PROVISIONAL REMEDIES - PRELIMINARY ATTACHMENT CASES
GERVASIO ERAÑA ET AL., PETITIONERS, VS. JOSE O. VERA, JUDGE OF FIRST have jurisdiction of all its necessary incidents. Indeed, it is expressly provided in Rule 124,
INSTANCE OF MANILA, AND MARIE JOSEPHINE PANZANI RESPONDENTS.
MORAN, J.:
Respondent Marie Josephine Panzani was charged in the Court of First Instance of Manila with
the crime of murder committed against Dr. Francisco Erana and with the crime of frustrated
murder committed against Bienvenido B. Erana. In these two criminal cases, the offended
parties reserved their right to institute a separate civil action for the civil liability
arising from the two crimes charged. The same respondent was charged in the same court
in another criminal case with estafa wherein the right to institute a separate civil action was
not waived nor reserved by the offended persons.
In these three criminal cases—for murder, frustrated murder and estafa—a petition was filed
by the offended parties wherein a preliminary attachment of the properties belonging to
respondent was applied for upon some of the grounds specified in Rule 59, section 1, of the
new Rules of Court. The Court issued an order declaring itself to be without authority to issue
writs of preliminary attachment in criminal cases. Hence, this petition for combined' writs of
certiorari and mandamus to annul such order and to compel the respondent court to consider
the merits of the motion for preliminary attachment.
The question here raised is, therefore, whether or not a court, acting on a criminal case, has
authority to grant preliminary attachment. According to Rule 107, section 1, of the new Rules
of Court, "when a criminal action is instituted, the civil action for recovery of civil liability
arising from the offense charged is impliedly instituted with the criminal action, unless the
offended party expressly waives the civil action or reserves his right to institute it
separately." In the estafa case, since the offended persons did not either waive or reserve their
right to institute their civil action separately, the same is deemed instituted with the criminal
action. There were, therefore, in the estafa case two actions before the court: the criminal
action for the punishment of the accused, and the civil action for recovery of the money
fraudulently taken by her. If the Court had jurisdiction over the civil action, it must necessarily
section 6, that "when by law jurisdiction is conferred on a court or judicial officer, all auxiliary
writs, processes and other means necessary to carry it into effect may be employed by such
court or officer; and if the procedure to be followed in the exercise of such jurisdiction is not
specifically pointed out by these rules, any suitable process or mode of proceeding may be
adopted which appears most conformable to the spirit of said rules." One of the auxiliary writs
to carry into effect the jurisdiction of the court over the civil action is the preliminary writ of
attachment without which the judgment of the court awarding civil indemnity may be
nugatory. Other processes which the court may issue are those which refer to the execution
of such judgment where the rules applicable in civil cases should be followed.
Respondents, however, invoke the decisions of this Court in U. S. vs. Namit, 38 Phil., 926 and
People vs. Moreno, 60 Phil., 674, wherein it was held that preliminary attachment is not proper
in criminal cases. But this ruling is predicated fundamentally upon the theory that
preliminary attachment is a purely statutory remedy and there was then no clear legal provision
making it applicable in criminal proceedings. All doubts on this question have, however,
disappeared upon the promulgation of the new Rules of Court wherein, by clear authority of
Rule 124, section 6, above quoted, a criminal court having jurisdiction over the civil action
arising from the offense charged, is now permitted to issue all the auxiliary writs necessary to
carry such jurisdiction into effect. A similar legal principle was recognized before in scattered
provisions of law or decisions (see Act No. 136, section 19; Revised Administrative Code, section
145-G; Act No. 190, section 610; Shioji vs. Harvey, 43 Phil., 333, 344), applicable only in
some courts and in certain cases, and does not seem to covet the question now before us. Now,
it is made general and applicable in all cases and in all courts provided the requirements
therein specified are present.
At the hearing of this case, it has been suggested that as the respondent Judge merely followed
former decisions of this Court, he should not be blamed therefor and that accordingly the writ
does not lie against him. This suggestion confuses the basic ground for the writ. The personal
motives of the respondent Judge as well as his good or bad faith are in no way material for the
grant or denial of the writ. The only issue before us is whether the action taken by him
constitutes a mistake of law. We hold it to be such according to our construction of the law
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PROVISIONAL REMEDIES - PRELIMINARY ATTACHMENT CASES

as it is. The fact that he has followed previous rulings of this Court may exempt him from In this jurisdiction, criminal responsibility carries with it civil liability, the latter consisting of
blame but it can in no wise wipe out his mistake. And such mistake, however well-grounded it restitution, reparation of the damage caused and indemnification for consequential
may be, is a sufficient basis for granting the writ. damages. (Arts. 17 and 119, old Penal Code; and Arts. 100 and 104, Revised Penal Code.)
Under the Spanish Code of Criminal Procedure, the criminal and the civil actions could be
In the criminal cases for murder and frustrated murder, since the offended persons reserved brought either jointly or separately (Art. 111 the criminal action alone was filed, the civil action
their right to institute their civil action separately, preliminary attachment is not proper. As was understood to have been likewise utilized ("se entendera tambien utilizada la civil",) unless
the court in said criminal cases has no jurisdiction of the civil actions arising from the offenses the civil action was waived or the right to file it separately was expressly reserved. (Art. 112,
charged, there is nothing before the court to which the preliminary attachment may be Spanish Code of Criminal Procedure.) When General Orders No. 58 took effect no change was
considered as an auxiliary writ and, therefore, the court has no jurisdiction to issue such writ. made, for Section 107 of said General Orders provided:
"SEC. 107. The privileges now secured by law to the Person claiming to be injured by the
Judgment is, therefore, rendered declaring the respondent Court with authority to grant commission of an offense to take part in the prosecution of the offense and to recover damages
preliminary writ of attachment in the estafa case wherein the civil action arising from the for the injury sustained by reason of the same shall not be held to be abridged by the provisions
offense charged is deemed instituted, and the respondent Court is hereby ordered to act upon of this order; but such person may appear and shall be heard either individual or by attorney
the merits of the motion for preliminary attachment filed therein by the offended parties. With at all stages of the case, and the court upon conviction of the accused may enter judgment against
respect, however, to the criminal cases for murder and frustrated murder, the respondent is him for the damages occasioned by his wrongful act. It shall, however, be the duty of the
declared to be without authority to issue preliminary writs of attachment therein, and, promotor fiscal to direct the prosecution, subject to the right of the person injured to appeal
accordingly, its order to that effect is valid. Without costs. from any decision of the court denying him a legal right."(Italics supplied.)

PARAS,
I vote for a complete abandonment of the old doctrine because, in my humble opinion, the new
interpretation or application of the law or rule is sound and correct.
The Code of Civil Procedure (Act 190) authorized the preliminary attachment of defendant's
J.:
property under Section 424 which reads thus:
"SEC. 424. Attachment.—A plaintiff may, at the commencement of his action, or at any time
afterwards, have the property of the defendant attached as security for the satisfaciton of any
judgment that may be recovered, unless the defendant gives security to pay such judgment in

CONCURRING the manner hereinafter provided, in the following cases:

BOCOBO, J., 1. In all cases mentioned in section four hundred and twelve, providing for the arrest of a
defendant. But the plaintiff must make an election as to whether he will ask for an order

I concur m the Judgment which declares the respondent Court with authority to grant a of arrest or an order of attachment; he shall not be entitled to both orders;

Preliminary writ of attachment in the estafa case, wherein the civil action arising from the
offense charged is deemed instituted. But my reasons are different from those set forth in the 2. In an action against a defendant not residing in the Philippine Islands."

opinion Penned Mr. Justice Moran.

One of the grounds stated in section 412 of Act 190 was the following:

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PROVISIONAL REMEDIES - PRELIMINARY ATTACHMENT CASES

"5. When the defendant has removed or disposed of his property, or is about to do so, with "Does the fact that in this country civil liability is, as a rule,
intent to defraud his creditors." determined in the criminal action transform it into criminal liability
and thus make it a part of the punishment for the crime? Certainly
In U.S. vs. Namit, 38 Phil., 926 and People vs. Moreno, 60 Phil., 674, this Court held that
the mere form of a remedy should not affect its substance. And there
preliminary attachment being a statutory remedy, and there being no statute authorizing
are many indications in the Penal Code that the civil liability therein
preliminary attachment in criminal cases, this process was not available in criminal
imposed for the commission of crimes was not intended to be merged
proceedings.
into the punishment for the crime. Articles 17, 119-126, which provide
for civil liability of offenders, are confined strictly to that
With all due respect to those Justices who held this view in the two cases mentioned, I an of
subject. Article 23 sharply defines one distinction between the
the opinion that at the time these two decisions were rendered there was already a clear
criminal and civil liability in that the former cannot he waived by a
statutory authorization for a preliminary attachment to enforce the civil responsibility for
pardon of the party injured, while the latter may be waived. The
damages arising from a crime. unless there was a waiver or a reservation of the civil action,
chapters of the Code dealing with the classification and duration of
two suits were initiated at the same time, namely, the criminal prosecution and the civil action
penalties (articles 25 to 62 inclusive), nowhere list the civil liability
what happened when both the criminal and the civil actions were thus brought and tried
attached to a crime. And article 133 provides that "Civil liability
together? Each retained (as it now retains) its own nature and individuality, as shown by the
arising out of crimes or misdemeanors shall be extinguished in the
following:
same manner as other obligations, in accordance with the rules of civil

1. In U.S. v. Heery, 25 Phil. 600, this Court held that there is no merger of the law.'

two kinds of liability (criminal and civil) from,the mere, fact that they are tried
together. In that case, this Court upon the first appeal affirmed the sentence "In commenting upon this article, Groizard (vol. 2, p. 717), says:

of the lower court condemning the defendant-appeal of one year and three
months of prison correccional, but the appeal of the injured party against the "From crimes arise, as we know, two liabilities: criminal and civil. The

ruling of the trial court which refused to allow him to submit evidence on the first is extinguished by the methods to which we have just

damages suffered by him was sustained and the case was returned with the adverted. The method of terminating the second is not a subject of

following instructions: "It is therefore ordered that the record be returned to criminal law, but of civil law.

the court whence it came for the execution of the criminal judgment herein
affirmed, and for the further purpose of completing the civil branch of the "The character of this work does not permit us to tarry for further

case." (Italics supplied.) Upon the second appeal, the defendant raised the explanations. We would not be commenting upon subjects included

question of double jeopardy, of the case for the determination of the civil within the Penal Code but laws of a purely civil character.'

damages did not subject the accused to double jeopardy. This Court said in
part: "And, as a complement of this article, article 1813 of the Civil Code
provides that civil liability attached to crimes may be compromised
but that the criminal liability is not thereby extinguished. Other

