LIM v.

LAZARO
Doctrine

By its nature, preliminary attachment, under Rule 57 of the Rules of Court (Rule 57), is an ancillary remedy applied for not for its own
sake but to enable the attaching party to realize upon the relief sought and expected to be granted in the main or principal action; it is a
measure auxiliary or incidental to the main action. As such, it is available during its pendency 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. In addition,
attachment is also availed of in order to acquire jurisdiction over the action by actual or constructive seizure of the property in those
instances where personal or substituted service of summons on the defendant cannot be effected.

In this relation, while the provisions of Rule 57 are silent on the length of time within which an attachment lien shall continue to subsist
after the rendition of a final judgment, jurisprudence dictates that the said lien continues until the debt is paid, or the sale is had under
execution issued on the judgment or until the judgment is satisfied, or the attachment discharged or vacated in the same manner provided
by law.

FACTS

Lim, Jr. filed a complaint for sum of money with prayer for the issuance of a writ of preliminary attachment before the Regional Trial Court
(RTC), seeking to recover from respondents-spouses Tito S. Lazaro and Carmen T. Lazaro (Sps. Lazaro) the sum of ₱2,160,000.00,
which represented the amounts stated in several dishonored checks issued by the latter to the former, as well as interests, attorney’s
fees, and costs. The RTC granted the writ of preliminary attachment application and upon the posting of the required ₱2,160,000.00
bond, issued the corresponding writ. Three (3) parcels of land situated in Bulacan, covered by Transfer Certificates of Title (TCTs)
registered in the names of Sps. Lazaro, were levied upon.

In their Answer with Counterclaim, Sps. Lazaro averred, among others, that Lim, Jr. had no cause of action against them since: (a) Colim
Merchandise (Colim), and not Lim, Jr., was the 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 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, they sought for an accounting and reconciliation of records to determine the actual amount due. They likewise argued that
no fraud should be imputed against them as the aforesaid checks issued to Colim were merely intended as a form of collateral. Hinged
on the same grounds, Sps. Lazaro equally opposed the issuance of a writ of preliminary attachment.

Nonetheless, the parties entered into a Compromise Agreement whereby Sps. Lazaro agreed to pay Lim, Jr. the amount of ₱2,351,064.80
on an installment basis, following a schedule of payments, 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 of the entire obligation; 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 obligation immediately due and demandable.

The aforesaid compromise agreement was approved by the RTC in its October 31, 2006 Decision and January 5, 2007 Amended
Decision.

Subsequently, Sps. Lazaro filed an Omnibus Motion, seeking to lift the writ of preliminary attachment annotated on the subject TCTs,
which the RTC granted. It ruled that a writ of preliminary attachment is a mere provisional or ancillary remedy, resorted to by a litigant to
protect and preserve certain rights and interests pending final judgment. Considering that the case had already been considered closed
and terminated by the rendition of the January 5, 2007 Amended Decision on the basis of the compromise agreement, the writ of
preliminary attachment should be lifted and quashed. Consequently, it ordered the Registry of Deeds of Bulacan to cancel the writ’s
annotation on the subject TCTs.

Lim, Jr. filed a motion for reconsideration which was denied by the RTC.

The Court of Appeals (CA) found no grave abuse of discretion on the RTC’s part. It observed that a writ of preliminary attachment may
only be issued at the commencement of the action or at any time before entry of judgment. Thus, since the principal cause of action had
already been declared closed and terminated by the RTC, the provisional or ancillary remedy of preliminary attachment would have no
leg to stand on, necessitating its discharge.

Lim, Jr. moved for reconsideration which was denied by the CA.

ISSUE

Whether the writ of preliminary attachment was properly lifted.

RULING:

NO! By its nature, preliminary attachment, under Rule 57 of the Rules of Court (Rule 57), is an ancillary remedy applied for not for its own
sake but to enable the attaching party to realize upon the relief sought and expected to be granted in the main or principal action; it is a
measure auxiliary or incidental to the main action. As such, it is available during its pendency 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. In addition,
attachment is also availed of in order to acquire jurisdiction over the action by actual or constructive seizure of the property in those
instances where personal or substituted service of summons on the defendant cannot be effected.
In this relation, while the provisions of Rule 57 are silent on the length of time within which an attachment lien shall continue to subsist
after the rendition of a final judgment, jurisprudence dictates that the said lien continues until the debt is paid, or the sale is had under
execution issued on the judgment or until the judgment is satisfied, or the attachment discharged or vacated in the same manner provided
by law.

Applying these principles, the Supreme Court (SC) found that the discharge of the writ of preliminary attachment against the properties
of Sps. Lazaro was improper.

Records indicate that while the parties have entered into a compromise agreement which had already been approved by the RTC, the
obligations thereunder have yet to be fully complied with – particularly, the payment of the total compromise amount of ₱2,351,064.80.
Hence, given that the foregoing debt remains unpaid, the attachment of Sps. Lazaro’s properties should have continued to subsist.

In Chemphil Export & Import Corporation v. CA, the Court pronounced that a writ of attachment is not extinguished by the execution of a
compromise agreement between the parties.

The parties to the compromise agreement should not be deprived of the protection provided by an attachment lien especially in an
instance where one reneges on his obligations under the agreement.

In fine, the Court held that the writ of preliminary attachment subject of this case should be restored and its annotation revived in the
subject TCTs, re-vesting unto Lim, Jr. his preferential lien over the properties covered by the same as it were before the cancellation of
the said writ.

LIGON VS. RTC-MAKATI

FACTS:

Petitioner Ligon filed before the QC RTC a complaint for the collection of a sum of money with prayer for the issuance of a writ of
preliminary attachment against the Sps. Baladjay, a certain Olivia Marasigan (Marasigan), Polished Arrow Holdings, Inc. (Polished Arrow),
and its incorporators. The complaint alleges among others that the spouses Baladjay enticed her to extend a short-term loan secured by
a PDC which bounced upon presentment, and that the subject property was transferred to respondent Polished Arrow allegedly
defendants’ dummy corporation to defraud creditors. The application for the writ was granted so the subject property was levied upon by
annotating the writ on the dorsal portion of TCT No. 9273.

While the case was pending, a similar complaint for the sum of money damages, and cancellation of title with prayer for issuance of a
writ of preliminary attachment was lodged before the RTC Makati by the Sps Vicente against the same respondents. During the
proceedings therein, a writ of preliminary attachment also against the subject property was issued and annotated on the dorsal portion of
TCT No. 9273.

