Civil Procedure PRELIMINARY ATTACHMENT CUARTERO vs.

CA (1992) FACTS: Cuartero filed a complaint before the RTC of Quezon City against the Evangelista spouses, for a sum of money plus damages with a prayer for the issuance of a writ of preliminary attachment. RTC issued an order granting ex-parte the petitioner's prayer for the issuance of a writ of preliminary attachment. The writ of preliminary attachment was issued pursuant to the RTCs order. On the same day, the summons for the spouses Evang elista was prepared. The following day, a copy of the writ of preliminary attachment, the order, the summons and the complaint were all simultaneously served upon the private respondents at their residence. Immediately, Deputy Sheriff Sula levied, attached and pulled out the properties in compliance with the court's directive to attach all the properties of private respondents not exempt from execution, or so much thereof as may be sufficient to satisfy the petitioner's principal claim in the amount of P2,171,794.91. Subsequently, the spouses Evangelista filed motion to set aside the order and discharge the writ of preliminary attachment for having been irregularly and improperly issued. The lower court denied the motion for lack of merit. Private respondents, then, filed a special civil action for certiorari with the CA questioning the orders of the lower court with a prayer for a restraining order or writ of preliminary injunction to enjoin the judge from taking further proceedings below. CA resolved not to grant the prayer for restraining order or writ of preliminary injunction. o CA granted the petition for certiorari and rendered the questioned decision. Hence, the present recourse to this Court.

ISSUE: WON the RTC could validly issue the subject writ of attachment DECISION: YES. Petition GRANTED. Order of attachment REINSTATED. HELD: The Spouses argue that no proper ground existed for the issuance of the writ of preliminary attachment. They stress that the fraud in contracting the debt or incurring the obligation upon which the action is brought which comprises a ground for attachment must have already been intended at the inception of the contract. According to them, there was no intent to defraud the petitioner when the postdated checks were issued inasmuch as the latter was aware that the same were not yet funded and that they were issued only for purposes of creating an evidence to prove a pre-existing obligation. Another point which the private respondents raised in their comment is the alleged violation of their constitutionally guaranteed right to due process when the writ was issued without notice and hearing. Davao Light and Power Co., Inc. v. CA- The question which was resolved in the Davao Light case is whether or not a writ of preliminary attachment may issue ex-parte against a defendant before the court acquires jurisdiction over the latter's person by service of summons or his voluntary submission to the court's authority. The Court answered in the affirmative. A writ of preliminary attachment is defined as a provisional remedy issued upon order of the court where an action is pending to be levied upon the property or properties of the defendant therein, the same to be held thereafter by the sheriff as security for the satisfaction of whatever judgment might be secured in said action by the attaching creditor against the defendant (Adlawan v. Tomol, [1990] citing Virata v. Aquino, [1973]). Under section 3, Rule 57 of the Rules of Court, the only requisites for the issuance of the writ are the affidavit and bond of the applicant. No notice to the adverse party or hearing of the application is required inasmuch as the time which the hearing will take could be enough to enable the defendant to abscond or dispose of his property before a writ of attachment issues. In such a case, a hearing would render nugatory the purpose of this provisional remedy. The ruling remains good law. There is, thus, no merit in the private respondents' claim of violation of their constitutionally guaranteed right to due process. The writ of preliminary attachment can be applied for and granted at the commencement of the action or at any time thereafter (Section 1, Rule 57, Rules of Court). In Davao Light and Power, Co., Inc. v. CA, the phrase "at the commencement of the action" is interpreted as referring to the date of the filing of the complaint which is a time before summons is served on the defendant or even before summons issues. It is clear from our pronouncements that a writ of preliminary attachment may issue even before summons is served upon the defendant. However, we have likewise ruled that the writ cannot bind and affect the defendant. However, we have likewise ruled that the writ cannot bind and affect the defendant until jurisdiction over his person is eventually obtained. Therefore, it is required that when the proper officer commences implementation of the writ of attachment, service of summons should be simultaneously made. It must be emphasized that the grant of the provisional remedy of attachment practically involves three stages: o 1ST , the court issues the order granting the application; o 2ND, the writ of attachment issues pursuant to the order granting the writ; and o 3RD, the writ is implemented. For the initial two stages, it is not necessary that jurisdiction over the person of the defendant should first be obtained. However, once the implementation commences, it is required that the court must have acquired jurisdiction over the defendant for without such jurisdiction, the court has no power and authority to act in any manner against the defendant. The question as to whether a proper ground existed for the issuance of the writ is a question of fact the determination of which can only be had in appropriate proceedings conducted for the purpose (Peroxide Philippines Corporation V. CA, [1991]). It must be noted that the spouses Evangelista's motion to discharge the writ of preliminary attachment was denied by the lower court for lack of merit. There is no showing that there was an abuse of discretion on the part of the lower court in denying the motion. Moreover, an attachment may not be dissolved by a showing of its irregular or improper issuance if it is upon a ground which is at the same time the applicant's cause of action in the main case since an anomalous situation would result if the issues of the main case would be ventilated and resolved in a mere hearing of a motion (Davao Light and Power Co., Inc. v. CA, Solidbank v. CA [1991]). In the present case, one of the allegations in petitioner's complaint below is that the defendant spouses induced the plaintiff to grant the loan by issuing postdated checks to cover the installment payments and a separate set of postdated cheeks for payment of the stipulated interest. The issue of fraud, then, is clearly within the competence of the lower court in the main action.

