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Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G. R. No.

L-45948 September 10, 1985 MERCEDES GRUENBERG and ALBERT GRUENBERG, petitioners, vs. HONORABLE COURT OF APPEALS, HONORABLE LINO L. AOVER and ELDA R. FLORES, respondents. Perlas, Joven & Associate Law Office for private respondent. GUTIERREZ, JR., J.: This is a petition to review the decision of the Court of Appeals, now Intermediate Appellate Court, which affirmed the order for the issuance of a writ of preliminary attachment, and other related orders of the then Court of First Instance of Rizal in Civil Case No. Q-18444. The antecedent facts are summarized by the appellate court as follows: Petitioners are the defendants and private respondent is the plaintiff in Civil Case No. Q-18444, Court of First Instance of Rizal, Branch XVII-B-Quezon City, for annulment of sale, recovery of ownership and possession of the house and lot situated at No. 24 Scout Limbaga, Diliman, Quezon City, the same, allegedly, having been sold in fraud of creditors. Private respondent filed the complaint in Civil Case No. Q18444, in her capacity as the administratrix of the intestate estate of the late William Gruenberg. It is alleged in the complaint in Civil Case No. Q-18444 that the house and lot in question, which were sold to defendant Albert Gruenberg (one of the petitioners), form part of the conjugal partnership of the Gruenberg spouses, which must answer for the obligations that deceased William Gruenberg might have incurred during his lifetime in his capacity as manager and administrator of the conjugal partnership; and that the sale of the house and lot before the death of William Gruenberg, when at that time two creditors had already filed suits against him for collection of unpaid obligations, and the latter had unpaid obligation to plaintiff Elda R, Flores (private respondent) in the amount of P13,000.00, exclusive of interest and collection charges, patently and clearly can no longer be paid or liquidated. On March 1, 1974, petitioners filed their answer to the complaint. Under date of February 7, 1976, private respondent filed a 'Motion for Issuance of Writ of Preliminary Attachment' against the properties of petitioners, alleging, among others, that the latter are indebted to her in the principal amount of P13,000.00, which, according to her, she seeks to recover in Civil Case No. Q-18444. On March 1, 1976, petitioners filed their opposition to the motion for the issuance of writ of preliminary attachment, alleging among others, that Civil Case No. Q-18444 is an action for annulment of sale and recovery of the house and lot mentioned therein, and not for recovery of sum of money. It is contended that a writ of preliminary attachment is not the proper remedy for the protection of the rights of the estate. In the same opposition, petitioners refuted the allegations of private respondent in her motion that the complaint in Civil Case No. Q-18444 is one for collection of a sum of money allegedly contracted fraudulently by petitioners. On March 26, 1976, respondent Judge issued an order, granting the motion of private respondent and issuing a writ of preliminary attachment against the properties of petitioners, respondent Judge stating that no opposition had been filed to the motion.

In the latter part of July, 1976, respondent Sheriff and/or his deputies served on petitioners and the managers of the Hollywood Theater, Palace Theater and Illusion Theatre a writ of preliminary attachment and notice of garnishment against petitioners and personally in favor of respondent Flores. It is alleged that the order of respondent Judge was not received by petitioners' new counsel but upon being informed by petitioners of the writ of preliminary attachment and notice of garnishment, petitioners'new counsel promptly went to the court of respondent Judge and then and there he discovered that petitioners' opposition to the motion was not attached to the record, because the same was forwarded to Branch XVIII to which Civil Case No. Q-18444 was originally assigned, On July 30, 1976, petitioners filed (a) a motion for reconsideration of the order granting the motion for the issuance of a writ of preliminary attachment, and (b) a motion to recall the writ of preliminary attachment and notice of garnishment, on the ground that it is not true that petitioners did not oppose the motion of private respondent, and that there is no valid basis to grant the motion. On August 16, 1976, respondent Judge issued an order, denying the motions of petitioners. On October 28, 1976, respondent Judge issued an order, requiring petitioners to appear before his court to explain why they should not be punished for contempt for denying or disobeying the lawful processes of the court. The issuance of the "show cause" order prompted the petitioners to file a petition for certiorari with writ of preliminary injunction in the Court of Appeals. The petition was dismissed. Hence, the instant petition The issues raised to us are embodied in the petitioners' assignments of errors as follows: I. THE COURT OF APPEALS ERRED IN OVERLOOKING THE FACT THAT WRIT OF PRELIMINARY ATTACHMENT COULD ONLY BE GRANTED TO SECURE THE SATISFACTION OF A JUDGMENT IN A CASE IN WHICH SAID WRIT IS PRAYED FOR; II. THE COURT ERRED IN SUSTAINING THE ISSUANCE OF THE WRIT OF PRELIMINARY ATTACHMENT FOR THE PERSONAL BENEFIT OF PRIVATE RESPONDENT IN CIVIL CASE NO. Q-18444, NOTWITHSTANDING THE FACT THAT SAID RESPONDENT INSTITUTED SAID ACTION NOT IN HER PERSONAL CAPACITY, BUT AS ADMINISTRATRIX OF THE ESTATE OF THE LATE WILLIAM GRUENBERG, SR.; III. THE COURT OF APPEALS ERRED IN RULING THAT PETITIONERS CAN BE CITED FOR CONTEMPT FOR THE ALLEGED FAILURE TO COMPLY WITH THE NOTICE OF GARNISHMENT ADDRESSED TO THIRD PARTIES. The issues are interrelated and may be discussed together. They all focus on the proprietary of the writ of attachment and garnishment against the petitioners' properties issued by the trial court and affirmed by the appellate court. In her affidavit supporting the motion for a writ of preliminary attachment, the private respondent stated that her case "... is one of the situations covered by Section 1 (d), Rule 57 of the Rules of Court whereby a writ of preliminary attachment may issue." Section 1 (d), Rule 57 provides: Grounds upon which attachment may issue.A plaintiff or any proper party may, at the commencement of the action or at any time thereafter, have the property of the adverse party attached as security for the satisfaction of any judgment that may be recovered in the following cases: xxx xxx xxx (d) In an action against a party who has been guilty of a fraud in contracting the debt or incurring the obligation upon which the action is brought, or in concealing or disposing of the property for

the taking, detention or conversion of which the action is brought. xxx xxx xxx There are various reasons why this petition should prosper. Private respondent Elda R. Flores, as a claimant for P13,000.00 against the estate of William Gruenberg, Sr., was appointed administratrix of the estate of the deceased. In her capacity as administratrix, she filed Civil Case No. Q-18444 against the petitioners. This main case was for the annulment of a deed of sale executed by the late William Gruenberg, Sr., in favor of Albert Gruenberg and for the recovery of possession and ownership of the house and lot involved in that sale. The motion for a writ of preliminary attachment filed by Flores, however, states: 1. Defendants are indebted to plaintiff in the amount of P13,000.00 exclusive of accrued interest and collection charges, which plaintiff seeks to recover in the instant action; and 2. Defendants are guilty of fraud in contracting the debt or incurring the obligation due plaintiff in that they conspired and confederated with each other as mother End son to defraud other creditors one of whom is plaintiff, by simulating the sale of house and lot situated at No. 24 Scout Limbaga Street, Quezon City ... . While the respondent filed the motion in her capacity as administratrix of the Gruenberg estate, the motion for a writ of attachment and its supporting affidavit show that the attachment was intended to secure only her P13,000.00 claim against the estate. Obviously, this cannot be done. A writ of attachment is a remedy ancillary to the principal proceeding. The well-entrenched principle is that: Attachment is a juridical institution which has for its purpose to secure the outcome of the trial, that is, the satisfaction of the pecuniary obligation really contracted by a person or believed to have been contracted by him, either by virtue of a civil obligation emanating from contract or from law, or by virtue of some crime or misdemeanor that he might have committed, and the writ issued, granted it, is executed by attaching and safely keeping all the movable property of the defendant, or so much thereof as may be sufficient to satisfy the plaintiff's demands ... . (Guzman v. Catolico, et al., 65 Phil. 257). The purpose behind the filing of the complaint was to recover a piece of property allegedly belonging to the intestate estate of the deceased. Hence, any writ of attachment necessary to secure the judgment must be related to the protection of the estate. The writ may not issue if only to protect the personal interests of the private respondent as a creditor of that estate. The records show that the private respondent's interest in the estate is to recover a debt based on a contract with the deceased Gruenberg, For this reason, she instituted the special proceedings for the settlement of the intestate estate resulting to her appointment as administratrix. Under these circumstances, the private respondent's remedy to recover the outstanding debt of the deceased is to follow the procedure in Rule 86 on claims against an estate. As a matter of fact, if an administrator has a claim against an estate, Section 8 of Rule 86 calls for the appointment of a special administrator to defend the estate against such claim. A court order which violates the Rules constitutes grave abuse of discretion as it wrecks the orderly procedure prescribed for the settlement of claims against deceased persons designed to protect the interests of the creditors of the decedent. (See Dy v. Enage, 70 SCRA 96). Allowing the private respondent in the annulment case to attach the petitioners' properties for the benefit of her P13,000.00 claim against the estate would give her an undue advantage over other creditors against the estate, Moreover, the P13,000.00 claim of the respondent cannot be settled in the case for annulment of the deed of sale, wherein the writ of attachment is sought. What she seeks to be secured is not the judgment in the main case but a mere claim against the estate which is still to be considered and adjudicated by the court. The rules on the issuance of a writ of attachment must be construed strictly in favor of the defendant. The remedy of attachment is harsh, extraordinary, and summary in nature. If all the requisites for the issuance of the writ are not present, the court which issues it acts in excess of its jurisdiction.

