic Act 7227, are hereby repealed or modified accordingly.
Presidential Decree No. 40 and all laws, decrees, rules and regulations, or portions thereof,
inconsistent with this Act are hereby repealed or modified accordingly.
In addition to the foregoing, the EPIRA also conferred new powers upon the ERC under Section
43, among which are:
SEC. 43. Functions of the ERC. The ERC shall promote competition, encourage market
development, ensure customer choice and penalize abuse of market power in the restructured
electricity industry. In appropriate cases, the ERC is authorized to issue cease and desist order
after due notice and hearing. Towards this end, it shall be responsible for the following key
functions in the restructured industry:
xxxx
(f) In the public interest, establish and enforce a methodology for setting transmission and
distribution wheeling rates and retail rates for the captive market of a distribution utility, taking
into account all relevant considerations, including the efficiency or inefficiency of the regulated
entities. The rates must be such as to allow the recovery of just and reasonable costs and a
reasonable return on rate base (RORB) to enable the entity to operate viably. The ERC may
adopt alternative forms of internationally-accepted rate-setting methodology as it may deem
appropriate. The rate-setting methodology so adopted and applied must ensure a reasonable
price of electricity. The rates prescribed shall be non-discriminatory. To achieve this objective
and to ensure the complete removal of cross subsidies, the cap on the recoverable rate of
system losses prescribed in Section 10 of Republic Act No. 7832, is hereby amended and shall
be replaced by caps which shall be determined by the ERC based on load density, sales mix, cost
of service, delivery voltage and other technical considerations it may promulgate. The ERC shall
determine such form of rate-setting methodology, which shall promote efficiency. x x x.
xxxx
(u) The ERC shall have the original and exclusive jurisdiction over all cases contesting rates, fees,
fines and penalties imposed by the ERC in the exercise of the abovementioned powers,
functions and responsibilities and over all cases involving disputes between and among
participants or players in the energy sector.
All notices of hearings to be conducted by the ERC for the purpose of fixing rates or fees shall be
published at least twice for two successive weeks in two (2) newspapers of nationwide
circulation.
A careful review of the material allegations of BF Homes and PWCC in their Petition before the
RTC reveals that the very subject matter thereof is the off-setting of the amount of refund they
are supposed to receive from MERALCO against the electric bills they are to pay to the same
company. This is squarely within the primary jurisdiction of the ERC.
The right of BF Homes and PWCC to refund, on which their claim for off-setting depends,
originated from the MERALCO Refund cases. In said cases, the Court (1) authorized MERALCO to
adopt a rate adjustment in the amount of P0.017 per kilowatthour, effective with respect to its
billing cycles beginning February 1994; and (2) ordered MERALCO to refund to its customers or
credit in said customers favor for future consumption P0.167 per kilowatthour, starting with the
customers billing cycles that begin February 1998, in accordance with the ERB Decision dated
February 16, 1998.
It bears to stress that in the MERALCO Refund cases, this Court only affirmed the February 16,
1998 Decision of the ERB (predecessor of the ERC) fixing the just and reasonable rate for the
electric services of MERALCO and granting refund to MERALCO consumers of the amount they
overpaid. Said Decision was rendered by the ERB in the exercise of its jurisdiction to determine
and fix the just and reasonable rate of power utilities such as MERALCO.
Presently, the ERC has original and exclusive jurisdiction under Rule 43(u) of the EPIRA over all
cases contesting rates, fees, fines, and penalties imposed by the ERC in the exercise of its
powers, functions and responsibilities, and over all cases involving disputes between and
among participants or players in the energy sector. Section 4(o) of the EPIRA Implementing
Rules and Regulation provides that the ERC shall also be empowered to issue such other rules
that are essential in the discharge of its functions as in independent quasi-judicial body.
Indubitably, the ERC is the regulatory agency of the government having the authority and
supervision over MERALCO. Thus, the task to approve the guidelines, schedules, and details of
the refund by MERALCO to its consumers, to implement the judgment of this Court in the
MERALCO Refund cases, also falls upon the ERC. By filing their Petition before the RTC, BF
Homes and PWCC intend to collect their refund without submitting to the approved schedule of
the ERC, and in effect, enjoy preferential right over the other equally situated MERALCO
consumers.
Administrative agencies, like the ERC, are tribunals of limited jurisdiction and, as such, could
wield only such as are specifically granted to them by the enabling statutes. In relation thereto
is the doctrine of primary jurisdiction involving matters that demand the special competence of
administrative agencies even if the question involved is also judicial in nature. Courts cannot
and will not resolve a controversy involving a question within the jurisdiction of an
administrative tribunal, especially when the question demands the sound exercise of
administrative discretion requiring special knowledge, experience and services of the
administrative tribunal to determine technical and intricate matters of fact. The court cannot
arrogate into itself the authority to resolve a controversy, the jurisdiction of which is initially
lodged with the administrative body of special competence.[27]
Since the RTC had no jurisdiction over the Petition of BF Homes and PWCC in Civil Case No. 03-
0151, then it was also devoid of any authority to act on the application of BF Homes and PWCC
for the issuance of a writ of preliminary injunction contained in the same Petition. The ancillary
and provisional remedy of preliminary injunction cannot exist except only as an incident of an
independent action or proceeding.[28]
Incidentally, BF Homes and PWCC seemed to have lost sight of Section 8 of Executive Order No.
172 which explicitly vested on the ERB, as an incident of its principal function, the authority to
grant provisional relief, thus:
Section 8. Authority to Grant Provisional Relief. The Board may, upon the filing of an
application, petition or complaint or at any stage thereafter and without prior hearing, on the
basis of supporting papers duly verified or authenticated, grant provisional relief on motion of a
party in the case or on its own initiative, without prejudice to a final decision after hearing,
should the Board find that the pleadings, together with such affidavits, documents and other
evidence which may be submitted in support of the motion, substantially support the
provisional order: Provided, That the Board shall immediately schedule and conduct a hearing
thereon within thirty (30) days thereafter, upon publication and notice to all affected parties.
The aforequoted provision is still applicable to the ERC as it succeeded the ERB, by virtue of
Section 80 of the EPIRA. A writ of preliminary injunction is one such provisional relief which a
party in a case before the ERC may move for.
Lastly, the Court herein already declared that the RTC not only lacked the jurisdiction to issue
the writ of preliminary injunction against MERALCO, but that the RTC actually had no
jurisdiction at all over the subject matter of the Petition of BF Homes and PWCC in Civil Case No.
03-0151. Therefore, in addition to the dissolution of the writ of preliminary injunction issued by
the RTC, the Court also deems it appropriate to already order the dismissal of the Petition of BF
Homes and PWCC in Civil Case No. 03-0151 for lack of jurisdiction of the RTC over the subject
matter of the same. Although only the matter of the writ of preliminary injunction was brought
before this Court in the instant Petition, the Court is already taking cognizance of the issue on
the jurisdiction of the RTC over the subject matter of the Petition. The Court may motu proprio
consider the issue of jurisdiction. The Court has discretion to determine whether the RTC validly
acquired jurisdiction over Civil Case No. 03-0151 since, to reiterate, jurisdiction over the subject
matter is conferred only by law. Jurisdiction over the subject matter cannot be acquired
through, or waived by, any act or omission of the parties. Neither would the active participation
of the parties nor estoppel operate to confer jurisdiction on the RTC where the latter has none
over a cause of action.[29] Indeed, when a court has no jurisdiction over the subject matter, the
only power it has is to dismiss the action.[30]
WHEREFORE, the instant Petition for Review is DENIED. The Decision dated October 27, 2005 of
the Court of Appeals in CA-G.R. SP No. 82826 is AFFIRMED with the MODIFICATION that the
Regional Trial Court, Branch 202 of Las Pias City, is ORDERED to dismiss the Petition [With Prayer
for the Issuance of Writ of Preliminary Injunction and for the Immediate Issuance of Restraining
Order] of BF Homes, Inc. and Philippine Waterworks and Construction Corporation in Civil Case
No. 03-0151. Costs against BF Homes, Inc. and Philippine Waterworks and Construction
Corporation.
SO ORDERED.
NORTHERN ISLANDS, CO., INC., Petitioner, v. SPOUSES DENNIS AND CHERYLIN* GARCIA,
DOING BUSINESS UNDER THE NAME AND STYLE ECOLAMP MULTI
RESOURCES,, Respondents.
DECISION
PERLAS-BERNABE, J.:
Assailed in this petition for review on certiorari1 are the Decision2 dated January 19, 2012 and
the Resolution3 dated August 24, 2012 of the Court of Appeals (CA) in CA-G.R. SP No. 97448,
ordering the Regional Trial Court of Quezon City, Branch 215 (RTC) to appoint a commissioner to
determine the value of the attached properties of respondents Spouses Dennis and Cherylin
Garcia (respondents), and to discharge any excessive attachment found thereby.
The Facts
4
On September 23, 2005, petitioner Northern Islands Co., Inc. (petitioner) filed a Complaint with
application for a writ of preliminary attachment, before the RTC against respondents, docketed
as Civil Case No. Q-05-53699 (Main Case), which was subsequently amended 5 on October 25,
2005.6 It alleged that: (a) from March to July 2004, petitioner caused the delivery to
respondents of various appliances in the aggregate amount of P8,040,825.17; 7 (b) the goods
were transported, shipped, and delivered by Sulpicio Lines, Inc., and were accepted in good
order and condition by respondents representatives;8 (c) the parties agreed that the goods
delivered were payable within 120 days, and that the unpaid amounts would earn interest at a
rate of eighteen percent (18%) per annum;9 (d) however, the value of the goods were not paid
by respondents despite repeated demands;10 and (e) respondents fraudulently asserted that
petitioner had no proof that they had indeed received the quantity of the subject goods. 11
In connection with the application for a writ of preliminary attachment, petitioner posted a
bond, through Visayan Surety and Insurance Corporation, in the amount of ?8,040,825.17. On
November 7, 2005, the RTC issued the writ sought for. 12
Instead of filing an answer, respondents filed on November 11, 2001, an Urgent Motion for
Extension of Time to File Proper Pleading and Motion for Discovery (Production and
Inspection)13 (November 11, 2001 Motion), asking the RTC to allow them to photocopy and
personally examine the original invoices, delivery cargo receipts, and bills of lading attached to
the Amended Complaint, claiming that they could not come up with an intelligent answer
without being presented with the originals of such documents. 14
Thereafter, or on January 11, 2006, respondents filed a Motion to Discharge Excess
Attachment,15alleging that the attachment previously ordered by the RTC exceeded by
P9,232,564.56 given that the estimated value of the attached properties, including the
garnished bank accounts, as assessed by their appraiser, Gaudioso W. Lapaz (Lapaz), amounted
to P17,273,409.73, while the attachment bond is only in the amount of P8,040,825.17. 16
In an Order17 dated February 28, 2006, the RTC denied the November 11, 2001 Motion, and,
instead, directed respondents to file their answer, which the latter complied with through the
filing of their Answer Ad Cautelam Ex Abudante with Compulsory Counterclaim18 on April 3,
2006. Despite this, respondents again filed a Motion for Leave of Court to File Motion for
Discovery (Production and Inspection)19 (Motion for Discovery) on April 7, 2006.20
The RTC Ruling

