Rule 57 (Secs. 1-6) FTC

Rule 57: Preliminary Attachment | 1
G.R. No. L-825 July 20, 1948

ROMAN MABANAG vs. JOSEPH M. GALLEMORE
081 Phil 254

FIRST DIVISION
[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.

SYLLABUS
COURTS; JURISDICTION; NON-RESIDENT DEFENDANT; EFFECT OF ATTACHMENT OR
GARNISHMENT. Attachment or garnishment of property of a non-resident defendant located in
the Philippines confers jurisdiction on the court in an otherwise personal action. In other words,
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.

D E C I S I O N

TUASON, J p:
This case, here on appeal from an order of 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 non-resident."
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 Philippines 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. Kaamio who as amicus curiae 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 affects
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, sections 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 proceedings 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 principle that a 'State, through its tribunals, may subject property
situated within its limits 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 where 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 and 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 the 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 proceeding against the property continues, that proceeding is none the less
necessarily in rem, although in form there is but a single proceeding. (4 Am. Jur., 556-557.)
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 a 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 where 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, Actg. C.J., Feria, Pablo, Perfecto, Bengzon, Briones, and Padilla, JJ., concur.

FIRST DIVISION
[G.R. No. 115678. February 23, 2001]
PHILIPPINE BANK OF COMMUNICATIONS, petitioner, vs. HON. COURT OF APPEALS
and BERNARDINO VILLANUEVA, respondents.
[G.R. No. 119723. February 23, 2001]
PHILIPPINE BANK OF COMMUNICATIONS, petitioner, vs. HON. COURT OF APPEALS
and FILIPINAS TEXTILE MILLS, INC., respondents.
D E C I S I O N
YNARES-SANTIAGO, J .:
Before us are consolidated petitions for review both filed by Philippine Bank of
Communications; one against the May 24, 1994 Decision of respondent Court of Appeals in CA-
G.R. SP No. 32863
[1]
and the other against its March 31, 1995 Decision in CA-G.R. SP No. 32762.
[2]

Both Decisions set aside and nullified the August 11, 1993 Order
[3]
of the Regional Trial Court of
Manila, Branch 7, granting the issuance of a writ of preliminary attachment in Civil Case No. 91-
56711.
The case commenced with the filing by petitioner, on April 8, 1991, of a Complaint against
private respondent Bernardino Villanueva, private respondent Filipinas Textile Mills and one Sochi
Villanueva (now deceased) before the Regional Trial Court of Manila. In the said Complaint,
petitioner sought the payment of P2,244,926.30 representing the proceeds or value of various textile
goods, the purchase of which was covered by irrevocable letters of credit and trust receipts executed
by petitioner with private respondent Filipinas Textile Mills as obligor; which, in turn, were covered
by surety agreements executed by private respondent Bernardino Villanueva and Sochi Villanueva.
In their Answer, private respondents admitted the existence of the surety agreements and trust
receipts but countered that they had already made payments on the amount demanded and that the
interest and other charges imposed by petitioner were onerous.
On May 31, 1993, petitioner filed a Motion for Attachment,
[4]
contending that violation of the
trust receipts law constitutes estafa, thus providing ground for the issuance of a writ of preliminary
attachment; specifically under paragraphs b and d, Section 1, Rule 57 of the Revised Rules of
Court. Petitioner further claimed that attachment was necessary since private respondents were
disposing of their properties to its detriment as a creditor. Finally, petitioner offered to post a bond
for the issuance of such writ of attachment.
The Motion was duly opposed by private respondents and, after the filing of a Reply thereto
by petitioner, the lower court issued its August 11, 1993 Order for the issuance of a writ of
preliminary attachment, conditioned upon the filing of an attachment bond. Following the denial of
the Motion for Reconsideration filed by private respondent Filipinas Textile Mills, both private
respondents filed separate petitions for certiorari before respondent Court assailing the order
granting the writ of preliminary attachment.
Both petitions were granted, albeit on different grounds. In CA-G.R. SP No. 32762,
respondent Court of Appeals ruled that the lower court was guilty of grave abuse of discretion in not
conducting a hearing on the application for a writ of preliminary attachment and not requiring
petitioner to substantiate its allegations of fraud, embezzlement or misappropriation. On the other
hand, in CA-G.R. SP No. 32863, respondent Court of Appeals found that the grounds cited by
petitioner in its Motion do not provide sufficient basis for the issuance of a writ of preliminary
attachment, they being mere general averments. Respondent Court of Appeals held that neither
embezzlement, misappropriation nor incipient fraud may be presumed; they must be established in
order for a writ of preliminary attachment to issue.
Hence, the instant consolidated
[5]
petitions charging that respondent Court of Appeals erred in

1. Holding that there was no sufficient basis for the issuance of the writ of preliminary
attachment in spite of the allegations of fraud, embezzlement and misappropriation of the proceeds
or goods entrusted to the private respondents;
2. Disregarding the fact that that the failure of FTMI and Villanueva to remit the proceeds or
return the goods entrusted, in violation of private respondents fiduciary duty as entrustee, constitute
embezzlement or misappropriation which is a valid ground for the issuance of a writ of preliminary
attachment.
[6]

We find no merit in the instant petitions.
To begin with, we are in accord with respondent Court of Appeals in CA-G.R. SP No. 32863
that the Motion for Attachment filed by petitioner and its supporting affidavit did not sufficiently
establish the grounds relied upon in applying for the writ of preliminary attachment.
The Motion for Attachment of petitioner states that
1. The instant case is based on the failure of defendants as entrustee to pay or remit the
proceeds of the goods entrusted by plaintiff to defendant as evidenced by the trust receipts (Annexes
B, C and D of the complaint), nor to return the goods entrusted thereto, in violation of their
fiduciary duty as agent or entrustee;
2. Under Section 13 of P.D. 115, as amended, violation of the trust receipt law constitute(s)
estafa (fraud and/or deceit) punishable under Article 315 par. 1[b] of the Revised Penal Code;
3. On account of the foregoing, there exist(s) valid ground for the issuance of a writ of
preliminary attachment under Section 1 of Rule 57 of the Revised Rules of Court particularly under
sub-paragraphs b and d, i.e. for embezzlement or fraudulent misapplication or conversion of
money (proceeds) or property (goods entrusted) by an agent (entrustee) in violation of his fiduciary
duty as such, and against a party who has been guilty of fraud in contracting or incurring the debt or
obligation;
4. The issuance of a writ of preliminary attachment is likewise urgently necessary as there
exist(s) no sufficient security for the satisfaction of any judgment that may be rendered against the
defendants as the latter appears to have disposed of their properties to the detriment of the creditors
like the herein plaintiff;
5. Herein plaintiff is willing to post a bond in the amount fixed by this Honorable Court as a
condition to the issuance of a writ of preliminary attachment against the properties of the defendants.
Section 1(b) and (d), Rule 57 of the then controlling Revised Rules of Court, provides, to wit