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PROVISIONAL REMEDIES - PRELIMINARY ATTACHMENT CASES
distinctions might be noticed which show that there is no merger of
the two kinds of liability from the mere fact that they are tried
together. But these are we think, sufficient to sustain the point."
(Italics supplied )
2. The aggrieved party could take part in the Prosecution of the offense. (Articles
109 and 110, Spanish Code of Civil Procedure). This privilege has been
preserved by Section 107 General Orders No. 58, and by Sections 15 and 4,
Rule 106 of the new Rules of Court
3. The extinction of the criminal action did not carry with it that of the civil
action, unless the extinction proceeded from a declaration in a final judgment
that the fact from which the civil action might arise did not exist. (Art. 116
Spanish Code of Criminal Procedure). This principle is reiterated in the new
Rules of Court (Rule 107, Sec. 1-d)
Inasmuch as each of the two actions kept its own separate existence and individuality, although
both were tried at the same time, it would seem to follow that each action also retained its own
incidents. And one of the incidents of a civil suit was the preliminary attachment provided for
in Sections 424 and 412 of the Code of brought his civil action separately, a preliminary
attachment was unquestionably proper. But in the Namit and Moreno cases this Court fa
effect held that if the civil suit was filed together with the criminal prosecution, no such
attachment could be allowed because there was no specific authority therefor. In the one case
the civil damages could be safeguarded, but in the other, they were precarious and uncertain. I
am not inclined to indulge in such a hairsplitting nicely. It is hard for me to believe that the
lawmakers contemplated such a distinction, which made the vitality of a judgment for civil
liability depend upon the course taken: whether a separation or a joining of the criminal
and civil actions. If the choice was for the former, the judgment for damages was real,
efficacious and commanding, but if the choice was for the latter, then such judgment might
become an egregious delusion and a solemn mockery, because the defendant could dispose of
all his property with intent to evade and defeat his civil liability. Unless the statute is clearly
worded to that effect, I cannot bring myself to adhere to an interpretation whereby; on account
of a technicality, pure and simple a court judgment might become illusory, the civil redress
justly due an aggrieved person might be rendered nugatory and meaningless, and the accused
upon conviction might easily escape his obligation to repair the injury he has caused through
his wrongful deed. A situation s0 deplorable and so extraordinary which defies and
contravenes every primary concept of right and is gravely destructive of administration of
justice, should never be countenanced unless the law interpreter is constrained to do so by the
explicit and unequivocal terms of the statutes authorized a preliminary attachment, whether
the civil action was brought separately from, or jointly with the criminal prosecution.
The fact that in neither the General Orders No. 58, nor the Code of Civil Procedure, was there
any specific authority for preliminary attachment in case a civil action was brought and tried
together with a criminal action does not in the least affect my conclusion just formulated, for
these reasons:
1. Such explicit provision for the specific case mentioned was not necessary, because
when the law said that the civil action was understood to have been likewise utilized,
all the incidents of the civil action were retained, as already explained.
2. Section 107 of General Orders No. 58, when read in connection with Section 112 of the
Spanish Code of Criminal Procedure clearly intended that the right to recover civil
damages should be undiminished and should conserve its original vigor and
efficacy. Such right to damages was later implemented and strengthened in Sections
424 and 412 of the Code of Civil Procedure. The creation of the auxiliary remedy of
preliminary attachment in the Code of Civil Procedure rendered it superfluous to
provide in an amendment to General Orders No. 58, or in any other subsequent
legislation, for specific authority for preliminary attachment in case a civil action was
instituted together with a criminal action.
The above was, I believe, the law when the cases of U. S. v. Namit and People v. Moreno were
decided by this Court, dent. Has the law been altered or modified? I do not think so, because
Rule 107, Section 1 (a) of the new Rules of Court which reads:
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"(a) When a criminal action is instituted, the civil action for recovery of civil liability arising from The view which I take of the instant case makes it unnecessary, I believe, amend Rule 107 of
the Rules of Court, as suggested by the dissenting opinion herein.
the offense charged is impliedly instituted with the criminal action unless the offended
party expressly waives the civil action or reserves his right to institute it separately." The next inquiry which I wish to take up is this: Can certiorari and mandamus be ordered
when the trial court; simply followed the previous decisions of this the highest court of the
is a mere reiteration of the old principle that if the criminal action alone was filed, the civil land? The negative answer would seem, at first sight, to be warranted, because the
action was understood to have been likewise utilized. Neither does Rule 124, Sec. 6, announce interpretations of the law rendered by this Court become part and parcel of the Philippine legal
system, and are invested with compelling authority that binds all the lower courts in the
a new principle, inasmuch as before said Rule came into being, every court already had an
country; so a trial court that merely yields to them incurs in no mistake of law, and does not
inherent power to issue any auxiliary writ or process to carry out its judgments. (14 A. J., 371 commit any abuse of discretion.
and 373; 7R. C.L., 1033). Today, as before the promulgation of the new Rules of Court, though
the two actions are brought and tried together, each however, retains its own character and The point urged is that the respondent court cannot be held to have incurred any error of law
when it only applied the law as interpreted by this Court in previous cases. Such a theory
individuality; as stated by Mr. Justice Moran, there were in the estafa case herein, "two actions implies the argument that the adoption by this Court of a new and different interpretation of
before the court: the criminal action for the punishment of the accused, and the civil action the same law cannot logically convert the trial court's order, which was correct at the time it
for the recovery of the money fraudulently taken by her." Today, as before the new Rules of was signed—according to the highest court's previous pronouncements—into a mistaken
one. I believe, however, that this mode of reasoning would prevent this Court from revising or
Court took effect, a preliminary attachment under Section 1 of Rule 59, is an incident in a civil abandoning its previous rulings, a power which this Court exercises in the interest of
action instituted and tried simultaneously with the criminal prosecution. Today, as before the justice. There is nothing inviolably sacrosanct in the doctrine of stare decisis, for an orderly
new Rules of Court became binding, the existence of authority for a preliminary attachment and wholesome development of jurisprudence demands that there should be no undue
reluctance to re-examine previous interpretations of the law.
under Section 1 of Rule 59, of the Rules of Court, renders it unnecessary that Part III (Rules
106-122) of the same Rules should again specifically provide for such process in case a civil This is especially true when the former view of the law was not unanimously held. In U. S. v.
suit is brought and tried at the same time with the criminal action. Consequently, today as Namit, five Justices were on the majority, while one Justice dissented. In People v. Moreno,
seven Justices constituted the majority, while four Justices formed the minority. The
before the new Rules of Court became operative, there is clear statutory authority for the
existence of a forceful dissenting opinion—and dissenting opinions are often to of that
preliminary attachment in question. The foregoing construction is supported by character—dulls the edge of the majority decision. It would seem that an opinion whose power
precedent. Thus: is thus impaired, while technically it may be cited as a precedent—because it is presumed to
be the correct view until the contrary is maintained by the court in a subsequent decision—
"While the remedy of attachment or garnishment is statutory and in derogation of the common
nevertheless practically leaves the legal question open for further examination in future
law, strict construction should not be pushed to the extent of nullifying the beneficial intent of cases. If the original interpretation is intrinsically sound, it can stand the pressure of
the statute or depriving the creditor of recourse thereto in a proper case, for it is an indisputable additional discussion and inquiry in subsequent cases, and instead of being weakened, it will
gather greater strength and momentum. But if on the other hand, the original view of the
fact that the policy of the law is that a man's property shall be amenable to legal process for
minority bears within itself the puissant urge of reason and the driving impetus of justice, it
the satisfaction of his pecuniary indebtedness. Indeed, in view of the abolition of the capias will eventually, after one or more searching re-examinations in of the issue involved, gain
and of imprisonment for debt, and in view of the enlarged and liberal provisions in more recent ascendancy, thus replacing the old proposition. It is this possibility, among other
statutes on the subject of attachments and garnishments, it has been said that a more considerations, that justifies the writing of dissenting opinions, and makes it particularly
desirable and necessary that the original majority ruling be re-studied.
favorable and liberal construction of these laws should be adopted. In some states the statutes
expressly require that a liberal construction be put upon their provisions. In any event, such The stability of judicial decisions, which is earnestly to be sought, requires that a legal
construction ought to be given to a law, if it will reasonably admit of it, as will not suffer it to interpretation which is still on the way toward final crystallization, as it has yet to gain general
acceptance (a majority opinion questioned by a strong dissent being of such type), should not
be defeated, and technicality should not be allowed to override justice." (4 A. J., 567-568.)
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PROVISIONAL REMEDIES - PRELIMINARY ATTACHMENT CASES
be looked upon with awesome reverence as a primitive taboo. On the contrary, it should be
openly subjected to the most thorough discussion in order to find out whether it is sufficiently
solid and enduring to be incorporated into the legal structure. Without such a rigid and severe
test, the rule of law announced by a majority of the court will continue to languish in the
penumbra of doubt, whereas the doctrine of stare decisis can thrive only in the life-giving
sunshine of reason and justice, and in the clear atmosphere of widespread concord in the legal
profession.
In view of the foregoing, my vote is that the respondent court had authority to grant
the preliminary attachment prayed for in the civil action impliedly instituted with the criminal
action for estafa.
DISSENTING
OZAETA, J.,
I find no innovation in the new Rules of Court insofar as the issuance of preliminary attachment
in a criminal case is concerned. Section 1 of Rule 107 is but a re-enactement of article 112 of
the Spanish Code of Criminal Procedure, which had been carried over under General Orders
No. 58. (Almeida vs. Abaroa, 218 U. S.,476, 40 Phil., 1056; Alba vs. Acuña, 53 Phil., 380;
Orbeta vs. Sotto, 58 Phil., 505.) And section 6 of Rule 124 is but a restatement of a general
principle of law theretofore recognized in our statutes and jurisprudence, as indicated in the
majority opinion itself. So it is to me clear that the law now is the same as it was when this
Court handed down its decisions in the cases of United States vs. Namit (1918), 38 Phil., 926;
and People vs. Moreno (1934), 60 Phil., 674, in both of which it was declared in effect that
there was no law authorizing the issuance of preliminary attachment in a criminal case to
secure the payment of the civil liability of the accused to the offended party. With these
decisions in mind, if this Court had intended to change the law on the subject by
allowing preliminary attachment in a criminal case when it promulgated the new Rules of
Court in virtue of the rule-making power conferred upon it by the Constitution, it could and
would have done so by inserting in Rule 107 an express provision to that effect.
I am in full accord with my associates in the Court that such provision is desirable to secure
full remedy to the offended parties in criminal cases. But this desideratum should, in my
opinion, be satisfied by amending Rule 107 and not by giving it a new interpretation or
application different from that in the previous cases aforecited. In other words, this Court
should exercise its rule-making power and not its judicial power to achieve the desired
result. The judicial power cannot be used to change the rule but only to apply it. On the other
hand, the rule-making power may be availed of to amend the rule prospectively. The change
or amendment effected by the majority through judicial interpretation is the more
objectionable because it is necessarily retroactive in operation.
Another reason why I cannot give my assent to the majority opinion is, that it brushes aside
the important and well-recognized rule of stare decisis without justification, and tends to
undermine the stability of the jurisprudence established and followed in virtue of that rule. We
should carefully avoid the impression that a change in the membership of this Court creates
an open season against its previous decisions. These should be abandoned only when clearly
shown to be erroneous or untenable. No attempt is made in the majority opinion to demon
strate that the decisions of this Court in the cases of United States vs. Namit and People vs.
Moreno, supra, are clearly erroneous. The refusal to follow them in this case is predicated
upon a supposed change in the law effected by section 6 of Rule 124. But I think the mere
restatement in section 6, Rule 124, of a general principle of law previously recognized in
scattered provisions of different statutes and in adjudicated cases furnishes no justification for
a different interpretation or application of Rule 107, which is the basic statutory provisions
involved.
In his concurring opinion, Justice Bocobo admits that the law now is the same as it was when
this Court decided the cases of U. S. vs. Namit and People vs. Moreno; but he dissents from
the opinion of this Court in said cases and maintains that the statutory authorization for
preliminary attachment in civil actions may be availed of by the offended party in a criminal
action even in the absence of an express provision to that effect in the rules of criminal
procedure and in spite of the undisputed principle that attachment is a purely statutory
remedy. If we were to interpret the law for the first time, we might adopt the liberal view
sustained by the concurring opinion instead of amending the rule. But inasmuch as this
Court, after mature and conscientious deliberation, has repeatedly and consistently
maintained the view that express statutory warrant for the issuance of a preliminary
attachment in a criminal action is necessary— which view is not without support in reason and
authority; inasmuch as the legislature acquiesced in that interpretation ever since it was
handed down for the first time in the Namit case in 1918 and reiterated in the Moreno case in
1934, until this Court promulgated the new Rules of Court in 1940 in lieu of the codes of civil
and criminal procedure; and inasmuch as it is within the power of this Court to amend said
Rules, I am persuaded that we should amend Rule 107 instead of giving it now a new
interpretation. The same end would be achieved regularly and without violence to our own
jurisprudence. The fact is, that the jurisprudence in question has stood its ground for a quarter
of a century notwithstanding repeated attempts to overthrow it, and that even now the
majority of the Court are not persuaded that the opinion is untenable.
I think the respondent judge acted with commendable propriety in following the previous
decisions of this Court, saying that it is up to us either to reverse them or to amend the Rules
of Court." I believe the last inquiry in the concurring opinion to be a superfluity. If the previous
opinion of this Court were clearly erroneous or untenable, no argument is needed to
demonstrate that we would be justified—indeed we would be in duty bound—to reverse it,
regardless of whether or not it was followed by the lower court. And the fact that such
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PROVISIONAL REMEDIES - PRELIMINARY ATTACHMENT CASES
previous opinion "was not unanimously held" is of no consequence. Stare decisis recognizes
no distinction between a unanimous and a dissented opinion. Every opinion of a collegiate
court, whether unanimous or not, derives its persuasive force as precedent from the cogency
and intrinsic validity of its reasoning and not from the number of Justices who subscribe to it.
My vote is to deny the petition in toto, without prejudice to amending Rule 107 by inserting
another section therein expressly providing for the issuance of a preliminary attachment in
criminal cases.
RAMCAR, INCORPORATED, PETITIONER, VS. DIONISIO DE LEON, JUDGE OF FIRST
INSTANCE OF MANILA, ET AL., RESPONDENTS.
PERFECTO, J.:
On December 26, 1946, petitioner initiated a civil action against Daniel Francisco, Ulysses S.
Tread, Jr., and Antonio Lloret, by filing a complaint for damages with the Court of First Instance
of Manila, praying that defendants be sentenced to pay the sum of P5,000, value of a stolen
taxicab, P500, a price offered through the newspapers to anyone who could point the
whereabouts of said taxicab, plus P50 per day as the average minimum daily income of the car
and the costs of the suit, and that, pending all proceedings, attachment of the properties of
defendants be ordered, upon such bond and in the amount that the court may deem proper to
fix.
Plaintiff alleged that he owns, among other taxicabs, a Renault car with motor No. 36428,
painted black and white and provided with a taximeter, the total value of which is P5,000, and
that about December 2, 1946, it was stolen from the parking place in front of the premises of
plaintiff at 1049 R. Hidalgo, Manila, and after many days of fruitless search, an offer of P500
through the newspapers was made to anyone who could point to its whereabouts, and that
said car, already in dismantled condition, was found in and recovered from the possession of
defendants, who confessed to the representative of plaintiff and, the police authorities as being
the authors of the theft of said car and of dismantling it to pieces, making it completely
unserviceable and a total loss. In support of the petition for the issuance of a writ of attachment,
plaintiff alleged that defendants were concealing their properties and were about to dispose of
them with intent of defrauding their creditors, including plaintiff.
Two days later, on December 28, an information for the theft of the above described taxicab
and based on the same facts alleged in the complaint, was filed with the court of first instance
against the said three defendants.
On January 2, 1947, after petitioner had filed a bond in the amount of P5,000, a writ of
attachment was issued against the properties of defendants. On January 14, 1947, defendant
Daniel Francisco filed a petition praying for the dismissal of the complaint and for the setting
aside of the writ of attachment. On January 27, 1947, defendant Ulysses S. Tread, Jr., moved
for the suspension of the time within which to file a responsive pleading to the complaint and
to dissolve the writ of attachment. On January 30, 1947, respondent judge issued an order
denying the dismissal of the complaint prayed for by Daniel Francisco, but granted its petition
to set aside the writ of attachment against him. On February 3, the same judge granted the
petition of defendant Ulysses S. Tread, Jr., dated January 27, 1947. On February 20, 1947,
respondent judge denied the motion for reconsideration filed by plaintiff who, consequently,
filed with this Supreme Court the petition which is now under our consideration, praying that
the orders of respondent judge of January 30 and February 3 and 20, 1947, be declared null
and void and that the writ of attachment of January 2, 1947, be declared valid and in force.
Respondent judge set aside the writ of attachment of January 2, 1947, upon the theory that it
was improperly issued because at the time of its issuance the information in the criminal case
had already been filed, the theory being based on the lower court's interpretation of Section 1
of Rule 107 in which it is read:
"(b) Criminal and civil actions arising from the same offense may be instituted separately, but
after the criminal action has been commenced the civil action cannot be instituted until final
judgment has been rendered in the criminal action;
"(c) After a criminal action has been commenced, no civil action arising from the same offense
can be prosecuted; and the same shall be suspended, in whatever stage it may be found, until
final judgment in the criminal proceeding has been rendered."
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PROVISIONAL REMEDIES - PRELIMINARY ATTACHMENT CASES
From the provisions of Rule 107 it is clear that, unless there is a waiver of civil action or reserve
of the right to initiate it expressly, criminal action always carries the civil action for recovery of
liability arising from the offense charged; that when criminal action has been commenced
before the civil action, the latter cannot be instituted until final judgment has been rendered
in the former; that when the civil action has been commenced before the criminal action, the
former shall be suspended upon the institution of the latter and until final judgment is rendered
in the same; that, generally, extinction of the criminal action does not carry with it extinction
of the civil; and that final judgment rendered in a civil action in absolving defendant from civil
liability is no bar to a criminal action.
The above-quoted subsection (c) is the one directly applicable to the facts in this case, although
it should not be interpreted as an isolated provision, but in conjunction with the rest of Rule
107. Said subsection enjoins that no civil action arising from the same offense can be
prosecuted after a criminal action has been commenced, and if the civil action has been
instituted before the criminal, it "shall be suspended, in whatever stage it may be found, until
final judgment in the criminal proceeding has been rendered." The question is whether, under
such injunctions, the lower court was, after the filing of the information in the criminal case,
ipso facto deprived of the power to issue preliminary and auxiliary writs, such as preliminary
injunction, attachment, appointment of receiver, fixing amounts of bonds to be filed, and other
processes of similar nature, none of which goes into the merits of the case.
Under the subsection in question, the civil action undergoes a procedural freezing. But, in the
same way that in physical congelation not all manifestations of life are wiped out, the
procedural freezing in question does not have the effect of wiping out all manifestations of the
existence of the suspended civil action. Marmots and certain species of bats, including
pipistrels, when hibernating in burrows and caves during winter, offer the appearance of
immobile corpses or simple lumps of ice. But within the lifeless appearance that deceives
human perception, because metabolism, heart-beat rate, breathing and body temperature drop
so low, there lies the mysteriously latent vitality that, when hibernation is over, will permit
those animals to run with surprising agility and to soar high in cross-country flying.
Suspension is not termination. Suspension is not final ending, is not destruction, is not death.
The suspended civil action continues to be alive. Only its evolution to maturity is temporarily
stopped. Only it has to bide time. In the meantime, while it is waiting to be tried and decided
on the merits, it may avail itself of the ancillary processes which, expressly authorized by law,
will permit it to accomplish its purposes efficaciously, and may defend itself against bad faith,
fraud and other evil practices, intended to make nugatory the relief sought by it and to defeat
the ends of the administration of justice. If those ancillary processes cannot be resorted to
during the suspension, there is no sense in the rule providing only for suspension, when its
effect is to kill the action. We cannot subscribe to the idea that the authors of the subsection
in question, in providing for the suspension of the civil action during the life of the criminal
action, had the purpose of crippling to death the civil action, but lacked the honesty of saying
so in an outright manner, seeking rather the hypocritical method of concealing their purpose
under a deceitful word.
No one should forget that civil action for recovery of civil liability arising from an offense has
always deserved the concern of the law. The Revised Penal Code, although it is supposed to
deal only on criminal offenses, contain an express provision reserving to offended parties such
civil action. To make effective that right of recovery of civil liability, Section 2 of Rule 106 grants
to the offended party the right to commence a criminal action through a complaint, and Section
16 of the same rule guarantees to the offended party the right of intervention in criminal action,
either personally or by attorney. Rule 107 has been drafted to further guarantee to the offended
party the right of recovery above-mentioned.
When no civil action is expressly instituted, according to subsection (a) of Section 1 of Rule
107, it shall be impliedly jointly "instituted with the criminal action." That means as if two
actions are joined in one as twins, each one complete with the same completeness as any of
the two normal persons composing a twin. It means that the civil action may be tried and
prosecuted, with all the ancillary processes provided by law. Such was the idea of the Supreme
Court in United States vs. Heery (25 Phil., 600) where, besides affirming the criminal judgment
rendered therein, it ordered the record returned to the lower court "for the further purpose of
completing the civil branch of the case." Therefore, within the criminal action, with which the
civil action is "impliedly instituted," the offended party may obtain the preliminary writ of
attachment. There is no logic in denying that right to the plaintiff, when the civil action is
separately instituted.
8
PROVISIONAL REMEDIES - PRELIMINARY ATTACHMENT CASES
The orders of the respondent judge dated January 30 and February 3, 1947, having been issued
upon a wrong interpretation of subsection (c) of Section 1 of Rule 107, and no intimation to the
contrary having been made, we should assume that, without said wrong interpretation, the
writ of attachment was issued because the plaintiff was, under the facts and the law, entitled
to its issuance, and that there was the duty of the lower court to issue it.
For all the foregoing, the orders of the respondent judge of January 30 and February 3, 1947,
are set aside, and the writ of attachment of January 2, 1947, is maintained, unless and until
lifted through a proper counter-bond that the defendants may file or for any other reason
recognized by law. Costs shall be taxed against respondents.
ELEAZAR V. ADLAWAN AND ELENA S. ADLAWAN, PETITIONERS, VS. HON. JUDGE
RAMON AM. TORRES, AS PRESIDING JUDGE OF BRANCH 6, REGIONAL TRIAL COURT
CEBU CITY, ABOITIZ & COMPANY, INC. AND THE PROVINCIAL SHERIFFS OF CEBU,
DAVAO, RIZAL AND METRO MANILA, RESPECTIVELY, RESPONDENTS.
QUIASON, J.:
This is a petition for certiorari and mandamus with preliminary injunction or restraining order
to nullify: (1) the Order dated September 14, 1983 of respondent Judge Ramon Am. Torres of
the Regional Trial Court, Branch 6, Cebu City, in Civil Case No. CEB-1185 and the Order dated
September 26, 1983 of Judge Emilio A. Jacinto of Branch 23 of the same court in Civil Case
No. CEB-1186, which granted the motion for the issuance of writs of preliminary attachment
for the seizure of the property of petitioners by respondent Provincial Sheriffs; and (2) the Order
dated December 12, 1983 of respondent Judge Ramon Am. Torres in the consolidated cases,
Civil Case No. CEB-1185 and Civil Case No. CEB-1186.
I issued prior to the filing of said notice of dismissal had been rendered functus oficio, and
In a complaint dated April 24, 1982 filed with the Court of First Instance of Cebu, now Regional
Trial Court, (Civil Case No. R-21761), respondent Aboitiz and Company, Inc. (Aboitiz) sought
to collect from petitioners a sum of money representing payments for: (1) the unpaid
amortizations of a loan; (2) technical and managerial services rendered; and (3) the unpaid
installments of the equipment provided by respondent Aboitiz to petitioners (Rollo, p. 37).
Acting on the ex parte application for attachment, the Executive Judge of the Court of First
Instance of Cebu, issued on May 14, 1982, an order directing the issuance of the writ of
preliminary attachment against the property of petitioners upon the filing by respondent Aboitiz
of an attachment bond.
Subsequently, the case was raffled to Branch 11 of the Court of First Instance of Cebu, which
issued a writ of attachment addressed to the Provincial Sheriffs of Cebu and the City Sheriff of
Davao City. It was the Sheriff of Davao City who enforced the writ of attachment, resulting in
the seizure of heavy construction equipment, motor vehicle spare parts, and other personal
property with the aggregate value of P15,000,000.00. The said court also granted the motion
of respondent Aboitiz to take possession and custody of the attached property of petitioners
and ordered the Provincial Sheriff of Davao to deliver the property to respondent Aboitiz.
Petitioners moved for a bill of particulars and to set aside the ex parte writ of attachment.
Finding merit in the motion to set aside the writ, Branch 11 ordered on July 6, 1982 the lifting
of the writ and, consequently, the discharge of the property levied upon.
Respondent Aboitiz filed an urgent ex parte motion, praying for the stay of the July 6, 1982
Order for a period of 15 days for it to be able to appeal the order. The motion was favorably
acted upon.
However, on July 13, 1982, respondent Aboitiz filed a notice of dismissal of its complaint in
accordance with Section 1, Rule 17 of the Revised Rules of Court. Consequently, Branch 11
issued an order confirming the notice of dismissal, emphasizing that all orders of the court
considering all pending incidents in the case as moot and academic.
Petitioner Eleazar Adlawan filed a motion praying that the July 6, 1982 Order be implemented
and enforced. On December 20, however, Branch 11 denied the motion on account of the filing
9
PROVISIONAL REMEDIES - PRELIMINARY ATTACHMENT CASES
by respondent Aboitiz before Branch 16 of the Court of First Instance of Cebu in Lapu-lapu
City of an action for delivery of personal property (Civil Case No. 619-L), and the filing by
petitioner Eleazar Adlawan before Branch 10 of the same court of an action for damages in
connection with the seizure of his property under the writ of attachment.
In the replevin suit, Branch 16 ordered the seizure and delivery of the property described in
the complaint. Said property were later delivered by the provincial sheriff to respondent Aboitiz.
Alleging that while his office was situated in Cebu City, Adlawan was a resident of Minglanilla,
and therefore, the Lapu-lapu City court should not entertain the action for replevin. Petitioner
Eleazar Adlawan filed an omnibus motion praying for the reconsideration and dissolution of
the writ of seizure, the retrieval of the property seized, and the dismissal of the complaint. He
also averred that the property seized were in custodia legis by virtue of the writ of attachment
issued by Branch 11. His omnibus motion was denied. Subsequently, he filed a motion for
reconsideration which was not granted.
The denial of his omnibus motion led petitioner Eleazar Adlawan to file a petition for certiorari
and mandamus in the Supreme Court (G.R. No. 63225). The Third Division of this Court ruled
on April 3, 1990 that since attachment is an ancillary remedy, the withdrawal of the complaint
left it with no leg to stand on. Thus, the Court disposed of the case as follows:
"WHEREFORE, in view of the foregoing, this Court rules that the attached properties left in the
custody of private respondent Aboitiz and Company, Inc. be returned to petitioner Eleazar V.
Adlawan without prejudice to the outcome of the cases filed by both parties" (Rollo, p. 324).
Respondent Aboitiz filed a motion for reconsideration of the decision, contending that the
replevin case was distinct and separate from the case where the writ of attachment was issued.
It argued that the writ of replevin, therefore, remained in force as the Third Division of the
Supreme Court had not found it illegal. The motion was, however, denied with finality in the
Resolution of July 11, 1990.
Undaunted, respondent Aboitiz filed a second motion for reconsideration with a prayer that the
dispositive portion of the decision be clarified. It asserted that because the writ of preliminary
attachment was different from the writ of replevin, we should rule that the property subject of
the latter writ should remain in custodia legis of the court issuing the said writ.
In the Resolution dated September 10, 1990, the Third Division stated that "the properties to
be returned to petitioner are only those held by private respondent (Aboitiz) by virtue of the writ
of attachment which has been declared non-existent." Accordingly, the dispositive portion of
the April 3, 1990 decision of the Third Division of this Court was modified to read as follows:
"WHEREFORE, in view of the foregoing, this Court rules that the properties in the custody of
the private respondent Aboitiz & Company by virtue of the writ of attachment issued in Civil
Case No. R-21761 be returned to the petitioner, but properties in the custody of the private
respondent by virtue of the writ of replevin issued in Civil Case No. 619-L be continued in
custodia legis of said court pending litigation therein."
The Decision in G.R. No. 63225 having become final and executory, entry of judgment was
made on November 15, 1990. This should have terminated the controversy between petitioners
and respondent Aboitiz insofar as the Supreme Court was concerned, but that was not to be.
On September 9, 1983 respondent Aboitiz filed against petitioners two complaints for collection
of sums of money with prayers for the issuance of writs of attachment in the Regional Trial
Court, Branch 23, Cebu City, docketed as Civil Cases Nos. CEB-1185 and CEB-1186. The
complaint in Civil Case No. CEB-1185 alleged that petitioner Eleazar Adlawan (defendant
therein) was awarded a contract for the construction of the Tago Diversion Works for the Tago
River Irrigation Project by the National Irrigation Administration and that respondent Aboitiz
(plaintiff therein) loaned him money and equipment, which indebtedness as of June 30, 1983
totalled P13,430,259.14. Paragraph 16 of the complaint states:
"16. That, in view of the enormous liabilities which the defendants have with the plaintiff,
defendants executed a real estate mortgage covering eleven (11) parcels of land in favor of
Philippine Commercial and Industrial Bank (PCIB) to secure a P1,000,000.00 loan with said
bank and was able to remove, conceal and dispose of their properties, obviously to defraud the
plaintiff, x x x" (Rollo, pp. 65-66).
10
PROVISIONAL REMEDIES - PRELIMINARY ATTACHMENT CASES
The complaint in Civil Case No. CEB-1186 alleged that petitioner Eleazar Adlawan (defendant
therein) was awarded a contract for the construction of the Lasang River Irrigation Project by
the National Irrigation Administration and that respondent Aboitiz (plaintiff therein) loaned him
money and equipment, which indebtedness as of June 30, 1983 totalled P5,370,672.08.
Paragraph 15 of the complaint is similarly worded as paragraph 16 of the complaint in Civil
Case No. CEB-1185.
Civil Case No. CEB-1185 was raffled to the Regional Trial Court, Branch 6, presided by
respondent Judge Ramon Am. Torres. On September 14, 1983, respondent Judge ordered the
issuance of a writ of attachment upon respondent Aboitiz’ filing of a bond of P5,000,000.00.
Similarly, in Civil Case No. CEB-1186, which was raffled to Branch 23, presiding Judge Emilio
A. Jacinto ordered the issuance of a writ of attachment upon the filing of a bond of
P2,500,000.00. Accordingly, in Civil Case No. CEB-1185, the Acting Provincial Sheriff of Cebu
issued separate writs dated September 26, 1983 addressed to the Sheriffs of Cebu, Davao and
Metro Manila. No writ of preliminary attachment was, however, issued in Civil Case No. CEB-
1186.
Petitioners then filed in Civil Cases Nos. CEB-1185 and CEB-1186 urgent motions to hold in
abeyance the enforcement of the writs of attachments. They alleged in the main that since their
property had been previously attached and said attachment was being questioned before the
Supreme Court in G.R. No. 63225, the filing of the two cases, as well as the issuance of the
writs of attachment, constituted undue interference with the processes of this court in the then
pending petition involving the same property.
Upon motion of respondent Aboitiz, Branch 23 issued on October 13, 1983, an order directing
the transfer to Branch 6 of Civil Case No. CEB-1186 for consolidation with Civil Case No. CEB-
1185.
Meanwhile, in its comment on petitioners' motion to withhold the enforcement of the writs of
attachment, respondent Aboitiz alleged that the voluntary dismissal of Civil Case No. R-21761
under Section 1, Rule 17 of the Revised Rules of Court was without prejudice to the institution
of another action based on the same subject matter. It averred that the issuance of the writ of
attachment was justified because petitioners were intending to defraud respondent Aboitiz by
mortgaging 11 parcels of land to the Philippine Commercial and Industrial Bank (PCIB) in
consideration of the loan of P1,100,000.00, thereby making PCIB a preferred creditor to the
prejudice of respondent Aboitiz, which had an exposure amounting to P13,430,259.14.
Petitioners then filed a rejoinder to said comment, contending that since the property subject
of the writ of attachment have earlier been attached or replevied, the same property were under
custodia legis and therefore could not be the subject of other writs of attachment.
On December 12, 1983, respondent Judge issued an order finding no merit in petitioners'
motion for reconsideration and directing the sheriffs of Cebu, Davao and Metro Manila "to
proceed with the enforcement and implementation of the writs of preliminary attachment."
Respondent Judge ruled that the writs of attachment were issued on the basis of the supporting
affidavits alleging that petitioner had removed or disposed of their property with intent to
defraud respondent Aboitiz (Rollo, pp. 109-113).
On December 15, petitioners filed an ex parte motion praying: (1) that the December 12, 1983
Order be set for hearing; (2) that they be given 15 days within which to either file a motion for
reconsideration or elevate the matter to this Court or the then Intermediate Appellate Court;
and (3) that within the same 15-day period the implementation or enforcement of the writs of
attachment be held in abeyance.
On the same day, respondent Judge issued an order holding in abeyance the enforcement of
the writs of preliminary attachment in order to afford petitioners an opportunity to seek their
other remedies (Rollo, p. 116).
On December 27, petitioners filed the instant petition for certiorari and mandamus. They alleged
that respondent Judge gravely abused his discretion in ordering the issuance of the writs of
preliminary attachment inasmuch as the real estate mortgage executed by them in favor of
PCIB did not constitute fraudulent removal, concealment or disposition of property. They
argued that granting the mortgage constituted removal or disposition of property, it was not
per se a ground for attachment lacking proof of intent to defraud the creditors of the defendant.
11
PROVISIONAL REMEDIES - PRELIMINARY ATTACHMENT CASES
Petitioners contended that in Civil Case No. 21761, Branch 11 had ruled that the loan for which
the mortgage was executed was contracted in good faith, as it was necessary for them to
continue their business operations even after respondent Aboitiz had stopped giving them
financial aid.
Petitioners also contended that respondent Judge exceeded his jurisdiction when he issued the
Order of December 12, 1983, without first hearing the parties on the motion for attachment
and the motion to dissolve the attachment. Moreover, they argued that respondent Judge
gravely abused his discretion in proceeding with the case, notwithstanding that his attention
had been called with regard to the pendency of G.R. No. 63225 in this Court.
As prayed for by petitioners, we issued a temporary restraining order on January 6, 1984
"enjoining the respondents from enforcing or implementing the writs of preliminary attachment
against the property of petitioners, all dated September 26, 1983 and issued in Civil Cases Nos.
CEB 1185 and 1186" (Rollo, p. 118).
II
The resolution of this case centers on the issue of the legality of the writ of attachment issued
by respondent Judge in the consolidated cases for collection of sums of money.
The affidavit submitted by respondent Aboitiz in support of its prayer for the writ of attachment
does not meet the requirements of Rule 57 of the Revised Rules of Court regarding the
allegations on impending fraudulent removal, concealment and disposition of defendant's
property. As held in Carpio v. Macadaeg, 9 SCRA 552 (1963), to justify a preliminary
attachment, the removal or disposal must have been made with intent to defraud defendant's
creditors. Proof of fraud is mandated by paragraphs (d) and (e) of Section 1, Rule 57 of the
Revised Rules of Court on the grounds upon which attachment may issue. Thus, the factual
basis on defendant's intent to defraud must be clearly alleged in the affidavit in support of the
prayer for the writ of attachment if not so specifically alleged in the verified complaint. The
affidavit submitted by respondent Aboitiz states:
"REPUBLIC OF THE PHILIPPINES)
CITY OF CEBU……………) S.S.
I, ROMAN S. RONQUILLO, of legal age, married and a resident of Cebu City, after being sworn
in accordance with law, hereby depose and say:
That I am the Vice-President of the plaintiff corporation in the above-entitled case;
That a sufficient cause of action exists against the defendants named therein because the said
defendants are indebted to the plaintiffs in the amount of P13,430,259.14 exclusive of interests
thereon and damages claimed;
That the defendants have removed or disposed of their properties with intent to defraud the
plaintiff, their creditor, because on May 27, 1982 they executed a real estate mortgage in favor
of Philippine Commercial and Industrial Bank (PCIB) covering eleven (11) of their fifteen (15)
parcels of land in Cebu to secure a P1,100,000.00 loan with the same bank;
That this action is one of those specifically mentioned in Section 1, Rule 57 of the Rules of
Court, whereby a writ preliminary attachment may lawfully issue because the action therein is
one against parties who have removed or disposed of their properties with intent to defraud
their creditor, plaintiff herein;
That there is no sufficient security for the claims sought to be enforced by the present action;
That the total amount due to the plaintiff in the above-entitled case is P13,430,259.14,
excluding interests and claim for damages and is as much the sum for which an order of
attachment is herein sought to be granted; above all legal counter-claims on the part of the
defendants.
IN VIEW WHEREOF, I hereunto set my hand this 24th day of August 1983 at Cebu City,
Philippines.
(Sgd.)
RAMON S. RONQUILLO
Affiant"
12
PROVISIONAL REMEDIES - PRELIMINARY ATTACHMENT CASES
(Rollo, pp. 171-172)
It is evident from said affidavit that the prayer for attachment rests on the mortgage by
petitioners of 11 parcels of land in Cebu, which encumbrance respondent Aboitiz considered
as fraudulent concealment of property to its prejudice. We find, however, that there is no factual
allegation which may constitute as a valid basis for the contention that the mortgage was in
fraud of respondent Aboitiz. As this Court said in Jardine-Manila Finance, Inc. v. Court of
Appeals, 171 SCRA 636 (1989), "[T]he general rule is that the affidavit is the foundation of the
writ, and if none be filed or one be filed which wholly fails to set out some facts required by law
to be stated therein, there is no jurisdiction and the proceedings are null and void."
Bare allegation that an encumbrance of a property is in fraud of the creditor does not suffice.
Factual bases for such conclusion must be clearly averred.
The execution of a mortgage in favor of another creditor is not conceived by the Rules as one of
the means of fraudulently disposing of one's property. By mortgaging a piece of property, a
debtor merely subjects it to a lien but ownership thereof is not parted with.
Furthermore, the inability to pay one's creditors is not necessarily synonymous with fraudulent
intent not to honor an obligation (Insular Bank of Asia & America, Inc. v. Court of Appeals, 190
SCRA 629 [1990]).
Consequently, when petitioners filed a motion for the reconsideration of the order directing the
issuance of the writ of attachment, respondent Judge should have considered it as a motion
for the discharge of the attachment and should have conducted a hearing or required
submission of counter-affidavits from the petitioners, if only to gather facts in support of the
allegation of fraud (Jopillo, Jr. v. Court of Appeals, 167 SCRA 247 [1988]). This is what Section
13 of Rule 57 mandates.
This procedure should be followed because, as the Court has time and again said, attachment
is a harsh, extraordinary and summary remedy and the rules governing its issuance must be
construed strictly against the applicant. Verily, a writ of attachment can only be granted on
concrete and specific grounds and not on general averments quoting perfunctorily the words
of the Rules (D.P. Lub Oil Marketing Center, Inc. v. Nicolas, 191 SCRA 423 [1990]).
The judge before whom the application is made exercises full discretion in considering the
supporting evidence proffered by the applicant. One overriding consideration is that a writ of
attachment is substantially a writ of execution except that it emanates at the beginning, instead
of at the termination of the suit (Santos v. Aquino, Jr., 205 SCRA 127 [1992]; Tay Chun Suy v.
Court of Appeals, 212 SCRA 713 [1992]).
We need not discuss the issue of whether or not Civil Cases Nos. CEB-1185 and CEB-1186
constituted undue interference with the proceedings in G.R. No. 63225 in view of the entry of
judgment in the latter case.
WHEREFORE, the petition is GRANTED and the Temporary Restraining Order issued on
January 6, 1984 is made PERMANENT. Respondent Judge or whoever is the presiding judge
of the Regional Trial Court, Branch 6, Cebu City, is DIRECTED to PROCEED with the resolution
of Civil Cases Nos. CEB-1185 and CEB-1186 with deliberate dispatch.
SO ORDERED.
ISABELO CARPIO, PETITIONER, VS. HON. HIGINIO MACADAEG, ET AL.,
RESPONDENTS.
MAKALINTAL, J.:
Isabelo Carpio filed this petition for certiorari and prohibition to annul and stop implemention
of respondent Judge's orders of October 24 and November 25, 1960, directing the sale of five
race horses and goods previously attached upon motion of respondent Oscar Abaya. We issued
a writ of preliminary injunction to restrain the sale, with instructions to respondent Sheriff of
Rizal to allow the daily training of the said horses and their participation in races whenever
they were included in the racing programs.
13
PROVISIONAL REMEDIES - PRELIMINARY ATTACHMENT CASES
On January 17, 1960 respondent Oscar Abaya filed a complaint against petitioner for the
recovery of various sums aggregating P25,000 (Civil Case No. 42450, C.F.I. Manila). Before
summons was served, and upon ex parte motion of respondent Abaya (Annex B), respondent
Judge issued two orders of attachment dated February 8 (Annex C-1) and February 10, 1960
(Annex C), pursuant to which the Sheriff of Manila garnished goods consisting of hardware
imported by petitioner, and the Sheriff of Rizal seized petitioner's five racing horses named
Mohamad, Mohamad's Pride, Magic Spell, Nashua and Sirius. On February 12, 1960 petitioner
filed an urgent petition to discharge the orders of attachment (Annex 1). Acting thereon,
respondent Judge, on March 11, 1960, set aside the two orders of February 8 and 10,1960
(Annex F).
Upon two motions of respondent Abaya (Annexes H and I), respondent Judge, on March 29,
1960, set aside his order of March 11, 1960 (Annex K). Though no new petition was filed for
issuance of a writ of attachment and no new order or alias writ of attachment was issued,
respondent Sheriff of Manila garnished the aforementioned goods and respondent Sheriff of
Rizal attached the five racing horses.
Upon petition of respondent Abaya (Annex L), respondent Judge issued an order directing the
sale at public auction of the five racing horses (Annex M). However, the sale was halted by
petitioner's putting up a bond of P4,000 and the horses were released to him by respondent
Sheriff of Rizal.
Upon motion of respondent Abaya (Annex R), respondent Judge, on October 24, 1960, ordered
the increase of the bond to P10,000, and ordered respondent Sheriff of Rizal to proceed with
the sale of the horses should petitioner fail to file the additional bond of P6,000 (Annex S).
Motions filed by petitioner seeking reconsideration of the said order of October 24 were denied
by respondent Judge on November 25, 1960 (Annex X). So, respondent Sheriff of Rizal
advertised the sale at public auction of the five racing horses. Upon motion of respondent Abaya
(Annex T), and despite the opposition of petitioner (Annex U), respondent Judge, on the same
day-November 25 issued an order authorizing the sale of the garnished goods (Annex Z).
Petitioner seeks annulment of the order of October 24, 1960 ordering him to file an additional
bond of P6,000; the order of November 25, 1960 denying his motion for reconsideration of the
order of October 24; and the order of the same date authorizing the sale of the garnished goods,
on the ground that in issuing them respondent Judge acted without jurisdiction and/or with
grave abuse of discretion.
Respondent Judge should not have issued the two writs of preliminary attachment (Annexes C
and C-1) on Abaya's simple allegation that the petitioner was about to dispose of his property,
thereby leaving no security for the satisfaction of any judgment. [1] Mere removal or disposal of
property, by itself, is not ground for issuance of preliminary attachment, notwithstanding
absence of any security for the satisfaction of any judgment against the defendant. The removal
or disposal, to justify preliminary attachment, must have been made with intent to defraud
defendant's creditors.[2]
Respondent Judge in fact corrected himself. Acting on petitioner's motion to discharge
attachment and apparently believing the correctness of the grounds alleged therein, [3] he set
aside the orders of attachment (Order of March 11, 1960, Annex F).
But reversing himself again, he set aside his order of March 11, 1960 (Annex K, dated March
29, 1960.[4] This he did apparently on Abaya's contention that petitioner was about to remove
or dispose of his property in order to defraud his creditors, as example of which disposals he
pointed to the alleged sale of the horses and of petitioner's office furniture (Abaya's motion for
reconsideration dated March 15, 1960, Annex H). These averments of fraudulent disposals were
controverted by petitioner who, in his opposition to Abaya's motions for reconsideration (Annex
J), reiterated the defenses against preliminary attachment which he had previously enumerated
in his petition to discharge the two orders of attachment. Thus the question of fraudulent
disposal was put in issue; and respondent Judge, before issuing the preliminary attachment
anew, should have given the parties opportunity to prove their respective claims or, at the very
least, should have provided petitioner with the chance to show that he had not been disposing
of his property in fraud of creditors.[5]
14
PROVISIONAL REMEDIES - PRELIMINARY ATTACHMENT CASES
But for much more than the above reason, respondent Judge should not have again ordered
the issuance of the writ of preliminary attachment since Abaya never made any affidavit as
required by Rules 59, Rules of court, which states that:
"Sec. 3. Order issued only when affidavit and bond filed.—An order of attachment shall be
granted when it is made to appear by the affidavit of the plaintiff, or of some other person who
personally knows the facts, that a sufficient cause of action exists, that the case is one of those
mentioned in Section 1 hereof, that there is no other sufficient security for the claim sought to
be enforced by the action, and that the amount due to the plaintiff, or the value of the property
which he is entitled to recover the possession of, is as much as the sum for which the order is
granted above all legal counterclaims; which affidavit, and the bond required by the next
succeeding section, must be duly filed with the clerk or judge of the court before the order
issues."
For purposes of issuance of preliminary attachment, the affidavit (Annex B-1) attached to
Abaya's motion therefor (Annex B), as we have said, is not sufficient, and it does not appear
that he ever executed another affidavit that complies with the above section. None appears
attached either to his motion for reconsideration dated March 15, 1960 (Annex H) or to his
motion for reconsideration dated March 16, 1960 (Annex I), upon which the order of attachment
(Annex K) was based.
Having construed that the preliminary attachment should not have been ordered, we believe it
no longer necessary to discuss the subsequent actuations of respondent Judge which were all
based on the erroneous assumption that his order of March 29, 1960 was valid (Annex K).
Wherefore, the order of March 29, 1960 and all succeeding orders of respondent Judge with
respect to said preliminary attachment, are hereby declared null .and void; the attached
properties are ordered released; and the preliminary injunction issued by this Court is made
permanent. Costs against respondent Abaya.
MAXIMO UY AND SYLVIA VASQUEZ-UY, PETITIONERS, VS. THE HON. COURT OF
APPEALS, ENRIQUE ANLAP AND ROSALINDA MORENO-ANLAP, RESPONDENTS.
NOCON, J.:
Petitioners, spouses Maximo Uy and Sylvia Vasquez, are before Us praying for the review of the
decision of respondent Court of Appeals, dated April 24, 1990, and its resolution dated
September 26, 1990, denying their motion for reconsideration. The questioned decision
dismissed the petition for certiorari and upheld the order of attachment against petitioner’s
properties, issued by Judge Jesus Tabilon, Branch 40 of the 7th Judicial Region, Dumaguete
City.
Records show that private respondents Enrique Anlap and Rosalinda Moreno-Anlap are the
owners of a fishing vessel known as "cub-cub" valued at P350,000.00. On September 20, 1985,
they rented said vessel and its accessories to petitioners for a period of sixty (60) days
commencing September 20, 1985 until November 19, 1985, at the rental rate of P8,000.00 per
30-days or for a total sum of P16,000.00, which petitioners fully paid. The agreement was that
should petitioners continue using the vessel after the expiration of the lease, the same shall be
considered renewed for another period of one hundred twenty (120) days, provided petitioners
pay the amount of P16,000.00 as advance payment for the first sixty (60) days and another
P16,000.00 after the expiration of the first sixty (60) days. However, despite the expiration of
the original 60-day period petitioners failed to return the fishing vessel and instead continued
using the vessel without paying rentals in spite of repeated demands.
Hence, respondents filed a complaint against petitioners for recovery of a sum of money, return
of the fishing vessel and damages before the Regional Trial Court of Negros Oriental,
Dumaguete City, Branch 40. After trial on the merits, a judgment, dated November 29, 1989,
was rendered against petitioners ordering them to:
1. Return the fishing vessel which they leased from respondents, together with its accessories
or to pay its value of P350,000.00 if delivery cannot be made;
2. To pay respondents the following sums:
15
PROVISIONAL REMEDIES - PRELIMINARY ATTACHMENT CASES
a) P32,000.00 for unpaid rentals plus legal rate of interest from the filing of the civil case until
paid;
b) P400/day representing the daily income of the fishing vessel or its value paid;
c) P3,000.00 as expenses for litigation;
d) P5,000.00 as moral damages;
and 20% of all the aforementioned amount as attorneys fees and to pay cost.
The judgment was predicated on the following findings of the trial court, to wit:
"Defendants however, failed to deliver to plaintiffs at Basay, Negros Oriental, the fishing vessel
and its accessories in question up to the present nor pay the rentals thereof, in violation of the
contract of lease . . . which is the law between plaintiffs and defendants. Obligations arising
from contracts had (sic) the force of law between the contracting parties and should be complied
with in good faith (Art. 1159, New Civil Code). Those who in the performance of their obligations
are guilty of fraud, negligence, or delay and those who in any manner contravene the tenor
thereof, are liable for damages (Art. 1170, New Civil Code). Defendants (sic) allegation that on
December 21, 1985, plaintiffs went to their house and informed them that they (plaintiffs) were
terminating the lease of the fishing vessel in question and had already informed Edson Celle
the boat engineer to bring the fishing vessel in question from Zamboanga to Basay do not
absolve defendants from complying with their obligations mandated in the contract of lease,
for aside from the fact that those allegations were not supported with clear and convincing
evidence and therefore, lacks the ring of truth, they were denied by plaintiffs. That even
granting that those allegations were true, the same cannot be considered delivery of the fishing
vessel . . . as contemplated in . . . the lease contract . . .
x x x
"Defendants cannot also claimed (sic) exemption from any liability regarding the non-delivery
of the fishing boat . . . on the ground that the same got lost due to fortuitous event because in
the contract of lease . . . defendants are bound to pay plaintiffs the value of the fishing boat . .
. in the event of total loss or destruction by fortuitous events. When by law or stipulation, the
obligor is liable even for fortuitous events, the loss of the thing does not extinguish the
obligation and he shall be responsible for damages."[1]
On December 15, 1989, petitioners filed a notice of appeal from the aforesaid decision, while
respondents filed an ex-parte motion for writ of attachment dated December 18, 1989, which
was granted, and the same issued on December 19, 1989. Petitioners’ ex-parte motion to
discharge said writ failed. Likewise, their attempt at securing a reversal with the Court of
Appeals was a failure with the dismissal of their petition for certiorari.
Elevating the matter to this Court, petitioners specifically challenge the propriety of the order
of preliminary attachment issued by the trial court, which reads as follows:
"It appearing that the appeal taken by the defendants by filing a Notice of Appeal has not been
perfected on account of the fact that the last day for taking an appeal has not yet expired and
finding the Ex-parte Motion for Writ of Attachment to be meritorious, the same is hereby
granted."[2]
Petitioners contend that the above-quoted Order does not measure up to the rigid standard set
by this Court in the issuance of preliminary attachment orders since it does not contain any
findings of fact or of law. The lower court in denying the motion of the petitioners to discharge
the writ of attachment admitted that “there was no hearing in the granting of the question (sic)
writ for this case was decided by this Court and its factual findings supporting the decision
supports the issuance of the question (sic) writ pursuant to paragraphs (c) and (d) of Sec. 1,
16
PROVISIONAL REMEDIES - PRELIMINARY ATTACHMENT CASES
Rule 57 of the Rules of Court. That to conduct a hearing of said motion will just be a repetition
in the presentation of evidence already on record.”[3]
Petitioners argue that there is nothing in the trial court's decision which would support any
kind of fraud or concealment which could serve as basis for attachment. At any rate, petitioners
do not agree that a writ of attachment may be issued upon a ground established from the
evidence in the main case. Petitioners went further to say that during the entire hearing of the
main case, no petition for attachment was filed by the respondents, and it was only after the
appeal was perfected that an ex-parte motion for attachment was filed.
Attachment is a provisional remedy by which the property of an adverse party is taken into
legal custody as a security for the satisfaction of any judgment that may be recovered by the
plaintiff or any proper party.[4] It is an auxiliary remedy the granting of which lies within the
sound discretion of the judge taking cognizance of the principal case upon whose existence it
depends. Its purpose is to secure a contingent lien on defendant's property until plaintiff can
obtain a judgment and have such property applied to its satisfaction or to make provision for
unsecured debts in cases where the means of satisfaction thereof are liable to be removed
beyond the jurisdiction or improperly disposed of or concealed or placed beyond the reach of
creditors.[5]
We find nothing in the Rules of Court which makes notice and hearing indispensable and
mandatory for the issuance of a writ of attachment. It is simply the duty of the court to ensure
that the writ is issued on concrete and specific grounds and not on general averments. Such
being the rule, there is no reason why the evidence in the main case cannot be used as basis
for issuance of a writ of attachment, more so if it was proved that the defendants unjustly
detained, improperly disposed of or concealed or placed the personal property beyond the reach
of their creditors.
In the case before Us the writ of attachment sought for was granted only after trial on the merits
and a finding on petitioners’ liability for the return of the boat leased or its value in case delivery
cannot be effected. Nevertheless, We agree with the petitioners that We find nothing in the
judgment that would justify the issuance of a writ of attachment.
The statement in respondents’ motion for a writ of attachment that they are incorporating "by
way of reference the allegations of plaintiffs’ complaint and all the evidence already adduced in
this case insofar as they are applicable;"[6] and in which complaint, respondents alleged that
petitioners refused and/or denied them information as to the whereabouts of their fishing
vessel,[7] are not grounds justifying the issuance of a writ of attachment. Moreover, such
allegation was not proved in the main case. Petitioners’ liability, if any, is predicated on their
non-fulfillment of their obligation under the lease contract.
Be that as it may, petitioners’ impression that the trial court loses jurisdiction to issue a writ
of attachment upon perfection of the appeal is misplaced. The rules specifically state that a
motion for a writ of attachment may be filed at the commencement of an action or at anytime
17
PROVISIONAL REMEDIES - PRELIMINARY ATTACHMENT CASES
thereafter.[8] The trial court may even issue orders for the protection and preservation of the
rights of the parties which do not involve any matter litigated by the appeal.[9]
In the case of Galang v. Endencia[10] this Court upheld the issuance of a writ of attachment
even though appeal had been perfected. Relying on Sec. 9, Rule 41 of the then Rules of Court,
the Court said that "[t]he levy in attachment of the properties of the defendant upon the
allegation that he is about to dispose of the same to defraud his creditors is one which is
intended for the protection and preservation of the rights of the plaintiff and which in no way
involves any matter litigated by defendant's appeal."
In the same case, the Court said that errors committed by the trial in the appreciation of the
probative value of the facts stated in the petition for the writ do not affect its jurisdiction, but
merely the exercise of such jurisdiction. In such cases, appeal together with the main case, not
certiorari, is the proper remedy.
PREMISES CONSIDERED, the Petition for Review is hereby GRANTED, the decision of the
Court of Appeals dated April 24, 1990 is hereby REVERSED and the trial court's order of
preliminary attachment against the properties of the petitioners is hereby LIFTED and
CANCELLED. It is further ordered that properties attached be restituted to the petitioners or if
this is not possible, to allow petitioners to claim on the bond.
SO ORDERED.
SPS. OSCAR T. OLIB AND ROBERTA R. OLIB, PETITIONERS, VS. HON. EDELWINA C.
PASTORAL, JUDGE OF THE REGIONAL TRIAL COURT OF AGUSAN DEL NORTE AND
BUTUAN CITY, BRANCH III AND CORAZON M. NAVIA, RESPONDENTS.
CRUZ, J.:
This case could have been remanded to the Court of Appeals, which has concurrent jurisdiction
with this Court in petitions for certiorari against the regional trial courts under Rule 65 of the
Rules of Court. We have decided to retain and rule on it directly, however, so we can emphasize
the important doctrines we shall here affirm.
On November 13, 1981, Corazon M. Navia sued the spouses Oscar and Roberta Olib, petitioners
herein, for dissolution of their partnership and other reliefs, with a prayer for the issuance of
a writ of a preliminary attachment.[1] The writ was granted on November 10, 1983, resulting in
the attachment of six parcels of land belonging to the petitioners, along with stocks of
merchandise in their bodega.[2] The writ was amended on December 14, 1983, to release the
merchandise. Two years later, on May 16, 1985, the petitioners filed a motion to discharge the
preliminary attachment on the ground that the attachment bond executed for one year from
November 1983 had already lapsed.[3] This was accompanied by a certification from the bonding
18
PROVISIONAL REMEDIES - PRELIMINARY ATTACHMENT CASES
company that the bond had not been renewed and the corresponding payment for extension
had not been made.[4]
On February 25, 1986, Judge Miguel S. Rallos of the Regional Trial Court of Agusan del Norte
and Butuan City rendered judgment for the petitioners and sentenced the private respondent
to pay them actual, moral and exemplary damages, plus attorney’s fees and litigation
expenses.[5] On April 16, 1986, Navia perfected her appeal from the challenged judgment, and
the records of the case were elevated to the Court of Appeals on January 25, 1988.[6]
Although the trial court found in the text of the decision that the private respondent was not
entitled to the issuance of the writ of preliminary attachment, no mention was made of the said
writ in the dispositive portion. As a result, the annotation of the preliminary attachment on the
certificates/titles of the attached lands was maintained and could not be canceled.
On July 20, 1987, the petitioners moved for the discharge of the writ of preliminary attachment
by the respondent court on the basis of the judgment in their favor. Navia filed an opposition,
contending that as she had perfected her appeal to the Court of Appeals, the trial court no
longer had any jurisidiction over the case. The private respondent cited Rule 41, Section 9, of
the Rules of Court, reading as follows:
When appeal deemed perfected; effect thereof. - If the notice of appeal, the appeal bond and the
record on appeal have been filed in due time, the appeal is deemed perfected upon the approval
of the record on appeal and of the appeal bond other than a cash bond, and thereafter the trial
court loses its jurisdiction over the case, except to issue orders for the protection and
preservation of the rights of the parties which do not involve any matter litigated by the appeal,
to approve compromises offered by the parties prior to the transmittal of the record on appeal
to the appellate court, and to permit the prosecution of pauper”s appeals.
On August 24, 1987, Judge Edelwina C. Pastoral, who had succeeded Judge Rallos, denied the
motion on the ground invoked in the opposition and declared:
Settled is the rule that the trial court loses its jurisdiction over the record and over the subject
of the case once an appeal in the case has been perfected. The exception to this rule refers to
the orders of the Court to protect and preserve the rights of the parties which do not involve
any matter litigated by appeal (Section 9, Rule 41 of the Rules of Court). The writ of preliminary
attachment was earlier granted as a security for the satisfaction of the judgment, the latter
being now the subject of the appeal. To grant defendant’s motion at this juncture is to disturb
and not to preserve the rights of the parties. It is the stand of this Court that the status quo of
the parties shall be maintained for it cannot predetermine the posture which the appellate
court will adopt, either to affirm, modify or reverse the questioned decision of this Court.
The petitioners moved for reconsideration, invoking the case of Galang v. Endencia, [7] where
this Court held:
The levy in attachment of the properties of the defendant upon the allegation that he is about
to dispose of the same to defraud his creditors is one which is intended for the protection and
preservation of the rights of the plaintiff and which in no way involves any matter litigated by
the defendant’s appeal. And as the respondent court had jurisdiction to issue the writ of
attachment, its errors, if any, committed in the appreciation of the probative value of the facts
stated in the petition for the writ do not affect its jurisdiction but merely the exercise of such
19
PROVISIONAL REMEDIES - PRELIMINARY ATTACHMENT CASES
jurisdiction. We need not belabor here the rule that what makes up jurisdiction is the authority
to act in a particular case and not the correctness of the action taken thereon. Without such
authority, as determined by law, the court cannot act, or if it does, its actuations are null and
void; but where the authority exists, all orders and decisions of the court rendered in the
exercise thereof and within its limits are valid even if they were erroneous.
They argued that if the court a quo could issue a writ of attachment after the appeal had been
perfected, then it could a fortiori discharge such a writ, especially where, as in the case at bar,
the movants were the prevailing parties.
Later, somewhat inconsistently, the petitioners also contended that there was really no more
need for an order discharging the attachment as this followed by operation of Rule 57, Section
19, of the Rules of Court. Such discharge was the immediate and automatic effect of any
judgment in favor of the party whose property had been attached, thus:
SEC. 19. Disposition of attached property where judgment is for party against whom
attachment is issued. - If judgment be rendered against the attaching creditor, all the proceeds
of sales and money collected or received by the sheriff, clerk, or other proper officer under the
order of attachment, and all property attached remaining in any such officer”s hands, shall be
delivered to the party against whom attachment was issued, and the order of attachment
discharged.
The motion having been denied, the petitioners sought reconsideration a second time, insisting
that (a) the attachment had been automatically discharged under Rule 57, Section 19; and (b)
the attachment bond had already lapsed for non-payment of the premiums. They were rebuffed
again. They then came before this Court, contending that the respondent court committed
grave abuse of discretion in denying their motion.
We hold that it did not.
Attachment is defined as a provisional remedy by which the property of an adverse party is
taken into legal custody, either at the commencement of an action or at any time thereafter, as
a security for the satisfaction of any judgment that may be recovered by the plaintiff or any
proper party.[8]
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.[9] 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
case independent of the principal action because the attachment was only an incident of such
action.
We held in Olsen v. Olsen:[10]
The preliminary attachment is an auxiliary remedy the granting of which lies within the sound
discretion of the judge taking cognizance of the principal case upon whose existence it depends.
The order of the judge denying a motion for the annulment of a writ of preliminary attachment,
being of an incidental or interlocutory and auxiliary character, cannot be the subject of an
20
PROVISIONAL REMEDIES - PRELIMINARY ATTACHMENT CASES
appeal independently from the principal case, because our procedural law now in force
authorizes an appeal only from a final judgment which gives an end to the litigation. (Section
143, Act 190; 3 C.J., 549, par. 389.)
x x x
While it is true that an order denying a motion for the annulment of a preliminary attachment
is not subject to review through an appeal independently from the principal case, it is not
constituting a final order, yet when the writ of preliminary attachment becomes final by virtue
of a final judgment rendered in the principal case, said writ is subject to review jointly with the
judgment rendered in the principal case through an ordinary appeal.
It is also worth noting, as an appropriate observation on the impropriety of the remedy
employed by the petitioners in this case, that, in Jopillo v. Court of Appeals, [11] this Court
observed:
x x x even assuming that the trial court committed an error in denying the motion to discharge
the writ of attachment the error (if it is an error at all) is an error in judgment which cannot be
corrected through the extraordinary remedy of certiorari but by an ordinary appeal at the proper
time.
Coming now to the argument that the attachment was automatically lifted because of the non-
payment of the premium on the attachment bond, the Court feels it is time again to correct a
common misimpression. The rule is that the bond is not deemed extinguished by reason alone
of such non-payment. The Court made this clear in Luzon Surety Co. v. Quebrar, [12] where it
declared:
To allow the defendants-appellants to evade their liability under the Indemnity Agreements by
non-payment of the premiums would ultimately lead to giving the administrator the power to
diminish or reduce and altogether nullify his liability under the Administrator’s Bonds. As
already stated, this is contrary to the intent and purpose of the law in providing for the
administrator’s bonds for the protection of the creditors, heirs, legatees, and the estate.
x x x
Lastly, in Manila Surety and Fidelity Co., Inc. v. Villarama (107 Phil. 891), it was held that "the
one-year period mentioned therein refers not to the duration or lifetime of the bond, but merely
to the payment of premiums, and, consequently, does not affect at all the effectivity or efficacy
of such bond. But such non-payment alone of the premiums for the succeeding years x x x
does not necessarily extinguish or terminate the effectivity of the counter-bond in the absence
of an express stipulation in the contract making such non-payment of premiums a cause for
the extinguishments or termination of the undertaking.
These principles are applicable to other kinds of bonds, including the attachment bond in the
case at bar. On this bond, the respondent court correctly observed:
x x x a cursory examination of the bond for levy on attachment executed between herein plaintiff
Corazon M. Navia and the branch manager of the First Continental Assurance Co., Inc. (Rollo,
pp. 347-348) discloses no stipulation that the surety company will terminate the bond for non-
payment of the premium. This minor matter on non-payment of premiums of the bond pertains
to the contracting parties to resolve.[13]
Finally, on the correct interpretation of Rule 57, Section 19, of the Rules of Court, we hold that
the order of attachment is considered discharged only where the judgment has already become
21
PROVISIONAL REMEDIES - PRELIMINARY ATTACHMENT CASES
final and executory and not when it is still on appeal. The obvious reason is that, except in a
few specified cases, execution pending appeal is not allowed.[14]
WHEREFORE, the petition is DISMISSED, with costs against the petitioners. The petitioners
may, if they see fit, move for the lifting of the writ of preliminary attachment in the Court of
Appeals, to which that ancillary remedy is deemed elevated along with the principal action.
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.
NARVASA, J.:
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. No. 19513-89). The complaint contained an
ex parte appplication 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.
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PROVISIONAL REMEDIES - PRELIMINARY ATTACHMENT CASES
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 in 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 proceeding 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 "that critical time is the
time 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 acquisition
of jurisdiction over the person of the defendant (either by service of summons or his voluntary
submission to the court's authority), nothing can be validly done by the plaintiff or the court. It
is wrong to assume that the validity of acts done during this period should be dependent on,
or held in suspension until, the actual obtention of jurisdiction over the defendant's person.
The obtention by the court of jurisdiction over the person of the defendant is one thing; quite
another is the acquisition of jurisdiction over the person of the plaintiff or over the subject-
matter or nature of the action, or the res or object thereof.
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
23
PROVISIONAL REMEDIES - PRELIMINARY ATTACHMENT CASES
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 on the
defendant. During this period, different acts may be done by the plaintiff or by the Court which
are of 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 proper party may, at the commencement of the
action or at any time thereafter, have the property of the adverse party taken into the custody
of the court as security for the satisfaction of any judgment that may be recovered.[15] It is a
remedy which is purely statutory in respect of which the law requires a strict construction of
24
PROVISIONAL REMEDIES - PRELIMINARY ATTACHMENT CASES
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 phrase, "at the commencement of the action," obviously refers to the
date of the filing of the complaint -- which, as above pointed out, is the date that marks "the
commencement of the action;"[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 (counterclaim, cross-claim, third-party claim) and for the Trial Court to issue the writ
ex parte at the commencement of the action if it finds the application otherwise sufficient in
form and substance.
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
plaintiff's claim, conditioned that the latter will pay all the costs which may be adjudged to the
adverse party and all damages which he may sustain by reason of the attachment, if the court
shall finally adjudge that the applicant was not entitled thereto."[24]
25
PROVISIONAL REMEDIES - PRELIMINARY ATTACHMENT CASES
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. C.A., 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,
26
PROVISIONAL REMEDIES - PRELIMINARY ATTACHMENT CASES
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,
instread 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 in 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 attrachment 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 plaintiff's 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 withdrawn."
27
PROVISIONAL REMEDIES - PRELIMINARY ATTACHMENT CASES
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 the defendant, as above indicated -- issuance of summons, order
of attachment and writ of attachment (and/or appointment of guardian ad litem, or grant of
authority to the plaintiff to prosecute the suit as a pauper litigant, or amendment of the
complaint by the plaintiff as it 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 explicitly required by Section
5 of Rule 57, but also the summons addressed to said defendant as well as a copy of the
complaint and order for appointment of guardian ad litem, if any, as also explicitly directed by
Section 3, Rule 14 of the Rules of Court. Service of all such documents is indispensable not
only for the acquisition of jurisdiction over the person of the defendant, but also upon
considerations of fairness, to apprise the defendant of the complaint against him, of the
issuance of a writ of preliminary attachment and the grounds therefor and thus accord him
the opportunity to prevent attachment of his property by the posting of a counterbond in an
amount equal to the plaintiffs claim in the complaint pursuant to Section 5 (or Section 12),
Rule 57, or dissolving it by causing dismissal of the complaint itself on any of the grounds set
forth in Rule 16, or demonstrating the insufficiency of the applicant's affidavit or bond in
accordance with Section 13, Rule 57.
It was on account of the failure to comply with this fundamental requirement of service of
summons and the other documents above indicated that writs of attachment issued by the
Trial Court ex parte were struck down by this Court's Third Division in two (2) cases, namely:
Sievert v. Court of Appeals,[31] and BAC Manufacturing and Sales Corporation v. Court of Appeals,
et al.,[32] In contrast to the case at bar -- where the summons and a copy of the complaint, as
well as the order and writ of attachment and the attachment bond were served on the defendant
-- in Sievert, levy on attachment was attempted notwithstanding that only the petition for
issuance of the writ of preliminary attachment was served on the defendant, without any prior
or accompanying summons and copy of the complaint; and in BAC Manufacturing and Sales
Corporation, neither the summons nor the order granting the preliminary attachment or the
writ of attachment itself was served on the defendant "before or at the time the levy was made."
For the guidance of all concerned, the Court reiterates and reaffirms the proposition that writs
of attachment may properly issue ex parte provided that the Court is satisfied that the relevant
requisites therefor have been fulfilled by the applicant, although it may, in its discretion,
require prior hearing on the application with notice to the defendant; but that levy on property
pursuant to the writ thus issued may not be validly effected unless preceded, or
contemporaneously accompanied, by service on the defendant of summons, a copy of the
complaint (and of the appointment of guardian ad litem, if any), the application for
attachment (if not incorporated in but submitted separately from the complaint), the order of
attachment, and the plaintiffs attachment bond.
28
PROVISIONAL REMEDIES - PRELIMINARY ATTACHMENT CASES
WHEREFORE, the petition is GRANTED; the challenged decision of the Court of Appeals is
hereby REVERSED, and the order and writ of attachment issued by Hon. Milagros C. Nartatez,
Presiding Judge of Branch 8, Regional Trial court of Davao City in Civil Case No. 19513-89
against Queensland Hotel or Motel or Queensland Tourist Inn and Teodorico Adarna are hereby
REINSTATED. Costs against private respondents.
SO ORDERED.
EMMANUEL C. OÑATE AND ECON HOLDINGS CORPORATION, PETITIONERS, VS. HON.
ZEUS C. ABROGAR, AS PRESIDING JUDGE OF BRANCH 150 OF THE REGIONAL TRIAL
COURT OF MAKATI, AND SUN LIFE ASSURANCE COMPANY OF CANADA,
RESPONDENTS.
BRUNNER DEVELOPMENT CORPORATION, PETITIONER, VS. HON. ZEUS C. ABROGAR,
AS PRESIDING JUDGE OF BRANCH 150 OF THE REGIONAL TRIAL COURT OF MAKATI,
AND SUN LIFE ASSURANCE COMPANY OF CANADA, RESPONDENTS.
MENDOZA, J.:
These are motions separately filed by petitioners, seeking reconsideration of the decision of the
Second Division holding that although the levy on attachment of petitioners' properties had
been made before the trial court acquired jurisdiction over them, the subsequent service of
summons on them cured the invalidity of the attachment.
The motions were referred to the Court en banc in view of the fact that in another decision
rendered by the Third Division on the same question, it was held that the subsequent
acquisition of jurisdiction over the person of a defendant does not render valid the previous
attachment of his property. [1] The Court en banc accepted the referral and now issues this
resolution.
Petitioners maintain that, in accordance with prior decisions of this Court, the attachment of
their properties was void because the trial court had not at that time acquired jurisdiction over
them and that the subsequent service of summons on them did not cure the invalidity of the
levy. They further contend that the examination of the books and ledgers of the Bank of the
Philippine Islands (BPI), the Philippine National Bank (PNB) and the Urban Bank was a "fishing
expedition" which the trial court should not have authorized because petitioner Emmanuel C.
Oñate, whose accounts were examined, was not a signatory to any of the documents evidencing
the transaction between Sun Life Assurance of Canada (Sun Life) and Brunner Development
Corporation (Brunner).
On the other hand private respondent Sun Life stresses the fact that the trial court eventually
acquired jurisdiction over petitioners and contends that this cured the invalidity of the
attachment of petitioners' properties. With respect to the second contention of petitioners,
private respondent argues that the examination of petitioner Oñate's bank account was
justified because it was he who signed checks transferring huge amounts from Brunner's
account in the Urban Bank to the PNB and the BPI.
I.
At the outset, it should be stated that the Court does not in the least doubt the validity of the
writ of attachment issued in these cases. The fact that a criminal complaint for estafa which
Sun Life had filed against petitioner Oñate and Noel L. Diño, president of Brunner, was
dismissed by the Office of the Provincial Prosecutor is immaterial to the resolution of the
motions for reconsideration. In the first place, the dismissal, although later affirmed by the
Department of Justice, is pending reconsideration. In the second place, since the issue in the
case below is precisely whether petitioners were guilty of fraud in contracting their obligation,
resolution of the question must await the trial of the main case.
However, we find petitioners' contention respecting the validity of the attachment of their
properties to be well taken. We hold that the attachment of petitioners' properties prior to the
acquisition of jurisdiction by the respondent court is void and that the subsequent service of
summons on petitioners did not cure the invalidity of such attachment. The records show that
before the summons and the complaint were served on petitioners Oñate and Econ Holdings
29
PROVISIONAL REMEDIES - PRELIMINARY ATTACHMENT CASES