While the case is still pending in QC, the Makati RTC rendered a decision rescinding the transfer of the subject property to Polished Arrow
upon a finding that the same was made in fraud of creditors. Consequently, the Makati City RTC directed the Register of Deeds of
Muntinlupa City to: (a) cancel TCT No. 9273 in the name of Polished Arrow; and (b) restore TCT No. 8502 “in its previous condition” in
the name of Rosario Baladjay. In the subsequent execution proceedings, the property was sold at a public auction to respondent Ting.

The RTC Makati then ordered the RD under pain of contempt to issue a new certificate in favor of Ting free from any liens and
encumbrances.

Meanwhile the QC RTC ruled in favor of Ligon who sought its execution and discovered the earlier attachment annotation in her favor
has been deleted.

ISSUE:
Whether or not the Makati RTC gravely abused its discretion when it ordered the deletion of Ligon’s attachment lien

RULING:

YES! Case law instructs that an attachment is a proceeding in rem, and, hence, is against the particular property, enforceable against
the whole world. Accordingly, the attaching creditor acquires a specific lien on the attached property which nothing can subsequently
destroy except the very dissolution of the attachment or levy itself. Such a proceeding, in effect, means that the property attached is an
indebted thing and a virtual condemnation of it to pay the owner’s debt. The lien continues until the debt is paid, or sale is had under
execution issued on the judgment, or until the judgment is satisfied, or the attachment discharged or vacated in some manner provided
by law. Thus, a prior registration40 of an attachment lien creates a preference, such that when an attachment has been duly levied upon
a property, a purchaser thereof subsequent to the attachment takes the property subject to the said attachment.42 As provided under PD
1529, said registration operates as a form of constructive notice to all.

Notwithstanding the subsequent cancellation of TCT No. 9273 due to the Makati City RTC’s December 9, 2004 Decision rescinding the
transfer of the subject property from Sps. Baladjay to Polished Arrow upon a finding that the same was made in fraud of creditors, Ligon’s
attachment lien over the subject property continued to subsist since the attachment she had earlier secured binds the property itself, and,
hence, continues until the judgment debt of Sps. Baladjay to Ligon as adjudged in the Quezon City Case is satisfied, or the attachment
discharged or vacated in some manner provided by law. The grave abuse of discretion of the Makati City RTC lies with its directive to
issue a new certificate of title in the name of Ting (i.e., TCT No. 19756),47 free from any liens and encumbrances. This course of action
clearly negates the efficacy of Ligon’s attachment lien and, also, defies the legal characterization of attachment proceedings. It bears
noting that Ligon’s claim, secured by the aforesaid attachment, is against Sps. Baladjay whose ownership over the subject property had
been effectively restored in view of the RTC’s rescission of the property’s previous sale to Polished Arrow.

Thus, Sps. Ligon’s attachment lien against Sps. Baladjay as well as their successors-in-interest should have been preserved, and the
annotation thereof carried over to any subsequent certificate of title,49 the most recent of which as it appears on record is TCT No. 31001
in the name of Techico, without prejudice to the latter’s right to protect his own ownership interest over the subject property.

LUZON DEV’T BANK VS. KRISHNAN

TICKLER: Sec. 5 of Rule 57 requires that the counter-bond is in the form of cash. A party may not deposit any real or personal property
in lieu of cash as a counterbond.

DOCTRINE: The proximate relation of the word "deposit" and "amount" is unmistakable in Section 5 of Rule 57. Plainly, in construing
said words, it can be safely concluded that Section 5 requires the deposit of money as the word "amount" commonly refers to or is
regularly associated with a sum of money.

FACTS:

This is a Petition for Review on Certiorari under Rule 45 of the Rules of Civil Procedure praying for the annulment of the Decision and
Resolution Court of Appeals (CA) which affirmed the Orders Regional Trial Court (RTC)-Manila.

Erlinda Khrishnan filed a complaint for Collection of Sum of Money and Damages against petitioners Luzon Development Bank, Tomas
Clemente, and Oscar Ramirez. Erlinda claimed that she is a client of the petitioner bank wherein she maintained several accounts
including time deposits. On several occasions, when Erlinda presented her Time Deposits Certificates amounting to P28,597,472.70 for
payment because they have become due, petitioners refused to honor them for the reason that they were fraudulent. Respondent Erlinda
likewise applied for a Preliminary Writ of Attachment. In a Decision granting a Petition for Certiorari filed by Erlinda, the RTC ordered the
petitioner bank file a counter bond in accordance with Sec. 12, Rule 57, 1997 Rules of Civil Procedure, within 10 days from the finality of
this decision; otherwise, the REGIONAL TRIAL COURT, BRANCH 36, in Manila shall immediately reinstate the writ of attachment issued
and implemented in Civil Case No. 01-100046. Respondent Erlinda filed her attachment bond on June 25, 2009 in the amount of
P35,000,000.00 through Visayan Surety and Insurance Corporation. Meanwhile, petitioners filed an Omnibus Motion praying that a
hearing be held to determine the sufficiency of the attachment bond and they be allowed to deposit Certificates of Title of real property,
and the issuance of the writ of attachment be held in abeyance. The CA affirmed the Orders of the RTC reinstating the Writ of Attachment
for failure of petitioners to file the required counter-bond.

In their petition, petitioners contend that it has the option to deposit real property, in lieu of cash or a counter-bond, to secure any contingent
lien on its property in the event respondent wins the case. They argue that Section 2 of Rule 57 only mentions the term "deposit," thus, it
cannot only be confined or construed to refer to cash.

ISSUE:
Whether or not the bank property be deposited in lieu of cash or a counter-bond.

RULING:

NO! Section 2, Rule 57 of the Rules of Court explicitly states that "[a]n order of attachment may be issued either ex parte or upon motion
with notice and hearing by the court in which the action is pending, or by the Court of Appeals or the Supreme Court, and must require
the sheriff of the court to attach so much of the property in the Philippines of the party against whom it is issued, not exempt from
execution, as may be sufficient to satisfy the applicant’s demand, unless such party makes deposit or gives a bond as hereinafter provided
in an amount equal to that fixed in the order, which may be the amount sufficient to satisfy the applicant’s demand or the value of the
property to be attached as stated by the applicant, exclusive of costs."

Section 5 of the same Rule likewise states that "[t]he sheriff enforcing the writ shall without delay and with all reasonable diligence attach,
to await judgment and execution in the action, only so much of the property in the Philippines of the party against whom the writ is issued,
not exempt from execution, as may be sufficient to satisfy the applicant’s demand, unless the former makes a deposit with the court from
which the writ is issued, or gives a counter-bond executed to the applicant, in an amount equal to the bond fixed by the court in the order
of attachment or to the value of the property to be attached, exclusive of costs."

