1. HANIL DEVELOPMENT CO., LTD. vs. HON. INTERMEDIATE APPELLATE COURT and M. R. ESCOBAR EXPLOSIVES ENGINEERS, INC., G.R.

No. 71229. September 30, 1986. 2. ROMULO G. DINSAY and PLANTERS MACHINERY CORPORATION (PLAMACOR) vs. JUDGE ROMEO J. HIBIONADA and TRADERS ROYAL BANK, G.R. No. 71784. December 12, 1986

respondents and the bank accounts of the petitioner were garnished and its equipment attached. The petitioner then filed a motion for reconsideration of the May 24, 1982 order. While this motion was pending, the private respondent filed another motion, this time an "Ex-Parte Motion to Deposit Cash" praying that an order be issued directing the Finance Manager of the National Power Corporation (NAPOCOR) to withdraw available funds of the petitioner from the NAPOCOR and deposit them with the clerk of court of the Court of First Instance of Rizal. This motion was granted in an order dated June 29, 1982. In view of this development, the petitioner filed with the then Intermediate Appellate Court a petition for certiorari with prayer for prohibition, injunction and preliminary restraining order challenging the orders dated May 24, 1982 and June 29, 1982 of the trial court. The case was docketed as CA-G.R. No. 14512. The appellate court temporarily restrained the enforcement of the challenged orders and after a hearing issued a preliminary injunction enjoining the implementation of said orders upon the filing of a P50,000.00 cash bond by the petitioner. In a decision dated February 3, 1983, the appellate court granted the petition and declared the challenged orders null and void, having been issued with grave abuse of discretion. While the above-mentioned petition was pending before the appellate court and despite the writ of injunction issued by it, other developments continued to unfold in the trial court. In an order dated August 23, 1982, the trial court disapproved the petitioner's amended record on appeal on the ground that it was "filed beyond the reglementary period and the extension granted." The appeal was dismissed. The petitioner filed a motion for reconsideration of the dismissal while the private respondent filed a motion for execution of judgment. On October 19, 1982, the trial court issued an order denying the petitioner's motion for reconsideration and at the same time granting the private respondent's motion for execution of judgment. The petitioner filed a petition for certiorari and mandamus with prayer for prohibition with the Intermediate Appellate Court assailing the trial court's orders dated August 23, 1982 and October 19, 1982. The case was docketed as AC-G.R. No. 15050. The appellate court granted the petition. The challenged orders were set aside and declared null and void. Hence, the petitioner's appeal in Civil Case No. 35966 was reinstated and the trial court was ordered to elevate the entire records of the case to the appellate court. A petition for review of the decision in AC-G.R. No. 15050 was filed by the private respondent before this Court, but was denied for lack of merit. After transmittal of the records, the appellate court on February 11, 1985, sent a notice to the petitioner to file appellant's brief within forty-five (45) days from receipt. The petitioner received the notice on February 25, 1985. On March 13, 1985, and within the reglementary period to file appellant's brief, the petitioner filed an "Application for Judgment against Attachment Bond" and "Motion to Defer Filing of Appellant's Brief" praying for a hearing before the appellate court so it could prove the damages it sustained as a result of the illegal writ of attachment issued by the trial court. It wanted a judgment against the attachment bond posted by the private respondent and its insurer Sanpiro Insurance Corporation to be included in the final decision in the main case, Civil Case No. 35966, now pending before the appellate court. Acting on the petitioner's motions, the appellate court issued a resolution directing the private respondent to comment on these motions.

3.

MAXIMO UY and SYLVIA VASQUEZ-UY vs. THE HON. COURT OF APPEALS, G.R. No. 95550. November 23, 1992. 4. MASTER TOURS and TRAVEL CORPORATION, vs. HON. COURT OF APPEALS, G.R. No. 105409. March 1, 1993. 5. LIBERTY INSURANCE CORPORATION vs. THE HONORABLE COURT OF APPEALS, G.R. No. 104405. May 13, 1993. 6. GONZALO R. GONZALES vs. STATE PROPERTIES CORPORATION, G.R. No. 140765. January 25, 2001.

7.

VICENTE B. CHUIDIAN vs. SANDIGANBAYAN, G.R. No. 139941. January 19, 2001

September 30, 1986 HANIL DEVELOPMENT CO., LTD., petitioner, vs. HON. INTERMEDIATE APPELLATE COURT and M. R. ESCOBAR EXPLOSIVES ENGINEERS, INC., represented by its General Manager, MANUEL R. ESCOBAR, respondents. GUTIERREZ, JR., J.: This is a petition for certiorari, mandamus, and prohibition, with prayer for mandatory injunction and restraining order from the resolutions of the then Intermediate Appellate Court dated April 30, 1985 and June 20, 1985 in AC-G.R. No. 05055 entitled "Hanil Development Co., Ltd. v. M.R. Escobar Explosives Engineers, Inc., represented by its General Manager, Manuel R. Escobar." The present controversy has its origins in a complaint for recovery of a sum of money with damages filed by private respondent Escobar Explosives Engineers, Inc., against petitioner Hanil Development Co., Ltd., before the then Court of First Instance of Rizal, Branch XXXI, Pasig, Metro Manila. The petitioner is a foreign corporation organized under the laws of the Republic of Korea and doing business in the Philippines pursuant to the Corporation Code and the Foreign Investment Act. The complaint docketed as Civil Case No. 35966 sought to compel the petitioner to pay for the blasting services rendered by the private respondent in connection with the former's contract with the Ministry of Public Highways to construct the 200 Km. Oro-Butuan Road Project in Mindanao. The trial court, on April 16, 1983, rendered a decision in favor of the private respondent. The petitioner was ordered to pay the private respondent the sum of P1,341,727.40 corresponding to the value of the rocks blasted by the private respondent; ten percent (10%) of said amount as attorney's fees and costs. On May 6, 1982, the private respondent filed a petition for the issuance of a preliminary attachment. The motion was set for hearing. On May 13, 1982, the petitioner filed its notice of appeal and cash appeal bond with the trial court. On May 24, 1982, the trial court issued an order granting the petition for the issuance of preliminary attachment. On May 26, 1982, the private respondent moved for the appointment of Deputy Sheriff Felix Honoracion as special sheriff to serve the writ of attachment/garnishment. Consequently, the order dated May 24, 1982 and the writ of attachment dated May 27, 1982 were enforced by the

The private respondent filed its "Comment" with a "Motion to Dismiss Appeal" for the petitioner's alleged failure to file its appellant's brief. In a resolution dated April 30, 1985, the appellate court denied the petitioner's application for judgment against the attachment bond and the motion to defer filing of appellant's brief, granted the private respondent's motion to dismiss the appeal, and dismissed the appeal. The petitioner filed a motion for reconsideration but this was denied in a resolution dated June 20, 1985. Hence, this petition. In a resolution dated July 17, 1985, we issued a temporary restraining order to enjoin the respondents from proceeding with the execution of the decision in Civil Case No. 35966. The petitioner now asserts that the April 30, 1985 and June 20, 1985 resolutions were issued by the appellate court with grave abuse of discretion. The questioned April 30, 1985 minute resolution of the appellate court states: Acting upon (1) the application for judgment against attachment bond, etc. filed by counsel for defendant-appellant on March 13, 1985; (2) the comment thereto; (3) the motion to dismiss appeal filed by counsel for plaintiffappellee on April 24, 1985; and the docket report dated April 25, 1985, the COURT RESOLVED: (a) to DENY the application for judgment against attachment bond and the motion to defer filing of appellant's brief; and (b) to GRANT the motion to dismiss appeal and to dismiss the instant appeal. The issues to be resolved in the instant petition are: (1) whether or not the petitioner's application for judgment against the attachment bond and its motion to defer filing of appellant's brief were correctly denied by the appellate court and (2) whether or not the same court rightly dismissed the petitioner's appeal. Anent the first issue, the petitioner contends that its application for judgment against the attachment bond was pursuant to Section 20, Rule 57 of the Revised Rules of Court. Section 20, Rule 57 of the Revised Rules of Court provides for the claim of damages on account of illegal attachment, to wit: Claim for damages on account of illegal attachment. If the judgment on the motion be in favor of the party against whom attachment was issued, he may recover, upon the bond given or deposit made by the attaching creditor, any damages resulting from the attachment. Such damages may be awarded only upon application and after proper hearing, and shall be included in the final judgment. The application must be filed before the trial or before appeal is perfected or before the judgment becomes executory, with notice to the attaching creditor and his surety or sureties, setting forth the facts showing his right to damages and the amount thereof. If the judgment of the appellate court be favorable to the party against whom the attachment was issued, he must claim damages sustained during the pendency of the appeal by filing an application with notice to the party in whose favor the attachment was issued or his surety or sureties, before the judgment of the appellate court becomes executory. The appellate court may allow the application to be heard and decided by the trial court.

In the instant case, the initial writ of attachment issued by the trial court in the main case Civil Case No. 35966 which is the subject of appeal was declared null and void by the appellate court in CAG.R. No. 14512. This present writ of attachment was issued and subsequently enforced after the trial court's decision in Civil Case No. 35966 had been rendered and after the petitioner had already perfected its appeal. The petitioner, therefore, argues that the application for judgment against the attachment bond was properly lodged with the appellate court pursuant to Section 9, of the Judiciary Reorganization Act of 1980 (Batas Pambansa Blg. 129) which grants the Intermediate Appellate Court "power to try cases and conduct hearings, receive evidence and perform any and all acts necessary to resolve factual issues ... ." It contends that it is only in the appellate court that these damages could well be ventilated because they occurred during the pendency of the appeal in AC-G.R. No. 15050. The petitioner's arguments are well-taken. The application for judgment against attachment bond was filed to prove the damages sustained by the petitioner as a result of the illegal writ of attachment issued by the trial court so that the judgment against the attachment bond posted by the private respondent and its insurer could be included in the final judgment of the main case. The assessment and award of such damages could not have been made in CA-G.R. No. 14512 as alleged by the private respondent because the question therein was whether or not the writ of attachment in Civil Case No. 35966 should have been issued. The object was to set aside the preliminary attachment immediately. It was a preventive measure. The private respondent, in its petition for writ of attachment filed with the trial court, posted an attachment bond issued by the Sanpiro Insurance Corporation in the amount of P1,341,727.40, the relevant portion of which reads: WHEREFORE, WE, M.R. ESCOBAR EXPLOSIVE ENGINEERS as PRINCIPAL, and the SANPIRO INSURANCE CORPORATION, a corporation duly organized and existing under and by virtue of the laws of the Philippines, as SURETY, in consideration of the above and of the levying of said attachment, hereby jointly and severally bind ourselves in the sum of PESOS: ONE MILLION THREE HUNDRED FORTY ONE THOUSAND SEVEN HUNDRED TWENTY SEVEN & 40/100 (P1,341,727.40), Philippine Currency, under the condition that we will pay all the costs which may be adjudged to said defendant/s and all damages which said defendant/s may sustain by reason of the attachment, if the Court shall finally adjudge that plaintiff/s was/were not entitled thereto. Contrary to the claim of the private respondent, this writ of attachment issued by the trial court was executed. The petitioner's equipment and bank accounts were garnished pursuant to the writ. In fact, the private respondent's opposition to the petitioner's motion for reconsideration of the trial court's order which issued the writ of attachment stated that the same should be denied for being moot and academic "because the writ of attachment and/or garnishment have already been executed." Considering that the writ of attachment was declared null and void, the petitioner had the right to ask for whatever damages it may have incurred as a result of its issuance pursuant to Section 20, Rule 57 of the Revised Rules of Court. Malayan Insurance Co., Inc. v. Salas (90 SCRA 252), lays down the procedure regarding claims for damages against an illegal attachment. It states: Under section 20, in order to recover damages on a replevin bond (or on a bond for preliminary attachment, injunction or receivership) it is necessary (1) that the defendant-claimant has secured a favorable judgment in the main action, meaning that the plaintiff has no cause of action and was not, therefore, entitled to the provisional remedy of replevin; (2) that the application for damages, showing claimant's right thereto and the amount thereof, be filed in the same action before trial or