Corporation (Econ) on January 9, 1992, Deputy Sheriff Arturo C. Flores had already served on
January 3, 1992 notices of garnishment on the PNB Head Office [2] and on all its Metro Manila It goes without saying that whatever be the acts done by the Court prior to the acquisition of
branches and on A.B. Capital. [3] In addition he made other levies before the service of summons jurisdiction over the person of the defendant, as above indicated — issuance of summons, order
on petitioners, to wit: of attachment and writ of attachment (and/or appointment of guardian ad litem, or grant of
authority to the plaintiff to prosecute the suit as a pauper litigant, or amendment of the
— On January 6, 1992, he served notices of garnishment on the Urban Bank Head Office and complaint by the plaintiff as a matter of right without leave of court — and however valid and
all its Metro Manila branches, [4] and on the BPI. [5] 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
— On the same day, he levied on attachment Oñate's condominium unit at the Amorsolo him of summons or other coercive process or his voluntary submission to the court's authority.
Apartments Condominium Project, covered by Condominium Certificate of Title No. S-1758. [6] 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
— On January 7, 1992, he served notice of garnishment on the Union Bank of the Philippines. affidavit and attachment bond, and of the order of attachment, as explicitly required by Section
[7] 5 of Rule 57, but also the summons addressed to said defendant as well as a copy of the
complaint and order for appointment of guardian ad litem, if any, as also explicitly directed by
— On January 8, 1992, he attached Oñate’s lot, consisting of 1,256 square meters, at the Section 3, Rule 14 of the Rules of Court. [10]

Ayala-Alabang Subdivision, Alabang, Muntinlupa, covered by TCT No. 112673. [8]

It is clear from the above excerpt, however, that while the petition for a writ of preliminary
First. The Deputy Sheriff claims that he had tried to serve the summons with a copy of the attachment may be granted and the writ itself issued before the defendant is summoned, the
complaint on petitioners on January 3, 1992 but that there was no one in the offices of writ of attachment cannot be implemented until jurisdiction over the person of the defendant
petitioners on whom he could make a service. This is denied by petitioners who claim that their is obtained. As this Court explained, "levy on property pursuant to the writ thus issued may
office was always open and that Adeliza M. Jaranilla, Econ's Chief Accountant who eventually not be validly effected unless preceded, or contemporaneously accompanied, by service on the
received summons on behalf of Oñate and Econ, was present that day. Whatever the truth is, defendant of summons, a copy of the complaint (and of the appointment of guardian ad litem,
the fact is that no other attempt was made by the sheriff to serve the summons except on if any), the application for attachment (if not incorporated in but submitted separately from the
January 9, 1992, in the case of Oñate and Econ, and on January 16, 1992, in the case of Diño. complaint), the order of attachment, and the plaintiff's attachment bond." [11]

Meantime, he made several levies, which indicates a predisposition to serve the writ of
attachment in anticipation of the eventual acquisition by the court of jurisdiction over Further clarification on this point was made in Cuartero v. Court of Appeals, [12] in which it was
petitioners. held:

Second. Private respondent invokes the ruling in Davao Light & Power Co. v. Court of Appeals It must be emphasized that the grant of the provisional remedy of attachment practically
[9] in support of its contention that the subsequent acquisition of jurisdiction by the court cured involves three stages; first, the court issues the order granting the application; second, the writ
the defect in the proceedings for attachment. It cites the following portion of the decision in of attachment issues pursuant to the order granting the writ; and third, the writ is
Davao Light and Power, written by Justice, now Chief Justice, Narvasa: implemented. For the initial two stages, it is not necessary that jurisdiction over the person of

30
PROVISIONAL REMEDIES - PRELIMINARY ATTACHMENT CASES

the defendant should first be obtained. However, once the implementation commences, it is on attachment. To the contrary, Rule 57, § 13 allows the defendant to move to discharge the
required that the court must have acquired jurisdiction over the defendant for without such attachment even before any attachment is actually levied upon, thus negating any inference
jurisdiction, the court has no power and authority to act in any manner against the defendant. that before its enforcement, the issuance of the writ must be kept secret. Rule 57, § 13 provides:
Any order issuing from the Court will not bind the defendant.
SEC. 13. Discharge of attachment for improper or irregular issuance. — The party whose property
Private respondent argues that the case of Cuartero itself provides for an exception as shown has been attached may also, at any time either before or after the release of the attached
in the statement that "the court [in issuing the writ of preliminary attachment] cannot bind property, or before any attachment shall have been actually levied, upon reasonable notice to
and affect the defendant until jurisdiction is eventually obtained" and that since petitioners the attaching creditor, apply to the judge who granted the order, or to the judge of the court in
were subsequently served with summons, no question can be raised against the validity of the which the action is pending, for an order to discharge the attachment on the ground that the
attachment of petitioners' properties before such service. same was improperly or irregularly issued. . . . (Emphasis added).

The statement in question has been taken out of context. The full statement reads: As this Court pointed out in Davao Light and Power, [15] the lifting of an attachment "may be
resorted to even before any property has been levied on."
It is clear from our pronouncements that a writ of preliminary attachment may issue even
before summons is served upon the defendant. However, we have likewise ruled that the writ It is indeed true that proceedings for the issuance of a writ of attachment are generally ex parte.
cannot bind and affect the defendant until jurisdiction over his person is eventually obtained. In Mindanao Savings and Loans Ass'n v. Court of Appeals [16] it was held that no hearing is
Therefore, it is required that when the proper officer commences implementation of the writ of required for the issuance of a writ of attachment because this "would defeat the objective of the
attachment, service of summons should be simultaneously made. [13] remedy [because] the time which such hearing would take could be enough to enable the
defendant to abscond or dispose of his property before a writ of attachment issues." It is not,
Indeed, as this Court through its First Division has ruled on facts similar to those in these however, notice to defendant that is sought to be avoided but the "time which such hearing
cases, the attachment of properties before the service of summons on the defendant is invalid, would take" because of the possibility that defendant may delay the hearing to be able to
even though the court later acquires jurisdiction over the defendant. [14] At the very least, then, dispose of his properties. On the contrary there may in fact be a need for a hearing before the
the writ of attachment must be served simultaneously with the service of summons before the writ is issued as where the issue of fraudulent disposal of property is raised. [17] It is not true
writ may be enforced. As the properties of the petitioners were attached by the sheriff before he that there should be no hearing lest a defendant learns of the application for attachment and
had served the summons on them, the levies made must be considered void. he removes his properties before the writ can be enforced.

Third. Nor can the attachment of petitioners' properties before the service of summons on them
was made be justified on the ground that unless the writ was then enforced, petitioners would
be alerted and might dispose of their properties before summons could be served on them.
The Rules of Court do not require that issuance of the writ be kept a secret until it can be
enforced. Otherwise in no case may the service of summons on the defendant precede the levy
On the other hand, to authorize the attachment of property even before jurisdiction over the
person of the defendant is acquired through the service of summons or his voluntary
appearance could lead to abuse. It is entirely possible that the defendant may not know of the
filing of a case against him and consequently may not be able to take steps to protect his
interests.

31
PROVISIONAL REMEDIES - PRELIMINARY ATTACHMENT CASES

Nor may sheriff's failure to abide by the law be excused on the pretext that after all the court Thus the issue is whether the money paid to Brunner was the consideration for the sale of
later acquired jurisdiction over petitioners. More important than the need for insuring success treasury bills, as Sun Life claims, or whether it was money intended for placement, as
in the enforcement of the writ is the need for affirming a principle by insisting on that "most petitioners allege. Petitioners do not deny receipt of P39,526,500.82 from Sun Life. Hence,
fundamental of all requisites — the jurisdiction of the court issuing attachment over the person whether the transaction is considered a sale or money placement does not make the money the
of the defendant." [18] It may be that the same result would follow from requiring that a new "subject matter of litigation" within the meaning of § 2 of Republic Act No. 1405 which prohibits
writ be served all over again. The symbolic significance of such an act, however, is that it would the disclosure or inquiry into bank deposits except "in cases where the money deposited or
affirm our commitment to the rule of law. [19] invested is the subject matter of litigation." Nor will it matter whether the money was "swindled"
as Sun Life contends.
II.
Second. The examination of bank books and records cannot be justified under Rule 57, § 10.
This provision states:
We likewise find petitioners' second contention to be meritorious. The records show that, on
January 21, 1992, respondent judge ordered the examination of the books of accounts and SEC. 10. - Examination of party whose property is attached and persons indebted to him or
ledgers of Brunner at the Urban Bank, Legaspi Village branch, and on January 30, 1992 the controlling his property; delivery of property to officer. — Any person owing debts to the party
records of account of petitioner Oñate at the BPI, even as he ordered the PNB to produce the whose property is attached or having in his possession or under his control any credit or other
records regarding certain checks deposited in it. personal property belonging to such party, may be required to attend before the court in which
the action is pending, or before a commissioner appointed by the court, and be examined on
First. Sun Life defends these court orders on the ground that the money paid by it to Brunner oath respecting the same. The party whose property is attached may also be required to attend
was subsequently withdrawn from the Urban Bank after it had been deposited by Brunner and for the purpose of giving information respecting his property, and may be examined on oath.
then transferred to petitioner Oñate's account in the BPI and to the unnamed account in the The court may, after such examination, order personal property capable of manual delivery
PNB. belonging to him, in the possession of the person so required to attend before the court, to be
delivered to the clerk of the court, sheriff, or other proper officer on such terms as may be just,
The issue before the trial court, however, concerns the nature of the transaction between having reference to any lien thereon or claims against the same, to await the judgment in the
petitioner Brunner and Sun Life. In its complaint, Sun Life alleges that Oñate, in his personal action.
capacity and as president of Econ, offered to sell to Sun Life P46,990,000.00 worth of treasury
bills owned by Econ and Brunner at the discounted price of P39,526,500.82; that on November Since, as already stated, the attachment of petitioners' properties was invalid, the examination
27, 1991, Sun Life paid the price by means of a check payable to Brunner; that Brunner, ordered in connection with such attachment must likewise be considered invalid. Under Rule
through its president Noel L. Diño, issued to it a receipt with undertaking to deliver the treasury 57, § 10, as quoted above, such examination is only proper where the property of the person
bills to Sun Life; and that on December 4, 1991, Brunner and Diño delivered instead a examined has been validly attached.
promissory note, dated November 27, 1991, in which it was made to appear that the transaction
was a money placement instead of sale of treasury bills. WHEREFORE, the decision dated February 21, 1994 is RECONSIDERED and SET ASIDE and
another one is rendered GRANTING the petitions for certiorari and SETTING ASIDE the orders

32
PROVISIONAL REMEDIES - PRELIMINARY ATTACHMENT CASES

dated February 26, 1992 and September 9, 1992, insofar as they authorize the attachment of In the afternoon of 1 June 1976, a Cimarron PUJ owned and registered in the name of Nelia
Enriquez, and driven by Gosme Casas, was travelling from Cebu City to Danao City. While
petitioners’ properties and the examination of bank books and records pertaining to their passing through Liloan, Cebu, the Cimarron PUJ collided with a private jeep owned by the late
accounts, and ORDERING respondent Judge Zeus C. Abrogar — Calixto Palmes (husband of private respondent Primitiva Palmes) who was then driving the
private jeep. The impact of the collision was such that the private jeep was flung away to a
distance of about thirty (30) feet and then fell on its right side pinning down Calixto Palmes.
(1) forthwith to issue an alias writ of attachment upon the same bond furnished by respondent He died as a result of cardio-respiratory arrest due to a crushed chest.[4] The accident also
Sun Life Assurance Company of Canada; caused physical injuries on the part of Adeudatus Borbon who was then only two (2) years old.
On 25 June 1976, private respondents Primitiva Palmes (widow of Calixto Palmes) and
Honorato Borbon, Sr. (father of minor Adeudatus Borbon) filed a complaint[5] against Cosme
(2) direct the sheriff to lift the levy under the original writ of attachment and simultaneously
Casas and Nelia Enriquez (assisted by her husband Leonardo Enriquez) before the then Court
levy on the same properties pursuant to the alias writ so issued; and of First Instance of Cebu, Branch 3, claiming actual, moral, nominal and exemplary damages
as a result of the accident.
The claim of private respondent Honorato Borbon, Sr., being distinct and separate from that of
(3) take such steps as may be necessary to insure that there will be no intervening period
co-plaintiff Primitiva Palmes, and the amount thereof falling properly within the jurisdiction of
between the lifting of the original attachment and the subsequent levy under the alias writ. the inferior court, respondent Judge Jose R. Ramolete ordered the Borbon claim excluded from
the complaint, without prejudice to its being filed with the proper inferior court.
Petitioners may file the necessary counterbond to prevent subsequent levy or to dissolve the
On 4 April 1977, the Court of First Instance rendered a Decision[6] in favor of private
attachment after such levy. respondent Primitiva Palmes, ordering common carrier Nelia Enriquez to pay her P10,000.00
as moral damages, P12,000.00 as compensatory damages for the death of Calixto Palmes,
P3,000.00 as exemplary damages, P5,000.00 as actual damages, and P1,000.00 as attorney's
SO ORDERED.
fees.

The judgment of the trial court, became final and executory and a writ of execution was
thereafter issued. The writ of execution was, however, returned unsatisfied. Consequently, the
judgment debtor Nelia Enriquez was summoned before the trial court for examination on 23
July 1979. She declared under oath that the Cimarron PUJ registered in her name was covered
by a third-party liability insurance policy issued by petitioner Perla.
PERLA COMPANIA DE SEGUROS, INC., PETITIONER, VS. HON. JOSE R. RAMOLETE,
Thus, on 31 July 1979, private respondent Palmes filed a motion for garnishment[7] praying
PRIMITIVA Y. PALMES. HONORATO BORBON. SR., OFFICE OF THE PROVINCIAL
that an order of garnishment be issued against the insurance policy issued by petitioner in
SHERIFF, PROVINCE OF CEBU, RESPONDENTS.
favor of the judgment debtor. On 6 August 1979, respondent Judge issued an Order[8]
directing the Provincial Sheriff or his deputy to garnish the third-party liability insurance
policy.
FELICIANO, J.:
Petitioner then appeared before the trial court and moved for reconsideration of the 6 August
The present Petition for Certiorari seeks to annul: (a) the Order dated 6 August 1979[1]which
1979 Order and for quashal of the writ of garnishment[9], alleging- that the writ was void on
ordered the Provincial Sheriff to garnish the third-party liability insurance policy issued by
the ground that it (Perla) was not a party to the case and that jurisdiction over its person had
petitioner Perla Compania de, Seguros, Inc. ("Perla") in favor of Nelia Enriquez, judgment debtor
never been acquired by the trial court by service of summons or by any other process. The trial
in Civil Case No. R-15391; (b) the Order dated 24 October 1979 which denied the motion for
court denied petitioner's motion[10]. An Order for issuance of an alias writ of garnishment was
reconsideration of the 6 August 1979[2] Order; and (c) the Order dated 8 April 1980[3] which
subsequently issued on 8 April 1980.[11]
ordered the issuance of an alias writ of garnishment against petitioner.
33
PROVISIONAL REMEDIES - PRELIMINARY ATTACHMENT CASES
More than two (2) years later, the present Petition for Certiorari and Prohibition was filed with
this Court on 25 June 1982 alleging grave abuse of discretion on the part of respondent Judge
Ramolete in ordering garnishment of the third-party liability insurance contract issued by
petitioner Perla in favor of the judgment debtor, Nelia Enriquez. The Petition should have been
dismissed forthwith for having been filed way out of time but, for reasons which do not appear
on the record, was nonetheless entertained.
In this Petition, petitioner Perla reiterates its contention that its insurance contract cannot be
subjected to garnishment or execution to satisfy the judgment in Civil Case No. R-15391
because petitioner was not a party to the case and the trial court did not acquire jurisdiction
over petitioner's person. Perla further argues that the writ of garnishment had been issued
solely on the basis of the testimony of the judgment debtor during the examination on 23 July
1979 to the effect that the Cimarron PUJ was covered by a third-party liability insurance issued
by Perla, without granting it the opportunity to set up any defenses which it may have under
the insurance contract; and that the proceedings, taken against petitioner are contrary to the
procedure laid down in Economic Insurance Company, Inc. v. Torres, et al.,[12] which held
that under Rule 39, Section 45, the Court "may only authorize" the judgment creditor to
institute an action against a third person who holds property belonging to the judgment debtor.
We find no grave abuse of discretion or act in excess of or without jurisdiction on the part of
respondent Judge Ramolete in ordering the garnishment of the judgment debtor's third-party
liability insurance.
Garnishment has been defined as a species of attachment for reaching any property or credits
pertaining or payable to a judgment debtor.[13] In legal contemplation, it is a forced novation
by the substitution of creditors:[14] the judgment debtor, who is the original creditor of the
garnishee is, through service of the writ of garnishment, substituted by the judgment creditor
who thereby becomes creditor of the garnishee. Garnishment has also been described as a
warning to a person having in his possession property or credits of the judgment debtor, not to
pay the money or deliver the property to the latter, but rather to appear and answer the
plaintiff's suit.[15]
In order that the trial court, may validly acquire jurisdiction to bind the person of the garnishee,
it is not necessary that summons be served upon him. The garnishee need not be imp leaded
as a party to the case. All that is necessary for the trial court lawfully to bind the person of the
garnishee or any person who has in his possession credits belonging to the judgment debtor is
service upon him of the writ of garnishment.
The Rules of Court themselves do not require that the garnishee be served with summons or
imp leaded in the case in order to make him liable.
Rule 39, Section 15 provides:
"Sec. 15. Execution of money judgments. — The officer must enforce an execution of a money
judgment by levying on all the property, real or personal of every name and nature whatsoever,
and which may be disposed of for value, of the judgment debtor not exempt from execution x x
x.
Real property, stocks, shares, debts, credits, and other personal property, or any interest in
either real or personal property, may be levied on in like manner and with like effect as under
a writ of attachment." (Underscoring supplied).
Rule 57, Section 7(e) in turn reads:
"Sec. 7. Attachment of real and personal property; recording thereof. — Properties shall be
attached by the officer executing the order in the following manner:
(e) Debts and credits, and other personal property not capable of manual delivery, by leaving
with the person owing such debts, or having in his possession or under his control, such credits
or other personal property, or with his agent, a copy of the order, and notice that the debts
owing by him to the party against whom attachment is issued, and the credits and other
personal property in his possession, or under his control, belonging to said party, are attached
in pursuance of such order;
(Underscoring supplied)
Through service of the writ of garnishment, the garnishee becomes a "virtual party" to, or a
"forced intervenor" in, the case and the trial court thereby acquires jurisdiction to bind him to
compliance with all orders and processes of the trial court with a view to the complete
.satisfaction of the judgment of the court. In Bautista v. Barredo,[16] the Court, through Mr.
Justice Bautista Angelo, held:.
"While it is true that defendant Jose M. Barredo was not a party in Civil Case No. 1636 when
it was instituted by appellant against the Philippine Ready Mix Concrete Company, Inc.,
however, jurisdiction was acquired over him by the court and he became a virtual party to the
case when, after final judgment was rendered in said case against the company, the sheriff
served upon him a writ of garnishment in behalf of appellant. Thus, as held by this Court in
the case of Tayabas Land Company vs. Sharruf, 41 Phil. 382, the proceeding by garnishment
is a species of attachment for reaching credits belonging to the judgment debtor and owing to
him from a stranger to the litigation. By means of the citation, the stranger becomes a forced
intervenor; and the court, having acquired jurisdiction over him by means of the citation,
requires him to pay his debt, not to his former creditor, but to the new creditor, who is creditor
in the main litigation." (Underscoring supplied).
34
PROVISIONAL REMEDIES - PRELIMINARY ATTACHMENT CASES

MINDANAO SAVINGS & LOAN ASSOCIATION, INC. (FORMERLY DAVAO SAVINGS & LOAN
In Rizal Commercial Banking Corporation v. De Castro,[17] the Court stressed that the asset
or credit garnished is thereupon subjected to a specific lien: ASSOCIATION) & FRANCISCO VILLAMOR, PETITIONERS, VS. HON. COURT OF
APPEALS, POLY R. MERCADO, & JUAN P. MERCADO, RESPONDENTS.
"The garnishment of property to satisfy a writ of execution operates as an attachment and
fastens upon the property a lien by which the property is brought under the jurisdiction of the
GRIÑO-AQUINO, J.:
court issuing the writ. It is brought into custodia legis, under the sole control of such
court."[18] (Underscoring supplied)
On September 10, 1986, private respondents filed in the Regional Trial Court of Davao City, a
In the present case, there can be no doubt, therefore, that the trial court actually acquired
complaint against defendants D.S. Homes, Inc., and its directors, Laurentino G. Cuevas,
jurisdiction over petitioner Perla when it was served with the writ of garnishment of the third-
party liability insurance policy it had issued in favor of judgment debtor Nelia Enriquez. Perla Saturnino R. Petalcorin, Engr. Uldarico D. Dumdum, Aurora P. De Leon, Ramon D. Basa,
cannot successfully evade liability thereon by such a contention. Francisco D. Villamor, Richard F. Magallanes, Geronimo S. Palermo, Felicisimo V. Ramos and
Eugenio M. De los Santos (hereinafter referred to as D.S. Homes, et al.) for "Rescission of
Every interest which the judgment debtor may have in property may be subjected to
execution.[19] In the instant case, the judgment debtor Nella Enriquez clearly had an interest Contract and Damages" with a prayer for the issuance of a writ of preliminary attachment,
in the proceeds of the third-party liability insurance contract. In a third-party liability docketed as Civil Case No. 18263.
insurance contract, the insurer assumes the obligation of paying the injured third party to
whom the insured is liable.[20] The insurer becomes liable as soon as the liability of the insured
On September 28, 1986, Judge Dinopol issued an order granting ex parte the application for a
to the injured third person attaches. Prior payment by the insured to the injured third person
is not necessary in order that the obligation of the insurer may arise. From the moment that writ of preliminary attachment.
the insured became liable to the third person, the insured, acquired an interest in the insurance
contract, which interest may be garnished like any other credit.[21]
On September 22, 1986, the private respondents amended their complaint and on October 10,

Petitioner also contends that in order that it may be held liable under the third-party, liability 1986, filed a second amended complaint impleading as additional defendants herein petitioners
insurance, a separate action should have been commenced by private respondents to establish Davao Savings &Loan Association, Inc. and its president, Francisco Villamor, but dropping
petitioner's liability. Petitioner invokes Economic Insurance Company, Inc. v. Torres,[22] which Eugenio M. De los Santos.
stated:

"It is clear from Section 45, Rule 39 that if a person alleged to have property of the judgment
debtor or to be indebted to him claim's an interest not applicable in the instant case, and we
see no need to require a separate action against Perla: a writ of garnishment suffices to hold
petitioner answerable to the judgment creditor. If Perla had any substantive defenses against
the judgment debtor, it is properly deemed to have waived them by laches.
WHEREFORE, the Petition for Certiorari and Prohibition is hereby DISMISSED for having been
filed out of time and for lack of merit. The assailed Orders of the trial court are hereby
AFFIRMED. Costs against petitioner. This Decision is immediately executory.
SO ORDERED.
On November 5, 1986, Judge Dinopol issued ex parte an amended order of attachment against
all the defendants named in the second amended complaint, including the petitioners but
excluding Eugenio C. de los Santos.
D.S. Homes, Inc., et al. and the Davao Savings & Loan Association (later renamed Mindanao
Savings & Loan Association, Inc. or "MSLA") and Francisco Villamor filed separate motions to
quash the writ of attachment. When their motions were denied by the court, D.S. Homes, Inc.,
et al. offered a counterbond in the amount of P1,752,861.41 per certificate issued by the Land
Bank of the Philippines, a banking partner of petitioner MSLA. The lower court accepted the

35
PROVISIONAL REMEDIES - PRELIMINARY ATTACHMENT CASES
Land Bank Certificate of Time Deposit for P1,752,861.41 as counterbond and lifted the writ of
preliminary attachment on June 5, 1987 (Annex V).
On July 29, 1987, MSLA and Villamor filed in the Court of Appeals a petition for certiorari
(Annex A) to annul the order of attachment and the denial of their motion to quash the same
(CA-G.R. SP No. 12467). The petitioners alleged that the trial court acted in excess of its
jurisdiction in issuing the ex parte orders of preliminary attachment and in denying their
motion to quash the writ of attachment. D.S. Homes, Inc., et al. did not join them.
On May 5, 1988, the Court of Appeals dismissed the petition for certiorari and remanded the
records of Civil Case No. 18263 to the Regional Trial Court of Davao City, Branch 13, for
expeditious proceedings. It held:
"Objections against the writ may no longer be invoked once a counterbond is filed for its lifting
or dissolution.
"The grounds invoked for the issuance of the writ form the core of the complaint and it is right
away obvious that a trial on the merits was necessary. The merits of a main action are not
triable in a motion to discharge an attachment otherwise an applicant for dissolution could
force a trial on the merits on his motion (4 Am. Jur., Sec. 635, 934, cited in G.G. Inc. vs.
Sanchez, et al., 98 Phil. 886, 890, 891)." (Annex B, p. 185, Rollo.)
Dissatisfied, the petitioners appealed to this Court.
A careful consideration of the petition for review fails to yield any novel legal questions for this
Court to resolve.
The only requisites for the issuance of a writ of preliminary attachment under Section 3, Rule
57 of the Rules of Court are the affidavit and bond of the applicant.
"SEC. 3. Affidavit and bond required. - An order of attachment shall be granted only when it is
made to appear by the affidavit of the applicant, or of some other person who personally knows
the facts, that a sufficient cause of action exists, that the case is one of those mentioned in
section 1 hereof, that there is no other sufficient security for the claim sought to be enforced
by the action, and that the amount due to the applicant, or the value of the property the
possession of which he is entitled to recover, is as much as the sum for which the order is
granted above all legal counterclaims. The affidavit, and the bond required by the next
succeeding section must be duly filed with the clerk or judge of the court before the order
issues."
No notice to the adverse party or hearing of the application is required. As a matter of fact a
hearing would defeat the purpose of this provisional remedy. 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. Nevertheless, while no hearing is required by the Rules of
Court for the issuance of an attachment (Belisle Investment & Finance Co., Inc. vs. State
Investment House, Inc., 72927, June 30, 1987; Filinvest Credit Corp. vs. Relova, 117 SCRA
420), a motion to quash the writ may not be granted without "reasonable notice to the
applicant" and only "after hearing" (Secs. 12 and 13, Rule 57, Rules of Court).
The Court of Appeals did not err in holding that objections to the impropriety or irregularity of
the writ of attachment "may no longer be invoked once a counterbond is filed," when the ground
for the issuance of the writ forms the core of the complaint.
Indeed, after the defendant has obtained the discharge of the writ of attachment by filing a
counterbond under Section 12, Rule 57 of the Rules of Court, he may not file another motion
under Section 13, Rule 57 to quash the writ for impropriety or irregularity in issuing it.
The reason is simple. The writ had already been quashed by filing a counterbond, hence,
another motion to quash it would be pointless. Moreover, as the Court of Appeals correctly
observed, when the ground for the issuance of the writ is also the core of the complaint, the
question of whether the plaintiff was entitled to the writ can only be determined after, not
before, a full-blown trial on the merits of the case. This accords with our ruling in G.B., Inc.
vs. Sanchez, 98 Phil. 886 that: "The merits of a main action are not triable in a motion to
discharge an attachment, otherwise an applicant for the dissolution could force a trial on the
merits of the case on this motion."
36
PROVISIONAL REMEDIES - PRELIMINARY ATTACHMENT CASES
May the defendant, after procuring the dissolution of the attachment by filing a counterbond,
ask for the cancellation of the counterbond on the ground that the order of attachment was
improperly issued? That question was answered by this Court when it ruled in Uy Kimpang vs.
Javier, 65 Phil. 170, that "the obligors in the bond are absolutely liable for the amount of any
judgment that the plaintiff may recover in the action without reference to the question of
whether the attachment was rightfully or wrongfully issued.”
The liability of the surety on the counterbond subsists until the Court shall have finally
absolved the defendant from the plaintiff's claims. Only then may the counterbond be released.
The same rule applies to the plaintiff's attachment bond. "The liability of the surety on the
bond subsists because the final reckoning is when the Court shall finally adjudge that the
attaching creditor was not entitled to the issuance of the attachment writ," (Calderon vs.
Intermediate Appellate Court, 155 SCRA 531.)
WHEREFORE, finding no reversible error in the decision of the Court of Appeals in CA-G.R. SP
No. 12467, the petition for review is denied for lack of merit with costs against the petitioners.
SO ORDERED.
JOSE D. CALDERON, PETITIONER, VS. THE INTERMEDIATE APPELLATE COURT,
GEORGE SCHULZE, GEORGE SCHULZE, JR., ANTONIO C. AMOR, MANUEL A. MOZO,
AND VICTOR M. NALUZ, RESPONDENTS.
[G.R. NO. 73916. NOVEMBER 11, 1987]
FIRST INTEGRATED BONDING AND INSURANCE COMPANY, INC., PETITIONER, VS. THE
INTERMEDIATE APPELLATE COURT, GEORGE SCHULZE, ANTONIO C. AMOR, MANUEL
A. MOZO AND VICTOR M. NALUZ, RESPONDENTS.
PARAS, J.:
For review on certiorari is respondent appellate Court's decision[1] in AC-G.R. No. 01420, which
affirmed the Regional Trial Court's decision[2] appealed from holding the plaintiff Jose D.
Calderon (petitioner herein) and his bondsman the Integrated Bonding and Insurance Com-
pany, Inc., jointly and severally liable to pay defendants (private respondents herein), damages
caused by the filing by Calderon of the allegedly unwarranted suit and the wrongful and
malicious attachment of private respondents' properties.
The facts of the case are briefly as follows:
On November 2, 1976, petitioner Calderon purchased from the private respondents the
following: the Luzon Brokerage Corporation (LBC, for brevity) and its five (5) affiliate
companies, namely - Luzon Air Freight, Inc., Luzon Port Terminals Services, Inc., Luzon (GS)
Warehousing Corporation, GS Industrial Management Corporation, and GS Luzon Trucking
Corporation. Twenty one (21) days thereafter or on November 23, 1976, the Bureau of Customs
suspended the operations of LBC for failure to pay the amount of P1,475,840.00 representing
customs taxes and duties incurred prior to the execution of the sale. In order to lift the
suspension, Calderon paid the sum of P606,430.00 to the Bureau of Customs.
On October 27, 1977, Calderon filed a complaint against private respondents to recover said
amount of P1,475,840.00, with damages by reason of breach of warranty. In the same
complaint, the petitioner prayed for a preliminary attachment, alleging: that private
37
PROVISIONAL REMEDIES - PRELIMINARY ATTACHMENT CASES

respondents had deliberately and willfully concealed from his knowledge such staggering On November 17, 1977, private respondents filed a counterbond, whereupon the trial court
liability of the LBC for the purpose of misleading him into buying the six aforesaid companies; issued an order directing the sheriff to return all real and personal properties already levied
and that private respondent Schulze is about to depart from the Philippines in order to defraud upon and to lift the notices of garnishment issued in connection with the said attachment
his creditors. (Annex B, p. 42, Rollo).