21
In an Order dated June 21, 2006, the RTC, among others, denied the Motion to Discharge
Excess Attachment, finding that the appraisal made by Lapaz was not reflective of the true
valuation of the properties, adding too that the bond posted by petitioner stands as sufficient
security for whatever damages respondents may sustain by reason of the attachment. 22
On the other hand, the RTC granted the Motion for Discovery in accordance with Rule 27 of the
Rules of Court, despite petitioners claim that it did not have the originals of the documents
being sought.23
However, no production or inspection was conducted on July 10, 2006 as the RTC directed since
respondents received the copy of the above order only on July 11, 2006. 24
On July 25, 2006, respondents filed a Motion for Partial Reconsideration of the Order dated
June 21, 2006, specifically assailing the denial of their Motion to Discharge Excess Attachment.
In this relation, they prayed that the RTC refer to a commissioner, pursuant to Rule 32 of the
Rules of Court, the factual determination of the total aggregate amount of respondents
attached properties so as to ascertain if the attachment was excessive. Also, they prayed that
the order for production and inspection be modified and that petitioner be ordered to produce
the original documents anew for their inspection and copying. 25
The foregoing motion was, however, denied by the RTC in an Order 26 dated August 23, 2006 for
lack of merit. Thus, respondents elevated the matter to the CA via petition for certiorari and
mandamus,27docketed as CA-G.R. SP No. 97448 (Certiorari Case).
In the interim, the RTC rendered a Decision 28 dated September 21, 2011 in the Main Case.
Essentially, it dismissed petitioners Amended Complaint due to the absence of any evidence to
prove that respondents had agreed to the pricing of the subject goods. 29
The RTCs September 21, 2011 Decision was later appealed 30 by petitioner before the CA on
October 27, 2011. Finding that the Notice of Appeal was seasonably filed, with the payment of
the appropriate docket fees, the RTC, in an Order 31 dated January 25, 2012, ordered the
elevation of the entire records of the Main Case to the CA. The appeal was then raffled to the
CAs Eighth Division, and docketed as CA-G.R. CV No. 98237. On the other hand, records do not
show that respondents filed any appeal. 32
The CA Ruling in the Certiorari Case
Meanwhile, the CA, in a Decision33 dated January 19, 2012, partly granted the certiorari petition
of respondents, ordering the RTC to appoint a commissioner as provided under Rule 32 of the
Rules of Court as well as the subsequent discharge of any excess attachment if so found therein,
and, on the other hand, denying respondents Motion for Discovery. 34
It held that: (a) on the issue of attachment, trial by commissioners under Rule 32 of the Rules of
Court was proper so that the parties may finally settle their conflicting valuations; 35 and (b) on
the matter of discovery, petitioner could not be compelled to produce the originals sought by
respondents for inspection since they were not in the formers possession. 36
Aggrieved, petitioner filed a Motion for Partial Reconsideration 37 on February 13, 2012 but was,
however, denied in a Resolution38 dated August 24, 2012, hence, the present petition.
The Issues Before the Court
The issues presented for the Courts resolution are: (a) whether the RTC had lost jurisdiction
over the matter of the preliminary attachment after petitioner appealed the decision in the
Main Case, and thereafter ordered the transmittal of the records to the CA; and (b) whether the
CA erred in ordering the appointment of a commissioner and the subsequent discharge of any
excess attachment found by said commissioner.
The Courts Ruling
The petition is meritorious.
Section 9, Rule 41 of the Rules of Court provides that in appeals by notice of appeal, the court
loses jurisdiction over the case upon the perfection of the appeals filed in due time and the
expiration of the time to appeal of the other parties.
In this case, petitioner had duly perfected its appeal of the RTCs September 21, 2011 Decision
resolving the Main Case through the timely filing of its Notice of Appeal dated October 27,
2011, together with the payment of the appropriate docket fees. The RTC, in an Order 39 dated
January 25, 2012, had actually confirmed this fact, and thereby ordered the elevation of the
entire records to the CA. Meanwhile, records do not show that respondents filed any appeal,
resulting in the lapse of its own period to appeal therefrom. Thus, based on Section 9, Rule 41,
it cannot be seriously doubted that the RTC had already lost jurisdiction over the Main Case.
With the RTCs loss of jurisdiction over the Main Case necessarily comes its loss of jurisdiction
over all matters merely ancillary thereto. Thus, the propriety of conducting a trial by
commissioners in order to determine the excessiveness of the subject preliminary attachment,
being a mere ancillary matter to the Main Case, is now mooted by its supervening appeal in CA-
G.R. CV No. 98237.
It is an auxiliary remedy and cannot have an independent existence apart from the main suit or
claim instituted by the plaintiff against the defendant. Being merely ancillary to a principal
proceeding, the attachment must fail if the suit itself cannot be maintained as the purpose of
the writ can no longer be justified.
The consequence is that where the main action is appealed, the attachment which may have
been issued as an incident of that action, is also considered appealed and so also removed from
the jurisdiction of the court a quo. The attachment itself cannot be the subject of a separate
action independent of the principal action because the attachment was only an incident of
such action.41 (Emphases supplied)
That being said, it is now unnecessary to discuss the other issues raised herein. In fine, the
petition is granted and the assailed CA rulings are set aside.
WHEREFORE, the petition is GRANTED. The Decision dated January 19, 2012 and the Resolution
dated August 24, 2012 of the Court of Appeals in CA-G.R. SP No. 97448 are hereby SET ASIDE.
SO ORDERED.

Note that in Sps. Olib v. Judge Pastoral,40 the Court, in view of the nature of a preliminary
attachment, definitively ruled that the attachment itself cannot be the subject of a separate
action independent of the principal action because the attachment was only an incident of such
action, viz.: Valdevieso v. Damalerio, 451 SCRA 664;

Attachment is defined as a provisional remedy by which the property of an adverse party is

taken into legal custody, either at the commencement of an action or at any time thereafter, as The mere execution of a deed of sale covering an unregistered parcel of land is not enough to
a security for the satisfaction of any judgment that may be recovered by the plaintiff or any bind third persons. A succeeding step - the registration of the sale - has to be taken. Indeed,
proper party.
registration is the operative act to convey or affect the unregistered land insofar as third
persons are concerned.
Spouses Nestor and Felicidad Dadizon (Dadizons), the defendants in the trial court, seek the
review of the resolutions dated February 26, 2003 and June 30, 2003, respectively dismissing
their petition for review[1] and denying their motion for reconsideration,[2] both issued by the
Court of Appeals (CA).
Antecedents
Respondent Spouses Dominador and Elsa Mocorro (Mocorros) initiated this case in the
Municipal Trial Court (MTC) of Naval, Biliran against the Dadizons to recover a parcel of land
with an area of 78 square meters and to cancel the latters tax declaration. The Mocorros also
sought consequential damages.
The Mocorros right to recover was traced back to Ignacia Bernal, who had owned a large tract
of 3,231 square meters that she had declared for taxation purposes in Tax Declaration No.
504. On December 30, 1946, Bernal had sold to Almeda Elaba a portion of 364 square meters of
her land. Tax Declaration No. 1551 had been then issued in the name of Elaba, but covering only
224 square meters. On May 29, 1971, Elaba had sold the same 224 square meters to Brigido
Caneja, Sr., resulting in the issuance of Tax Declaration No. 4301 in the name of Caneja, Sr. in
1972 over the entire 224 square meters. As alleged in this action, the land of Caneja, Sr. was
described as follows:
It is a residential lot and house, bounded on the North by P. Inocentes St.; on the East by High
School Plaza; on the South by Elem. School Plaza; and on the West by Ignacia Bernal; of
approximately 224 square meters in area, more or less, covered by Tax Dec. No. 4301 and
assessed at P448.00 only.[3]
On June 2, 1973, Caneja, Sr. sold the land to the Mocorros. Thus, Caneja, Sr.s Tax Declaration
No. 4301 was cancelled and Tax Declaration No. 4518 was issued in the name of Dominador
Mocorro.[4]
In 1979, Tax Declaration No. 4518 was superseded by Tax Declaration No. 3478, still covering
the same area of 224 square meters. It is relevant to mention that Tax Declaration No. 3478
carried an annotation of the mortgage on the land constituted by the Mocorros in favor of the
Rural Bank of Naval on July 23, 1975.[5]
In 1984, as borne out in Tax Declaration No. 607, the area of 224 square meters was reduced by
78 square meters to only 146 square meters, with the western boundary being now described
as Cadastral Lot No. 523, Assessors Lot No. 049, owned by the Dadizons. [6] It is not denied that
the Dadizons were issued their own tax declaration for the first time only in 1980, through Tax
Declaration No. 535 in the name of Felicidad Dadizon, covering an area of 147 square
meters. Tax Declaration No. 535 indicated as the eastern boundary the property of the
Mocorros, described as Cadastral Lot No. 524, Assessors Lot No. 048. The dorsal side of Tax
Declaration No. 535 of the Dadizons contained the following note:
Note: Previous Tax Declaration was unidentified it is subject for further verification Cad. Lot No.
523 in the name of Felicidad Dadizon is denominated has no previous tax declaration and or
assessed as NEW under the Tax Mapping revision. [7]
Based on the tax declarations, the area of the land of the Mocorros had always been 224 square
meters until 1984, when the area was reduced to 146 square meters following the exclusion of
a part thereof measuring 78 square meters to adjust the area to that declared in the name of
the Dadizons in Tax Declaration No. 535.[8]
Ruling of the MTC
In determining the issue as to who between the Mocorros and the Dadizons possessed the
better right to the 78-square meter lot occupied by the Dadizons, the MTC rendered judgment
on December 6, 1999 in favor of the Mocorros, holding thuswise:
The Court has painstakingly reviewed the evidence in this case and has arrived at the conclusion
that the seventy eight (78) square meters complained of is part of the land sold to plaintiff
spouses. Plaintiffs have convincingly proved that they have a better right to the land. They have
solid evidence to support their claim of ownership.
As early as June 2, 1973, they bought the land in question from Brigido Caneja Sr., a former
town mayor of Naval, Biliran. The integrity of His honor, was engrained into the document so
much so that it was respected by the adjoining owners. A total land area of 224 square meters
was sold by Brigido Caneja, Sr. to plaintiff spouses as reflected in a Deed of Absolute Sale.
It was only in 1975 when defendant spouses allegedly acquired a residential land adjoining that
of plaintiff spouses that a boundary dispute ensued between them.
The Court finds the alleged acquisition of defendant spouses of the land in question peppered
with inconsistencies. At the outset, the land was conveyed to defendant spouses by their
mother Eustaquia Bernadas in a private document on March 10, 1976. Defendant spouses
offered flimsy excuses why said document was not notarized. They did not know according to
their joint affidavit that there was a need for it while their instrumental witness claim that
defendant spouses had no more money to pay for the notarization. The Court does not
subscribe to said assertion because defendant Felicidad Dadizon is a public school teacher and
as such knowledgeable enough to know that it takes a notary public to make a private
document a public one. And to claim that they had no more money to pay the notarization of
the document is unbelievable considering that they could even pay the alleged consideration of
the property in the amount of P2,000.00. The only logical reason why the document was not
notarized according to the mind of the Court is to make it appear that the documents were
executed on the dates mentioned therein.
It was unfortunate, however, that the plaintiff Dominador Mocorro was misled into fencing their
residential land as to its correct boundary upon misrepresentation of one Eustaquia Bernadas,
the mother of defendant Felicidad Dadizon. Plaintiff Elsa Mocorro was not around when the
alleged deception was made upon co-plaintiff Dominador Mocorro by Eustaquia Bernadas.
 On appeal, the Regional Trial Court (RTC) in Naval, Biliran affirmed the MTCs findings through its
decision of May 17, 2001,[10] to wit:
xxx

WHEREFORE, in view of the foregoing, the Court finds a preponderance of evidence in favor of
plaintiffs and against defendants and hereby declares plaintiffs as owners of the seventy eight Factual findings and conclusions of the trial court are entitled to great weight and respect
(78) square meters of the lot covered by Tax Declaration No. 535 and/or TD No. 68 in the name absent any showing of a fact or any circumstance which the court a quo failed to appreciate and
of defendant Felicidad Dadizon. which would change the result if it were considered.

The Court likewise orders the defendant spouses, WHEREFORE, premises considered, this Court finds that the decision of the court a quo as
correct; hereby affirming the said decision in toto.

a. To deliver the said seventy eight (78) square meters portion to plaintiffs and to demolish
whatever structures defendants might have erected thereon; Ruling of the Court of Appeals

b.To pay plaintiffs the sum of TEN THOUSAND PESOS P10,000.00 for attorneys fees and litigation The Dadizons filed a notice of appeal. Initially, the CA required the Dadizons to file
expenses and the costs of suit. their appellants brief. Later on, however, the Mocorros moved to dismiss the Dadizons appeal
on the ground that the mode of appeal they had adopted was erroneous.