ADLAWAN vs. TOMOL (1990) FACTS: Adlawan, a private contractor, was awarded by the NIA and the BPH (DPWH) contracts for the construction of various infrastructure projects of the government.

Adlawan sought financial assistance and support from Aboitiz. For failure of Adlawan to pay the installments and amortizations, Aboitiz filed before the CFI of Cebu a complaint for the collection of a sum of money and damages including an ex-parte application for the issuance of a writ of preliminary attachment against the property of Adlawan. The Executive Judge without notice and hearing issued an order directing the issuance of a writ of preliminary attachment against all the properties of Adlawan, real and personal, upon the filing of an attachment bond for P4M. The case was raffled to Judge Tomol. Writs of preliminary attachment were issued addressed to the Sheriffs of Cebu, Davao City, Quezon City, Davao del Sur and Davao del Norte, directing them to attach the real and personal properties of Adlawan within their respective jurisdictions. Subsequently, Aboitiz filed an Urgent Ex-parte Motions asking the court that it be allowed to take possession and custody of the attached properties to protect its interest and to avoid any damage or deterioration considering that the sheriff has no proper place to store or deposit said properties. This was granted by respondent Judge. Meanwhile, Adlawan before submitting an answer to the complaint, filed a Motion for a Bill of Particulars and to Set Aside the Ex-Parte Writ of Preliminary Attachment which was opposed by Aboitz. Finding that the discharge of the writ of attachment is unavoidable on the ground that it was issued ex-parte, without notice and hearing, based principally on the alleged removal or disposition by the defendants of their properties with intent to defraud the plaintiff, which allegation was limited to a bare assertion and not persuasively substantial, Judge issued an Order lifting and vacating the Order of attachment Aboitiz filed an Urgent Ex-Parte Motion praying for a stay of the Order dissolving the writ of preliminary attachment, thus maintaining the status quo. Aboitiz further prayed for the court to direct the sheriff of Davao City to desist and/or stop the enforcement or implementation of the order lifting the attachment and to grant them 15 days to elevate the matter to the Appellate Court. Judge Tomol issued on the same day an Order granting the motion prayed for by Aboitiz. In the meantime, 3 Deputy Sheriffs of Cebu implemented the Order lifting the Writ of Attachment and were able to pull out some personal properties of Adlawan. They were not able to take out all the attached properties in view of the subsequent Order of judge to stay its implementation. As Adlawans Motion for a Bill of Particulars was not immediately acted upon, he was not able to file an answer or interpose any counterclaim. For this reason, Adlawan filed an Application for Award of Damages asking for a reasonable rental on the attached heavy construction equipment, machineries and other properties at the rate of P30k per day from the date of seizure until said properties are actually returned to his possession and control. Before the court a quo could act on the motions of Adlawan, and before he could file an answer, his motion for a bill of particulars not having been acted upon, Aboitiz filed a Notice of Dismissal or Withdrawal of Complaint. Judge Tomol issued an Order confirming the dismissal of the case. Adlawan filed a Motion praying for the issuance of an order to the Provincial Sheriff of Cebu to implement and enforce the Order of respondent Judge dissolving the writ of preliminary attachment and to secure the delivery of the attached properties to Adlawan. Judge issued an Order denying the Motion in view of the institution by Aboitiz of a civil case for delivery of Personal Properties with Replevin and Damages before the CFI of Cebu, and the filing of petitioner Adlawan of a case for damages before the CFI of Cebu, in connection with the seizure of his properties under the writ of preliminary attachment. With regard to the replevin case filed by Aboitiz, the CFI of Cebu, issued an Order for the seizure and delivery of the properties described to Aboitiz. The seized properties were thus delivered to Aboitiz by the Clerk of Court and Ex-officio Provincial Sheriff. Adlawan filed an Omnibus Motion to reconsider, dissolve and set aside the Writ of Seizure and Replevin and to direct that the properties seized be returned as well as to dismiss the complaint. In support of this motion, Adlawan alleged, among others, that Aboitiz's office is in Cebu City while Adlawan is a resident of mainland Cebu, particularly Minglanilla therefore the CFI of Cebu stationed in Lapu-Lapu should not accept the case. o Furthermore, he alleged that the same personal properties seized are in custodia legis by virtue of a writ of preliminary attachment issued by the CFI of Cebu, presided by Judge Tomol. Judge Dulay of the CFI Lapu-Lapu denied the Omnibus Motion for lack of merit. Hence, the present petition for certiorari and mandamus impleading Judge Tomol and Judge Dulay in Lapu-Lapu City and Aboitiz.