To support the petition for preliminary attachment, the petitioner posted a surety bond of
P1,475,840.00. On October 28, 1977, the trial court issued a writ of preliminary attachment,
whereupon properties of the private respondents were attached and their bank deposits were
garnished.
On November 10, 1977, petitioner Calderon filed an amended complaint, alleging that while
the liabilities of LBC are reflected in its books, the aforesaid amount was fraudulently
withdrawn and misappropriated by private respondent Schulze. (pp. 7-18, Rollo).
On the other hand, private respondents claimed: that the amount of P1,475,840.00 due to the
Bureau of Customs represents the duties and taxes payable out of the advanced payments
made by LBC's client, Philippine Refining Company (PRC, for brevity) in August, September
and October, 1976, and in the first and second weeks of November 1976, after Calderon himself
had taken control of the management of LBC (Exhibit A); that these deposit payments were
properly recorded in the books of the corporation and existing as part of the corporate funds;
that from the first week of June, 1976 up to October 30, 1976, private respondent Schulze fully
disclosed and explained to Calderon that these customer's advanced deposit payments
(including those of the PRC) are to be paid to the Bureau of Customs when their corresponding
customs taxes and duties become due; that during this phase of the negotiation, Calderon and
his representatives inspected and studied the corporate books and records at will and learned
After trial, the trial court dismissed the complaint, holding Calderon and his surety First
Integrated Bonding and Insurance Co., Inc., jointly and severally liable to pay the damages
prayed for by the private respondents.
Said decision was affirmed on appeal, although slightly modified in the sense that the award of
moral and exemplary damages in favor of private respondents Schulze and Amor was reduced.
The dispositive portion of the judgment of affirmance and modification reads:
"WHEREFORE, the judgment of the lower court is modified as follows:
To defendant-appellee George Schulze:
P650,00.00 as moral damages and
P200,000.00 as exemplary damages.
To defendant-appellee Antonio C. Amor:
P150,000.00 as moral damages and
P 30,000.00 as exemplary damages.
"All other dispositions in the judgment appealed from, including the dismissal of the amended

the daily operations and management of LBC; that the petitioner did not pay out of his own complaint, are hereby affirmed in toto.

pocket but out of the LBC funds the said amount of P606,430.30 demanded by the Bureau of "SO ORDERED."
Customs, as evidenced by a manager's check No. FEBTC 25092 (Exhibits 9, 10, 11 & 38) and
another facility negotiated with the Insular Bank of Asia and America (Exhibit K-2); and that In his petition, petitioner Calderon asserts, among other things, that the court below erred:
private respondents are setting up a counterclaim for actual, moral and exemplary damages as
well as attorney's fees, as a consequence of the filing of the baseless suit and the wrongful and I
malicious attachment of their properties. (pp. 217-221, Rollo).

38
PROVISIONAL REMEDIES - PRELIMINARY ATTACHMENT CASES
IN HOLDING THAT THE PETITIONER FAILED TO ESTABLISH HIS CLAIMS.
II
IN HOLDING THAT THE PRELIMINARY ATTACHMENT HAD BEEN WRONGFULLY AND
MALICIOUSLY SUED OUT.
III
IN HOLDING THAT THE PETITIONER IS LIABLE NOT ONLY FOR ACTUAL DAMAGES BUT
MORAL AND EXEMPLARY DAMAGES AS WELL.
On the other hand, petitioner Insurance Company raises the following issues:
I Luzon Brokerage Corporation. Neither did appellant Calderon prove his sworn charges that
WHETHER OR NOT THE PETITIONER SURETY IS LIABLE FOR DAMAGES ON ITS
CONTRACTED SURETYSHIP NOTWITHSTANDING THE DISSOLUTION OF THE WRIT OF
PRELIMINARY ATTACHMENT, AS A CONSEQUENCE OF THE FILING OF THE DEFENDANT'S
COUNTER-BOND, WHEREBY LEVIED PROPERTIES WERE ORDERED BY THE COURT
RETURNED TO PRIVATE RESPONDENTS AND THE NOTICES OF GARNISHMENT ISSUED IN
CONNECTION THEREWITH ORDERED LIFTED.
II
WHETHER OR NOT THE SUBSEQUENT FILING BY PRIVATE RESPONDENTS OF A COUNTER-
BOND TO DISCHARGE THE WRIT OF PRELIMINARY ATTACHMENT CONSTITUTE A WAIVER
ON ANY DEFECT IN THE ISSUANCE OF THE ATTACHMENT WRIT.
III
WHETHER OR NOT A SURETY IS A GUARANTOR OF THE EXISTENCE OF A GOOD CAUSE
OF ACTION IN THE COMPLAINT.
The petition is devoid of merit.
Whether or not the amount of P1,475,840.00 was duly disclosed as an outstanding liability of
LBC or was misappropriated by private respondent Schulze is purely a factual issue. That
Calderon was clearly in bad faith when he asked for the attachment is indicated by the fact
that he failed to appear in court to support his charge of misappropriation by Schulze, and in
effect, preventing his being cross-examined, no document on the charges was presented by
him.
What the Appellate Court found in this regard need not be further elaborated upon. The
Appellate Court ruled:
"xxx The record shows that appellant Calderon failed to produce any evidence in support of his
sworn charge that appellee Schulze had deliberately and willfully concealed the liabilities of
appellee Schulze had maliciously and fraudulently withdrawn and misappropriated the amount
of P1,475,840.00 and that all the defendants had maliciously and fraudulently concealed and
withheld from him this alleged liability of Luzon Brokerage Corporation in breach of the
contract-warranty that said corporation had no obligations or liabilities except those appearing
in the books and records of the said corporation. Indeed, appellant Calderon never appeared
in the trial court to substantiate the charges in his verified complaints and in his affidavit to
support his petition for the issuance of a writ of attachment. He distanced himself from the
appellees and avoided cross-examination regarding his sworn allegations. xxx
"xxx But even though appellant Calderon failed to prove his serious charges of fraud, malice
and bad faith, the appellees took it upon themselves to show that they did not conceal or
withhold from appellant's knowledge the deposits made by Philippine Refining Co., Inc. with
Luzon Brokerage Corporation and that they did not withdraw and misappropriate the deposits
made by Philippine Refining Co., Inc. with Luzon Brokerage Corporation.
“The books and records of Luzon Brokerage Corporation on which the Financial Statement of
Luzon Brokerage Corporation, as of October 31, 1976 was prepared by the auditing firm re-
tained by appellant Calderon himself (Exhibit 1), disclose that the liabilities of Luzon Brokerage
39
PROVISIONAL REMEDIES - PRELIMINARY ATTACHMENT CASES
Corporation in the total amount of P4,574,498.32 appear under the heading 'Customers Depo-
sit' (Exhibit 1-A) this amount includes the deposit of Philippine Refining Co., Inc. in the sum of
P1,475,840.00.
"But appellant Calderon contends that this financial statement was dated February 4, 1977
(see Exhibit 1-C). There is nothing commendable in this argument because the bases of the
financial statement were the books, records and documents of Luzon Brokerage Corporation
for the period ending October 31, 1976, which were all turned over to and examined by
appellant Calderon and his executive, legal and financial staffs. There is also no merit in the
contention of appellant Calderon that the appellees have tampered the books of Luzon
Brokerage Corporation because there is no proof to back this charge, let alone the fact that
appellant Calderon did not even present the said books to support his charge.
"As stated above, the amount of customers' deposits in the sum of P4,574,498.32 includes the
deposits of Philippine Refining Co., Inc. (Exhibits 46-A, 46-B, 46-C, 46-D, 46-E, 46-F, 46-G,
46-H, 46-I, 46-J, t.s.n. July 23, 1980, pp. 12-13, 14-15). The amounts deposited by Philippine
Refining Co., Inc. on various dated with Luzon Brokerage Corporation made before the
execution of the sale were all entered in three other corporate books of Luzon Brokerage
Corporation namely, the Cash Receipts Register (Exhibits 39-A-1 to 39-K-1 and 39-A-1-B to
39- K-1-B), the Journal Vouchers (Exhibits 42 to 46 and 42-A to 45-A), and the Customer's
Deposit Ledger (Exhibits 46-A to 46-J) xxx.
Thus, the claim of appellant Calderon that the deposits made by Philippine Refining Co., Inc.
with Luzon Brokerage Corporation of P406,430.00 on August 24, 1976 (Exhibit N), P53,640.00
on October 13, 1976 (Exhibit O), P406,430.00 on September 8, 1976 (Exhibit P), P199,508.00
on September 24, 1976 (Exhibit Q), P52,738.00 on October 22, 1976 (Exhibit R), and
P264,436.00 on October 7, 1976 (Exhibit S) were not entered in the books of Luzon Brokerage
Corporation, is completely without merit. xxx" (pp. 85-87, Rollo)
It is evident from the foregoing that the attachment was maliciously sued out and that as
already pointed out Schulze was not in bad faith.
While as a general rule, the liability on the attachment bond is limited to actual damages, moral
and exemplary damages may be recovered where the attachment was alleged to be maliciously
sued out and established to be so. (Lazatin vs. Twano et al, L-12736 July 31, 1961)
In the instant case, the issues of wrongful and malicious suing out of the writ of preliminary
attachment were joined not only in private respondents' motion to discharge the attachment
but also in their answer to the amended complaint (p. 38, Rollo). The trial court observed that
the books and records of Luzon Brokerage Corporation disclose that the liabilities of the said
corporation in the total amount of P4,574,498.32 appear under the heading “Customs Deposit”
(Exhibit 1-A) and this amount includes the deposit of Philippine Refining Co., Inc. in the sum
of P1,475,840.00 (p. 26, Rollo). On the other hand, plaintiff never appeared in court, and failed
to produce any evidence to substantiate his charges (p. 26, Rollo).
Well settled is the rule that the factual findings of the trial court are entitled to great weight
and respect on appeal, especially when established by unrebutted testimonial and
documentary evidence, as in this case.
Anent the petition of the surety, We say the following:
Specifically, petitioner surety contends that the dissolution of the attachment extinguishes its
obligation under the bond, for the basis of its liability, which is wrongful attachment, no longer
exists, the attachment bond having been rendered void and ineffective, by virtue of Section
12,Rule 57 of the Rules of Court. (p. 5, Petition)
While Section 12, Rule 57 of the Rules of Court provides that upon the filing of a counterbond,
the attachment is discharged or dissolved, nowhere is it provided that the attachment bond is
rendered void and ineffective upon the filing of counterbond.
The liability of the attachment bond is defined in Section 4, Rule 57 of the Rules of Court, as
follows:
40
PROVISIONAL REMEDIES - PRELIMINARY ATTACHMENT CASES

“Sec. 4. Condition of applicant's bond. - The party applying for the order must give a bond
executed to the adverse party in an amount to be fixed by the judge, not exceeding the
applicant's claim, conditioned that the latter will pay all the costs which may be adjudged to
the adverse party and all damages which he may sustain by reason of the attachment, if the
court shall finally adjudge that the applicant was not entitled thereto."
It is clear from the above provision that the responsibility of the surety arises "if the court shall
finally adjudge that the plaintiff was not entitled thereto.” In Rocco vs. Meads, 96 Phil Reports
884, we held that the liability attaches if the plaintiff is not entitled to the attachment because
the requirements entitling him to the writ are wanting, or if the plaintiff has no right to the
attachment because the facts stated in his affidavit, or some of them, are untrue. It is,
therefore, evident that upon the dismissal of an attachment wrongfully issued, the surety is
liable for damages as a direct result of said attachment.
We believe, however, that in the light of the factual situation in this case, the damages awarded
by the Intermediate Appellate Court are rather excessive. They must be reduced.
WHEREFORE, the judgment of said Appellate Court is hereby modified as follows: Both
petitioner Calderon and petitioner First Integrated Bonding and Insurance Company, Inc. are
hereby ordered to give jointly and severally:
1. Respondent George Schulze, P250,000.00 as moral damages and P50,000.00 as exemplary
damages; and
2. Respondent Antonio C. Amor, P50,000.00 as moral damages and P10,000.00 as exemplary
damages.
The rest of the judgment of the Intermediate Appellate Court is hereby AFFIRMED.

Equally untenable is the Surety's contention that by filing a counterbond, private respondents
SO ORDERED.
waived any defect or flaw in the issuance of the attachment writ, for they could have sought,
without need of filing any counterbond, the discharge of the attachment if the same was
ESTEBAN B. UY, JR. AND NILO S. CABANG, PETITIONERS, VS. THE HONORABLE
improperly or irregularly issued, as provided in Section 13, Rule 57 of the Rules of Court.
COURT OF APPEALS, WILSON TING, AND YU HON, RESPONDENTS.

Whether the attachment was discharged by either of the two (2) ways indicated in the law, i.e.,
PARAS, J.:
by filing a counterbond or by showing that the order of attachment was improperly or
irregularly issued, the liability of the surety on the attachment bond subsists because the final
This is a petition for review on certiorari seeking to reverse the decision* which dismissed CA--
reckoning is when "the Court shall finally adjudge that the attaching creditor was not entitled"
G.R. No. SP-05659 for Certiorari and Prohibition with Preliminary Injunction and/or
to the issuance of the attachment writ in the first place. The attachment debtor cannot be
Restraining Order filed by petitioner seeking to annul and set aside the two Orders dated
deemed to have waived any defect in the issuance of the attachment writ by simply availing
August 24, 1982 and October 10, 1983 issued by the then Court of First Instance of Rizal
himself of one way of discharging the attachment writ, instead of the other. Moreover, the filing
Branch LII** (now Regional Trial Court of Quezon City Branch XCLVII***) in Civil Case No. Q-
of a counterbond is a speedier way of discharging the attachment writ maliciously sought out
35128, granting a writ of preliminary attachment and directing the sheriff assigned therein to
by the attaching creditor instead of the other way, which, in most instances like in the present
attach the properties of defendants Uy and Cabang (herein petitioners); and denying
case, would require presentation of evidence in a fullblown trial on the merits and cannot easily
defendants’ motion to dismiss.
be settled in a pending incident of the case.

The antecedent facts of the case as found by the Court of Appeals are as follows:

41
PROVISIONAL REMEDIES - PRELIMINARY ATTACHMENT CASES
On March 24, 1982, Esteban B. Uy, Jr (herein petitioner) filed a complaint against Sy Yuk Tat
for sum of money, damages, with preliminary attachment, docketed as Civil Case No Q-34782
("the first case" for short) in the then Court of First Instance of Rizal, Branch LII, Quezon City
(the case was later assigned to the Regional Trial Court of Quezon City, Branch XCVII now
presided over by respondent Judge). On the same day, upon plaintiff filing a bond of
P232,780.00 said court issued a writ of preliminary attachment and appointed Deputy Sheriff
Nilo S. Cabang (co-petitioner herein) as Special Sheriff to implement the writ. On April 6, 1982,
the same court issued a break-open order upon motion filed by petitioner Uy.
On the following day, April 7, 1982, petitioner Cabang began to implement the writ of
preliminary attachment as the Special Sheriff on the case.
On April 19, 1982, petitioner Cabang filed a Partial Sheriff's Return, stating, inter alia:
xxxxx
That in the afternoon of April 12, 1982, the undersigned together with Atty. Lupino Lazaro,
plaintiff's counsel and the members of the same team proceeded to No. 65 Speaker Perez St.,
Quezon City, and effected a physical and actual count of the items and merchandise pointed
to by the Ting family as having been taken from the Mansion Emporium and nearby bodega
which are as follows:
a) 329 boxes of "GE" Flat Iron each box containing 6 pcs. each;
b) 229 boxes of Magnetic Blank Tapes with 48 pcs. each;
c) 239 boxes of floor polishers marked "Sanyo"
d) 54 boxes of floor polishers marked (Ronson"
xxxxx
On April 12, 1982, a third party claim was filed by Wilson Ting and Yu Hon (private respondents
herein) in the same Civil Case No. Q-34782, addressed to petitioner Cabang asserting
ownership over the properties attached at No. 65 Speaker Perez St., Quezon City (other than
those attached at No. 296 Palanca St., Manila). The third party claim specifically enumerated
the properties, as reflected in the Partial Sheriff's Return dated April 13, 1982, belonging to the
plaintiffs (private respondents herein).
On the same day that petitioner Cabang filed his Partial Sheriff's Return (April 19, 1982) the
third party claimants Ting and Yu filed a motion to dissolve the aforementioned writ of
preliminary attachment in the same Civil Case No. Q-34782; alleging among others, that being
the absolute owners of the personal properties listed in their third party claim which were
illegally seized from them they were willing to file a counterbond for the return thereof; which
motion was opposed by plaintiff Uy.
On April 29, 1982, then CFI Judge Jose P. Castro rendered judgment by default in said Civil
Case No. Q-34782 in favor of plaintiff Uy.
Meanwhile, on May 5, 1982, third party claimants Wilson Ting and Yu Hon filed a complaint
for damages with application for preliminary injunction against Esteban Uy and Nilo Cabang
(co-petitioners herein) in the then Court of First Instance of Rizal, Branch 52, Quezon City ("the
court a quo for short) which case was docketed as Civil Case No. Q-35128 ("the second case"
for short). The complaint alleged inter alia, that the plaintiffs are the owners of the personal
properties reflected in the Partial Sheriff’s Return dated April 13, 1983 which have been
attached and seized by defendant Cabang. In this second civil case, the court a quo (then
presided over by CFI Judge Concepcion B. Buencamino) issued an order on May 5, 1982,
stating among other things, the following:
“Considering that it will take time before this Court could act upon said prayers for the issuance
of a Writ of Preliminary Injunction, the parties are hereby ordered to maintain the STATUS
QUO in this case with respect to the properties attached and subject of this action alleged to
belong to the plaintiffs" (Rollo, p. 133)
Meanwhile, in the first case, where a judgment by default had been rendered, the first court
issued an order striking off from the records all pleadings filed by the third party claimants.
With respect to the case in the court a quo, defendants Uy and Cabang filed their answer with
counterclaim.
Meanwhile, in the first case, plaintiff Uy on June 7, 1982, filed an ex-parte motion for writ of
execution which was granted the following day, June 8, 1982.
42
PROVISIONAL REMEDIES - PRELIMINARY ATTACHMENT CASES

On the same day (June 7, 1982) that plaintiff Uy filed his ex-parte motion for writ of execution attach such properties of the defendants not exempt from execution, sufficient to satisfy the
he and Cabang filed a motion to quash or dissolve status quo order in the case a quo as applicants’ demand." (Rollo, p. 247)
defendants therein on the ground that the court "has no jurisdiction to interfere with properties
On August 31, 1982, in the same case a quo, defendant Uy filed an urgent motion to quash
under custodia legis on orders of a court of co-equal and co-ordinate jurisdiction" and that
and/ or dissolve preliminary attachment which motion was opposed by plaintiffs Ting and Yu
plaintiffs' complaint is not for recovery of properties in question."
Hon.
On June 24, 1982, plaintiff Uy in the first case filed his ex-parte motion to authorize Sheriff to
About half a year later, on February 21, 1982, in the case a quo, defendant Uy filed a motion
sell the attached properties enumerated in Sheriff Cabang's partial return filed on April 19,
for preliminary hearing on affirmative defenses as motion to dismiss. Following an exchange
1982, on the ground that the properties under custodia legis were perishable especially those
of subsequent papers between the parties, the court a quo issued the other disputed order
taken from No. 65 Speaker Perez, Quezon City.
which denied defendant Uy's motion to dismiss on October 10, 1983. The motion to quash was
Subsequently, on July 2, 1982, in the case a quo the court denied defendants' Uy and Cabang also denied by the court a quo on December 9, 1983. Defendant Uy filed a motion for
motion to quash or dissolve the status quo order. reconsideration on both Orders. Finally, on February 15, 1985, respondent Judge issued two
Orders ‘denying both motions for reconsideration. (CA decision, Rollo, p. 109-122)
Meanwhile, the first case on July 12, 1982, Cabang filed another partial sheriff's return this
time stating among others that the judgment in that case had been partially satisfied, and that
Thereafter, petitioners Esteban Uy, Jr. and Nilo Cabang filed with the Court of Appeals a
in the public auction sale held on July 6, 1982, certain personal properties had been sold to
petition for Certiorari and Prohibition with prayer for a Writ of Preliminary Injunction or a
plaintiff Esteban Uy, Jr., the winning bidder for P15,000.00 while the other properties were
Retraining Order to annul and set aside the two orders issued by the then CFI of Rizal Branch
sold in the amount of P200,000.00 in cash with Bernabe Ortiz of No 97 Industrial Avenue,
52.
Northern Hill, Malabon Manila, as the highest bidder.

Back to the case a quo, on August 23, 1982, plaintiffs Ting and Yu Hon filed a motion for In its decision, the Court of Appeals dismissed the petition, the dispositive portion of which

preliminary attachment alleging this ground: "In the case at bar, which, is one ‘to recover reads:

possession of personal properties unjustly detained, x x the property x x has been x x removed
x x (and) disposed of to prevent its being found or taken by the applicant or an officer’ and/or "WHEREFORE, finding respondent Judge not to have committed a grave abuse of discretion

said defendants are guilty of fraud in disposing of the property for the taking, (or) detention x amounting to lack or excess of jurisdiction in issuing the order dated August 24, 1982, denying

x of which the action is brought’ (Sec. 1(c) and (d), Rule 57, Rules of Court)
Acting on such motion the court a quo, on August 24, 1982, issued the disputed order granting
the writ of preliminary attachment prayed for by the plaintiffs (Wilson Ting and Yu Hon), stating
that:
"Let a writ of preliminary attachment issue upon the plaintiffs putting up a bond in the amount
of P1,430,070.00, which shall be furnished to each of the defendants with copies of the verified
application therewith, and the sheriff assigned to this court, Danilo Del Mundo, shall forthwith
petitioners’ motion to quash the writ of preliminary attachment, and the order dated October
10, 1983, denying petitioners’ motion to dismiss the complaint a quo, we hereby deny the
instant petition, and therefore dismiss the same. No pronouncement as to cost." (Rollo, pp.
132-133)
Hence, the instant petition.
43
PROVISIONAL REMEDIES - PRELIMINARY ATTACHMENT CASES
In the resolution of October 16, 1989, the Court gave due course to the petition and required
both parties to submit simultaneous memoranda within thirty days from notice (Rollo,
p.190). Private respondents filed their memorandum on December 6, 1989 (Ibid., p. 192) while
petitioners filed their memorandum on January 5, 1990 (Ibid., p. 208)
The main issue in this case is whether or not properties levied and seized by virtue of a writ of
attachment and later by a writ of execution, were under custodia legis and therefore not subject
to the jurisdiction of another co-equal court where a third party claimant claimed ownership of
the same properties.
The issue has long been laid to rest in the case of Manila Herald Publishing Co. Inc. v. Ramos
(88 Phil. 94 [1951] where the Court ruled that while it is true that property in custody of the
law may not be interfered with, without the permission of the proper court, this rule is confined
to cases where the property belongs to the defendant or one in which the defendant has
proprietary interests. But when the Sheriff, acting beyond the bounds of his office seizes a
stranger's property, the rule does not apply and interference with his custody is not interference
with another court's order of attachment.
Under the circumstances, this Court categorically stated:
“It has been seen that a separate action by the third party who claims to be the owner of the
property attached is appropriate. If this is so, it must be admitted that the judge trying such
action may render judgment ordering the sheriff or whoever has in possession of the attached
property to deliver it to the plaintiff claimant or desist from seizing it. It follows further that
the court may make an interlocutory order, upon the filing of such bond as may be necessary,
to release the property pending final adjudication of the title. Jurisdiction over an action
includes jurisdiction on interlocutory matter incidental to the cause and deemed necessary to
preserve the subject matter of the suit or protect the parties interests. This is self-evident.
(Manila Herald Publishing Co. Inc. v. Ramos supra).
The foregoing ruling was reiterated in the later case of Traders Royal Bank v. IAC (133 SCRA
141 [1984]) and even more recently in the case of Escovilla v. C.A., G.R. No. 84497, November
6, 1989, where this Court stressed:
"The power of the court in the execution of judgments extends only over properties
unquestionably belonging to the judgment debtor. The levy by the sheriff of a property by virtue
of a writ of attachment may be considered as made under the authority of the court only when
the property levied upon belongs to the defendant. If he attaches properties other than those
of the defendant, he acts beyond the limits of his authority. The court issuing a writ of
execution is supposed to enforce its authority only over properties of the judgment
debtor. Should a third party appear to claim the property levied upon by the sheriff, the
procedure laid down by the Rules is that such claim should be the subject of a separate and
independent action.”
Neither can petitioner complain that they were denied their day in court when the Regional
Trial Court issued a writ of preliminary attachment without hearing as it is well settled that its
issuance may be made by the court ex parte. As clearly explained by this Court, no grave abuse
of discretion can be ascribed to respondent Judge in the issuance of a writ of attachment
without notice to petitioners as there is nothing in the Rules of Court which makes notice and
hearing indispensable and mandatory requisites in its issuance. (Filinvest Credit Corp. v.
Relova, 117 SCRA 420 [1982]; Belisle Investment & Finance Co. Inc. v. State Investment House,
Inc. 151 SCRA 631 [1987]; Toledo v. Burgos, 168 SCRA 513 [1988].
In addition, petitioner's motion to quash or discharge the questioned attachment in the court
a quo is in effect a motion for reconsideration which cured any defect of absence of
notice. (Dormitorio v. Fernandez, 72 SCRA 388 [1976]).
Estoppel is likewise unavailing in the case at bar by the mere fact that private respondent Ting
(complainant in the court a quo) pointed the items and merchandise taken from the Mansion
House and nearby Bodega which were levied and hauled by Special Sheriff Cabang, where in
the report of said Sheriff made earlier on April 6, 1982, he stated that on the same occasion
44
PROVISIONAL REMEDIES - PRELIMINARY ATTACHMENT CASES

referred to in his Partial Return, private respondents denied Sy Yuk Tat’s is ownership over the an appeal should have been dismissed for non-compliance with the Rules, the Court relaxed
goods in question. (Rollo, pp. 203-204). the rigid interpretation of the Rules holding that a straight?jacket application will do more
injustice. (Pan-Am Airways v. Espiritu, 69 SCRA 45 [1976]).
In like manner, the sale of the disputed properties at the public auction, in satisfaction of a
judgment of a co-equal court does not render the case moot and academic. The undeviating PREMISES CONSIDERED, the petition is hereby DENIED and the assailed decision of the
ruling of this Court in such cases is that attachment and sale of properties belonging to a third Court of Appeals is hereby AFFIRMED.
person is void because such properties cannot be attached and sold at public auction for the
purpose of enforcing a judgment against the judgment debtor. (Orosco v. Nepumoceno [57 Phil. SO ORDERED.
1007 [1932-33]).
SOFIA TORRES, FRUCTOSA TORRES, HEIRS OF MARIO TORRES AND SOLAR
The other issues in this case deserve scant consideration. RESOURCES, INC., PETITIONERS, VS. NICANOR SATSATIN, EMILINDA AUSTRIA
SATSATIN, NIKKI NORMEL SATSATIN AND NIKKI NORLIN SATSATIN, RESPONDENTS.
On the issue of the expiration of the restraining order, there is no argument that the life span
of the status quo order automatically expires on the 20th day and no judicial declaration to PERALTA, J.:
that affect is necessary (Paras v. Roura, 163 SCRA 1 [1988]). But such fact is of no consequence
in so far as the propriety of the questioned attachment is concerned. As found by the Court of This is a petition for review on certiorari assailing the Decision[1] dated November 23, 2004 of
Appeals, the grounds invoked by respondents for said attachment did not depend at all upon the Court of Appeals (CA) in CA-G.R. SP No. 83595, and its Resolution[2] dated January 18,
the continuing efficacy of the restraining order. 2005, denying petitioners' motion for reconsideration.

As to petitioner's contention that the complaint filed by private respondent in the lower court The factual and procedural antecedents are as follows:
is merely seeking an ancillary remedy of injunction which is not a cause of action itself, the
Court of Appeals correctly observed that the object of private respondents’ complaint is The siblings Sofia Torres (Sofia), Fructosa Torres (Fructosa), and Mario Torres (Mario) each own
injunction although the ancillary remedy of preliminary injunction was also prayed for during adjacent 20,000 square meters track of land situated at Barrio Lankaan, Dasmariñas, Cavite,
the pendency of the proceeding. covered by Transfer Certificate of Title (TCT) Nos. 251267,[3] 251266,[4] and 251265,[5]
respectively.
Finally, the non-joinder of the husband of private respondent, Yu Hon as well as her failure to
verify the complaint does not warrant dismissal of the complaint for they are mere formal Sometime in 1997, Nicanor Satsatin (Nicanor) asked petitioners' mother, Agripina Aledia, if she
requirements which could be immediately cured without prejudice to the rights of the wanted to sell their lands. After consultation with her daughters, daughter-in-law, and
petitioners. This Court frowns on the resort to technicalities to defeat substantial grandchildren, Agripina agreed to sell the properties. Petitioners, thus, authorized Nicanor,
justice. Thus, the Court states that the rules of procedure are intended to promote not to defeat through a Special Power of Attorney, to negotiate for the sale of the properties. [6]
substantial justice, and therefore, they should not be applied in a very rigid and technical
sense. (Angel v. Inopiquez, G.R. 66712, January 13, 1989). Again on another occasion where Sometime in 1999, Nicanor offered to sell the properties to Solar Resources, Inc. (Solar). Solar

45
PROVISIONAL REMEDIES - PRELIMINARY ATTACHMENT CASES

allegedly agreed to purchase the three parcels of land, together with the 10,000-square-meter WHEREFORE, premises considered, and finding the present complaint and motion sufficient
property owned by a certain Rustica Aledia, for P35,000,000.00. Petitioners alleged that in form and substance, this Court hereby directs the herein plaintiffs to post a bond, pursuant
Nicanor was supposed to remit to them the total amount of P28,000,000.00 or P9,333,333.00 to Section 3, Rule 57 of the 1997 Rules of Civil Procedure, in the amount of Seven Million Pesos
each to Sofia, Fructosa, and the heirs of Mario. (P7,000,000.00), before the Writ of Attachment issues.[10]

On November 15, 2002, petitioners filed a Motion for Deputation of Sheriff, [11] informing the
Petitioners claimed that Solar has already paid the entire purchase price of P35,000,000.00 to
court that they have already filed an attachment bond. They also prayed that a sheriff be
Nicanor in Thirty-Two (32) post-dated checks which the latter encashed/deposited on their
deputized to serve the writ of attachment that would be issued by the court.
respective due dates. Petitioners added that they also learned that during the period from
January 2000 to April 2002, Nicanor allegedly acquired a house and lot at Vista Grande BF
In the Order[12] dated November 15, 2002, the RTC granted the above motion and deputized the
Resort Village, Las Piñas City and a car, which he registered in the names of his unemployed
sheriff, together with police security assistance, to serve the writ of attachment.
children, Nikki Normel Satsatin and Nikki Norlin Satsatin. However, notwithstanding the
receipt of the entire payment for the subject property, Nicanor only remitted the total amount
Thereafter, the RTC issued a Writ of Attachment[13] dated November 15, 2002, directing the
of P9,000,000.00, leaving an unremitted balance of P19,000,000.00. Despite repeated verbal
sheriff to attach the estate, real or personal, of the respondents, the decretal portion of which
and written demands, Nicanor failed to remit to them the balance of P19,000,000.00.
reads:

Consequently, on October 25, 2002, petitioners filed before the regional trial court (RTC) a WE, THEREFORE, command you to attach the estate, real or personal, not exempt from
Complaint[7] for sum of money and damages, against Nicanor, Ermilinda Satsatin, Nikki Normel execution, of the said defendants, in your province, to the value of said demands, and that you
Satsatin, and Nikki Norlin Satsatin. The case was docketed as Civil Case No. 2694-02, and safely keep the same according to the said Rule, unless the defendants give security to pay
raffled to RTC, Branch 90, Dasmariñas, Cavite. such judgment as may be recovered on the said action, in the manner provided by the said
Rule, provided that your legal fees and all necessary expenses are fully paid.
On October 30, 2002, petitioners filed an Ex-Parte Motion for the Issuance of a Writ of
Attachment,[8] alleging among other things: that respondents are about to depart the You shall return this writ with your proceedings indorsed hereon within twenty (20) days from
Philippines; that they have properties, real and personal in Metro Manila and in the nearby the date of receipt hereof.
provinces; that the amount due them is P19,000,000.00 above all other claims; that there is
no other sufficient security for the claim sought to be enforced; and that they are willing to post GIVEN UNDER MY HAND AND SEAL of this Court, this 15 th day of November, 2002, at Imus
a bond fixed by the court to answer for all costs which may be adjudged to the respondents for Dasmariñas, Cavite, Philippines.[14]
and all damages which respondents may sustain by reason of the attachment prayed for, if it
On November 19, 2002, a copy of the writ of attachment was served upon the respondents. On
shall be finally adjudged that petitioners are not entitled thereto.
the same date, the sheriff levied the real and personal properties of the respondent, including
household appliances, cars, and a parcel of land located at Las Piñas, Manila. [15]
On October 30, 2002, the trial court issued an Order[9] directing the petitioners to post a bond
in the amount of P7,000,000.00 before the court issues the writ of attachment, the dispositive
On November 21, 2002, summons, together with a copy of the complaint, was served upon the
portion of which reads as follows:

46
PROVISIONAL REMEDIES - PRELIMINARY ATTACHMENT CASES

respondents.[16]
The defendants, once again, is directed to file their counter-bond of Seven Million Pesos
On November 29, 2002, respondents filed their Answer.[17] (P7,000,000.00), if it so desires, in order to discharge the Writ of Attachment.

On the same day respondents filed their answer, they also filed a Motion to Discharge Writ of SO ORDERED.
Attachment[18] anchored on the following grounds: the bond was issued before the issuance of
On December 15, 2003, respondents filed an Urgent Motion to Lift/Set Aside Order Dated
the writ of attachment; the writ of attachment was issued before the summons was received by
March [11], 2003,[23] which the RTC denied in an Order[24] of even date, the dispositive portion
the respondents; the sheriff did not serve copies of the application for attachment, order of
of which reads:
attachment, plaintiffs' affidavit, and attachment bond, to the respondents; the sheriff did not
submit a sheriff's return in violation of the Rules; and the grounds cited for the issuance of the WHEREFORE, premises considered, defendants' Urgent Motion to Lift/Set Aside Order Dated
writ are baseless and devoid of merit. In the alternative, respondents offered to post a counter- March 23, 2003 (With Manifestation to Dissolve Writ of Attachment) is hereby DENIED for lack
bond for the lifting of the writ of attachment.[19] of Merit.

On March 11, 2003, after the parties filed their respective pleadings, the RTC issued an Order[20]
denying the motion, but at the same time, directing the respondents to file a counter-bond, to
wit:
WHEREFORE, premises considered, after the pertinent pleadings of the parties have been
taken into account, the herein defendants are hereby directed to file a counter-bond executed
to the attaching party, in the amount of Seven Million Pesos (P7,000,000.00), to secure the
payment of any judgment that the attaching party may recover in the action, with notice on the
attaching party, whereas, the Motion to Discharge Writ of Attachment is DENIED.
SO ORDERED.[21]
Thereafter, respondents filed a motion for reconsideration and/or motion for clarification of the
above order. On April 3, 2003, the RTC issued another Order[22] which reads:
In view of the Urgent Motion For Reconsideration And/Or Motion For Clarification of the Order
of this Court dated March 11, 2003, denying their Motion to Discharge Writ of Attachment filed
by the defendants through counsel Atty. Franco L. Loyola, the Motion to Discharge Writ of
Attachment is denied until after the defendants have posted the counter-bond in the amount
of Seven Million Pesos (P7,000,000.00).
SO ORDERED.
Respondents filed an Urgent Motion for Reconsideration,[25] but it was denied in the Order[26]
dated March 3, 2004.
Aggrieved, respondents filed before the CA a Petition for Certiorari, Mandamus and Prohibition
with Preliminary Injunction and Temporary Restraining Order[27] under Rule 65 of the Rules of
Court, docketed as CA-G.R. SP No. 83595, anchored on the following grounds:
(1) public respondents committed grave abuse of discretion amounting to lack of or in excess
of jurisdiction in failing to notice that the lower court has no jurisdiction over the person and
subject matter of the complaint when the subject Writ of Attachment was issued;
(2) public respondents committed grave abuse of discretion amounting to lack of or in excess
of jurisdiction in granting the issuance of the Writ of Attachment despite non-compliance with
the formal requisites for the issuance of the bond and the Writ of Attachment.[28]
Respondents argued that the subject writ was improper and irregular having been issued and
enforced without the lower court acquiring jurisdiction over the persons of the respondents.
They maintained that the writ of attachment was implemented without serving upon them the

47
PROVISIONAL REMEDIES - PRELIMINARY ATTACHMENT CASES

summons together with the complaint. They also argued that the bond issued in favor of the JURISDICTION IN GRANTING THE WRIT OF ATTACHMENT DESPITE THE BOND BEING
petitioners was defective, because the bonding company failed to obtain the proper clearance INSUFFICIENT AND HAVING BEEN IMPROPERLY ISSUED.
that it can transact business with the RTC of Dasmariñas, Cavite. They added that the various
clearances which were issued in favor of the bonding company were applicable only in the III.
courts of the cities of Pasay, Pasig, Manila, and Makati, but not in the RTC, Imus, Cavite. [29]
THE HONORABLE COURT OF APPEALS ERRED IN NOT DISMISSING THE PETITION BY
On November 23, 2003, the CA rendered the assailed Decision in favor of the respondents, REASON OF ESTOPPEL, LACHES AND PRESCRIPTION AND IN HOLDING THAT THE WRIT OF
finding grave abuse of discretion amounting to lack of or in excess of jurisdiction on the part ATTACHMENT WAS IMPROPERLY AND IRREGULARLY ENFORCED IN VIOLATION OF
of the RTC in issuing the Orders dated December 15, 2003 and March 3, 2004. The decretal SECTION 5, RULE 57 OF THE REVISED RULES OF COURT.
portion of the Decision reads:
IV.
WHEREFORE, the instant petition is hereby GRANTED. Accordingly, the assailed Orders are
hereby nullified and set aside. The levy on the properties of the petitioners pursuant to the Writ
THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT THE PRINCIPLE OF
of Attachment issued by the lower court is hereby LIFTED.
ESTOPPEL WILL NOT LIE AGAINST RESPONDENTS.

SO ORDERED.[30]
Petitioners maintain that in the case at bar, as in the case of FCY Construction Group, Inc. v.
Petitioners filed a Motion for Reconsideration,[31] but it was denied in the Resolution[32] dated
Court of Appeals,[33] the only way the subject writ of attachment can be dissolved is by a
January 18, 2005.
counter-bond. They claim that the respondents are not allowed to file a motion to dissolve the
attachment under Section 13, Rule 57 of the Rules of Court. Otherwise, the hearing on the
Hence, this petition assigning the following errors:
motion for the dissolution of the writ would be tantamount to a trial on the merits, considering
that the writ of preliminary attachment was issued upon a ground which is, at the same time,
I.
the applicant's cause of action.