From the foregoing, it is evidently clear that once the writ of attachment has been issued, the only remedy of the petitioners in lifting the
same is through a cash deposit or the filing of the counter-bond. Thus, the Court holds that petitioner’s argument that it has the option to
deposit real property instead of depositing cash or filing a counter-bond to discharge the attachment or stay the implementation thereof
is unmeritorious.

In Security Pacific Assurance Corporation v. Tria-Infante, the trial court ruled that while it is true that the word deposit cannot only be
confined or construed to refer to cash, a broader interpretation thereof is not justified in the present case for the reason that a party
seeking a stay of the attachment under Section 5 is required to make a deposit in an amount equal to the bond fixed by the court in the
order of attachment or to the value of the property to be attached. The proximate relation of the word "deposit" and "amount" is
unmistakable in Section 5 of Rule 57. Plainly, in construing said words, it can be safely concluded that Section 5 requires the deposit of
money as the word "amount" commonly refers to or is regularly associated with a sum of money.
 NORTHERN ISLANDS CO. VS. GARCIA

SUMMARY: Petitioner filed a Complaint with application for a writ of preliminary attachment, alleging that petitioner caused the delivery
to respondents of various appliances but the value of the goods was not paid by respondents despite repeated demands and respondents
fraudulently asserted that petitioner had no proof that they had indeed received the quantity of the subject goods. A writ of preliminary
attachment was granted by the RTC after petitioner posted bond in the amount of P8,040,825.17. The respondents filed a Motion to
Discharge Excess Attachment, alleging that the attachment previously ordered by the RTC exceeded by P9,232,564.56 given that the
estimated value of the attached properties, including the garnished bank accounts, as assessed by their appraiser, amounted to
P17,273,409.73. The RTC denied the motion. The CA modified the ruling and ordered RTC to appoint a commissioner to determine the
real value of the attached properties. The SC ruled that the CA erred in its order because RTC has no more jurisdiction to appoint a
commissioner.

DOCTRINES: In this case, the appeal to the CA was already perfected thus, it cannot be seriously doubted that the RTC had already lost
jurisdiction over the Main Case. With the RTC’s loss of jurisdiction over the Main Case necessarily comes its loss of jurisdiction over all
matters merely ancillary thereto. In view of the nature of a preliminary attachment, the attachment itself cannot be the subject of a separate
action independent of the principal action because the attachment was only an incident of such action.

FACTS:

RTC – Quezon City – In 2005, petitioner filed a Complaint with application for a writ of preliminary attachment, alleging that petitioner
caused the delivery to respondents of various appliances but the value of the goods was not paid by respondents despite repeated
demands and respondents fraudulently asserted that petitioner had no proof that they had indeed received the quantity of the subject
goods.

In connection with the application for a writ of preliminary attachment, petitioner posted a bond, through Visayan Surety and Insurance
Corporation, in the amount of P8,040,825.17. The RTC issued the writ sought for.

Respondents filed a Motion to Discharge Excess Attachment, alleging that the attachment previously ordered by the RTC exceeded by
P9,232,564.56 given that the estimated value of the attached properties, including the garnished bank accounts, as assessed b y their
appraiser, Gaudioso W. Lapaz (Lapaz), amounted to P17,273,409.73, while the attachment bond is only in the amount of P8,040,825.17.

The RTC, among others, denied the Motion to Discharge Excess Attachment, finding that the appraisal made by Lapaz was not reflective
of the true valuation of the properties, adding too that the bond posted by petitioner stands as sufficient security for whatever damages
respondents may sustain by reason of the attachment.

In this relation, respondents prayed that the RTC refer to a commissioner, pursuant to Rule 32 of the Rules of Court, the factual
determination of the total aggregate amount of respondents’ attached properties so as to ascertain if the attachment was excessive.

Court of Appeals – The foregoing motion was, however, denied by the RTC for lack of merit. Thus, respondents elevated the matter to
the CA via petition for certiorari and mandamus.

The CA, partly granted the certiorari petition of respondents, ordering the RTC to appoint a commissioner as provided under Rule 32 of
the Rules of Court as well as the subsequent discharge of any excess attachment if so found therein, and, on the other hand, denying
respondents’ Motion for Discovery.

ISSUE:
Whether or not it is proper for the CA to order the RTC to appoint a commissioner in order to determine the excessiveness of the
preliminary attachment.

RULING:

NO! Section 9, Rule 41 of the Rules of Court provides that in appeals by notice of appeal, the court loses jurisdiction over the case upon
the perfection of the appeals filed in due time and the expiration of the time to appeal of the other parties. In this case, petitioner had duly
perfected its appeal of the RTC’s Decision resolving the Main Case through the timely filing of its Notice of Appeal together with the
payment of the appropriate docket fees. Meanwhile, records do not show that respondents filed any appeal, resulting in the lapse of its
own period to appeal therefrom. Thus, based on Section 9, Rule 41, it cannot be seriously doubted that the RTC had already lost
jurisdiction over the Main Case.

With the RTC’s loss of jurisdiction over the Main Case necessarily comes its loss of jurisdiction over all matters merely ancillary thereto.
Thus, the propriety of conducting a trial by commissioners in order to determine the excessiveness of the subject preliminary attachment,
being a mere ancillary matter to the Main Case, is now mooted by its supervening appeal to the CA.

Note that in Sps. Olib v. Judge Pastoral, the Court, in view of the nature of a preliminary attachment, definitively ruled that the attachment
itself cannot be the subject of a separate action independent of the principal action because the attachment was only an incident of such
action, viz.:
Attachment is defined as a provisional remedy by which the property of an adverse party is taken into legal custody, either at the
commencement of an action or at any time thereafter, as a security for the satisfaction of any judgment that may be recovered by the
plaintiff or any proper party.

It is an auxiliary remedy and cannot have an independent existence apart from the main suit or claim instituted by the plaintiff against the
defendant. Being merely ancillary to a principal proceeding, the attachment must fail if the suit itself cannot be maintained as the purpose
of the writ can no longer be justified.

The consequence is that where the main action is appealed, the attachment which may have been issued as an incident of that action,
is also considered appealed and so also removed from the jurisdiction of the court a quo. The attachment itself cannot be the subject of
a separate action independent of the principal action because the attachment was only an incident of such action.

EXCELLENT QUALITY APPAREL VS. VISAYAN SURETY

FACTS:

On March 26, 1996, Excellent Quality Apparel, Inc, then represented by Max L.F. Ying, Vice-President, entered into a contract with Multi-
Rich for the construction of a garment factory within the Cavite Philippine Economic Zone Authority (CPEZA). The duration of the project
was for a maximum period of five (5) months. Included in the contract was an Arbitration Clause in case of dispute.