ISSUE: WON after the attachment of Adlawan's properties was dissolved and discharged because it was found by Judge to be wrongful and illegal, it constitutes grave and manifest abuse of discretion on the part of the same judge TO REFUSE to implement his own order for the return of the attached properties to Adlawan simply because Aboitiz suddenly dismissed its complaint DECISION: YES. Adlawan wins. HELD: Adlawan's properties were attached on the strength of the writs of preliminary attachment issued without notice and hearing by the executive judge. These attached properties were given to the custody of Aboitiz. Adlawan then filed a Motion to Dissolve the Writ of Attachment which was granted by Judge Tomol. Thus, Adlawan was able to recover some of his properties. But on the following day, this order was stayed by the same judge leaving the rest the properties with Aboitiz. Later, Aboitiz withdrew its complaint which was confirmed by rJudge Tomol. Adlawan filed a motion to have the rest of his properties returned but judge refused to act on said motion due to cases filed by both parties in the different branches of the Court of First Instance of Cebu relating to the same case. There is no question that Judge Tomol lifting and vacating the order granting the writ of preliminary attachment is a valid order. The execution of aforesaid order was stayed for a period of 15 days on motion of the plaintiff to enable the latter to question the propriety or impropriety of the same in the appellate court. Instead, plaintiff filed a civil case for delivery of Personal Properties with Replevin and Damages with another branch of the CFI of Cebu. Accordingly, having failed to appeal or question the aforementioned order in the appellate court as originally manifested, the same became final and executory. Section 1, Rule 39 of the Revised Rules of Court provides: Execution upon final judgment or orders. Execution shall issue upon a judgment or order that finally disposes of the action or proceeding. Such execution shall issue as a matter of right upon the expiration of the period to appeal therefrom if no appeal has been perfected. It is basic that once a judgment becomes final, the prevailing party is entitled as a matter of right to a Writ of Execution, and the issuance thereof is the Court's ministerial duty. A writ of preliminary attachment is a provisional remedy issued upon order of the court where an action is pending to be levied upon the property or properties of the defendant therein, the same to be held thereafter by the Sheriff as security for the satisfaction of whatever judgment might be secured in said action by the attaching creditor against the defendant. The purpose and function of an attachment or garnishment is two-fold. o First, it seizes upon property of an alleged debtor in advance of final judgment and holds it subject to appropriation thus prevents the loss or dissipation of the property by fraud or otherwise. o Second, it subjects to the payment of a creditor's claim property of the debtor in those cases where personal service cannot be obtained upon the debtor. Attachment is an ancillary remedy. It is not sought for its own sake but rather to enable the attaching party to realize upon relief sought and expected to be granted in the main or principal pal action. The remedy of attachment is adjunct to the main suit, therefore, it can have no independent existence apart from a suit on a claim of the plaintiff against the defendant. Thus, this Court ruled that upon levy by attachment of the property in question by order of the Court, said property fell into custodia legis of that court for purposes of that civil case only. Courts have no jurisdiction to order the delivery of personal property (replevin) to the plaintiff if the property is under attachment. Only courts having supervisory control or superior jurisdiction in the premises, have the right to interfere with and change possession of property in custodia legis. The garnishment of property to satisfy a writ of execution operates as an attachment and fastens upon the property a lien by which the property is brought under the jurisdiction of the court issuing the writ. It is brought into custodia legis under the sole control of such court. That the writ of preliminary attachment issued is already dissolved and rendered non-existent in view of the withdrawal of the complaint by Aboitiz. More importantly, even if the writ of attachment can be considered independently of the main case, the same, having been improperly issued as found by Judge Tomol himself, is null and void and cannot be a justification for holding properties in custodia legis any longer. When Aboitiz withdrew its complaint, the attachment ceased to have a leg to stand on. The attached properties of Adlawan which are in the custody of Aboitiz should be returned.