The Court orders the Provincial Assessor of Naval, Biliran to cancel Tax Declaration No. 531 T.M.
and 608 in the name of Felicidad Dadizon and any other tax declaration relative to the property Agreeing with the Mocorros, the CA dismissed the Dadizons appeal through its resolution
in question.[9] dated February 26, 2003.[11] The CA denied the Dadizons motion for reconsideration on June 30,
2003.[12]

Ruling of the RTC

Hence, the Dadizons have come to this Court to assail the dismissal of their appeal and the
denial of their motion for reconsideration.
Our Ruling
The petition for review on certiorari lacks merit.
I a) by ordinary appeal, or appeal by writ of error - where judgment was rendered in a civil or
The mode of appeal vis--vis the decision of the RTC adopted by the Dadizons was undoubtedly
wrong. They should have filed a petition for review in accordance with Rule 42, Rules of Court,
which was the correct mode of appeal, considering that the RTC had rendered the decision in
question in the exercise of its appellate jurisdiction.
The error of the Dadizons was inexcusable and inexplicable. The Court has followed
a strict policy against misdirected or erroneous appeals since February 27, 1990, when it issued
the following instructions and caution in Murillo v. Consul:[13]
At present then, except in criminal cases where the penalty imposed is life imprisonment
or reclusion perpetua, there is no way by which judgments of regional trial courts may be
appealed to the Supreme Court except by petition for review on certiorari in accordance with
Rule 45 of the Rules of Court, in relation to Section 17 of the Judiciary Act of 1948 as
amended.The proposition is clearly stated in the Interim Rules: Appeals to the Supreme Court
shall be taken by petition for certiorari which shall be governed by Rule 45 of the Rules of Court.
On the other hand, it is not possible to take an appeal by certiorari to the Court of Appeals.
Appeals to that Court from the Regional Trial Courts are perfected in two (2) ways, both of
which are entirely distinct from an appeal by certiorari to the Supreme Court. They are:
criminal action by the RTC in the exercise of original jurisdiction; and
b) by petition for review - where judgment was rendered by the RTC in the exercise of appellate
jurisdiction.
The petition for review must be filed with the Court of Appeals within 15 days from notice of
the judgment, and as already stated, shall point out the error of fact or law that will warrant a
reversal or modification of the decision or judgment sought to be reviewed. An ordinary appeal
is taken by merely filing a notice of appeal within 15 days from notice of the judgment, except in
special proceedings or cases where multiple appeals are allowed in which event the period of
appeal is 30 days and a record on appeal is necessary.
There is therefore no longer any common method of appeal in civil cases to the Supreme Court
and the Court of Appeals. The present procedures for appealing to either court and, it may be
added, the process of ventilation of the appeal are now to be made by petition for review or by
notice of appeals (and, in certain instances, by record on appeal), but only by petition for review
on certiorari under Rule 45. As was stressed by this Court as early as 1980, in Buenbrazo v.
Marave, 101 SCRA 848, all the members of the bench and bar are charged with knowledge, not
only that since the enactment of Republic Act No. 8031 in 1969, the review of the decision of
the Court of First Instance in a case exclusively cognizable by the inferior court x x cannot be
made in an ordinary appeal or by record on appeal, but also that appeal by record on appeal to
the Supreme Court under Rule 42 of the Rules of Court was abolished by Republic Act No. 5440
which, as already stated, took effect on September 9, 1968. Similarly, in Santos, Jr., v. C.A., 152
SCRA 378, this Court declared that Republic Act No. 5440 had long superseded Rule 41 and
Section 1, Rule 122 of the Rules of Court on direct appeals from the court of first instance to the
Supreme Court in civil and criminal cases, x x and that direct appeals to this Court from the trial
court on questions of law had to be through the filing of a petition for review on certiorari,
wherein this Court could either give due course to the proposed appeal or deny it outright to
prevent the clogging of its docket with unmeritorious and dilatory appeals.
In fine, if an appeal is essayed to either court by the wrong procedure, the only course of action
open is to dismiss the appeal. In other words, if an appeal is attempted from a judgment of a
Regional Trial Court by notice of appeal, that appeal can and should never go to the Supreme
Court, regardless of any statement in the notice that the court of choice is the Supreme Court;
and more than once has this Court admonished a Trial Judge and/or his Clerk of Court, as well
as the attorney taking the appeal, for causing the records to be sent up to this Court in such a
case. Again, if an appeal by notice of appeal is taken from the Regional Trial Court to the Court
of Appeals and in the latter Court, the appellant raises naught but issues of law, the appeal
should be dismissed for lack of jurisdiction. And finally, it may be stressed once more, it is only
through petitions for review on certiorari that the appellate jurisdiction of the Supreme Court
may properly be invoked.
There is no longer any justification for allowing transfers of erroneous appeals from one court
to the other, much less for tolerating continued ignorance of the law on appeals. It thus
behooves every attorney seeking review and reversal of a judgment or order promulgated
against his client, to determine clearly the errors he believes may be ascribed to the judgment
or order, whether of fact or of law; then to ascertain which Court properly has appellate
jurisdiction; and finally, to observe scrupulously the requisites for appeal prescribed by law,
with keen awareness that any error or imprecision in compliance therewith may well be fatal
to his client's cause.
The dictum of Murillo v. Consul found its way to the Rules of Court as Sec. 2, Rule 41, effective
July 1, 1997, under which the various modes of appeal are now specifically delineated, viz:
Sec. 2. Modes of appeal.
(a) Ordinary appeal. The appeal to the Court of Appeals in cases decided by the Regional Trial
Court in the exercise of its original jurisdiction shall be taken by filing a notice of appeal with the
court which rendered the judgment or final order appealed from and serving a copy thereof
upon the adverse party. No record on appeal shall be required except in special proceedings
and other cases of multiple or separate appeals where the law or these Rules so require. In such
cases, the record on appeal shall be filed and served in like manner.
(b) Petition for review. The appeal to the Court of Appeals in cases decided by the Regional
Trial Court in the exercise of its appellate jurisdiction shall be by petition for review in
accordance with Rule 42.
(c) Appeal by certiorari. In all cases where only questions of law are raised or involved, the
appeal shall be to the Supreme Court by petition for review on certiorari in accordance with
Rule 45. (n)
Consequently, the CAs dismissal of the Dadizons appeal was proper. Sec. 2, Rule 50 of the Rules
of Court[14] pronounces that an appeal by notice of appeal instead of by petition for review from
the appellate judgment of a Regional Trial Court shall be dismissed. The dismissal was also
unavoidable notwithstanding that the procedural rules might be liberally construed, [15] because
the provisions of law and the rules concerning the manner and period of appeal were
mandatory and jurisdictional requirements essential to enable the appellate court to take
cognizance of the appeal.[16] According to Dee Hwa Liong Electronics Corporation v. Papiona,
[17]
the liberal construction of the rules - authorized by Sec. 6, Rule 1, Rules of Court, in order to
promote their objective of securing a just, speedy and inexpensive disposition of every action
and proceeding - cannot be made the vehicle by which to ignore the Rules of Court at will and
at random to the prejudice of the orderly presentation and assessment of the issues and their
just resolution.
Indeed, the policy of liberal construction mandated by the Rules of Court may be invoked only in
situations in which there is some excusable formal deficiency or error in a pleading, but not
where its application subverts the essence of the proceeding or results in the utter disregard of
the Rules of Court. Imperative justice requires the correct observance of indispensable
technicalities precisely designed to ensure its proper dispensation, for, as Justice Regalado
observed in one case:[18]
The danger wrought by non-observance of the Rules of Court is that the violation of or failure to
comply with the procedure prescribed by law prevents the proper determination of the
questions raised by the parties with respect to the merits of the case and makes it necessary to
decide, in the first place, such questions as relate to the form of the action. The rules and
procedure laid down for the trial court and the adjudication of cases are matters of public
policy. They are matters of public order and interest which can in no wise be changed or
regulated by agreements between or stipulations by parties to an action for their singular
convenience.
II
Still, even had the CA treated the appeal as proper, the outcome would have favored the
Mocorros.
The unison between the MTC and the RTC in arriving at their factual findings and legal
conclusions in favor of the Mocorros cannot be justly ignored, but calls for our acceptance of
their judgments on the facts as well as on their legal conclusions upon such facts. Their findings
were supported by the records and the evidence; their legal conclusions accorded with the
pertinent laws and jurisprudence.
There is no question that the 78-square meter portion subject of this suit was part of the lot
with an area of 224 square meters that the Mocorros had acquired from their predecessors-in-
interest, starting from Ignacia Bernal. The Mocorros had possessed the land since their
purchase of it on June 2, 1973 from Caneja, Sr. After their acquisition from Caneja, Sr., they had
been issued Tax Declaration No. 4518, which had been their tax declaration for the property
until its cancellation in 1979 and the issuance to them of Tax Declaration No. 3478. Up to then,
no other persons, the Dadizons included, had challenged their ownership of the 78-square
meter lot. A further proof of their ownership was the fact that they had constituted a mortgage
on the entire area of 224 square meters on July 23, 1975 in favor of the Rural Bank of Naval to
secure an obligation. The mortgage lien was annotated on their Tax Declaration No. 3478.
In contrast, the Dadizons declared the 78-square meter portion for the first time only in 1980
under Tax Declaration No. 535. Their declaration was suspect, however, considering that the
Office of the Provincial Assessor had no previous record of any declaration in the name of the
Dadizons or of their predecessors-in-interest. Thus, that office issued the certification to the
effect that the preceding tax declaration of the property of Felicidad Dadizon was unidentified
and still subject to further verification,[19] which could only mean that the Dadizons had filed no
earlier tax declaration on their property. In fact, Cadastral Lot No. 523 in the name of Felicidad
Dadizon was described as: ha(ving) no previous tax declaration and or assessed as NEW under
the Tax Mapping revision.[20] Given such antecedents, the reduction of the area of the
landholding of the Mocorros to adjust the area in favor of the land of the Dadizons under Tax
Declaration No. 535 was questionable.
The conclusion of the MTC, supra that the Dadizons supposed acquisition on March 10, 1976 by
means of a private document of the 78-square meter portion from Eustaquia Bernadas,
Felicidad Dadizons own mother, had been feigned to make it appear that the documents were
executed on the dates mentioned therein; and that Dominador Mocorro had been misled into
fencing their residential land as to its correct boundary upon misrepresentation of one
Eustaquia Bernadas in the absence of Elsa Mocorro was upheld by the RTC as the appellate
court for the reason that the Dadizons had not presented any fact or circumstance that the MTC
as the trial court had failed to appreciate, but if considered would change the result. The
conclusion binds the Court now, for the trial court was in the best position to assess the
witnesses credibility and to appreciate their truthfulness, honesty and candor. [21] Absent the
showing of a fact or circumstance of weight and influence that was overlooked and, if
considered, could affect the outcome of the case, the factual findings and assessment on the
credibility of witnesses or other evidence made by the trial court remain binding on the
appellate tribunal.[22] The legal aphorism is that the findings of facts of the trial court, its
calibration of the testimonies of witnesses and its assessment of their probative weight, as well
as its conclusions based on its findings, are accorded by the appellate court high respect, if not
conclusive effect.[23]
Moreover, the Dadizons traced their ownership of the 78-square meter portion to Ignacia
Bernal. They tended to show that Bernal had sold 364 square meters of her land to Elaba on
December 30, 1946; that, in turn, Elaba had conveyed a 7x13-meter portion (or 91 square
meters) to Donato Cabalquinto on February 25, 1952 and another portion measuring 6x13-
meters (or 78 square meters) to Floselfina Elaba in 1953 (evidenced by a deed of confirmation);
[24]
that Floselfina had then sold the 78-square meter lot to Eustaquia Bernadas in 1954
(evidenced by the same deed of confirmation); that Cabalquinto and Elaba had transferred the
91-square meter lot and confirmed the sale of the 78-square meter lot (a total of 169 square
meters) to Eustaquia Bernadas on May 3, 1954 (evidenced by a deed of sale dated May 3,
1954);[25] that Bernadas had remained in possession of the 169-square meter land from May 3,
1954 until her transfer of it to the Dadizons, who were her daughter and son-in-law, on March
10, 1976 (evidenced by an affidavit of adjoining owners[26] and an unnotarized deed of absolute
sale of real property);[27] and that the Dadizons had then possessed the 169-square meter land
from the time of the sale to them until the present, building their house thereon. [28]
The reliance of the Dadizons on the unnotarized and unregistered deed of absolute sale of real WHEREFORE, we affirm the resolution dated February 26, 2003 and the resolution dated June
property executed by Bernadas in their favor was misplaced and unwarranted, for the non- 30, 2003 issued in CA-G.R. C.V. No. 71649.
registration of the deed meant that the sale could not bind third parties like the respondents.
The transaction affecting unregistered lands covered by an unrecorded contract, if legal, might
be valid and binding on the parties themselves, but not on third parties. In the case of third The petitioners shall pay the costs of suit.
parties, it was necessary for the contract to be registered. Sec. 113 of Presidential Decree No.
1529, also known as the Property Registration Decree, provides, viz:

Section 113. Recording of instruments relating to unregistered lands.- No deed, conveyance, K.O. GLASS CONSTRUCTION CO., INC., petitioner,
mortgage, lease, or other voluntary instrument affecting land not registered under the Torrens vs.
system shall be valid, except as between the parties thereto, unless such instrument shall have THE HONORABLE MANUEL VALENZUELA, Judge of the Court of First Instance of Rizal, and
been recorded in the manner herein prescribed in the office of the Register of Deeds for the ANTONIO D. PINZON, respondents.
province or city where the land lies.
Guillermo E. Aragones for petitioner.

Ruben V. Lopez for respondent Antonio D. Pinzon.

Bernadas execution on March 10, 1976 of the deed of absolute sale of real property in favor of
the Dadizons, standing alone, did not suffice to bind and conclude the Mocorros. Pursuant to
Sec. 113, Presidential Decree No. 1529, the recording of the sale was necessary. [29] Besides, the
deed, being the unilateral act of Bernadas, did not adversely affect the Mocorros, who were not
her privies. Otherwise stated, the deed was res inter alios acta as far as they were concerned.[30]
Neither would the affidavit of adjoining owners support the Dadizons cause, considering that
such affidavit, aside from its being self-serving and unilateral, had been executed only for the
purpose of facilitating Felicidad Dadizons application for the low cost housing loan from the
Development Bank of the Philippines.
CONCEPCION, JR., J.:
Petition for certiorari to annul and set aside the writ of preliminary attachment issued by the
respondent Judge in Civil Case No. 5902-P of the Court of First Instance of Rizal,
entitled: Antonio D. Pinzon plaintiff, versus K.O. Glass Construction Co., Inc., and Kenneth O.
Glass, defendants, and for the release of the amount of P37,190.00, which had been deposited
with the Clerk of Court, to the petitioner.
On October 6, 1977, an action was instituted in the Court of First Instance of Rizal by Antonio D.
Pinzon to recover from Kenneth O. Glass the sum of P37,190.00, alleged to be the agreed
rentals of his truck, as well as the value of spare parts which have not been returned to him
upon termination of the lease. In his verified complaint, the plaintiff asked for an attachment
against the property of the defendant consisting of collectibles and payables with the Philippine
Geothermal, Inc., on the grounds that the defendant is a foreigner; that he has sufficient cause
of action against the said defendant; and that there is no sufficient security for his claim against
the defendant in the event a judgment is rendered in his favor. 1
Finding the petition to be sufficient in form and substance, the respondent Judge ordered the
issuance of a writ of attachment against the properties of the defendant upon the plaintiff's
filing of a bond in the amount of P37,190.00. 2
Thereupon, on November 22, 1977, the defendant Kenneth O. Glass moved to quash the writ of
attachment on the grounds that there is no cause of action against him since the transactions or
claims of the plaintiff were entered into by and between the plaintiff and the K.O. Glass
Construction Co., Inc., a corporation duly organized and existing under Philippine laws; that
there is no ground for the issuance of the writ of preliminary attachment as defendant Kenneth
O. Glass never intended to leave the Philippines, and even if he does, plaintiff can not be
prejudiced thereby because his claims are against a corporation which has sufficient funds and
property to satisfy his claim; and that the money being garnished belongs to the K.O. Glass
Corporation Co., Inc. and not to defendant Kenneth O. Glass. 3
By reason thereof, Pinzon amended his complaint to include K.O. Glass Construction Co., Inc. as
co-defendant of Kenneth O. Glass. 4
On January 26, 1978, the defendants therein filed a supplementary motion to discharge and/or
dissolve the writ of preliminary attachment upon the ground that the affidavit filed in support
of the motion for preliminary attachment was not sufficient or wanting in law for the reason
that: (1) the affidavit did not state that the amount of plaintiff's claim was above all legal set-
offs or counterclaims, as required by Sec. 3, Rule 57 of the Revised Rules of Court; (2) the
affidavit did not state that there is no other sufficient security for the claim sought to be
recovered by the action as also required by said Sec. 3; and (3) the affidavit did not specify any
of the grounds enumerated in Sec. 1 of Rule 57, 5 but, the respondent Judge denied the motion
and ordered the Philippine Geothermal, Inc. to deliver and deposit with the Clerk of Court the
amount of P37,190.00 immediately upon receipt of the order which amount shall remain so
deposited to await the judgment to be rendered in the case. 6
On June 19, 1978, the defendants therein filed a bond in the amount of P37,190.00 and asked
the court for the release of the same amount deposited with the Clerk of Court, 7 but, the
respondent Judge did not order the release of the money deposited. 8
Hence, the present recourse. As prayed for, the Court issued a temporary restraining order,
restraining the respondent Judge from further proceeding with the trial of the case. 9
We find merit in the petition. The respondent Judge gravely abused his discretion in issuing the
writ of preliminary attachment and in not ordering the release of the money which had been
deposited with the Clerk of Court for the following reasons:
First, there was no ground for the issuance of the writ of preliminary attachment. Section 1,
Rule 57 of the Revised Rules of Court, which enumerates the grounds for the issuance of a writ
of preliminary attachment, reads, as follows:
Sec. 1. Grounds upon which attachment may issue. A plaintiff or any proper party may, at the
commencement of the action or at any time thereafter, have the property of the adverse party
attached as security for the satisfaction of any judgment that may be recovered in the following
cases:
(a) In an action for the recovery of money or damages on a cause of action arising from
contract, express or implied, against a party who is about to depart from the Philippines with
intent to defraud his creditor;
(b) In an action for money or property embezzled or fraudulently misapplied or converted to his
own use by a public officer, or an officer of a corporation, or an attorney, factor, broker, agent,
or clerk, in the course of his employment as such, or by any other person in a fiduciary capacity,
or for a willful violation of duty;
(c) In an action to recover the possession of personal property unjustly detained, when the
property, or any part thereof, has been concealed, removed, or disposed of to prevent its being
found or taken by the applicant or an officer;
(d) In an action against the party who has been guilty of a fraud in contracting the debt or
incurring the obligation upon which the action is brought, or in concealing or disposing of the
property for the taking, detention or conversion of which the action is brought;
(e) In an action against a party who has removed or disposed of his property, or is about to do
so, with intent to defraud his creditors;
(f) In an action against a party who resides out of the Philippines, or on whom summons may be
served by publication.
In ordering the issuance of the controversial writ of preliminary attachment, the respondent
Judge said and We quote:
The plaintiff filed a complaint for a sum of money with prayer for Writ of Preliminary
Attachment dated September 14, 1977, alleging that the defendant who is a foreigner may, at
any time, depart from the Philippines with intent to defraud his creditors including the plaintiff
herein; that there is no sufficient security for the claim sought to be enforced by this action;
that the amount due the plaintiff is as much as the sum for which an order of attachment is
sought to be granted; and that defendant has sufficient leviable assets in the Philippines
consisting of collectibles and payables due from Philippine Geothermal, Inc., which may be
disposed of at any time, by defendant if no Writ of Preliminary Attachment may be issued.
Finding said motion and petition to be sufficient in form and substance. 10
Pinzon however, did not allege that the defendant Kenneth O. Glass "is a foreigner (who) may,
at any time, depart from the Philippines with intent to defraud his creditors including the
plaintiff." He merely stated that the defendant Kenneth O. Glass is a foreigner. The pertinent
portion of the complaint reads, as follows:
15. Plaintiff hereby avers under oath that defendant is a foreigner and that said defendant has a
valid and just obligation to plaintiff in the total sum of P32,290.00 arising out from his failure to
pay (i) service charges for the hauling of construction materials; (ii) rentals for the lease of
plaintiff's Isuzu Cargo truck, and (iii) total cost of the missing/destroyed spare parts of said
leased unit; hence, a sufficient cause of action exists against said defendant. Plaintiff also avers
under oath that there is no sufficient security for his claim against the defendant in the event a
judgment be rendered in favor of the plaintiff. however, defendant has sufficient assets in the
Philippines in the form of collectible and payables due from the Philippine Geothermal, Inc.
with office address at Citibank Center, Paseo de Roxas, Makati, Metro Manila, but which
properties, if not timely attached, may be disposed of by defendants and would render
ineffectual the reliefs prayed for by plaintiff in this Complaint. 11
In his Amended Complaint, Pinzon alleged the following:
15. Plaintiff hereby avers under oath that defendant GLASS is an American citizen who controls
most, if not all, the affairs of defendant CORPORATION. Defendants CORPORATION and GLASS
have a valid and just obligation to plaintiff in the total sum of P32,290.00 arising out
for their failure to pay (i) service charges for hauling of construction materials, (ii) rentals for the
lease of plaintiff's Isuzu Cargo truck, and (iii) total cost of the missing/destroyed spare parts of
said leased unit: hence, a sufficient cause of action exist against said defendants. Plaintiff also
avers under oath that there is no sufficient security for his claim against the defendants in the
event a judgment be rendered in favor of the plaintiff. however, defendant CORPORATION has
sufficient assets in the Philippines in the form of collectibles and payables due from the
Philippine Geothermal., Inc. with office address at Citibank Center, Paseo de Roxas, Makati,
Metro Manila, but which properties, if not timely attached, may be disposed of
by defendants and would render ineffectual the reliefs prayed for by plaintiff in this
Complaint. 12
There being no showing, much less an allegation, that the defendants are about to depart from
the Philippines with intent to defraud their creditor, or that they are non-resident aliens, the
attachment of their properties is not justified.
Second, the affidavit submitted by Pinzon does not comply with the Rules. Under the Rules, an
affidavit for attachment must state that (a) sufficient cause of action exists, (b) the case is one of
those mentioned in Section I (a) of Rule 57; (c) there is no other sufficient security 'or the claim
sought to be enforced by the action, and (d) the amount due to the applicant for attachment or
the value of the property the possession of which he is entitled to recover, is as much as the
sum for which the order is granted above all legal counterclaims. Section 3, Rule 57 of the
Revised Rules of Court reads. as follows:
Section 3. Affidavit and bond required.An order of attachment shall be granted only when it is
made to appear by the affidavit of the applicant, or of some person who personally knows the
facts, that a sufficient cause of action exists that the case is one of those mentioned in Section 1
hereof; that there is no other sufficient security for the claim sought to be enforced by the
action, and that the amount due to the applicant, or the value of the property the possession of
which he is entitled to recover, is as much as the sum for which the order is granted above all
legal counterclaims. The affidavit, and the bond required by the next succeeding section, must
be duly filed with the clerk or judge of the court before the order issues.
In his affidavit, Pinzon stated the following:
I, ANTONIO D. PINZON Filipino, of legal age, married and with residence and postal address at
1422 A. Mabini Street, Ermita, Manila, subscribing under oath, depose and states that.
1. On October 6,1977,I filed with the Court of First Instance of Rizal, Pasay City Branch, a case
against Kenneth O. Glass entitled 'ANTONIO D. PINZON vs. KENNETH O. GLASS', docketed as
Civil Case No. 5902-P;
2. My Complaint against Kenneth O. Glass is based on several causes of action, namely:
(i) On February 15, 1977, we mutually agreed that I undertake to haul his construction materials
from Manila to his construction project in Bulalo, Bay, Laguna and vice-versa, for a consideration
of P50.00 per hour;
(ii) Also, on June 18, 1977, we entered into a separate agreement whereby my Isuzu cargo truck
will be leased to him for a consideration of P4,000.00 a month payable on the 15th day of each
month;
(iii) On September 7, 1977, after making use of my Isuzu truck, he surrendered the same
without paying the monthly rentals for the leased Isuzu truck and the peso equivalent of the
spare parts that were either destroyed or misappropriated by him;
3. As of today, October 11, 1977, Mr. Kenneth 0. Glass still owes me the total sum of P32,290.00
representing his obligation arising from the hauling of his construction materials, monthly
rentals for the lease Isuzu truck and the peso equivalent of the spare parts that were either
destroyed or misappropriated by him;
4. I am executing this Affidavit to attest to the truthfulness of the foregoing and in compliance
with the provisions of Rule 57 of the Revised Rules of Court. 13
While Pinzon may have stated in his affidavit that a sufficient cause of action exists against the
defendant Kenneth O. Glass, he did not state therein that "the case is one of those mentioned
in Section 1 hereof; that there is no other sufficient security for the claim sought to be enforced
by the action; and that the amount due to the applicant is as much as the sum for which the
order granted above all legal counter-claims." It has been held that the failure to allege in the
affidavit the requisites prescribed for the issuance of a writ of preliminary attachment, renders
the writ of preliminary attachment issued against the property of the defendant fatally
defective, and the judge issuing it is deemed to have acted in excess of his jurisdiction. 14
Finally, it appears that the petitioner has filed a counterbond in the amount of P37,190.00 to
answer for any judgment that may be rendered against the defendant. Upon receipt of the
counter-bond the respondent Judge should have discharged the attachment pursuant to Section
12, Rule 57 of the Revised Rules of Court which reads, as follows:
Section 12. Discharge of attachment upon giving counterbond.At any time after an order of
attachment has been granted, the party whose property has been attached, or the person
appearing on his behalf, may upon reasonable notice to the applicant, apply to the judge who
granted the order, or to the judge of the court in which the action is pending, for an order
discharging the attachment wholly or in part on the security given. The judge shall, after
hearing, order the discharge of the attachment if a cash deposit is made or a counterbond
executed to the attaching creditor is filed, on behalf of the adverse party, with the clerk or judge
of the court where the application is made, in an amount equal to the value of the property
attached as determined by the judge, to secure the payment of any judgment that the attaching
creditor may recover in the action. Upon the filing of such counter-bond, copy thereof shall
forthwith be served on the attaching creditor or his lawyer. Upon the discharge of an
attachment in accordance with the provisions of this section the property attached, or the
proceeds of any sale thereof, shall be delivered to the party making the deposit or giving the
counter-bond, or the person appearing on his behalf, the deposit or counter-bond aforesaid
standing in the place of the property so released. Should such counter-bond for any reason be
found to be, or become, insufficient, and the party furnishing the same fail to file an additional
counter-bond the attaching creditor may apply for a new order of attachment.
The filing of the counter-bond will serve the purpose of preserving the defendant's property
and at the same time give the plaintiff security for any judgment that may be obtained against
the defendant. 15
WHEREFORE, the petition is GRANTED and the writ prayed for is issued. The orders issued by
the respondent Judge on October 11, 19719, January 26, 1978, and February 3, 1978 in Civil