On November 27, 1996, the construction of the factory building was completed. On January 26, 2004, Win Multi-Rich filed a complaint
for sum of money and damages against petitioner and Ying before the RTC. It also prayed for the issuance of a writ of attachment,
claiming that Ying was about to abscond and that petitioner had an impending closure.

Multi-Rich then secured the necessary bond from Visayan Surety. RTC issued a writ of preliminary attachment in favor of Win Multi-Rich.
To prevent the enforcement of the writ of preliminary attachment on its equipment and machinery, Excellent issued Check payable to the
Clerk of Court of the RTC.

On February 19, 2004, Excellent filed its Omnibus Motion, seeking to discharge the attachment. Excellent also questioned the jurisdiction
of the RTC due to the presence of the Arbitration Clause in the contract. The motion was denied by the RTC.Then, the RTC issued
another order directing the deposit of the garnished funds of Excellent to the cashier of the Clerk of Court of the RTC.

Multi-Rich then filed a motion to release petitioner's cash deposit to it, which was granted by the RTC. Thus, Win Multi-Rich was able to
receive the funds of petitioner even before the trial began.

On June 18, 2004, Excellent filed a petition for certiorari to CA, which was partially granted. Aggrieved, Excellent filed a petition for review
before SC.

On February 10, 2009, in G.R. No. 175048, the Court promulgated a decision[21] in favor of petitioner and held: first, that Win Multi-Rich
was not a real party in interest; second, that the RTC should not have taken cognizance of the... collection suit because the presence of
the arbitration clause vested jurisdiction on the CIAC over all construction disputes between petitioner and Multi-Rich; and lastly, that Win
Multi-Rich could not retain the garnished amount, as the RTC did not have jurisdiction to... issue the questioned writ of attachment and
to order the release of the funds.

the Court's decision became final and executory on June 2, 2009.

On June 26, 2009, petitioner moved for execution thereof, praying for the return of its cash deposit and, in the event of refusal of Win
Multi-Rich to comply, to hold Visayan Surety and FESICO liable under their respective bonds.

Win Multi-Rich, Visayan Surety and FESICO were served with copies of the motion for execution.

On October 15, 2009, Win Multi-Rich opposed the motion for execution because the cash deposit awarded to it by the RTC had been
paid to suppliers and the said amount was long overdue and demandable.

The RTC granted the motion for execution in an Order, dated October 19, 2009, and issued a writ of execution.

On January 15, 2010, the RTC issued the order,[32] granting the surety respondents' motion for reconsideration and lifting its October
19, 2009 Order insofar as it granted the motion for execution against Visayan Surety and FESICO. The RTC absolved the... surety
respondents because petitioner did not file a motion for judgment on the attachment bond before the finality of judgment, thus, violating
the surety respondents' right to due process. It further held that the execution against the surety respondents would go beyond the...
terms of the judgment sought to be executed considering that the Court decision pertained to Win Multi-Rich only.

In the assailed decision, dated October 21, 2013, the CA found petitioner's appeal without merit. Citing Section 20, Rule 57 of the 1997
Rules of Civil Procedure (Section 20, Rule 57), the CA held that petitioner failed to timely claim damages against the surety before... the
decision of the Court became final and executory. It further stated that a court judgment could not bind persons who were not parties to
the action as the records showed that Visayan Surety and FESICO were neither impleaded nor informed of the proceedings before the
Court in
G.R. No. 175048. It was the view of the CA that "[hjaving failed to observe very elementary rules of procedure which are mandatory,
[petitioner] caused its own predicament."

Issues:

THE ASSAILED DECISION AND THE ASSAILED RESOLUTION OF THE COURT OF APPEALS SHOULD BE REVERSED AND SET
ASIDE FOR BEING CONTRARY TO LAW AND JURISPRUDENCE CONSIDERING THAT THE RIGHT TO DUE PROCESS OF THE
TWO SURETY COMPANIES WILL NOT BE VIOLATED IF EXECUTION OF THE JUDGMENT

AGAINST THEM IS ALLOWED.

II

THE ASSAILED DECISION AND THE ASSAILED RESOLUTION OF THE COURT OF APPEALS SHOULD BE REVERSED AND SET
ASIDE FOR BEING CONTRARY TO LAW AND JURISPRUDENCE CONSIDERING THAT TO ALLOW THE EXECUTION AGAINST
THE TWO SURETY COMPANIES WOULD GIVE FULL EFFECT TO THE TERMS OF THE

JUDGMENT.[34]

Ruling:

The petition is partly meritorious.

There was an application for damages; but there was no notice given to Visayan Surety. The attachment bond was issued by Visayan
Surety in order for Win Multi-Rich to secure the issuance of the writ of attachment. Hence, any application for damages arising from the
improper, irregular or excessive attachment shall be governed by Section 20, Rule 57.

The current provision of Section 20, Rule 57 of the 1997 Rules of Civil Procedure covers application for damages against improper
attachment, preliminary injunction, receivership, and replevin.[43] Consequently, jurisprudence concerning application for damages
against preliminary injunction, receivership and replevin bonds can be equally applied in the present case.

In a catena of cases, the Court has cited the requisites under Section 20, Rule 57 in order to claim damages against the bond, as follows:

The application for damages must be filed in the same case where the bond was issued;
Such application for damages must be filed before the entry of judgment; and
After hearing with notice to the surety.

The first and second requisites, as stated above, relate to the application for damages against the bond. An application for damages must
be filed in the same case where the bond was issued, either (a) before the trial or (b) before the appeal is perfected or (c) before the...
judgment becomes executory.[45] The usual procedure is to file an application for damages with due notice to the other party and his
sureties. The other method would be to incorporate the application in the answer with compulsory counterclaim.[46]

The purpose of requiring the application for damages to be filed in the same proceeding is to avoid the multiplicity of suit and forum
shopping. It is also required to file the application against the bond before the finality of the decision to prevent the alteration of the...
immutable judgment.[47]

In the present petition, the Court holds that petitioner sufficiently incorporated an application for damages against the wrongful attachment
in its answer with compulsory counterclaim filed before the RTC. Petitioner alleged that the issuance of the improper writ of attachment...
caused it actual damages in the amount of at least P3,000,000.00. It added that the Equitable PCI Bank Check No. 160149 it issued to
the RTC Clerk of Court, to lift the improper writ of attachment, should be returned to it.[50] Evidently, these allegations... constitute
petitioner's application for damages arising from the wrongful attachment, and the said application was timely filed as it was filed before
the finality of judgment.