before appeal is perfected or before the judgment becomes executory; (3) that due notice be given to the other party and his surety or sureties, notice to the principal not being sufficient and (4) that there should be a proper hearing and the award for damages should be included in the final judgment (Luneta Motor Co. v. Menendez, 117 Phil. 970, 974; 3 Moran's Comments on the Rules of Court, 1970 Ed., pp. 54-56. See Cruz v. Manila Surety & Fidelity Co., Inc., 92 Phil. 699). xxx xxx xxx As may be gathered from section 20 of Rule 57, the application for damages against the surety must be filed (with notice to the surety) in the Court of First Instance before the trial or before appeal is perfected or before the judgment becomes executory. If an appeal is taken, the application must be filed in the appellate court but always before the judgment of that court becomes executory so that the award may be included in its judgment (Luneta Motor Co. v. Menendez, supra). But it is not always mandatory that the appellate court should include in its judgment the award of damages against the surety. Thus, it was held that where the application for damages against the surety is seasonably made in the appellate court, 'the latter must either proceed to hear and decide the application or refer 'it' to the trial court and allow it to hear and decide the same' (Rivera v. Talavera, 112 Phil. 209, 219). xxx xxx xxx Note that under the second paragraph of section 20, Rule 57 of the present Rules of Court, the damages suffered during the pendency of an appeal in a case where the writs of attachment, injunction and replevin or an order of receivership were issued should be claimed in the appellate court. xxx xxx xxx In the instant case, the application for judgment against the attachment bond was filed under the following circumstances: (1) the writ of attachment was issued by the trial court after it had rendered its decision and after the petitioner had already perfected its appeal; (2) the private respondent posted a surety bond to answer for any damages that may be adjudged to the petitioner if the writ is later found to be illegal; (3) the writ of attachment was declared illegal; and (4) the application for judgment against the attachment bond was made with notice to the insurer, Sanpiro Insurance Corporation. Applying the principles laid down in the Malayan case to the circumstances surrounding the application for judgment against attachment bond in this case, the appellate court committed grave abuse of discretion in denying the application for judgment against attachment bond. The appellate court's error in this case is more pronounced considering that under Section 9 of the Judiciary Reorganization Act of 1980 (Batas Pambansa Blg. 129) the Intermediate Appellate Court is now empowered to try cases and conduct hearings, receive evidence and perform acts necessary to resolve factual issues in cases falling within its original and appellate jurisdiction. Certainly, the amount of damages, if any, suffered by the petitioner as a result of the issuance of the illegal attachment during the pendency of the appeal is a factual issue. Moreover, the application for judgment against the bond seasonably filed by the petitioner in the appellate court would avoid multiplicity of suits. We have earlier ruled that "the explicit provision of Section 20 of Rule 57, Revised Rules of Court that the judgment against the surety should be included in the final judgment is to avoid additional proceedings. (Cruz v. Manila Surety & Fidelity Co., Inc. et al., 92 Phil. 699; (Japco v. City of Manila, 48 Phil. 851, 855 cited in Malayan insurance Corporation v. Salas, supra).

Consequently, the appellate court also committed a grave abuse of discretion in denying the motion to defer filing of appellant's brief. The petitioner filed this motion for the purpose of first settling the issue on damages against the attachment bond so that such issue would be discussed and included in the appellant's brief and ultimately in the final judgment thereby avoiding multiplicity of suits. Needless to say, the appellate court should not have dismissed the petitioner's appeal. We take notice of the circumstances under which the appellate court dismissed the appeal. Granting that the petitioner's application for judgment against attachment bond was not meritorious, the appellate court's dismissal of the appeal would still be unwarranted. The record shows that in response to the petitioner's application for judgment against the attachment bond and motion to defer filing of the appellant's brief which was filed on March 13, 1985 and within the 45-day reglementary period to fife appellant's brief, the appellate court issued a resolution directing the private respondent to comment on the motion within ten (10) days from notice. Upon motion ' of the private respondent, the appellate court issued another resolution granting an extension of ten (10) days from April 13, 1985 to file comment on the said motions of the petitioner. The extension granted meant that the private respondent had until April 24, 1985 to file its comment. In addition to the comment, the private respondent filed on April 24, 1985 a motion to dismiss appeal contending that the petitioner had not filed its appellant's brief within the 45-day reglementary period. Upon verification from its docket decision that no appellant's brief was filed as of April 25, 1985, the appellate court dismissed the appeal. Under these circumstances, the dismissal of the appeal by the appellate court due to the failure to file the appellant's brief within the 45-day reglementary period counted from February 25, 1985 to April 25, 1985 without allowing any interruption gave undue advantage to the private respondent. This is so, because the private respondent after having been given ten (10) days from receipt of notice to comment on the twin motions of the petitioner was again granted a ten-day extension or until April 24, 1985 to file its comment thereto. This, in effect, removed a substantial number of days from the 45-day period of the petitioner to file its brief, through no fault of its own. The procedure adopted by the appellate court in interpreting the 45-day reglementary period to file appellant's brief was unfair. When the appellate court issued the resolution requiring the private respondent to comment on the petitioner's application for judgment against the attachment bond and motion to defer appellant's brief the 45-day period should be deemed to have stopped, and the period to commence again after denial of the motions. The notice to "file appellant's brief within 45 days from receipt" was received by the petitioner on February 25, 1985. The petitioner filed the application for judgment against the attachment bond and motion to defer filing of appellant's brief on March 13, 1985. Thus, the petitioner filed its motions on the 16th day after receipt of the notice to file appellant's brief and within the 45-day reglementary period. On March 26, 1985, the appellate court issued its resolution directing the private respondent to file its comment on the motions of the petitioner. At this point, counting from February 25, 1985 to March 26, 1985, a total number of 29 days had lapsed. Hence, the petitioner still had 16 days within the 45-day reglementary period to file its appellant's brief in the event that its motions were denied. It is likewise the practise in the Court of Appeals, after granting an initial period of 45 days, to routinely grant a motion for extension of another 45 days for the filing of an appellant's brief. Considering the amount involved in this litigation and the nature of the defenses raised by the petitioner, the appellate court was unduly severe when it peremptorily dismissed the appeal. Therefore, we have to set aside the appellate court's action in simultaneously denying the application for judgment against the attachment bond and the motion to defer the filing of appellant's brief and in dismissing the appeal. Since the petitioner's two motions were denied on April 30, 1985, the petitioner still had 16 days from notice of the denial to file its appellant's brief. In short, the petitioner's 45-day period within which to file its appellant's

brief had not yet lapsed when the appellate court dismissed the appeal. The brief could have been filed or a motion for extension of time requested. WHEREFORE, the instant petition is GRANTED. The questioned resolutions dated April 30, 1985 and June 20, 1985 of the then Intermediate Appellate Court are hereby REVERSED and SET ASIDE. The Court of Appeals is directed to conduct hearings on the application for judgment against attachment bond filed by the petitioner and to reinstate the appeal. The temporary restraining order dated July 17, 1985 is made PERMANENT. SO ORDERED.

G.R. No. 71784 December 12, 1986 ROMULO G. DINSAY and PLANTERS MACHINERY CORPORATION (PLAMACOR), petitioners, vs. THE HONORABLE JUDGE ROMEO J. HIBIONADA and TRADERS ROYAL BANK, respondents. PER CURIAM: The persons and entities in these three cases are: (1) Traders Royal Bank (the MORTGAGEE or BANK, for short); (2) Planters Machinery Corporation (PLAMACO), inclusive of its President Romulo G. DINSAY, et al. (the MORTGAGORS, for short); (3) Leopoldo D. CIOCO, Clerk of the Metropolitan Trial Court and Ex-Oficio Sheriff of Bacolod, and Renato M. BELLEZA, Deputy Sheriff of Bacolod (the SHERIFFS, for short); (4) The SANDIGANBAYAN; and (5) 6th Region RTC Branch 48 (the BACOLOD COURT, for short). The three cases are: G.R. No. 71784. Certiorari proceedings questioning a writ of attachment issued by the BACOLOD COURT in a case for deficiency judgment filed by the MORTGAGEE against the MORTGAGORS (the DEFICIENCY JUDGMENT CASE, for short). AM No. R-252-P. Complaint filed by DINSAY with this Court for administrative action against the SHERIFFS (the ADMINISTRATIVE CASE, for short); and G.R. No. 75113. Certiorari proceedings questioning the refusal of the SANDIGANBAYAN to suspend proceedings against the SHERIFFS for falsification of public document (the FALSIFICATION CASE, for short), on the ground that the DEFICIENCY JUDGMENT CASE and the ADMINISTRATIVE CASE involve prejudicial questions. The three cases are interrelated and can be decided jointly, but there will be no finding of fact in this Decision which should be considered as binding on the SANDIGANBAYAN and on the BACOLOD COURT in connection with the cases before them. The relevant factual background may be briefly stated: In 1980, certain properties of the MORTGAGORS were mortgaged to the BANK to secure credits extended to PLAMACO. Upon request of the MORTGAGEE for extrajudicial foreclosure, the SHERIFFS, on March 8, 1984, sold the mortgaged properties to the MORTGAGEE, as the sole bidder, for P3,263,182.67. On the same date, the SHERIFFS executed a Deed of Sale which was notarized on the same date by Judge Vivencio T. lbrado of the Metropolitan Trial Court of Bacolod. It was in page 4 of the certificate of sale, signed by CIOCO, where it was stated that the bid price was P3,263,182.67. Shortly thereafter, or on June 1, 1984, the MORTGAGEE instituted the DEFICIENCY JUDGMENT CASE against the MORTGAGORS alleging that what PLAMACO had owed was Pl,739,700.00, exclusive of interest and other bank charges, and that the foreclosed properties were purchased by the BANK only for P730,000.00. On October 29, 1984, DINSAY instituted the ADMINISTRATIVE CASE against the SHERIFFS, alleging that they had changed page 4 of the original certificate of sale with another page 4, wherein the bid price was stated to be P730,000.00. On August 10, 1985, the FALSIFICATION CASE was instituted against the SHERIFFS before the SANDIGANBAYAN. THE ADMINISTRATIVE CASE

The complaint against the SHERIFFS for "gross dishonesty and grave misconduct" was endorsed to Judge Alfonso B. Baguio, Executive Judge of the BACOLOD COURT for investigation. CIOCO claims that the substitution was solely the act of BELLEZA; that the former's act of signing the original page 4 as well as the substituted one was purely ministerial on his part; and that there was a valid change because of the amended bid submitted by the BANK late in the afternoon of March 8, 1984 to reflect the true intention of the bidder. BELLEZA contends that he conducted the auction sale on March 8, 1984; that at 9:00 A.M., the BANK submitted a bid price of P3,263,182.67 although he does not know who received the same; that at 2:30 P.M., the BANK submitted an amended bid of P730,000.00, which he himself received, on the ground that the original bid was "inadvertently overstated"; that he then re-typed page 4 to reflect the reduced bid, submitted it to CIOCO for signature, and then substituted the original page 4 with another page containing the amended bid; that at 4:30 P.M., he (BELLEZA) submitted the amended certificate of sale to Judge lbrado for notarization but that through inadvertence he was unable to substitute the original page 4 with the amended page 4; and that he had acted in good faith. However, Antonia Resujento. an employee of the Metropolitan Trial Court, and one of the witnesses to the certificate of sale testified that it was she who was asked by BELLEZA to re-type page 4 of the original certificate of sale about the third week of April, 1984 by substituting P730,000.00 for the original P3,263,182.67, after which she was asked to sign as a witness. On the other hand, Eufemia Claridad, also an employee of the Metropolitan Trial Court and a witness to the Certificate of Sale, testified that she signed the revised page 4 in the afternoon of March 8, 1984 upon instructions of BELLEZA. The Investigating Judge concluded that "although it is believed that the change of the consideration in the certificate of sale from over 3 million pesos to P730,000.00 may have some basis, yet, the procedure done by the respondents in making the change was without legal basis, since "considering that it was already a complete public document by itself, any change made on said document is no longer proper." According to him, the basis for the change of consideration was the BANK's claim that the MORTGAGORS had committed misrepresentations in their loan application, which the MORTGAGORS did not rebut. He then found the SHERIFFS "guilty of substituting page four (4) of the certificate of sale" and recommended suspension for a period of three (3) months, without pay. The Court Administrator, however, observing that the recommended penalty was not in accord with the penalty for the offense of grave misconduct, recommended, instead, suspension from office for one (1) year, without pay. In so far as the ADMINISTRATIVE CASE is concerned, our review of the testimonial and documentary evidence presented before the investigating Judge convinces us that the substitution was not done on the same day of March 8, 1984, but sometime in April, 1984, upon the following considerations: 1. The substituted page 4 did not bear the imprint of the notarial seal in contrast to the original page 4 which did, together with pages 1, 2, 3 and 5. That BELLEZA failed to submit the substituted page 4 for notarization through "inadvertence" is a lame excuse. 2. Judge lbrado testified that he had notarized only one Certificate of Sale with a stated bid of P3,263,182.67, which was submitted by CIOCO to the Regional Trial Court on April 11, 1984, specifically, to Rodegelio Cortez who was in charge of Notarial Reports. 1 The records show, however, that the amended bid was submitted to the Office of the Register of Deeds for registration only on May 21, 1984. 3. As the NBI had stated in its evaluation comment dated January 15, 1985: 10. If it were true that the letter of the TRB amending the bid price from P3,263,182.67 to P730,000.00 on the ground that the bid price was inadvertently overstated, was received by the Office of the City Sheriff on 8 March 1984, then there is no need for the Sheriff of Bacolod to prepare and execute a Certificate of Sale on the auctioned properties in the amount of P3,263,182.67