In Salas v. Adil (90 SCRA 121), we stated: A preliminary attachment is a rigorous remedy, which exposes the debtor to humiliation and annoyance, such it should not be abused as to cause unnecessary prejudice. It is, therefore, the duty of the court, before issuing the writ, to ensure that all the requisites of the law have been complied with; otherwise the judge acts in excess of his jurisdiction and the writ so issued shall be null and void. (Guzman v. Catolico, 65 Phil. 257, 261). xxx xxx xxx Considering the gravity of the allegation that herein petitioners have removed or disposed of their properties or are about to do so with intent to defraud their creditors, and further considering that the affidavit in support of the preliminary attachment merely states such ground in general terms, without specific allegations of circumstances to show the reason why plaintiffs believe that defendants are disposing of their properties in fraud of creditors, it was incumbent upon respondent Judge to give notice to petitioners and to allow them to present their position at a hearing wherein evidence is to be received. Following the principle of strict compliance with all requisites, this Court has also ruled that "when the facts, or some of them, stated in the plaintiff's affidavit are shown by the defendant to be untrue, the writ may be considered as improperly or irregularly issued." (National Coconut Corporation V. Pecson, et al., 90 Phil. 809). The February 7, 1976 motion for issuance of a writ of preliminary attachment and the affidavit of preliminary attachment are misleading. First, the private respondent states that the "defendants are indebted to plaintiff in the amount of P13,000.00" exclusive of interests and collection charges. Then, she avers that the "defendants are guilty of fraud in contracting the debt or incurring the obligation due plaintiff ". The facts in the motion and the affidavit are deceptively framed. The obligation which the respondent seeks to secure by an attachment was between her and the late William Gruenberg, Sr. What she seeks to establish as fraudulent was the sale between the late Mr. Gruenberg and his son. These are two entirely distinct transactions. One of the reasons for granting the motion for the issuance of a writ of preliminary attachment was the court's finding that the petitioners' failed to file an opposition thereto. It turns out, however, that the petitioners filed a timely opposition to the motion but it was filed in another branch of the court where the case had earlier been assigned. Nevertheless, despite this timely opposition, the motion for reconsideration of the order for the issuance of a writ of preliminary attachment, was summarily denied for lack of merit. We also note that the order which directed the issuance of a writ of preliminary attachment merely recited the grounds alleged in the private respondent's motion without any specific details as to the supposed fraud committed by the petitioners when they contracted the debt and the alleged disposition or concealment by the petitioners of their properties. The order of the trial court disregards the rule that attachment being a harsh remedy, it must be issued on concrete and specific grounds and not on general averments merely quoting the words of the pertinent rules. (Dy v. Enage, supra). The absence of specific grounds highlights the fact that the petitioners are not indebted to respondent Flores. It was the late William Gruenberg who incurred the alleged indebtedness and it is his estate which owes Flores. The validity of the claim of Flores will have to be threshed out in the special proceedings, not in the case for annulment of the deed of sale. Finally, the transaction sought to be annulled in the main case refers to a questioned sale of a house and lot. It would have been sufficient to annotate a notice of lis pendens in the title to that property. Assuming the trial court could validly attach the house and lot involved in the sale, we see no justification why the attachment should reach out to the petitioners' interests in the Hollywood Theatre, the Palace Theatre, and the Illusion Theatre. The petitioners also point out that there is no showing of any attempt on their part to conceal or to dispose of the house and lot nor of any change in the title or condition of the property. Considering all the foregoing, we find the writ of preliminary attachment to have been improvidently issued. WHEREFORE, the petition is hereby GRANTED. The decision of the former Court of Appeals is SET ASIDE. The writ of preliminary attachment and the notice of garnishment issued in Civil Case No. Q-18444 are DISSOLVED. The other related orders issued in connection with the writ of attachment are SET ASIDE.

SO ORDERED. G.R. No. L-63225 April 3, 1990 ELEAZAR V. ADLAWAN, petitioner, vs. HON. JUDGE VALERIANO P. TOMOL, as Presiding Judge of Branch XI of RTC-Cebu (formerly Branch XI, CFI-Cebu), Branch XXVII of RTC-Cebu, with Station in Lapu-Lapu City (formerly Branch XVI, CFI-Cebu, Presided over by former Judge Ceferino E. Dulay), and ABOITIZ COMPANY, INC., respondents. Pablo P. Garcia for petitioner. Angara, Concepcion, Regala & Cruz for private respondent. FERNAN, C.J.: This is a special civil action for certiorari and mandamus seeking to annul : [a] the Order dated December 20, 1982 of respondent Judge Valeriano P. Tomol, Branch XI of CFI-Cebu, now Branch XI, RTC-Cebu, in Civil Case No. R-21761, entitled "Aboitiz and Company, Inc. v. Adlawan, et al" denying the motion of the defendant to require the Provincial Sheriff of Cebu to deliver to him the properties seized by the Sheriff of Davao City and [b] the Order dated September 4, 1982 of Judge Ceferino F. Dulay, Branch XVI of the Court of First Instance of Cebu, now Branch XXVII, RTC-Cebu, Lapu-Lapu City, in Civil Case No. 619-L between the same parties, denying for lack of merit petitioner's Omnibus Motion to reconsider, dissolve and set aside the Writ of seizure and Replevin. The antecedent facts are as follows: Petitioner Eleazar A. Adlawan, a private contractor, was awarded by the National Irrigation Administration (NIA) and the Bureau of Public Highways (BPH) contracts for the construction of various infrastructure projects of the government to perform his obligations thereunder, petitioner sought financial assistance and support from private respondent Aboitiz and Company, Inc. For failure of petitioner to pay the installments and amortizations, private respondent filed on May 13, 1982 before the Court of First Instance of Cebu a complaint 1 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 petitioner as defendant therein. The Executive Judge without notice and hearing issued an order 2 on May 14, 1982 directing the issuance of a writ of preliminary attachment against all the properties of petitioner, real and personal, upon the filing of an attachment bond for Four Million Pesos. The case, docketed as Civil Case No. R21761 was raffled and later assigned to Branch XI of the Court of First Instance of Cebu, presided by respondent Judge Valeriano P. Tomol. On May 26, 1982, 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 petitioner within their respective jurisdictions. On the strength of the writ of preliminary attachment, the bulk of petitioner's property in Davao City was attached. Subsequently, private respondent filed an Urgent Ex-parte Motions 3 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 on May 28, 1982 for being meritorious. Meanwhile, petitioner before submitting an answer to the complaint, filed a Motion for a Bill of Particulars 4 and to Set Aside the Ex-Parte Writ of Preliminary Attachment 5 which was opposed by private respondent. 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, respondent Judge issued an Orders 6 dated July 6, 1982, the dispositive portion of which reads: Accordingly, the Order of May 14, 1982 granting the writ of preliminary attachment is lifted and

vacated. The writs issued on 26 May 1982, are dissolved and recalled and the properties levied and seized by the Sheriffs of Cebu and Davao City are discharged and released. SO ORDERED. (Emphasis supplied) In view of the foregoing, private respondent Aboitiz and Company, Inc. filed an Urgent Ex-Parte Motion 7 dated July 7, 1982 praying for a stay of the July 6, 1982 Order dissolving the writ of preliminary attachment, thus maintaining the status quo. Private respondent 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 fifteen (15) days to elevate the matter to the Appellate Court. Consequently, respondent Judge Tomol issued on the same day an Orders 8 granting the motion prayed for by private respondent Aboitiz and Company, Inc. Thus, the July 6, 1982 Order was stayed. In the meantime, three (3) Deputy Sheriffs of Cebu implemented the Order lifting the Writ of Attachment and were able to pull out some personal properties of petitioner Adlawan. They were not able to take out all the attached properties in view of the subsequent Order of respondent judge to stay its implementation. As petitioner's 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, petitioner filed an Application for Award of Damages dated July 9, 1982 asking for a reasonable rental on the attached heavy construction equipment, machineries and other properties at the rate of P30,000.00 per day from the date of seizure until said properties are actually returned to his possession and control. 9 Before the court a quo could act on the motions of petitioner Adlawan, and before he could file an answer, his motion for a bill of particulars not having been acted upon, private respondent Aboitiz and Company, Inc., filed on July 13, 1982 a Notice of Dismissal or Withdrawal of Complaint 10 as a matter of right in accordance with Section 1, Rule 17 of the Rules of Court. Respondent Judge Tomol issued an Order 11 dated July 15, 1982, the dispositive portion of which reads: Accordingly, the termination of this case upon the notice of dismissal voluntarily filed by the plaintiff is hereby confirmed. For emphasis, all orders of this Court issued prior to the filing of said notice of dismissal are each and all rendered functus officio. By the same token, all pending incidents, particularly the defendant's motion for a bill of particulars and their petition for damages against the Plaintiffs attachment bond, are now beyond the competence of this Court to consider for being moot and academic. SO ORDERED Petitioner Adlawan filed a Motion 12 dated July 28, 1982 praying for the issuance of an order to the Provincial Sheriff of Cebu to implement and enforce the Order of respondent Judge dated July 6, 1982 dissolving the writ of preliminary attachment and to secure the delivery of the attached properties to the petitioner. Respondent Judge issued an Order 13 dated December 20, 1982 denying the Motion in view of the institution by private respondent Aboitiz and Company, Inc. of a civil case (No. 619-L) for delivery of Personal Properties with Replevin and Damages before the Court of First Instance of Cebu, Branch XVI in Lapu-Lapu City on July 13, 1982 and the filing of petitioner Adlawan of a case for damages (Civil Case No. 22265) before the Court of First Instance of Cebu, Branch X, in connection with the seizure of his properties under the writ of preliminary attachment. With regard to the replevin case filed by private respondent Aboitiz and Company, Inc., the Court of First Instance of Cebu, Branch XVI, Lapu-Lapu City, issued an Order 14 for the seizure and delivery of the properties described therein to the private respondent. The seized properties were thus delivered to private respondent by the Clerk of Court and Ex-officio Provincial Sheriff on July 24, 1982. Petitioner filed an Omnibus Motion 15 dated July 17, 1982 to reconsider, dissolve and set aside the Writ of Seizure and Replevin and to direct that the properties seized be returned to petitioner as well as to dismiss the complaint. In support of this motion, petitioner alleged, among others, that private respondent's office is situated in Cebu City while petitioner is a resident of mainland Cebu, particularly Minglanilla therefore the Court of First Instance of Cebu stationed in Lapu-Lapu should not accept the case. Furthermore, he alleged that the same personal properties seized are in custodia legis by virtue of a writ of preliminary attachment issued by the Court of First Instance of Cebu, Branch

XI, presided by respondent Judge Tomol. The Court of First Instance of Cebu, Branch XVI in Lapu-Lapu City, presided by Judge Ceferino E. Dulay denied the Omnibus Motion for lack of merit on September 4, 1982. Petitioner Adlawan filed a Motion for Reconsideration but the same was denied. Hence, the present petition for certiorari and mandamus impleading respondent Judge Valeriano P. Tomol as Presiding Judge of Branch XI of the Court of First Instance of Cebu (now Branch XI, RTC-Cebu) and Branch XVI, CFI-Cebu presided by Judge Ceferino E. Dulay in Lapu-Lapu City (now Branch XXVII of RTC Cebu in Lapu-Lapu) and private respondent Aboitiz and Company, Inc. The issues raised by petitioner Adlawan are the following, to wit: 1) After the attachment of petitioner's properties was dissolved and discharged because it was found by respondent Judge to be wrongful and illegal, does it not constitute grave and manifest abuse of discretion on the part of the same respondent judge TO REFUSE to implement his own order for the return of the attached properties to petitioner simply because private respondent suddenly dismissed its complaint? 2) On the other hand, the court, after having deprived petitioner possession and enjoyment of his properties, by reason of an attachment which, subsequently, was dissolved and discharged, was it not the clear, specific and inescapable duty of that same court, to order that said properties be returned and restored to the possession and enjoyment of petitioner? 3) Are not the attached properties of petitioner under the custodia legis of the attaching court Branch XI, CFI-Cebu (now Branch XI, RTC-Cebu) and, therefore, subject to its jurisdiction and control? If so, does it not constitute grave and manifest abuse of discretion on the part of the attaching court to literally wash his (sic) hands off any duty or responsibility by considering himself (sic) as having been divested of authority to deal with such properties? 4) Did not the Lapu-Lapu Branch of CFI-Cebu act, without or in excess of his ( sic) jurisdiction or, at least, with grave abuse of discretion, in taking cognizance of the replevin case which involves properties already in custodia legis of Branch XI of CFI-Cebu? 5) On the other hand, was it not the clear, specific and inescapable duty of the Lapu-Lapu Branch of CFI-Cebu, to dismiss the replevin case and dissolve the writ of replevin, not only because of the principle of custodia legis but also because it was in clear violation of Adm. Order No. 6 of this Honorable Supreme Court, which amends Adm. Orders No. 147 and 328 of the Department (now Ministry) of Justice? 16 From the recital of facts may be gleamed a series of peculiar events and circumstances requiring examination and looking into in order that justice and equity may be subserved. Petitioner'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 private respondent, Aboitiz and Company, Inc. Petitioner then filed a Motion to Dissolve the Writ of Attachment which was granted by respondent Judge Tomol. Thus, petitioner was able to recover some of his properties. But on the following day, this order was stayed by the same respondent judge leaving the rest of petitioner's properties with private respondent. Later, private respondent withdrew its complaint which was confirmed by respondent Judge Tomol. Petitioner Adlawan filed a motion to have the rest of his properties returned but respondent 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. After a careful examination of the records of the case We rule in favor of petitioner Adlawan. There is no question that the order dated July 6, 1982 of respondent Judge Valeriano P. Tomol, Jr. lifting and vacating the order granting the writ of preliminary attachment is a valid order, issued while he had jurisdiction over the case. The execution of aforesaid order of July 6, 1982 was stayed for a period of fifteen (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." 17 But as earlier stated, the reasons advanced by respondent Judge Tomol for denying the enforcement of his order dated July 6, 1982 which lifted the writ of attachment and the restoration of the seized properties to the defendant petitioner herein are: [a] the filing by private respondent of Civil Case No. 619-L with Branch XVI of CFI-Lapu-Lapu City for delivery of Personal Properties with Replevin and Damages which as a consequence, the same properties involved in this case were seized under a writ of replevin upon order of aforesaid court and [b] the filing by petitioner of Civil Case No. 22265 before Branch X of the Court of First Instance of Cebu, for damages. Hence, the issues in this case center on the nature and purpose of the writ of attachment. 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. 18 The provisional remedy of attachment is available in order that the defendant may not dispose of his property attached, and thus secure the satisfaction of any judgment that may be secured by plaintiff from defendant. 19 The purpose and function of an attachment or garnishment is two-fold. 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. 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. 20 This remedy is to secure a contingent lien on defendant's property until plaintiff can, by appropriate proceedings, obtain a judgment and have such property applied to its satisfaction, or to make some 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 otherwise placed beyond the reach of creditors. 21 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. 22 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. In other words, a attachment or garnishment is generally ancillary to, and dependent on, a principal proceeding, either at law or in equity, which has for its purpose a determination of the justice of creditor's demand. 23 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. Any relief against such attachment and the execution an issuance of a writ of possession that ensued subsequently could be disposed of only in that case. 24 More specifically, it was held that courts have no jurisdiction to order the delivery of personal property (replevin) to the plaintiff if the property is under attachment. 25 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. 26 More recently, this Court ruled that 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. 27 During the life of the attachment, the attached property continues in the custody of the law, the attaching officer