SECTION 1. Grounds upon which attachment may issue. A plaintiff or any proper party
may, at the commencement of the action or at any time thereafter, have the property of the adverse
party attached as security for the satisfaction of any judgment that may be recovered in the following
cases:
x x x x x x x x x
(b) In an action for money or property embezzled or fraudulently misapplied or converted to
his use by a public officer, or an officer of a corporation, or an attorney, factor, broker, agent or
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;
x x x x x x x x x
(d) In an action against a party who has been guilty of fraud in contracting the debt or
incurring the obligation upon which the action is brought, or in concealing or disposing of the
property for the taking, detention or conversion of which the action is brought;
x x x x x x x x x
While the Motion refers to the transaction complained of as involving trust receipts, the
violation of the terms of which is qualified by law as constituting estafa, it does not follow that a writ
of attachment can and should automatically issue. Petitioner cannot merely cite Section 1(b) and
(d), Rule 57, of the Revised Rules of Court, as mere reproduction of the rules, without more, cannot
serve as good ground for issuing a writ of attachment. An order of attachment cannot be issued on a
general averment, such as one ceremoniously quoting from a pertinent rule.
[7]

The supporting Affidavit is even less instructive. It merely states, as follows --
I, DOMINGO S. AURE, of legal age, married, with address at No. 214-216 Juan Luna Street,
Binondo, Manila, after having been sworn in accordance with law, do hereby depose and say,
THAT:
1. I am the Assistant Manager for Central Collection Units Acquired Assets Section of the
plaintiff, Philippine Bank of Communications, and as such I have caused the preparation of the
above motion for issuance of a writ of preliminary attachment;
2. I have read and understood its contents which are true and correct of my own knowledge;
3. There exist(s) sufficient cause of action against the defendants in the instant case;
4. The instant case is one of those mentioned in Section 1 of Rule 57 of the Revised Rules
of Court wherein a writ of preliminary attachment may be issued against the defendants, particularly
sub-paragraphs b and d of said section;
5. There is no other sufficient security for the claim sought to be enforced by the instant
case and the amount due to herein plaintiff or the value of the property sought to be recovered is as
much as the sum for which the order for attachment is granted, above all legal counterclaims.
Again, it lacks particulars upon which the court can discern whether or not a writ of
attachment should issue.
Petitioner cannot insist that its allegation that private respondents failed to remit the proceeds
of the sale of the entrusted goods nor to return the same is sufficient for attachment to issue. We
note that petitioner anchors its application upon Section 1(d), Rule 57. This particular provision
was adequately explained in Liberty Insurance Corporation v. Court of Appeals,
[8]
as follows
To sustain an attachment on this ground, it must be shown that the debtor in contracting the
debt or incurring the obligation intended to defraud the creditor. The fraud must relate to the
execution of the agreement and must have been the reason which induced the other party into giving
consent which he would not have otherwise given. To constitute a ground for attachment in Section
1 (d), Rule 57 of the Rules of Court, fraud should be committed upon contracting the obligation sued
upon. A debt is fraudulently contracted if at the time of contracting it the debtor has a
preconceived plan or intention not to pay, as it is in this case. Fraud is a state of mind and need
not be proved by direct evidence but may be inferred from the circumstances attendant in each case
(Republic v. Gonzales, 13 SCRA 633). (Emphasis ours)
We find an absence of factual allegations as to how the fraud alleged by petitioner was
committed. As correctly held by respondent Court of Appeals, such fraudulent intent not to honor
the admitted obligation cannot be inferred from the debtors inability to pay or to comply with the
obligations.
[9]
On the other hand, as stressed, above, fraud may be gleaned from a preconceived plan
or intention not to pay. This does not appear to be so in the case at bar. In fact, it is alleged by
private respondents that out of the total P419,613.96 covered by the subject trust receipts, the
amount of P400,000.00 had already been paid, leaving only P19,613.96 as balance. Hence,
regardless of the arguments regarding penalty and interest, it can hardly be said that private
respondents harbored a preconceived plan or intention not to pay petitioner.
The Court of Appeals was correct, therefore, in its finding in CA-G.R. SP No. 32863 that
neither petitioners Motion or its supporting Affidavit provides sufficient basis for the issuance of
the writ of attachment prayed for.
We also agree with respondent Court of Appeals in CA-G.R. SP No. 32762 that the lower
court should have conducted a hearing and required private petitioner to substantiate its allegations
of fraud, embezzlement and misappropriation.
To reiterate, petitioners Motion for Attachment fails to meet the standard set forth in D.P.
Lub Oil Marketing Center, Inc. v. Nicolas,
[10]
in applications for attachment. In the said case, this
Court cautioned --
The petitioners prayer for a writ of preliminary attachment hinges on the allegations in
paragraph 16 of the complaint and paragraph 4 of the affidavit of Daniel Pe which are couched in
general terms devoid of particulars of time, persons and places to support such a serious assertion
that defendants are disposing of their properties in fraud of creditors. There is thus the necessity of
giving to the private respondents an opportunity to ventilate their side in a hearing, in accordance
with due process, in order to determine the truthfulness of the allegations. But no hearing was
afforded to the private respondents the writ having been issued ex parte. A writ of attachment can
only be granted on concrete and specific grounds and not on general averments merely quoting the
words of the rules.
As was frowned upon in D.P. Lub Oil Marketing Center, Inc.,
[11]
not only was petitioners
application defective for having merely given general averments; what is worse, there was no
hearing to afford private respondents an opportunity to ventilate their side, in accordance with due
process, in order to determine the truthfulness of the allegations of petitioner. As already mentioned,
private respondents claimed that substantial payments were made on the proceeds of the trust
receipts sued upon. They also refuted the allegations of fraud, embezzlement and misappropriation
by averring that private respondent Filipinas Textile Mills could not have done these as it had ceased
its operations starting in June of 1984 due to workers strike. These are matters which should have
been addressed in a preliminary hearing to guide the lower court to a judicious exercise of its
discretion regarding the attachment prayed for. On this score, respondent Court of Appeals was
correct in setting aside the issued writ of preliminary attachment.
Time and again, we have held that the rules on the issuance of a writ of attachment must be
construed strictly against the applicants. This stringency is required because the remedy of
attachment is harsh, extraordinary and summary in nature. If all the requisites for the granting of the
writ are not present, then the court which issues it acts in excess of its jurisdiction.
[12]