The next requisite that must be satisfied by petitioner to hold Visayan Surety liable would be that the judgment against the wrongful
attachment was promulgated after the hearing with notice to the surety. Certainly, the surety must be given prior notice and an opportunity
to be... heard with respect to the application for damages before the finality of the judgment. The Court rules that petitioner did not satisfy
this crucial element.

Section 20, Rule 57 specifically requires that the application for damages against the wrongful attachment, whether filed before the trial
court or appellate court, must be with due notice to the attaching party and his surety or sureties. Such damages may be awarded only
after... proper hearing and shall be included in the judgment on the main case.

Due notice to the adverse party and its surety setting forth the facts supporting the applicant's right to damages and the amount thereof
under the bond is indispensable. The surety should be given an opportunity to be heard as to the reality or reasonableness of the
damages... resulting from the wrongful issuance of the writ. In the absence of due notice to the surety, therefore, no judgment for damages
may be entered and executed against it.[51]
In the present case, petitioner's answer with compulsory counterclaim, which contained the application for damages, was not served on
Visayan Surety.[59] Also, a perusal of the records[60] revealed that Visayan Surety was not furnished... any copies of the pleadings,
motions, processes, and judgments concerned with the application for damages against the surety bond. Visayan Surety was only notified
of the application when the motion for execution was filed by petitioner on June 29, 2009, after the judgment in

G.R. No. 175048 had become final and executory on June 2, 2009.

FESICO's bond is not covered by Section 20, Rule 57

While Visayan Surety could not be held liable under Section 20, Rule 57, the same cannot be said of FESICO. In the case at bench, to
forestall the enforcement of the writ of preliminary attachment, petitioner issued Equitable PCI Bank Check No. 160149, dated February
16, 2004,... in the amount of P8,634,448.20 payable to the Clerk of Court of the RTC. Pursuant to the RTC Order, dated April 29, 2004,
the garnished funds of petitioner were deposited to the cashier of the Clerk of Court of the RTC. The procedure to discharge the writ of
preliminary... attachment is stated in Section 12, Rule 57, to wit:

The court shall, after due notice and hearing,... order the discharge of the attachment if the movant makes a cash deposit, or files a
counter-bond executed to the attaching party with the clerk of the court where the application is made, in an amount equal to that fixed
by the court in the order of attachment, exclusive of... costs.

Win Multi-Rich, however, took a step further and filed a motion to release petitioner's cash deposit to it. Immediately, the RTC granted
the motion and directed Win Multi-Rich to post a bond in favor of petitioner in the amount of P9,000,000.00 to answer for the damages
which... the latter may sustain should the court decide that Win Multi-Rich was not entitled to the relief sought. Subsequently, Win Multi-
Rich filed a surety bond of FESICO before the RTC and was able to obtain the P8,634,448.20 cash deposit of petitioner, even before the
trial... commenced.

Strictly speaking, the surety bond of FESICO is not covered by any of the provisions in Rule 57 of the Rules of Court because, in the first
place, Win Multi-Rich should not have filed its motion to release the cash deposit of petitioner and the RTC should not have granted the...
same. The release of the cash deposit to the attaching party is anathema to the basic tenets of a preliminary attachment.

The garnished funds or attached properties could only be released... to the attaching party after a judgment in his favor is obtained. Under
no circumstance, whatsoever, can the garnished funds or attached properties, under the custody of the sheriff or the clerk of court, be
released to the attaching party before the promulgation of... judgment.

Cash deposits and counterbonds posted by the defendant to lift the writ of attachment is a security for the payment of any judgment that
the attaching party may obtain; they are, thus, mere replacements of the property previously attached.[62] Accordingly,... the
P8,634,448.20 cash deposit of petitioner, as replacement of the properties to be attached, should never have been released to Win Multi-
Rich.

Nevertheless, the Court must determine the nature of the surety bond of FESICO. The cash deposit or the counter-bond was supposed
to secure the payment of any judgment that the attaching party may recover in the action.[63] In this case, however, Win

Multi-Rich was able to withdraw the cash deposit and, in exchange, it posted a surety bond of FESICO in favor of petitioner to answer for
the damages that the latter may sustain. Corollarily, the surety bond of FESICO substituted the cash deposit of petitioner as a security
for... the judgment. Thus, to claim damages from the surety bond of FESICO, Section 17, Rule 57 could be applied.

a surety on a counter-bond given to secure the payment of a judgment becomes liable for the payment of the amount due upon: (1)
demand made upon the surety; and (2) notice and summary hearing on the same... action.[64] Noticeably, unlike Section 20, Rule 57,
which requires notice and hearing before the finality of the judgment in an application for damages, Section 17, Rule 57 allows a party to
claim damages on the surety bond after the judgment has become... executory.

Under Section 20, Rule 57, in relation to Section 4 therein,[66] the surety bond shall answer for all the costs which may be adjudged to
the adverse party and all damages which he may sustain by reason of the attachment. In other words, the damages sought... to be
enforced against the surety bond are unliquidated. Necessarily, a notice and hearing before the finality of judgment must be undertaken
to properly determine the amount of damages that was suffered by the defendant due to the improper attachment. These damages to
be... imposed against the attaching party and his sureties are different from the principal case, and must be included in the judgment.

On the other hand, under Section 17, Rule 57, in relation to Section 12 therein, the cash deposit or the counter-bond shall secure the
payment of any judgment that the attaching party may recover in the action. Stated differently, the damages sought to be charged against
the... surety bond are liquidated. The final judgment had already determined the amount to be awarded to the winning litigant on the main
action. Thus, there is nothing left to do but to execute the judgment against the losing party, or in case of insufficiency, against its...
sureties.

Here, the Court is convinced that a demand against FESICO had been made, and that it was given due notice and an opportunity to be
heard on its defense.

First, petitioner filed a motion for execution on June 29, 2009, a copy of which was furnished to FESICO;[67] second, petitioner filed a
manifestation,[68] dated July 13, 2009, that FESICO was duly served with the said motion and notified of the hearing on August 7, 2009;
third, during the August 7, 2009 hearing on the motion for... execution, the counsels for petitioner, Win Multi-Rich and FESICO were all
present;[69] fourth, in an Order, dated September 16, 2009, FESICO was given fifteen (15) days to submit its comment or opposition to
the motion for execution;[70] and lastly, FESICO filed its comment[71] on the motion on October 1, 2009. Based on the foregoi ng, the
requirements under Section 17, Rule 57 have been more than satisfied.