being entitled to its possession and liability for its safe keeping. 28 Based on the above-cited principles, it is obvious that the writ of preliminary attachment issued is already dissolved and rendered non-existent in view of the withdrawal of the complaint by Aboitiz and Company, Inc. 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 respondent Judge Tomol himself, is null and void and cannot be a justification for holding petitioners' properties in custodia legis any longer. To reiterate, an attachment is but an incident to a suit; and unless the suit can be maintained, the attachment must fall. When Aboitiz and Company, Inc. withdrew its complaint, the attachment ceased to have a leg to stand on. The attached properties of petitioner Adlawan which are in the custody of private respondent Aboitiz should be returned to petitioner. This is only proper and equitable and in consonance with the rules and principles of law. The parties, by the withdrawal of the complaint, should be placed in the same standing as they were before the filing of the same. Petitioner also questions the jurisdiction of the CFI of Cebu stationed in Lapu-Lapu City to hear the replevin case filed by private respondent in view of the fact that petitioner is a resident of Minglanilla, Cebu while private respondent's principal place of business is in Cebu City. Obviously, the question posed by petitioner is venue. A reading of the Omnibus Motion filed by petitioner, then defendant therein, would reveal that he not only questioned the jurisdiction of the court but likewise alleged non-jurisdictional grounds for dismissing the replevin case, such as the amount of the bond put up by Aboitiz & Co. as grossly insufficient and that the same properties are involved both in the replevin case and in the original collection case with preliminary attachment. Thus, in so doing, the court acquired jurisdiction over him. In the case of Wang Laboratories, Inc. vs. Mendoza 2 9 this Court held: Even though the defendant objects to the jurisdiction of the court, if at the same time he alleges any non-jurisdictional ground for dismissing the action, the court acquires jurisdiction over him. Furthermore, in the case of City of Cebu v. Consolacion, 30 We held that: . . . any of the branches of the Court of First Instance of the Province of Cebu, whether stationed in the city of the same name or in any of the municipalities of the province would be proper venue for its trial and determination, it being admitted that the parties are residents of the Province of Cebu . . . Finally, the employment by counsel for private respondent of dubious procedural maneuvers as what transpired in the case at bar obviously to continue the wrongful and illegal possession and custody of petitioner's properties even after the dissolution of the attachment is to say the least, hardly commendable if not a form of "forum shopping", to seek the court where he may possibly obtain favorable judgment. 31 It may therefore be stated that the right to come before the Courts to redress a grievance or right a wrong should be exercised with prudence and good faith. In the case of Indianapolis v. Chase National Bank, Trustee, 314 U.S. 69, it is opined that "Litigation is the pursuit of practical ends, not a game of chess." WHEREFORE, in view of the foregoing, this Court rules that the attached properties left in the custody of private respondent Aboitiz and Company, Inc. be returned to petitioner Eleazar V. Adlawan without prejudice to the outcome of the cases filed by both parties. SO ORDERED. Gutierrez, Jr., Feliciano, Bidin and Cortes, JJ., concur. 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 CocaCola 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, issue. Sec. 1. Grounds upon which attachment may

(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 commencing certiorari 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 for certiorari 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. L-825 July 20, 1948

ROMAN MABANAG, plaintiff-appellant, vs. JOSEPH M. GALLEMORE, defendant-appellee. Santiago Catane for appellant. No appearance for appellee. TUASON, J.:

This case, here on appeal from an order dismissal by the Court of First Instance of Occidental Misamis, raises the question of the court's jurisdiction. More specifically, the question is whether the action is in personam or one in rem. The trial court opined that it is the first and that it "has no authority nor jurisdiction to render judgment against the herein defendant, Joseph M. Gallemore for being a nonresident. The purpose of the action is to recover P735.18, an amount said to have been paid by the plaintiff to the defendant for two parcels of land whose sale was afterward annulled. The defendant is said to be residing in Los Angeles, California, U. S. A. He has no property in the Philippine except an alleged debt owing him by a resident of the municipality of Occidental Misamis. This debt, upon petition of the plaintiff, after the filing of the complaint and before the suit was dismissed, was attached to the extent of plaintiff's claim for the payment of which the action was brought. But the attachment was dissolved in the same order dismissing the case. It was Atty. Valeriano S. Kaamino who has amicus curi filed the motion to dismiss and to set aside the attachment. There is no appearance before this Court to oppose the appeal. Section 2, Rule 5, of the Rules of Court provides: If any of the defendants does not reside and is not found in the Philippines, and the action effects the personal status of the plaintiff, or any property of the defendant located in the Philippines, the action may be commenced and tried in the province where the plaintiff resides or the property, or any portion thereof, is situated or found. The Philippine leading cases in which this Rule, or its counterpart in the former Code of Civil Procedure, section 377 and 395, were cited and applied, are Banco Espaol-Filipino vs. Palanca, 37 Phil. 921, and Slade Perkins vs. Dizon, 40 Off. Gaz., [3d Suppl.], No. 7, p. 216. The gist of this Court's ruling in these cases, in so far as it is relevant to the present issues, is given in I Moran's Comments on the Rules of Court, 2d Ed., 105: As a general rule, when the defendant is not residing and is not found in the Philippines, the Philippine courts cannot try any case against him because of the impossibility of acquiring jurisdiction over his person, unless he voluntarily appears in court. But, when the action affects the personal status of the plaintiff residing in the Philippines, or is intended to seize or dispose of any property, real or personal, of the defendant, located in the Philippines, it may be validly tried by the Philippine courts, for then, they have jurisdiction over the res, i.e., the personal status of the plaintiff or the property of the defendant, and their jurisdiction over the person of the non-resident defendant is not essential. Venue in such cases may be laid in the province where the plaintiff whose personal status is in question resides, or where the property of the defendant or a part thereof involved in the litigation is located. Literally this Court said: Jurisdiction over the property which is the subject of litigation may result either from a seizure of the property under legal process, whereby it is brought into the actual custody of the law, or it may result from the institution of legal proceedings wherein, under special provisions of law, the power of the court over the property is recognized and made effective. In the latter case the property, though at all times within the potential power of the court, may never be taken into actual custody at all. An illustration of the jurisdiction acquired by actual seizure is found in attachment proceedings, where the property is seized at the beginning of the action, or some subsequent stage of its progress, and held to abide the final event of the litigation. An illustration of what we term potential jurisdiction over the res, is found in the proceeding to register the title of land under our system for the registration of land. Here the court, without

taking actual physical control over the property assumes, at the instance of some person claiming to be owner, to exercise a jurisdiction in rem over the property and to adjudicate the title in favor of the petitioner against all the world. (Banco Espaol-Filipino vs. Palanca, supra, 927-928.). In an ordinary attachment proceeding, if the defendant is not personally served, the preliminary seizure is to be considered necessary in order to confer jurisdiction upon the court. In this case the lien on the property is acquired by the seizure; and the purpose of the proceeding is to subject the property to that lien. If a lien already exists, whether created by mortgage, contract, or statute, the preliminary seizure is not necessary; and the court proceeds to enforce such lien in the manner provided by law precisely as though the property had been seized upon attachment. (Roller vs. Holly, 176 U.S., 398, 405; 44 Law. ed., 520.) It results that the mere circumstance that in an attachment the property may be seized at the inception of the proceedings, while in the foreclosure suit it is not taken into legal custody until the time comes for the sale, does not materially affect the fundamental principle involved in both cases, which is that the court is here exercising a jurisdiction over the property in a proceeding directed essentially in rem. (Id., 929-930.). When, however, the action relates to property located in the Philippines, the Philippine courts may validly try the case, upon the principles that a "State, through its tribunals, may subject property situated within its limit owned by non-residents to the payment of the demand of its own citizens against them; and the exercise of this jurisdiction in no respect infringes upon the sovereignty of the State were the owners are domiciled. Every State owes protection to its own citizens; and, when non-residents deal with them, it is a legitimate and just exercise of authority to hold any appropriate any property owned by such non-residents to satisfy the claims of its citizens. It is in virtue of the State's jurisdiction over the property of the non-resident situated within its limits that its tribunals can inquire into the non-resident's obligations to its own citizens, and the inquiry can then be carried only to the extent necessary to control disposition of the property. If the non-resident has no property in the State, there is nothing upon which the tribunals can adjudicate. (Slade Perkins vs. Dizon, 40 Off. Gaz. [3d Supplement], No. 7, p. 216.). A fuller statement of the principle whereunder attachment or garnishment of property of a non-resident defendant confers jurisdiction on the court in an otherwise personal action, appears in two well known and authoritative works: The main action in an attachment or garnishment suit is in rem until jurisdiction of the defendant is secured. Thereafter, it is in personam and also in rem, unless jurisdiction of the res is lost as by dissolution of the attachment. If jurisdiction of the defendant is acquired but jurisdiction of the res is lost, it is then purely in personam. . . a proceeding against property without jurisdiction of the person of the defendant is in substance a proceeding in rem; and where there is jurisdiction of the defendant, but the proceedings against the property continues, that proceedings is none the less necessarily in rem, although in form there is but a single proceeding. (4 Am. Jur., 556557.) As the remedy is administered in some states, the theory of an attachment, whether it is by process against or to subject the property or effects of a resident or non-resident of the state, is that it partakes essentially of the nature and character of the proceeding in personam and not of a proceeding in rem. And if the defendant appears the action proceeds in accordance with the practice governing proceedings in personam. But were the defendant fails to appear in the action, the proceeding is to be considered as one in the nature of a proceeding in rem. And where the court acts directly on the property, the title thereof being charged by the court without