because the overstated bid price was accordingly amended by the second letter which was received on the very day of the auction sale. 4. The testimony of Antonia Resujento is more worthy of credence than that of Eufemia Claridad, who is a first cousin of CIOCO, and can be biased. 5. Apart from that, the testimony of Antonia Resujento that the substitution was made sometime in April 1984 is indirectly supported by the testimony of Margarito Magbanua, a Civil and Geodetic Engineer, who declared that in April, 1984 he was commissioned by the BANK to conduct an actual survey of the mortgaged properties to determine the relative position of one of the lots in relation to the provincial road and the national highway, as well as the location of the ricemill. It was then that the BANK must have become aware that the MORTGAGORS had committed misrepresentations in their loan application relative to the improvements on and the location of the mortgaged properties. As testified to by Benigno Tingson, Jr., the BANK's appraiser, "after the resurvey, it appeared that the ricemill is situated in the other lot which was omitted in the original parcellary plan." 2 Ramon H. Coscolluela, the BANK's Branch Manager testified that he was instructed by the Manila Office in the morning of March 8, 1984 to verify the mortgaged properties and to file an amendment before the end of the auction sale that same day. Yet, the necessary verification, could not have been made in a matter of hours, as, in fact, it needed a survey by a geodetic engineer Margarito Magbanua.3 Further, while Ramon Coscolluela signed the original bid on a plain piece of paper, the amended bid was in the BANK's stationery, carried his typewritten name but with a materially different signature. According to Coscolluela, he authorized the Assistant Manager, Nick Encarnacion, to sign the same as he had to leave the office. The latter, however, did not even sign "by." The amended letterbid is also stamp-marked "RECEIVED, Office of the City Sheriff, 3-8-84 by R. Belleza," but which stamp appears nowhere in the original bid, thereby indicating a deliberate attempt to make it appear that the amended bid was submitted on the same day of March 8, 1984. On the fact alone of the substitution by the SHERIFFS of page 4 of the original certificate of sale, that is, taking no account of the reasons or motivation on their part, the mere substitution made was a very serious step in the preparation and archiving of official papers, involving the performance of official duties and affecting public interest. The SHERIFFS, therefore, must be held administratively liable and meted out the penalty of dismissal for grave misconduct highly prejudicial to the service. THE DEFICIENCY JUDGMENT CASE The BACOLOD COURT issued its Preliminary Attachment mainly on the ground of fraud. Said the Court: From the evidence gathered, it is the finding of the court that defendant Romulo Dinsay fraudulently contracted the obligation by misrepresenting to plaintiff that a ricemill stands on Lot 1043-C. This took place at the inception of the transaction. With these representation, plaintiff was made to believe on the soundness of the collateral and that precipitated the higher valuation of the collaterals. One of the grounds for the issuance of the writ of preliminary attachment is when the defendant has been guilty of fraud in contracting the debt or incurring the obligation upon which the action is brought (Rule 57, Sec. 1 [d]). DINSAY elevated the case to us on certiorari challenging that Order. On September 11, 1985, we issued a Temporary Restraining Order enjoining the enforcement of the Writ of Attachment, and on December 4, 1985, we gave due course to the Petition. In Villanueva vs. Villanueva, 91 Phil. 43 (1952), where a vendee sought rescission and annulment of two Deeds of Sale on the ground of fraud on the part of the seller, it was held that the action should be filed within four (4) years after discovery of the fraud. Similarly, if the MORTGAGEE, upon discovery of PLAMACO's fraud, had sought rescission and annulment of the mortgage as well as recovery of the amounts

released to PLAMACO on the basis of the mortgage, its action should be filed within four (4) years after discovery of the fraud. In Emas vs. De Zuzuarregui and Aguilar, 53 Phil pp. 203, 204 (1929) the following was said: A person cannot claim the rights of an innocent purchaser who wilfully closes his eyes to facts which would be sufficient to arouse the suspicion of a reasonable person; and knowledge of what might have been revealed by proper inquiry is imputable to the purchaser. The mortgage was allegedly executed on March 26, 1980. It should not have been difficult for the BACOLOD COURT to have realized that the MORTGAGEE, as a BANK, could not have failed to see that no ricemill stood on Lot 1043-C at the time the mortgage was accepted as a collateral. Banks usually appraise properties before extending any loan. The point is that if the BANK took no action based on the alleged fraud within four (4) years after March 26, 1980, it should ordinarily not be entitled to a Writ of Preliminary Attachment based on that fraud when its Complaint was filed only on June 1, 1984. To the Complaint of the BANK was attached an Annex "P". That must have been the certificate of sale with the re-written page 4. In the Answer of the MORTGAGORS filed on June 18, 1984, they had already denied the authenticity of Annex "P" of the Complaint. They also attached to their Answer a copy of the Information filed against the SHERIFFS for falsification of public documents in regards to the certificate of sale attached to the Complaint. The BACOLOD COURT could have realized that the case would then have to be decided, not only on the alleged fraud committed on March 26, 1980, but also on whether or not Annex "P" of the complaint was a valid certificate of sale. The alleged fraud would be only an incident. All told, it should have been the better exercise of discretion on the part of the BACOLOD COURT if it had refused to issue the Order of Preliminary Attachment, or to recall it after the allegation was clearly made that the certification of sale, depended upon by the MORTGAGEE, was questionable. THE FALSIFICATION CASE Preliminarily, it may be stated that the National Bureau of Investigation (NBI) in its evaluation comment dated January 15, 1985, 4 and the 4th Assistant Fiscal of Bacolod City, as deputized Tanodbayan Prosecutor, in a Resolution dated July 19, 1985, 5 separately recommended the filing of a falsification charge against the SHERIFFS based on prima facie evidence. The issue poised is whether the ADMINISTRATIVE CASE and the DEFICIENCY JUDGMENT CASE constitute prejudicial questions to the FALSIFICATION CASE that would warrant the suspension of the proceedings in the latter case. The SANDIGANBAYAN held in the negative, hence, this Petition for Certiorari, which, on July 24, 1986, we dismissed for lack of merit. The SHERIFFS have moved for reconsideration. A prejudicial question is one "... based on a fact distinct and separate from the crime but so intimately connected with it that it determines the guilt or innocence of the accused." 6 Section 5, Rule 111, of the 1985 Rules on Criminal Procedure prescribes the elements of a prejudicial question thus: SEC. 5. Elements of prejudicial question. The two (2) essential elements of a prejudicial question are: (a) the civil action involves an issue similar or intimately related to the issue raised in the criminal action; and (b) the resolution of such issue determines whether or not the criminal action may proceed. The ADMINISTRATIVE CASE is not a prejudicial question. 7 The issue in the ADMINISTRATIVE CASE is whether the SHERIFFS, by their act of substituting page 4, committed gross dishonesty and/or grave misconduct. The issue in the FALSIFICATION CASE is

whether or not the SHERIFFS had unlawfully and feloniously made an alteration or intercalation in a genuine document which changes its meaning in violation of Article 171 (o) of the Revised Penal Code. A finding of grave misconduct in the ADMINISTRATIVE CASE would not be determinative of the guilt or innocence of the SHERIFFS in the FALSIFICATION CASE. The DEFICIENCY JUDGMENT CASE is neither a prejudicial question to the FALSIFICATION CASE. The main issue involved in the former is the amount of the highest bid at which the auctioned properties were sold in order to determine whether or not a deficiency exists. The BACOLOD COURT will have to sustain either the original certificate of sale or the certificate of sale with the substituted page 4. In either possibility, the ruling will not be determinative of the guilt or innocence of the SHERIFFS in the FALSIFICATION CASE. In other words, in the Sandiganbayan rests the determination of whether or not the act of substitution by the SHERIFFS, a fact admitted by them but which they allege was done in good faith, should be considered a felony upon a finding of criminal intent. That issue is not involved, nor will it be resolved, either in the ADMINISTRATIVE CASE or in the DEFICIENCY JUDGMENT CASE. WHEREFORE, judgment is hereby rendered: 1. In G.R. No. 71784, setting aside the Order, dated July 11, 1984, and the Writ of Preliminary Attachment, dated July 16, 1984, issued in Civil Case No. 2931 of the Regional Trial Court of Negros Occidental, Branch 48, of Bacolod City; and making permanent the Temporary Restraining Order heretofore issued. 2. In AM No. R-252-P, dismissing from the service City Sheriff Leopoldo D. Cioco and Deputy Sheriff Renato M. Belleza, both of Bacolod City, with forfeiture of full retirement benefits and pay in respect of Renato M. Belleza, but only a forfeiture equivalent to one year retirement benefits and pay as to Leopoldo D. Cioco; and as to both of them, with prejudice to reinstatement in any branch of the government or any of its agencies or instrumentalities; and 3. In G.R. No. 75113, denying the Motion for Reconsideration of the Resolution of this Court, dated July 24, 1986, which dismissed the Petition for certiorari for lack of merit. This Decision is immediately executory. Without costs in all three cases. SO ORDERED.

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, respondent 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: 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 predicted 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 . . . xxx xxx xxx 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 the 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

G.R. No. 95550 November 23, 1992 MAXIMO UY and SYLVIA VASQUEZ-UY, petitioners, vs. THE HON. COURT OF APPEALS, and ROSALINDA MORENOANLAP, 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 of P8,000.00 per 30-days or for a total sum of P16,000.000, 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

On December 15, 1989, petitioners filed a notice of appeal from the aforesaid decision, while respondent 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 read as follows: It appearing that the appeal taken by the defendants by filing a Notice of Appeal had 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, 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 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 reach of creditors. 5 We find nothing in the Rules of Court which makes notice and hearing indispensible 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 respondent's 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 allegations was not proved in the main case. Petitioners' liability, if any is predicted 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 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. G.R. No. 105409. March 1, 1993. MASTER TOURS and TRAVEL CORPORATION, petitioner, vs. HON. COURT OF APPEALS, (Twelfth Division), HON. LEONARDO I. CRUZ, Presiding Judge of the Regional Trial Court of Manila, Branch 25, FRANCISCO SALVADOR, Deputy Sheriff, RTC of Manila, Branch 25, and CATHAY PACIFIC AIRWAYS, LTD., respondents. DECISION PADILLA, J p: Basically, the question here involved is the propriety of a writ of preliminary attachment issued by the trial court ex parte, prior to notice and hearing but served on the defendant simultaneously with the summons. The Facts: On 28 February 1991, summons together with a copy of the complaint for sum of money filed by the private respondent Cathay Pacific Airways Ltd. (Cathay) and an Order of Attachment dated 21 February 1991 were served upon and received by the petitioner. Pursuant to the Order of Attachment, the sheriff immediately levied upon properties of the petitioner, with value equivalent to Cathay's claim. On 25 March 1991, defendant therein (herein petitioner) moved to set aside the order of attachment on the grounds that there had been no prior notice or hearing before the issuance of the writ and that the averments of the complaint failed to satisfactorily allege the basis for attachment as required by the Rules of Court. Pending resolution of this motion, petitioner filed its answer to Cathay's complaint. On 29 April 1991, the trial court issued an order denying the petitioner's motion to set aside or discharge the attachment writ; petitioner thereupon moved for reconsideration. However, pending resolution of the incident, the respondent sheriff and Cathay's counsel, allegedly thru coercion and harassment, compelled the petitioner, thru its counsel and vicepresident, to enter into a compromise agreement. Petitioner

subsequently moved to withdraw the said compromise agreement before the trial court could approve the same. On 7 June 1991, petitioner's aforesaid motion for reconsideration and motion to withdraw compromise agreement were jointly heard and later submitted for resolution. Pending said resolution, respondent sheriff and Cathay's counsel allegedly continued to harass the petitioner and were able to effect garnishment of certain bank deposits of petitioner. Faced with this predicament, the petitioner resorted to a petition for certiorari with the Court of Appeals, but the latter court denied due course to the same as the trial court had yet to rule on petitioner's twin motions for reconsideration and withdrawal or compromise agreement. Finally, on 17 October 1991, the trial court issued an order denying petitioner's twin motions. Petitioner again took recourse to the respondent appellate court, but after hearing both parties, the appellate court ruled to dismiss the petition. Hence, this petition for review. Petitioner principally contends that the respondent Court of Appeals committed a grave reversible error in not holding that the trial court had not yet acquired jurisdiction over the person of the petitioner for lack of notice and hearing when it issued exparte the writ of preliminary attachment, hence, this was a denial of due process. Davao Light and Power, Co., Inc. vs. Court of Appeals (G.R. No. 93262, November 29, 1991, 204 SCRA 343) lays down the rules on the issuance of writs of attachment ex-parte: "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. It is a remedy which is purely statutory in respect of which the law requires a strict construction of the provisions granting it. 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.' 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;' and the reference plainly is to a time before summons is served on the defendant, or even before summons issues. What the rule is saying quite clearly is that after an action is properly commenced by the filing of the complaint and the payment of all requisite docket and other fees the plaintiff may apply for and obtain a writ of preliminary attachment upon fulfillment of the pertinent requisites laid down by law, and that he may do so at any time, either before or after service of summons on the defendant. And this indeed, has been the immemorial practice sanctioned by the courts: for the plaintiff or other proper party to incorporate the application for attachment in the complaint or other appropriate pleading (counter-claim, cross-claim, thirdparty 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." " . . . 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.' If the court be so satisfied, the 'order of attachment shall be granted,' 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.'"