WHEREFORE, for the foregoing reasons, the instant petitions are DENIED. The decision
of the Court of Appeals in CA-G.R. SP No. 32863 and CA-G.R. SP No. 32762 are AFFIRMED. No
pronouncement as to costs.
SO ORDERED.
Davide, Jr., C.J., (Chairman), Puno, Kapunan, and Pardo, JJ., concur.


THIRD DIVISION

PHILIPPINE COMMERCIAL G.R. No. 175587
INTERNATIONAL BANK,
Petitioner, Present:

Ynares-Santiago, J.
(Chairperson),
- versus - Austria-Martinez,
Chico-Nazario,
Nachura, and
Reyes, JJ.
JOSEPH ANTHONY M. ALEJANDRO,
Respondent. Promulgated:

September 21, 2007
x ---------------------------------------------------------------------------------------- x

DECI SI ON


This petition for review assails the May 31, 2006 Decision
1[1]
of the Court of Appeals in
CA-G.R. CV No. 78200 affirming the August 30, 2000 Decision
2[2]
Makati, which granted respondent Joseph Anthony M. Alejandros claim for damages arising from
petitioner Philippine Commercial International Banks (PCIB) invalid garnishment of respondents
deposits.

On October 23, 1997, petitioner filed against respondent a complaint
3[3]
for sum of money
with prayer for the issuance of a writ of preliminary attachment. Said complaint alleged that on
September 10, 1997, respondent, a resident of Hong Kong, executed in favor of petitioner a
promissory note obligating himself to pay P249,828,588.90 plus interest. In view of the fluctuations
in the foreign exchange rates which resulted in the insufficiency of the deposits assigned by
respondent as security for the loan, petitioner requested the latter to put up additional security for the
loan. Respondent, however, sought a reconsideration of said request pointing out petitioners
alleged mishandling of his account due to its failure to carry out his instruction to close his account
as early as April 1997, when the prevailing rate of exchange of the US Dollar to Japanese yen was
US$1.00:JPY127.50.
4[4]
It appears that the amount of P249,828,588.90 was the consolidated amount

1[1]
Rollo, pp. 199-220. Penned by Associate Justice Magdangal M. De Leon
and concurred in by Associate Justices Conrado M. Vasquez, Jr. and Mariano C.
Del Castillo.
2[2]
Record on appeal, vol. 1, pp. 357-365.
3[3]
Id. at 13-16.
4[4]
Id. at 40.
of a series of yen loans granted by petitioner to respondent during the months of February and April
1997.
5[5]

In praying for the issuance of a writ of preliminary attachment under Section 1
paragraphs (e) and (f) of Rule 57 of the Rules of Court, petitioner alleged that (1) respondent
fraudulently withdrew his unassigned deposits notwithstanding his verbal promise to PCIB Assistant
Vice President Corazon B. Nepomuceno not to withdraw the same prior to their assignment as
security for the loan; and (2) that respondent is not a resident of the Philippines. The application for
the issuance of a writ was supported with the affidavit of Nepomuceno.
6[6]

On October 24, 1997, the trial court granted the application and issued the writ ex
parte
7[7]
after petitioner posted a bond in the amount of P18,798,734.69, issued by Prudential
Guarantee & Assurance Inc., under Bond No. HO-46764-97. On the same date, the bank deposits of
respondent with Rizal Commercial Banking Corporation (RCBC) were garnished. On October 27,
1997, respondent, through counsel, filed a manifestation informing the court that he is voluntarily
submitting to its jurisdiction.
8[8]

Subsequently, respondent filed a motion to quash
9[9]
the writ contending that the
withdrawal of his unassigned deposits was not fraudulent as it was approved by petitioner. He also
alleged that petitioner knew that he maintains a permanent residence at Calle Victoria, Ciudad
Regina, Batasan Hills, Quezon City, and an office address in Makati City at the Law Firm Romulo
Mabanta Buenaventura Sayoc & De los Angeles,
10[10]
where he is a partner. In both addresses,
petitioner regularly communicated with him through its representatives. Respondent added that he is
the managing partner of the Hong Kong branch of said Law Firm; that his stay in Hong Kong is only
temporary; and that he frequently travels back to the Philippines.

On December 24, 1997, the trial court issued an order quashing the writ and holding that
the withdrawal of respondents unassigned deposits was not intended to defraud petitioner. It also
found that the representatives of petitioner personally transacted with respondent through his home
address in Quezon City and/or his office in Makati City. It thus concluded that petitioner
misrepresented and suppressed the facts regarding respondents residence considering that it has
personal and official knowledge that for purposes of service of summons, respondents residence and
office addresses are located in the Philippines. The dispositive portion of the courts decision is as
follows:

WHEREFORE, the URGENT MOTION TO QUASH, being
meritorious, is hereby GRANTED, and the ORDER of 24 October 1997 is
hereby RECONSIDERED and SET ASIDE and the WRIT OF attachment of
the same is hereby DISCHARGED.