the intervention of the party, the proceeding unquestionably is one in rem in the fullest meaning of the term. In attachment proceedings against a non-resident defendant where personal service on him is lacking, it is elementary that the court must obtain jurisdiction of the property of the defendant. If no steps have been taken to acquire jurisdiction of the defendant's person, and he has not appeared and answered or otherwise submitted himself to the jurisdiction of the court, the court is without jurisdiction to render judgment until there has been a lawful seizure of property owned by him within the jurisdiction of the court. (2 R. C. L., 800-804.). Tested by the foregoing decisions and authorities, the Court has acquired jurisdiction of the case at bar by virtue of the attachment of the defendant's credit. Those authorities and decisions, so plain and comprehensive as to make any discussion unnecessary, are in agreement that though no jurisdiction is obtained over the debtor's person, the case may proceed to judgment if there is property in the custody of the court that can be applied to its satisfaction. It is our judgment that the court below erred in dismissing the case and dissolving the attachment; and it is ordered that, upon petition of the plaintiff, it issue a new writ of attachment and then proceed to trial. The costs of this appeal will be charged to defendant and appellee. Paras, Feria, Pablo, Perfecto, Bengzon, Briones and Padilla, JJ., concur.

G.R. No. 84481 April 18, 1989 MINDANAO SAVINGS & LOAN ASSOCIATION, INC. (formerly Davao Savings & Loan Association) & FRANCISCO VILLAMOR, petitioners, vs. HON. COURT OF APPEALS, POLY R. MERCADO, and JUAN P. MERCADO, respondents. Villarica, Tiongco & Caboverde Law Office for petitioners. A B C Law Offices for private respondents.

GRIO-AQUINO, J.: On September 10, 1986, private respondents filed in the Regional Trial Court of Davao City, a complaint against defendants D.S. Homes, Inc., and its directors, Laurentino G. Cuevas, Saturnino R. Petalcorin, Engr. Uldarico D. Dumdum, Aurora P. De Leon, Ramon D. Basa, Francisco D. Villamor, Richard F. Magallanes, Geronimo S. Palermo Felicisima V. Ramos and Eugenio M. De los Santos (hereinafter referred to as D.S. Homes, et al.) for "Rescission of Contract and Damages" with a prayer for the issuance of a writ of preliminary attachment, docketed as Civil Case No. 18263. On September 28, 1986, Judge Dinopol issued an order granting ex parte the application for a writ of preliminary attachment. On September 22, 1986, the private respondents amended their complaint and on October 10, 1986, filed a second amended complaint impleading as additional defendants herein petitioners Davao Savings & Loan Association, Inc. and its president, Francisco Villamor, but dropping Eugenio M. De los Santos. On November 5, 1986, Judge Dinopol issued ex parte an amended order of attachment against all the defendants named in the second amended complaint, including the petitioners but excluding Eugenio C. de los Santos. D. S. Homes. Inc., et al. and the Davao Savings & Loan Association (later renamed Mindanao Savings & Loan Association, Inc. or "MSLA") and Francisco Villamor filed separate motions to quash the writ of attachment. When their motions were denied by the Court, D.S. Homes, Inc., et al. offered a counterbond in the amount of Pl,752,861.41 per certificate issued by the Land Bank of the Philippines, a banking partner of petitioner MSLA The lower court accepted the Land Bank Certificate of . Deposit for Pl,752,861.41 as counterbond and lifted the writ of preliminary attachment on June 5, 1987 (Annex V) On July 29, 1987, MSLA and Villamor filed in the Court of Appeals a petition for certiorari (Annex A) to annul the order of attachment and the denial of their motion to quash the same (CA-G.R. SP No. 12467). The petitioners alleged that the trial court acted in excess of its jurisdiction in issuing the ex parte orders of preliminary attachment and in denying their motion to quash the writ of attachment, D.S. Homes, Inc., et al. did not join them. On May 5, 1988, the Court of Appeals dismissed the petition for certiorari and remanded the records of Civil Case No. 18263 to the Regional Trial Court of Davao City, Branch 13, for expeditious proceedings. It held: Objections against the writ may no longer be invoked once a counterbond is filed for its lifting or dissolution. The grounds invoked for the issuance of the writ form the core of the complaint and it is right away obvious that a trial on the merits was necessary. The merits of a main action are not triable in a motion to discharge an attachment otherwise an applicant for dissolution could force a trial on the merits on his motion (4 Am. Jur., Sec. 635, 934, cited in G.G. Inc. vs. Sanchez, et al., 98 Phil. 886, 890, 891). (Annex B, p. 185, Rollo.) Dissatisfied, the petitioners appealed to this Court. A careful consideration of the petition for review fails to yield any novel legal questions for this Court to resolve. The only requisites for the issuance of a writ of preliminary attachment under Section 3, Rule 57 of the Rules of Court are the affidavit and bond of the applicant. SEC. 3. Affidavit and bond required . An order of attachment shall be granted only when it is made to appear by the affidavit of the applicant, or of some other person who personally knows the facts, that a sufficient cause of action exists that the case is one of those mentioned in section 1 hereof, that there is no other sufficient security for the claim sought to be enforced by the action, and that the amount due to the applicant, or the value of the. property the possession of which he is entitled to recover, is as much as the sum for which the order is granted above all legal counterclaims. The affidavit, and the bond required by the next succeeding section must be

duly filed with the clerk or judge of the court before the order issues. No notice to the adverse party or hearing of the application is required. As a matter of fact a hearing would defeat the purpose of this provisional remedy. The time which such a hearing would take, could be enough to enable the defendant to abscond or dispose of his property before a writ of attachment issues. Nevertheless, while no hearing is required by the Rules of Court for the issuance of an attachment (Belisle Investment & Finance Co., Inc. vs. State Investment House, Inc., 72927, June 30, 1987; Filinvest Credit Corp. vs. Relova, 11 7 SCRA 420), a motion to quash the writ may not be granted without "reasonable notice to the applicant" and only "after hearing" (Secs. 12 and 13, Rule 57, Rules of Court). The Court of Appeals did not err in holding that objections to the impropriety or irregularity of the writ of attachment "may no longer be invoked once a counterbond is filed," when the ground for the issuance of the writ forms the core of the complaint. Indeed, after the defendant has obtained the discharge of the writ of attachment by filing a counterbond under Section 12, Rule 57 of the Rules of Court, he may not file another motion under Section 13, Rule 57 to quash the writ for impropriety or irregularity in issuing it. The reason is simple. The writ had already been quashed by filing a counterbond, hence, another motion to quash it would be pointless. Moreover, as the Court of Appeals correctly observed, when the ground for the issuance of the writ is also the core of the complaint, the question of whether the plaintiff was entitled to the writ can only be determined after, not before, a full-blown trial on the merits of the case. This accords with our ruling G.B. Inc. vs. Sanchez, 98 Phil. 886 that: "The merits of a main action are not triable in a motion to discharge an attachment, otherwise an applicant for the dissolution could force a trial on the merits of the case on this motion." May the defendant, after procuring the dissolution of the attachment by filing a counterbond, ask for the cancellation of the counterbond on the ground that the order of attachment was improperly issued? That question was answered by this Court when it ruled in Uy Kimpang vs. Javier, 65 Phil. 170, that "the obligors in the bond are absolutely liable for the amount of any judgment that the plaintiff may recover in the action without reference to the question of whether the attachment was rightfully or wrongfully issued." The liability of the surety on the counterbond subsists until the Court shall have finally absolved the defendant from the plaintiff s claims. Only then may the counterbond be released. The same rule applies to the plaintiffs attachment bond. "The liability of the surety on the bond subsists because the final reckoning is when the Court shall finally adjudge that the attaching creditor was not entitled to the issuance of the attachment writ," (Calderon vs. Intermediate Appellate Court, 155 SCRA 531.) WHEREFORE, finding no reversible error in the decision of the Court of Appeals in CA-G.R. SP No. 12467, the petition for review is denied for lack of merit with costs against the petitioners. SO ORDERED. Cruz, Gancayco and Medialdea, JJ., concur.

Separate Opinions NARVASA, J.: Concurring And Dissenting Opinion I agree that the decision of the Court of Appeals subject of the appeal in this case should be affirmed. I write this separate opinion simply to stress certain principles relative to the discharge of preliminary attachments so that our own decision or that thereby affirmed be not applied to juridical situations beyond their intendment, which may well result from the statement that "after the defendant has obtained the discharge of the writ of attachment by filing a counterbond under Section 12, Rule 57 of the Rules of Court, he may not file another motion under Section 13, Rule 57 to quash the writ for impropriety or irregularity in issuing it."

Rule 57 specifies in clear terms the modes by which a preliminary attachment may be discharged at the instance of the party against whom it has been issued. The first is by the submission of a counterbond or security. The second is by a demonstration of the attachment's improper or irregular issuance. 1.0. The discharge of an attachment on security given is governed by Section 12 of the Rule. SEC 12. Discharge of attachment upon giving counterbond. At any time after an order of attachment has been granted, the party whose property has been attached, or the person appearing in his behalf, may, upon reasonable notice to the applicant, apply to the judge who granted the order, or to the judge of the court in which the action is pending, for an order discharging the attachment wholly or in part on the security given .. in an amount equal to the value of the property attached as determined by the judge to secure the payment of any judgment that the attaching creditor may recover in the action. .. . This mode of dissolution presents no apparent difficulty. It applies when there has already been a seizure of property by the sheriff. All that is entailed is the presentation of a motion to the proper court, seeking approval of a cash or surety bond in an amount equivalent to the value of the property seized and the lifting of the attachment on the basis thereof. The counter-bond stands, according to the cited section, "in place of the property so released." 1.1. But a party need not wait until his property has been seized before seeking its dissolution upon security. In fact he may prevent the seizure of his property under attachment by giving security in an amount sufficient to satisfy the claims against him. The relevant provision of the Rule is Section 5. 1 SEC. 5. Manner of attaching property . The officer executing the order shall without delay attach, to await judgment and execution in the action, all the properties of the party against whom the order is issued in the province, not exempt from execution, or so much thereof as may be sufficient to satisfy the applicant's demand, unless the former makes a deposit with the clerk or judge of the court from which the order issued, or gives a counter-bond executed to the applicant, in an amount sufficient to satisfy such demand besides costs or in an amount equal to the value of the property which is about to be attached, to secure payment to the applicant of any judgment which he may recover in the action. .. . 2.0. The second way of lifting a preliminary attachment is by proving its irregular or improper issuance, under Section 13 of Rule 57. Like the first, this second mode may be availed of even before any property has been actually attached. It may even be resorted to after the property has already been released from the levy on attachment, as the pertinent provision makes clear. 2 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 properly, 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. .. . As pointed out in Calderon v. I.A.C. 155 SCRA 531 (1987), "The attachment debtor cannot be deemed to have waived any defect in the issuance of the attachment writ by simply availing himself of one way of discharging the attachment writ, instead of the other. Moreover, the filing of a counterbond is a speedier way of discharging the attachment writ maliciously sought out by the attaching creditor instead of the other way, which, in most instances .. would require presentation of evidence in a fullblown trial on the merits and cannot easily be settled in a pending incident of the case." 3.0. However, 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," 3 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, 4 the defendant is not allowed to file a motion to dissolve the attachment under Section 13 of Rule 57 by offering to show the falsity of the factual averments in the plaintiffs application and affidavits on which the writ was based and consequently that the writ based thereon had been improperly or irregularly issued 5 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 counter-bond. 6 4.0. 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 plaintiffs 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." 7 Hence, until that determination is made, as to the applicant's entitlement to the attachment, his bond must stand and cannot be withdrawn.