MASTER TOURS v. CA (1993) FACTS: Summons with a copy of the complaint for sum of money filed by Cathay Pacific and an Order of Attachment were served upon and received by Master Tours. The sheriff immediately levied upon properties of the Master Tours, with value equivalent to Cathay's claim. Master Tours 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, Master Tours filed its answer to Cathay's complaint. The trial court issued an order denying the Master Tours' motion to set aside or discharge the attachment writ; Master Tours thereupon moved for reconsideration. However, pending resolution of the incident, the sheriff and Cathay's counsel, allegedly thru coercion and harassment, compelled the Master Tours, thru its counsel and vice-president, to enter into a compromise agreement. Master Tours subsequently moved to withdraw the said compromise agreement before the trial court could approve the same. Pending resolution, sheriff and Cathay's counsel allegedly continued to harass Master Tours and were able to effect garnishment of certain bank deposits of Master Tours. Faced with this predicament, Master Tours resorted to a petition for certiorari with the CA, but the latter court denied due course to the same as the trial court had yet to rule on Master Tours' twin motions for reconsideration and withdrawal or compromise agreement. The trial court issued an order denying the twin motions. Hence, this petition for review.

ISSUE: WON the trial court had not yet acquired jurisdiction over Master Tours for lack of notice and hearing when it issued ex-parte the writ of preliminary attachment DECISION: Petition DENIED. HELD: Davao Light and Power, Co., Inc. vs. CA lays down the rules on the issuance of writs of attachment ex-parte: o "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. Pre-requisites o 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, o that the case is one of those mentioned in Section 1 . . (Rule 57), o that there is no other sufficient security for the claim sought to be enforced by the action, and o 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.' Master Tours 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, 1991) In its order of 17 October 1991 (p. 249, Rollo), the Regional Trial Court said: o "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.

DAVAO LIGHT v. CA (1991) FACTS: Davao Light filed a verified complaint for recovery of a sum of money and damages against Queensland Hotel, etc. and Adarna. The complaint contained an ex parte application for a writ of preliminary attachment. Judge Nartatez issued an Order granting the ex parte application and fixing the attachment bond at P4,600,513.37. The attachment bond having been submitted by Davao Light, the writ of attachment issued. The summons and a copy of the complaint, as well as the writ of attachment and a copy of the attachment bond, were served on Queensland and Adarna; and pursuant to the writ, the sheriff seized properties belonging to the latter. Queensland and Adarna filed a motion to discharge the attachment for lack of jurisdiction to issue the same because at the time the order of attachment was promulgated and the attachment writ issued, the Trial Court had not yet acquired jurisdiction over the cause and over the persons of the defendants. Davao Light filed an opposition to the motion to discharge attachment. Trial Court issued an Order denying the motion to discharge. This Order was successfully challenged by Queensland and Adarna in a special civil action of certiorari in the CA. The Order was annulled by the CA. Hence, this petition.