Indeed, FESICO cannot escape liability on its surety bond issued in favor of petitioner. The purpose of FESICO's bond was to secure the
withdrawal of the cash deposit and to answer any damages that would be inflicted against petitioner in the course of the... proceedings.[72]
Also, the undertaking[73] signed by FESICO stated that the duration of the effeetivity of the bond shall be from its approval by the court
until the action is fully decided, resolved or terminated.

FESICO cannot simply escape liability by invoking that it was not a party in G.R. No. 175048. From the moment that FESICO issued
Surety Bond No. 10198 to Win Multi-Rich and the same was posted before the RTC, the court has acquired jurisdiction over the surety,
and the... provisions of Sections 12 and 17 of Rule 57 became operational. Thus, the Court holds that FESICO is solidarity liable under
its surety bond with its principal Win Multi-Rich.

WATERCRAFT VENTURE CORP. VS. WOLFE

FACTS:

Sometime in June 1997, Watercraft hired respondent Alfred Raymond Wolfe (Wolfe), a British national and resident of Subic Bay Freeport
Zone, Zambales, as its Shipyard Manager.

During his empolyment, Wolfe stored the sailboat, Knotty Gull, within Watercraft1 s boat storage facilities, but never paid for the storage
fees.

On March 7, 2002, Watercraft terminated the employment of Wolfe.

Sometime in June 2002, Wolfe pulled out his sailboat from Watercraft's storage facilities after signing a Boat Pull-Out Clearance dated
June 29, 2002 where he allegedly acknowledged the outstanding obligation of Sixteen Thousand Three Hundred and Twenty-Four and
82/100 US

Dollars (US$16,324.82) representing unpaid boat storage fees for the period of June 1997 to June 2002. Despite repeated demands, he
failed to pay the said amount.

Thus, on July 7, 2005, Watercraft filed against Wolfe a Complaint for Collection of Sum of Money with Damages with an Application for
the Issuance of a Writ of Preliminary Attachment.

In his Answer, Wolfe... denied owing Watercraft the amount of US$16,324.82 representing storage fees for the sailboat. He explained
that the sailboat was purchased in February 1998 as part of an... agreement between him and Watercraft1 s then General Manager,
Barry Bailey, and its President, Ricky Sandoval, for it to be repaired and used as training or fill-in project for the staff, and to be sold later
on. He added that pursuant to a central Listing Agreement for the sale... of the sailboat, he was appointed as agent, placed in possession
thereof and entitled to a ten percent (10%) sales commission. He insisted that nowhere in the agreement was there a stipulation that
berthing and storage fees will be charged during the entire time that the... sailboat was in Watercraft's dockyard.

Fie pointed out that the complaint was an offshoot of an illegal dismissal case he... filed against Watercraft which had been decided in
his favor by the Labor Arbiter.

Meanwhile, finding Watercraft's ex-parte application for writ of preliminary attachment sufficient in form and in substance pursuant to
Section 1 of Rule 57 of the Rules of Court, the RTC granted the same in the Order dated July 15, 2005

Pursuant to the Order dated July 15, 2005, the Writ of Attachment dated August 3, 2005 and the Notice of Attachment dated August 5,
2005 were issued, and Wolfe's two vehicles, a gray Mercedes Benz with plate number XGJ 819 and a maroon Toyota Corolla with plate
number TFW 110,... were levied upon.

On August 12, 2005, Wolfe's accounts at the Bank of the Philippine Islands were also garnished.

On November 8, 2005, Wolfe filed a Motion to Discharge the Writ of Attachment, arguing that Watercraft failed to show the existence of
fraud and that the mere failure to pay or perform an obligation does not amount to fraud. Me also claimed that he is not a flight risk for
the... following reasons: (1) contrary to the claim that his Special Working Visa expired in April 2005, his Special Subic Working Visa and
Alien Certificate of Registration are valid until April 25, 2007 and May 11, 2006, respectively; (2) he and his family have been residing in
the

Philippines since 1997; (3) he is an existing stockholder and officer of Wolfe Marine Corporation which is registered with the Securities
and Exchange Commission, and a consultant of "Sudeco/Ayala" projects in Subic, a member of the Multipartite Committee for the new
port... development in Subic, and the Subic Chamber of Commerce; and (4) he intends to finish prosecuting his pending labor case
against Watercraft.

In an Order dated March 20, 2006, the RTC denied Wolfe's Motion to Discharge Writ of Attachment and Motion for Preliminary Hearing
for lack of merit.

Wolfe filed a petition for certiorari before the CA.

The CA granted Wolfe's petition in a Decision dated September 2007

The CA ruled that the act of issuing the writ of preliminary attachment ex-parte constitutes grave abuse of discretion on the part of the
RTC

In the instant case, the Affidavit of Merit executed by Rosario E. Rañoa, Watercraft's Vice-President, failed to show fraudulent intent on
the part of Wolfe to defraud the company. It merely enumerated the circumstances tending to show the alleged possibility of Wolfe's
flight... from the country. And upon Wolfe's filing of the Motion to Discharge the Writ, what the respondent Judge should have done was
to determine, through a hearing, whether the allegations of fraud were true.

As correctly noted by Wolfe, although Sec. 1 of Rule 57 allows a party to invoke fraud as a ground for the issuance of a writ of attachment,
the Rules require that in all averments of fraud, the circumstances constituting fraud must be stated with particularity, pursuant to Rule

8, Section 5.

Wolfe's mere failure to pay the boat... storage fees does not necessarily amount to fraud, absent any showing that such failure was due
to [insidious] machinations and intent on his part to defraud Watercraft of the amount due it.

As to the allegation that Wolfe is a flight risk, thereby warranting the issuance of the writ, the same lacks merit.

circumstances... should have convinced the trial court that Wolfe would not want to... leave the country at will just because a suit for the
collection of the alleged unpaid boat storage fees has been filed against him by Watercraft.

Neither should the fact that Wolfe's Special Working Visa expired in April 2005 lead automatically to the conclusion that he would leave
the country. It is worth noting that all visas issued by the government to foreigners staying in the Philippines have expiration periods.

These visas, however, may be renewed, subject to the requirements of the law. In Wolfe's case, he indeed renewed his visa

ISSUES:

WHETHER THE EX-PARTE ISSUANCE OF THE PRELIMINARY ATTACHMENT BY THE TRIAL COURT IN FAVOR OF THE
PETITIONER IS VALID.

WHETHER THE ALLEGATIONS IN THE AFFIDAVIT OF MERIT CONCERNING FRAUD ARE SUFFICIENT TO WARRANT THE
ISSUANCE OF A PRELIMINARY WRIT OF ATTACHMENT BY THE TRIAL COURT IN FAVOR OF THE PETITIONER.[7]

RULING:

The petition lacks merit.

the Court agrees with the CA that Watercraft failed to state with particularity the circumstances constituting fraud, as required by Section
5,[24] Rule 8 of the Rules of Court, and that Wolfe's mere... failure to pay the boat storage fees does not necessarily amount to fraud,
absent any showing that such failure was due to insidious machinations and intent on his part to defraud Watercraft of the amount due it.