SO ORDERED.
11[11]

With the denial
12[12]
of petitioners motion for reconsideration, it elevated the case to the
Court of Appeals (CA-G.R. SP No. 50748) via a petition for certiorari. On May 10, 1999, the
petition was dismissed for failure to prove that the trial court abused its discretion in issuing the

5[5]
Id. at 34-35.
6[6]
Id. at 17.
7[7]
Id. at 22-28.
8[8]
TSN, vol. II, set I, pp. 633-639.
9[9]
Record on appeal, vol. I, pp. 30-38.
10[10]
Also spelled as Delos Angeles in some parts of the records and rollo.
11[11]
Id. at 67-69. Penned by Judge Fernando V. Gorospe, Jr.
12[12]
Id. at 128.
aforesaid order.
13[13]
Petitioner filed a motion for reconsideration but was denied on October 28,
1999.
14[14]
On petition with this Court, the case was dismissed for late filing in a minute resolution
(G.R. No. 140605) dated January 19, 2000.
15[15]
Petitioner filed a motion for reconsideration but was
likewise denied with finality on March 6, 2000.
16[16]

Meanwhile, on May 20, 1998, respondent filed a claim for damages in the amount of P25
Million
17[17]
on the attachment bond (posted by Prudential Guarantee & Assurance, Inc., under
JCL(4) No. 01081, Bond No. HO-46764-97) on account of the wrongful garnishment of his deposits.
He presented evidence showing that his P150,000.00 RCBC check payable to his counsel as
attorneys fees, was dishonored by reason of the garnishment of his deposits. He also testified that
he is a graduate of the Ateneo de Manila University in 1982 with a double degree of Economics and
Management Engineering and of the University of the Philippines in 1987 with the degree of
Bachelor of Laws. Respondent likewise presented witnesses to prove that he is a well known lawyer
in the business community both in the Philippines and in Hong Kong.
18[18]
For its part, the lone
witness presented by petitioner was Nepomuceno who claimed that she acted in good faith in
alleging that respondent is a resident of Hong Kong.
19[19]

On August 30, 2000, the trial court awarded damages to respondent in the amount of P25
Million without specifying the basis thereof, thus:

WHEREFORE, premises above considered, and defendant having
duly established his claim in the amount of P25,000,000.00, judgment is
hereby rendered ordering Prudential Guarantee & [Assurance] Co., which is
solidarily liable with plaintiff to pay defendant the full amount of bond under
Prudential Guarantee & Assurance, Inc. JCL(4) No. 01081, [Bond No. HO-
46764-97], dated 24 October 1997 in the amount of P18,798,734.69. And,
considering that the amount of the bond is insufficient to fully satisfy the
award for damages, plaintiff is hereby ordered to pay defendant the amount of
P6,201,265.31.

SO ORDERED.
20[20]

The trial court denied petitioners motion for reconsideration on October 24, 2000.
21[21]

Petitioner elevated the case to the Court of Appeals which affirmed the findings of the
trial court. It held that in claiming that respondent was not a resident of the Philippines, petitioner
cannot be said to have been in good faith considering that its knowledge of respondents Philippine
residence and office address goes into the very issue of the trial courts jurisdiction which would
have been defective had respondent not voluntarily appeared before it.

The Court of Appeals, however, reduced the amount of damages awarded to petitioner
and specified their basis. The dispositive portion of the decision of the Court of Appeals states:

13[13]
Rollo, pp. 328-334. The Decision was penned by Associate Justice Hector
L. Hofilea and concurred in by Associate Justices Bernardo P. Abesamis and
Presbitero J. Velasco, Jr. (now a member of this Court).
14[14]
Id. at 335-336.
15[15]
Id. at 337.
16[16]
Id. at 338.
17[17]
18[18]
Id. at 359-361.
19[19]
Id. at 362.
20[20]
Id. at 365. Penned by Judge Fernando V. Gorospe, Jr.
21[21]
Id. at 392-394.

WHEREFORE, the appeal is PARTIALLY GRANTED and the
decision appealed from is hereby MODIFIED. The award of damages in the
amount of P25,000,000.00 is deleted. In lieu thereof, Prudential Guarantee &
[Assurance, Inc.], which is solidarily liable with appellant [herein petitioner],
is ORDERED to pay appellee [herein respondent] P2,000,000.00 as nominal
damages; P5,000,000.00 as moral damages; and P1,000,000.00 as attorneys
fees, to be satisfied against the attachment bond under Prudential Guarantee &
Assurance, Inc. JCL (4) No. 01081.

SO ORDERED.
22[22]

Both parties moved for reconsideration. On November 21, 2006, the Court of Appeals
denied petitioners motion for reconsideration but granted that of respondents by ordering petitioner
to pay additional P5Million as exemplary damages.
23[23]

Hence, the instant petition.

At the outset, it must be noted that the ruling of the trial court that petitioner is not
entitled to a writ of attachment because respondent is a resident of the Philippines and that his act of
withdrawing his deposits with petitioner was without intent to defraud, can no longer be passed upon
by this Court. More importantly, the conclusions of the court that petitioner bank misrepresented
that respondent was residing out of the Philippines and suppressed the fact that respondent has a
permanent residence in Metro Manila where he may be served with summons, are now beyond the
power of this Court to review having been the subject of a final and executory order. Said findings
were sustained by the Court of Appeals in CA-G.R. SP No. 50784 and by this Court in G.R. No.
140605. The rule on conclusiveness of judgment, which obtains under the premises, precludes the
relitigation of a particular fact or issue in another action between the same parties even if based on a
different claim or cause of action. The judgment in the prior action operates as estoppel as to those
matters in issue or points controverted, upon the determination of which the finding or judgment was
rendered. The previous judgment is conclusive in the second case, as to those matters actually and
directly controverted and determined.
24[24]
Hence, the issues of misrepresentation by petitioner and
the residence of respondent for purposes of service of summons can no longer be questioned by
petitioner in this case.

The core issue for resolution is whether petitioner bank is liable for damages for the
improper issuance of the writ of attachment against respondent.

We rule in the affirmative.

Notwithstanding the final judgment that petitioner is guilty of misrepresentation and
suppression of a material fact, the latter contends that it acted in good faith. Petitioner also contends
that even if respondent is considered a resident of the Philippines, attachment is still proper under
Section 1, paragraph (f), Rule 57 of the Rules of Court since he (respondent) is a resident who is
temporarily out of the Philippines upon whom service of summons may be effected by publication.