Case No. 5902-P of the Court of First Instance of Rizal, insofar as they relate to the issuance of
the writ of preliminary attachment, should be as they are hereby ANNULLED and SET ASIDE and
the respondents are hereby ordered to forthwith release the garnished amount of P37,190.00
to the petitioner. The temporary restraining order, heretofore issued, is hereby lifted and set
aside. Costs against the private respondent Antonio D. Pinzon.
SO ORDERED.
PHILIPPINE COMMERCIAL INTERNATIONAL BANK, Petitioner,
vs.
JOSEPH ANTHONY M. ALEJANDRO, Respondent.
DECISION
YNARES-SANTIAGO, J.:
This petition for review assails the May 31, 2006 Decision 1 of the Court of Appeals in CA-G.R. CV
No. 78200 affirming the August 30, 2000 Decision 2 of the Regional Trial Court of Makati, which
granted respondent Joseph Anthony M. Alejandros claim for damages arising from petitioner
Philippine Commercial International Banks (PCIB) invalid garnishment of respondents deposits.
On October 23, 1997, petitioner filed against respondent a complaint 3 for sum of money with
prayer for the issuance of a writ of preliminary attachment. Said complaint alleged that on
September 10, 1997, respondent, a resident of Hong Kong, executed in favor of petitioner a
promissory note obligating himself to pay P249,828,588.90 plus interest. In view of the
fluctuations in the foreign exchange rates which resulted in the insufficiency of the deposits
assigned by respondent as security for the loan, petitioner requested the latter to put up
additional security for the loan. Respondent, however, sought a reconsideration of said request
pointing out petitioners alleged mishandling of his account due to its failure to carry out his
instruction to close his account as early as April 1997, when the prevailing rate of exchange of
the US Dollar to Japanese yen was US$1.00:JPY127.50. 4 It appears that the amount
of P249,828,588.90 was the consolidated amount of a series of yen loans granted by petitioner
to respondent during the months of February and April 1997. 5
In praying for the issuance of a writ of preliminary attachment under Section 1 paragraphs (e)
and (f) of Rule 57 of the Rules of Court, petitioner alleged that (1) respondent fraudulently
withdrew his unassigned deposits notwithstanding his verbal promise to PCIB Assistant Vice
President Corazon B. Nepomuceno not to withdraw the same prior to their assignment as
security for the loan; and (2) that respondent is not a resident of the Philippines. The
application for the issuance of a writ was supported with the affidavit of Nepomuceno. 6
On October 24, 1997, the trial court granted the application and issued the writ ex parte 7 after
petitioner posted a bond in the amount of P18,798,734.69, issued by Prudential Guarantee &
Assurance Inc., under Bond No. HO-46764-97. On the same date, the bank deposits of
respondent with Rizal Commercial Banking Corporation (RCBC) were garnished. On October 27,
1997, respondent, through counsel, filed a manifestation informing the court that he is
voluntarily submitting to its jurisdiction.8
Subsequently, respondent filed a motion to quash 9 the writ contending that the withdrawal of
his unassigned deposits was not fraudulent as it was approved by petitioner. He also alleged
that petitioner knew that he maintains a permanent residence at Calle Victoria, Ciudad Regina,
Batasan Hills, Quezon City, and an office address in Makati City at the Law Firm Romulo
Mabanta Buenaventura Sayoc & De los Angeles, 10 where he is a partner. In both addresses,
petitioner regularly communicated with him through its representatives. Respondent added
that he is the managing partner of the Hong Kong branch of said Law Firm; that his stay in Hong
Kong is only temporary; and that he frequently travels back to the Philippines.
On December 24, 1997, the trial court issued an order quashing the writ and holding that the
withdrawal of respondents unassigned deposits was not intended to defraud petitioner. It also
found that the representatives of petitioner personally transacted with respondent through his
home address in Quezon City and/or his office in Makati City. It thus concluded that petitioner
misrepresented and suppressed the facts regarding respondents residence considering that it
has personal and official knowledge that for purposes of service of summons, respondents
residence and office addresses are located in the Philippines. The dispositive portion of the
courts decision is as follows:
WHEREFORE, the URGENT MOTION TO QUASH, being meritorious, is hereby GRANTED, and the
ORDER of 24 October 1997 is hereby RECONSIDERED and SET ASIDE and the WRIT OF
attachment of the same is hereby DISCHARGED.
SO ORDERED.11
With the denial12 of petitioners motion for reconsideration, it elevated the case to the Court of
Appeals (CA-G.R. SP No. 50748) via a petition for certiorari. On May 10, 1999, the petition was
dismissed for failure to prove that the trial court abused its discretion in issuing the aforesaid
order.13 Petitioner filed a motion for reconsideration but was denied on October 28, 1999. 14 On
petition with this Court, the case was dismissed for late filing in a minute resolution (G.R. No.
140605) dated January 19, 2000.15 Petitioner filed a motion for reconsideration but was
likewise denied with finality on March 6, 2000.16
Meanwhile, on May 20, 1998, respondent filed a claim for damages in the amount of P25
Million17 on the attachment bond (posted by Prudential Guarantee & Assurance, Inc., under
JCL(4) No. 01081, Bond No. HO-46764-97) on account of the wrongful garnishment of his
deposits. He presented evidence showing that his P150,000.00 RCBC check payable to his
counsel as attorneys fees, was dishonored by reason of the garnishment of his deposits. He also
testified that he is a graduate of the Ateneo de Manila University in 1982 with a double degree
of Economics and Management Engineering and of the University of the Philippines in 1987
with the degree of Bachelor of Laws. Respondent likewise presented witnesses to prove that he
is a well known lawyer in the business community both in the Philippines and in Hong
Kong.18 For its part, the lone witness presented by petitioner was Nepomuceno who claimed
that she acted in good faith in alleging that respondent is a resident of Hong Kong. 19
On August 30, 2000, the trial court awarded damages to respondent in the amount of P25
Million without specifying the basis thereof, thus:
WHEREFORE, premises above considered, and defendant having duly established his claim in
the amount of P25,000,000.00, judgment is hereby rendered ordering Prudential Guarantee &
[Assurance] Co., which is solidarily liable with plaintiff to pay defendant the full amount of bond
under Prudential Guarantee & Assurance, Inc. JCL(4) No. 01081, [Bond No. HO-46764-97], dated
24 October 1997 in the amount of P18,798,734.69. And, considering that the amount of the
bond is insufficient to fully satisfy the award for damages, plaintiff is hereby ordered to pay
defendant the amount of P6,201,265.31.
SO ORDERED.20
The trial court denied petitioners motion for reconsideration on October 24, 2000. 21
Petitioner elevated the case to the Court of Appeals which affirmed the findings of the trial
court. It held that in claiming that respondent was not a resident of the Philippines, petitioner
cannot be said to have been in good faith considering that its knowledge of respondents
Philippine residence and office address goes into the very issue of the trial courts jurisdiction
which would have been defective had respondent not voluntarily appeared before it.
The Court of Appeals, however, reduced the amount of damages awarded to petitioner and
specified their basis. The dispositive portion of the decision of the Court of Appeals states:
WHEREFORE, the appeal is PARTIALLY GRANTED and the decision appealed from is hereby
MODIFIED. The award of damages in the amount of P25,000,000.00 is deleted. In lieu thereof,
Prudential Guarantee & [Assurance, Inc.], which is solidarily liable with appellant [herein
petitioner], is ORDERED to pay appellee [herein respondent] P2,000,000.00 as nominal
damages; P5,000,000.00 as moral damages; and P1,000,000.00 as attorneys fees, to be
satisfied against the attachment bond under Prudential Guarantee & Assurance, Inc. JCL (4) No.
01081.
SO ORDERED.22
Both parties moved for reconsideration. On November 21, 2006, the Court of Appeals denied
petitioners motion for reconsideration but granted that of respondents by ordering petitioner
to pay additional P5Million as exemplary damages.23
Hence, the instant petition.
At the outset, it must be noted that the ruling of the trial court that petitioner is not entitled to
a writ of attachment because respondent is a resident of the Philippines and that his act of
withdrawing his deposits with petitioner was without intent to defraud, can no longer be
passed upon by this Court. More importantly, the conclusions of the court that petitioner bank
misrepresented that respondent was residing out of the Philippines and suppressed the fact
that respondent has a permanent residence in Metro Manila where he may be served with
summons, are now beyond the power of this Court to review having been the subject of a final
and executory order. Said findings were sustained by the Court of Appeals in CA-G.R. SP No.
50784 and by this Court in G.R. No. 140605. The rule on conclusiveness of judgment, which
obtains under the premises, precludes the relitigation of a particular fact or issue in another
action between the same parties even if based on a different claim or cause of action. The
judgment in the prior action operates as estoppel as to those matters in issue or points
controverted, upon the determination of which the finding or judgment was rendered. The
previous judgment is conclusive in the second case, as to those matters actually and directly
controverted and determined.24 Hence, the issues of misrepresentation by petitioner and the
residence of respondent for purposes of service of summons can no longer be questioned by
petitioner in this case.
The core issue for resolution is whether petitioner bank is liable for damages for the improper
issuance of the writ of attachment against respondent.
We rule in the affirmative.
Notwithstanding the final judgment that petitioner is guilty of misrepresentation and
suppression of a material fact, the latter contends that it acted in good faith. Petitioner also
contends that even if respondent is considered a resident of the Philippines, attachment is still
proper under Section 1, paragraph (f), Rule 57 of the Rules of Court since he (respondent) is a
resident who is temporarily out of the Philippines upon whom service of summons may be
effected by publication.
Petitioners contentions are without merit.
While the final order of the trial court which quashed the writ did not categorically use the
word "bad faith" in characterizing the representations of petitioner, the tenor of said order
evidently considers the latter to have acted in bad faith by resorting to a deliberate strategy to
mislead the court. Thus
In the hearings of the motion, and oral arguments of counsels before the Court, it appears that
plaintiff BANK through its contracting officers Vice President Corazon B. Nepomuceno and
Executive Vice President Jose Ramon F. Revilla, personally transacted with defendant mainly
through defendants permanent residence in METRO-MANILA, either in defendants home
address in Quezon City or his main business address at the Romulo Mabanta Buenaventura
Sayoc & Delos Angeles in MAKATI and while at times follow ups were made through defendants
temporary home and business addresses in Hongkong. It is therefore clear that plaintiff could
not deny their personal and official knowledge that defendants permanent and official
residence for purposes of service of summons is in the Philippines. In fact, this finding is further
confirmed by the letter of Mr. JOHN GOKONGWEI, JR. Chairman, Executive Committee of
plaintiff BANK, in his letter dated 6 October 1997 on the subject loan to defendant of the same
law firm was addressed to the ROMULO LAW FIRM in MAKATI.
[Anent the] second ground of attachment x x x [t]he Court finds that the amount withdrawn
was not part of defendants peso deposits assigned with the bank to secure the loan and as
proof that the withdrawal was not intended to defraud plaintiff as creditor is that plaintiff
approved and allowed said withdrawals. It is even noted that when the Court granted the
prayer for attachment it was mainly on the first ground under Section 1(f) of Rule 57 of the 1997
Rules of Civil Procedure, that defendant resides out of the Philippines.
On the above findings, it is obvious that plaintiff already knew from the beginning the
deficiency of its second ground for attachment [i.e.,] disposing properties with intent to defraud
his creditors, and therefore plaintiff had to resort to this misrepresentation that defendant was
residing out of the Philippines and suppressed the fact that defendants permanent residence is
in METRO MANILA where he could be served with summons.
On the above findings, and mainly on the misrepresentations made by plaintiff on the grounds
for the issuance of the attachment in the verified complaint, the Court concludes that
defendant has duly proven its grounds in the MOTION and that plaintiff is not entitled to the
attachment.25
Petitioner is therefore barred by the principle of conclusiveness of judgment from again
invoking good faith in the application for the issuance of the writ. Similarly, in the case of Hanil
Development Co., Ltd. v. Court of Appeals,26the Court debunked the claim of good faith by a
party who maliciously sought the issuance of a writ of attachment, the bad faith of said party
having been previously determined in a final decision which voided the assailed writ. Thus
Apropos the Application for Judgment on the Attachment Bond, Escobar claims in its petition
that the award of attorneys fees and injunction bond premium in favor of Hanil is [contrary] to
law and jurisprudence. It contends that no malice or bad faith may be imputed to it in procuring
the writ.
Escobars protestation is now too late in the day. The question of the illegality of the attachment
and Escobars bad faith in obtaining it has long been settled in one of the earlier incidents of
this case. The Court of Appeals, in its decision rendered on February 3, 1983 in C.A.-G.R. No. SP-
14512, voided the challenged writ, having been issued with grave abuse of discretion. Escobars
bad faith in procuring the writ cannot be doubted. Its Petition for the Issuance of Preliminary
Attachment made such damning allegations that: Hanil was already able to secure a complete
release of its final collection from the MPWH; it has moved out some of its heavy equipments
for unknown destination, and it may leave the country anytime. Worse, its Ex Parte Motion to
Resolve Petition alleged that "after personal verification by (Escobar) of (Hanils) equipment in
Cagayan de Oro City, it appears that the equipments were no longer existing from their
compound." All these allegations of Escobar were found to be totally baseless and untrue.
Even assuming that the trial court did not make a categorical pronouncement of
misrepresentation and suppression of material facts on the part of petitioner, the factual
backdrop of this case does not support petitioners claim of good faith. The facts and
circumstances omitted are highly material and relevant to the grant or denial of writ of
attachment applied for.
Finally, there is no merit in petitioners contention that respondent can be considered a resident
who is temporarily out of the Philippines upon whom service of summons may be effected by
publication, and therefore qualifies as among those against whom a writ of attachment may be
issued under Section 1, paragraph (f), Rule 57 of the Rules of Court which provides:
(f) In an action against a party x x x on whom summons may be served by publication.
In so arguing, petitioner attempts to give the impression that although it erroneously invoked
the ground that respondent does not reside in the Philippines, it should not be made to pay
damages because it is in fact entitled to a writ of attachment had it invoked the proper ground
under Rule 57. However, even on this alternative ground, petitioner is still not entitled to the
issuance of a writ of attachment.
The circumstances under which a writ of preliminary attachment may be issued are set forth in
Section 1, Rule 57 of the Rules of Court, to wit:
SEC. 1. Grounds upon which attachment may issue. At the commencement of the action or at
any time before entry of judgment, a plaintiff or any proper party may have the property of the
adverse party attached as security for the satisfaction of any judgment that may be recovered in
the following cases:
(a) In an action for the recovery of a specified amount of money or damages, other than moral
and exemplary, on a cause of action arising from law, contract, quasi-contract, delict or quasi-