Separate Opinions NARVASA, J.: Concurring And Dissenting Opinion I agree that the decision of the Court of Appeals subject of the appeal in this case should be affirmed. I write this separate opinion simply to stress certain principles relative to the discharge of preliminary attachments so that our own decision or that thereby affirmed be not applied to juridical situations beyond their intendment, which may well result from the statement that "after the defendant has obtained the discharge of the writ of attachment by filing a counterbond under Section 12, Rule 57 of the Rules of Court, he may not file another motion under Section 13, Rule 57 to quash the writ for impropriety or irregularity in issuing it." Rule 57 specifies in clear terms the modes by which a preliminary attachment may be discharged at the instance of the party against whom it has been issued. The first is by the submission of a counterbond or security. The second is by a demonstration of the attachment's improper or irregular issuance. 1.0. The discharge of an attachment on security given is governed by Section 12 of the Rule. SEC 12. Discharge of attachment upon giving counterbond. At any time after an order of attachment has been granted, the party whose property has been attached, or the person appearing in his behalf, may, upon reasonable notice to the applicant, apply to the judge e who granted the order, or to the judge of the court in which the action is pending, for an order discharging the attachment wholly or in part on the security given .. in an amount equal to the value of the property attached as determined by the judge to secure the payment of any judgment that the attaching creditor may recover in the action. .. . This mode of dissolution presents no apparent difficulty. It applies when there has already been a seizure of property by the sheriff. All that is entailed is the presentation of a motion to the proper court, seeking approval of a cash or surety bond in an amount equivalent to the value of the property seized and the lifting of the attachment on the basis thereof. The counter- bond stands, according to the cited section, "in place of the property so released." 1.1. But a party need not wait until his property has been seized before seeking its dissolution upon security. In fact he may prevent the seizure of his property under attachment by giving security in an amount sufficient to satisfy the claims against him. The relevant provision of the Rule is Section 5. 1 SEC. 5. Manner of attaching property. The officer executing the order shall without delay attach, to await judgment and execution in the action, all the properties of the party against whom the order is issued in the province, not exempt from execution, or so much thereof as may be sufficient to satisfy the applicant's demand, unless the former makes a deposit with the clerk

or judge of the court from which the order issued, or gives a counter-bond executed to the applicant, in an amount sufficient to satisfy such demand besides costs or in an amount equal to the value of the property which is about to be attached, to secure payment to the applicant of any judgment which he may recover in the action. .. . 2.0. The second way of lifting a preliminary attachment is by proving its irregular or improper issuance, under Section 13 of Rule 57. Like the first, this second mode may be availed of even before any property has been actually attached. It may even be resorted to after the property has already been released from the levy on attachment, as the pertinent provision makes clear. 2 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 properly, 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. .. . As pointed out in Calderon v. I.A.C. 155 SCRA 531 (1987), "The attachment debtor cannot be deemed to have waived any defect in the issuance of the attachment writ by simply availing himself of one way of discharging the attachment writ, instead of the other. Moreover, the filing of a counterbond is a speedier way of discharging the attachment writ maliciously sought out by the attaching creditor instead of the other way, which, in most instances .. would require presentation of evidence in a fullblown trial on the merits and cannot easily be settled in a pending incident of the case." 3.0. However, 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," 3 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, 4 the defendant is not allowed to file a motion to dissolve the attachment under Section 13 of Rule 57 by offering to show the falsity of the factual averments in the plaintiffs application and affidavits on which the writ was basedand consequently that the writ based thereon had been improperly or irregularly issued 5 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 counter-bond. 6 4.0. 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 plaintiffs 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." 7 Hence, until that determination is made, as to the applicant's entitlement to the attachment, his bond must stand and cannot be withdrawn.

G.R. No. 84034 December 22, 1988 ALBERTO SIEVERT, petitioner, vs. COURT OF APPEALS, HON. JUDGE ARTEMON D. LUNA and AURELIO CAMPOSANO, respondents.

King & Adorio Law Offices for petitioner. Moises C. Kallos for private respondent. FELICIANO, J.: On 18 May 1988 petitioner Alberto Sievert a citizen and resident of the Philippines received by mail a Petition for Issuance of a Preliminary Attachment filed with the Regional Trial Court of Manila Branch 32 in Civil Case No. 88-44346. Petitioner had not previously received any summons and any copy of a complaint against him in Civil Case No. 88-44346. On the day set for hearing of the Petition for a Preliminary Writ of Attachment, petitioner's counsel went before the trial court and entered a special appearance for the limited purpose of objecting to the jurisdiction of the court. He simultaneously filed a written objection to the jurisdiction of the trial court to hear or act upon the Petition for Issuance of a Preliminary Writ of Attachment. In this written objection, petitioner prayed for denial of that Petition for lack of jurisdiction over the person of the petitioner (defendant therein) upon the ground that since no summons had been served upon him in the main case, no jurisdiction over the person of the petitioner had been acquired by the trial court. The trial court denied the petitioner's objection and issued in open court an order which, in relevant part, read as follows: Under Section 1, Rule 57, Rules of Court, it is clear that a plaintiff or any proper party may "... at the commencement of the action or at any time thereafter, have the property of the adverse party attached as the security for the satisfaction of any judgment ..." This rule would overrule the contention that this Court has no jurisdiction to act on the application, although if counsel for defendant so desire, she is given five (5) days from today within which to submit her further position why the writ should not be issued, upon the receipt of which or expiration of the period, the pending incident shall be considered submitted for resolution. (Underscoring in the original)
1

Thereupon, on the same day, petitioner filed a Petition for certiorari with the Court of Appeals. On 13 July 1988, the respondent appellate court rendered a decision, notable principally for its brevity, dismissing the Petition. The relevant portion of the Court of Appeals' decision is quoted below: The grounds raised in this petition state that the court a quo had not acquired jurisdiction over defendant (now petitioner) since no summons had been served on him, and that respondent Judge had committed a grave abuse of discretion in issuing the questioned order without jurisdiction. In short, the issue presented to us is whether respondent Judge may issue a writ of preliminary attachment against petitioner before summons is served on the latter. We rule for respondent Judge. Under Sec. 1, Rule 57, it is clear that, at the commencement of the action, a party may have the property of the adverse party attached as security. The resolution of this issue depends, therefore, on what is meant by "Commencement of the action." Moran, citing American jurisprudence on this point, stated thus: "Commencement of action. Action is commenced by filing of the complaint, even though summons is not issued until a later date." (Comment on the Rules of Court, Vol. I, p. 150, 1979). Thus, a writ of preliminary attachment may issue upon filing of the complaint even before issuance of the summons. WHEREFORE, for lack of merit, the petition is hereby denied and, accordingly, dismissed. (Emphasis supplied) 2 The petitioner is now before this Court on a Petition for Review on Certiorari, assailing the above-quoted decision of the Court of Appeals. The petitioner assigns two (2) errors:

1. The proceedings taken and the order issued on plaintiffs petition for attachment prior to the service of summons on the defendant were contrary to law and jurisprudence and violated the defendant's right to due process. 2. The Court of Appeals committed a grave abuse of discretion amounting to lack of jurisdiction in ruling that a writ of preliminary attachment may issue upon filing of the complaint even prior to issuance of the summons. 3 The two (2) assignments of error relate to the single issue which we perceive to be at stake here, that is, whether a court which has not acquired jurisdiction over the person of the defendant in the main case, may bind such defendant or his property by issuing a writ of preliminary attachment. Both the trial court and the Court of Appeals held that the defendant may be bound by a writ of preliminary attachment even before summons together with a copy of the complaint in the main case has been validly served upon him. We are unable to agree with the respondent courts. There is no question that a writ of preliminary attachment may be applied for a plaintiff "at the commencement of the action or at any time thereafter" in the cases enumerated in Section 1 of Rule 57 of the Revised Rules of Court. The issue posed in this case, however, is not to be resolved by determining when an action may be regarded as having been commenced, a point in time which, in any case, is not necessarily fixed and Identical regardless of the specific purpose for which the deter. nation is to be made. The critical time which must be Identified is, rather, when the trial court acquires authority under law to act coercively against the defendant or his property in a proceeding in attachment. We believe and so hold that critical time is the time of the vesting of jurisdiction in the court over the person of the defendant in the main case. 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 action . 4A court which has not acquired jurisdiction over the person of defendant, cannot bind that defendant whether in the main case or in any ancillary proceeding such as attachment proceedings. The service of a petition for preliminary attachment without the prior or simultaneous service of summons and a copy of the complaint in the main case and that is what happened in this case does not of course confer jurisdiction upon the issuing court over the person of the defendant. Ordinarily, the prayer in a petition for a writ of preliminary attachment is embodied or incorporated in the main complaint itself as one of the forms of relief sought in such complaint. Thus, valid service of summons and a copy of the complaint will in such case vest jurisdiction in the court over the defendant both for purposes of the main case and for purposes of the ancillary remedy of attachment. In such case, notice of the main case is at the same time notice of the auxiliary proceeding in attachment. Where, however, the petition for a writ of preliminary attachment is embodied in a discrete pleading, such petition must be served either simultaneously with service of summons and a copy of the main complaint, or after jurisdiction over the defendant has already been acquired by such service of summons. Notice of the separate attachment petition is not notice of the main action. Put a little differently, jurisdiction whether ratione personae or ratione materiae in an attachment proceeding is ancillary to jurisdiction ratione personae or ratione materiae in the main action against the defendant. If a court has no jurisdiction over the subject matter or over the person of the defendant in the principal action, it simply has no jurisdiction to issue a writ of preliminary attachment against the defendant or his property. It is basic that the requirements of the Rules of Court for issuance of preliminary attachment must be strictly and faithfully complied with in view of the nature of this provisional remedy. In Salas v. Adil, 5 this Court described preliminary attachment as a rigorous remedy which exposes the debtor to humiliation and annoyance, such [that] it should not be abused as to cause unnecessary prejudice. It is, therefore; the duty of the court, before issuing the writ, to ensure that all the requisites of the law have been complied with; otherwise the judge

acts in excess of his jurisdiction and the writ so issued shall be null and void. (Emphasis supplied )6 The above words apply with greater force in respect of that most fundamental of requisites, the jurisdiction of the court issuing attachment over the person of the defendant. In the case at bar, the want of jurisdiction of the trial court to proceed in the main case against the defendant is quite clear. It is not disputed that neither service of summons with a copy of the complaint nor voluntary appearance of petitioner Sievert was had in this case. Yet, the trial court proceeded to hear the petition for issuance of the writ. This is reversible error and must be corrected on certiorari. WHEREFORE, the Petition for Review on certiorari is GRANTED due course and the Order of the trial court dated 20 May 1988 and the Decision of the Court of Appeals dated 13 July 1988 are hereby SET ASIDE and ANNULLED. No pronouncement as to costs. SO ORDERED. Fernan, C.J., Gutierrez, Jr., Bidin and Cortes, JJ., concur