Petitioners contentions are without merit.

While the final order of the trial court which quashed the writ did not categorically use
the word bad faith in characterizing the representations of petitioner, the tenor of said order

22[22]
Rollo, p. 220.
23[23]
Id. at 223-225.
24[24]
Tan v. Court of Appeals, G.R. No. 142401, August 20, 2001, 363 SCRA
444, 445 and 449-450.
evidently considers the latter to have acted in bad faith by resorting to a deliberate strategy to
mislead the court. Thus

In the hearings of the motion, and oral arguments of counsels
before the Court, it appears that plaintiff BANK through its contracting
officers Vice President CORAZON B. NEPOMUCENO and Executive Vice
President JOSE RAMON F. REVILLA, personally transacted with defendant
mainly through defendants permanent residence in METRO-MANILA, either
in defendants home address in Quezon City or his main business address at
the ROMULO MABANTA BUENAVENTURA SAYOC & DELOS
ANGELES in MAKATI and while at times follow ups were made through
defendants temporary home and business addresses in Hongkong. It is
therefore clear that plaintiff could not deny their personal and official
knowledge that defendants permanent and official residence for purposes of
service of summons is in the Philippines. In fact, this finding is further
confirmed by the letter of Mr. JOHN GOKONGWEI, JR. Chairman,
Executive Committee of plaintiff BANK, in his letter dated 6 October 1997 on
the subject loan to defendant of the same law firm was addressed to the
ROMULO LAW FIRM in MAKATI.

[Anent the] second ground of attachment x x x [t]he Court finds
that the amount withdrawn was not part of defendants peso deposits assigned
with the bank to secure the loan and as proof that the withdrawal was not
intended to defraud plaintiff as creditor is that plaintiff approved and allowed
said withdrawals. It is even noted that when the Court granted the prayer for
attachment it was mainly on the first ground under Section 1(f) of Rule 57 of
the 1997 Rules of Civil Procedure, that defendant resides out of the
Philippines.

On the above findings, it is obvious that plaintiff already knew
from the beginning the deficiency of its second ground for attachment [i.e.,]
disposing properties with intent to defraud his creditors, and therefore plaintiff
had to resort to this misrepresentation that defendant was residing out of the
Philippines and suppressed the fact that defendants permanent residence is in
METRO MANILA where he could be served with summons.

On the above findings, and mainly on the misrepresentations made
by plaintiff on the grounds for the issuance of the attachment in the verified
complaint, the Court concludes that defendant has duly proven its grounds in
the MOTION and that plaintiff is not entitled to the attachment.
25[25]

Petitioner is therefore barred by the principle of conclusiveness of judgment from again
invoking good faith in the application for the issuance of the writ. Similarly, in the case of Hanil
Development Co., Ltd. v. Court of Appeals,
26[26]
the Court debunked the claim of good faith by a
party who maliciously sought the issuance of a writ of attachment, the bad faith of said party having
been previously determined in a final decision which voided the assailed writ. Thus

Apropos the Application for Judgment on the Attachment Bond,
Escobar claims in its petition that the award of attorneys fees and injunction
bond premium in favor of Hanil is [contrary] to law and jurisprudence. It
contends that no malice or bad faith may be imputed to it in procuring the
writ.

25[25]
Record on appeal, Vol. II, pp. 67-68.
26[26]
G.R. Nos. 113176 & 113342, July 30, 2001, 362 SCRA 1, 15.

Escobars protestation is now too late in the day. The question of
the illegality of the attachment and Escobars bad faith in obtaining it has long
been settled in one of the earlier incidents of this case. The Court of Appeals,
in its decision rendered on February 3, 1983 in C.A.-G.R. No. SP-14512,
voided the challenged writ, having been issued with grave abuse of discretion.
Escobars bad faith in procuring the writ cannot be doubted. Its Petition for
the Issuance of Preliminary Attachment made such damning allegations that:
Hanil was already able to secure a complete release of its final collection from
the MPWH; it has moved out some of its heavy equipments for unknown
destination, and it may leave the country anytime. Worse, its Ex Parte Motion
to Resolve Petition alleged that after personal verification by (Escobar) of
(Hanils) equipment in Cagayan de Oro City, it appears that the equipments
were no longer existing from their compound. All these allegations of
Escobar were found to be totally baseless and untrue.

Even assuming that the trial court did not make a categorical pronouncement of
misrepresentation and suppression of material facts on the part of petitioner, the factual backdrop of
this case does not support petitioners claim of good faith. The facts and circumstances omitted are
highly material and relevant to the grant or denial of writ of attachment applied for.

Finally, there is no merit in petitioners contention that respondent can be considered a
resident who is temporarily out of the Philippines upon whom service of summons may be effected
by publication, and therefore qualifies as among those against whom a writ of attachment may be
issued under Section 1, paragraph (f), Rule 57 of the Rules of Court which provides:

(f) In an action against a party x x x on whom summons
may be served by publication.

In so arguing, petitioner attempts to give the impression that although it erroneously
invoked the ground that respondent does not reside in the Philippines, it should not be made to pay
damages because it is in fact entitled to a writ of attachment had it invoked the proper ground under
Rule 57. However, even on this alternative ground, petitioner is still not entitled to the issuance of a
writ of attachment.

The circumstances under which a writ of preliminary attachment may be issued are set
forth in Section 1, Rule 57 of the Rules of Court, to wit:

SEC. 1. Grounds upon which attachment may issue. At the
commencement of the action or at any time before entry of judgment, a
plaintiff or any proper party may have the property of the adverse party
attached as security for the satisfaction of any judgment that may be recovered
in the following cases:

(a) In an action for the recovery of a specified amount of
money or damages, other than moral and exemplary, on a cause of action
arising from law, contract, quasi-contract, delict or quasi-delict against a party
who is about to depart from the Philippines with intent to defraud his
creditors;

(b) In 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;

(c) In an action to recover the possession of personal
property unjustly or fraudulently taken, detained, or converted, when the
property, or any part thereof, has been concealed, removed, or disposed of to
prevent its being found or taken by the applicant or an authorized person;

(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 the performance thereof;

(e) In an action against a party who has removed or
disposed of his property, or is about to do so, with intent to defraud his
creditors;

(f) In an action against a party who resides out of the
Philippines, or on whom summons may be served by publication.