THE HONORABLE COURT OF APPEALS ERRED IN ORDERING THE LIFTING OF THE WRIT
Petitioners insist that the determination of the existence of grounds to discharge a writ of
OF ATTACHMENT PURSUANT TO SECTION 13, RULE 57 OF THE REVISED RULES OF CIVIL
attachment rests in the sound discretion of the lower court. They argue that the Certification [34]
PROCEDURE.
issued by the Office of the Administrator and the Certifications[35] issued by the clerks of court
of the RTCs of Dasmariñas and Imus, Cavite, would show that the bonds offered by Western
II.
Guaranty Corporation, the bonding company which issued the bond, may be accepted by the
RTCs of Dasmariñas and Imus, Cavite, and that the said bonding company has no pending
THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT PUBLIC RESPONDENT
liability with the government.
COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF OR IN EXCESS OF

48
PROVISIONAL REMEDIES - PRELIMINARY ATTACHMENT CASES

Petitioners contend that respondents are barred by estoppel, laches, and prescription from issued the writ of attachment founded on the said bond.
questioning the orders of the RTC issuing the writ of attachment. They also maintain that the
issue whether there was impropriety or irregularity in the issuance of the orders is moot and Moreover, in provisional remedies, particularly that of preliminary attachment, the distinction
academic, considering that the attachment bond questioned by the respondent had already between the issuance and the implementation of the writ of attachment is of utmost importance
expired on November 14, 2003 and petitioners have renewed the attachment bond covering the to the validity of the writ. The distinction is indispensably necessary to determine when
period from November 14, 2003 to November 14, 2004, and further renewed to cover the period jurisdiction over the person of the defendant should be acquired in order to validly implement
of November 14, 2004 to November 14, 2005. the writ of attachment upon his person.

The petition is bereft of merit.
A writ of preliminary attachment is defined as a provisional remedy issued upon order of the
court where an action is pending to be levied upon the property or properties of the defendant
therein, the same to be held thereafter by the sheriff as security for the satisfaction of whatever
judgment that might be secured in the said action by the attaching creditor against the
defendant.[36]
In the case at bar, the CA correctly found that there was grave abuse of discretion amounting
to lack of or in excess of jurisdiction on the part of the trial court in approving the bond posted
by petitioners despite the fact that not all the requisites for its approval were complied with. In
accepting a surety bond, it is necessary that all the requisites for its approval are met;
otherwise, the bond should be rejected.[37]
Every bond should be accompanied by a clearance from the Supreme Court showing that the
company concerned is qualified to transact business which is valid only for thirty (30) days
from the date of its issuance.[38] However, it is apparent that the Certification[39] issued by the
Office of the Court Administrator (OCA) at the time the bond was issued would clearly show
that the bonds offered by Western Guaranty Corporation may be accepted only in the RTCs of
the cities of Makati, Pasay, and Pasig. Therefore, the surety bond issued by the bonding
company should not have been accepted by the RTC of Dasmariñas, Branch 90, since the
certification secured by the bonding company from the OCA at the time of the issuance of the
bond certified that it may only be accepted in the above-mentioned cities. Thus, the trial court
acted with grave abuse of discretion amounting to lack of or in excess of jurisdiction when it
This Court has long put to rest the issue of when jurisdiction over the person of the defendant
should be acquired in cases where a party resorts to provisional remedies. A party to a suit
may, at any time after filing the complaint, avail of the provisional remedies under the Rules of
Court. Specifically, Rule 57 on preliminary attachment speaks of the grant of the remedy "at
the commencement of the action or at any time before entry of judgment."[40] This phrase refers
to the date of the filing of the complaint, which is the moment that marks "the commencement
of the action." The reference plainly is to a time before summons is served on the defendant, or
even before summons issues.[41]
In Davao Light & Power Co., Inc. v. Court of Appeals,[42] this Court clarified the actual time when
jurisdiction should be had:
It goes without saying that whatever be the acts done by the Court prior to the acquisition of
jurisdiction over the person of defendant x x x issuance of summons, order of attachment
and writ of attachment x x x these do not and cannot bind and affect the defendant until
and unless jurisdiction over his person is eventually obtained by the court, either by
service on him of summons or other coercive process or his voluntary submission to the court's
authority. Hence, when the sheriff or other proper officer commences implementation of the writ
of attachment, it is essential that he serve on the defendant not only a copy of the applicant's
affidavit and attachment bond, and of the order of attachment, as explicitly required by Section
5 of Rule 57, but also the summons addressed to said defendant as well as a copy of the
complaint x x x. (Emphasis supplied.)
In Cuartero v. Court of Appeals,[43] this Court held that the grant of the provisional remedy of
attachment involves three stages: first, the court issues the order granting the application;
49
PROVISIONAL REMEDIES - PRELIMINARY ATTACHMENT CASES
second, the writ of attachment issues pursuant to the order granting the writ; and third, the
writ is implemented. For the initial two stages, it is not necessary that jurisdiction over the
person of the defendant be first obtained. However, once the implementation of the writ
commences, the court must have acquired jurisdiction over the defendant, for without such
jurisdiction, the court has no power and authority to act in any manner against the defendant.
Any order issuing from the Court will not bind the defendant.[44]
Thus, it is indispensable not only for the acquisition of jurisdiction over the person of the
defendant, but also upon consideration of fairness, to apprise the defendant of the complaint
against him and the issuance of a writ of preliminary attachment and the grounds therefor that
prior or contemporaneously to the serving of the writ of attachment, service of summons,
together with a copy of the complaint, the application for attachment, the applicant's affidavit
and bond, and the order must be served upon him.
In the instant case, assuming arguendo that the trial court validly issued the writ of attachment
on November 15, 2002, which was implemented on November 19, 2002, it is to be noted that
the summons, together with a copy of the complaint, was served only on November 21, 2002.
At the time the trial court issued the writ of attachment on November 15, 2002, it can validly
to do so since the motion for its issuance can be filed "at the commencement of the action or
at any time before entry of judgment." However, at the time the writ was implemented, the trial
court has not acquired jurisdiction over the persons of the respondent since no summons was
yet served upon them. The proper officer should have previously or simultaneously with the
implementation of the writ of attachment, served a copy of the summons upon the respondents
in order for the trial court to have acquired jurisdiction upon them and for the writ to have
binding effect. Consequently, even if the writ of attachment was validly issued, it was
improperly or irregularly enforced and, therefore, cannot bind and affect the respondents.
Moreover, although there is truth in the petitioners' contention that an attachment may not be
dissolved by a showing of its irregular or improper issuance if it is upon a ground which is at
the same time the applicant's cause of action in the main case, since an anomalous situation
would result if the issues of the main case would be ventilated and resolved in a mere hearing
of a motion. However, the same is not applicable in the case bar. It is clear from the
respondents' pleadings that the grounds on which they base the lifting of the writ of attachment
are the irregularities in its issuance and in the service of the writ; not petitioners' cause of
action.
Further, petitioners' contention that respondents are barred by estoppel, laches, and
prescription from questioning the orders of the RTC issuing the writ of attachment and that
the issue has become moot and academic by the renewal of the attachment bond covering after
its expiration, is devoid of merit. As correctly held by the CA:
There are two ways of discharging the attachment. First, to file a counter-bond in accordance
with Section 12 of Rule 57. Second[,] [t]o quash the attachment on the ground that it was
irregularly or improvidently issued, as provided for in Section 13 of the same rule. Whether the
attachment was discharged by either of the two ways indicated in the law, 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. The
filing of a counter-bond is merely a speedier way of discharging the attachment writ instead of
the other way.[45]
Moreover, again assuming arguendo that the writ of attachment was validly issued, although
the trial court later acquired jurisdiction over the respondents by service of the summons upon
them, such belated service of summons on respondents cannot be deemed to have cured the
fatal defect in the enforcement of the writ. The trial court cannot enforce such a coercive process
on respondents without first obtaining jurisdiction over their person. The preliminary writ of
attachment must be served after or simultaneous with the service of summons on the
defendant whether by personal service, substituted service or by publication as warranted by
the circumstances of the case. The subsequent service of summons does not confer a
retroactive acquisition of jurisdiction over her person because the law does not allow for
retroactivity of a belated service.[46]
WHEREFORE, premises considered, the petition is DENIED. The Decision and Resolution of
the Court of Appeals dated November 23, 2004 and January 18, 2005, respectively, in CA-G.R.
SP No. 83595 are AFFIRMED.
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PROVISIONAL REMEDIES - PRELIMINARY ATTACHMENT CASES

SO ORDERED. In May 2003, respondents filed with the Regional Trial Court, Branch 197, Las Piñas City (trial
court) a complaint against petitioners for sum of money and damages with a prayer for the
METRO, INC. AND SPOUSES FREDERICK JUAN AND LIZA JUAN, PETITIONERS, VS. issuance of a writ of preliminary attachment. Subsequently, respondents filed an amended
LARA'S GIFTS AND DECORS, INC., LUIS VILLAFUERTE, JR. AND LARA MARIA R. complaint[5] and alleged that, as of July 2002, petitioners defrauded them in the amount of
VILLAFUERTE, RESPONDENTS. $521,841.62. Respondents also prayed for P1,000,000 as moral damages, P1,000,000 as
exemplary damages and 10% of the judgment award as attorney's fees. Respondents also
CARPIO, J.: prayed for the issuance of a writ of preliminary attachment.

The Case In its 23 June 2003 Order,[6] the trial court granted respondents' prayer and issued the writ of
attachment against the properties and assets of petitioners. The 23 June 2003 Order provides:

This is a petition for review[1] of the 29 September 2004 Decision[2] and 2 March 2006
WHEREFORE, let a Writ of Preliminary Attachment issue against the properties and assets of
Resolution[3] of the Court of Appeals in CA-G.R. SP No. 79475. In its 29 September 2004
Defendant METRO, INC. and against the properties and assets of Defendant SPOUSES
Decision, the Court of Appeals granted the petition for certiorari of respondents Lara's Gifts
FREDERICK AND LIZA JUAN not exempt from execution, as may be sufficient to satisfy the
and Decors, Inc., Luis Villafuerte, Jr., and Lara Maria R. Villafuerte (respondents). In its 2
applicants' demand of US$521,841.62 US Dollars or its equivalent in Pesos upon actual
March 2006 Resolution, the Court of Appeals denied the motion for reconsideration of
attachment, which is about P27 Million, unless such Defendants make a deposit or give a bond
petitioners Metro, Inc., Frederick Juan and Liza Juan (petitioners).
in an amount equal to P27 Million to satisfy the applicants' demand exclusive of costs, upon
posting by the Plaintiffs of a Bond for Preliminary Attachment in the amount of twenty five
The Facts
million pesos (P25,000,000.00), subject to the approval of this Court.

SO ORDERED.[7]
Lara's Gifts and Decors Inc. (LGD) and Metro, Inc. are corporations engaged in the business of
manufacturing, producing, selling and exporting handicrafts. Luis Villafuerte, Jr. and Lara
On 26 June 2003, petitioners filed a motion to discharge the writ of attachment. Petitioners
Maria R. Villafuerte are the president and vice-president of LGD respectively. Frederick Juan
argued that the writ of attachment should be discharged on the following grounds: (1) that the
and Liza Juan are the principal officers of Metro, Inc.
2001 agreement was not a valid contract because it did not show that there was a meeting of
the minds between the parties; (2) assuming that the 2001 agreement was a valid contract, the
Sometime in 2001, petitioners and respondents agreed that respondents would endorse to
same was inadmissible because respondents failed to authenticate it in accordance with the
petitioners purchase orders received by respondents from their buyers in the United States of
Rules on Electronic Evidence; (3) that respondents failed to substantiate their allegations of
America in exchange for a 15% commission, to be shared equally by respondents and James
fraud with specific acts or deeds showing how petitioners defrauded them; and (4) that
R. Paddon (JRP), LGD's agent. The terms of the agreement were later embodied in an e-mail
respondents failed to establish that the unpaid commissions were already due and
labeled as the "2001 Agreement."[4]
demandable.

51
PROVISIONAL REMEDIES - PRELIMINARY ATTACHMENT CASES

After considering the arguments of the parties, the trial court granted petitioners' motion and Hence, this petition.
lifted the writ of attachment. The 12 August 2003 Order[8] of the trial court provides:
The 12 August 2003 Order of the Trial Court
Premises considered, after having taken a second hard look at the Order dated June 23, 2003
granting plaintiff's application for the issuance of a writ of preliminary attachment, the Court
holds that the issuance of a writ of preliminary attachment in this case is not justified. According to the trial court, respondents failed to sufficiently show that petitioners were guilty
of fraud either in incurring the obligation upon which the action was brought, or in the
WHEREFORE, the writ of preliminary attachment issued in the instant case is hereby ordered performance thereof. The trial court found no proof that petitioners were motivated by malice
immediately discharged and/or lifted. in entering into the 2001 agreement. The trial court also declared that petitioners' failure to
fully comply with their obligation, absent other facts or circumstances to indicate evil intent,
SO ORDERED.[9] does not automatically amount to fraud. Consequently, the trial court ordered the discharge
of the writ of attachment for lack of evidence of fraud.
Respondents filed a motion for reconsideration. In its 10 September 2003 Order, the trial court
denied the motion. The 29 September 2004 Decision of the Court of Appeals

Respondents filed a petition for certiorari before the Court of Appeals. Respondents alleged that
the trial court gravely abused its discretion when it ordered the discharge of the writ of According to the Court Appeals, the trial court gravely abused its discretion when it ordered
attachment without requiring petitioners to post a counter-bond. the discharge of the writ of attachment without requiring petitioners to post a counter-
bond. The Court of Appeals said that when the writ of attachment is issued upon a ground
In its 29 September 2004 Decision, the Court of Appeals granted respondents' petition. The 29 which is at the same time also the applicant's cause of action, courts are precluded from
September 2004 Decision provides: hearing the motion for dissolution of the writ when such hearing would necessarily force a trial
on the merits of a case on a mere motion.[11] The Court of Appeals pointed out that, in this case,
WHEREFORE, finding merit in the petition, We GRANT the same. The assailed Orders are fraud was not only alleged as the ground for the issuance of the writ of attachment, but was
hereby ANNULLED and SET ASIDE. However, the issued Writ of Preliminary Attachment may actually the core of respondents' complaint. The Court of Appeals declared that the only way
be ordered discharged upon the filing by the private respondents of the proper counter-bond that the writ of attachment can be discharged is by posting a counter-bond in accordance with
pursuant to Section 12, Rule 57 of the Rules of Civil Procedure. Section 12,[12] Rule 57 of the Rules of Court.

SO ORDERED.[10] The Issue

Petitioners filed a motion for reconsideration. In its 2 March 2006 Resolution, the Court of
Appeals denied the motion.

52
PROVISIONAL REMEDIES - PRELIMINARY ATTACHMENT CASES
Petitioners raise the question of whether the writ of attachment issued by the trial court was
improperly issued such that it may be discharged without the filing of a counter-bond.
The Ruling of the Court
The petition has no
Petitioners contend that the writ of attachment was improperly issued because respondents'
amended complaint failed to allege specific acts or circumstances constitutive
fraud. Petitioners insist that the improperly issued writ of attachment may be discharged
without the necessity of filing a counter-bond. Petitioners also argue that respondents failed
to show that the writ of attachment was issued upon a ground which is at the same time also
respondents' cause of action. Petitioners maintain that respondents' amended complaint was
not an action based on fraud but was a simple case for collection of sum of money plus
damages.
On the other hand, respondents argue that the Court of Appeals did not err in ruling that the
writ of attachment can only be discharged by filing a counter-bond. According to respondents,
petitioners cannot avail of Section 13,[13] Rule 57 of the Rules of Court to have the attachment
set aside because the ground for the issuance of the writ of attachment is also the basis of
respondents' amended complaint. Respondents assert that the amended complaint is a
complaint for damages for the breach of obligation and acts of fraud committed by petitioners.
In this case, the basis of respondents' application for the issuance of a writ of preliminary
attachment is Section 1(d), Rule 57 of the Rules of Court which provides:
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 maybe
recovered in the following cases: x x
(d) In an action against a party who has been guilty of fraud in contracting the debt or incurring
the obligation upon which the action is brought, or in the performance thereof; x x x
In Liberty Insurance Corporation v. Court of Appeals,[14] we explained:
To sustain an attachment on this ground, it must be shown that the debtor in contracting the
merit. debt or incurring the obligation intended to defraud the creditor. The fraud must relate to the
execution of the agreement and must have been the reason which induced the other party into
giving consent which he would not have otherwise given. To constitute a ground for attachment
of in Section 1(d), Rule 57 of the Rules of Court, fraud should be committed upon contracting the
obligation sued upon. A debt is fraudulently contracted if at the time of contracting it the debtor
has a preconceived plan or intention not to pay, as it is in this case.[15]
The applicant for a writ of preliminary attachment must sufficiently show the factual
circumstances of the alleged fraud because fraudulent intent cannot be inferred from the
debtor's mere non-payment of the debt or failure to comply with his obligation. [16]
In their amended complaint, respondents alleged the following in support of their prayer for a
writ of preliminary attachment:
5. Sometime in early 2001, defendant Frederick Juan approached plaintiff spouses and asked
them to help defendants' export business. Defendants enticed plaintiffs to enter into a
business deal. He proposed to plaintiff spouses the following:
a. That plaintiffs transfer and endorse to defendant Metro some of the Purchase Orders (PO's)
they will receive from their US buyers;
b. That defendants will sell exclusively and "only thru" plaintiffs for their US buyer;
xxx
x
6. After several discussions on the matter and further inducement on the part of defendant
53
PROVISIONAL REMEDIES - PRELIMINARY ATTACHMENT CASES

spouses, plaintiff spouses agreed. Thus, on April 21, 2001, defendant spouses confirmed and only way it can be dissolved is by filing a counter-bond in accordance with Section 12, Rule 57
finalized the agreement in a letter-document entitled "2001 Agreement" they emailed to plaintiff of the Rules of Court.
spouses, a copy of which is hereto attached as Annex "A".
Moreover, the reliance of the Court of Appeals in the cases of Chuidian v. Sandiganbayan,[18]
x x x FCY Construction Group, Inc. v. Court of Appeals,[19] and Liberty Insurance Corporation v. Court
of Appeals[20] is proper. The rule that "when the writ of attachment is issued upon a ground
20. Defendants are guilty of fraud committed both at the inception of the agreement and in which is at the same time the applicant's cause of action, the only other way the writ can be
the performance of the obligation. Through machinations and schemes, defendants lifted or dissolved is by a counter-bond"[21] is applicable in this case. It is clear that in
successfully enticed plaintiffs to enter into the 2001 Agreement. In order to secure plaintiffs' respondents' amended complaint of fraud is not only alleged as a ground for the issuance of
full trust in them and lure plaintiffs to endorse more POs and increase the volume of the the writ of preliminary attachment, but it is also the core of respondents' complaint. The fear
orders, defendants during the early part, remitted to plaintiffs shares under the Agreement. of the Court of Appeals that petitioners could force a trial on the merits of the case on the
strength of a mere motion to dissolve the attachment has a basis.
21. However, soon thereafter, just when the orders increased and the amount involved likewise
increased, defendants suddenly, without any justifiable reasons and in pure bad faith and WHEREFORE, we DENY the petition. We AFFIRM the 29 September 2004 Decision and 2
fraud, abandoned their contractual obligations to remit to plaintiffs their shares. And March 2006 Resolution of the Court of Appeals in CA-G.R. SP No. 79475.
worse, defendants transacted directly with plaintiffs' foreign buyer to the latter's
exclusion and damage. Clearly, defendants planned everything from the beginning, SO ORDERED.
employed ploy and machinations to defraud plaintiffs, and consequently take from them a
valuable client. ALFREDO C. LIM, JR., PETITIONER, VS. SPOUSES TITO S. LAZARO AND CARMEN T.
LAZARO, RESPONDENTS.
22. Defendants are likewise guilty of fraud by violating the trust and confidence reposed
upon them by plaintiffs. Defendants received the proceeds of plaintiffs' LCs with the PERLAS-BERNABE, J.:
clear obligation of remitting 15% thereof to the plaintiffs. Their refusal and failure to
remit the said amount despite demand constitutes a breach of trust amounting to malice Assailed in this petition for review on certiorari[1] are the July 10, 2008 Decision[2] and December
and fraud.[17] (Emphasis and underscoring in the original) (Boldfacing and italicization 18, 2008 Resolution[3] of the Court of Appeals (CA) in CA-G.R. SP No. 100270, affirming the
supplied) March 29, 2007 Order[4] of the Regional Trial Court of Quezon City, Branch 223 (RTC), which
lifted the writ of preliminary attachment issued in favor of petitioner Alfredo C. Lim, Jr. (Lim,
Jr.).
We rule that respondents' allegation that petitioners undertook to sell exclusively and only
through JRP/LGD for Target Stores Corporation but that petitioners transacted directly with
The Facts
respondents' foreign buyer is sufficient allegation of fraud to support their application for a writ
of preliminary attachment. Since the writ of preliminary attachment was properly issued, the
On August 22, 2005, Lim, Jr. filed a complaint[5] for sum of money with prayer for the issuance

54
PROVISIONAL REMEDIES - PRELIMINARY ATTACHMENT CASES

of a writ of preliminary attachment before the RTC, seeking to recover from respondents- Subsequently, Sps. Lazaro filed an Omnibus Motion,[17] seeking to lift the writ of preliminary
spouses Tito S. Lazaro and Carmen T. Lazaro (Sps. Lazaro) the sum of P2,160,000.00, which attachment annotated on the subject TCTs, which the RTC granted on March 29, 2007. [18] It
represented the amounts stated in several dishonored checks issued by the latter to the former, ruled that a writ of preliminary attachment is a mere provisional or ancillary remedy, resorted
as well as interests, attorney’s fees, and costs. The RTC granted the writ of preliminary to by a litigant to protect and preserve certain rights and interests pending final judgment.
attachment application[6] and upon the posting of the required P2,160,000.00 bond,[7] issued Considering that the case had already been considered closed and terminated by the rendition
the corresponding writ on October 14, 2005.[8] In this accord, three (3) parcels of land situated of the January 5, 2007 Amended Decision on the basis of the September 22, 2006 compromise
in Bulacan, covered by Transfer Certificates of Title (TCT) Nos. T-64940, T-64939, and T-86369 agreement, the writ of preliminary attachment should be lifted and quashed. Consequently, it
(subject TCTs), registered in the names of Sps. Lazaro, were levied upon. [9] ordered the Registry of Deeds of Bulacan to cancel the writ’s annotation on the subject TCTs.

In their Answer with Counterclaim,[10] Sps. Lazaro averred, among others, that Lim, Jr. had no Lim, Jr. filed a motion for reconsideration[19] which was, however, denied on July 26, 2007,[20]
cause of action against them since: (a) Colim Merchandise (Colim), and not Lim, Jr., was the prompting him to file a petition for certiorari[21] before the CA.
payee of the fifteen (15) Metrobank checks; and (b) the PNB and Real Bank checks were not
drawn by them, but by Virgilio Arcinas and Elizabeth Ramos, respectively. While they admit The CA Ruling
their indebtedness to Colim, Sps. Lazaro alleged that the same had already been substantially
reduced on account of previous payments which were apparently misapplied. In this regard, On July 10, 2008, the CA rendered the assailed decision,[22] finding no grave abuse of discretion
they sought for an accounting and reconciliation of records to determine the actual amount on the RTC’s part. It observed that a writ of preliminary attachment may only be issued at the
due. They likewise argued that no fraud should be imputed against them as the aforesaid commencement of the action or at any time before entry of judgment. Thus, since the principal
checks issued to Colim were merely intended as a form of collateral. [11] Hinged on the same cause of action had already been declared closed and terminated by the RTC, the provisional
grounds, Sps. Lazaro equally opposed the issuance of a writ of preliminary attachment. [12] or ancillary remedy of preliminary attachment would have no leg to stand on, necessitating its
discharge.[23]
Nonetheless, on September 22, 2006, the parties entered into a Compromise Agreement[13]
whereby Sps. Lazaro agreed to pay Lim, Jr. the amount of P2,351,064.80 on an installment Aggrieved, Lim, Jr. moved for reconsideration[24] which was likewise denied by the CA in its
basis, following a schedule of payments covering the period from September 2006 until October December 18, 2008 Resolution.[25]
2013, under the following terms, among others: (a) that should the financial condition of Sps.
Lazaro improve, the monthly installments shall be increased in order to hasten the full payment Hence, the instant petition.
of the entire obligation;[14] and (b) that Sps. Lazaro’s failure to pay any installment due or the
dishonor of any of the postdated checks delivered in payment thereof shall make the whole The Issue Before the Court
obligation immediately due and demandable.
The sole issue in this case is whether or not the writ of preliminary attachment was properly
The aforesaid compromise agreement was approved by the RTC in its October 31, 2006 lifted.
Decision[15] and January 5, 2007 Amended Decision.[16]
The Court’s Ruling

55
PROVISIONAL REMEDIES - PRELIMINARY ATTACHMENT CASES

Did the compromise agreement between Antonio Garcia and the consortium discharge the
The petition is meritorious. latter’s attachment lien over the disputed shares?

By its nature, preliminary attachment, under Rule 57 of the Rules of Court (Rule 57), is an CEIC argues that a writ of attachment is a mere auxiliary remedy which, upon the dismissal of
ancillary remedy applied for not for its own sake but to enable the attaching party to realize the case, dies a natural death. Thus, when the consortium entered into a compromise
upon the relief sought and expected to be granted in the main or principal action; it is a agreement, which resulted in the termination of their case, the disputed shares were released
measure auxiliary or incidental to the main action. As such, it is available during its pendency from garnishment.
which may be resorted to by a litigant to preserve and protect certain rights and interests
during the interim, awaiting the ultimate effects of a final judgment in the case.[26] In addition, We disagree. To subscribe to CEIC’s contentions would be to totally disregard the concept and
attachment is also availed of in order to acquire jurisdiction over the action by actual or purpose of a preliminary attachment.
constructive seizure of the property in those instances where personal or substituted service of
summons on the defendant cannot be effected.[27] x x x x

In this relation, while the provisions of Rule 57 are silent on the length of time within which an The case at bench admits of peculiar character in the sense that it involves a compromise
attachment lien shall continue to subsist after the rendition of a final judgment, jurisprudence agreement. Nonetheless, x x x. The parties to the compromise agreement should not be
dictates that the said lien continues until the debt is paid, or the sale is had under deprived of the protection provided by an attachment lien especially in an instance
execution issued on the judgment or until the judgment is satisfied, or the attachment where one reneges on his obligations under the agreement, as in the case at bench, where
discharged or vacated in the same manner provided by law.[28] Antonio Garcia failed to hold up his own end of the deal, so to speak.

Applying these principles, the Court finds that the discharge of the writ of preliminary x x x x
attachment against the properties of Sps. Lazaro was improper.
If we were to rule otherwise, we would in effect create a back door by which a debtor can easily
Records indicate that while the parties have entered into a compromise agreement which had escape his creditors. Consequently, we would be faced with an anomalous situation where a
already been approved by the RTC in its January 5, 2007 Amended Decision, the obligations debtor, in order to buy time to dispose of his properties, would enter into a compromise
thereunder have yet to be fully complied with – particularly, the payment of the total agreement he has no intention of honoring in the first place. The purpose of the provisional
compromise amount of P2,351,064.80. Hence, given that the foregoing debt remains unpaid, remedy of attachment would thus be lost. It would become, in analogy, a declawed and
the attachment of Sps. Lazaro’s properties should have continued to subsist. toothless tiger. (Emphasis and underscoring supplied; citations omitted)

In Chemphil Export & Import Corporation v. CA,[29] the Court pronounced that a writ of In fine, the Court holds that the writ of preliminary attachment subject of this case should be
attachment is not extinguished by the execution of a compromise agreement between the restored and its annotation revived in the subject TCTs, re-vesting unto Lim, Jr. his preferential
parties, viz: lien over the properties covered by the same as it were before the cancellation of the said writ.
Lest it be misunderstood, the lien or security obtained by an attachment even before judgment,

56
PROVISIONAL REMEDIES - PRELIMINARY ATTACHMENT CASES

is in the nature of a vested interest which affords specific security for the satisfaction of the executed continuing guaranty/comprehensive surety agreements binding themselves solidarily
debt put in suit.[30] Verily, the lifting of the attachment lien would be tantamount to an with the corporation. On maturity, South Pacific and its guarantors failed to honor their
abdication of Lim, Jr.’s rights over Sps. Lazaro’s properties which the Court, absent any respective covenants.
justifiable ground therefor, cannot allow.
On January 26, 2001, Allied Bank filed a complaint for collection of a sum of money with a
WHEREFORE, the petition is GRANTED. The July 10, 2008 Decision and the December 18, prayer for the issuance of a writ of preliminary attachment against respondents. Allied Bank
2008 Resolution of the Court of Appeals in CA-G.R. SP No. 100270 are REVERSED and SET prayed in its complaint (1) that upon its filing, a writ of preliminary attachment be issued ex
ASIDE, and the March 29, 2007 Order of the Regional Trial Court of Quezon City, Branch 223 parte against all leviable properties of the respondents as may be sufficient to satisfy
is NULLIFIED. Accordingly, the trial court is directed to RESTORE the attachment lien over petitioner’s claim; and (2) that the respondents be ordered to pay petitioner P90,000,000 plus
Transfer Certificates of Title Nos. T-64940, T-64939, and T-86369, in favor of petitioner Alfredo interest and charges, as well as attorney’s fees and costs of suit.
C. Lim, Jr.
During the ex parte hearing for the issuance of a writ of preliminary attachment, Allied Bank’s
SO ORDERED. lone witness, Account Officer Marilou T. Go, testified that Allied Bank approved the
corporation’s application for credit facilities on the latter’s representation that (1) it was in good
ALLIED BANKING CORPORATION, Petitioner, vs. SOUTH PACIFIC SUGAR fiscal condition and had positive business projections as stated in a voluminous Information
CORPORATION, MARGARITA CHUA SIA, AGOSTO SIA, LIN FAR CHUA, GERRY CHUA, Memorandum, and that (2) it would use the loan to fund the operations of the sugar refinery.
SIU DY CHUA, and ANTONIO CHUA, Respondents. Go further testified that Allied Bank discovered soon after that these representations were false;
that the loans were allegedly “diverted to illegitimate purposes;” that as of January 2001, the
QUISUMBING, J.: loan amounted to P90 million; that based on a project study by a consulting company, Seed
Capital Ventures, Inc., South Pacific was suffering losses and incurring debts in the millions;
The instant petition assails the Decision[1] dated February 3, 2004 and the Resolution[2] dated that there had been no credit investigation to appraise the corporation’s business operations;
May 13, 2004 of the Court of Appeals in CA-G.R. SP No. 68619. The appellate court had found and that Allied Bank relied on the financial statements of the corporation. [4]
no grave abuse of discretion on the part of the Regional Trial Court (RTC) of Makati City, Branch
148, in discharging the writ of preliminary attachment it previously granted, and dismissed the Thereafter, the trial court granted the attachment and Allied Bank posted the requisite bond.
petition for certiorari. The motion for reconsideration was denied.
The respondents filed a motion to discharge the attachment with an urgent motion to defer
The factual antecedents of this case are as follows: further the implementation of the writ, grounded upon the arguments that (1) the evidence of
fraud was insufficient and self-serving; and (2) there was no evidence that South Pacific used
South Pacific Sugar Corporation (South Pacific), on March 23, 1999, issued three promissory the loan for other purposes. The respondents pointed out that they have been dealing with
notes totaling P96,000,000[3] to the petitioner, Allied Banking Corporation (hereafter Allied Allied Bank since 1995, and had paid a total of P210 million out of a maximum exposure of
Bank), to secure payment of loans contracted during the same period. Respondents Margarita about P300 million, and that the P90 million subject of the pending suit constitutes merely the
Chua Sia, Agosto Sia, Lin Far Chua, Gerry Chua, Siu Dy Chua, and Antonio Chua (guarantors) balance of their loan.[5]

57
PROVISIONAL REMEDIES - PRELIMINARY ATTACHMENT CASES

The trial court granted the respondents’ motion to defer the implementation of the writ of Having failed to obtain a reversal by its motion for reconsideration before the appellate court,
attachment. Allied Bank opposed the motion. After hearing, the court granted the motion to Allied Bank now interposes this appeal through a petition for review, raising the following
discharge[6] and denied the motion for reconsideration.[7] issues:

I.
On certiorari, Allied Bank averred that the trial court acted with precipitate haste in deciding
the motion to discharge the attachment without its written opposition, and with grave abuse of
THE HONORABLE COURT OF APPEALS ERRED IN FINDING THAT THERE WAS NO
discretion in dissolving the writ without requiring the guarantors to post a counter-bond.
INTENTION ON [THE] PART OF RESPONDENTS TO DEFRAUD THE PETITIONER.
Finally, it asserted that the trial court failed to appreciate evidence of respondents’ fraud.

II.
The Court of Appeals, however, affirmed the trial court’s order. It ruled that Allied Bank was
not denied its day in court since it was allowed to argue its position during the hearing on the
THE HONORABLE COURT OF APPEALS ERRED IN NOT FINDING THAT A COUNTER-BOND
motion and was given ample opportunity to file its opposition. However, Allied Bank failed to
WAS NECESSARY FOR THE DISCHARGE OF THE WRIT OF PRELIMINARY ATTACHMENT.
take advantage of the period given to it. Instead of filing its opposition within the time allowed
by the Court, Allied Bank filed a motion for extension of time by registered mail. Then, it filed
its opposition also only by registered mail notwithstanding that it was forewarned that the III.
motion to discharge the attachment would be considered submitted for resolution with or
without the parties’ respective position papers.[8]
THE HONORABLE COURT OF APPEALS ERRED IN NOT FINDING THAT THE COURT A QUO
COMMITTED GRAVE ABUSE OF DISCRETION IN DISCHARGING THE WRIT OF PRELIMINARY
On the issue of discharge of the writ notwithstanding fraud, the Court of Appeals held that the
ATTACHMENT WITHOUT AFFORDING THE PETITIONER THE REQUISITE DUE PROCESS OF
inability of respondents to pay does not amount to a fraudulent intent. The Court of Appeals
LAW.[11]
stated that Allied Bank failed to justify the grant of a writ of attachment. Essentially, it found
wanting such evidence as would establish fraud as required before a writ of attachment may The ultimate issue raised in this petition is whether there was fraud committed by respondents
be granted under Section 1,[9] Rule 57 of the 1997 Rules of Civil Procedure. It found that “the against petitioner bank such that a writ of attachment may be issued against respondents.
core of the prayer for the attachment was the failure of the respondents to pay their obligations
on maturity date,” not fraudulent intent to evade their commitments; and that the “inability to Allied Bank contends that respondents were guilty of fraud in contracting for their loan
pay one’s creditors is not necessarily synonymous with fraudulent intent not to honor an amounting to about P90 million and in performing their obligations under said loan, as
obligation.”[10] The appellate court added that Allied Bank was aware of the corporation’s sufficiently testified to by its lone witness. Respondents counter that they had no fraudulent
financial standing and capacity to pay its loans when Allied Bank granted credit facilities to it. intent in such contract for loan nor in the performance of obligations thereunder.
The appellate court noted that respondents had disclosed their financial standing through the
Information Memorandum they submitted. The trial court, therefore, committed no grave error, A thorough examination of witness Marilou Go’s testimony, however, reveals that her testimony
said the appellate court. did not detail how respondents induced or deceived Allied Bank into granting the loans. She
58
PROVISIONAL REMEDIES - PRELIMINARY ATTACHMENT CASES

mentioned an Information Memorandum which allegedly misled Allied Bank to grant the loan. x x x x
She claimed that promising financial projections in said Memorandum guaranteeing South
Pacific’s present and future capacity to pay convinced Allied Bank to approve the loan. Yet, the 4. Defendants committed fraud in contracting the obligations upon which the present action is
Information Memorandum was never presented in evidence. Neither was its existence proved, based and in the performance thereof. Among others, defendants induced plaintiff to grant the
nor its authorship authenticated, much less its contents shown to explain how the information subject loans to defendant corporation by wilfully and deliberately misrepresenting that, one,
could have enticed, misinformed or deceived Allied Bank. The alleged content of the document, the proceeds of the loans would be used as additional working capital and, two, they would be
which was not identified nor formally offered in evidence, is technically pure hearsay. It cannot in a financial position to pay, and would most certainly pay, the loan obligations on their
be admitted or considered as the proof of petitioner’s contention.[12] maturity dates. In truth, defendants had no intention of honoring their commitments as shown
by the fact that upon their receipt of the proceeds of the loans, they diverted the same to
Next, the witness of petitioner, Marilou Go, cited a project study prepared by a certain illegitimate purposes and then brazenly ignored and resisted plaintiff’s lawful demands for
consulting firm, Seed Capital Ventures, Inc.. According to petitioner, the project study them to settle their past due loan obligations;[13]
suggested that only about 60% of South Pacific’s mill and refinery was being utilized to
capacity, leading Allied Bank to suspect that the loan was being diverted to other purposes. xxxx
Yet, again, the project study was neither presented nor offered in evidence, hence testimony on
Such general averment will not suffice to support the issuance of the writ of preliminary
it is just hearsay.
attachment. It is necessary to recite in what particular manner an applicant for the writ of
attachment was defrauded. In a prayer for a writ of attachment, as already held by this Court:
The same witness also testified that South Pacific was indebted in millions of pesos to several
other banks, but then again, no documentary evidence or other proof was presented to … It is not enough for the complaint to ritualistically cite, as here, that the defendants are
establish such fact. Hence, the witness’ testimony remains uncorroborated. “guilty of fraud in contracting an obligation.” An order of attachment cannot be issued on a
general averment, such as one ceremoniously quoting from a pertinent rule. The need for a
In our considered view, without presenting the documents adverted to by petitioner’s lone recitation of factual circumstances that support the application becomes more
witness, Allied Bank’s allegations of fraud amount to no more than mere conjectures. Yet there compelling here considering that the ground relied upon is “fraud in contracting an
is no showing why Allied Bank, being in the business of loans, could not obtain and present obligation.” The complaint utterly failed to even give a hint about what constituted the
the necessary documents in support of its allegations. Thus, we are in agreement that the Court fraud and how it was perpetrated. Fraud cannot be presumed.[14] (Emphasis supplied.)
of Appeals was correct in finding that the testimony of Allied Bank’s witness failed to show that
Likewise, written contracts are presumed to have been entered into voluntarily and for a
respondents’ indebtedness was incurred fraudulently.
sufficient consideration. Section 1,[15] Rule 131 of the Rules of Court instructs that each party
must prove his own affirmative allegations. To repeat, in this jurisdiction, fraud is never
Moreover, even a cursory examination of the bank’s complaint will reveal that it cited no factual
presumed. Moreover, written contracts such as the documents executed by the parties in the
circumstance to show fraud on the part of respondents. The complaint only had a general
present case, are presumed to have been entered into for a sufficient consideration. [16]
statement in the Prayer for the Issuance of a Writ of Preliminary Attachment, reproduced in
the attached affidavit of petitioner’s witness Go who stated as follows:
In this instance, the transaction between the bank and its client appears to have commenced

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PROVISIONAL REMEDIES - PRELIMINARY ATTACHMENT CASES

rather regularly and aboveboard. The parties have been transacting business with each other
since 1995. Up until the present case, it appears Allied Bank had not complained of any Again, we stress that this Court gives credence to the factual findings of the trial court when
wrongdoing by this client. It also appears that South Pacific had availed of a total of P300 supported by the evidence and gives them more weight still when the same are affirmed by the
million in credit accommodations from Allied Bank, P210 million of which has already been Court of Appeals.[22]
paid – a fact Allied Bank did not deny nor object to.[17] Allied Bank even admitted that of the
outstanding loan of P96 million, P6 million had been paid. These facts hardly point to the WHEREFORE, the instant petition is DENIED for lack of merit. The Decision dated February
direction of fraud. Allied Bank claims repeatedly that the fact that P210 million out of P300 3, 2004 and the Resolution dated May 13, 2004 of the Court of Appeals in CA-G.R. SP No.
million has been paid does not discount the possibility that respondents indeed committed 68619 are AFFIRMED. The Order[23] dated May 23, 2001 of the Regional Trial Court of Makati
fraud in their assumption and/or the performance of their obligations. Yet, it never denied such City, Branch 148, discharging the writ of preliminary attachment in Civil Case No. 01-121 is
fact of payment of the P210 million. As the Court of Appeals pointedly held, UPHELD. No pronouncement as to costs.