ISSUE: WON a writ of preliminary attachment may issue ex parte against a defendant before acquisition of jurisdiction of the latter's person by service of summons or his voluntary submission to the Court's authority DECISION. YES. Petition GRANTED. HELD: It is incorrect to theorize that after an action or proceeding has been commenced and jurisdiction over the person of the plaintiff has been vested in the court, but before the acquisition of jurisdiction over the person of the defendant (either by service of summons or his voluntary submission to the court's authority), nothing can be validly done by the plaintiff or the court. It is wrong to assume that the validity of acts done during this period should be defendant on, or held in suspension until, the actual obtention of jurisdiction over the defendant's person. The obtention by the court of jurisdiction over

the person of the defendant is one thing; quite another is the acquisition of jurisdiction over the person of the plaintiff or over the subject-matter or nature of the action, or the res or object hereof. Provisional remedies of preliminary attachment, preliminary injunction, receivership or replevin may be validly and properly applied for and granted even before the defendant is summoned or is heard from. A preliminary attachment may be defined, paraphrasing the Rules of Court, as the provisional remedy in virtue of which a plaintiff or other party may, at the commencement of the action or at any time thereafter, have the property of the adverse party taken into the custody of the court as security for the satisfaction of any judgment that may be recovered. 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 phase, "at the commencement of the action," obviously refers to the date of the filing of the complaint which, as above pointed out, is the date that marks "the commencement of the action;" and the reference plainly is to a time before summons is served on the defendant, or even before summons issues. What the rule is saying quite clearly is that after an action is properly commenced by the filing of the complaint and the payment of all requisite docket and other fees the plaintiff may apply for and obtain a writ of preliminary attachment upon fulfillment of the pertinent requisites laid down by law, and that he may do so at any time, either before or after service of summons on the defendant. And this indeed, has been the immemorial practice sanctioned by the courts: for the plaintiff or other proper party to incorporate the application for attachment in the complaint or other appropriate pleading (counter-claim, cross-claim, third-party claim) and for the Trial Court to issue the writ ex-parte at the commencement of the action if it finds the application otherwise sufficient in form and substance. Withal, ample modes of recourse against a preliminary attachment are secured by law to the defendant. The relative ease with which a preliminary attachment may be obtained is matched and paralleled by the relative facility with which the attachment may legitimately be prevented or frustrated. That separate opinion stressed that there are two (2) ways of discharging an attachment: first, by the posting of a counterbond; and second, by a showing of its improper or irregular issuance. The submission of a counterbond is an efficacious mode of lifting an attachment already enforced against property, or even of preventing its enforcement altogether. o When property has already been seized under attachment, the attachment may be discharged upon counterbond in accordance with Section 12 of Rule 57. o But even before actual levy on property, seizure under attachment may be prevented also upon counterbond. The defendant need not wait until his property is seized before seeking the discharge of the attachment by a counterbond. This is made possible by Section 5 of Rule 57. Aside from the filing of a counterbond, a preliminary attachment may also be lifted or discharged on the ground that it has been irregularly or improperly issued, in accordance with Section 13 of Rule 57. Like the first, this second mode of lifting an attachment may be resorted to even before any property has been levied on. Indeed, it may be availed of after property has been released from a levy on attachment. It may not be amiss to here reiterate other related principles dealt with in Mindanao Savings & Loans Asso. Inc. v.C.A., supra., 28 to wit: o When an attachment may not be dissolved by a showing of its irregular or improper issuance: . . . (W)hen the preliminary attachment is issued upon a ground which is at the same time the applicant's cause of action; e.g., "an action for money or property embezzled or fraudulently misapplied or converted to his own use by a public officer, or an officer of a corporation, or an attorney, factor, broker, agent, or