The purposes of preliminary attachment are: (1) to seize the property of the debtor in
advance of final judgment and to hold it for purposes of satisfying said judgment, as in the grounds
stated in paragraphs (a) to (e) of Section 1, Rule 57 of the Rules of Court; or (2) to acquire
jurisdiction over the action by actual or constructive seizure of the property in those instances
where personal or substituted service of summons on the defendant cannot be effected, as in
paragraph (f) of the same provision.
27[27]

Corollarily, in actions in personam, such as the instant case for collection of sum of
money,
28[28]
summons must be served by personal or substituted service, otherwise the court will not
acquire jurisdiction over the defendant. In case the defendant does not reside and is not found in the
Philippines (and hence personal and substituted service cannot be effected), the remedy of the
plaintiff in order for the court to acquire jurisdiction to try the case is to convert the action into a
proceeding in rem or quasi in rem by attaching the property of the defendant.
29[29]
Thus, in order to
acquire jurisdiction in actions in personam where defendant resides out of and is not found in the
Philippines, it becomes a matter of course for the court to convert the action into a proceeding in rem
or quasi in rem by attaching the defendants property. The service of summons in this case (which
may be by publication coupled with the sending by registered mail of the copy of the summons and
the court order to the last known address of the defendant), is no longer for the purpose of acquiring
jurisdiction but for compliance with the requirements of due process.
30[30]

However, where the defendant is a resident who is temporarily out of the Philippines,
attachment of his/her property in an action in personam, is not always necessary in order for the
court to acquire jurisdiction to hear the case.

Section 16, Rule 14 of the Rules of Court reads:

Sec. 16. Residents temporarily out of the Philippines. When an
action is commenced against a defendant who ordinarily resides within the

27[27]
Herrera, Remedial Law, vol. III, pp. 2 and 8; Regalado, Remedial Law
Compendium, vol. I, ninth revised edition, p. 678.
28[28]
Obaa v. Court of Appeals, G.R. No. 78635, April 27, 1989, 172 SCRA
866, 874.
29[29]
Consolidated Plywood Industries, Inc. v. Breva, G.R. No. L-82811,
October 18, 1988, 166 SCRA 589, 593-594; Obaa v. Court of Appeals, supra
at 874.
30[30]
Sahagun v. Court of Appeals, G.R. No. 78328, June 3, 1991, 198 SCRA 44,
54.
Philippines, but who is temporarily out of it, service may, by leave of court, be
also effected out of the Philippines, as under the preceding section.

The preceding section referred to in the above provision is Section 15 which provides for
extraterritorial service (a) personal service out of the Philippines, (b) publication coupled with
the sending by registered mail of the copy of the summons and the court order to the last known
address of the defendant; or (c) in any other manner which the court may deem sufficient.

In Montalban v. Maximo,
31[31]
however, the Court held that substituted service of
summons (under the present Section 7, Rule 14 of the Rules of Court) is the normal mode of service
of summons that will confer jurisdiction on the court over the person of residents temporarily out of
the Philippines. Meaning, service of summons may be effected by (a) leaving copies of the summons
at the defendants residence with some person of suitable discretion residing therein, or (b) by
leaving copies at the defendants office or regular place of business with some competent person in
charge thereof.
32[32]
Hence, the court may acquire jurisdiction over an action in personam by mere
substituted service without need of attaching the property of the defendant.

The rationale in providing for substituted service as the normal mode of service for
residents temporarily out of the Philippines, was expounded in Montalban v. Maximo,
33[33]
in this
wise:

A man temporarily absent from this country leaves a definite place of
residence, a dwelling where he lives, a local base, so to speak, to which any
inquiry about him may be directed and where he is bound to return. Where
one temporarily absents himself, he leaves his affairs in the hands of one who
may be reasonably expected to act in his place and stead; to do all that is
necessary to protect his interests; and to communicate with him from time to
time any incident of importance that may affect him or his business or his
affairs. It is usual for such a man to leave at his home or with his business
associates information as to where he may be contacted in the event a question
that affects him crops up.

Thus, in actions in personam against residents temporarily out of the Philippines, the
court need not always attach the defendants property in order to have authority to try the case.

31[31]
131 Phil. 154, 165-166 (1968).
32[32]
The pronouncement of the Court in Castillo v. Court of First Instance of
Bulacan, Branch IV (G.R. No. L-55869, February 20, 1984, 127 SCRA 632)
that with respect to residents temporarily out of the Philippines, non-compliance
with the modes of service under Section 17 (now Section 15, i.e., service of
summons out of the Philippines by personal service, or by publication in a
newspaper of general circulation), is a denial of due process and renders the
proceedings void, does not mean that said modes of service are exclusive.
Substituted service of summons is still the normal mode of service for residents
temporarily out of the Philippines. The declaration of nullity of the proceedings
in the said case was by reason of the defective substituted service of summons to
a person not authorized to receive the same being a mere overseer of the lessee
in the conjugal property of the defendant, and not because substituted service of
summons per se is not among the valid modes of service upon a resident
temporarily out of the country.
33[33]
Supra at 164-165.
Where the plaintiff seeks to attach the defendants property and to resort to the concomitant service
of summons by publication, the same must be with prior leave, precisely because, if the sole
purpose of the attachment is for the court to acquire jurisdiction, the latter must determine
whether from the allegations in the complaint, substituted service (to persons of suitable discretion at
the defendants residence or to a competent person in charge of his office or regular place of
business) will suffice, or whether there is a need to attach the property of the defendant and resort to
service of summons by publication in order for the court to acquire jurisdiction over the case and to
comply with the requirements of due process.