Petitioner likewise raises the issue of the permissibility of withdrawing a compromise agreement which has not been approved by the court. The rule is that a judgment rendered in accordance with a compromise agreement is immediately executory unless a motion is filed to set aside the agreement on the ground of fraud, mistake or duress in which case an appeal may be taken against the order denying the motion. (Arkoncel, Jr. v. Lagamon, G.R. No. 50526, December 4, 1991, 204 SCRA 560). In its order of 17 October 1991 (p. 249, Rollo), the Regional Trial Court said: "The Court does not believe, so to speak, that the Executive Vice President, who signed the compromise agreement cannot bind the defendant for if it were otherwise, the defendant corporation's board as portrayed above, would have been on guard. The compromise agreement, to say the least, in the contemplation of the law, is a valid document binding not only on the Executive Vice President, but also on the defendant corporation itself. It is not vitiated by what the Executive Vice President of the defendant corporation and the lawyer representing both call lack of authority and threat and intimidation that compelled them (Executive Vice President and counsel) to sign it. This protestation, is amply refuted in the plaintiff's opposition . . . ." The propriety or improriety of withdrawing the compromise agreement is more a question of fact than of law in this particular case. ACCORDINGLY, the petition is DENIED, there being no reversible error committed by respondent appellate court. SO ORDERED. G.R. No. 104405 May 13, 1993 LIBERTY INSURANCE CORPORATION, petitioner, vs. THE HONORABLE COURT OF APPEALS, HON. NAPOLEON K. FLOJO, Presiding Judge of Branch II, RTC Manila; ATILLA ARKIN, the CITY SHERIFF OF MANILA, the REGISTER OF DEEDS OF MANILA and the REGISTER OF DEEDS OF MAKATI, METRO MANILA, respondents. Cochico, Lopez, Delgado , Aquino & De la Merced for petitioner. Edgar Dennis A. Padernal for private respondent. BIDIN, J.: This is a petition for review on certiorari seeking to set aside and to declare null and void the decision dated September 17, 1991 of the respondent Court of Appeals dismissing petitioner's petition for review and its resolution dated February 7, 1992 denying petitioner's Motion for Reconsideration. On May 4, 1988 Jose H. Imperial Organizations, Pty., thru Atty. Jose H. Imperial entered into an agreement with Coca-Cola Bottlers Philippines to promote two concerts featuring a group known as "Earth, Wind and Fire" on June 12 and 13, 1988 with Coca-Cola sponsoring the concerts and the former promoting the same. To ensure compliance with the terms of the agreement, Coca-Cola required Imperial Organizations to put up a performance bond. Petitioner Liberty Insurance, upon application of Imperial Organization put up the performance bond in the amount of Three Million Pesos (P3,000,000.00), the principal condition of which was to "fully and faithfully guarantee the terms and conditions" of the agreement dated May 24, 1988 entered into between Coca-Cola and Imperial Organizations. More particularly, the bond was to guarantee the return to Coca-Cola of "whatever portion of the cash sponsorship and cash advances to be made by Coca-Cola to finance the holding of the concerts on the dates aforesaid . . . ." (Rollo, pp. 37) In turn, and as a condition for the issuance of said performance bond, petitioner required Imperial Organizations, Jose H. Imperial, Atilla Arkin, and Carmen Madlangbayan to execute an indemnity agreement in its favor to indemnify it for any and all damages

including attorney's fees which the petitioner may incur by reason of the issuance of the bond. It appears that while the concerts took place, Imperial Organizations and private respondents failed to comply with their obligations to Coca Cola, as a result of which petitioner became liable upon its performance bond paying Coca-Cola Three Million Pesos. Petitioner, demanded reimbursement from Imperial, Arkin And Madlangbayan based on their indemnity bond but to no avail. On August 7, 1988 petitioner filed with the Regional Trial Court, National Capital Region, Branch 2, Manila a complaint for damages with application for the issuance of a writ of preliminary attachment against private respondents. On September 20, 1988, the Trial Court thru the Hon. Rosario A. de Leon, issued an order allowing the issuance of the writ, stating that.: . . . There could have been fraud committed by the defendants Arkin and Madlangbayan in promising to give as security or collateral to their Indemnity Agreement, which caused the plaintiff to release the security bond, when as it turned out, the Transfer Certificate of Title of a parcel of land supposedly issued by the Register of Deeds of Rizal turned out to be fake, as the true land title number was issued over a different parcel of land issued in the name of a person other than defendant Madlangbayan, while defendant Atilla Arkin delivered an official receipt in the name of a third party but which vehicle was allegedly sold to him free from lien and encumbrance, when it turned out that the car was heavily mortgaged to a third party, . . . . The conclusion of fraud is inevitable in view of the above circumstances, for any (sic) rate fraud is a state of mind that maybe inferred from the circumstances extant in the case (Republic vs. Gonzales, 13 SCRA 633). In addition to the fact that these representations/promises of Arkin and Madlangbayan were made prior to the release of the bond (the bond by then had already been executed), it can still be said that this fraud existed when the obligation was contracted in line with Sec. 1, par (d), Rule 57, which reads: An attachment may issue in an action against a party who has been guilty of fraud in contracting or incurring the obligation upon which the action is brought. A debt is fraudulently contracted if at the time of contracting it, the debtor entertained an intention not to pay, or an intention not to keep a collateral agreement regarding the disposition of a property purchased on credit. (Francisco, Rules of Court, Second [1985] Edition, p. 21) . . . (Rollo, pp. 38-39) On May 10, 1989 respondent Arkin filed a motion to Quash/ Recall Writ of Attachment. On October 19, 1989, the trial court, this time presided by respondent judge Napoleon K. Flojo, denied the motion, reasoning out as follows: Defendant Atilla Arkin posits that no ground existed for the issuance of the preliminary attachment because he was not guilty of fraud in incurring the obligation under the indemnity agreement. The Court granted the prayer for a writ of preliminary attachment after a finding of fraud from the evidence adduced by the parties. This conclusion was supported by substantial evidence. There is no cogent reason from the arguments posed by the movant to warrant and/or recall of the writ.

Furthermore, the complaint invokes another ground for the grant of the writ and that is, "in an action against a party who has removed be (sic) disposed of his property, or is about to do so, with the intent to defraud his creditors," . . ., evidenced by three conveyances or disposals of properties by defendant Atilla Arkin though made before the institution of the action, is a circumstance tending to show fraudulent conveyance with intent to defraud his creditors. Especially so, when the payment of herein claim which the action is brought is not secured by any mortgage or pledge of real (sic) personal property and plaintiff had no other sufficient security for the enforcement of the claim. (Rollo, p. 58; emphasis supplied). After more than a year, or on December 14, 1990, Arkin filed a Motion for Reconsideration of the aforementioned order of denial. On March 6, 1991, respondent judge reversed his earlier ruling and instead issued two orders, (1) granting Arkin's Motion for Reconsideration and directing the lifting of the writ of preliminary attachment earlier issued, and (2) ordering the deputy sheriff assigned to said court to immediately discharge or lift said writ. The first order, among other things, states: xxx xxx xxx The Court, presided at the time by Judge Rosalio De Leon, found that the defendant has been guilty of fraud in inveigling the plaintiff to issue the surety bond by offering false collaterals. The ground relied upon by the Court to issue the attachment was based on Section 1 (d) of Rule 57 of the Rules of Court , which states: "Sec. 1. Grounds upon which attachment may issue. A plaintiff or any party may, at the commencement of the action or at anytime 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: xxx xxx xxx (d) In action (sic) against a party who has been guilty of fraud in contracting the obligation upon which the action is brought, . . . ." To constitute a ground for attachment, fraud should be committed prior to or simultaneous with the birth of the obligation sued upon, which in this case is the May 30, 1988 surety bond. xxx xxx xxx A close examination of the evidence on record shows that the delivery of the fake collaterals were made to Eduardo Cunanan on June 1, 1988, or two (2) days after the issuance by the plaintiff of the surety bond. Thus, the offering of the fake Transfer Certificate of Title and encumbered Mercedes Benz car was not prior to or simultaneous with the execution of the Surety Bond. Such being the case, the offer of the collaterals were not the cause which induced the plaintiff to issue the surety bond. It is therefore clear that the issuance of the surety bond on May 30, 1988 was not based on the alleged fraud of the defendant Arkin offering the fake collaterals. xxx xxx xxx

With regards (sic) to the allegations that the defendant Arkin has removed or disposed of his property, with intent to defraud his creditors, suffice it to say that (when) the law authorizes the issuance of a writ preliminary attachment (it) should be construed in favor of the defendant and before issuing an Order to that effect, the judge should require that all the requisites prescribed by law be complied (with), without which a judge acquires no jurisdiction to issue the writ. xxx xxx xxx Furthermore, allegations that debtors were removing or disposing some of the properties with intent to defraud creditors must be specific. xxx xxx xxx In the present case the plaintiff did not prove the intent of defendant Arkin to defraud creditors. Aside From the fact that the alleged dispositions were made long prior to the filing of the case, the alleged dispositions were made of conjugal partnership property which were then the subjects of partition between Arkin and his estranged wife. . . . (Rollo, pp. 42-43). Aggrieved, petitioner filed a special civil action for certiorari with respondent Court of Appeals to set aside the above orders of respondent judge. Respondent court dismissed the petition on the ground that the filing of the said petition was premature considering that there was yet a remedy available in the ordinary course of law, i.e., filing a motion for reconsideration of the challenged orders. Hence, this petition with the following assignment of errors: I. A MOTION FOR RECONSIDERATION IS NOT ALWAYS A CONDITION PRECEDENT TO THE FILING OF A SPECIAL CIVIL ACTION FOR CERTIORARI, AS THERE IS NO APPEAL OR ANY PLAIN, SPEEDY AND ADEQUATE REMEDY IN THE ORDINARY COURSE OF LAW AVAILABLE TO HEREIN PETITIONER; II. RESPONDENT HONORABLE COURT OF APPEALS ERRED IN UPHOLDING THE DISSOLUTION OF THE WRIT OF PRELIMINARY ATTACHMENT ON THE BASIS OF SECTION 13, RULE 57, OF THE RULES OF THE COURT SUPPORTED (SIC) BY ANY EVIDENCE; III. RESPONDENT COURT OF APPEALS COMMITTED GRAVE ERROR OF LAW IN CONCLUDING THAT HEREIN PETITIONER FAILED TO RAISE AS AN ISSUE THE DELAYED FILING OF PRIVATE RESPONDENT'S MOTION FOR RECONSIDERATION DATED DECEMBER 14, 1990, IN PETITIONER'S OPPOSITION THERETO. IV. THE APPREHENSION OF THE HEREIN PETITIONER REGARDING THE PROPENSITY OF PRIVATE RESPONDENT TO DISPOSE OF HIS PROPERTIES IN FRAUD OF HIS CREDITORS TURNED OUT TO BE TRUE AND CORRECT. (Rollo, pp. 24-26, 30). In brief, the questions posited by the instant petition may be consolidated into two issues, namely: 1) Whether or not the writ of preliminary attachment in question was properly or regularly issued and 2) Whether or not petitioner's failure to file a motion for reconsideration of the questioned orders of the court a quo bars the filing of a special civil action for certiorari before the respondent court.