In Liberty Insurance Corporation v. Court of Appeals,[25] the Court explained that to constitute a ground for attachment in Section 1(d),
Rule 57 of the Rules of Court, it must be shown that the debtor in contracting the debt or incurring the... obligation intended to defraud
the creditor. A debt is fraudulently contracted if at the time of contracting it, the debtor has a preconceived plan or intention not to pay.
"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."[26]

Fraudulent intent is not a physical entity, but a condition of the mind beyond the reach of the senses, usually kept secret, very unlikely to
be confessed, and therefore, can only be proved by unguarded expressions, conduct and circumstances.[27] Thus, 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.[28]

The particulars of such circumstances necessarily include the time, persons, places and specific acts of fraud committed.[29] An affidavit
which does not contain concrete and specific grounds is inadequate to sustain the issuance of such writ. In fact, mere... general averments
render the writ defective and the court that ordered its issuance acted with grave abuse of discretion amounting to excess of
jurisdiction.[30]

In this case, Watercraft's Affidavit of Preliminary Attachment does not contain specific allegations of other factual circumstances to show
that Wolfe, at the time of contracting the obligation, had a preconceived plan or intention not to pay. Neither can it be inferred from... such
affidavit the particulars of why he was guilty of fraud in the performance of such obligation. To be specific, Watercraft's following allegation
is unsupported by any particular averment of circumstances that will show why or how such inference or conclusion was arrived at,... to
wit: "16. For failing to pay for the use [of] facilities and services - in the form of boat storage facilities - duly enjoyed by him and for failing
and refusing to fulfill his promise to pay for the said boat storage fees, the Defendant is clearly guilty of fraud x x... x."[31] It is not an
allegation of essential facts constituting Watercraft's causes of action, but a mere conclusion of law.
With respect to Section 1 (a),[32] Rule 57, the other ground invoked by Watercraft for the issuance of the writ of preliminary attachment,
the Court finds no compelling reason to depart from the CA's exhaustive ruling to the effect that such writ is... unnecessary because Wolfe
is not a flight risk

Meanwhile, Watercraft's reliance on Chuidian v. Sandiganbayan[34] is displaced. It is well settled that:... when the preliminary attachment
is issued upon a ground which is at the same time the applicant's cause of action... the defendant is not allowed to file a motion to dissolve
the attachment under Section 13 of Rule 57 by offering to show the falsity of the factual averments in the plaintiffs application and affidavits
on... which the writ was based - and consequently that the writ based thereon had been improperly or irregularly issued - 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.

the foregoing rule is not applicable in this case because when Wolfe filed a motion to dissolve the writ of preliminary attachment, he did
not offer to show the falsity of the factual averments in Watercraft's application and affidavit on which the writ was... based. Instead, he
sought the discharge of the writ on the ground that Watercraft failed to particularly allege any circumstance amounting to fraud. No trial
on the merits of the action at a mere hearing of such motion will be had since only the sufficiency of the factual... averments in the
application and affidavit of merit will be examined in order to find out whether or not Wolfe was guilty of fraud in contracting the debt or
incurring the obligation upon which the action is brought, or in the performance thereof.

Furthermore, the other ground upon which the writ of preliminary attachment was issued by the RTC is not at the same time the applicant's
cause of action. Assuming arguendo that the RTC was correct in issuing such writ on the ground that Watercraft's complaint involves
an... action for the recovery of a specified amount of money or damages against a party, like Wolfe, who is about to depart from the
Philippines with intent to defraud his creditors, the Court stresses that the circumstances[36] cited in support thereof are... merely
allegations in support of its application for such writ.[37] Such circumstances, however, are neither the core of Watercraft's complaint for
collection of sum of money and damages, nor one of its three (3) causes of action therein.

PHIL-AIR CONDITIONING CENTER VS. RCJ LINES

Phil-Air Conditioning Center (Phil-Air) filed this petition for review on certiorari

On various dates between March 5, 1990, and August 29, 1990, petitioner Phil-Air sold to respondent RCJ Lines four Carrier Paris 240
air conditioning units for buses (units). The units included compressors, condensers, evaporators, switches, wiring, circuit boards,
brackets, and fittings.

Phil-Air allegedly performed regular maintenance checks on the units pursuant to the one-year warranty on parts and labor. RCJ Lines
issued three post-dated checks in favor of Phil-Air to partly cover the unpaid balance.

All the post-dated checks were dishonored when Phil-Air subsequently presented them for payment. Check No. 479759 was returned
because it was drawn against insufficient funds, while Check Nos. 479760 and 479761 were returned because payments were stopped.

Before presenting the third check for payment, Phil-Air sent a demand letter to Rolando Abadilla, Sr. asking him to fund the post-dated
checks. In view of the failure of RCJ Lines to pay the balance despite demand, Phil-Air filed on April 1, 1998 the complaint for sum of
money with prayer for the issuance of a writ of preliminary attachment.

In its answer with compulsory counterclaim, RCJ Lines admitted that it purchased the units in the total amount of P1,240,000.00 and that
it had only paid P400,000.00. It refused to pay the balance because Phil-Air allegedly breached its warranty.

RCJ Lines averred that the units did not sufficiently cool the buses despite repeated repairs. Phil-Air purportedly represented that the
units were in accord with RCJ Lines’ cooling requirements as shown in Phil-Air’s price quotation. The price quotation provided that full
payment should be made upon the units’ complete installation. Complete installation, according to RCJ Lines, is equivalent to being in
operational condition.

RCJ Lines claimed that it was also entitled to be reimbursed for costs and damages occasioned by the enforcement of the writ of
attachment.

Issues:
(1) Whether the claim of Phil-Air was barred by laches;
(2) Whether Phil-Air should reimburse RCJ Lines for the counterbond premium and its alleged unrealized profits;
(3) Whether RCJ Lines proved its alleged unrealized profits arising from the enforcement of the preliminary writ of attachment.

Held:
1. Phil-Air’s claim is not barred by laches. In general, there is no room to apply the concept of laches when the law provides the period
within which to enforce a claim or file an action in court. Phil-Air’s complaint for sum of money is based on a written contract of sale. The
ten-year prescriptive period under Article 1144 of the Civil Code thus applies.