In the instant case, it must be stressed that the writ was issued by the trial court mainly on
the representation of petitioner that respondent is not a resident of the Philippines.
34[34]
Obviously,
the trial courts issuance of the writ was for the sole purpose of acquiring jurisdiction to hear and
decide the case. Had the allegations in the complaint disclosed that respondent has a residence in
Quezon City and an office in Makati City, the trial court, if only for the purpose of acquiring
jurisdiction, could have served summons by substituted service on the said addresses, instead of
attaching the property of the defendant. The rules on the application of a writ of attachment must be
strictly construed in favor of the defendant. For attachment is harsh, extraordinary, and summary in
nature; it is a rigorous remedy which exposes the debtor to humiliation and annoyance.
35[35]
It
should be resorted to only when necessary and as a last remedy.

It is clear from the foregoing that even on the allegation that respondent is a resident
temporarily out of the Philippines, petitioner is still not entitled to a writ of attachment because the
trial court could acquire jurisdiction over the case by substituted service instead of attaching the
property of the defendant. The misrepresentation of petitioner that respondent does not reside in the
Philippines and its omission of his local addresses was thus a deliberate move to ensure that the
application for the writ will be granted.

In light of the foregoing, the Court of Appeals properly sustained the finding of the trial
court that petitioner is liable for damages for the wrongful issuance of a writ of attachment against
respondent.

Anent the actual damages, the Court of Appeals is correct in not awarding the same
inasmuch as the respondent failed to establish the amount garnished by petitioner. It is a well settled
rule that one who has been injured by a wrongful attachment can recover damages for the actual loss
resulting therefrom. But for such losses to be recoverable, they must constitute actual damages duly
established by competent proofs, which are, however, wanting in the present case.
36[36]

Nevertheless, nominal damages may be awarded to a plaintiff whose right has been
violated or invaded by the defendant, for the purpose of vindicating or recognizing that right, and not
for indemnifying the plaintiff for any loss suffered by him. Its award is thus not for the purpose of
indemnification for a loss but for the recognition and vindication of a right. Indeed, nominal
damages are damages in name only and not in fact.
37[37]
They are recoverable where some injury has

34[34]
The pertinent portion of the December 24, 1997 Order of the trial court,
provides:
It is even noted that when the Court granted the prayer for attachment it was
mainly on the first ground under Section 1(f) of Rule 57 of the 1997 Rules of
Civil Procedure, that defendant resides out of the Philippines.
35[35]
Jardine-Manila Finance, Inc. v. Court of Appeals, G.R. No. 55272, April
10, 1989, 171 SCRA 636, 645.
36[36]
Philippine Commercial International Bank v. Intermediate Appellate Court,
G.R. No. 73610, April 19, 1991, 196 SCRA 29, 36-37.
37[37]
Almeda v. Cario, G.R. No. 152143, January 13, 2003, 395 SCRA 144,
149-150.
been done but the pecuniary value of the damage is not shown by evidence and are thus subject to
the discretion of the court according to the circumstances of the case.
38[38]

In this case, the award of nominal damages is proper considering that the right of
respondent to use his money has been violated by its garnishment. The amount of nominal damages
must, however, be reduced from P2 million to P50,000.00 considering the short period of 2 months
during which the writ was in effect as well as the lack of evidence as to the amount garnished.

Likewise, the award of attorneys fees is proper when a party is compelled to incur
expenses to lift a wrongfully issued writ of attachment. The basis of the award thereof is also the
amount of money garnished, and the length of time respondents have been deprived of the use of
their money by reason of the wrongful attachment.
39[39]
It may also be based upon (1) the amount
and the character of the services rendered; (2) the labor, time and trouble involved; (3) the nature and
importance of the litigation and business in which the services were rendered; (4) the responsibility
imposed; (5) the amount of money and the value of the property affected by the controversy or
involved in the employment; (6) the skill and the experience called for in the performance of the
services; (7) the professional character and the social standing of the attorney; (8) the results secured,
it being a recognized rule that an attorney may properly charge a much larger fee when it is
contingent than when it is not.
40[40]

All the aforementioned weighed, and considering the short period of time it took to have
the writ lifted, the favorable decisions of the courts below, the absence of evidence as to the
professional character and the social standing of the attorney handling the case and the amount
garnished, the award of attorneys fees should be fixed not at P1 Million, but only at P200,000.00.

The courts below correctly awarded moral damages on account of petitioners
misrepresentation and bad faith; however, we find the award in the amount of P5 Million excessive.
Moral damages are to be fixed upon the discretion of the court taking into consideration the
educational, social and financial standing of the parties.
41[41]
Moral damages are not intended to
enrich a complainant at the expense of a defendant.
42[42]
They are awarded only to enable the injured
party to obtain means, diversion or amusements that will serve to obviate the moral suffering he has
undergone, by reason of petitioners culpable action. Moral damages must be commensurate with
the loss or injury suffered. Hence, the award of moral damages is reduced to P500,000.00.

38[38]
Robes-Francisco Realty & Development Corporation v. Court of First
Instance of Rizal, (Branch XXXIV), G.R. No. L-41093, October 30, 1978, 86
SCRA 59, 64; Pedrosa v. Court of Appeals, G.R. No. 118680, March 5, 2001,
353 SCRA 620, 630-631.
39[39]
Carlos v. Sandoval, G.R. No. 135830, September 30, 2005, 471 SCRA 266,
300.
40[40]
Prudential Bank v. Court of Appeals, G.R. No. 125536, March 16, 2000,
328 SCRA 264, 272.
41[41]
Philippine Commercial International Bank v. Intermediate Appellate Court,
supra at 38-39.
42[42]
Filinvest Credit Coporation v. Intermediate Appellate Court, G.R. No. L-
65935, September 30, 1988, 166 SCRA 155, 165-166.
Considering petitioners bad faith in securing the writ of attachment, we sustain the
award of exemplary damages by way of example or correction for public good. This should deter
parties in litigations from resorting to baseless and preposterous allegations to obtain writs of
attachments. While as a general rule, the liability on the attachment bond is limited to actual (or in
some cases, temperate or nominal) damages, exemplary damages may be recovered where the
attachment was established to be maliciously sued out.
43[43]
Nevertheless, the award of exemplary
damages in this case should be reduced from P5M to P500,000.00.