G.R. No. 93262 December 29, 1991 DAVAO LIGHT & POWER CO., INC., petitioner, vs. THE COURT OF APPEALS, QUEENSLAND HOTEL or MOTEL or QUEENSLAND TOURIST INN, and TEODORICO ADARNA, respondents. Breva & Breva Law Offices for petitioner. Goc-Ong & Associates for private respondents. NARVASA, J.:p

Subject of the appellate proceedings at bar is the decision of the Court of Appeals in CA-G.R. Sp. No. 1967 entitled "Queensland Hotel, Inc., etc. and Adarna v. Davao Light & Power Co., Inc.," promulgated on May 4, 1990. 1 That decision nullified and set aside the writ of preliminary attachment issued by the Regional Trial Court of Davao City 2 in Civil Case No. 19513-89 on application of the plaintiff (Davao Light & Power Co.), before the service of summons on the defendants (herein respondents Queensland Co., Inc. and Adarna). Following is the chronology of the undisputed material facts culled from the Appellate Tribunal's judgment of May 4, 1990. 1. On May 2, 1989 Davao Light & Power Co., Inc. (hereafter, simply Davao Light) filed a verified complaint for recovery of a sum of money and damages against Queensland Hotel, etc. and Teodorico Adarna (docketed as Civil Case No. 19513-89). The complaint contained an ex parte application for a writ of preliminary attachment. 2. On May 3, 1989 Judge Nartatez, to whose branch the case was assigned by raffle, issued an Order granting the ex parte application and fixing the attachment bond at P4,600,513.37. 3. On May 11, 1989 the attachment bond having been submitted by Davao Light, the writ of attachment issued. 4. On May 12, 1989, the summons and a copy of the complaint, as well as the writ of attachment and a copy of the attachment bond, were served on defendants Queensland and Adarna; and pursuant to the writ, the sheriff seized properties belonging to the latter. 5. On September 6, 1989, defendants Queensland and Adarna filed a motion to discharge the attachment for lack of jurisdiction to issue the same because at the time the order of attachment was promulgated (May 3, 1989) and the attachment writ issued (May 11, 1989), the Trial Court had not yet acquired jurisdiction over the cause and over the persons of the defendants. 6. On September 14, 1989, Davao Light filed an opposition to the motion to discharge attachment. 7. On September 19, 1989, the Trial Court issued an Order denying the motion to discharge. This Order of September 19, 1989 was successfully challenged by Queensland and Adarna in a special civil action of certiorari instituted by them in the Court of Appeals. The Order was, as aforestated, annulled by the Court of Appeals in its Decision of May 4, 1990. The Appellate Court's decision closed with the following disposition: . . . the Orders dated May 3, 1989 granting the issuance of a writ of preliminary attachment, dated September 19, 1989 denying the motion to discharge attachment; dated November 7, 1989 denying petitioner's motion for reconsideration; as well as all other orders emanating therefrom, specially the Writ of Attachment dated May 11, 1989 and Notice of Levy on Preliminary Attachment dated May 11, 1989, are hereby declared null and void and the attachment hereby ordered DISCHARGED. The Appellate Tribunal declared that . . . While it is true that a prayer for the issuance of a writ of preliminary attachment may be included m the complaint, as is usually done, it is likewise true that the Court does not acquire jurisdiction over the person of the defendant until he is duly summoned or voluntarily appears, and adding the phrase that it be issued "ex parte" does not confer said jurisdiction before actual summons had been made, nor retroact jurisdiction upon summons being made. . . . It went on to say, citing Sievert v. Court of Appeals, 3 that "in a proceedings in attachment," the "critical time which must be identified is . . . when the trial court acquires authority under law to act coercively against the defendant or his property . . .;" and that "the critical time is the of the vesting of jurisdiction in the court over the person of the defendant in the main case." Reversal of this Decision of the Court of Appeals of May 4, 1990 is what Davao Light seeks in the present appellate proceedings. The question is whether or not a writ of preliminary attachment may issue ex parte against a defendant before acquisition of jurisdiction of the latter's person by service of summons or his voluntary submission to the Court's

authority. The Court rules that the question must be answered in the affirmative and that consequently, the petition for review will have to be granted. It is incorrect to theorize that after an action or proceeding has been commenced and jurisdiction over the person of the plaintiff has been vested in the court, but before the acquisition of jurisdiction over the person of the defendant (either by service of summons or his voluntary submission to the court's authority), nothing can be validly done by the plaintiff or the court. It is wrong to assume that the validity of acts done during this period should be defendant on, or held in suspension until, the actual obtention of jurisdiction over the defendant's person. The obtention by the court of jurisdiction over the person of the defendant is one thing; quite another is the acquisition of jurisdiction over the person of the plaintiff or over the subject-matter or nature of the action, or the res or object hereof. An action or proceeding is commenced by the filing of the complaint or other initiatory pleading. 4 By that act, the jurisdiction of the court over the subject matter or nature of the action or proceeding is invoked or called into activity; 5 and it is thus that the court acquires jurisdiction over said subject matter or nature of the action. 6 And it is by that self-same act of the plaintiff (or petitioner) of filing the complaint (or other appropriate pleading) by which he signifies his submission to the court's power and authority that jurisdiction is acquired by the court over his person. 7 On the other hand, jurisdiction over the person of the defendant is obtained, as above stated, by the service of summons or other coercive process upon him or by his voluntary submission to the authority of the court. 8 The events that follow the filing of the complaint as a matter of routine are well known. After the complaint is filed, summons issues to the defendant, the summons is then transmitted to the sheriff, and finally, service of the summons is effected on the defendant in any of the ways authorized by the Rules of Court. There is thus ordinarily some appreciable interval of time between the day of the filing of the complaint and the day of service of summons of the defendant. During this period, different acts may be done by the plaintiff or by the Court, which are unquestionable validity and propriety. Among these, for example, are the appointment of a guardian ad litem, 9 the grant of authority to the plaintiff to prosecute the suit as a pauper litigant, 10 the amendment of the complaint by the plaintiff as a matter of right without leave of court, 11 authorization by the Court of service of summons by publication, 12 the dismissal of the action by the plaintiff on mere notice. 13 This, too, is true with regard to the provisional remedies of preliminary attachment, preliminary injunction, receivership or replevin. 14 They may be validly and properly applied for and granted even before the defendant is summoned or is heard from. A preliminary attachment may be defined, paraphrasing the Rules of Court, as the provisional remedy in virtue of which a plaintiff or other party may, at the commencement of the action or at any time thereafter, have the property of the adverse party taken into the custody of the court as security for the satisfaction of any judgment that may be recovered. 15 It is a remedy which is purely statutory in respect of which the law requires a strict construction of the provisions granting it. 16 Withal no principle, statutory or jurisprudential, prohibits its issuance by any court before acquisition of jurisdiction over the person of the defendant. Rule 57 in fact speaks of the grant of the remedy "at the commencement of the action or at any time thereafter." 17 The phase, "at the commencement of the action," obviously refers to the date of the filing of the complaint which, as above pointed out, is the date that marks "the commencement of the action;" 18 and the reference plainly is to a time before summons is served on the defendant, or even before summons issues. What the rule is saying quite clearly is that after an action is properly commenced by the filing of the complaint and the payment of all requisite docket and other fees the plaintiff may apply for and obtain a writ of preliminary attachment upon fulfillment of the pertinent requisites laid down by law, and that he may do so at any time, either before or after service of summons on the defendant. And this indeed, has been the immemorial practice sanctioned by the courts: for the plaintiff or other proper party to incorporate the application for attachment in the complaint or other appropriate pleading (counter-claim, cross-claim, third-party claim) and for the Trial Court to issue the writ ex-parte at the commencement of the action if it finds the application otherwise sufficient in form and substance.

In Toledo v. Burgos, 19 this Court ruled that a hearing on a motion or application for preliminary attachment is not generally necessary unless otherwise directed by the Trial Court in its discretion. 20 And in Filinvest Credit Corporation v. Relova, 21 the Court declared that "(n)othing in the Rules of Court makes notice and hearing indispensable and mandatory requisites for the issuance of a writ of attachment." The only pre-requisite is that the Court be satisfied, upon consideration of "the affidavit of the applicant or of some other person who personally knows the facts, that a sufficient cause of action exists, that the case is one of those mentioned in Section 1 . . . (Rule 57), that there is no other sufficient security for the claim sought to be enforced by the action, and that the amount due to the applicant, or the value of the property the possession of which he is entitled to recover, is as much as the sum for which the order (of attachment) is granted above all legal counterclaims." 22 If the court be so satisfied, the "order of attachment shall be granted," 23 and the writ shall issue upon the applicant's posting of "a bond executed to the adverse party in an amount to be fixed by the judge, not exceeding the plaintiffs claim, conditioned that the latter will pay all the costs which may be adjudged to the adverse party and all damages which he may sustain by reason of the attachment, if the court shall finally adjudge that the applicant was not entitled thereto." 24 In Mindanao Savings & Loan Association, Inc. v. Court of Appeals, decided on April 18, 1989, 25 this Court had occasion to emphasize the postulate that no hearing is required on an application for preliminary attachment, with notice to the defendant, for the reason that this "would defeat the objective of the remedy . . . (since the) time which such a hearing would take, could be enough to enable the defendant to abscond or dispose of his property before a writ of attachment issues." As observed by a former member of this Court, 26 such a procedure would warn absconding debtors-defendants of the commencement of the suit against them and the probable seizure of their properties, and thus give them the advantage of time to hide their assets, leaving the creditorplaintiff holding the proverbial empty bag; it would place the creditor-applicant in danger of losing any security for a favorable judgment and thus give him only an illusory victory. Withal, ample modes of recourse against a preliminary attachment are secured by law to the defendant. The relative ease with which a preliminary attachment may be obtained is matched and paralleled by the relative facility with which the attachment may legitimately be prevented or frustrated. These modes of recourse against preliminary attachments granted by Rule 57 were discussed at some length by the separate opinion in Mindanao Savings & Loans Asso. Inc. v. CA., supra. That separate opinion stressed that there are two (2) ways of discharging an attachment: first, by the posting of a counterbond; and second, by a showing of its improper or irregular issuance. 1.0. The submission of a counterbond is an efficacious mode of lifting an attachment already enforced against property, or even of preventing its enforcement altogether. 1.1. When property has already been seized under attachment, the attachment may be discharged upon counterbond in accordance with Section 12 of Rule 57. Sec. 12. Discharge of attachment upon giving counterbond. At any time after an order of attachment has been granted, the party whose property has been attached or the person appearing in his behalf, may, upon reasonable notice to the applicant, apply to the judge who granted the order, or to the judge of the court in which the action is pending, for an order discharging the attachment wholly or in part on the security given . . . in an amount equal to the value of the property attached as determined by the judge to secure the payment of any judgment that the attaching creditor may recover in the action. . . . 1.2. But even before actual levy on property, seizure under attachment may be prevented also upon counterbond. The defendant need not wait until his property is seized before seeking the discharge of the attachment by a counterbond. This is made possible by Section 5 of Rule 57. Sec. 5. Manner of attaching property. The officer executing the order shall without delay attach, to await judgment and execution in the action, all the properties of the party against whom the order is issued in the province, not exempt from execution, or so much thereof as may be sufficient to satisfy the applicant's demand, unless the former makes a deposit with the clerk or judge of the court from which the order issued, or gives a counter-bond executed to the