…The inability to pay one’s creditors is not necessarily synonymous with fraudulent
SO ORDERED.
intent not to honor an obligation. There must be factual allegations as to how fraud was
committed. Fraud may be gleaned from a preconceived plan or intention not to pay.
PHILIPPINE BANK OF COMMUNICATIONS, PETITIONER, VS. HON. COURT OF APPEALS
Unfortunately, this does not appear to be so in the case at bench. In fact, in its complaint
AND BERNARDINO VILLANUEVA, RESPONDENTS.
the petitioner alleged that the private respondents had a total obligation of
P96,000,000.00 covered by three (3) separate promissory notes, out of which, they paid
G.R. NO. 119723
only P6,000,000.00 leaving an unpaid outstanding obligation in the sum of
P90,000,000.00. There was no mention at all that the indebtedness was incurred in
PHILIPPINE BANK OF COMMUNICATIONS, PETITIONER, VS. HON. COURT OF APPEALS
consequence of fraud; neither does it show in the testimony of petitioner’s witness,
AND FILIPINAS TEXTILE MILLS, INC., RESPONDENTS.
Marilou T. Go, as summarized by the public respondent in the order dated February 20, 2001,
that there exists a preconceived plan or intention not to pay their obligation in defraudation of
YNARES-SANTIAGO, J.:
the petitioner….[18] (Emphasis supplied.)

We take this opportunity to reiterate that an application for a writ of attachment, being a harsh Before us are consolidated petitions for review both filed by Philippine Bank of
remedy, is to be construed strictly in favor of the defendant. [19] For by it, the reputation of the Communications; one against the May 24, 1994 Decision of respondent Court of Appeals in
debtor may be seriously prejudiced. Thus, caution must be exercised in granting the writ. There CA-G.R. SP No. 32863[1] and the other against its March 31, 1995 Decision in CA-G.R. SP No.
must be more compelling reasons to justify attachment beyond a mere general assertion of 32762.[2] Both Decisions set aside and nullified the August 11, 1993 Order[3] of the Regional
fraud. This must be so lest we, as Garcia v. Reyes[20] puts it, be “spinning tight webs on Trial Court of Manila, Branch 7, granting the issuance of a writ of preliminary attachment in
gossamer filigrees.”[21] Civil Case No. 91-56711.

We need not tarry further to discuss the other issues raised in the petition for being moot on The case commenced with the filing by petitioner, on April 8, 1991, of a Complaint against
account of the foregoing pronouncement. private respondent Bernardino Villanueva, private respondent Filipinas Textile Mills and one

60
PROVISIONAL REMEDIES - PRELIMINARY ATTACHMENT CASES

Sochi Villanueva (now deceased) before the Regional Trial Court of Manila. In the said be established in order for a writ of preliminary attachment to issue.
Complaint, petitioner sought the payment of P2,244,926.30 representing the proceeds or value
of various textile goods, the purchase of which was covered by irrevocable letters of credit and Hence, the instant consolidated[5] petitions charging that respondent Court of Appeals erred in
trust receipts executed by petitioner with private respondent Filipinas Textile Mills as obligor; -
which, in turn, were covered by surety agreements executed by private respondent Bernardino
"1. Holding that there was no sufficient basis for the issuance of the writ of preliminary
Villanueva and Sochi Villanueva. In their Answer, private respondents admitted the existence
attachment in spite of the allegations of fraud, embezzlement and misappropriation
of the surety agreements and trust receipts but countered that they had already made
of the proceeds or goods entrusted to the private respondents;
payments on the amount demanded and that the interest and other charges imposed by
petitioner were onerous.
2. Disregarding the fact that that the failure of FTMI and Villanueva to remit the
proceeds or return the goods entrusted, in violation of private respondents' fiduciary
On May 31, 1993, petitioner filed a Motion for Attachment, [4] contending that violation of the
duty as entrustee, constitute embezzlement or misappropriation which is a valid
trust receipts law constitutes estafa, thus providing ground for the issuance of a writ of
ground for the issuance of a writ of preliminary attachment."[6]
preliminary attachment; specifically under paragraphs "b" and "d," Section 1, Rule 57 of the
We find no merit in the instant petitions.
Revised Rules of Court. Petitioner further claimed that attachment was necessary since private
respondents were disposing of their properties to its detriment as a creditor. Finally, petitioner
To begin with, we are in accord with respondent Court of Appeals in CA-G.R. SP No. 32863
offered to post a bond for the issuance of such writ of attachment.
that the Motion for Attachment filed by petitioner and its supporting affidavit did not
sufficiently establish the grounds relied upon in applying for the writ of preliminary
The Motion was duly opposed by private respondents and, after the filing of a Reply thereto by
attachment.
petitioner, the lower court issued its August 11, 1993 Order for the issuance of a writ of
preliminary attachment, conditioned upon the filing of an attachment bond. Following the
The Motion for Attachment of petitioner states that -
denial of the Motion for Reconsideration filed by private respondent Filipinas Textile Mills, both
private respondents filed separate petitions for certiorari before respondent Court assailing the
1. The instant case is based on the failure of defendants as entrustee to pay or remit the
order granting the writ of preliminary attachment.
proceeds of the goods entrusted by plaintiff to defendant as evidenced by the trust receipts
(Annexes "B", "C" and "D" of the complaint), nor to return the goods entrusted thereto, in
Both petitions were granted, albeit on different grounds. In CA-G.R. SP No. 32762, respondent
violation of their fiduciary duty as agent or entrustee;
Court of Appeals ruled that the lower court was guilty of grave abuse of discretion in not
conducting a hearing on the application for a writ of preliminary attachment and not requiring
2. Under Section 13 of P.D. 115, as amended, violation of the trust receipt law
petitioner to substantiate its allegations of fraud, embezzlement or misappropriation. On the
constitute(s) estafa (fraud and/or deceit) punishable under Article 315 par. 1[b] of the
other hand, in CA-G.R. SP No. 32863, respondent Court of Appeals found that the grounds
Revised Penal Code;
cited by petitioner in its Motion do not provide sufficient basis for the issuance of a writ of
preliminary attachment, they being mere general averments. Respondent Court of Appeals held
that neither embezzlement, misappropriation nor incipient fraud may be presumed; they must

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PROVISIONAL REMEDIES - PRELIMINARY ATTACHMENT CASES

3. On account of the foregoing, there exist(s) valid ground for the issuance of a writ of the obligation upon which the action is brought, or in concealing or disposing of the property
preliminary attachment under Section 1 of Rule 57 of the Revised Rules of Court for the taking, detention or conversion of which the action is brought;
particularly under sub-paragraphs "b" and "d", i.e. for embezzlement or fraudulent
xxxxxxxxx
misapplication or conversion of money (proceeds) or property (goods entrusted) by an agent
(entrustee) in violation of his fiduciary duty as such, and against a party who has been
While the Motion refers to the transaction complained of as involving trust receipts, the
guilty of fraud in contracting or incurring the debt or obligation;
violation of the terms of which is qualified by law as constituting estafa, it does not follow that
a writ of attachment can and should automatically issue. Petitioner cannot merely cite Section
4. The issuance of a writ of preliminary attachment is likewise urgently necessary as there
1(b) and (d), Rule 57, of the Revised Rules of Court, as mere reproduction of the rules, without
exist(s) no sufficient security for the satisfaction of any judgment that may be rendered
more, cannot serve as good ground for issuing a writ of attachment. An order of attachment
against the defendants as the latter appears to have disposed of their properties to the
cannot be issued on a general averment, such as one ceremoniously quoting from a pertinent
detriment of the creditors like the herein plaintiff;
rule.[7]

5. Herein plaintiff is willing to post a bond in the amount fixed by this Honorable Court
The supporting Affidavit is even less instructive. It merely states, as follows --
as a condition to the issuance of a writ of preliminary attachment against the properties of
I, DOMINGO S. AURE, of legal age, married, with address at No. 214-216 Juan Luna Street,
the defendants.
Binondo, Manila, after having been sworn in accordance with law, do hereby depose and say,
THAT:
Section 1(b) and (d), Rule 57 of the then controlling Revised Rules of Court, provides, to wit -
SECTION 1. Grounds upon which attachment may issue. - A plaintiff or any proper party may,
1. I am the Assistant Manager for Central Collection Units Acquired Assets Section of the
at the commencement of the action or at any time thereafter, have the property of the adverse
plaintiff, Philippine Bank of Communications, and as such I have caused the preparation
party attached as security for the satisfaction of any judgment that may be recovered in the
of the above motion for issuance of a writ of preliminary attachment;
following cases:

2. I have read and understood its contents which are true and correct of my own knowledge;
xxxxxxxxx

3. There exist(s) sufficient cause of action against the defendants in the instant case;
(b) In an action for money or property embezzled or fraudulently misapplied or converted to his
use by a public officer, or an officer of a corporation, or an attorney, factor, broker, agent or
4. The instant case is one of those mentioned in Section 1 of Rule 57 of the Revised Rules
clerk, in the course of his employment as such, or by any other person in a fiduciary capacity,
of Court wherein a writ of preliminary attachment may be issued against the defendants,
or for a willful violation of duty;
particularly sub-paragraphs "b" and "d" of said section;

xxxxxxxxx
5. There is no other sufficient security for the claim sought to be enforced by the instant
case and the amount due to herein plaintiff or the value of the property sought to be
(d) In an action against a party who has been guilty of fraud in contracting the debt or incurring

62
PROVISIONAL REMEDIES - PRELIMINARY ATTACHMENT CASES
recovered is as much as the sum for which the order for attachment is granted, above all
legal counterclaims.
Again, it lacks particulars upon which the court can discern whether or not a writ of attachment
should issue.
Petitioner cannot insist that its allegation that private respondents failed to remit the proceeds
of the sale of the entrusted goods nor to return the same is sufficient for attachment to issue.
We note that petitioner anchors its application upon Section 1(d), Rule 57. This particular
provision was adequately explained in Liberty Insurance Corporation v. Court of Appeals,[8] as
follows -
To sustain an attachment on this ground, it must be shown that the debtor in contracting the
debt or incurring the obligation intended to defraud the creditor. The fraud must relate to the
execution of the agreement and must have been the reason which induced the other party into
giving consent which he would not have otherwise given. To constitute a ground for attachment
in Section 1 (d), Rule 57 of the Rules of Court, fraud should be committed upon contracting
the obligation sued upon. A debt is fraudulently contracted if at the time of contracting it
the debtor has a preconceived plan or intention not to pay, as it is in this case. Fraud is a
state of mind and need not be proved by direct evidence but may be inferred from the
circumstances attendant in each case (Republic v. Gonzales, 13 SCRA 633). (Emphasis ours)
We find an absence of factual allegations as to how the fraud alleged by petitioner was
committed. As correctly held by respondent Court of Appeals, such fraudulent intent not to
honor the admitted obligation cannot be inferred from the debtor's inability to pay or to comply
with the obligations.[9] On the other hand, as stressed, above, fraud may be gleaned from a
preconceived plan or intention not to pay. This does not appear to be so in the case at bar. In
fact, it is alleged by private respondents that out of the total P419,613.96 covered by the subject
trust receipts, the amount of P400,000.00 had already been paid, leaving only P19,613.96 as
balance. Hence, regardless of the arguments regarding penalty and interest, it can hardly be
said that private respondents harbored a preconceived plan or intention not to pay petitioner.
The Court of Appeals was correct, therefore, in its finding in CA-G.R. SP No. 32863 that neither
petitioner's Motion or its supporting Affidavit provides sufficient basis for the issuance of the
writ of attachment prayed for.
We also agree with respondent Court of Appeals in CA-G.R. SP No. 32762 that the lower court
should have conducted a hearing and required private petitioner to substantiate its allegations
of fraud, embezzlement and misappropriation.
To reiterate, petitioner's Motion for Attachment fails to meet the standard set forth in D.P. Lub
Oil Marketing Center, Inc. v. Nicolas,[10] in applications for attachment. In the said case, this
Court cautioned --
The petitioner's prayer for a writ of preliminary attachment hinges on the allegations in
paragraph 16 of the complaint and paragraph 4 of the affidavit of Daniel Pe which are couched
in general terms devoid of particulars of time, persons and places to support such a serious
assertion that "defendants are disposing of their properties in fraud of creditors." There is thus
the necessity of giving to the private respondents an opportunity to ventilate their side in a
hearing, in accordance with due process, in order to determine the truthfulness of the
allegations. But no hearing was afforded to the private respondents the writ having been issued
ex parte. A writ of attachment can only be granted on concrete and specific grounds and not
on general averments merely quoting the words of the rules.
As was frowned upon in D.P. Lub Oil Marketing Center, Inc.,[11] not only was petitioner's
application defective for having merely given general averments; what is worse, there was no
hearing to afford private respondents an opportunity to ventilate their side, in accordance with
due process, in order to determine the truthfulness of the allegations of petitioner. As already
mentioned, private respondents claimed that substantial payments were made on the proceeds
of the trust receipts sued upon. They also refuted the allegations of fraud, embezzlement and
misappropriation by averring that private respondent Filipinas Textile Mills could not have
done these as it had ceased its operations starting in June of 1984 due to workers' strike. These
are matters which should have been addressed in a preliminary hearing to guide the lower
court to a judicious exercise of its discretion regarding the attachment prayed for. On this
score, respondent Court of Appeals was correct in setting aside the issued writ of preliminary
attachment.
Time and again, we have held that the rules on the issuance of a writ of attachment must be
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PROVISIONAL REMEDIES - PRELIMINARY ATTACHMENT CASES

construed strictly against the applicants. This stringency is required because the remedy of
attachment is harsh, extraordinary and summary in nature. If all the requisites for the granting All the foregoing promissory notes are secured by two Continuing Guaranty/ Comprehensive
of the writ are not present, then the court which issues it acts in excess of its jurisdiction. [12] Surety Agreements (CG/CSA) executed in the personal capacities of spouses Henry and Ma.
Julie Ann (Spouses Tanchan) and Henry's brother, herein petitioner Santiago Tanchan
WHEREFORE, for the foregoing reasons, the instant petitions are DENIED. The decision of the (Santiago),[9] for himself and as attorney-in-fact of his wife and co-petitioner Rufina Tanchan
Court of Appeals in CA-G.R. SP No. 32863 and CA-G.R. SP No. 32762 are AFFIRMED. No (Rufina) under a Special Power of Attorney, dated April 30, 1993, which grants Santiago
pronouncement as to costs. authority to:
x x x borrow and/or contract debts and obligations involving, affecting or creating a charge or
SO ORDERED. liability on, or which may involve, affect or create a liability on the Property and/or my interest
therein, whether or not such debt/s or obligation/s contracted or to be contracted will benefit
SPOUSES SANTIAGO AND RUFINA TANCHAN, PETITIONERS, VS. ALLIED BANKING me or the family, and to sign, execute and deliver in my name to or in favor of any party, under
CORPORATION, RESPONDENT. such terms and conditions as my attorney-in-fact may deem necessary, appropriate or
convenient, any and all documents instruments or contract/s (including without limitations,
AUSTRIA-MARTINEZ, J.: promissory notes, loan agreements, assignments, surety or guaranty undertakings, security
agreements) involving, affecting or creating a charge or liability on the Property."[10]
By way of Petition for Review under Rule 45 of the Rules of Court, spouses Santiago and Rufina
The liability of the sureties under both CG/CSAs is limited to Php150,000,000.00. [11]
Tanchan (petitioners) seek the modification of the June 15, 2004 Decision [1]of the Court of
Appeals (CA) which affirmed the August 3, 2001 Decision[2] and August 8, 2002 Order[3] of
Exhibit "G" and all the Philippine peso promissory notes, including Exhibit "H", are secured not
Branch 137, Regional Trial Court (RTC), Makati in Civil Case No. 98-2468.[4]
only by the two CG/CSAs but also by a Real Estate Mortgage executed on February 14, 1997
by Henry, for himself and as the legal guardian of the minors Henry Paul L. Tanchan and Don
The relevant facts are of record.
Henry L. Tanchan; his wife Ma. Julie Ann; and Spouses Pablo and Milagros Lim, over real
properties registered in their names under Transfer Certificates of Title No. 115804, No.
For value received, Cebu Foremost Construction, Inc. (Foremost), through its Chairman and
111149, No. 110672 and No. 3815, all located in Cebu City.[12]
President Henry Tanchan (Henry) and his spouse, Vice-President and Treasurer Ma. Julie Ann
Tanchan (Ma. Julie Ann) executed and delivered to Allied Banking Corporation (respondent)
In separate final demand letters, both dated May 14, 1998, respondent sought from Foremost
seven US$ promissory notes,[5] including Promissory Note No. 0051-97-03696[6] (Exhibit "G")
payment of US$1,054,000.00, as the outstanding principal balance, exclusive of interest and
for US$379,000.00, at 9.50% interest rate per annum, due on February 9, 1998.
charges, of its obligations under the seven US$ promissory notes, and PhP28,900,000.00 under
its Philippine peso promissory notes.[13] Separate demands for payment were also made upon
Foremost also issued to respondent several Philippine peso promissory notes[7] covering various
Spouses Tanchan[14] and the petitioners[15] as sureties.
loans in the aggregate amount of Php28,900,000.00, including Promissory Note No. 0051-97-
03688 (Exhibit "H") for PhpP16,500,000.00, at an interest rate of 14.5% per annum, due on
In a letter dated April 6, 1998, Foremost offered to cede to respondent, by way of dacion en
February 9, 1998.[8]
pago, the mortgaged real properties in full payment of its loan obligations. [16]
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PROVISIONAL REMEDIES - PRELIMINARY ATTACHMENT CASES

0051-97- US$45,000.00 plus interest at the rate of 11.4% per annum and a penalty
On August 3, 1998, respondent instituted the extra-judicial foreclosure of the real estate 02444 charge at the rate of 1% per month all reckoned from December 29, 1997 until
mortgage to satisfy its claim against Foremost in the aggregate "amount of Php55,578,826.77, fully paid.
inclusive of interest, other charges and attorney's fees, equivalent to 10% of the total amount 0051-97- US$379,000.00 plus interest at the rate of 11.4% per annum reckoned from
due as of May 3, 1998, plus the costs and expenses of foreclosure."[17] At the public auction 03696 January 8, 1998 until fully paid and a penalty charge at the rate of 1% per
sale, respondent's bid of only Php37,745,283.67 for all the mortgaged properties, including the (Exhibit "G") month from February 9, 1998 until fully paid.
buildings and improvements thereon,[18] was adjudged the sole and highest bid. 0051-97- PhpP7,466,795.67 plus interest at the rate of 20% per annum and a penalty
03688 charge at the rate of 3% per month from August 10, 1998. (Emphasis supplied)
On October 13, 1998, respondent filed with the RTC a Complaint for Collection of Sum of Money (Exhibit "H")
with Petition for Issuance of Writ of Preliminary Injunction against Foremost, Spouses Tanchan
Respondent also prayed for payment of attorney's fees equivalent to 25% of the total amount
and herein petitioners (collectively referred to as Foremost, et al.), praying that they be ordered
due, expenses and costs of suit,
to pay, jointly and severally, the following amounts:[19]

Promissory Amount In support of its application for issuance of a writ of preliminary attachment, respondent

Note submitted an Affidavit executed by Elmer Elumbaring (Elumbaring), Branch Cashier/Loans

Supervisor, Cebu, Jakosalem Branch, stating that:
0051-96- US$ 80,000.00 plus interest at the rate of 11.4% per annum from December
09495 29, 1997 until fully paid and a penalty charge on the unpaid interest at the rate
4. Defendants [Foremost, et al.] committed fraud in contracting the obligations upon which
of 1% per month reckoned from December 29, 1997 until fully paid and a
the action is brought in that: a) to induce plaintiff [respondent] to grant the credit
penalty charge on the unpaid principal reckoned from May 28, 1998 until fully
accommodation they represented to the plaintiff [respondent] that they were in a financial
paid.
position to pay their obligations on maturity date in consideration of which plaintiff
0051-96- US$110,000.00 plus interest at the rate of 11.4% per annum and a penalty
[respondent] granted the credit accommodations. It turned out, however, that they were
17617 charge at the rate of 1% per month, all reckoned from December 29, 1997 until
not in such financial position when they failed to pay their obligations on maturity date;
fully paid.
b) they falsely represented that the proceeds of the Loan would be used as additional
0051-96- US$250,000.00 plus interest at the rate of 11.4% per annum and a penalty
working capital in consideration of which, plaintiff [respondent] granted the loans but
19008 charge at the rate of 1% per month all reckoned from November 30, 1997 until
when defendants [Foremost, et al.] received the said proceeds, they diverted the same to
fully paid.
a purpose other than that for which they were intended as shown by the fact that
0051-96- US$115,000.00 plus interest at the rate of 11.4% per annum and a penalty defendants [Foremost, et al.] were not able to fully pay the obligations at its maturity
24801 charge at the rate of 1% per month all reckoned from December 29, 1997 until date;
fully paid.
0051-96- US$75,000.00 plus interest at the rate of 11.4% per annum and a penalty 5. There is no security whatsoever for the claim plaintiff [respondent] seeks to enforce by
00603 charge at the rate of 1% per month all reckoned from December 29, 1997 until this action, and only by the issuance of a writ of preliminary attachment can its interest
fully paid. be protected.[20]
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PROVISIONAL REMEDIES - PRELIMINARY ATTACHMENT CASES

The application for writ of preliminary attachment was granted by the RTC in an Order dated herein petitioners, they claim that they had no personal participation or influence in the loan
November 3, 1998, to wit: transactions except to ensure its payment; hence, they could not have practiced fraud upon
WHEREFORE, finding plaintiff's [respondent's] application for the issuance of a writ of respondent because they did not personally contract the loans with it.[27] Thus, each sought
preliminary attachment sufficient in form and substance, and the ground set forth therein payment of Php100,000,000.00 as moral damages for the emotional and mental vexation
being among those allowed by the Rules (Rule 57, Sec. 1 [e]), let a Writ of Preliminary visited upon them by respondent in causing the unwarranted preliminary attachment of their
Attachment issue against the properties of defendants Cebu Foremost Construction, properties.[28]
Incorporated, Santiago Tanchan, Jr., Rufina C. Tanchan, Henry Tanchan and Ma. Julie Ann T.
Tanchan, upon plaintiff's [respondent's] filing of a bond in the amount of FIFTY-FOUR MILLION At the pre-trial, respondent submitted an Amended Pre-trial Brief where it admitted that
(P54,000,000.00) PESOS, conditioned to answer for whatever damage that the said defendants Foremost's Exhibit "G" and Exhibit "H" were among those secured by the real estate mortgage[29]
[Foremost, et al.] may suffer by reason of the issuance of said writ should the Court finally that it earlier foreclosed, but the proceeds of the foreclosure sale satisfied only part of the
adjudge that plaintiff [respondent] was not entitled thereto. amounts due on said promissory notes and left a deficiency which is now the subject of their
complaint.[30]
SO ORDERED.[21]
The RTC issued a Pre-trial Order which limited the issues to be resolved to the following:
Thus, armed with a writ of attachment,[22] the sheriff levied several parcels of land registered in
the name of Foremost, et al.[23]
1. Does the [respondent] have a cause of action with respect to the promissory notes marked
as [Exhibits] G[31] and H[32]?
In their Amended Answer with Counterclaim,[24] Foremost, et al. acknowledged the authenticity
and due execution of the promissory notes but denied liability for the amounts alleged in the
2. Is [petitioner] Rufina C. Tanchan liable on the basis of the Continuing
Complaint, the computation of which they dispute due to the arbitrariness of the imposition of
Guaranty/Comprehensive Surety Agreements because of her authority from [sic]
new interest rates. They impugned the cause of action of respondent to collect the amount due
Santiago Tanchan, Jr. was limited to borrow money only for the benefit of the family?
under Exhibit "G" and Exhibit "H" in view of the bank's prior extra-judicial foreclosure of the
securities thereon, which recourse bars collection of the amounts due on the same promissory
3. Is the unilateral increase of the interest rate of [respondent] valid?
notes.[25]

4. What is the amount and nature of the damages that should be adjudged against the
Foremost, et al. questioned the inclusion of Rufina as a party-defendant even when she was
losing party in favor of the prevailing party?[33]
not bound by the CG/CSAs which her husband Santiago signed in excess of his authority
under the special power of attorney to contract loans for the family but not to guarantee loans
As directed by the RTC in its Pre-trial Order, both parties presented affidavits in lieu of direct
obtained by third persons.[26]
examination of their witnesses.

The issuance of the writ of preliminary attachment was likewise objected to by Foremost on the
For respondent, Fresnido Bandilla (Bandilla), Manager, Legal Department, testified that the
ground that it contracted the loans in good faith but was prevented from paying the same only
obligations of Foremost which were secured by the real estate mortgage had amounted to
because of the economic crisis that beset the country. On the part of Spouses Tanchan and
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PROVISIONAL REMEDIES - PRELIMINARY ATTACHMENT CASES

Php61,155,339.36 as of the date of the foreclosure sale, and that with respondent's bid of only 1% penalty per month on the amount due from maturity date until fully paid; (8)
Php37,745,283.67 being adjudged the lone and highest bid, there remained an unpaid balance P7,582,945.85, plus 28.5% interest per annum, and 3% penalty per month, from the
of Php23,415,115.69.[34] Elumbaring corroborated Bandilla's testimony.[35] foreclosure sale on 10 August 1998 until fully paid; (9) attorney's fees equivalent to 10% of the
amount due plaintiff. However, the liability of defendants' Santiago Tanchan, Jr., Rufina C.
On the other hand, Henry averred that even in the wake of the Asian financial crisis, Foremost Tanchan, Henry Tanchan and Ma. Julie Ann T. Tanchan is limited to P150,00,000.00 only.
struggled to meet interest payments on its loan obligations with respondent, but the point came
when there were no more construction jobs to be had, and Foremost was constrained to default Defendants' counterclaims are dismissed for lack of sufficient merit.
on its obligations.[36]
SO ORDERED.[39]
Santiago testified that he and his spouse could not have defrauded respondent because they
Foremost, et al. filed a Motion for Partial Reconsideration of Decision on the ground that
did not directly contract the loans with it but merely acted as sureties. Thus, the issuance of
respondent failed to state a cause of action for the payment of any deficiency account under
the writ of attachment against their properties was arbitrary, and brought upon them social
Exhibit "G" and Exhibit "H". Its Complaint does not contain any allegation regarding a
humiliation and emotional torment.[37]
deficiency account; nor even an allusion to the foreclosure sale conducted in partial satisfaction
of said promissory notes. Although in its Amended Pre-trial Brief, respondent mentioned that
After the parties submitted their respective memoranda,[38] the RTC rendered its August 31,
a deficiency account remained after the foreclosure of the real estate mortgage, such statement
2001 Decision, the dispositive portion of which reads:
did not have the effect of amending the Complaint itself. Neither did the testimonies of Bandilla
WHEREFORE, judgment is hereby rendered ordering defendants Cebu Foremost Construction,
and Elumbaring about a deficiency account take the place of a specific allegation of such cause
Inc., Santiago Tanchan, Jr., Rufina C. Tanchan, Henry Tanchan and Ma. Julie Ann Tanchan,
of action in the Complaint. Thus, in the absence of an allegation in the Complaint of a cause
solidarily, [to] pay plaintiff Allied Banking Corporation the following amounts: (1) US
of action for the payment of a deficiency account, the RTC had no factual or legal basis to grant
$80,000.00, plus 8.75 % interest per annum from 7 June 1996 to 6 May 1997, 9.5% interest
such claim.[40]
per annum from 7 May 1997 until fully paid, and 1% penalty per month on the amount due
from maturity date and until fully paid; (2) US $110,00.00, plus 8.75% interest per annum
Spouses Tanchan and herein petitioners also filed a Motion to Lift the Writ of Preliminary
from 24 September to 29 May 1997, 9.5% interest per annum from 30 May 1997 until fully
Attachment.[41]
paid, and 1% penalty per month on the amount due from maturity date until fully paid; (3) US
$570,000.00, plus 8.75% interest per annum from 8 October 1996 to 29 May 1997, 9.5%
The RTC denied the Motion to Lift the Writ of Attachment in an Order[42] dated September 25,
interest per annum from 30 May 1997 until fully paid, and 1% penalty per month on the
2001, and the Motion for Partial Reconsideration, in an Order [43] dated August 8, 2002.
amount due from maturity date until fully paid; (4) US $115,000.00 plus 9.5% interest per
month from 12 December 1996 until fully paid, and 1% penalty per month on the amount due
Foremost, et al. appealed to the CA under the following assignment of errors:
from maturity date until fully paid; (5) US $75,000.00, plus 9.5% interest per annum from 7
January 1997 until fully paid, and 1% penalty per month on the amount due from maturity 1. The lower court erred in not holding that having opted to extra-judicially foreclose the
date until fully paid; (7) US $379,000.00, plus 9.5% interest per annum from 12 February 1997 real estate mortgage which was executed to secure the promissory notes marked as
to 8 December 1997, 11.4% interest per annum from 9 December 1997 until fully paid, and

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PROVISIONAL REMEDIES - PRELIMINARY ATTACHMENT CASES

Exhibits "G" and "H", the [respondent] is barred from filing an action for collection of the properties of petitioners only, but not as against the properties of Foremost and Spouses
same; Tanchan, neither of whom appealed before the Court. The discussion that follows,
therefore, shall pertain only to the effect of the writ on petitioners.
2. The lower court erred in not holding that Rufina Tanchan did not authorize her
husband, Santiago J. Tanchan, Jr. to sign the Continuing Guaranty/ Comprehensive One of the grounds cited by the CA in refusing to discharge the writ of attachment is that "it is
Surety Agreement marked as Exhibit "I"; and now too late for [petitioners] to question the validity of the writ" because they waited three long
years to have it lifted or discharged.[46]
3. The lower court erred in not lifting the writ of preliminary attachment and granting the
claim for damages of the individual defendants by virtue of the wrongful issuance of the Under Section 13, Rule 57 of the Rules of Court, a party whose property has been ordered
writ of preliminary attachment.[44] attached may file a motion "with the court in which the action is pending" for the discharge of
the attachment on the ground that it has been improperly issued or enforced. In addition, said
The CA dismissed the appeal in the June 15, 2004 Decision assailed herein. party may file, under Section 20, Rule 57, a claim for damages on account of improper
attachment within the following periods:
Only petitioners took the present recourse to raise the following issues: Sec. 20. Claim for damages on account of improper, irregular or excessive attachment. - An
application for damages on account of improper, irregular or excessive attachment must be
I. Whether or not the petitioners as mere sureties of the loans obtained by Cebu Foremost filed before the trial or before appeal is perfected or before the judgment becomes
Construction, Inc. were guilty of fraud in incurring the obligations so that a writ of executory, with due notice to the attaching obligee or his surety or sureties, setting forth the
preliminary attachment may be issued against them? facts showing his right to damages and the amount thereof. Such damages may be awarded
only after proper hearing and shall be included in the judgment on the main case.
II. Whether or not the respondent may claim for deficiency judgment on its seventh and
eight causes of action, not having alleged in its complaint that said loans were secured If the judgment of the appellate court be favorable to the party against whom the attachment
by a real estate mortgage and after the foreclosure there was a deficiency as in fact in was issued, he must claim damages sustained during the pendency of the appeal by filing an
its complaint, the respondent sought full recovery of the promissory notes subject of its application in the appellate court with notice to the party in whose favor the attachment was
seventh and eighth cause of action? issued or his surety or sureties, before the judgment of the appellate court becomes executory.
The appellate court may allow the application to be heard and decided by the trial
III. Whether or not the lower court and the Court of Appeals erred in not awarding court.[47] (Emphasis supplied)
petitioners damages for the wrongful issuance of a writ of preliminary attachment
Records reveal that the RTC issued the writ of preliminary attachment on November 3, 1998,[48]
against them?[45]
and as early as March 23, 1999, in their Amended Answer with Counterclaim, petitioners
already sought the discharge of the writ.[49] Moreover, after the RTC rendered its Decision on
Being interrelated, the first and third issues will be resolved jointly.
August 3, 2001 but before appeal therefrom was perfected, petitioners filed on August 23, 2001
a Motion to Lift the Writ of Preliminary Attachment, reiterating their objection to the writ and
The issues involve the validity of the writ of preliminary attachment as against the
seeking payment of damages for its wrongful issuance.[50]
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PROVISIONAL REMEDIES - PRELIMINARY ATTACHMENT CASES
Clearly, petitioners' opposition to the writ was timely.
The question now is whether petitioner has a valid reason to have the writ discharged and to
claim damages.
It should be borne in mind that the questioned writ of preliminary attachment was issued by
the RTC under Section 1(d), Rule 57 of the Rules of Court, to wit -
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:
x x x x
(d) In an action against a party who has been guilty of a fraud in contracting the debt or
incurring the obligation upon which the action is brought, or in concealing or disposing of the
property for the taking, detention or conversion of which the action is brought;
x x x x.
and on the basis solely of respondent's allegations in its Complaint "that defendants [Foremost,
et al.] failed to pay their obligations on maturity dates, with the amount of US$1,054,000.00
and Php7,466795.69 remaining unpaid; that defendants are disposing/concealing their
properties with intent to defraud the plaintiff and/or are guilty of fraud in the performance of
their obligations; and that there is no security whatsoever for the claim sought to be
enforced."[51]
Petitioners argue that the foregoing allegations are not sufficient to justify issuance of the writ,
especially in the absence of findings that they, as sureties, participated in specific fraudulent
acts in the execution and performance of the loan agreements with respondent. [52]
In refusing to lift the writ, the RTC held that the lack of a specific factual finding of fraud in its
decision is not among the grounds provided under Sections 12 and 13, Rule 57 of the Rules of
Court for the discharge of the writ.[53] The CA agreed for the reason that the RTC's affirmative
action on the complaint filed by respondent signifies its agreement with the allegations found
therein that Foremost, et al., including herein petitioners, committed fraudulent acts in
procuring loans from respondent.[54]
Both courts are in error.
The present case fits perfectly into the mold of Allied Banking Corporation v. South Pacific Sugar
Corporation,[55] where a writ of preliminary attachment issued in favor of Allied Banking
Corporation was discharged by the lower courts for lack of evidence of fraud. In sustaining the
discharge of the writ, the Court held:
Moreover, even a cursory examination of the bank's complaint will reveal that it cited no factual
circumstance to show fraud on the part of respondents. The complaint only had a general
statement in the Prayer for the Issuance of a Writ of Preliminary Attachment, reproduced in
the attached affidavit of petitioner's witness Go who stated as follows:
xxxx
4. Defendants committed fraud in contracting the obligations upon which the present
action is based and in the performance thereof. Among others, defendants induced
plaintiff to grant the subject loans to defendant corporation by willfully and deliberately
misrepresenting that, one, the proceeds of the loans would be used as additional working
capital and, two, they would be in a financial position to pay, and would most certainly
pay, the loan obligations on their maturity dates. In truth, defendants had no intention of
honoring their commitments as shown by the fact that upon their receipt of the proceeds
of the loans, they diverted the same to illegitimate purposes and then brazenly ignored
and resisted plaintiff's lawful demands for them to settle their past due loan obligations
xxxx
Such general averment will not suffice to support the issuance of the writ of
preliminary attachment. It is necessary to recite in what particular manner an
applicant for the writ of attachment was defrauded x x x.
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PROVISIONAL REMEDIES - PRELIMINARY ATTACHMENT CASES
Likewise, written contracts are presumed to have been entered into voluntarily and for a
sufficient consideration. Section 1, Rule 131 of the Rules of Court instructs that each party
must prove his own affirmative allegations. To repeat, in this jurisdiction, fraud is never
presumed. Moreover, written contracts such as the documents executed by the parties in the
present case, are presumed to have been entered into for a sufficient consideration. (Citations
omitted)
In the aforecited case — as in the present case — the bank presented the testimony of its
account officer who processed the loan application, but the Court discarded her testimony for
it did not detail how the corporation induced or deceived the bank into granting the loans. [56]
Also apropos is Ng Wee v. Tankiansee[57] where the appellate court was questioned for
discharging a writ of preliminary attachment to the extent that it affected the properties of
respondent Tankiansee, a corporate officer of Wincorp, both defendants in the complaint for
damages which petitioner Ng Wee had filed with the trial court. In holding that the appellate
court correctly spared respondent Tankiansee from the writ of preliminary attachment, the
Court cited the following basis:
In the instant case, petitioner's October 12, 2000 Affidavit is bereft of any factual statement
that respondent committed a fraud. The affidavit narrated only the alleged fraudulent
transaction between Wincorp and Virata and/or Power Merge, which, by the way, explains why
this Court, in G.R. No. 162928, affirmed the writ of attachment issued against the latter. As to
the participation of respondent in the said transaction, the affidavit merely states that
respondent, an officer and director of Wincorp, connived with the other defendants in
the civil case to defraud petitioner of his money placements. No other factual averment
or circumstance details how respondent committed a fraud or how he connived with
the other defendants to commit a fraud in the transaction sued upon. In other words,
petitioner has not shown any specific act or deed to support the allegation that
respondent is guilty of fraud.
The affidavit, being the foundation of the writ, must contain such particulars as to how the
fraud imputed to respondent was committed for the court to decide whether or not to issue the
writ. Absent any statement of other factual circumstances to show that respondent, at the time
of contracting the obligation, had a preconceived plan or intention not to pay, or without any
showing of how respondent committed the alleged fraud, the general averment in the affidavit
that respondent is an officer and director of Wincorp who allegedly connived with the other
defendants to commit a fraud, is insufficient to support the issuance of a writ of preliminary
attachment x x x. Verily, the mere fact that respondent is an officer and director of the
company does not necessarily give rise to the inference that he committed a fraud or
that he connived with the other defendants to commit a fraud. While under certain
circumstances, courts may treat a corporation as a mere aggroupment of persons, to
whom liability will directly attach, this is only done when the wrongdoing has been
clearly and convincingly established. (Emphasis supplied)
Indeed, a writ of preliminary attachment is too harsh a provisional remedy to
be issued based on mere abstractions of fraud.[58] Rather, the rules require that for the writ to
issue, there must be a recitation of clear and concrete factual circumstances manifesting that
the debtor practiced fraud upon the creditor at the time of the execution of their agreement in
that said debtor had a pre-conceived plan or intention not to pay the creditor.[59] Being a state
of mind, fraud cannot be merely inferred from a bare allegation of non-payment of debt or non-
performance of obligation.[60]
As shown in Ng Wee, the requirement becomes all the more stringent when the application for
preliminary attachment is directed against a defendant officer of a defendant corporation, for
it will not be inferred from the affiliation of one to the other that the officer participated in or
facilitated in any fraudulent practice attributed to the corporation. There must be evidence
clear and convincing that the officer committed a fraud or connived with the corporation to
commit a fraud; only then may the properties of said officer, along with those of the corporation,
be held under a writ of preliminary attachment.
There is every reason to extend the foregoing rule, by analogy, to a mere surety of the
defendant. A surety's involvement is marginal to the principal agreement between the
defendant and the plaintiff; hence, in order for the surety to be subject to a proceeding for
issuance of a writ of preliminary attachment, it must be shown that said surety participated in
or facilitated the fraudulent practice of the defendant, such as by offering a security solely to
induce the plaintiff to enter into the agreement with the defendant.
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PROVISIONAL REMEDIES - PRELIMINARY ATTACHMENT CASES

malice in causing the wrongful issuance of the writ.