clerk, in the course of his employment as such, or by any other person in a fiduciary capacity, or for a willful violation of duty." (Sec. 1 [b], Rule 57), or "an action against a party who has been guilty of fraud m contracting the debt or incurring the obligation upon which the action is brought" (Sec. 1 [d], Rule 57), the defendant is not allowed to file a motion to dissolve the attachment under Section 13 of Rule 57 by offering to show the falsity of the factual averments in the plaintiff's application and affidavits on which the writ was based and consequently that the writ based thereon had been improperly or irregularly issued (SEE Benitez v. I.A.C., 154 SCRA 41) the reason being that the hearing on such a motion for dissolution of the writ would be tantamount to a trial of the merits of the action. In other words, the merits of the action would be ventilated at a mere hearing of a motion, instead of at the regular trial. Therefore, when the writ of attachment is of this nature, the only way it can be dissolved is by a counterbond (G.B. Inc. v. Sanchez, 98 Phil. 886). o Effect of the dissolution of a preliminary attachment on the plaintiffs attachment bond: . . . The dissolution of the preliminary attachment upon security given, or a showing of its irregular or improper issuance, does not of course operate to discharge the sureties on plaintiff's own attachment bond. The reason is simple. That bond is "executed to the adverse party, . . . conditioned that the . . . (applicant) will pay all the costs which may be adjudged to the adverse party and all damages which he may sustain by reason of the attachment, if the court shall finally adjudge that the applicant was not entitled thereto" (SEC. 4, Rule 57). Hence, until that determination is made, as to the applicant's entitlement to the attachment, his bond must stand and cannot be with-drawn. With respect to the other provisional remedies, i.e., preliminary injunction (Rule 58), receivership (Rule 59), replevin or delivery of personal property (Rule 60), the rule is the same: they may also issue ex parte. It goes without saying that whatever be the acts done by the Court prior to the acquisition of jurisdiction over the person of defendant, as above indicated issuance of summons, order of attachment and writ of attachment (and/or appointments of guardian ad litem, or grant of authority to the plaintiff to prosecute the suit as a pauper litigant, or amendment of the complaint by the plaintiff as a matter of right without leave of court and however valid and proper they might otherwise be, these do not and cannot bind and affect the defendant until and unless jurisdiction over his person is eventually obtained by the court, either by service on him of summons or other coercive process or his voluntary submission to the court's authority. Hence, when the sheriff or other proper officer commences implementation of the writ of attachment, it is essential that he serve on the defendant not only a copy of the applicant's affidavit and attachment bond, and of the order of attachment, as explicity required by Section 5 of Rule 57, but also the summons addressed to said defendant as well as a copy of the complaint and order for appointment of guardian ad litem, if any, as also explicity directed by Section 3, Rule 14 of the Rules of Court. Service of all such documents is indispensable not only for the acquisition of jurisdiction over the person of the defendant, but also upon considerations of fairness, to apprise the defendant of the complaint against him, of the issuance of a writ of preliminary attachment and the grounds therefor and thus accord him the opportunity to prevent attachment of his property by the posting of a counterbond in an amount equal to the plaintiff's claim in the complaint pursuant to Section 5 (or Section 12), Rule 57, or dissolving it by causing dismissal of the complaint itself on any of the grounds set forth in Rule 16, or demonstrating the insufficiency of the applicant's affidavit or bond in accordance with Section 13, Rule 57. For the guidance of all concerned, the Court reiterates and reaffirms the proposition that writs of attachment may properly issue ex parte provided that the Court is satisfied that the relevant requisites therefor have been fulfilled by the applicant, although it may, in its discretion, require prior hearing on the application with notice to the defendant; but that levy on property pursuant to the writ thus issued may not be validly effected unless preceded, or contemporaneously accompanied, by service on the defendant of summons, a copy of the complaint (and of the appointment of guardian ad litem, if any), the application for attachment (if not incorporated in but submitted separately from the complaint), the order of attachment, and the plaintiff's attachment bond.