applicant, in an amount sufficient to satisfy such demand besides costs, or in an amount equal to the value of the property which is about to be attached, to secure payment to the applicant of any judgment which he may recover in the action. . . . (Emphasis supplied) 2.0. Aside from the filing of a counterbond, a preliminary attachment may also be lifted or discharged on the ground that it has been irregularly or improperly issued, in accordance with Section 13 of Rule 57. Like the first, this second mode of lifting an attachment may be resorted to even before any property has been levied on. Indeed, it may be availed of after property has been released from a levy on attachment, as is made clear by said Section 13, viz.: Sec. 13. Discharge of attachment for improper or irregular issuance. The party whose property has been attached may also, at any time either BEFORE or AFTER the release of the attached property, or before any attachment shall have been actually levied, upon reasonable notice to the attaching creditor, apply to the judge who granted the order, or to the judge of the court in which the action is pending, for an order to discharge the attachment on the ground that the same was improperly or irregularly issued. If the motion be made on affidavits on the part of the party whose property has been attached, but not otherwise, the attaching creditor may oppose the same by counter-affidavits or other evidence in addition to that on which the attachment was made. . . . (Emphasis supplied) This is so because "(a)s pointed out in Calderon v. I.A.C., 155 SCRA 531 (1987), The attachment debtor cannot be deemed to have waived any defect in the issuance of the attachment writ by simply availing himself of one way of discharging the attachment writ, instead of the other. Moreover, the filing of a counterbond is a speedier way of discharging the attachment writ maliciously sought out by the attaching creditor instead of the other way, which, in most instances . . . would require presentation of evidence in a fullblown trial on the merits, and cannot easily be settled in a pending incident of the case." 27 It may not be amiss to here reiterate other related principles dealt with in Mindanao Savings & Loans Asso. Inc. v. C.A., supra., 28 to wit: (a) When an attachment may not be dissolved by a showing of its irregular or improper issuance: . . . (W)hen the preliminary attachment is issued upon a ground which is at the same time the applicant's cause of action; e.g., "an action for money or property embezzled or fraudulently misapplied or converted to his own use by a public officer, or an officer of a corporation, or an attorney, factor, broker, agent, or clerk, in the course of his employment as such, or by any other person in a fiduciary capacity, or for a willful violation of duty." (Sec. 1 [b], Rule 57), or "an action against a party who has been guilty of fraud m contracting the debt or incurring the obligation upon which the action is brought" (Sec. 1 [d], Rule 57), the defendant is not allowed to file a motion to dissolve the attachment under Section 13 of Rule 57 by offering to show the falsity of the factual averments in the plaintiff's application and affidavits on which the writ was based and consequently that the writ based thereon had been improperly or irregularly issued (SEE Benitez v. I.A.C., 154 SCRA 41) the reason being that the hearing on such a motion for dissolution of the writ would be tantamount to a trial of the merits of the action. In other words, the merits of the action would be ventilated at a mere hearing of a motion, instead of at the regular trial. Therefore, when the writ of attachment is of this nature, the only way it can be dissolved is by a counterbond (G.B. Inc. v. Sanchez, 98 Phil. 886). (b) Effect of the dissolution of a preliminary attachment on the plaintiffs attachment bond: . . . The dissolution of the preliminary attachment upon security given, or a showing of its irregular or improper issuance, does not of course operate to discharge the sureties on plaintiff's own attachment bond. The reason is simple. That bond is "executed to the adverse party, . . . conditioned that the . . . (applicant) will pay all the costs which may be adjudged to the adverse party and all damages which he may sustain by reason of the attachment, if the court shall finally adjudge that the applicant was not entitled thereto" (SEC. 4, Rule 57). Hence, until that determination is made, as to the applicant's entitlement to the attachment, his bond must stand

and cannot be with-drawn. With respect to the other provisional remedies, i.e., preliminary injunction (Rule 58), receivership (Rule 59), replevin or delivery of personal property (Rule 60), the rule is the same: they may also issue ex parte. 29 It goes without saying that whatever be the acts done by the Court prior to the acquisition of jurisdiction over the person of defendant, as above indicated issuance of summons, order of attachment and writ of attachment (and/or appointments of guardian ad litem, or grant of authority to the plaintiff to prosecute the suit as a pauper litigant, or amendment of the complaint by the plaintiff as a matter of right without leave of court 30 and however valid and proper they might otherwise be, these do not and cannot bind and affect the defendant until and unless jurisdiction over his person is eventually obtained by the court, either by service on him of summons or other coercive process or his voluntary submission to the court's authority. Hence, when the sheriff or other proper officer commences implementation of the writ of attachment, it is essential that he serve on the defendant not only a copy of the applicant's affidavit and attachment bond, and of the order of attachment, as explicity required by Section 5 of Rule 57, but also the summons addressed to said defendant as well as a copy of the complaint and order for appointment of guardian ad litem, if any, as also explicity directed by Section 3, Rule 14 of the Rules of Court. Service of all such documents is indispensable not only for the acquisition of jurisdiction over the person of the defendant, but also upon considerations of fairness, to apprise the defendant of the complaint against him, of the issuance of a writ of preliminary attachment and the grounds therefor and thus accord him the opportunity to prevent attachment of his property by the posting of a counterbond in an amount equal to the plaintiff's claim in the complaint pursuant to Section 5 (or Section 12), Rule 57, or dissolving it by causing dismissal of the complaint itself on any of the grounds set forth in Rule 16, or demonstrating the insufficiency of the applicant's affidavit or bond in accordance with Section 13, Rule 57. It was on account of the failure to comply with this fundamental requirement of service of summons and the other documents above indicated that writs of attachment issued by the Trial Court ex parte were struck down by this Court's Third Division in two (2) cases, namely: Sievert v. Court of Appeals, 31 and BAC Manufacturing and Sales Corporation v. Court of Appeals, et al. 32 In contrast to the case at bar where the summons and a copy of the complaint, as well as the order and writ of attachment and the attachment bond were served on the defendant in Sievert, levy on attachment was attempted notwithstanding that only the petition for issuance of the writ of preliminary attachment was served on the defendant, without any prior or accompanying summons and copy of the complaint; and in BAC Manufacturing and Sales Corporation, neither the summons nor the order granting the preliminary attachment or the writ of attachment itself was served on the defendant "before or at the time the levy was made." For the guidance of all concerned, the Court reiterates and reaffirms the proposition that writs of attachment may properly issue ex parte provided that the Court is satisfied that the relevant requisites therefor have been fulfilled by the applicant, although it may, in its discretion, require prior hearing on the application with notice to the defendant; but that levy on property pursuant to the writ thus issued may not be validly effected unless preceded, or contemporaneously accompanied, by service on the defendant of summons, a copy of the complaint (and of the appointment of guardian ad litem, if any), the application for attachment (if not incorporated in but submitted separately from the complaint), the order of attachment, and the plaintiff's attachment bond. WHEREFORE, the petition is GRANTED; the challenged decision of the Court of Appeals is hereby REVERSED, and the order and writ of attachment issued by Hon. Milagros C. Nartatez, Presiding Judge of Branch 8, Regional Trial Court of Davao City in Civil Case No. 19513-89 against Queensland Hotel or Motel or Queensland Tourist Inn and Teodorico Adarna are hereby REINSTATED. Costs against private respondents. SO ORDERED.

G.R. No. L-9353 May 21, 1957 MANILA SURETY AND FIDELITY, INC., plaintiff-appellant, -versusBATU CONSTRUCTION AND COMPANY, CARLOS N. BAQUIRAN, GONZALO P. AMBOY and ANDRES TUNAC, defendants-appellees.

De Santos and Herrera for appellant. Bienvenido C. Castro and Ruiz, Ruiz, Ruiz and Ruiz for appellees. PADILLA, J.: In a complaint filed in the Court of First Instance of Manila, the plaintiff, a domestic corporation engaged in the bonding business, hereafter called the company, alleges that the Batu Construction & Company, a partnership the members of which are the other three defendants, requested it to post, as it did, a surety bond for P8,812 in favor of the Government of the Philippines to secure the faithful Performance of the construction of the Bacarra Bridge, Project PR-72 (3), in Ilocos Norte, undertaken by the partnership, as stipulated in a construction on contract entered into on 11 July 1950 by and between the partnership and the Government of the Philippines, on condition that the defendants would "indemnify the COMPANY for any damage, loss, costs, or charges, or expenses of whatever kind and nature, including counsel or attorney's fees, which the COMPANY may, at any time, sustain or incur, as a consequence of having become surety upon the above mentioned bond; said attorney's fees shall not be less than fifteen (15%) per cent of the total amount claimed in any action which the COMPANY may institute against the undersigned (the defendants except Andres Tunac) in Court," and that "Said indemnity shall be paid to the COMPANY as soon as it has become liable for the payment of any amount, under the above-mentioned bond, whether or not it shall have paid such sum or sums of money, or any part thereof," as stipulated in a contract executed on 8 July 1950 (Exhibit B); that on 30 May 1951 because of the unsatisfactory progress of the work on the bridge, the Director of Public Works, with the approval of the Secretary of Public Works and Communications, annulled, the construction contract referred to and notified the plaintiff Company that the Government would hold it (the Company) liable for any amount incurred by the Government for the completion of the bridge, in excess of the contract price (Exhibit D); that on 19 December 1951 (should be 23 November 1951), Ricardo Fernandez and 105 other persons brought an action in the Justice of the Peace Court of Laoag, Ilocos Norte, against the partnership, the individual partners and the herein plaintiff Company for the collection of unpaid wages amounting to P5,960.10, lawful interests thereon and costs (Exhibit E); that the defendants are in imminent danger of becoming insolvent, and are removing and disposing, or about to remove and dispose, of their properties with intent to defraud their creditors, particularly the plaintiff Company; and that the latter has no other sufficient security to protect its rights against the defendants. Upon these allegations, the plaintiff prays that, upon the approval of a bond and on the strength of the allegations of the verified complaint, a writ attachment be issued and levied upon the properties of the defendants; and that after hearing, judgment be rendered " ordering the defendants to deliver to the plaintiff such sufficient security as shall protect plaintiff from the any proceedings by the creditors on the Surety Bond aforementioned and from the danger of insolvency of the defendants; and to allow costs to the herein plaintiff," and " for such other measures of relief as may be proper and just in the premises." Attached to the complaint are a verification and affidavit of attachment; and copies of the surety bond marked Annex A; of the indemnity contract marked Annex B; and of the letter of the Acting Director of Public Works to the plaintiff dated 30 May 1951, marked Annex C. Andres Tunac admits in his answer the allegations in paragraphs 1, 2, 3 and 4 of the complaint, but denies the allegations in paragraphs 5, 6, 7, 8 and 9 of the complaint, because he has never promised to put up an indemnity bond in favor of the plaintiff nor has he ever entered into any indemnity agreement with it; because the partnership or the Batu Construction & Company was fulfilling its obligations in accordance with the terms of the construction contract; because the Republic of the Philippines, through the Director of Public, Works, had no authority to annul the contract at its own initiative; because the Justice of the Peace court of Laoag, Ilocos Norte had no jurisdiction to hear and decide a case for collection of P5,960.10; and because the defendants were not in imminent danger of insolvency, neither did they remove or dispose of their properties with intent to defraud their creditors. By way of affirmative defenses, he alleges that the signing by Carlos N. Baquiran of the indemnity agreement for and in behalf of the partnership Batu Construction & Company did not bind the latter to the plaintiff and as the partnership is not bound, he (Andres Tunac), as a member thereof, is also not bound; that he not being a party to the said agreement, the plaintiff has no cause of action against him; that in the event the partnership is bound by the indemnity agreement he invokes his right of exhaustion of the property of the partnership before the plaintiff may proceed against his property. And as a counterclaim he alleges that the plaintiff brought the action against him maliciously and in bad faith for the purpose of annoying him and damaging his professional reputation, he having a flourishing and successful practice as engineer in Ilocos Norte, thereby compelling him to defend himself; that to secure the issuance of a writ of attachment the plaintiff made