There is neither allegation nor innuendo in the Complaint of respondent or the Affidavit of
Elumbaring that petitioners as sureties or officers of Foremost participated in or facilitated the
commission of fraud by Foremost, et al. against respondent. In fact, there is no mention of
petitioners, much less a recital of their role or influence in the execution of the loan
agreements. The RTC cited an allegation that petitioners are disposing/concealing their
properties with intent to defraud respondent, but there is no hint of such scheme in the five
paragraphs of the Complaint[61] or in the four corners of the Affidavit of Elumbaring.[62] All that
is alleged is that Foremost obtained loans from respondent but failed to pay the same, but as
the Court has repeatedly held, no fraud can be inferred from a mere failure to pay a loan. [63]
In fine, there was no factual basis for the issuance of a writ of preliminary attachment against
the properties of petitioners. The immediate dissolution of the writ is called for.
In so ruling, however, the Court does not go so far as to grant petitioners' claim for moral
damages. A wrongful attachment may give rise to liability for moral damages but evidence
must be adduced not only of the torment and humiliation brought upon the defendant by the
attaching party but also of the latter's bad faith or malice in causing the wrongful
attachment,[64] such as evidence that the latter deliberately made false statements in its
application for attachment.[65] Absent such evidence of malice, the attaching party cannot be
held liable for moral damages.[66]
In the present case, petitioners cite the allegations made by respondent in its application for
attachment as evidence of bad faith. However, the allegations in question contain nothing but
the stark truth that Foremost obtained loans and that it failed to pay. The Court fails to see
any malice in such bare allegations as would make respondent liable to petitioners for moral
damages.
To recapitulate, the Court partly dissolves the writ of preliminary attachment for having
wrongfully issued against the properties of petitioners who were not shown to have committed
fraud in the execution of the loan agreements between Foremost and respondent, but declines
to award moral damages to petitioners in the absence of evidence that respondent acted with
The second issue involves that portion of the August 3, 2001 RTC Decision awarding
respondent "(7) US $379,000.00, plus 9.5% interest per annum from 12 February 1997 to 8
December 1997, 11.4% interest per annum from 9 December 1997 until fully paid, and 1%
penalty per month on the amount due from maturity date until fully paid" under Promissory
Note No. 0051-97-03696, and "(8) P7,582,945.85, plus 28.5% interest per annum, and 3%
penalty per month, from the foreclosure sale on 10 August 1998 until fully paid" under
Promissory Note No. 0051-97-03688.
Petitioners argue that respondent is barred from claiming any amount under the Promissory
Notes, Exhibits "G" and "H", because it had already elected to foreclose on the mortgage
security, and it failed to allege in its pleadings that a deficiency remained after the public
auction sale of the securities and that what it is seeking is the payment of such deficiency. [67]
There is no question that a mortgage creditor has a single cause of action against a mortgagor
debtor, which is to recover the debt; but it has the option of either filing a personal action for
collection of sum of money or instituting a real action to foreclose on the mortgage
security.[68] An election of the first bars recourse to the second; otherwise, there would be
multiplicity of suits in which the debtor would be tossed from one venue to another, depending
on the location of the mortgaged properties and the residence of the parties. [69] On the other
hand, a creditor who elects to foreclose on the mortgage may yet file an independent civil action
for recovery of whatever deficiency may remain in the outstanding obligation of the debtor, after
deducting the price obtained in the sale of the mortgaged properties at public auction.[70] The
complaint, though, must specifically allege that what is being sought is the recovery of the
deficiency,[71] or that in the pre-trial, such claim be raised as an issue.[72]
Contrary to petitioners' argument, it is clear from the allegations in the Complaint that what
respondent sought was the payment of the deficiency amount under the subject promissory
notes. In particular, while the Promissory Note, Exhibit "H", is for the amount of
Php16,500,000.00, what respondent sought to recover was only Php7,582,945.85, consistent
with the fact that part of said promissory note has been satisfied from the proceeds of the extra-

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PROVISIONAL REMEDIES - PRELIMINARY ATTACHMENT CASES

judicial foreclosure. While the exact phrase "deficiency account" is not employed in the On October 29, 2004, the Sandiganbayan issued a resolution ordering the issuance of a writ
Complaint, the intention of respondent to recover the same is borne out by its allegations. of preliminary attachment against the properties of the Garcias upon the filing by the Republic
of a P1 million attachment bond.[5] On November 2, 2004, the Republic posted the required
More importantly, in the Pre-trial Order issued by the RTC, the right of respondent to recover attachment bond to avoid any delay in the issuance of the writ as well as to promptly protect
the deficiency account under the subject promissory notes was raised as a specific issue. and secure its claim.

WHEREFORE, the petition is PARTLY GRANTED. The June 15, 2004 Decision of the Court of On December 7, 2004, the Republic filed a motion for partial reconsideration of the October
Appeals is MODIFIED to the effect that the November 3, 1998 Writ of Preliminary Attachment 29, 2004 resolution claiming that it was exempt from filing an attachment bond and praying
is LIFTED and DISSOLVED insofar as it affects the properties of petitioners Spouses Santiago for the release thereof.
and Rufina Tanchan.
In a resolution dated January 14, 2005, the Sandiganbayan ruled that there was nothing in
SO ORDERED. the Rules of Court that exempted the Republic from filing an attachment bond. It reexamined
Tolentino v. Carlos[6] which was invoked by the Republic to justify its claimed exemption. That
REPUBLIC OF THE PHILIPPINES, PETITIONER, VS. MAJ. GEN. CARLOS FLORES case was decided under the old Code of Civil Procedure enacted more than a century ago.
GARCIA, CLARITA DEPAKAKIBO GARCIA, IAN CARL DEPAKAKIBO GARCIA, JUAN
PAULO DEPAKAKIBO GARCIA, TIMOTHY DEPAKAKIBO GARCIA AND THE The Sandiganbayan denied the Republic's motion. Reconsideration was also denied in a
SANDIGANBAYAN (FOURTH DIVISION), RESPONDENTS. resolution dated March 2, 2005.

CORONA, J.: As already stated, these two resolutions (January 14, 2005 and March 2, 2005) are the subject
of the present petition.
This petition for certiorari[1] assails the January 14, 2005 and March 2, 2005 resolutions[2] of
the Fourth Division of the Sandiganbayan in Civil Case No. 0193 entitled Republic of the Did the Sandiganbayan commit grave abuse of discretion when it rejected the Republic's claim
Philippines v. Maj. Gen. Carlos Flores Garcia, Clarita Depakakibo Garcia, Ian Carl Depakakibo of exemption from the filing of an attachment bond? Yes.
Garcia, Juan Paulo Depakakibo Garcia and Timothy Mark Depakakibo Garcia.
Sections 3 and 4, Rule 57 of the Rules of Court provide:
Civil Case No. 0193 was a petition for forfeiture of unlawfully acquired properties, with a verified Sec. 3. Affidavit and bond required. - An order of attachment shall be granted only when it
urgent ex-parte application for the issuance of a writ of preliminary attachment, filed by the appears by the affidavit of the applicant, or of some other person who personally knows the
Republic of the Philippines against Maj. Gen. Carlos F. Garcia, his wife[3] and children[4] in the facts, that a sufficient cause of action exists, that the case is one of those mentioned in section
Sandiganbayan on October 27, 2004. In praying for the issuance of a writ of preliminary 1 hereof, that there is no other sufficient security for the claim sought to be enforced by the
attachment, the Republic maintained that, as a sovereign political entity, it was exempt from action, and that the amount due to applicant, or the value of the property the possession of
filing the required attachment bond. 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,

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PROVISIONAL REMEDIES - PRELIMINARY ATTACHMENT CASES
must be duly filed with the court before the order issues.
Sec. 4. Condition of applicant's bond. - The party applying for the order must thereafter give
a bond executed to the adverse party in the amount fixed by the court in its order
granting the issuance of the writ, conditioned that the latter will pay all the costs which may
be adjudged to the adverse party and all damages which he may sustain by reason of the
attachment, if the court shall finally adjudge that the applicant was not entitled thereto.
(emphasis supplied)
Under these provisions, before a writ of attachment may issue, a bond must first be filed to
answer for all costs which may be adjudged to the adverse party and for the damages he may
sustain by reason of the attachment. However, this rule does not cover the State. In Tolentino,[7]
this Court declared that the State as represented by the government is exempt from filing an
attachment bond on the theory that it is always solvent.
2. Section 427 of the Code of Civil Procedure provides that before the issuance of a writ
of attachment, the applicant therefor or any person in his name, should file a bond in
favor of the defendant for an amount not less than P400 nor more than the amount of
the claim, answerable for damages in case it is shown that the attachment was obtained
illegally or without sufficient cause; but in the case at bar the one who applied for and
obtained the attachment is the Commonwealth of the Philippines, as plaintiff, and
under the theory that the State is always solvent it was not bound to post the
required bond and the respondent judge did not exceed his jurisdiction in exempting it
from such requirement. x x x[8] (emphasis supplied)
In other words, the issuance of a writ of preliminary attachment is conditioned on the filing of
a bond unless the applicant is the State. Where the State is the applicant, the filing of the
attachment bond is excused.[9]
The attachment bond is contingent on and answerable for all costs which may be adjudged to
the adverse party and all damages which he may sustain by reason of the attachment should
the court finally rule that the applicant is not entitled to the writ of attachment. Thus, it is a
security for the payment of the costs and damages to which the adverse party may be entitled
in case there is a subsequent finding that the applicant is not entitled to the writ. The Republic
of the Philippines need not give this security as it is presumed to be always solvent and able to
meet its obligations.
The Sandiganbayan thus erred when it disregarded the foregoing presumption and instead
ruled that the Republic should file an attachment bond. The error was not simply an error of
judgment but grave abuse of discretion.
There is grave abuse of discretion when an act is done contrary to the Constitution, the law or
jurisprudence.[10] Here, the Sandiganbayan's January 14, 2005 resolution was clearly contrary
to Tolentino.
Worse, the Sandiganbayan transgressed the Constitution and arrogated upon itself a power
that it did not by law possess. All courts must take their bearings from the decisions and rulings
of this Court. Tolentino has not been superseded or reversed. Thus, it is existing jurisprudence
and continues to form an important part of our legal system.[11] Surprisingly, the
Sandiganbayan declared that Tolentino "need(ed) to be carefully reexamined in the light of the
changes that the rule on attachment ha(d) undergone through the years."[12] According to the
court a quo:
[Tolentino] was decided by the Supreme Court employing the old Code of Civil Procedure (Act
No. 190) which was enacted by the Philippine Commission on August 7, 1901 or more than a
century ago.
That was then, this is now. The provisions of the old Code of Civil Procedure governing
attachment have been substantially modified in the subsequent Rules of Court. In fact, Rule
57 of the present 1997 Rules of Civil Procedure is an expanded modification of the provisions
of the old Code of Civil Procedure governing attachment. Unlike the old Code of Civil Procedure,
the present 1997 Rules of Civil Procedure is noticeably explicit in its requirement that the party
applying for an order of attachment should file a bond.
On this, Article VIII, Section 4(3) of the Constitution provides:
(3) Cases or matters heard by a division shall be decided or resolved with the concurrence of
majority of the Members who actually took part in the deliberations on the issues in the case
73
PROVISIONAL REMEDIES - PRELIMINARY ATTACHMENT CASES

and voted thereon, and in no case without the concurrence of at least three of such Members. The relevant provisions of Act No. 190 on attachment were later substantially adopted as
When the required number is not obtained, the case shall be decided en banc; Provided, that Sections 3[13] and 4, Rule 59 of the 1940 Rules of Court.
no doctrine or principle of law laid down by the court in a decision rendered en banc or Sec. 3. Order issued only when affidavit and bond filed. - An order of attachment shall be
in division may be modified or reversed except by the court sitting en banc. (emphasis granted only when it is made to appear by the affidavit of the plaintiff, or of some other person
supplied) who personally knows the facts, that the case is one of those mentioned in section 1 hereof,
that there is no other sufficient security for the claim sought to be enforced by the action, and
The Constitution mandates that only this Court sitting en banc may modify or reverse a doctrine
that the amount due to the plaintiff, or the value of the property which he is entitled to recover
or principle of law laid down by the Court in a decision rendered en banc or in division. Any
possession of, is as much as the sum for which the order is granted above all legal
court, the Sandiganbayan included, which renders a decision in violation of this constitutional
counterclaims; which affidavit, and the bond required by the next succeeding section, must
precept exceeds its jurisdiction.
be duly filed with the clerk or judge of the court before the order issues. (emphasis
supplied)
Therefore, the Sandiganbayan could not have validly "reexamined," much less reversed,
Tolentino. By doing something it could not validly do, the Sandiganbayan acted ultra vires and
Sec. 4. Bond required from plaintiff. - The party applying for the order must give a bond executed
committed grave abuse of discretion.
to the defendant in an amount to be fixed by the judge, not exceeding the plaintiff's claim, that
the plaintiff will pay all the costs which may be adjudged to the defendant and all damages
The fact was, the revisions of the Rules of Court on attachment, particularly those pertaining
which he may sustain by reason of the attachment, if the court shall finally adjudge that the
to the filing of an attachment bond, did not quash Tolentino.
plaintiff was not entitled thereto.

Tolentino applied Sec. 247 of Act No. 190 which provided:
Sec. 247. Obligation for damages in case of attachment. - Before the order is made, the party
applying for it, or some person on his behalf, must execute to the defendant an obligation
in an amount to be fixed by the judge, or justice of the peace, and with sufficient surety
to be approved by him, which obligation shall be for a sum not less than two hundred dollars,
and not exceeding the amount claimed by the plaintiff, that the plaintiff will pay all the costs
which may be adjudged to the defendant, and all damages which he may sustain by reason of
the attachment, if the same shall finally be adjudged to have been wrongful or without sufficient
cause. (emphasis supplied)
Contrary to the pronouncement of the Sandiganbayan, Section 247 of Act No. 190 explicitly
required the execution of an attachment bond before a writ of preliminary attachment could be
issued.
And with the promulgation of the 1964 Rules of Court, the rules on attachment were
renumbered as Rule 57, remaining substantially the same:
Sec. 3. Affidavit and bond required.- An order of attachment shall be granted only when it
appears by the affidavit of the applicant, or of some other person who personally knows the
facts, that a sufficient cause of action exists, that the case is one of those mentioned in section
1 hereof, that there is no other sufficient security for the claim sought to be enforced by the
action, and that the amount due to applicant, or the value of the property the possession of
which he is entitled to recover, is as much as the sum for which the order is granted above all
legal counterclaims. The affidavit, and the bond required by the next succeeding section,
must be duly filed with the clerk or judge of the court before the order issues. (emphasis
supplied)
Sec. 4. Condition of applicant's bond. - The party applying for the order must thereafter give a
bond executed to the adverse party in an amount to be fixed by the judge, not exceeding the
applicant's claim, conditioned that the latter will pay all the costs which may be adjudged to
74
PROVISIONAL REMEDIES - PRELIMINARY ATTACHMENT CASES

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. In filing forfeiture cases against erring public officials and employees, the Office of the
Ombudsman performs the State's sovereign functions of enforcing laws, guarding and
Clearly, the filing of an attachment bond before the issuance of a writ of preliminary attachment
protecting the integrity of the public service and addressing the problem of corruption in the
was expressly required under the relevant provisions of both the 1940 and 1964 Rules of Court.
bureaucracy.

Commentaries on Sections 3 and 4 of the 1964 Rules of Court uniformly cited Tolentino. They
The filing of an application for the issuance of a writ of preliminary attachment is a necessary
stated that the government is exempt from filing an attachment bond[14] and that the State
incident in forfeiture cases. It is needed to protect the interest of the government and to prevent
need not file an attachment bond.[15]
the removal, concealment and disposition of properties in the hands of unscrupulous public
Where the Republic of the Philippines as a party to an action asks for a writ of attachment
officers. Otherwise, even if the government subsequently wins the case, it will be left holding
against the properties of a defendant, it need not furnish a bond. This is so because the State
an empty bag.
is presumed to be solvent.[16]

Accordingly, the petition is hereby GRANTED. The January 14, 2005 and March 2, 2005
When plaintiff is the Republic of the Philippines, it need not file a bond when it applies for a
resolutions of the Sandiganbayan are REVERSED and SET ASIDE. The Republic of the
preliminary attachment. This is on the premise that the State is solvent.[17]
Philippines is declared exempt from the payment or filing of an attachment bond for the

And then again, we note the significant fact that Sections 3 and 4, Rule 57 of the 1964 Rules issuance of a writ of preliminary attachment issued in Civil Case No. 0193. The Sandiganbayan

of Court were substantially incorporated as Sections 3 and 4, Rule 57 of the present (1997) is hereby ordered to release the P1,000,000 bond posted by the Republic of the Philippines to

Rules of Court.[18] There is thus no reason why the Republic should be made to file an the Office of the Ombudsman.

attachment bond.
SO ORDERED.

In fact, in Spouses Badillo v. Hon. Tayag,[19] a fairly recent case, this Court declared that, when
the State litigates, it is not required to put up a bond for damages or even an appeal bond SPOUSES GREGORIO AND JOSEFA YU, PETITIONERS, VS. NGO YET TE, DOING
because it is presumed to be solvent. In other words, the State is not required to file a bond BUSINESS UNDER THE NAME AND STYLE, ESSENTIAL MANUFACTURING,
because it is capable of paying its obligations.[20] RESPONDENT.

The pronouncement in Spouses Badillo applies in this case even if Spouses Badillo involved the AUSTRIA-MARTINEZ, J.:
filing of a supersedeas bond. The pronouncement that the State "is not required to put up a
bond for damages or even an appeal bond "is general enough to encompass attachment bonds. Before us is a Petition for Review on Certiorari under Rule 45 of the Rules of Court assailing

Moreover, the purpose of an attachment bond (to answer for all costs and damages which the the March 21, 2001 Decision[1] of the Court of Appeals (CA) in CA-G.R. CV No. 52246[2] and its

adverse party may sustain by reason of the attachment if the court finally rules that the October 14, 2002 Resolution.[3]

applicant is not entitled to the writ) and a supersedeas bond (to answer for damages to the
winning party in case the appeal is found frivolous) is essentially the same. The antecedent facts are not disputed.

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PROVISIONAL REMEDIES - PRELIMINARY ATTACHMENT CASES

While the RTC did not resolve the Claim Against Surety Bond, it issued an Order[17] dated May
Spouses Gregorio and Josefa Yu (Spouses Yu) purchased from Ngo Yet Te (Te) bars of detergent 3, 1993, discharging from attachment the Toyota Ford Fierra, jeep, and Canter delivery van
soap worth P594,240.00, and issued to the latter three postdated checks [4] as payment of the on humanitarian grounds, but maintaining custody of Lot No. 11 and the passenger bus.
purchase price. When Te presented the checks at maturity for encashment, said checks were Spouses Yu filed a Motion for Reconsideration[18] which the RTC denied.[19]
returned dishonored and stamped "ACCOUNT CLOSED".[5] Te demanded[6] payment from
Spouses Yu but the latter did not heed her demands. Acting through her son and attorney-in- Dissatisfied, they filed with the CA a Petition for Certiorari,[20] docketed as CA-G.R. SP No.
fact, Charry Sy (Sy), Te filed with the Regional Trial Court (RTC), Branch 75, Valenzuela, Metro 31230, in which a Decision[21] was rendered on September 14, 1993, lifting the RTC Order
Manila, a Complaint,[7] docketed as Civil Case No. 4061-V-93, for Collection of Sum of Money of Attachment on their remaining properties. It reads in part:
and Damages with Prayer for Preliminary Attachment. In the case before Us, the complaint and the accompanying affidavit in support of the
application for the writ only contains general averments. Neither pleading states in particular
In support of her prayer for preliminary attachment, Te attached to her Complaint an Affidavit how the fraud was committed or the badges of fraud purportedly committed by the petitioners
executed by Sy that Spouses Yu were guilty of fraud in entering into the purchase agreement to establish that the latter never had an intention to pay the obligation; neither is there a
for they never intended to pay the contract price, and that, based on reliable information, they statement of the particular acts committed to show that the petitioners are in fact disposing of
were about to move or dispose of their properties to defraud their creditors. [8] their properties to defraud creditors. x x x.

Upon Te's posting of an attachment bond,[9] the RTC issued an Order of Attachment/Levy[10]
dated March 29, 1993 on the basis of which Sheriff Constancio Alimurung (Sheriff Alimurung)
of RTC, Branch 19, Cebu City levied and attached Spouses Yu's properties in Cebu City
consisting of one parcel of land (known as Lot No. 11)[11] and four units of motor vehicle,
specifically, a Toyota Ford Fierra, a jeep, a Canter delivery van, and a passenger bus. [12]
On April 21, 1993, Spouses Yu filed an Answer[13] with counterclaim for damages arising from
the wrongful attachment of their properties, specifically, actual damages amounting to
P1,500.00 per day; moral damages, P1,000,000.00; and exemplary damages, P50,000.00. They
also sought payment of P120,000.00 as attorney's fees and P80,000.00 as litigation
expenses.[14] On the same date, Spouses Yu filed an Urgent Motion to Dissolve Writ of
Preliminary Attachment.[15] They also filed a Claim Against Surety Bond [16] in which they
demanded payment from Visayan Surety and Insurance Corporation (Visayan Surety), the
surety which issued the attachment bond, of the sum of P594,240.00, representing the
damages they allegedly sustained as a consequence of the wrongful attachment of their
properties.
x x x x
Moreover, at the hearing on the motion to discharge the order of attachment x x x petitioners
presented evidence showing that private respondent has been extending multi-million peso
credit facilities to the petitioners for the past seven years and that the latter have consistently
settled their obligations. This was not denied by private respondent. Neither does the private
respondent contest the petitioners' allegations that they have been recently robbed of properties
of substantial value, hence their inability to pay on time. By the respondent court's own
pronouncements, it appears that the order of attachment was upheld because of the admitted
financial reverses the petitioner is undergoing.
This is reversible error. Insolvency is not a ground for attachment especially when defendant
has not been shown to have committed any act intended to defraud its creditors x x x.
For lack of factual basis to justify its issuance, the writ of preliminary attachment issued by
the respondent court was improvidently issued and should be discharged.[22]

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PROVISIONAL REMEDIES - PRELIMINARY ATTACHMENT CASES

From said CA Decision, Te filed a Motion for Reconsideration but to no avail.[23]

The RTC issued an Order dated August 9, 1994, which read:
Te filed with us a Petition for Review on Certiorari[24] but we denied the same in a Resolution x x x x
dated June 8, 1994 for having been filed late and for failure to show that a reversible error was
committed by the CA.[25] Entry of Judgment of our June 8, 1994 Resolution was made on July (2) With regard the counter claim filed by the defendants against the plaintiff for the alleged
22, 1994.[26] Thus, the finding of the CA in its September 14, 1993 Decision in CA-G.R. SP No. improvident issuance of this Court thru its former Presiding Judge (Honorable Emilio Leachon,
31230 on the wrongfulness of the attachment/levy of the properties of Spouses Yu became Jr.), the same has been ruled with definiteness by the Supreme Court that, indeed, the issuance
conclusive and binding. by the Court of the writ of preliminary attachment appears to have been improvidently done,
but nowhere in the decision of the Supreme Court and for that matter, the Court of
However, on July 20, 1994, the RTC, apparently not informed of the SC Decision, rendered a Appeal's decision which was in effect sustained by the High Court, contains any ruling
Decision, the dispositive portion of which reads: or directive or imposition, of any damages to be paid by the plaintiff to the defendants,
WHEREFORE, premises considered, the Court finds that the plaintiff has established a valid in other words, both the High Court and the CA, merely declared the previous issuance of the
civil cause of action against the defendants, and therefore, renders this judgment in favor of writ of attachment by this Court thru its former presiding judge to be improvidently issued, but
the plaintiff and against the defendants, and hereby orders the following: it did not award any damages of any kind to the defendants, hence, unless the High Court or
the CA rules on this, this Court coud not grant any damages by virtue of the improvident
1) Defendants are hereby ordered or directed to pay the plaintiff the sum of P549,404.00, with attachment made by this Court thru its former presiding judge, which was claimed by the
interest from the date of the filing of this case (March 3, 1993); defendants in their counter claim.

2) The Court, for reasons aforestated, hereby denies the grant of damages to the plaintiff; (3) This Court hereby reiterates in toto its Decision in this case dated July 20, 1994.
[30] (Emphasis ours)
3) The Court hereby adjudicates a reasonable attorney's fees and litigation expenses of
The RTC also issued an Order dated December 2, 1994,[31] denying the Motion for
P10,000.00 in favor of the plaintiff;
Reconsideration of Spouses Yu.[32]

4) On the counterclaim, this Court declines to rule on this, considering that the question
In the same December 2, 1994 Order, the RTC granted two motions filed by Te, a Motion to
of the attachment which allegedly gave rise to the damages incurred by the defendants
Correct and to Include Specific Amount for Interest and a Motion for Execution Pending
is being determined by the Supreme Court.
Appeal.[33] The RTC also denied Spouses Yu's Notice of Appeal[34] from the July 20, 1994
Decision and August 9, 1994 Order of the RTC.
SO ORDERED.[27] (Emphasis ours)

Spouses Yu filed with the RTC a Motion for Reconsideration [28] questioning the disposition of From said December 2, 1994 RTC Order, Spouses Yu filed another Notice of Appeal [35] which
their counterclaim. They also filed a Manifestation[29] informing the RTC of our June 8, 1994 the RTC also denied in an Order[36] dated January 5, 1995.
Resolution in G.R. No. 114700.
Spouses Yu filed with the CA a Petition[37] for Certiorari, Prohibition and Mandamus, docketed
77
PROVISIONAL REMEDIES - PRELIMINARY ATTACHMENT CASES

as CA-G.R. SP No. 36205, questioning the denial of their Notices of Appeal; and seeking the
modification of the July 20, 1994 Decision and the issuance of a Writ of Execution. The CA Such argument is not only flawed, it is also specious.
granted the Petition in a Decision[38] dated June 22, 1995.
As stated earlier, Spouses Yu filed a Claim Against Surety Bond on the same day they filed
Hence, Spouses Yu filed with the CA an appeal[39] docketed as CA-G.R. CV No. 52246, their Answer and Urgent Motion to Dissolve Writ of Preliminary Attachment. [46] Further, the
questioning only that portion of the July 20, 1994 Decision where the RTC declined to rule on records reveal that on June 18, 1993, Spouses Yu filed with the RTC a Motion to Give Notice
their counterclaim for damages.[40] However, Spouses Yu did not dispute the specific monetary to Surety.[47] The RTC granted the Motion in an Order[48] dated June 23, 1993. Accordingly,
awards granted to respondent Te; and therefore, the same have become final and executory. Visayan Surety was notified of the pre-trial conference to apprise it of a pending claim against
its attachment bond. Visayan Surety received the notice on July 12, 1993 as shown by a
Although in the herein assailed Decision[41] dated March 21, 2001, the CA affirmed in toto the registry return receipt attached to the records.[49]
RTC Decision, it nonetheless made a ruling on the counterclaim of Spouses Yu by declaring
that the latter had failed to adduce sufficient evidence of their entitlement to damages. Moreover, even if it were true that Visayan Surety was left in the proceedings a quo, such
omission is not fatal to the cause of Spouses Yu. In Malayan Insurance Company, Inc. v.
Spouses Yu filed a Motion for Reconsideration[42] but the CA denied it in the herein assailed Salas,[50] we held that "x x x if the surety was not given notice when the claim for damages
Resolution[43] dated October 14, 2002. against the principal in the replevin bond was heard, then as a matter of procedural due process
the surety is entitled to be heard when the judgment for damages against the principal is sought
Spouses Yu filed the present Petition raising the following issues: to be enforced against the surety's replevin bond."[51] This
remedy is applicable for the procedures governing claims for damages on an attachment
I. Whether or not the appellate court erred in not holding that the writ of attachment was bond and on a replevin bond are the same.[52]
procured in bad faith, after it was established by final judgment that there was no true
ground therefor. We now proceed to resolve the issues jointly.

II. Whether or not the appellate court erred in refusing to award actual, moral and Spouses Yu contend that they are entitled to their counterclaim for damages as a matter of
exemplary damages after it was established by final judgment that the writ of attachment right in view of the finality of our June 8, 1994 Resolution in G.R. No. 114700 which affirmed
was procured with no true ground for its issuance.[44] the finding of the CA in its September 14, 1993 Decision in CA-G.R. SP No. 31230 that
respondent Te had wrongfully caused the attachment of their properties. Citing Javellana v.
There is one preliminary matter to set straight before we resolve the foregoing issues. D.O. Plaza Enterprises, Inc.,[53] they argue that they should be awarded damages based solely
on the CA finding that the attachment was illegal for it already suggests that Te acted with
According to respondent Te,[45] regardless of the evidence presented by Spouses Yu, their malice when she applied for attachment. And even if we were to assume that Te did not act
counterclaim was correctly dismissed for failure to comply with the procedure laid down in with malice, still she should be held liable for the aggravation she inflicted when she applied
Section 20 of Rule 57. Te contends that as Visayan Surety was not notified of the counterclaim, for attachment even when she was clearly not entitled to it.[54]
no judgment thereon could be validly rendered.

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PROVISIONAL REMEDIES - PRELIMINARY ATTACHMENT CASES

That is a rather limited understanding of Javellana. The counterclaim disputed therein was In ruling that Spouses Yu failed to adduce sufficient evidence to support their counterclaim for
not for moral damages and therefore, there was no need to prove malice. As early as in Lazatin actual damages, the CA stated, thus:
v. Twaño,[55] we laid down the rule that where there is wrongful attachment, the attachment In this case, the actual damages cannot be determined. Defendant-appellant Josefa Yu testified
defendant may recover actual damages even without proof that the attachment plaintiff acted on supposed lost profits without clear and appreciable explanation. Despite her submission of
in bad faith in obtaining the attachment. However, if it is alleged and established that the the used and unused ticket stubs, there was no evidence on the daily net income, the routes
attachment was not merely wrongful but also malicious, the attachment defendant may recover plied by the bus and the average fares for each route. The submitted basis is too speculative
moral damages and exemplary damages as well. [56] Either way, the wrongfulness of the and conjectural. No reports regarding the average actual profits and other evidence of
attachment does not warrant the automatic award of damages to the attachment profitability necessary to prove the amount of actual damages were presented. Thus, the Court
defendant; the latter must first discharge the burden of proving the nature and extent of the a quo did not err in not awarding damages in favor of defendants-appellants.[64]
loss or injury incurred by reason of the wrongful attachment.[57]
We usually defer to the expertise of the CA, especially when it concurs with the factual findings
of the RTC.[65] Indeed, findings of fact may be passed upon and reviewed by the Supreme Court
In fine, the CA finding that the attachment of the properties of Spouses Yu was wrongful did
in the following instances: (1) when the conclusion is a finding grounded entirely on
not relieve Spouses Yu of the burden of proving the factual basis of their counterclaim for
speculations, surmises, or conjectures; (2) when the inference made is manifestly mistaken,
damages.
absurd, or impossible; (3) where there is a grave abuse of discretion in the appreciation of facts;
(4) when judgment is based on a misapprehension of facts; (5) when the lower court, in making
To merit an award of actual damages arising from a wrongful attachment, the attachment
its findings, went beyond the issues of the case and such findings are contrary to the
defendant must prove, with the best evidence obtainable, the fact of loss or injury suffered and
admissions of both appellant and appellee; (6) when the factual findings of the CA are contrary
the amount thereof.[58] Such loss or injury must be of the kind which is not only capable of
to those of the trial court; (7) when the findings of fact are themselves conflicting; (8) when the
proof but must actually be proved with a reasonable degree of certainty. As to its amount, the
findings of fact are conclusions made without a citation of specific evidence on which they are
same must be measurable based on specific facts, and not on guesswork or speculation. [59] In
based; (9) when the facts set forth in the petition as well as in the petitioner's main and reply
particular, if the claim for actual damages covers unrealized profits, the amount of unrealized
briefs are not disputed by the respondents; (10) when the findings of fact of the lower court
profits must be estalished and supported by independent evidence of the mean income of the
are premised on the supposed absence of evidence and are contradicted by the evidence on
business undertaking interrupted by the illegal seizure. [60]
record.[66] However, the present case does not fall under any of the exceptions. We are in full
accord with the CA that Spouses Yu failed to prove their counterclaim.
Spouses Yu insist that the evidence they presented met the foregoing standards. They point to
the lists of their daily net income from the operation of said passenger bus based on used ticket
Spouses Yu's claim for unrealized income of P1,500.00 per day was based on their computation
stubs[60] issued to their passengers. They also cite unused ticket stubs as proof of income
of their average daily income for the year 1992. Said computation in turn is based on the value
foregone when the bus was wrongfully seized.[62] They further cite the unrebutted testimony of
of three ticket stubs sold over only five separate days in 1992.[67] By no stretch of the
Josefa Yu that, in the day-to-day operation of their passenger bus, they use up at least three
imagination can we consider ticket sales for five days sufficient evidence of the average daily
ticket stubs and earn a minimum daily income of P1,500.00.[63]
income of the passenger bus, much less its mean income. Not even the unrebutted testimony
of Josefa Yu can add credence to such evidence for the testimony itself lacks corroboration.[68]

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PROVISIONAL REMEDIES - PRELIMINARY ATTACHMENT CASES

Besides, based on the August 29, 1994 Manifestation[69] filed by Sheriff Alimurung, it would A: We requested that it be replaced and staggered into smaller amounts.
appear that long before the passenger bus was placed under preliminary attachment in Civil
Case No. 4061-V-93, the same had been previously attached by the Sheriff of Mandaue City COURT: Did you fund it or not?
in connection with another case and that it was placed in the Cebu Bonded Warehousing
Corporation, Cebu City. Thus, Spouses Yu cannot complain that they were unreasonably Atty. Ferrer: The three checks involved?
deprived of the use of the passenger bus by reason of the subsequent wrongful attachment
issued in Civil Case No. 4061-V-93. Nor can they also attribute to the wrongful attachment Atty. Florido: Already answered. She said that they were not able to fund it.
their failure to earn income or profit from the operation of the passenger bus.
Atty. Ferrer: And as a matter of fact, you went to the bank to close your account?
Moreover, petitioners did not present evidence as to the damages they suffered by reason of the
wrongful attachment of Lot No. 11. A: We closed account with the bank because we transferred the account to another
bank.
Nonetheless, we recognize that Spouses Yu suffered some form of pecuniary loss when their
properties were wrongfully seized, although the amount thereof cannot be definitively Q: How much money did you transfer from that bank to which the three checks were
ascertained. Hence, an award of temperate or moderate damages in the amount of P50,000.00 drawn to this new bank?
is in order.[70]
A: I don't know how much was there but we transferred already to the Solid Bank.
As to moral and exemplary damages, to merit an award thereof, it must be shown that
the wrongful attachment was obtained by the attachment plaintiff with malice or bad faith, Q: Who transferred?
such as by appending a false affidavit to his application.[71]
A: My daughter, sir.[73] (Emphasis ours)
Spouses Yu argue that malice attended the issuance of the attachment bond as shown by the
Based on the foregoing testimony, it is not difficult to understand why Te concluded that
fact that Te deliberately appended to her application for preliminary attachment an Affidavit
Spouses Yu never intended to pay their obligation for they had available funds in their bank
where Sy perjured himself by stating that they had no intention to pay their obligations even
but chose to transfer said funds instead of cover the checks they issued. Thus, we cannot
when he knew this to be untrue given that they had always paid their obligations; and by
attribute malice nor bad faith to Te in applying for the attachment writ. We cannot hold her
accusing them of disposing of their properties to defraud their creditors even when he knew
liable for moral and exemplary damages.
this to be false, considering that the location of said properties was known to him. [72]

As a rule, attorney's fees cannot be awarded when moral and exemplary damages are not
The testimony of petitioner Josefa Yu herself negates their claim for moral and exemplary
granted, the exception however is when a party incurred expenses to lift a wrongfully issued
damages. On cross-examination she testified, thus:
writ of attachment.[74] Without a doubt, Spouses Yu waged a protracted legal battle to fight off
Q: Did you ever deposit any amount at that time to fund the check?
the illegal attachment of their properties and pursue their claims for damages. It is only just
and equitable that they be awarded reasonable attorney's fees in the amount of P30,000.00.
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PROVISIONAL REMEDIES - PRELIMINARY ATTACHMENT CASES

0239991 1-05-99 229,110.00

In sum, we affirm the dismissal of the counterclaim of petitioners Spouses Yu for actual, moral, 0239992 1-07-99 288,771.00
and exemplary damages. However, we grant them temperate damages and attorney's fees.
0239994 1-12-99 200,025.00
0239995 1-12-99 287,748.00
WHEREFORE, the petition is partly GRANTED. The March 21, 2001 Decision of the Court of
0296801 1-29-99 207,970.00
Appeals is AFFIRMED with the MODIFICATION that petitioners' counterclaim is PARTLY
GRANTED. Gregorio Yu and Josefa Yu are awarded P50,000.00 temperate damages and 0296802 1-30-99 206,127.00
P30,000.00 attorney's fees. 0296803 2-01-99 316,577.00
TOTAL 2,370,405.00[3]
No costs.
When presented for payment, the foregoing postdated checks were dishonored for the reason,
SILANGAN TEXTILE MANUFACTURING CORPORATION, TRADEWORLD SYNERGY, "Drawn Against Insufficient Fund" (DAIF). LSMI demanded from STMC the immediate payment
INCORPORATED, AND CELLU INDUSTRIES, INCORPORATED, PETITIONERS,* VS. HON. of the obligation.[4] STMC failed and refused to heed the demand of LSMI; hence, the latter filed
AVELINO G. DEMETRIA, PRESIDING JUDGE, REGIONAL TRIAL COURT, LIPA CITY, the Complaint before the RTC.
BRANCH 85, AND LUZON SPINNING MILLS, INCORPORATED, RESPONDENTS.
In accordance with the prayer of LSMI, and finding the same to be sufficient in form and
CHICO-NAZARIO, J.: substance, the RTC issued a writ of preliminary attachment against STMC's properties.[5] In
this connection, a notice of attachment on the properties in the name of STMC covered by
Luzon Spinning Mills, Incorporated (LSMI) filed before the Regional Trial Court (RTC) of Lipa Transfer Certificates of Title No. 202686 and No. 202685 was issued. [6]
City, Branch 85, a Complaint dated 23 August 2000, for Collection of Sum of Money [1] against
Silangan Textile Manufacturing Corporation (STMC). In its Complaint, LSMI alleged that from Apparently, LSMI had already previously instituted before the Municipal Trial Court (MTC) of
19 November 1998 to 14 June 1999, Anita, Jimmy and Benito, all surnamed Silangan, in their Lipa City, Branch 1, criminal cases against the Silangans for violation of Batas Pambansa Blg.
capacity as stockholders and officers of STMC ordered 111,161.60 kilograms of yarn, valued in 22. Thus, STMC was prompted to file a Motion, praying to dismiss the civil Complaint before
the total amount of P9,999,845.00. The yarns were delivered at the office of STMC as evidenced the RTC, to cite STMC's lawyer for contempt for forum shopping, and to discharge the writ of
by delivery receipts.[2] In payment of the yarns, STMC issued 34 postdated checks in the total preliminary attachment issued by the trial court.[7] After LSMI filed its Comment/Opposition to
amount of P9,999,845.00. Among these postdated checks are the following: the motion of STMC, the RTC resolved the said motion by denying it for lack of merit. [8]

The RTC held that:

Check No. Date Amount
For forum-shopping to exist, both actions must involve the same transactions and same
essential facts and circumstances. There must also be identical causes of action, subject matter
0239973 5-12-99 P317,952.00 and issues (PRC vs. CA, 292 SCRA 155). Forum-shopping also exists where the elements of
0239990 1-05-99 316,125.00 litis pendencia are present or where a final judgment in one case will amount to res judicata in
81
PROVISIONAL REMEDIES - PRELIMINARY ATTACHMENT CASES

the other (Alejandro vs. CA, 295 SCRA 536). check/s.