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, Section 1 (d) of Rule 57 authorizes the plaintiff or any proper party to have the property of the adverse party attached as security for the satisfaction of any judgment that may be recovered therein. Thus: Rule 57, Sec. 1. Grounds upon which attachment may issue. (d): In an action against a party who has been guilty of a fraud of 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; 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 [1965]). Here, it has been established that all the collaterals given by the respondent Arkin as security for the bond were either fraudulent or heavily encumbered. Records show that Transfer Certificate of Title No. 300011 supposedly issued by the Register of Deeds of Rizal covering a parcel of land with an area of 25,750 square meters located at Muntinlupa, Las Pias, M.M. and registered in the name of Carmen Madlangbayan, used as one of the collaterals, turned out to be fake and spurious as the genuine TCT No. 300011 of the Office of the Register of Deeds of Rizal covers a parcel of land located in Angono, Rizal with an area of 514 square meters registered in the name of persons other than respondents Imperial, Arkin, and Madlangbayan. Likewise, the supposed lien-free motor vehicle offered as collateral turned out to be heavily mortgaged and was even disposed of without informing petitioner. Furthermore, it has also been proven that subsequent to the issuance of the May 30, 1988 surety bond, respondent Arkin started disposing of his other properties. Prior to the filing of the complaint, respondent not only had sold the motor vehicle given as collateral but that his two other condominium units were also alienated in favor of a company of which respondent Arkin is the president. All these circumstances unerringly point to the devious scheme of respondent Arkin to defraud petitioner. It is therefore clear that fraud was present when private respondent, among others, entered into an indemnity agreement with petitioner. The actuations of respondent Arkin indubitably lead to the conclusion that he never entertained the idea of fulfilling his obligations under the agreement and was bent on defrauding petitioner from the very beginning. Under the circumstances, we perceive no impropriety or irregularity in the issuance of the writ of attachment especially so where petitioner has fully complied with the requirements for the issuance thereof. On the contrary, what we see as having been attended by irregularity is the assailed order of respondent judge lifting the writ of attachment based on grounds which are contradicted by the evidence on record. It is a fact that respondent Arkin gave fake land titles as collaterals and even disposed of real properties in his obvious attempt to defraud petitioner. And yet, respondent judge concluded that petitioner's allegation that respondent Arkin's fraudulent alienation of his properties has no foundation in fact. This is plain absurdity. As respondent judge himself noted in his earlier order denying respondent Arkin's motion to quash writ of attachment, the latter's three (3) conveyances, "though made before the institution of the action, is a circumstance tending to show fraudulent conveyance with intent to defraud his creditors. Especially so, when the payment of herein claim upon which the action is brought is not secured by any mortgage or pledge of real (or) personal property and plaintiff had no other sufficient security

for the enforcement of the claim" (Rollo, p. 58). Such being the case, respondent Arkin's claim that the writ of attachment has been irregularly issued should not have merited serious consideration by respondent judge. Be that as it may, the instant case being "an action against a party who has been guilty of fraud in contracting the obligation upon which the action is brought", respondent Arkin is not allowed to file a motion to dissolve the attachment on the ground that the writ has been improperly or irregularly issued. As we held in Mindanao Savings and Loan Assoc. vs. Court of Appeals (172 SCRA 480 [1989]): . . ., when the preliminary attachment is issued upon a ground which is at the same time the applicant's cause of action: e.g., . . . 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, the defendant is not allowed to file a motion to dissolve the attachment under Section 13 of Rule 57 by offering to show the falsity of the factual averments in the plaintiff's application and affidavits on which the writ was based and consequently that the writ based therein had been improperly, or irregularly, issued the reason being that the hearing on such motion for dissolution of the writ would be tantamount to a trial on the merits. In other words, the merits of the action would be ventilated at a mere hearing of a motion, instead of the regular trial. Therefore, when the writ of attachment is of this nature, the only way it can be dissolved is by a counterbond. Petitioner next contends that motion for reconsideration need not at all times be resorted to before a special civil action for certiorari may be instituted before respondent court. Ordinarily, certiorari will not lie unless an inferior court, through a motion for reconsideration, had been given an opportunity to correct the imputed errors. However, this rule admits of exceptions such as 1) when the issue raised is one purely, of law; 2) where public interest is involved; 3) in cases of urgency (Quirino vs. Grospe, 169 SCRA 702 [1989]); or 4) where special circumstances warrant immediate or more direct action (People vs. Dacudao, 170 SCRA 489 [1989]). In the case at bar, petitioner's failure to file a motion for reconsideration in the trial court before commencingcertiorari proceedings in the Court of Appeals is not fatal considering the existence of special circumstances that warrant immediate and more direct action (Saldaa vs. CA, 190 SCRA 396 [1990]). The indecent haste with which respondent Arkin had been disposing of his properties demonstrates the imperative need for a more adequate relief requiring an immediate and more direct action. There was an urgency which caused the present case to fall under one of the exceptions thereby allowing petitioner to file a petition forcertiorari without the need of first filing a motion for reconsideration. Filing a motion for reconsideration would have served no useful purpose nor can it be considered a plain, speedy and adequate remedy since the order directing the sheriff to discharge or lift the writ of attachment was issued on the same day the order granting the quashal was made. It would not have automatically forestalled Arkin from further disposing of his properties. It is rather disturbing how respondent judge, after ruling in his order of October 19, 1989, denying respondent's motion to quash, that the trial court's finding of fraud in incurring the obligation under the indemnity agreement was supported by substantial evidence, would, in his order of March 6, 1991 granting the motion for reconsideration, based on the same substantial evidence supporting a finding of fraud, later reverse himself and declare that "the plaintiff (petitioner herein) did not prove the intent of defendant Arkin to defraud creditors." Through the order for the "immediate" lifting of the writ, respondent Judge, in one swift stroke, completely subverted the valid order of attachment issued after a finding of fraud, which finding he himself has declared as supported by substantial

evidence. We hold that respondent judge in issuing the contested orders has acted capriciously, whimsically and arbitrarily and with grave abuse of discretion amounting to lack or in excess of jurisdiction correctible by the special writ of certiorari. WHEREFORE, the petition is GRANTED. The assailed order of respondent judge dated March 6, 1991 is SET ASIDE and the order dated October 19, 1989 is hereby REINSTATED. Costs against private respondent. SO ORDERED. G.R. No. 140765 January 25, 2001

GONZALO R. GONZALES, petitioner, vs. STATE PROPERTIES CORPORATION, respondent. PANGANIBAN, J.: The Rules of Court requires that an initiatory pleading with an application for a writ of preliminary injunction or temporary restraining order filed before a multiple-sala court shall be raffled only after (a) notice to and (b) in the presence of the adverse party or the person to be enjoined. These requirements may be dispensed with, however, in cases where it can be satisfactorily shown that summons could not be served despite diligent efforts. Besides, in the present case, petitioner has no reason to complain because he has been duly served the requirements, and he does not claim to represent the allegedly adversely affected parties. Statement of the Case Before this Court is a Petition for Review on Certiorari1 assailing the November 22, 1999 Decision2 of the Court of Appeals (CA) in CA-GR SP No. 54677. The CA affirmed the Order3 of the Regional Trial Court (RTC) of Las Pias City, setting the raffle of Civil Case No. LP-99-0077 even without notice to some of the defendants therein. The dispositive portion of the CA Decision reads as follows: "WHEREFORE, premises considered, the petition is hereby DISMISSED."4 The Facts The facts are summarized by the Court of Appeals in this manner: "x x x [R]espondent State Properties Corporation filed a verified complaint for Recovery of Property based on ownership on March 23, 1999 with the Regional Trial Court of Las Pias against Petitioner Gonzalo R. Gonzales and his brothers and sisters, all heirs of the late Benito Gonzales. The complaint, accompanied [by] an application for temporary restraining order and/or preliminary injunction, prayed that after trial, the Court render judgment confirming its right to take and enjoy possession of the property covered by Transfer Certificate of Title No. S-17992 together with all improvements thereon to the exclusion of the heirs of Benito Gonzales, inclusive of herein petitioner.1wphi1.nt "The case was raffled to Branch 253 of the Regional Trial Court of Las Pias and summons [was] duly served on Petitioner Gonzalo Gonzales. "On April 15, 1998, Petitioner Gonzalo Gonzales filed an Omnibus Motion, praying among others, that another raffle be held because the other defendants therein did not receive any notice of raffle as required by Administrative Circular No. 20-95. "In order to expedite the disposition of its application for injunctive relief, private respondent filed a manifestation expressing that it interpose[d] no objection to the said Omnibus Motion. Petitioner Gonzalo Gonzales then filed his Answer.

"Meanwhile, private respondent filed a Motion for Service of Summons by Publication on all the defendants therein, except Petitioner Gonzalo Gonzales, for the reason that their residences [could] not be ascertained despite diligent inquiry. The Court (Branch 253) granted the said motion at the hearing on May 21, 1999. "Subsequently, private respondent received a Notice of Raffle from the Office of the Clerk of Court of the Regional Trial Court of Law Pias enjoining private respondent to attend the raffle of the case before the sala of herein public respondent on July 30, 1999 at 1:00 p.m. "On the said date, the counsel of Petitioner Gonzales and counsel of private respondent appeared but petitioner's counsel opposed the holding of the raffle on the ground that the other defendants were not duly notified of the raffle, again invoking Administrative Circular No. 20-95. This was granted by public respondent in his Order, to wit: 'WHEREFORE, no raffle will be conducted. The Court advises the parties affected to do what is to be done for the final determination of the meaning of Administrative Circular No. 20-95, par. (1) when there are other parties whose addresses are not alleged in the complaint or with the unknown addresses.' (p. 22. Records, Annex A) "To this Order, private respondent filed a Motion for Reconsideration to which petitioner filed an opposition. "On August 30, 1999, public respondent issued the now assailed order which reconsidered his July 30, 1999 Order. Thus, the instant case was set for regular raffle on September 8, 1999."5 Ruling of the Court of Appeals Citing Section 4, Rule 58 of the Rules of Court, the Court of Appeals ruled that, necessarily, if summons could not be served, notice for the raffle could not be served either. The CA also held that the logic of petitioner, who insisted otherwise, was flawed. Herein respondent, it pointed out, would have no remedy in case the other defendants choose to make their whereabouts unknown. Hence, this recourse.6 Issues In his Memorandum,7 petitioner raises the following issues: "1. Respondent Court of Appeals acted with grave abuse of discretion tantamount to lack or excess of jurisdiction in holding that if summons could not be personally served, raffle could likewise be held without notice to parties; 2. Respondent Court of Appeals acted with grave abuse of discretion tantamount to excess or lack of jurisdiction in holding that in a case where the parties are unknown, the case will have to be raffled first before the court can act on the motion for leave to serve summons by publication; 3. Respondent Court of Appeals acted with grave abuse of discretion tantamount to excess or lack of jurisdiction in dismissing the petition; 4. There are special and important reasons to warrant a review."8 In the main, the issue before us is whether a case may be raffled, even when some of the parties could not be served notice because their whereabouts are unknown.

The Court's Ruling The Petition has no merit. Main Issue: Notice Requirement Prior to Raffle Petitioner contends that under Section 4 (c) of Rule 58, a case may be raffled only after notice to and in the presence of the adverse party. These requisites, according to him, are mandatory. Furthermore, he maintains that the latter part of the rule, which allows service of summons to be dispensed with in case the adverse party cannot be located despite diligent efforts, should not be isolated from other related provisions. He refers specifically to Section 5 of Rule 58, which provides that no writ of preliminary injunction shall be granted without hearing and prior notice to the adverse party.9 Petitioner's argument is incorrect. Administrative Circular No. 2095,10 which provided for the requisites of a raffle of cases, has been incorporated into Section 4 (c), Rule 58 of the 1997 Rules of Civil Procedure. The provision now reads as follows: "(c) When an application for a writ of preliminary injunction or a temporary restraining order is included in a complaint or any initiatory pleading, the case, if filed in a multiple-sala court, shall be raffled only after notice to and in the presence of the adverse party or the person to be enjoined. In any event, such notice shall be preceded, or contemporaneously accompanied, by service of summons, together with a copy of the complaint or initiatory pleading and the applicant's affidavit and bond, upon the adverse party in the Philippines. "However, where the summons could not be served personally or by substituted service despite diligent efforts, or the adverse party is a resident of the Philippines temporarily absent therefrom or is a nonresident thereof, the requirement of prior or contemporaneous service of summons shall not apply." From the foregoing, it is clear that the prerequisites for conducting a raffle when there is a prayer for a writ of preliminary injunction or temporary restraining order are (1) notice to and (b) presence of the adverse party or person to be enjoined. The above rule also provides that the notice shall be preceded or accompanied by a service of summons to the adverse party or person to be enjoined. The second paragraph clearly states, though, that the required prior or contemporaneous service of summons may be dispensed with in the following instances: (a) when the summons cannot be served personally or by substituted service despite diligent efforts, (b) when the adverse party is a resident of the Philippines temporarily absent therefrom, or (c) when such party is a nonresident. In such event, the notice of raffle and the presence of the adverse party must also be dispensed with. As pointed out by respondent, "the requirement of notice of the raffle to the party whose whereabouts are unknown does not also apply x x x because the case will have to be raffled first before the court can act on the motion for leave to serve summons by publication."11 Under the interpretation of petitioner, however, defendants, by the simple expedient of concealing their whereabouts and thereby preventing the holding of a raffle, can bar a trial court from acting on a case or from allowing a service of summons by publication. Clearly, such interpretation would result in absurdity and should not be countenanced.12 Moreover, in his commentary on the 1997 Rules of Civil Procedure, Justice Jose Feria explains that "[p]aragraphs (c) and (d) [of Section 4, Rule 58,] are based on paragraphs 1 and 2 of Administrative Circular No. 20-95, with the modification that the notice to the adverse party shall be preceded or contemporaneously accompanied by service of summons as required in Davao Light & Power Co., Inc. vs. Court of Appeals, with the same exceptions in Section 5 of Rule 57 but excluding actions in rem or quasi in rem."13 In Davao Light,14 the Court held:

"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 of summons, a copy of the complaint x x x, the application for attachment (if not incorporated in but submitted separately from the complaint), the order of attachment, and the plaintiff's attachment bond." (Emphasis supplied.) In H.B. Zachry v. CA,15 the Court expounded on the aforecited ruling as follows: "[A] distinction should be made between the issuance and the enforcement of the writ. The trial court has unlimited power to issue the writ upon commencement of the action even before it acquires jurisdiction over the person of the defendant, but enforcement thereof can only be validly done after it shall have acquired jurisdiction." In this light, it may be stressed that pursuant to Davao Light and the subsequent cases prior to the 1997 Rules, a writ of attachment may be issued ex parte, but it cannot be implemented if the trial court has not yet acquired jurisdiction over the person of the defendant. In the present case, the notice of raffle is required to be served prior to or contemporaneously with the summons -- a requirement absent from the pre-1997 Rules. This requirement shows the intention of the new Rules to ensure the implementation of the writ of preliminary injunction and preclude the defense that the trial court has no jurisdiction over the defendant. Nonetheless, the 1997 rule barring the raffle of these cases without effecting the service of summons is not absolute. As earlier noted, the second paragraph of Section 4 (c) of Rule 58 clearly provides that the service of summons may be dispensed with "where the summons could not be served personally or by substituted service despite diligent efforts." Furthermore, even Justice Feria opines that the exceptions to the rule are the same as those in Section 5 of Rule 57, the second paragraph of which reads thus: "The requirement of prior or contemporaneous service of summons shall not apply where the summons could not be served personally or by substituted service despite diligent efforts, or the defendant is a resident of the Philippines temporarily absent therefrom, or the defendant is a non-resident of the Philippines, or the action is one in rem or quasi in rem." In the present case, respondent was able to show that the whereabouts of the other defendants were unknown, and that summons could not be served personally or by substituted service. Hence, it cannot be required to serve such summons prior to or contemporaneous with the notice of raffle. The raffle, therefore, may proceed even without notice to and the presence of the said adverse parties. Indeed, contrary to the argument of petitioner, allowing the raffle to proceed in a case like this is not inconsistent with Section 5 of Rule 58, which reads as follows: "SEC. 5. Preliminary injunction not granted without notice; exception. No preliminary injunction shall be granted without hearing and prior notice to the party or person sought to be enjoined. If it shall appear from facts shown by affidavits or by the verified application that great or irreparable injury would result to the applicant before the matter can be heard on notice, the court to which the application for preliminary injunction was made, may issue ex parte a temporary restraining order to be effective only for a period of twenty (20) days from service on the party or person sought to be enjoined, except as herein provided. Within the said twenty day period, the court must order said party or person to show cause, at a specified time and place, why the injunction should not be granted, determine within the same period whether or not the preliminary injunction shall be granted, and accordingly issue the corresponding order.1wphi1.nt

"However, and subject to the provisions of the preceding sections, if the matter is of extreme urgency and the applicant will suffer grave injustice and irreparable injury, the executive judge of a multiple-sala court or the presiding judge of a single-sala court may issue ex parte a temporary restraining order effective for only seventy-two (72) hours from issuance but he shall immediately comply with the provisions of the next preceding section as to service of summons and the documents to be served therewith. Thereafter, within the aforesaid seventy-two (72) hours, the judge before whom the case is pending shall conduct a summary hearing to determine whether the temporary restraining order shall be extended until the application for preliminary injunction can be heard. In no case shall the total period of effectively of the temporary restraining order exceed twenty (20) days, including the original seventy-two hours provided herein." (Emphasis supplied.) Furthermore, petitioner makes much ado about the requirement of notice of raffle. In ordinary suits,16 notice of a raffle is given to the parties in order "to afford [them] a chance to be heard in the assignment of their cases."17 According to Justice Feria, the raffle of cases is done in open session with adequate notice, "so that parties or their counsel will be prevented from choosing judges to hear their case."18 Petitioner has no ground to object, since he himself had been given notice prior to the holding of the raffle. Furthermore, he has no standing to complain on behalf of the other parties, because he does not claim to represent them.19 In any event, the other defendants had been located and served summons. In fact, the case was subsequently raffled on December 8, 1999, and a pretrial conducted on May 9, 2000.20 the other defendants have not complained of any impropriety in the raffle. Their silence on this question demonstrates the utter lack of merit of petitioner's contention. WHEREFORE, the Petition is hereby DISMISSED, and the assailed Decision AFFIRMED. Double costs against petitioner. SO ORDERED. G.R. No. 139941 January 19, 2001

VICENTE B. CHUIDIAN, petitioner, vs. SANDIGANBAYAN (Fifth Division) and the REPUBLIC OF THE PHILIPPINES, respondents. YNARES-SANTIAGO, J.: The instant petition arises from transactions that were entered into by the government in the penultimate days of the Marcos administration. Petitioner Vicente B. Chuidian was alleged to be a dummy or nominee of Ferdinand and Imelda Marcos in several companies said to have been illegally acquired by the Marcos spouses. As a favored business associate of the Marcoses, Chuidian allegedly used false pretenses to induce the officers of the Philippine Export and Foreign Loan Guarantee Corporation (PHILGUARANTEE), the Board of Investments (BOI) and the Central Bank, to facilitate the procurement and issuance of a loan guarantee in favor of the Asian Reliability Company, Incorporated (ARCI) sometime in September 1980. ARCI, 98% of which was allegedly owned by Chuidian, was granted a loan guarantee of Twenty-Five Million U.S. Dollars (US$25,000,000.00).1wphi1.nt While ARCI represented to Philguarantee that the loan proceeds would be used to establish five inter-related projects in the Philippines, Chuidian reneged on the approved business plan and instead invested the proceeds of the loan in corporations operating in the United States, more particularly Dynetics, Incorporated and Interlek, Incorporated. Although ARCI had received the proceeds of the loan guaranteed by Philguarantee, the former defaulted in the payments thereof, compelling Philguarantee to undertake payments for the same. Consequently, in June 1985, Philguarantee sued Chuidian before the Santa Clara County Superior Court,1 charging that in violation of the terms of the loan, Chuidian not only defaulted in payment, but also misused the funds by investing them in Silicon Valley corporations and using them for his personal benefit.

For his part, Chuidian claimed that he himself was a victim of the systematic plunder perpetrated by the Marcoses as he was the true owner of these companies, and that he had in fact instituted an action before the Federal Courts of the United States to recover the companies which the Marcoses had illegally wrested from him.2 On November 27, 1985, or three (3) months before the successful people's revolt that toppled the Marcos dictatorship, Philguarantee entered into a compromise agreement with Chuidian whereby petitioner Chuidian shall assign and surrender title to all his companies in favor of the Philippine government. In return, Philguarantee shall absolve Chuidian from all civil and criminal liability, and in so doing, desist from pursuing any suit against Chuidian concerning the payments Philguarantee had made on Chuidian's defaulted loans. It was further stipulated that instead of Chuidian reimbursing the payments made by Philguarantee arising from Chuidian's default, the Philippine government shall pay Chuidian the amount of Five Million Three Hundred Thousand Dollars (US$5,300,000.00). Initial payment of Five Hundred Thousand Dollars (US$500,000.00) was actually received by Chuidian, as well as succeeding payment of Two Hundred Thousand Dollars (US$200,000.00). The remaining balance of Four Million Six Hundred Thousand Dollars (US$4,600,000.00) was to be paid through an irrevocable Letter of Credit (L/C) from which Chuidian would draw One Hundred Thousand Dollars (US$100,000.00) monthly.3 Accordingly, on December 12, 1985, L/C No. SSD-005-85 was issued for the said amount by the Philippine National Bank (PNB). Subsequently, Chuidian was able to make two (2) monthly drawings from said L/C at the Los Angeles branch of the PNB.4 With the advent of the Aquino administration, the newlyestablished Presidential Commission on Good Government (PCGG) exerted earnest efforts to search and recover money, gold, properties, stocks and other assets suspected as having been illegally acquired by the Marcoses, their relatives and cronies. Petitioner Chuidian was among those whose assets were sequestered by the PCGG. On May 30, 1986, the PCGG issued a Sequestration Order5 directing the PNB to place under its custody, for and in behalf of the PCGG, the irrevocable L/C (No. SSD-005-85). Although Chuidian was then residing in the United States, his name was placed in the Department of Foreign Affairs' Hold Order list.6 In the meantime, Philguarantee filed a motion before the Superior Court of Santa Clara County of California in Civil Case Nos. 575867 and 577697 seeking to vacate the stipulated judgment containing the settlement between Philguarantee and Chuidian on the grounds that: (a) Philguarantee was compelled by the Marcos administration to agree to the terms of the settlement which was highly unfavorable to Philguarantee and grossly disadvantageous to the government; (b) Chuidian blackmailed Marcos into pursuing and concluding the settlement agreement by threatening to expose the fact that the Marcoses made investments in Chuidian's American enterprises; and (c) the Aquino administration had ordered Philguarantee not to make further payments on the L/C to Chuidian. After considering the factual matters before it, the said court concluded that Philguarantee "had not carried its burden of showing that the settlement between the parties should be set aside."7 On appeal, the Sixth Appellate District of the Court of Appeal of the State of California affirmed the judgment of the Superior Court of Sta. Clara County denying Philguarantee's motion to vacate the stipulated judgment based on the settlement agreement.8 After payment on the L/C was frozen by the PCGG, Chuidian filed before the United States District Court, Central District of California, an action against PNB seeking, among others, to compel PNB to pay the proceeds of the L/C. PNB countered that it cannot be held liable for a breach of contract under principles of illegality, international comity and act of state, and thus it is excused from payment of the L/C. Philguarantee intervened in said action, raising the same issues and arguments it had earlier raised in the action before the Santa Clara Superior Court, alleging that PNB was excused from making payments on the L/C since the settlement was void due to illegality, duress and fraud.9

The Federal Court rendered judgment ruling: (1) in favor of PNB excusing the said bank from making payment on the L/C; and (2) in Chuidian's favor by denying intervenor Philguarantee's action to set aside the settlement agreement.10 Meanwhile, on February 27, 1987, a Deed of Transfer11 was executed between then Secretary of Finance Jaime V. Ongpin and then PNB President Edgardo B. Espiritu, to facilitate the rehabilitation of PNB, among others, as part of the government's economic recovery program. The said Deed of Transfer provided for the transfer to the government of certain assets of PNB in exchange for which the government would assume certain liabilities of PNB.12 Among those liabilities which the government assumed were unused commercial L/C's and Deferred L/C's, including SSD-005-85 listed under Dynetics, Incorporated in favor of Chuidian in the amount of Four Million Four Hundred Thousand Dollars (US$4,400,000.00).13 On July 30, 1987, the government filed before the Sandiganbayan Civil Case No. 0027 against the Marcos spouses, several government officials who served under the Marcos administration, and a number of individuals known to be cronies of the Marcoses, including Chuidian. The complaint sought the reconveyance, reversion, accounting and restitution of all forms of wealth allegedly procured illegally and stashed away by the defendants. In particular, the complaint charged that Chuidian, by himself and/or in conspiracy with the Marcos spouses, engaged in "devices, schemes and stratagems" by: (1) forming corporations for the purpose of hiding and avoiding discovery of illegally obtained assets; (2) pillaging the coffers of government financial institutions such as the Philguarantee; and (3) executing the court settlement between Philguarantee and Chuidian which was grossly disadvantageous to the government and the Filipino people. In fine, the PCGG averred that the above-stated acts of Chuidian committed in unlawful concert with the other defendants constituted "gross abuse of official position of authority, flagrant breach of public trust and fiduciary obligations, brazen abuse of right and power, unjust enrichment, violation of the Constitution and laws" of the land.14 While the case was pending, on March 17, 1993, the Republic of the Philippines filed a motion for issuance of a writ of attachment15 over the L/C, citing as grounds therefor the following: (1) Chuidian embezzled or fraudulently misapplied the funds of ARCI acting in a fiduciary capacity, justifying issuance of the writ under Section 1(b), Rule 57 of the Rules of Court; (2) The writ is justified under Section 1(d) of the same rule as Chuidian is guilty of fraud in contracting the debt or incurring the obligation upon which the action was brought, or that he concealed or disposed of the property that is the subject of the action; (3) Chuidian has removed or disposed of his property with the intent of defrauding the plaintiff as justified under Section 1(c) of Rule 57; and (4) Chuidian is residing out of the country or one on whom summons may be served by publication, which justifies the writ of attachment prayed for under Section 1(e) of the same rule. The Republic also averred that should the action brought by Chuidian before the U.S. District Court of California to compel payment of the L/C prosper, inspite of the sequestration of the said L/C, Chuidian can ask the said foreign court to compel the PNB Los Angeles branch to pay the proceeds of the L/C. Eventually, Philguarantee will be made to shoulder the expense resulting in further damage to the government. Thus, there was an urgent need for the writ of attachment to place the L/C under the custody of the Sandiganbayan so the same may be preserved as security for the satisfaction of judgment in the case before said court. Chuidian opposed the motion for issuance of the writ of attachment, contending that:

(1) The plaintiff's affidavit appended to the motion was in form and substance fatally defective; (2) Section 1(b) of Rule 57 does not apply since there was no fiduciary relationship between the plaintiff and Chuidian; (3) While Chuidian does not admit fraud on his part, if ever there was breach of contract, such fraud must be present at the time the contract is entered into; (4) Chuidian has not removed or disposed of his property in the absence of any intent to defraud plaintiff; (5) Chuidian's absence from the country does not necessarily make him a non-resident; and (6) Service of summons by publication cannot be used to justify the issuance of the writ since Chuidian had already submitted to the jurisdiction of the Court by way of a motion to lift the freeze order filed through his counsel. On July 14, 1993, the Sandiganbayan issued a Resolution ordering the issuance of a writ of attachment against L/C No. SSD-005-85 as security for the satisfaction of judgment.16 The Sandiganbayan's ruling was based on its disquisition of the five points of contention raised by the parties. On the first issue, the Sandiganbayan found that although no separate affidavit was attached to the motion, the motion itself contained all the requisites of an affidavit, and the verification thereof is deemed a substantial compliance of Rule 57, Section 3 of the Rules of Court. Anent the second contention, the Sandiganbayan ruled that there was no fiduciary relationship existing between Chuidian and the Republic, but only between Chuidian and ARCI. Since the Republic is not privy to the fiduciary relationship between Chuidian and ARCI, it cannot invoke Section 1(b) of Rule 57. On the third issue of fraud on the part of Chuidian in contracting the loan, or in concealing or disposing of the subject property, the Sandiganbayan held that there was a prima facie case of fraud committed by Chuidian, justifying the issuance of the writ of attachment. The Sandiganbayan also adopted the Republic's position that since it was compelled to pay, through Philguarantee, the bank loans taken out by Chuidian, the proceeds of which were fraudulently diverted, it is entitled to the issuance of the writ of attachment to protect its rights as creditor. Assuming that there is truth to the government's allegation that Chuidian has removed or disposed of his property with the intent to defraud, the Sandiganbayan held that the writ of attachment is warranted, applying Section 1(e) of Rule 57. Besides, the Rules provide for sufficient security should the owner of the property attached suffer damage or prejudice caused by the attachment.17 Chuidian's absence from the country was considered by the Sandiganbayan to be "the most potent insofar as the relief being sought is concerned."18 Taking judicial notice of the admitted fact that Chuidian was residing outside of the country, the Sandiganbayan observed that: "x x x no explanation whatsoever was given by him as to his absence from the country, or as to his homecoming plans in the future. It may be added, moreover, that he has no definite or clearcut plan to return to the country at this juncture given the manner by which he has submitted himself to the jurisdiction of the court."19 Thus, the Sandiganbayan ruled that even if Chuidian is one who ordinarily resides in the Philippines, but is temporarily living outside, he is still subject to the provisional remedy of attachment. Accordingly, an order of attachment20 was issued by the Sandiganbayan on July 19, 1993, ordering the Sandiganbayan Sheriff to attach PNB L/C No. SSD-005-85 for safekeeping

pursuant to the Rules of Court as security for the satisfaction of judgment in Sandiganbayan Civil Case No. 0027. On August 11, 1997, or almost four (4) years after the issuance of the order of attachment, Chuidian filed a motion to lift the attachment based on the following grounds: First, he had returned to the Philippines; hence, the Sandiganbayan's "most potent ground" for the issuance of the writ of preliminary attachment no longer existed. Since his absence in the past was the very foundation of the Sandiganbayan's writ of preliminary attachment, his presence in the country warrants the immediate lifting thereof. Second, there was no evidence at all of initial fraud or subsequent concealment except for the affidavit submitted by the PCGG Chairman citing mere "belief and information" and "not on knowledge of the facts." Moreover, this statement is hearsay since the PCGG Chairman was not a witness to the litigated incidents, was never presented as a witness by the Republic and thus was not subject to cross-examination. Third, Chuidian denies that he ever disposed of his assets to defraud the Republic, and there is nothing in the records that support the Sandiganbayan's erroneous conclusion on the matter. Fourth, Chuidian belied the allegation that he was also a defendant in "other related criminal action," for in fact, he had "never been a defendant in any prosecution of any sort in the Philippines."21 Moreover, he could not have personally appeared in any other action because he had been deprived of his right to a travel document by the government. Fifth, the preliminary attachment was, in the first place, unwarranted because he was not "guilty of fraud in contracting the debt or incurring the obligation". In fact, the L/C was not a product of fraudulent transactions, but was the result of a US Courtapproved settlement. Although he was accused of employing blackmail tactics to procure the settlement, the California Supreme Court ruled otherwise. And in relation thereto, he cites as a sixth ground the fact that all these allegations of fraud and wrongdoing had already been dealt with in actions before the State and Federal Courts of California. While it cannot technically be considered as forum shopping, it is nevertheless a "form of suit multiplicity over the same issues, parties and subject matter." 22 These foreign judgments constitute res judicata which warrant the dismissal of the case itself. Chuidian further contends that should the attachment be allowed to continue, he will be deprived of his property without due process. The L/C was payment to Chuidian in exchange for the assets he turned over to the Republic pursuant to the terms of the settlement in Case No. 575867. Said assets, however, had already been sold by the Republic and cannot be returned to Chuidian should the government succeed in depriving him of the proceeds of the L/C. Since said assets were disposed of without his or the Sandiganbayan's consent, it is the Republic who is fraudulently disposing of assets. Finally, Chuidian stressed that throughout the four (4) years that the preliminary attachment had been in effect, the government had not set the case for hearing. Under Rule 17, Section 3, the case itself should be dismissed for laches owing to the Republic's failure to prosecute its action for an unreasonable length of time. Accordingly, the preliminary attachment, being only a temporary or ancillary remedy, must be lifted and the PNB ordered to immediately pay the proceeds of the L/C to Chuidian. Subsequently, on August 20, 1997, Chuidian filed a motion to require the Republic to deposit the L/C in an interest bearing account.23Annex "D"; Rollo, pp. 77-79.23 He pointed out to the Sandiganbayan that the face amount of the L/C had, since its attachment, become fully demandable and payable. However, since the amount is just lying dormant in the PNB, without earning any interest, he proposed that it would be to the benefit of all if the Sandiganbayan requires PNB to deposit the full amount to a Sandiganbayan trust account at any bank in order to earn interest while awaiting judgment of the action. The Republic opposed Chuidian's motion to lift attachment, alleging that Chuidian's absence was not the only ground for the attachment and, therefore, his belated appearance before the Sandiganbayan is not a sufficient reason to lift the attachment. Moreover, allowing the foreign judgment as a basis for the lifting

of the attachment would essentially amount to an abdication of the jurisdiction of the Sandiganbayan to hear and decide the ill gotten wealth cases lodged before it in deference to the judgment of foreign courts. In a Resolution promulgated on November 13, 1998, the Sandiganbayan denied Chuidian's motion to lift attachment.24 On the same day, the Sandiganbayan issued another Resolution denying Chuidian's motion to require deposit of the attached L/C in an interest bearing account.25 In a motion seeking a reconsideration of the first resolution, Chuidian assailed the Sandiganbayan's finding that the issues raised in his motion to lift attachment had already been dealt with in the earlier resolution dated July 14, 1993 granting the application for the writ of preliminary attachment based on the following grounds: First, Chuidian was out of the country in 1993, but is now presently residing in the country. Second, the Sandiganbayan could not have known then that his absence was due to the non-renewal of his passport at the instance of the PCGG. Neither was it revealed that the Republic had already disposed of Chuidian's assets ceded to the Republic in exchange for the L/C. The foreign judgment was not an issue then because at that time, said judgment had not yet been issued and much less final. Furthermore, the authority of the PCGG Commissioner to subscribe as a knowledgeable witness relative to the issuance of the writ of preliminary attachment was raised for the first time in the motion to lift the attachment. Finally, the issue of laches could not have been raised then because it was the Republic's subsequent neglect or failure to prosecute despite the passing of the years that gave rise to laches.26 Chuidian also moved for a reconsideration of the Sandiganbayan resolution denying the motion to require deposit of the L/C into an interest bearing account. He argued that contrary to the Sandiganbayan's pronouncement, allowing the deposit would not amount to a virtual recognition of his right over the L/C, for he is not asking for payment but simply requesting that it be deposited in an account under the control of the Sandiganbayan. He further stressed that the Sandiganbayan abdicated its bounden duty to rule on an issue when it found "that his motion will render nugatory the purpose of sequestration and freeze orders over the L/C." Considering that his assets had already been sold by the Republic, he claimed that the Sandiganbayan's refusal to exercise its fiduciary duty over attached assets will cause him irreparable injury. Lastly, the Sandiganbayan's position that Chuidian was not the owner but a mere payee-beneficiary of the L/C issued in his favor negates overwhelming jurisprudence on the Negotiable Instruments Law, while at the same time obliterating his rights of ownership under the Civil Code.27 On July 13, 1999, the Sandiganbayan gave due course to Chuidian's plea for the attached L/C to be deposited in an interest-bearing account, on the ground that it will redound to the benefit of both parties. The Sandiganbayan declared the national government as the principal obligor of the L/C even though the liability remained in the books of the PNB for accounting and monitoring purposes. The Sandiganbayan, however, denied Chuidian's motion for reconsideration of the denial of his motion to lift attachment, agreeing in full with the government's apriorisms that: x x x (1) it is a matter of record that the Court granted the application for writ of attachment upon grounds other than defendant's absence in the Philippine territory. In its Resolution dated July 14, 1993, the Court found a prima facie case of fraud committed by defendant Chuidian, and that defendant has recovered or disposed of his property with the intent of defrauding plaintiff; (2) Chuidian's belated presence in the Philippines cannot be invoked to secure the lifting of attachment. The rule is specific that it applies to a party who is about to depart from the Philippines with intent to defraud his creditors. Chuidian's stay in the country is uncertain and he may leave at will because he holds a foreign passport; and (3) Chuidian's other ground, sufficiency of former PCGG Chairman

Gunigundo's verification of the complaint, has been met fairly and squarely in the Resolution of July 14, 1993.28 Hence, the instant petition for certiorari contending that the respondent Sandiganbayan committed grave abuse of discretion amounting to lack or excess of jurisdiction when it ruled that: 1) Most of the issues raised in the motion to lift attachment had been substantially addressed in the previous resolutions dated July 14, 1993 and August 26, 1998, while the rest were of no imperative relevance as to affect the Sandiganbayan's disposition; and 2) PNB was relieved of the obligation to pay on its own L/C by virtue of Presidential Proclamation No. 50. The Rules of Court specifically provide for the remedies of a defendant whose property or asset has been attached. As has been consistently ruled by this Court, the determination of the existence of grounds to discharge a writ of attachment rests in the sound discretion of the lower courts.29 The question in this case is: What can the herein petitioner do to quash the attachment of the L/C? There are two courses of action available to the petitioner: First. To file a counterbond in accordance with Rule 57, Section 12, which provides: SEC. 12. Discharge of attachment upon giving counterbond. At anytime after an order of attachment has been granted, the party whose property has been attached, or the person appearing on his behalf, may, upon reasonable notice to the applicant, apply to the judge who granted the order, or to the judge of the court in which the action is pending, for an order discharging the attachment wholly or in part on the security given. The judge shall, after hearing, order the discharge of the attachment if a cash deposit is made, or a counterbond executed to the attaching creditor is filed, on behalf of the adverse party, with the clerk or judge of the court where the application is made, in an amount equal to the value of the property attached as determined by the judge, to secure the payment of any judgment that the attaching creditor may recover in the action. Upon the filing of such counter-bond, copy thereof shall forthwith be served on the attaching creditor or his lawyer. Upon the discharge of an attachment in accordance with the provisions of this section the property attached, or the proceeds of any sale thereof, shall be delivered to the party making the deposit or giving the counter-bond, or the person appearing on his behalf, the deposit or counter-bond aforesaid standing in place of the property so released. Should such counterbond for any reason be found to be, or become, insufficient, and the party furnishing the same fail to file an additional counter-bond, the attaching creditor may apply for a new order of attachment.1wphi1.nt or Second. To quash the attachment on the ground that it was irregularly or improvidently issued, as provided for in Section 13 of the same Rule: 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. After hearing, the judge shall order the discharge of the attachment if it appears that it was improperly or irregularly issued and the defect is not cured forthwith. It would appear that petitioner chose the latter because the grounds he raised assail the propriety of the issuance of the writ of attachment. By his own admission, however, he repeatedly acknowledged that his justifications to warrant the lifting of the attachment are facts or events that came to light or took place after the writ of attachment had already been implemented.