delict against a party who is about to depart from the Philippines with intent to defraud his
creditors;
(b) In an action for money or property embezzled or fraudulently misapplied or converted to his
own use by a public officer, or an officer of a corporation or an attorney, factor, broker, agent, or
clerk, in the course of his employment as such, or by any other person in a fiduciary capacity, or
for a willful violation of duty;
(c) In an action to recover the possession of personal property unjustly or fraudulently taken,
detained, or converted, when the property, or any part thereof, has been concealed, removed,
or disposed of to prevent its being found or taken by the applicant or an authorized person;
(d) In an action against a party who has been guilty of a fraud in contracting the debt or
incurring the obligation upon which the action is brought, or in the performance thereof;
(e) In an action against a party who has removed or disposed of his property, or is about to do
so, with intent to defraud his creditors;
(f) In an action against a party who resides out of the Philippines, or on whom summons may be
served by publication.
The purposes of preliminary attachment are: (1) to seize the property of the debtor in advance
of final judgment and to hold it for purposes of satisfying said judgment, as in the grounds
stated in paragraphs (a) to (e) of Section 1, Rule 57 of the Rules of Court; or (2) to acquire
jurisdiction over the action by actual or constructive seizure of the property in those instances
where personal or substituted service of summons on the defendant cannot be effected, as in
paragraph (f) of the same provision.27
Corollarily, in actions in personam, such as the instant case for collection of sum of
money,28 summons must be served by personal or substituted service, otherwise the court will
not acquire jurisdiction over the defendant. In case the defendant does not reside and is not
found in the Philippines (and hence personal and substituted service cannot be effected), the
remedy of the plaintiff in order for the court to acquire jurisdiction to try the case is to convert
the action into a proceeding in rem or quasi in rem by attaching the property of the
defendant.29Thus, in order to acquire jurisdiction in actions in personam where defendant
resides out of and is not found in the Philippines, it becomes a matter of course for the court to
convert the action into a proceeding in rem or quasi in rem by attaching the defendants
property. The service of summons in this case (which may be by publication coupled with the
sending by registered mail of the copy of the summons and the court order to the last known
address of the defendant), is no longer for the purpose of acquiring jurisdiction but for
compliance with the requirements of due process. 30
However, where the defendant is a resident who is temporarily out of the Philippines,
attachment of his/her property in an action in personam, is not always necessary in order for
the court to acquire jurisdiction to hear the case.
Section 16, Rule 14 of the Rules of Court reads:
Sec. 16. Residents temporarily out of the Philippines. When an action is commenced against a
defendant who ordinarily resides within the Philippines, but who is temporarily out of it, service
may, by leave of court, be also effected out of the Philippines, as under the preceding section.
The preceding section referred to in the above provision is Section 15 which provides for
extraterritorial service (a) personal service out of the Philippines, (b) publication coupled with
the sending by registered mail of the copy of the summons and the court order to the last
known address of the defendant; or (c) in any other manner which the court may deem
sufficient.
In Montalban v. Maximo,31 however, the Court held that substituted service of summons (under
the present Section 7, Rule 14 of the Rules of Court) is the normal mode of service of summons
that will confer jurisdiction on the court over the person of residents temporarily out of the
Philippines. Meaning, service of summons may be effected by (a) leaving copies of the
summons at the defendants residence with some person of suitable discretion residing therein,
or (b) by leaving copies at the defendants office or regular place of business with some
competent person in charge thereof.32 Hence, the court may acquire jurisdiction over an action
in personam by mere substituted service without need of attaching the property of the
defendant.
The rationale in providing for substituted service as the normal mode of service for residents
temporarily out of the Philippines, was expounded in Montalban v. Maximo, 33 in this wise:
A man temporarily absent from this country leaves a definite place of residence, a dwelling
where he lives, a local base, so to speak, to which any inquiry about him may be directed and
where he is bound to return. Where one temporarily absents himself, he leaves his affairs in the
hands of one who may be reasonably expected to act in his place and stead; to do all that is
necessary to protect his interests; and to communicate with him from time to time any incident
of importance that may affect him or his business or his affairs. It is usual for such a man to
leave at his home or with his business associates information as to where he may be contacted
in the event a question that affects him crops up.
Thus, in actions in personam against residents temporarily out of the Philippines, the court
need not always attach the defendants property in order to have authority to try the case.
Where the plaintiff seeks to attach the defendants property and to resort to the concomitant
service of summons by publication, the same must be with prior leave, precisely because, if the
sole purpose of the attachment is for the court to acquire jurisdiction, the latter must
determine whether from the allegations in the complaint, substituted service (to persons of
suitable discretion at the defendants residence or to a competent person in charge of his office
or regular place of business) will suffice, or whether there is a need to attach the property of
the defendant and resort to service of summons by publication in order for the court to acquire
jurisdiction over the case and to comply with the requirements of due process.
In the instant case, it must be stressed that the writ was issued by the trial court mainly on the
representation of petitioner that respondent is not a resident of the Philippines. 34 Obviously, the
trial courts issuance of the writ was for the sole purpose of acquiring jurisdiction to hear and
decide the case. Had the allegations in the complaint disclosed that respondent has a residence
in Quezon City and an office in Makati City, the trial court, if only for the purpose of acquiring
jurisdiction, could have served summons by substituted service on the said addresses, instead
of attaching the property of the defendant. The rules on the application of a writ of attachment
must be strictly construed in favor of the defendant. For attachment is harsh, extraordinary, and
summary in nature; it is a rigorous remedy which exposes the debtor to humiliation and
annoyance.35 It should be resorted to only when necessary and as a last remedy.
It is clear from the foregoing that even on the allegation that respondent is a resident
temporarily out of the Philippines, petitioner is still not entitled to a writ of attachment because
the trial court could acquire jurisdiction over the case by substituted service instead of attaching
the property of the defendant. The misrepresentation of petitioner that respondent does not
reside in the Philippines and its omission of his local addresses was thus a deliberate move to
ensure that the application for the writ will be granted.
In light of the foregoing, the Court of Appeals properly sustained the finding of the trial court
that petitioner is liable for damages for the wrongful issuance of a writ of attachment against
respondent.
Anent the actual damages, the Court of Appeals is correct in not awarding the same inasmuch
as the respondent failed to establish the amount garnished by petitioner. It is a well settled rule
that one who has been injured by a wrongful attachment can recover damages for the actual
loss resulting therefrom. But for such losses to be recoverable, they must constitute actual
damages duly established by competent proofs, which are, however, wanting in the present
case.36
Nevertheless, nominal damages may be awarded to a plaintiff whose right has been violated or
invaded by the defendant, for the purpose of vindicating or recognizing that right, and not for
indemnifying the plaintiff for any loss suffered by him. Its award is thus not for the purpose of
indemnification for a loss but for the recognition and vindication of a right. Indeed, nominal
damages are damages in name only and not in fact. 37 They are recoverable where some injury
has been done but the pecuniary value of the damage is not shown by evidence and are thus
subject to the discretion of the court according to the circumstances of the case. 38
In this case, the award of nominal damages is proper considering that the right of respondent to
use his money has been violated by its garnishment. The amount of nominal damages must,
however, be reduced from P2 million to P50,000.00 considering the short period of 2 months
during which the writ was in effect as well as the lack of evidence as to the amount
garnished.1wphi1
Likewise, the award of attorneys fees is proper when a party is compelled to incur expenses to
lift a wrongfully issued writ of attachment. The basis of the award thereof is also the amount of
money garnished, and the length of time respondents have been deprived of the use of their
money by reason of the wrongful attachment. 39 It may also be based upon (1) the amount and
the character of the services rendered; (2) the labor, time and trouble involved; (3) the nature
and importance of the litigation and business in which the services were rendered; (4) the
responsibility imposed; (5) the amount of money and the value of the property affected by the
controversy or involved in the employment; (6) the skill and the experience called for in the
performance of the services; (7) the professional character and the social standing of the
attorney; (8) the results secured, it being a recognized rule that an attorney may properly
charge a much larger fee when it is contingent than when it is not. 40
All the aforementioned weighed, and considering the short period of time it took to have the
writ lifted, the favorable decisions of the courts below, the absence of evidence as to the
professional character and the social standing of the attorney handling the case and the amount
garnished, the award of attorneys fees should be fixed not at P1 Million, but only
at P200,000.00.
The courts below correctly awarded moral damages on account of petitioners
misrepresentation and bad faith; however, we find the award in the amount of P5 Million
excessive. Moral damages are to be fixed upon the discretion of the court taking into
consideration the educational, social and financial standing of the parties. 41Moral damages are
not intended to enrich a complainant at the expense of a defendant. 42 They are awarded only to
enable the injured party to obtain means, diversion or amusements that will serve to obviate
the moral suffering he has undergone, by reason of petitioners culpable action. Moral damages
must be commensurate with the loss or injury suffered. Hence, the award of moral damages is
reduced to P500,000.00.
Considering petitioners bad faith in securing the writ of attachment, we sustain the award of
exemplary damages by way of example or correction for public good. This should deter parties
in litigations from resorting to baseless and preposterous allegations to obtain writs of
attachments. While as a general rule, the liability on the attachment bond is limited to actual (or
in some cases, temperate or nominal) damages, exemplary damages may be recovered where
the attachment was established to be maliciously sued out. 43 Nevertheless, the award of
exemplary damages in this case should be reduced from P5M to P500,000.00.
Finally, contrary to the claim of petitioner, the instant case for damages by reason of the invalid
issuance of the writ, survives the dismissal of the main case for sum of money. Suffice it to state
that the claim for damages arising from such wrongful attachment may arise and be decided
separately from the merits of the main action. 44
WHEREFORE, the petition is PARTIALLY GRANTED. The May 31, 2006 Decision of the Court of
Appeals in CA-G.R. CV No. 78200 is AFFIRMED with MODIFICATIONS. As modified, petitioner
Philippine Commercial International Bank is ordered to pay respondent Joseph Anthony M.
Alejandro the following amounts: P50,000.00 as nominal damages, P200,000.00 as attorneys
fees; and P500,000.00 as moral damages, and P500,000.00 as exemplary damages, to be
satisfied against the attachment bond issued by Prudential Guarantee & Assurance Inc., 45 under
JCL (4) No. 01081, Bond No. HO-46764-97.
No pronouncement as to costs.
SO ORDERED.
DAVAO LIGHT & POWER CO., INC., petitioner,
vs.
THE COURT OF APPEALS, QUEENSLAND HOTEL or MOTEL or QUEENSLAND TOURIST INN, and
TEODORICO ADARNA, respondents.
Breva & Breva Law Offices for petitioner.
Goc-Ong & Associates for private respondents.
NARVASA, J.:p
Subject of the appellate proceedings at bar is the decision of the Court of Appeals in CA-G.R. Sp.
No. 1967 entitled "Queensland Hotel, Inc., etc. and Adarna v. Davao Light & Power Co., Inc.,"
promulgated on May 4, 1990. 1 That decision nullified and set aside the writ of preliminary
attachment issued by the Regional Trial Court of Davao City 2 in Civil Case No. 19513-89 on
application of the plaintiff (Davao Light & Power Co.), before the service of summons on the
defendants (herein respondents Queensland Co., Inc. and Adarna).
Following is the chronology of the undisputed material facts culled from the Appellate
Tribunal's judgment of May 4, 1990.
1. On May 2, 1989 Davao Light & Power Co., Inc. (hereafter, simply Davao Light) filed a verified
complaint for recovery of a sum of money and damages against Queensland Hotel, etc. and
Teodorico Adarna (docketed as Civil Case No. 19513-89). The complaint contained an ex
parte application for a writ of preliminary attachment.
2. On May 3, 1989 Judge Nartatez, to whose branch the case was assigned by raffle, issued an
Order granting the ex parte application and fixing the attachment bond at P4,600,513.37.
3. On May 11, 1989 the attachment bond having been submitted by Davao Light, the writ of
attachment issued.
4. On May 12, 1989, the summons and a copy of the complaint, as well as the writ of
attachment and a copy of the attachment bond, were served on defendants Queensland and
Adarna; and pursuant to the writ, the sheriff seized properties belonging to the latter.
5. On September 6, 1989, defendants Queensland and Adarna filed a motion to discharge the
attachment for lack of jurisdiction to issue the same because at the time the order of
attachment was promulgated (May 3, 1989) and the attachment writ issued (May 11, 1989), the
Trial Court had not yet acquired jurisdiction over the cause and over the persons of the
defendants.
6. On September 14, 1989, Davao Light filed an opposition to the motion to discharge
attachment.
7. On September 19, 1989, the Trial Court issued an Order denying the motion to discharge.
This Order of September 19, 1989 was successfully challenged by Queensland and Adarna in a
special civil action of certiorari instituted by them in the Court of Appeals. The Order was, as
aforestated, annulled by the Court of Appeals in its Decision of May 4, 1990. The Appellate
Court's decision closed with the following disposition:
. . . the Orders dated May 3, 1989 granting the issuance of a writ of preliminary attachment,
dated September 19, 1989 denying the motion to discharge attachment; dated November 7,
1989 denying petitioner's motion for reconsideration; as well as all other orders emanating
therefrom, specially the Writ of Attachment dated May 11, 1989 and Notice of Levy on
Preliminary Attachment dated May 11, 1989, are hereby declared null and void and the
attachment hereby ordered DISCHARGED.
The Appellate Tribunal declared that
. . . While it is true that a prayer for the issuance of a writ of preliminary attachment may be
included m the complaint, as is usually done, it is likewise true that the Court does not acquire
jurisdiction over the person of the defendant until he is duly summoned or voluntarily appears,
and adding the phrase that it be issued "ex parte" does not confer said jurisdiction before actual
summons had been made, nor retroact jurisdiction upon summons being made. . . .
It went on to say, citing Sievert v. Court of Appeals, 3 that "in a proceedings in attachment," the
"critical time which must be identified is . . . when the trial court acquires authority under law