In the present case, both parties admit the existence and validity of the contract of sale. They recognize that the price quotation dated
August 4, 1989, contained the terms and conditions of the sale contract. They also agree that the price and description of the units were
indicated on the sales invoice.
Laches is defined as the failure or neglect for an unreasonable and unexplained length of time, to do that which by exercising due
diligence, could or should have been done earlier; it is negligence or omission to assert a right within a reasonable time, warranting a
presumption that the party entitled to assert it either has abandoned it or declined to assert it.

While the CA correctly held that prescription and estoppel by laches are two different concepts, it failed to appreciate the marked
distinctions between the two concepts.

The court resolves whether the claimant asserted its claim within a reasonable time and whether its failure to do so warrants the
presumption that it either has abandoned it or declined to assert it. The court determines the claimant’s intent to assert its claim based
on its past actions or lack of action. After all, what is invoked in instances where a party raises laches as a defense is the equity jurisdiction
of the court.

On the other hand, if the law gives the period within which to enforce a claim or file an action in court, the court confirms whether the
claim is asserted or the action is filed in court within the prescriptive period. The court determines the claimant’s intent to assert its claim
by simply measuring the time elapsed from the proper reckoning point (e.g., the date of the written contract) to the filing of the action or
assertion of the claim.

In sum, where the law provides the period within which to assert a claim or file an action in court, the assertion of the claim or the filing of
the action in court at any time within the prescriptive period is generally deemed reasonable, and thus, does not call for the application of
laches. As we held in one case, unless reasons of inequitable proportions are adduced, any imputed delay within the prescriptive period
is not delay in law that would bar relief.

Not all the elements of laches are present. To repeat, Phil-Air filed the complaint with the RTC on April 1, 1998. The time elapsed from
August 4, 1989 (the date of the price quotation, which is the earliest possible reckoning point), is eight years and eight months, well within
the ten-year prescriptive period. There was simply no delay (second element of laches) where Phil-Air can be said to have negligently
slept on its rights. there is no basis for laches as the facts of the present case do not give rise to an inequitable situation that calls for the
application of equity and the principle of laches.

2. Phil-Air is not directly liable for the counter-bond premium and RCJ Lines’ alleged unrealized profits.

A writ of preliminary attachment is a provisional remedy issued by the court where an action is pending to be levied upon the property or
properties of the defendant. The property is held by the sheriff as security for the satisfaction of whatever judgment that might be secured
by the attaching party against the defendant.

The grant of the writ is conditioned not only on the finding of the court that there exists a valid ground for its issuance. The Rules also
require the applicant to post a bond.

Section 4 of Rule 57 of the Rules of Civil Procedure (Rules) provides that “the party applying for the order must…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 that may be adjudged to the adverse party and all damages that he may sustain by reason of the attachment, if the court shall
finally adjudge that the applicant was not entitled thereto.”

The enforcement of the writ notwithstanding, the party whose property is attached is afforded relief to have the attachment lifted. There
are various modes of discharging an attachment under Rule 57, viz.:
(1) by depositing cash or posting a counter-bond under Section 12;
(2) by proving that the attachment bond was improperly or irregularly issued or enforced, or that the bond is insufficient under Section 13;
(3) by showing that the attachment is excessive under Section 13; and (4) by claiming that the property is exempt from execution under
Section 2.

RCJ Lines availed of the first mode by posting a counter-bond.

Under the first mode, the court will order the discharge of the attachment after (1) the movant makes a cash deposit or posts a counterbond
and (2) the court hears the motion to discharge the attachment with due notice to the adverse party.

The amount of the cash deposit or counter-bond must be equal to that fixed by the court in the order of attachment, exclusive of costs.
The cash deposit or counter-bond shall secure the payment of any judgment that the attaching party may recover in the action.

The discharge under Section 12 takes effect upon posting of a counter-bond or depositing cash, and after hearing to determine the
sufficiency of the cash deposit or counter-bond. On the other hand, the discharge under Section 13 takes effect only upon showing that
the plaintiff’s attachment bond was improperly or irregularly issued, or that the bond is insufficient. The discharge of the attachment under
Section 13 must be made only after hearing.

As discussed above, it is patent that under the Rules, the attachment bond answers for all damages incurred by the party against whom
the attachment was issued. Thus, Phil-Air cannot be held directly liable for the costs adjudged to and the damages sustained by RCJ
Lines because of the attachment. Section 4 of Rule 57 positively lays down the rule that the attachment bond 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.”
The RTC, instead of declaring Phil-Air liable for the alleged unrealized profits and counter-bond premium, should have ordered the
execution of the judgment award on the attachment bond. To impose direct liability to Phil-Air would defeat the purpose of the attachment
bond, which was not dissolved despite the lifting of the writ of preliminary attachment.

The order to refund the counter-bond premium is likewise erroneous. The premium payment may be deemed a cost incurred by RCJ
Lines to lift the attachment. Such cost may be charged against the attachment bond.

3. RCJ Lines failed to prove its alleged unrealized profits.

In Spouses Yu v. Ngo Yet Te, we held that if the claim for actual damages covers unrealized profits, the amount of unrealized profits must
be established and supported by independent evidence of the mean income of the business undertaking interrupted by the illegal seizure.

We explained in Spouses Yu that to merit an award of actual damages arising from a wrongful attachment, the attachment defendant
must prove, with the best evidence obtainable, the fact of loss or injury suffered and the amount thereof. Such loss or injury must be of
the kind which is not only capable of proof but must actually be proved with a reasonable degree of certainty. As to its amount, the same
must be measurable based on specific facts, and not on guesswork or speculation.

Similarly, the evidence adduced by RCJ Lines to show actual damages fell short of the required proof. Its average daily income cannot
be derived from the summary of daily cash collections from only two separate occasions, i.e., August 22-23 and September 2-3, 2000.
The data submitted is too meager and insignificant to conclude that the buses were indeed earning an average daily income of
P12,000.00.

More significant, the person who prepared the unsigned summary of daily cash collections was not presented before the RTC to verify
and explain how she arrived at the computation. The dispatchers who prepared the collection reports were likewise not presented; some
of the reports were also unsigned. While the summary was approved by Rolando Abadilla, Jr., in his testimony on the alleged unrealized
profits was uncorroborated and self-serving.

Nonetheless, we recognize that RCJ Lines suffered some form of pecuniary loss when two of its buses were wrongfully seized, although
the amount cannot be determined with certainty.

We note that in its prayer for the issuance of the writ of preliminary attachment, Phil-Air alleged that RCJ Lines was guilty of fraud in
entering into the sale transaction. A perusal of the record, however, would show that Phil-Air failed to prove this bare assertion. This
justifies an award of temperate or moderate damages in the amount of Php 50,000.00.