More particularly, petitioner emphasized that four (4) years after the writ was issued, he had returned to the Philippines. Yet while he noted that he would have returned earlier but for the cancellation of his passport by the PCGG, he was not barred from returning to the Philippines. Then he informed the Sandiganbayan that while the case against him was pending, but after the attachment had already been executed, the government lost two (2) cases for fraud lodged against him before the U.S. Courts, thus invoking res judicata. Next, he also pointed out that the government is estopped from pursuing the case against him for failing to prosecute for the number of years that it had been pending litigation. It is clear that these grounds have nothing to do with the issuance of the writ of attachment. Much less do they attack the issuance of the writ at that time as improper or irregular. And yet, the rule contemplates that the defect must be in the very issuance of the attachment writ. For instance, the attachment may be discharged under Section 13 of Rule 57 when it is proven that the allegations of the complaint were deceptively framed,30 or when the complaint fails to state a cause of action.31 Supervening events which may or may not justify the discharge of the writ are not within the purview of this particular rule. In the instant case, there is no showing that the issuance of the writ of attachment was attended by impropriety or irregularity. Apart from seeking a reconsideration of the resolution granting the application for the writ, petitioner no longer questioned the writ itself. For four (4) long years he kept silent and did not exercise any of the remedies available to a defendant whose property or asset has been attached. It is rather too late in the day for petitioner to question the propriety of the issuance of the writ. Petitioner also makes capital of the two foreign judgments which he claims warrant the application of the principle of res judicata. The first judgment, in Civil Case Nos. 575867 and 577697 brought by Philguarantee before the Santa Clara Country Superior Court, denied Philguarantee's prayer to set aside the stipulated judgment wherein Philguarantee and Chuidian agreed on the subject attached L/C. On March 14, 1990, the Court of Appeal of the State of California affirmed the Superior Court's judgment. The said judgment became the subject of a petition for review by the California Supreme Court. There is no showing, however, of any final judgment by the California Supreme Court. The records, including petitioner's pleadings, are bereft of any evidence to show that there is a final foreign judgment which the Philippine courts must defer to. Hence, res judicata finds no application in this instance because it is a requisite that the former judgment or order must be final.32 Second, petitioner cites the judgment of the United States District Court in Civil Case 86-2255 RSWL brought by petitioner Chuidian against PNB to compel the latter to pay the L/C. The said Court's judgment, while it ruled in favor of petitioner on the matter of Philguarantee's action-in-intervention to set aside the settlement agreement, also ruled in favor of PNB, to wit: Under Executive Order No. 1, the PCGG is vested by the Philippine President with the power to enforce its directives and orders by contempt proceedings. Under Executive Order No. 2, the PCGG is empowered to freeze any, and all assets, funds and property illegally acquired by former President Marcos or his close friends and business associates. On March 11, 1986, PNB/Manila received an order from the PCGG ordering PNB to freeze any further drawings on the L/C. The freeze order has remained in effect and was followed by a sequestration order issued by the PCGG. Subsequently, Chuidian's Philippine counsel filed a series of challenges to the freeze and sequestration orders, which challenges were unsuccessful as the orders were found valid by the Philippine Supreme Court. The freeze and sequestration orders are presently in effect. Thus, under the PCGG order and Executive Orders Nos. 1 and 2, performance by PNB would be illegal under Philippine Law. Therefore PNB is excused from performance of the L/C agreement as long as the freeze and sequestration orders remain in effect. (Underscoring ours) xxx xxx xxx

occurred in California, and that two of the payments were made at PNB/LA, compels the conclusion that the act of prohibiting payment of the L/C occurred in Los Angeles. However, the majority of the evidence and Tchacosh and Sabbatino compel the opposite conclusion. The L/C was issued in Manila, such was done at the request of a Philippine government instrumentality for the benefit of a Philippine citizen, the L/C was to be performed in the Philippines, all significant events relating to the issuance and implementation of the L/C occurred in the Philippines, the L/C agreement provided that the L/C was to be construed according to laws of the Philippines, and the Philippine government certainly has an interest in preventing the L/C from being remitted in that it would be the release of funds that are potentially illgotten gains.Accordingly, the Court finds that the PCGG orders are acts of state that must be respected by this Court, and thus PNB is excused from making payment on the L/C as long as the freeze and sequestration orders remain in effect.33 (Underscoring ours) Petitioner's own evidence strengthens the government's position that the L/C is under the jurisdiction of the Philippine government and that the U.S. Courts recognize the authority of the Republic to sequester and freeze said L/C. Hence, the foreign judgments relied upon by petitioner do not constitute a bar to the Republic's action to recover whatever alleged ill-gotten wealth petitioner may have acquired. Petitioner may argue, albeit belatedly, that he also raised the issue that there was no evidence of fraud on record other than the affidavit of PCGG Chairman Gunigundo. This issue of fraud, however, touches on the very merits of the main case which accuses petitioner of committing fraudulent acts in his dealings with the government. Moreover, this alleged fraud was one of the grounds for the application of the writ, and the Sandiganbayan granted said application after it found a prima facie case of fraud committed by petitioner. In fine, fraud was not only one of the grounds for the issuance of the preliminary attachment, it was at the same time the government's cause of action in the main case. We have uniformly held that: x x x when 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," 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," the defendant is not allowed to file a motion to dissolve the attachment under Section 13 of Rule 57 by offering to show the falsity of the factual averments in the plaintiff's application and affidavits on which the writ was based and consequently that the writ based thereon had been improperly or irregularly issued 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.34 (Underscoring ours) Thus, this Court has time and again ruled that the merits of the action in which a writ of preliminary attachment has been issued are not triable on a motion for dissolution of the attachment, otherwise an applicant for the lifting of the writ could force a trial of the merits of the case on a mere motion.35 It is not the Republic's fault that the litigation has been protracted. There is as yet no evidence of fraud on the part of petitioner. Petitioner is only one of the twenty-three (23) defendants in the main action. As such, the litigation would take longer than most cases. Petitioner cannot invoke this delay in the proceedings as an excuse for not seeking the proper recourse in having the writ of attachment lifted in due time. If ever laches set in, it was petitioner, not the government, who failed to take action within a reasonable time period. Challenging the issuance of the writ of attachment four (4) years after its implementation showed petitioner's apparent indifference towards the proceedings before the Sandiganbayan. In sum, petitioner has failed to convince this Court that the Sandiganbayan gravely abused its discretion in a whimsical, capricious and arbitrary manner. There are no compelling reasons

Chuidian argues that the fact that the L/C was issued pursuant to a settlement in California, that the negotiations for which

to warrant the immediate lifting of the attachment even as the main case is still pending. On the other hand, allowing the discharge of the attachment at this stage of the proceedings would put in jeopardy the right of the attaching party to realize upon the relief sought and expected to be granted in the main or principal action. It would have the effect of prejudging the main case. The attachment is a mere provisional remedy to ensure the safety and preservation of the thing attached until the plaintiff can, by appropriate proceedings, obtain a judgment and have such property applied to its satisfaction.36 To discharge the attachment at this stage of the proceedings would render inutile any favorable judgment should the government prevail in the principal action against petitioner. Thus, the Sandiganbayan, in issuing the questioned resolutions, which are interlocutory in nature, committed no grave abuse of discretion amounting to lack or excess of jurisdiction. As long as the Sandiganbayan acted within its jurisdiction, any alleged errors committed in the exercise of its jurisdiction will amount to nothing more than errors of judgment which are reviewable by timely appeal and not by special civil action of certiorari.37 Moreover, we have held that when the writ of attachment is issued upon a ground which is at the same time the applicant's cause of action, the only other way the writ can be lifted or dissolved is by a counterbond, in accordance with Section 12 of the same rule.38 This recourse, however, was not availed of by petitioner, as noted by the Solicitor General in his comment.39 To reiterate, there are only two ways of quashing a writ of attachment: (a) by filing a counterbond immediately; or (b) by moving to quash on the ground of improper and irregular issuance.40 These grounds for the dissolution of an attachment are fixed in Rule 57 of the Rules of Court and the power of the Court to dissolve an attachment is circumscribed by the grounds specified therein.41 Petitioner's motion to lift attachment failed to demonstrate any infirmity or defect in the issuance of the writ of attachment; neither did he file a counterbond. Finally, we come to the matter of depositing the Letter of Credit in an interest-bearing account. We agree with the Sandiganbayan that any interest that the proceeds of the L/C may earn while the case is being litigated would redound to the benefit of whichever party will prevail, the Philippine government included. Thus, we affirm the Sandiganbayan's ruling that the proceeds of the L/C should be deposited in an interest bearing account with the Land Bank of the Philippines for the account of the Sandiganbayan in escrow until ordered released by the said Court. We find no legal reason, however, to release the PNB from any liability thereunder. The Deed of Transfer, whereby certain liabilities of PNB were transferred to the national government, cannot affect the said L/C since there was no valid substitution of debtor. Article 1293 of the New Civil Code provides: Novation which consists in substituting a new debtor in the place of the original one, may be made without the knowledge or against the will of the latter, but not without the consent of the creditor. Payment by the new debtor gives him the rights mentioned in Articles 1236 and 1237. Accordingly, any substitution of debtor must be with the consent of the creditor, whose consent thereto cannot just be presumed. Even though Presidential Proclamation No. 50 can be considered an "insuperable cause", it does not necessarily make the contracts and obligations affected thereby exceptions to the above-quoted law, such that the substitution of debtor can be validly made even without the consent of the creditor. Presidential Proclamation No. 50 was not intended to set aside laws that govern the very lifeblood of the nation's commerce and economy. In fact, the Deed of Transfer that was executed between PNB and the government pursuant to the said Presidential Proclamation specifically stated that it shall be deemed effective only upon compliance with several conditions, one of which requires that: (b) the BANK shall have secured such governmental and creditors' approvals as may be necessary to establish the consummation, legality and enforceability of the transactions contemplated hereby."

The validity of this Deed of Transfer is not disputed. Thus, PNB is estopped from denying its liability thereunder considering that neither the PNB nor the government bothered to secure petitioner's consent to the substitution of debtors. We are not unmindful that any effort to secure petitioner's consent at that time would, in effect, be deemed an admission that the L/C is valid and binding. Even the Sandiganbayan found that: 36 Sta. Ines Melale Forest Products Corp. v. Macaraig, Jr., 299 SCRA 491, 515 (1998). x x x Movant has basis in pointing out that inasmuch as the L/C was issued in his favor, he is presumed to be the lawful payeebeneficiary of the L/C until such time that the plaintiff successfully proves that said L/C is ill-gotten and he has no right over the same.42 In Republic v. Sandiganbayan,43 we held that the provisional remedies, such as freeze orders and sequestration, were not "meant to deprive the owner or possessor of his title or any right to the property sequestered, frozen or taken over and vest it in the sequestering agency, the Government or other person." Thus, until such time that the government is able to successfully prove that petitioner has no right to claim the proceeds of the L/C, he is deemed to be the lawful payee-beneficiary of said L/C, for which any substitution of debtor requires his consent. The Sandiganbayan thus erred in relieving PNB of its liability as the original debtor. WHEREFORE, in view of all the foregoing, the petition is DISMISSED. The Resolutions of the Sandiganbayan dated November 6, 1998 and July 2, 1999 are AFFIRMED. The PNB is DIRECTED to remit to the Sandiganbayan the proceeds of Letter of Credit No. SFD-005-85 in the amount of U.S. $4.4 million within fifteen (15) days from notice hereof, the same to be placed under special time deposit with the Land Bank of the Philippines, for the account of Sandiganbayan in escrow for the person or persons, natural or juridical, who shall eventually be adjudged lawfully entitled thereto, the same to earn interest at the current legal bank rates. The principal and its interest shall remain in said account until ordered released by the Court in accordance with law.1wphi1.nt No costs. SO ORDERED.