to act coercively against the defendant or his property . . .;" and that "the critical time is the of
the vesting of jurisdiction in the court over the person of the defendant in the main case."
Reversal of this Decision of the Court of Appeals of May 4, 1990 is what Davao Light seeks in the
present appellate proceedings.
The question is whether or not a writ of preliminary attachment may issue ex parte against a
defendant before acquisition of jurisdiction of the latter's person by service of summons or his
voluntary submission to the Court's authority.
The Court rules that the question must be answered in the affirmative and that consequently,
the petition for review will have to be granted.
It is incorrect to theorize that after an action or proceeding has been commenced and
jurisdiction over the person of the plaintiff has been vested in the court, but before the
acquisition of jurisdiction over the person of the defendant (either by service of summons or his
voluntary submission to the court's authority), nothing can be validly done by the plaintiff or the
court. It is wrong to assume that the validity of acts done during this period should be
defendant on, or held in suspension until, the actual obtention of jurisdiction over the
defendant's person. The obtention by the court of jurisdiction over the person of the defendant
is one thing; quite another is the acquisition of jurisdiction over the person of the plaintiff or
over the subject-matter or nature of the action, or the res or object hereof.
An action or proceeding is commenced by the filing of the complaint or other initiatory
pleading. 4 By that act, the jurisdiction of the court over the subject matter or nature of the
action or proceeding is invoked or called into activity; 5 and it is thus that the court acquires
jurisdiction over said subject matter or nature of the action. 6 And it is by that self-same act of
the plaintiff (or petitioner) of filing the complaint (or other appropriate pleading) by which he
signifies his submission to the court's power and authority that jurisdiction is acquired by the
court over his person. 7 On the other hand, jurisdiction over the person of the defendant is
obtained, as above stated, by the service of summons or other coercive process upon him or by
his voluntary submission to the authority of the court. 8
The events that follow the filing of the complaint as a matter of routine are well known. After
the complaint is filed, summons issues to the defendant, the summons is then transmitted to
the sheriff, and finally, service of the summons is effected on the defendant in any of the ways
authorized by the Rules of Court. There is thus ordinarily some appreciable interval of time
between the day of the filing of the complaint and the day of service of summons of the
defendant. During this period, different acts may be done by the plaintiff or by the Court, which
are unquestionable validity and propriety. Among these, for example, are the appointment of a
guardian ad litem, 9 the grant of authority to the plaintiff to prosecute the suit as a pauper
litigant, 10 the amendment of the complaint by the plaintiff as a matter of right without leave of
court, 11 authorization by the Court of service of summons by publication, 12 the dismissal of
the action by the plaintiff on mere notice. 13
This, too, is true with regard to the provisional remedies of preliminary attachment, preliminary
injunction, receivership or replevin. 14 They may be validly and properly applied for and granted
even before the defendant is summoned or is heard from.
A preliminary attachment may be defined, paraphrasing the Rules of Court, as the provisional
remedy in virtue of which a plaintiff or other party may, at the commencement of the action or
at any time thereafter, have the property of the adverse party taken into the custody of the
court as security for the satisfaction of any judgment that may be recovered. 15 It is a remedy
which is purely statutory in respect of which the law requires a strict construction of the
provisions granting it. 16 Withal no principle, statutory or jurisprudential, prohibits its issuance
by any court before acquisition of jurisdiction over the person of the defendant.
Rule 57 in fact speaks of the grant of the remedy "at the commencement of the action or at any
time thereafter." 17 The phase, "at the commencement of the action," obviously refers to the
date of the filing of the complaint which, as above pointed out, is the date that marks "the
commencement of the action;" 18 and the reference plainly is to a time before summons is
served on the defendant, or even before summons issues. What the rule is saying quite clearly
is that after an action is properly commenced by the filing of the complaint and the payment
of all requisite docket and other fees the plaintiff may apply for and obtain a writ of
preliminary attachment upon fulfillment of the pertinent requisites laid down by law, and that
he may do so at any time, either before or after service of summons on the defendant. And this
indeed, has been the immemorial practice sanctioned by the courts: for the plaintiff or other
proper party to incorporate the application for attachment in the complaint or other
appropriate pleading (counter-claim, cross-claim, third-party claim) and for the Trial Court to
issue the writ ex-parte at the commencement of the action if it finds the application otherwise
sufficient in form and substance.
In Toledo v. Burgos, 19 this Court ruled that a hearing on a motion or application for preliminary
attachment is not generally necessary unless otherwise directed by the Trial Court in its
discretion. 20 And in Filinvest Credit Corporation v. Relova, 21 the Court declared that
"(n)othing in the Rules of Court makes notice and hearing indispensable and mandatory
requisites for the issuance of a writ of attachment." The only pre-requisite is that the Court be
satisfied, upon consideration of "the affidavit of the applicant or of some other person who
personally knows the facts, that a sufficient cause of action exists, that the case is one of those
mentioned in Section 1 . . . (Rule 57), that there is no other sufficient security for the claim
sought to be enforced by the action, and that the amount due to the applicant, or the value of
the property the possession of which he is entitled to recover, is as much as the sum for which
the order (of attachment) is granted above all legal counterclaims." 22 If the court be so
satisfied, the "order of attachment shall be granted," 23 and the writ shall issue upon the
applicant's posting of "a bond executed to the adverse party in an amount to be fixed by the
judge, not exceeding the plaintiffs claim, conditioned that the latter will pay all the costs which
may be adjudged to the adverse party and all damages which he may sustain by reason of the
attachment, if the court shall finally adjudge that the applicant was not entitled thereto." 24
In Mindanao Savings & Loan Association, Inc. v. Court of Appeals, decided on April 18,
1989, 25 this Court had occasion to emphasize the postulate that no hearing is required on an
application for preliminary attachment, with notice to the defendant, for the reason that this
"would defeat the objective of the remedy . . . (since the) time which such a hearing would take,
could be enough to enable the defendant to abscond or dispose of his property before a writ of
attachment issues." As observed by a former member of this Court, 26 such a procedure would
warn absconding debtors-defendants of the commencement of the suit against them and the
probable seizure of their properties, and thus give them the advantage of time to hide their
assets, leaving the creditor-plaintiff holding the proverbial empty bag; it would place the
creditor-applicant in danger of losing any security for a favorable judgment and thus give him
only an illusory victory.
Withal, ample modes of recourse against a preliminary attachment are secured by law to the
defendant. The relative ease with which a preliminary attachment may be obtained is matched
and paralleled by the relative facility with which the attachment may legitimately be prevented
or frustrated. These modes of recourse against preliminary attachments granted by Rule 57
were discussed at some length by the separate opinion in Mindanao Savings & Loans
Asso. Inc. v. CA., supra.
That separate opinion stressed that there are two (2) ways of discharging an
attachment: first, by the posting of a counterbond; and second, by a showing of its improper or
irregular issuance.
1.0. The submission of a counterbond is an efficacious mode of lifting an attachment already
enforced against property, or even of preventing its enforcement altogether.
1.1. When property has already been seized under attachment, the attachment may be
discharged upon counterbond in accordance with Section 12 of Rule 57.
Sec. 12. Discharge of attachment upon giving counterbond. At any time after an order of
attachment has been granted, the party whose property has been attached or the person
appearing in his behalf, may, upon reasonable notice to the applicant, apply to the judge who
granted the order, or to the judge of the court in which the action is pending, for an order
discharging the attachment wholly or in part on the security given . . . in an amount equal to the
value of the property attached as determined by the judge to secure the payment of any
judgment that the attaching creditor may recover in the action. . . .
1.2. But even before actual levy on property, seizure under attachment may be prevented also
upon counterbond. The defendant need not wait until his property is seized before seeking the
discharge of the attachment by a counterbond. This is made possible by Section 5 of Rule 57.
Sec. 5. Manner of attaching property. The officer executing the order shall without delay
attach, to await judgment and execution in the action, all the properties of the party against
whom the order is issued in the province, not exempt from execution, or so much thereof as
may be sufficient to satisfy the applicant's demand, unless the former makes a deposit with the
clerk or judge of the court from which the order issued, or gives a counter-bond executed to the
applicant, in an amount sufficient to satisfy such demand besides costs, or in an amount equal
to the value of the property which is about to be attached, to secure payment to the applicant
of any judgment which he may recover in the action. . . . (Emphasis supplied)
2.0. Aside from the filing of a counterbond, a preliminary attachment may also be lifted or
discharged on the ground that it has been irregularly or improperly issued, in accordance with
Section 13 of Rule 57. Like the first, this second mode of lifting an attachment may be resorted
to even before any property has been levied on. Indeed, it may be availed of after property has
been released from a levy on attachment, as is made clear by said Section 13, viz.:
Sec. 13. Discharge of attachment for improper or irregular issuance. The party whose
property has been attached may also, at any time either BEFORE or AFTER the release of the
attached property, or before any attachment shall have been actually levied, upon reasonable
notice to the attaching creditor, apply to the judge who granted the order, or to the judge of the
court in which the action is pending, for an order to discharge the attachment on the ground
that the same was improperly or irregularly issued. If the motion be made on affidavits on the
part of the party whose property has been attached, but not otherwise, the attaching creditor
may oppose the same by counter-affidavits or other evidence in addition to that on which the
attachment was made. . . . (Emphasis supplied)
This is so because "(a)s pointed out in Calderon v. I.A.C., 155 SCRA 531 (1987), The attachment
debtor cannot be deemed to have waived any defect in the issuance of the attachment writ by
simply availing himself of one way of discharging the attachment writ, instead of the other.
Moreover, the filing of a counterbond is a speedier way of discharging the attachment writ
maliciously sought out by the attaching creditor instead of the other way, which, in most
instances . . . would require presentation of evidence in a fullblown trial on the merits, and
cannot easily be settled in a pending incident of the case." 27
It may not be amiss to here reiterate other related principles dealt with in Mindanao Savings &
Loans Asso. Inc. v. C.A., supra., 28 to wit:
(a) When an attachment may not be dissolved by a showing of its irregular or improper
issuance:
. . . (W)hen the preliminary attachment is issued upon a ground which is at the same time the
applicant's cause of action; e.g., "an action for money or property embezzled or fraudulently
misapplied or converted to his own use by a public officer, or an officer of a corporation, or an
attorney, factor, broker, agent, or clerk, in the course of his employment as such, or by any other
person in a fiduciary capacity, or for a willful violation of duty." (Sec. 1 [b], Rule 57), or "an
action against a party who has been guilty of fraud m contracting the debt or incurring the
obligation upon which the action is brought" (Sec. 1 [d], Rule 57), the defendant is not allowed
to file a motion to dissolve the attachment under Section 13 of Rule 57 by offering to show the
falsity of the factual averments in the plaintiff's application and affidavits on which the writ was
based and consequently that the writ based thereon had been improperly or irregularly
issued (SEE Benitez v. I.A.C., 154 SCRA 41) the reason being that the hearing on such a
motion for dissolution of the writ would be tantamount to a trial of the merits of the action. In
other words, the merits of the action would be ventilated at a mere hearing of a motion,
instead of at the regular trial. Therefore, when the writ of attachment is of this nature, the only
way it can be dissolved is by a counterbond (G.B. Inc. v. Sanchez, 98 Phil. 886).
(b) Effect of the dissolution of a preliminary attachment on the plaintiffs attachment bond:
. . . The dissolution of the preliminary attachment upon security given, or a showing of its
irregular or improper issuance, does not of course operate to discharge the sureties on
plaintiff's own attachment bond. The reason is simple. That bond is "executed to the adverse
party, . . . conditioned that the . . . (applicant) will pay all the costs which may be adjudged to
the adverse party and all damages which he may sustain by reason of the attachment, if the
court shall finally adjudge that the applicant was not entitled thereto" (SEC. 4, Rule 57). Hence,
until that determination is made, as to the applicant's entitlement to the attachment, his bond
must stand and cannot be with-drawn.
With respect to the other provisional remedies, i.e., preliminary injunction (Rule 58),
receivership (Rule 59), replevin or delivery of personal property (Rule 60), the rule is the same:
they may also issue ex parte. 29
It goes without saying that whatever be the acts done by the Court prior to the acquisition of
jurisdiction over the person of defendant, as above indicated issuance of summons, order of
attachment and writ of attachment (and/or appointments of guardian ad litem, or grant of
authority to the plaintiff to prosecute the suit as a pauper litigant, or amendment of the
complaint by the plaintiff as a matter of right without leave of court 30 and however valid
and proper they might otherwise be, these do not and cannot bind and affect the defendant
until and unless jurisdiction over his person is eventually obtained by the court, either by
service on him of summons or other coercive process or his voluntary submission to the court's
authority. Hence, when the sheriff or other proper officer commences implementation of the
writ of attachment, it is essential that he serve on the defendant not only a copy of the
applicant's affidavit and attachment bond, and of the order of attachment, as explicity required
by Section 5 of Rule 57, but also the summons addressed to said defendant as well as a copy of
the complaint and order for appointment of guardian ad litem, if any, as also explicity directed
by Section 3, Rule 14 of the Rules of Court. Service of all such documents is indispensable not
only for the acquisition of jurisdiction over the person of the defendant, but also upon
considerations of fairness, to apprise the defendant of the complaint against him, of the
issuance of a writ of preliminary attachment and the grounds therefor and thus accord him the
opportunity to prevent attachment of his property by the posting of a counterbond in an
amount equal to the plaintiff's claim in the complaint pursuant to Section 5 (or Section 12), Rule
57, or dissolving it by causing dismissal of the complaint itself on any of the grounds set forth in
Rule 16, or demonstrating the insufficiency of the applicant's affidavit or bond in accordance SO ORDERED.
with Section 13, Rule 57.