In the case at bar, the two (2) cases, one for violation of BP 22 and the other for collection of Accordingly, since the herein petitioners, as drawers of the checks in question, are not parties
sum of money although concerning the same amount of money are distinct litigations, neither to the criminal cases for violation of B.P. Blg. 22, the private respondent was and is not
involving exactly the same parties nor identical issues. prohibited from filing an independent civil action against them.

The accused in the criminal cases for violation of BP 22 are the persons who signed the Moreover, the civil liability of the accused Silangan(s), the signatories of the checks in the
worthless checks while the defendants in the instant case are the corporations which have criminal cases, is based on Article 20 of the Civil Code as declared in Banal vs. Tadeo, Jr.
outstanding obligations to the plaintiff. Hence, there is no identity of parties in the aforesaid
cases. On the other hand, the liability of petitioners corporations arose from contract. Under Article
31 of the Civil Code and also Section 1(a), Rule 111 of the 2000 Revised Rules on Criminal
As to whether or not the requisites prescribed by law for the issuance of a writ of preliminary Procedure, the offended party has the right to institute a separate civil action when its nexus
attachment have been complied with, record show (sic) that the contents of the affidavit is liability not arising from the crime, like a liability arising from contract.
required for the issuance of a writ of preliminary attachment were incorporated in the
complaint, verified and certified as correct by Mr. Vicente Africa, Jr. Thus, there was In fine, there is no violation of SC Administrative Circular No. 57-97, now Section 1(b) of the
substantial compliance of Section 3, Rule 57 of the Rules of Court.[9] 2000 Revised Rules of Criminal Procedure. The civil actions for the liability of the Silangans as
the signatories to the subject checks are deemed included in the criminal actions filed against
The Motion for Reconsideration and Motion to Discharge Attachment and Admit Counter-
them. The separate action filed against the petitioners corporations for the recovery of the
bond[10] filed by STMC were denied by the RTC in its Order dated 9 April 2001.[11]
purchase price of the yarn sold to them did not detract from it as this is an entirely different
suit.
STMC elevated the case to the Court of Appeals via a Petition for Certiorari under Rule 65 of
x x x x
the Rules of Court[12] which was dismissed by the appellate court in a Decision [13] dated 25
October 2004, holding that:
WHEREFORE, for being deficient both in form and in substance, the instant petition is
But it is also true that when the bounced check involved is issued by a corporation, B.P. Blg.
DISMISSED, with costs against the petitioners.
22 imposes the criminal liability only on the individual/s who signed the check, presumably in
keeping with the principle that generally only natural persons may commit a crime. Thus: STMC filed a Motion for Reconsideration thereon which was denied by the Court of Appeals in
a Resolution dated 24 January 2005.[14]
"Where the check is drawn by a corporation, company or entity, the person or persons who
actually signed the check in behalf of such drawer shall be liable under this Act." Hence, the instant petition.

We hold, at any rate, that with respect to the civil liability, the corporation concerned should STMC submits the following issues for our resolution:
bear the responsibility, the drawing of the bum check being a corporate act. And a corporation I. Whether or not the Honorable Court of Appeals erred in affirming the conclusion of public
has a legal personality of its own different from that of its stockholders/officers who signed the respondent Judge Demetria that the certification against forum-shopping is inapplicable in this
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PROVISIONAL REMEDIES - PRELIMINARY ATTACHMENT CASES

case? that any judgment rendered in the other action will amount to res judicata in the action under
consideration or will constitute litis pendentia.[15]
II. Whether or not the Honorable Court of Appeals erred in affirming the conclusion of the
public respondent Judge Demetria when it failed to apply Section 1(b), Rule 111 of the 2000 We grant the petition.
Revised Rules of Criminal Procedure?
The case of Hyatt Industrial Manufacturing Corporation v. Asia Dynamic Electrix Corporation [16]
III. Whether or not the Honorable Court of Appeals erred in affirming the conclusion of the is instructive. In that case, Hyatt Industrial Manufacturing Corporation (HIMC) instituted
public respondent Judge Demetria when it issued the writ of preliminary attachment in favor before the Regional Trial Court of Mandaluyong City a complaint for recovery of sum of money
of the private respondent. against respondent Asia Dynamic Electrix Corporation (ADEC). The complaint alleged that ADEC
purchased from HIMC various electrical conduits and fittings amounting to P1,622,467.14.
In its first assigned error, STMC argues that LSMI through its Operation Manager, Mr. Vicente
ADEC issued several checks in favor of HIMC as payment. The checks, however, were
Africa, failed to certify under oath that he had earlier filed criminal cases for violation of Batas
dishonored by the drawee bank on the ground of insufficient funds/account closed. Before the
Pambansa Blg. 22 against the Silangans before the MTC. These cases are as follows:
filing of the case for recovery of sum of money before the RTC of Mandaluyong City, HIMC had
already filed separate criminal complaints for violation of Batas Pambansa Blg. 22 against the
Case Number Name of Accused
officers of ADEC, Gil Santillan and Juanito Pamatmat. They were docketed as I.S. No. 00-01-
00304 and I.S. No. 01-00300, respectively, and were both pending before the Metropolitan Trial
(a) 00-0295 to 00- 0299 and 00-305 Anita Silangan and Benito Silangan Court (MeTC) of Pasig City. These cases involved the same checks which were the subjects of
b) 00-0294, 0300-04 and 306-09 Anita Silangan and Jimmy Silangan Civil Case No. MC-01-1493 before the RTC of Mandaluyong City.

(c) 00-1246 Anita Silangan and Benito Silangan

In holding that the civil case filed subsequent to the criminal cases was deemed instituted in
(d) 99-2145 to 99-2154 Anita Silangan and Benito Silangan
the criminal cases, this Court held:
99-2154
It is clear from the records that the checks involved in I.S. No. 00-01-00304 and I.S. No. 00-
01-00300 are the same checks cited by petitioner in Civil Case No. MC 01-1493. The Court will
The criminal cases for violation of Batas Pambansa Blg. 22 and the collection of sum of money
certainly not allow petitioner to recover a sum of money twice based on the same set of checks.
have the same issues, i.e., the recovery of the subject checks. The subsequent filing of the civil
Neither will the Court allow it to proceed with two actions based on the same set of checks to
case for sum of money constitutes forum shopping.
increase its chances of obtaining a favorable ruling. Such runs counter to the Court's policy
against forum shopping which is a deplorable practice of litigants in resorting to two different
Forum shopping exists when the elements of litis pendentia are present, or when a final
fora for the purpose of obtaining the same relief to increase his chances of obtaining a favorable
judgment in one case will amount to res judicata in another. There is forum shopping when the
judgment. It is a practice that ridicules the judicial process, plays havoc with the rules on
following elements concur: (1) identity of the parties or, at least, of the parties who represent
orderly procedure, and is vexatious and unfair to the other parties of the case.[17]
the same interest in both actions; (2) identity of the rights asserted and relief prayed for, as the
In dismissing Civil Case No. MC-01-1493, this Court applied and interpreted Supreme Court
latter is founded on the same set of facts; and (3) identity of the two preceding particulars, such
Circular No. 57-97 effective 16 September 1997, which reads:
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PROVISIONAL REMEDIES - PRELIMINARY ATTACHMENT CASES

1. The criminal action for violation of Batas Pambansa Blg. 22 shall be deemed collectors. While ordinarily no filing fees are charged for actual damages in criminal cases, the
to necessarily include the corresponding civil action, and no reservation to file rule on the necessary inclusion of a civil action with the payment of filing fees based on the
such action separately shall be allowed or recognized. face value of the check involved was laid down to prevent the practice of creditors of using the
threat of a criminal prosecution to collect on their credit free of charge. [19]
From this Supreme Court Circular was adopted Rule 111(b) of the 2000 Revised Rules of
Criminal Procedure which reads: Applying the Hyatt case to the case before us, the dismissal of Civil Case No. 00-0420 before
(b) The criminal action for violation of Batas Pambansa Blg. 22 shall be deemed to include the the RTC is warranted. It is not denied that LSMI likewise filed several criminal complaints
corresponding civil action. No reservation to file such civil action separately shall be allowed. against the officers of STMC before the MTC prior to the filing of Civil Case No. 00-0420. As

In the Hyatt case, the Court further negated the claim that there are no identity of parties and provided in Supreme Court Circular No. 57-97, as re-echoed in Rule 111, Section 1(b), of the

causes of action in the criminal and civil complaints for violation of Batas Pambansa Blg. 22 2000 Rules of Criminal Procedure, the civil action now filed against STMC arising from its

where a criminal case against the corporate officers is filed ahead of the civil case against the issuance of the bouncing checks is deemed instituted in the criminal cases filed against its

corporation. The parties in the civil case against the corporation represent the same interest as officers pending before the MTC.

the parties in the criminal case. As to the issue of identity or non-identity of relief sought, this
Court held that the criminal case and the civil case seek to obtain the same relief. Thus: Finally, as to the prayer of STMC for the discharge of the Writ of Preliminary Attachment issued

With the implied institution of the civil liability in the criminal actions before the Metropolitan by the RTC, Rule 57 of the Revised Rules of Court provides:

Trial Court of Pasig City, the two actions are merged into one composite proceeding, with the SECTION 1. Grounds upon which attachment may issue. - At the commencement of the action

criminal action predominating the civil. The prime purpose of the criminal action is to punish or at any time before entry of judgment, a plaintiff or any proper party may have the property

the offender to deter him and others from committing the same or similar offense, to isolate of the adverse party attached as security for the satisfaction of any judgment that may be

him from society, reform or rehabilitate him or, in general, to maintain social order. The recovered in the following cases:

purpose, meanwhile, of the civil action is for the restitution, reparation or indemnification of
the private offended party for the damage or injury he sustained by reason of the delictual or (a) In an action for the recovery of a specified amount of money or damages, other than moral

felonious act of the accused. Hence, the relief sought in the civil aspect of I.S. No. 00-01-00304 and exemplary, on a cause of action arising from law, contract, quasi-contract, delict or quasi-

and I.S. No. 00-01-00300 is the same as that sought in Civil Case No. MC 01-1493, that is, the delict against a party who is about to depart from the Philippines with intent to defraud his

recovery of the amount of the checks, which, according to [HIMC], represents the amount to be creditors.

paid by [ADEC] for its purchases. To allow [HIMC] to proceed with Civil Case No. MC 01-1493
despite the filing of I.S. 00-01-00304 and I.S. No. 00-01-00300 might result to a double xxxx

payment of its claim.[18]

SEC. 2. Issuance and contents of order. - An order of attachment may be issued either ex parte
The purpose of Section 1(b) of Rule 111 is explained by Justice Florenz D. Regalado, former
or upon motion with notice and hearing by the court in which the action is pending, or by the
chairman of the Committee tasked with the revision of the Rules of Criminal Procedure. He
Court of Appeals or the Supreme Court, and must require the sheriff of the court to attach so
clarified that the special rule on Batas Pambansa Blg. 22 cases was added because the dockets
much of the property in the Philippines of the party against whom it is issued, not exempt from
of the courts were clogged with such litigations and creditors were using the courts as
execution, as may be sufficient to satisfy the applicant's demand, unless such party makes

84
PROVISIONAL REMEDIES - PRELIMINARY ATTACHMENT CASES

deposit or gives a bond as hereinafter provided in an amount equal to that fixed in the order, and SET ASIDE. Civil Case No. 00-0420 before the Regional Trial Court of Lipa City, Branch
which may be the amount sufficient to satisfy the applicant's demand or the value of the 85, is ordered DISMISSED. The attachment over the properties by the writ of preliminary
property to be attached as stated by the applicant, exclusive of costs. Several writs may be attachment issued by the same trial court is hereby ordered LIFTED.
issued at the same time to the sheriffs of the courts of different judicial regions.
SO ORDERED.
SEC. 3. Affidavit and bond required. - An order of attachment shall be granted only when it
appears by the affidavit of the applicant, or of some other person who personally knows the PCL INDUSTRIES MANUFACTURING CORPORATION, PETITIONER, VS. THE COURT OF
facts, that a sufficient cause of action exists, that the case is one of those mentioned in Section APPEALS AND ASA COLOR & CHEMICAL INDUSTRIES, INC., RESPONDENTS
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 AUSTRIA-MARTINEZ, J.:
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, This resolves the petition for certiorari seeking the reversal of the Decision [1] of the Court of
must be duly filed with the court before the order issues. Appeals (CA) promulgated on February 21, 2001, which affirmed the Decision of the Regional
Trial Court (RTC) of Quezon City, Branch 226; and the CA Resolution dated May 9, 2001
Attachment is an ancillary remedy. It is not sought for its own sake but rather to enable the
denying petitioner's motion for reconsideration.
attaching party to realize upon relief sought and expected to be granted in the main or principal
action.[20] Being an ancillary or auxiliary remedy, it is available during the pendency of the
The antecedent facts are as follows:
action which may be resorted to by a litigant to preserve and protect certain rights and interests
therein pending rendition, and for purposes of the ultimate effects, of a final judgment in the
On October 10, 1995, private respondent filed a complaint with the RTC for Sum of Money with
case. They are provisional because they constitute temporary measures availed of during the
Preliminary Attachment against herein petitioner. Private respondent claims that during the
pendency of the action and they are ancillary because they are mere incidents in and are
period from January 18, 1994 to April 14, 1994, petitioner purchased and received from it
dependent upon the result of the main action.[21]
various printing ink materials with a total value of P504,906.00, payable within 30 days from
the respective dates of invoices; and that petitioner, in bad faith, failed to comply with the terms
A writ of preliminary attachment is a species of provisional remedy. As such, it is a collateral
of the sale and failed to pay its obligations despite repeated verbal and written demands.
proceeding, permitted only in connection with a regular action, and as one of its incidents; one
of which is provided for present need, or for the occasion; that is, one adapted to meet a
Petitioner was served with summons together with the Writ of Preliminary Attachment on
particular exigency.[22] On the basis of the preceding discussion and the fact that we find the
October 20, 1995. On October 23, 1995, petitioner filed a Motion to Dissolve and/or Discharge
dismissal of Civil Case No. 00-00420 to be in order, the writ of preliminary attachment issued
Writ of Preliminary Attachment. On November 20, 1995, the trial court issued an Order
by the trial court in the said case must perforce be lifted. [23]
denying petitioner's motion to dissolve the writ of preliminary attachment. Petitioner's motion
for reconsideration of said order was also denied per Order dated January 2, 1996. Petitioner
WHEREFORE, premises considered, the petition is GRANTED. The Decision of the Court of
no longer elevated to the higher courts the matter of the propriety of the issuance of the writ of
Appeals dated 25 October 2004 and Resolution dated 24 January 2005 affirming the Resolution
preliminary attachment.
dated 9 April 2001 of the Regional Trial Court of Lipa City, Branch 85, are hereby REVERSED
85
PROVISIONAL REMEDIES - PRELIMINARY ATTACHMENT CASES

The counterclaim of defendant is hereby dismissed for insufficiency of evidence.

In the meantime, on October 30, 1995, petitioner filed its Answer with Counterclaim. Petitioner
claims that the various printing ink materials delivered to it by private respondent were SO ORDERED.[2]
defective and sometime in August, October, and November of 1993, they have returned ink
The RTC Decision was appealed by herein petitioner to the CA. On February 21, 2001, the CA
materials to private respondent as shown by several Transmittal Slips. Nevertheless, petitioner
promulgated its Decision affirming the RTC judgment. The CA held that there was sufficient
admits that it continued to buy ink materials from private respondent in 1994 despite having
evidence to prove that herein petitioner had the intention of defrauding private respondent
rejected ink materials delivered by private respondent in 1993. Petitioner, however, insists that
when it contracted the obligation because it agreed to pay within 30 days from the date of
the ink materials delivered by private respondent in 1994 were also defective and they made
purchase but once the merchandise was in its possession, it refused to pay. Furthermore, the
known their complaints to Frankie, the authorized representative of private respondent. In a
CA ruled that the issue on the propriety of the issuance of the writ of preliminary attachment
letter dated June 30, 1995, petitioner informed private respondent that it had been complaining
should be laid to rest since petitioner no longer questioned the trial court's orders before the
to its (private respondent's) representative about the quality of the ink materials but nothing
higher courts.
was done to solve the matter. Private respondent replied through a letter dated July 16, 1995,
that it was giving petitioner the option to return the products delivered, "sealed and unused"
As to the alleged defect of the ink delivered by private respondent, both the trial court and the
within one week from receipt of said letter or pay the full amount of its obligation. Petitioner
CA found that the evidence presented by petitioner was insufficient to prove that it was indeed
answered in a letter dated September 26, 1995, that private respondent should pick up at its
the ink from private respondent which caused the unwanted smell in petitioner's finished
plant the remaining unused defective ink materials, and requested to meet with private
plastic products. The trial court's analysis of the evidence led it to the following conclusions,
respondent to thresh out the matter. No meeting was ever held. Petitioner further claims that
to wit:
it suffered damages in the amount of P1,592,794.50 because its customers rejected the finished
plastic products it delivered, complaining of the bad smell, which, according to petitioner, was [D]efendant presented transmittal receipts, which allegedly represent the items returned by
caused by the defective ink materials supplied by private respondent. defendant [herein petitioner] to plaintiff [herein respondent].

After trial on the merits, the trial court rendered its Decision dated January 8, 1999, the x x x x
dispositive portion of which reads thus:
A closer look at these three transmittal receipts would readily show that they are all for
WHEREFORE, premises considered, judgment is hereby rendered in favor of
deliveries made in 1993, whereas the items admittedly received by defendant and listed in
plaintiff. Defendant PCL Industries Manufacturing Corporation is hereby ordered to pay
paragraph 2 of the Complaint are all delivered and dated from January 18, 1994 to April 14,
plaintiff:
1994.
1) P504,906.00 plus 20% interest per annum from April 1994 until fully paid;
The items, therefore, returned for being defective and communicated by defendant to plaintiff
2) 25% of the above amount as and for attorney's fees; and are for those printing ink materials delivered in 1993 and these are not the items left unpaid
and in issue in this present Complaint.
3) cost of suit.
86
PROVISIONAL REMEDIES - PRELIMINARY ATTACHMENT CASES

There is no other proof of demand made by defendant to plaintiff corporation as to communicate plaintiff-appellee. The former's evidence on this point are either self-serving or
to plaintiff any defect in the printing ink materials delivered in 1994 except the demand letter unreliable, or totally unworthy of credence, as shown by the following:
(Exhibit "42") which is dated September 26, 1995.
1) The "work process" forms contain the names of two (2) or three (3) suppliers, as shown by
As admitted by defendant's witness, Eleno Cayabyab, the demands made by Mr. Jovencio Lim the following:
to plaintiff had been oral or verbal only and made only on two occasions. In fact said witness
Exh. "12" — STOCK/ASA
cannot remember exactly when these oral demands were made by Mr. Jovencio Lim, x x x
"13" — SIMCOR/ASA
"14" — SIMCOR/ASA
xxxx
"15" — SIMCOR/ASA
As regards the testimony of defendant's witness Jovencio Lim that defendant's end-users "16" — SYNPAC/ASA
returned the plastic packaging materials to defendant and defendant had to reimburse its "17" — SYNPAC/ASA
clients of the amount paid by them and defendant allegedly suffered damages, defendant failed "19" — SYNPAC/ASA
to present sufficient evidence of this allegation. x x x[3] "20" — SYNPAC/ASA/CDI
"21" — SYNPAC/ASA
Affirming the foregoing findings of the trial court, the CA further noted that:
This is an indication that the supplier of the obnoxious paint materials has not been
As may be observed, as early as January 31, 1994, the appellant [herein petitioner] had received
properly identified or pinpointed.
complaints from its customers about the alleged unwanted smell of their plastic
products. However, no steps were taken to investigate which of its several suppliers delivered
2) The "Memorandum" to the appellant's Production Department from its
the defective ink and, if indeed, the appellee's ink materials were the cause of the smell, no
Records/Receiving Section is an internal memo that does not indicate which of their
immediate communications were sent to the latter. On the contrary, it (appellant) continued
several suppliers delivered the "inferior quality of ink". No witness from the appellant's
to place orders and receive deliveries from the appellee. Worse, the appellant failed to
Production Department was presented to attest that the ink supplied by the appellee was
convincingly show that the appellant stopped using the subject ink materials upon notice
found defective. Not even the person who prepared the said "Work Process" sheets was
of its customers of the alleged unwanted smell of the products. Conversely, the appellant
presented to explain the entries thereon.
continued using the same in their production of plastic materials which would only show
that the cause of the alleged stinking smell cannot be attributed to the subject ink
3) Exhibits "30", "31" and "32" are supposedly memos from Frank F. Tanos of the Omega
materials used. The appellant tried to convince us that the subject ink materials were the
Manufacturing (one of the appellant's customers), alleging that they have rejected certain
same ink delivered by the appellee and used in the products that were returned because of the
printed materials due to "unwanted smell". Again, these memos do not indicate the source of
unwanted smell. However, its evidence fails to impress us.
such unwanted smell. In any case, the memos were respectively dated June 15, 1994, July
15, 1994 and March 30, 1995 - - which dates are too far away from the deliveries made by the
There is no indication that the plasticized pouches printed by the defendant-appellant
appellee.
and returned by its customers were printed with the use of the paint delivered by the

87
PROVISIONAL REMEDIES - PRELIMINARY ATTACHMENT CASES

4) The defendant-appellant made returns of ink products to the appellee much earlier on
August 3, 1993, August 6, 1993, October 13, 1993 and November 3, 1993 as shown by the
delivery receipts/return slips of such dates. According to the appellee, these were samples that
were really returnable if not acceptable. This explanation appears to be plausible, since the
quantity involved appears to be unusually low, compared to the questioned and unpaid
deliveries. At any rate, no similar delivery receipts or return slips were presented to show that
the subject ink materials were indeed rejected and returned by the appellant to the
appellee. On the contrary, the appellant admits that they still have them in their possession
for the reason that they were not picked up by the appellee's representative. Such reasoning
appears to be shallow and unworthy of credence. For if the materials were indeed not picked
II.
THE RESPONDENT COURT OF APPEALS ACTED WITH GRAVE ABUSE OF DISCRETION AS
ITS JUDGMENT WAS BASED ON A MISAPPREHENSION OF FACTS AND ITS FINDINGS ARE
NOT SUPPORTED BY THE EVIDENCE EXTANT IN THE RECORDS OF THIS CASE
III.
THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION IN NOT
REVERSING THE RULING OF THE TRIAL COURT [5]

up within a reasonable time by the appellee's representative, the appellant should have taken
First of all, although the petition states that it is one for certiorari under Rule 65 of the Rules
steps to return them; otherwise they will be held liable for the value thereof.
of Court as it imputes grave abuse of discretion committed by the CA, the Court shall treat the
petition as one for review on certiorari under Rule 45, considering that it was filed within the
5) The defendant-appellant never made any written or formal complaint about the alleged
reglementary period for filing a petition for review on certiorari and the issues and arguments
inferior quality ink and no steps were taken to demand restitution or rectification.
raised basically seek the review of the CA judgment.

Its letter dated June 30, 1995 was the first time it made a communication to the appellee
Secondly, it should be pointed out that petitioner mistakenly stated that it was the CA that
about the alleged inferior quality of the ink delivered by the latter. This letter was its
issued the writ of preliminary attachment. Said writ was issued by the trial court. On appeal,
answer to the appellee's letter of demand for payment. Obviously, the appellant's letter
the CA merely upheld the trial court's order, ruling that the applicant's (herein private
was written to serve as an excuse for its failure to pay for its contractual obligations. In
respondent's) affidavit was sufficient basis for the issuance of the writ because it stated that
any case, as a reaction to such letter, the appellee dared the appellant to return the materials
petitioner had the intention of defrauding private respondent by agreeing to pay its purchases
within one week, through its letter of July 16, 1995. Obviously, no such return was
within 30 days but then refused to pay the same once in possession of the merchandise.
made.[4] (Emphasis supplied)

Petitioner then filed the present petition for review on certiorari on the following grounds:
I.
THE RESPONDENT COURT OF APPEALS ACTED WITH GRAVE ABUSE OF DISCRETION IN
ISSUING A WRIT OF PRELIMINARY ATTACHMENT EX PARTE WITHOUT ANY LEGAL BASIS
AND ON GROUNDS NOT AUTHORIZED UNDER RULE 57 OF THE RULES OF COURT
The Court, however, finds the issuance of the Writ of Preliminary Attachment to be
improper. In Philippine Bank of Communications v. Court of Appeals,[6] the Court held thus:
Petitioner cannot insist that its allegation that private respondents failed to remit the
proceeds of the sale of the entrusted goods nor to return the same is sufficient for
attachment to issue. We note that petitioner anchors its application upon Section 1(d), Rule
57. This particular provision was adequately explained in Liberty Insurance Corporation v. Court
of Appeals, as follows —

88
PROVISIONAL REMEDIES - PRELIMINARY ATTACHMENT CASES

To sustain an attachment on this ground, it must be shown that the debtor in contracting the ...
debt or incurring the obligation intended to defraud the creditor. The fraud must relate to the
execution of the agreement and must have been the reason which induced the other party into
In support of these grounds, the affidavit of merit alleged the following:
giving consent which he would not have otherwise given. To constitute a ground for attachment
in Section 1 (d), Rule 57 of the Rules of Court, fraud should be committed upon contracting
3. Despite repeated demands and periodic statements of accounts sent to PNCC for the
the obligation sued upon. A debt is fraudulently contracted if at the time of contracting
settlement of the credit obligation Yen 5.46 Billion, its interests and penalties within three (3)
it the debtor has a preconceived plan or intention not to pay, as it is in this case. Fraud is
days from demand in writing, and in the case of credit obligation for P20,000,000 which PNCC
a state of mind and need not be proved by direct evidence but may be inferred from the
had agreed to punctually liquidate the said advances to its subsidiary, PNCC failed to pay and
circumstances attendant in each case (Republic v. Gonzales, 13 SCRA 633). (Emphasis ours)
honor its obligations herein stated.

We find an absence of factual allegations as to how the fraud alleged by petitioner was
xxxx
committed. As correctly held by respondent Court of Appeals, such fraudulent intent not to
honor the admitted obligation cannot be inferred from the debtor's inability to pay or to 5. That PNCC knowing that it is bankrupt and that it does not have enough assets to meet its
comply with the obligations.[7] (Emphasis supplied) existing obligations is now offering for sale its assets as shown in the reports published in
newspapers of general circulation.
More recently, in Philippine National Construction Corporation v. Dy,[8] the Court ruled that the
following allegations in an affidavit to support the application for a Writ of Preliminary
6. That the above series of acts as enumerated in paragraphs 3, 4 and 5[,] Marubeni believes,
Attachment is insufficient, to wit:
constitute fraud on the part of PNCC in contracting the obligations mentioned herein and will
Radstock grounded its application for a Writ of Preliminary Attachment on Section 1 (d) and (e) surely prejudice its creditors.
of Rule 57 of the Rules of Court which provides:
xxxx
SECTION 1. Grounds upon which attachment may issue. — A plaintiff or any proper party may,
We do not see how the above allegations, even on the assumption they are all true, can be
at the commencement of the action or at any time thereafter, have the property of the adverse
considered as falling within sub-paragraphs (d) and (e). The first three assert, in essence, that
party attached as security for the satisfaction of any judgment that may be recovered in the
PNCC has failed to pay its debt and is offering for sale its assets knowing that it does not have
following cases:
enough to pay its obligations. As previously held, fraudulent intent cannot be inferred from
a debtor's inability to pay or comply with obligations. Also, the fact that PNCC has
...
insufficient assets to cover its obligations is no indication of fraud even if PNCC attempts
(d) In an action against a party who has been guilty of fraud in contracting the debt or incurring
to sell them because it is quite possible that PNCC was entering into a bona fide good
the obligation upon which the action is brought, or in the performance thereof;
faith sale where at least fair market value for the assets will be received. In such a
situation, Marubeni would not be in a worse position than before as the assets will still
(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;
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PROVISIONAL REMEDIES - PRELIMINARY ATTACHMENT CASES
be there but just liquidated. Also, that the Financial Statements do not reflect the loan
obligation cannot be construed as a scheme to defraud creditors.
As to the last two paragraphs, these merely stated that while PNCC continued to receive
revenues from toll charges and other loan obligations the debt to Marubeni remained
unpaid. Again, no fraud can be deduced from these acts. While these may be sufficient
averments to be awarded damages once substantiated by competent evidence and for which a
writ of execution will issue, they are not sufficient to obtain the harsh provisional remedy
of preliminary attachment which requires more than mere deliberate failure to pay a
debt. (Emphasis supplied)
Similarly, in this case, the bare allegations in the applicant's affidavit, to wit:
6. PCL Industries Manufacturing Corporation, after receiving the above printing ink materials
acted in bad faith when it failed to comply with the terms and conditions of the sale thereby
prejudicing the interest of Asa Color & Chemical Industries, Inc.
x x x x
10. Defendant [herein petitioner] was guilty of fraud in contracting the obligation when he [sic]
agreed to pay the purchases within 30 days from date of purchases but once in possession of
the merchandise, refused to pay his just and valid obligation thereby using the capital of
plaintiff [herein private respondent] to the latter's prejudices [sic]. [9]
are insufficient to prove that petitioner was guilty of fraud in contracting the debt or incurring
the obligation. The affidavit does not contain statements of other factual circumstances to
show that petitioner, at the time of contracting the obligation, had a preconceived plan or
intention not to pay. Verily, in this case, the mere fact that petitioner failed to pay its purchases
upon falling due and despite several demands made by private respondent, is not enough to
warrant the issuance of the harsh provisional remedy of preliminary attachment.
However, with regard to the other issues raised in this petition, the Court finds the same
unmeritorious.
This Court reiterated in Child Learning Center, Inc. v. Tagario,[10] the well-settled rule that:
Generally, factual findings of the trial court, affirmed by the Court of Appeals, are final
and conclusive and may not be reviewed on appeal. The established exceptions are: (1)
when the inference made is manifestly mistaken, absurd or impossible; (2) when there is grave
abuse of discretion; (3) when the findings are grounded entirely on speculations, surmises or
conjectures; (4) when the judgment of the Court of Appeals is based on misapprehension of
facts; (5) when the findings of fact are conflicting; (6) when the Court of Appeals, in making its
findings, went beyond the issues of the case and the same is contrary to the admissions of both
appellant and appellee; (7) when the findings of fact are conclusions without citation of specific
evidence on which they are based; (8) when the Court of Appeals manifestly overlooked certain
relevant facts not disputed by the parties and which, if properly considered, would justify a
different conclusion; and (9) when the findings of fact of the Court of Appeals are premised on
the absence of evidence and are contradicted by the evidence on record. (Emphasis supplied)
Petitioner insists that the CA should have given weight to its evidence, i.e., the work processes
(Exhibits "12" to "21"), which supposedly proved that respondent ASA supplied the ink that
caused the unpleasant smell of petitioner's finished products. Petitioner argues that the CA
erred in concluding that the work processes failed to prove that the defective ink definitely came
from respondent because said documents showed not only the name of respondent ASA Color
as supplier, but also the names of several other suppliers. Petitioner now tries to explain that
the other names of suppliers appearing on the work processes were suppliers of plastic
materials, so the only supplier of ink appearing on said documents is respondent ASA. It is
further pointed out that, as testified by Jovencio Lim (Lim), petitioner's President, during the
period covered by the Work Processes, they had only two suppliers of ink, CDI Sakada and
respondent ASA Color.
The Court subjected the records of this case to close scrutiny, but found that petitioner's
allegation that the CA judgment is based on misapprehension of facts, is absolutely unfounded.
There is no testimonial evidence whatsoever to support petitioner's belated explanation
that the other names of suppliers appearing on the work processes are suppliers of plastic
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materials and not ink. Moreover, petitioner's witnesses contradict each other. Lim claims
that during the period covered by the work processes, they had only 2 suppliers of ink, namely,
CDI Sakada and ASA Color.[11] On the other hand, contrary to Lim's claim, Victor Montañez,
petitioner's Head of the Accounting Department, testified that at that time, they had three or
four suppliers of ink materials.[12] The work process form dated April 29, 1994 marked as
Exhibit "20" also listed the suppliers as "SYNPAC/ASA/ CDI," and the colors used as "Brown-
ASA" and "Yellow-CDI." Hence, petitioner's own evidence reveals that there were at least two
suppliers of ink for that batch of production, as Lim has stated that both ASA and CDI are
suppliers of ink materials.[13] Hence, the CA was correct in ruling that petitioner's evidence
failed to prove that it was indeed respondent ASA Color who supplied the defective ink.
of the Writ of Attachment is concerned, the Court finds the same improper, hence, the
attachment over any property of petitioner by the writ of preliminary attachment is ordered
LIFTED effective upon the finality of this Decision. In all other respects, the Decision of the
Court of Appeals dated February 21, 2001 and its Resolution dated May 9, 2001 are
AFFIRMED.
SO ORDERED.

Having failed to prove that the ink materials delivered by respondent were defective, petitioner
does not have any basis for claiming the right to return and not pay for the materials it
purchased from respondent. It is, therefore, no longer necessary to discuss whether it was the
obligation of respondent to pick-up the ink from petitioner's warehouse.

Petitioner is likewise wrong in assuming that the CA totally disregarded the testimony of Frank
Tanos (Tanos) who withdrew his testimony on February 24, 1998, or almost a year after
testifying that petitioner's plastic products were rejected by customers due to the bad smell of
paint. The CA made no ruling on the admissibility of Tanos' testimony. The appellate court
merely stated that the memos (Exhibits "30"-"32") from said witness also do not prove the
source of the unwanted smell. Thus, the CA obviously considered Tanos' testimony and the
documents he identified for whatever they were worth, but still found them unconvincing to
prove petitioner's claim that it was respondent who delivered defective ink materials.

Clearly, the findings of fact of both the trial court and the CA, as quoted above, are strongly
rooted on testimonial and documentary evidence submitted by both parties. This case
evidently does not fall under any of the enumerated exceptions to the general rule that factual
findings of the trial court, affirmed by the CA, are final and conclusive and may not be reviewed
on appeal.

IN VIEW OF THE FOREGOING, the petition is PARTLY GRANTED. Insofar as the issuance

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