LIBERTY INSURANCE v. CA, JUDGE FLOJO, SHERIFF ARKIN, RD OF MANILA & MAKATI (1993) FACTS: Imperial Organizations, Pty., thru Atty. Jose Imperial entered into an agreement with Coca-Cola to promote two concerts featuring a group known as "Earth, Wind and Fire" with Coca-Cola sponsoring the concerts and the former promoting the same. Coca-Cola required Imperial Organizations to put up a performance bond. Liberty Insurance, upon application of Imperial Organization put up the performance bond in the amount of P3M, the principal condition of which was to "fully and faithfully guarantee the terms and conditions" of the agreement entered into between Coca-Cola and Imperial Organizations. o 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 . . . ."

In turn, and as a condition for the issuance of said performance bond, Liberty Insurance required Imperial Organizations, Imperial, Arkin, and Madlangbayan to execute an indemnity agreement in its favor to indemnify it for any and all damages including attorney's fees which the Liberty Insurance 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 Liberty Insurance became liable upon its performance bond paying Coca-Cola P3M. Liberty Insurance demanded reimbursement from Imperial, Arkin And Madlangbayan based on their indemnity bond but to no avail. Liberty Insurance filed with the RTC a complaint for damages with application for the issuance of a writ of preliminary attachment against private respondents. Trial Court thru the Hon. de Leon, issued an order allowing the issuance of the writ. Arkin filed a motion to Quash/Recall Writ of Attachment. The trial court, this time presided by judge Flojo, denied the motion. After more than a year, Arkin filed a MR of the order of denial. Judge reversed his earlier ruling and instead issued two orders, (1) granting Arkin's MR 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. Aggrieved, Liberty Insurance filed a special civil action for certiorari with CA to set aside the above orders of respondent judge. CA 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.

ISSUE: WON the writ of preliminary attachment in question was properly or regularly issued DECISION: YES. Petition GRANTED. HELD: 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. 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]). All the collaterals given by the Arkin as security for the bond were either fraudulent or heavily encumbered. Records show that TCT supposedly issued by the RD of Rizal registered in the name of Carmen Madlangbayan, used as one of the collaterals, turned out to be fake Likewise, the supposed lien-free motor vehicle offered as collateral turned out to be heavily mortgaged and was even disposed of without informing Liberty Insurance. Furthermore, it has also been proven that subsequent to the issuance of the surety bond, 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. 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", 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.

WEE v. TANKIANSEE (2008) FACTS: Wee, a valued client of Westmont Bank (United Overseas Bank), made money placements totaling P210,595,991.62 with the bank's affiliate, Wincorp, a domestic entity engaged in the business of an investment house with the authority and license to extend credit. Wee received disturbing news on Wincorp's financial condition prompting him to inquire about and investigate the company's operations and transactions with its borrowers. He then discovered that the company extended a loan equal to his total money placement to a corporation [Power Merge] with a subscribed capital of only P37.5M. This credit facility originated from another loan of about P1.5B extended by Wincorp to another corporation [Hottick Holdings]. When the latter defaulted in its obligation, Wincorp instituted a case against it and its surety. Settlement was, however, reached in which Hottick's president, Virata, assumed the obligation of the surety. Under the scheme agreed upon by Wincorp and Hottick's president, Wee's money placements were transferred without his knowledge and consent to the loan account of Power Merge through an agreement that virtually freed the latter of any liability. Allegedly, through the false representations of Wincorp and its officers and directors, Wee was enticed to roll over his placements so that Wincorp could loan the same to Virata/Power Merge. Finding that Virata purportedly used Power Merge as a conduit and connived with Wincorp's officers and directors to fraudulently obtain for his benefit without any intention of paying the said placements, Wee instituted a civil case for damages with RTC of Manila. One of the defendants impleaded in the complaint is Tankiansee, Vice-Chairman and Director of Wincorp. On the basis of the allegations in the complaint and the Affidavit of Wee, the trial court ordered the issuance of a writ of preliminary attachment against the properties not exempt from execution of all the defendants in the civil case subject, among others, to Wee's filing of a P50M-bond. The writ was, consequently issued. Arguing that the writ was improperly issued and that the bond furnished was grossly insufficient, Tankiansee moved for the discharge of the attachment. The RTC, in an Omnibus Order, denied all the motions for the discharge of the attachment. The defendants, including Tankiansee, filed their respective MR but the trial court denied the same. Incidentally, while Tankiansee opted not to question anymore the said orders, his co-defendants, Virata and UEM-MARA Philippines Corporation (UEMMARA), assailed the same via certiorari under Rule 65 before the CA. It, however, denied the certiorari petition and the MR. In a petition for review on certiorari before the SC, in G.R. No. 162928, we denied the petition and affirmed the CA rulings for Virata's and UEM-MARA's failure to sufficiently show that the CA committed any reversible error. Tankiansee filed before the trial court another Motion to Discharge Attachment, re-pleading the grounds he raised in his first motion but raising the following additional grounds: (1) that he was not present in Wincorp's board meetings approving the questionable transactions; and (2) that he could not

have connived with Wincorp and the other defendants because he and Pearlbank Securities, Inc., in which he is a major stockholder, filed cases against the company as they were also victimized by its fraudulent schemes. Trial court denied the motion. Tankiansee filed a certiorari petition before the CA. It rendered the assailed Decision reversing and setting aside the orders of the trial court and lifting the Writ of Preliminary Attachment to the extent that it concerned Tankiansee's properties.