It was on account of the failure to comply with this fundamental requirement of service of
summons and the other documents above indicated that writs of attachment issued by the Trial
Court ex parte were struck down by this Court's Third Division in two (2) cases, namely: Sievert
v. Court of Appeals, 31 and BAC Manufacturing and Sales Corporation v. Court of Appeals, et
al. 32 In contrast to the case at bar where the summons and a copy of the complaint, as well
as the order and writ of attachment and the attachment bond were served on the defendant
in Sievert, levy on attachment was attempted notwithstanding that only the petition for
issuance of the writ of preliminary attachment was served on the defendant, without any prior
or accompanying summons and copy of the complaint; and in BAC Manufacturing and Sales
Corporation, neither the summons nor the order granting the preliminary attachment or the
writ of attachment itself was served on the defendant "before or at the time the levy was
made."

For the guidance of all concerned, the Court reiterates and reaffirms the proposition that writs
of attachment may properly issue ex parte provided that the Court is satisfied that the relevant
requisites therefor have been fulfilled by the applicant, although it may, in its discretion, require
prior hearing on the application with notice to the defendant; but that levy on property
pursuant to the writ thus issued may not be validly effected unless preceded, or
contemporaneously accompanied, by service on the defendant of summons, a copy of the
complaint (and of the appointment of guardian ad litem, if any), the application for attachment
(if not incorporated in but submitted separately from the complaint), the order of attachment,
and the plaintiff's attachment bond.

WHEREFORE, the petition is GRANTED; the challenged decision of the Court of Appeals is
hereby REVERSED, and the order and writ of attachment issued by Hon. Milagros C. Nartatez,
Presiding Judge of Branch 8, Regional Trial Court of Davao City in Civil Case No. 19513-89 against
Queensland Hotel or Motel or Queensland Tourist Inn and Teodorico Adarna are hereby
REINSTATED. Costs against private respondents.