false representations; and that the issuance of the writ upon such false representations of the plaintiff caused him damages in the sum of P10,000 including expenses of litigation and attorney's fees. Upon the foregoing he prays that the complaint be dismissed as to him and the defendant Batu Construction & Company, with costs against the plaintiff; that the latter be ordered to pay him the sum of P10,000; and that he be granted such other remedies as may be just, equitable and proper. Gonzalo P. Amboy denies in his answer the allegations of the complaint, except those that may be deemed admitted in the special defenses, and alleges that he is not in imminent danger of insolvency and is not removing and disposing or about to remove and dispose of his properties, because he has no property; that has been no liquidation of the expenses incurred in the construction of the Bacarra Bridge, Project PR-72(3) to determine whether there would be a balance of the contract price which may be applied to pay the claim for unpaid wages of Ricardo Fernandez et al. sought to be collected in civil case No. 198 of the Justice of the Peace Court of Laoag, Ilocos Norte, and not until after such liquidation shall have been made could his liability and that of his co-defendants be determined and fixed; that if after proper liquidation's there be a deficit of the contract price the defendants are willing to pay the claim for unpaid wages of Ricardo Fernandez et al. Upon these allegations he prays that the issuance of the writ of attachment prayed for by the plaintiff be held in abeyance until after civil case No. 198 of the Justice of the Peace Court of Laoag, Ilocos Norte, shall have been disposed of. Carlos N. Baquiran admits in his answer the allegations in paragraphs 1, 2, 3,4, 5, 6, and 11 of the complaint but alleges that he has no sufficient knowledge to form a belief as to the truth of the claim of Ricardo Fernandez et al. set forth in paragraph 7 of the complaint, for there has never been a liquidation between the defendants and the Bureau of Public Works. He further denies specifically paragraphs 8, 9 and 10 of the complaint. By way of special defenses he alleges that there has been no liquidation by and between the defendants and the Bureau of Public Works on Project PR-72(3) to determine whether the total amount spent for the construction of the bridge exceeded the contract price; that after the determination of the respective liabilities of the parties in civil case No. 198 of the Justice of the Peace Court of Laoag, Ilocos Norte, if any there be against the defendants herein, and such liability could not be paid out of the balance of the contract price of Project PR-72(3), the defendants are ready and willing to assume their respective responsibilities. Upon these allegations he prays that the complaint of the plaintiff be dismissed; that the issuance of the writ of attachment prayed for be denied; and that he be granted such other relief as may be just and equitable, with costs against the plaintiff. At the hearing, the plaintiff presented its evidence. After the plaintiff had rested its case, defendant Gonzalo P. Amboy moved for the dismissal of the complaint, on the ground that the remedy provided for in the last paragraph of article 2071 of the new Civil Code may be availed of by the guarantor only and not by a surety. Acting upon this motion to dismiss the trial court made the following findings: . . . That on July 8, 1950, the defendant Batu Construction & Company, as principal, and the plaintiff Manila Surety & Fidelity Co. Inc., as surety, executed a surety bond for the sum of P8,812.00 to insure faithful performance of the former's obligation as contractor for the construction of the Bacarra Bridge, Project PR-72 (No. 3) Ilocos Norte Province. On the same date, July 8,1950, the Batu Construction & Company and the defendants Carlos N. Baquiran and Gonzales P. Amboy executed an indemnity agreement to protect the Manila Surety & Fidelity Co. Inc.., against damage, loss or expenses which it may sustain as a consequence of the surety bond executed by it jointly with Batu Construction & Company. On or about May 30, 1951, the plaintiff received a notice from the Director of Public Works (Exhibit B) annulling its contract with the Government for the construction of the Bacarra Bridge because of its failure to make satisfactory progress in the execution of the works, with the warning that ,any amount spent by the Government in the continuation of the work, in excess of the contract price, will be charged against the surety bond furnished by the plaintiff. It also appears that a complaint by the laborers in said project of the Batu Construction & Company was filed against it and the Manila Surety and Fidelity Co., Inc., for unpaid wages amounting to P5,960.10. and, being of the opinion that the provisions of article 2071 of the new Civil Code may be availed of by a guarantor only and not by a surety the complaint, with costs against the plaintiff.

From this order the plaintiff Company has appealed to this Court, because it proposes to raise only a question of law. After the order dismissing the complaint had been entered, on 16 and 20 July 1953, the defendants Gonzalo P. Amboy and Andres Tunac moved for leave to prove damages they allegedly suffered as a result of the attachment levied upon their properties. On 15 August 1953 the Court heard the evidence on damages. On 23 September 1953 the Court found and held that the defendant Gonzalo P. Amboy is entitled to recover from the plaintiff damages equivalent to 6 per cent interest per annum on the sum of P35 in possession of the Provincial Treasurer of Ilocos Norte, which was garnished pursuant to the writ of attachment, from the date of garnishment until its charge; but the claims for damages of Andres Tunac and Gonzalo P. Amboy allegedly suffered by them in their business, moral damages and attorney's fees were without basis in law and in fact. Hence their recovery was denied. The Court dissolved the writ of attachment. From this last order only the plaintiff Company has appealed. The main question to determine is whether the last paragraph of article 2071 of the new Civil Code taken from article 1843 of the old Civil Code may be availed of by a surety. A guarantor is the insurer of the solvency of the debtor; a surety is an insurer of the debt. A guarantor binds himself to pay if the principal is unable to pay; a surety undertakes to pay if the principal does not pay. 1 The reason which could be invoked for the non-availability to a surety of the provisions of the last paragraph of article 2071 of the new Civil Code would be the fact that guaranty like commodatum2 is gratuitous. But guaranty could also be for a price or consideration as provided for in article 2048. So, even if there should be a consideration or price paid to a guarantor for him to insure the performance of an obligation by the principal debtor, the provisions of article 2071 would still be available to the guarantor. In suretyship the surety becomes liable to the creditor without the benefit of the principal debtor's exclusion of his properties, for he (the surety) maybe sued independently. So, he is an insurer of the debt and as such he has assumed or undertaken a responsibility or obligation greater or more onerous than that of guarantor. Such being the case, the provisions of article 2071, under guaranty, are applicable and available to a surety. The reference in article 2047 to, the provisions of Section 4, Chapter 3, Title 1, Book IV of the new Civil Code, on solidary or several obligations, does not mean that suretyship which is a solidary obligation is withdrawn from the applicable provisions governing guaranty. The plaintiff's cause of action does not fall under paragraph 2 of article 2071 of the new Civil Code, because there is no proof of the defendants' insolvency. The fact that the contract was annulled because of lack of progress in the construction of the bridge is no proof of such insolvency. It does not fall under paragraph 3, because the defendants have not bound themselves to relieve the plaintiff from the guaranty within a specified period which already has expired, because the surety bond does not fix any period of time and the indemnity agreement stipulates one year extendible or renewable until the bond be completely cancelled by the person or entity in whose behalf the bond was executed or by a Court of competent jurisdiction. It does not come under paragraph 4, because the debt has not become demandable by reason of the expiration of the period for payment. It does not come under paragraph 5 because of the lapse of 10 years, when the principal obligation has no period for its maturity, etc., for 10 years have not yet elapsed. It does not fall under paragraph 6, because there is no proof that "there are reasonable grounds to fear that the principal debtor intends to abscond." It does not come under paragraph 7, because the defendants, as principal debtors, are not in imminent danger of becoming insolvent, there being no proof to that effect. But the plaintiff's cause of action comes under paragraph 1 of article 2071 of the new Civil Code, because the action brought by Ricardo Fernandez and 105 persons in the Justice of the Peace Court of Laoag, province of Ilocos Norte, for the collection of unpaid wages amounting to P5,960.10, is in connection with the construction of the Bacarra Bridge, Project PR-72 (3), undertaken by the Batu Construction & Company, and one of the defendants therein is the herein plaintiff, the Manila Surety and Fidelity Co., Inc., and paragraph 1 of article 2071 of the new Civil Code provides that the guarantor, even before having paid, may proceed against the principal debtor "to obtain release from the guaranty, or to demand a security that shall protect him from any proceedings by the creditor or from the danger of insolvency of the debtor, when he (the guarantor) is sued for payment. It does not provide that the guarantor be sued by the creditor for the payment of the debt. It simply provides that the guarantor of surety be sued for the payment of an amount for which the surety bond was put up

to secure the fulfillment of the obligation undertaken by the principal debtor. So, the suit filed by Ricardo Fernandez and 105 persons in the Justice of the Peace Court of Laoag, province of Ilocos Norte, for the collection of unpaid wages earned in connection with the work done by them in the construction of the Bacarra Bridge, Project PR-72(3), is a suit for the payment of an amount for which the surety bond was put up or posted to secure the faithful performance of the obligation undertaken by the principal debtors (the defendants) in favor of the creditor, the Government of the Philippines. The order appealed from dismissing the complaint is reversed and set aside, and the case remanded to the court below for determination of the amount of security that would protect the plaintiff Company from any proceedings by the creditor or from the danger of insolvency of the defendants, the principal debtors, and direction to the defendants to put up such amount of security as may be established by competent evidence, without pronouncement as to costs. The writ of attachment having been issued improvidently because, although there is an allegation in the verified complaint that the defendants were in imminent danger of insolvency and that they were removing or disposing, or about to remove or dispose, of their properties, with intent to defraud their creditors, particularly the plaintiff Company, still such allegation was not proved, the fact that a complaint had been filed against the defendants and the plaintiff Company in the Justice of the Peace Court of Laoag, Ilocos Norte, for the collection of an amount for unpaid wages of the plaintiffs therein who claimed to have worked in the construction of the bridge, being insufficient to prove it, and because the relief prayed for in the complaint for security that shall protect it from any proceedings by the creditor and from the danger of the defendants becoming insolvent is inconsistent with the state of insolvency of the defendants or their being in imminent danger of insolvency, the order awarding 6 per cent on the sum of P35 in possession of the Provincial Treasurer owned by the defendant Gonzalo P. Amboy garnished by virtue of the writ of attachment, from the date of the garnishment until its discharge, and denying recovery of the amounts of damages claimed to have been suffered by the defendants, is affirmed, the defendants not having appealed therefrom. Bengzon, Montemayor, Reyes, A., Bautista Angelo, Labrador, Concepcion, Reyes, J.B.L., Endencia and Felix, JJ., concur.