ISSUE: WON the lifting of the writ of preliminary attachment is valid DECISION: Petition DENIED. HELD: The basis of petitioners application for the issuance of the writ of preliminary attachment against the properties of respon dent is Section 1(d) of Rule 57 of the Rules of Court For a writ of attachment to issue under this rule, the applicant must sufficiently show the factual circumstances of the alleged fraud because fraudulent intent cannot be inferred from the debtor's mere non-payment of the debt or failure to comply with his obligation. The applicant must then be able to demonstrate that the debtor has intended to defraud the creditor. In Liberty Insurance Corporation v. Court of Appeals,32 we explained as follows: o 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.33 Wee's Affidavit is bereft of any factual statement that respondent committed a fraud. The affidavit narrated only the alleged fraudulent transaction between Wincorp and Virata and/or Power Merge, which, by the way, explains why this Court, in G.R. No. 162928, affirmed the writ of attachment issued against the latter. As to the participation of respondent in the said transaction, the affidavit merely states that respondent, an officer and director of Wincorp, connived with the other defendants in the civil case to defraud petitioner of his money placements. No other factual averment or circumstance details how respondent committed a fraud or how he connived with the other defendants to commit a fraud in the transaction sued upon. In other words, petitioner has not shown any specific act or deed to support the allegation that respondent is guilty of fraud. The affidavit, being the foundation of the writ, must contain such particulars as to how the fraud imputed to respondent was committed for the court to decide whether or not to issue the writ. Absent any statement of other factual circumstances to show that respondent, at the time of contracting the obligation, had a preconceived plan or intention not to pay, or without any showing of how respondent committed the alleged fraud, the general averment in the affidavit that respondent is an officer and director of Wincorp who allegedly connived with the other defendants to commit a fraud, is insufficient to support the issuance of a writ of preliminary attachment. Verily, the mere fact that respondent is an officer and director of the company does not necessarily give rise to the inference that he committed a fraud or that he connived with the other defendants to commit a fraud. While under certain circumstances, courts may treat a corporation as a mere aggroupment of persons, to whom liability will directly attach, this is only done when the wrongdoing has been clearly and convincingly established. 40 Let it be stressed that the provisional remedy of preliminary attachment is harsh and rigorous for it exposes the debtor to humiliation and annoyance. The rules governing its issuance are, therefore, strictly construed against the applicant, such that if the requisites for its grant are not shown to be all present, the court shall refrain from issuing it, for, otherwise, the court which issues it acts in excess of its jurisdiction. Likewise, the writ should not be abused to cause unnecessary prejudice. If it is wrongfully issued on the basis of false or insufficient allegations, it should at once be corrected. Considering, therefore, that, in this case, petitioner has not fully satisfied the legal obligation to show the specific acts constitutive of the alleged fraud committed by respondent, the trial court acted in excess of its jurisdiction when it issued the writ of preliminary attachment against the properties of respondent. We are not unmindful of the rule enunciated in G.B. Inc., etc. v. Sanchez, et al., that o [t]he merits of the main action are not triable in a motion to discharge an attachment otherwise an applicant for the dissolution could force a trial of the merits of the case on his motion. However, the principle finds no application here because petitioner has not yet fulfilled the requirements set by the Rules of Court for the issuance of the writ against the properties of respondent. The evil sought to be prevented by the said ruling will not arise, because the propriety or impropriety of the issuance of the writ in this case can be determined by simply reading the complaint and the affidavit in support of the application. Furthermore, our ruling in G.R. No. 162928, to the effect that the writ of attachment is properly issued insofar as it concerns the properties of Virata and UEM-MARA, does not affect respondent herein, for, as correctly ruled by the CA, respondent is "never a party thereto." Also, he is not in the same situation as Virata and UEM-MARA since, as aforesaid, while petitioner's affidavit detailed the alleged fraudulent scheme perpetrated by Virata and/or Power Merge, only a general allegation of fraud was made against respondent. We state, in closing, that our ruling herein deals only with the writ of preliminary attachment issued against the properties of respondent-it does not concern the other parties in the civil case, nor affect the trial court's resolution on the merits of the aforesaid civil case.