Finally, contrary to the claim of petitioner, the instant case for damages by reason of the
invalid issuance of the writ, survives the dismissal of the main case for sum of money. Suffice it to
state that the claim for damages arising from such wrongful attachment may arise and be decided
separately from the merits of the main action.
44[44]

WHEREFORE, the petition is PARTIALLY GRANTED. The May 31, 2006 Decision
of the Court of Appeals in CA-G.R. CV No. 78200 is AFFIRMED with MODIFICATIONS. As
modified, petitioner Philippine Commercial International Bank is ordered to pay respondent Joseph
Anthony M. Alejandro the following amounts: P50,000.00 as nominal damages, P200,000.00 as
attorneys fees; and P500,000.00 as moral damages, and P500,000.00 as exemplary damages, to be
satisfied against the attachment bond issued by Prudential Guarantee & Assurance Inc.,
45[45]
under
JCL (4) No. 01081, Bond No. HO-46764-97.

No pronouncement as to costs.

43[43]
Hanil Development Co., Ltd. v. Court of Appeals, supra note 26 at 16.
44[44]
Carlos v. Sandoval, supra at 290-291.
45[45]
The surety, Prudential Guarantee & Assurance, Inc., was duly notified of
respondents application for damages (Record on appeal, p. 78) pursuant to
Section 20, Rule 57 of the Rules of Court.
SO ORDERED.

CONSUELO YNARES-SANTIAGO
Associate Justice

WE CONCUR:

MA. ALICIA AUSTRIA-MARTINEZ
Associate Justice

MINITA V. CHICO-NAZARIO ANTONIO EDUARDO B. NACHURA
Associate Justice Associate Justice

RUBEN T. REYES
Associate Justice

ATTESTATI ON

I attest that the conclusions in the above decision were reached in consultation before the
case was assigned to the writer of the opinion of the Courts Division.

Associate Justice

Chairperson, Third Division

CERTI FI CATI ON

Pursuant to Section 13, Article VIII of the Constitution and the Division Chairpersons
Attestation, it is hereby certified that the conclusions in the above Decision were reached in
consultation before the case was assigned to the writer of the opinion of the Courts Division.

REYNATO S. PUNO
Chief Justice

THIRD DIVISION

ALEJANDRO NG WEE,
Petitioner,

- versus -

MANUEL TANKIANSEE,
Respondent.

G.R. No. 171124

Present:

YNARES-SANTIAGO, J.,
Chairperson,
AUSTRIA-MARTINEZ,
CORONA,
*

NACHURA, and
REYES, JJ.

Promulgated:

February 13, 2008

x------------------------------------------------------------------------------------x

D E C I S I O N

NACHURA, J .:

Before the Court is a petition for review on certiorari under Rule 45 of the Rules of
Court assailing the September 14, 2005 Decision
46[1]
of the Court of Appeals (CA) in CA-G.R. SP
No. 90130 and its January 6, 2006 Resolution
47[2]
denying the motion for reconsideration thereof.

The facts are undisputed. Petitioner Alejandro Ng Wee, a valued client of Westmont
Bank (now United Overseas Bank), made several money placements totaling P210,595,991.62 with
the banks affiliate, Westmont Investment Corporation (Wincorp), a domestic entity engaged in the
business of an investment house with the authority and license to extend credit.
48[3]

Sometime in February 2000, petitioner received disturbing news on Wincorps financial
condition prompting him to inquire about and investigate the companys operations and transactions
with its borrowers. He then discovered that the company extended a loan equal to his total money
placement to a corporation [Power Merge] with a subscribed capital of only P37.5M. This credit
facility originated from another loan of about P1.5B extended by Wincorp to another corporation
[Hottick Holdings]. When the latter defaulted in its obligation, Wincorp instituted a case against it
and its surety. Settlement was, however, reached in which Hotticks president, Luis Juan L. Virata
(Virata), assumed the obligation of the surety.
49[4]

*
In lieu of Associate Justice Minita V. Chico-Nazario per Special Order
No. 484 dated January 11, 2008.
46[1]
Penned by Associate Justice Vicente S.E. Veloso, with Associate
Justices Roberto A. Barrios (deceased) and Amelita G. Tolentino, concurring;
rollo, pp. 44-55.
47[2]
Rollo, p. 57.
48[3]
Id. at 61-63, 650.
49[4]
Id. at 63-67, 650-652.
Under the scheme agreed upon by Wincorp and Hotticks president, petitioners money
placements were transferred without his knowledge and consent to the loan account of Power Merge
through an agreement that virtually freed the latter of any liability. Allegedly, through the false
representations of Wincorp and its officers and directors, petitioner was enticed to roll over his
placements so that Wincorp could loan the same to Virata/Power Merge.
50[5]

Finding that Virata purportedly used Power Merge as a conduit and connived with
Wincorps officers and directors to fraudulently obtain for his benefit without any intention of
paying the said placements, petitioner instituted, on October 19, 2000, Civil Case No. 00-99006 for
damages with the Regional Trial Court (RTC) of Manila.
51[6]
One of the defendants impleaded in the
complaint is herein respondent Manuel Tankiansee, Vice-Chairman and Director of Wincorp.
52[7]

On October 26, 2000, on the basis of the allegations in the complaint and the October 12,
2000 Affidavit
53[8]
of petitioner, the trial court ordered the issuance of a writ of preliminary

50[5]
Id. at 67-71, 652-653.

51[6]
Id. at 58.
52[7]
Id. at 60. The other defendants in the civil case are Luis Juan L. Virata,
Power Merge Corporation, UEM Development Philippines, Inc., UEM-MARA
Philippines Corporation, United Engineers (Malaysia) Berhad, Majlis Amanah
Rakyat, Renong Berhad, Westmont Investment Corporation, Antonio T. Ong,
Anthony A.T. Reyes, Simeon S. Cua, Mariza Santos-Tan, Vicente T. Cualoping,
Henry T. Cualoping, Manuel A. Estrella and John Anthony B. Espiritu.
53[8]
Id. at 377-383. The material portions of the October 12, 2000 Affidavit
read:
4. In order to entice me to place substantial funds in Wincorp, the
latters officers and said Manager of Westmont Bank-Binondo Branch, who
actively marketed Wincorps business, made the following representations to
me:
4.1. Money placements with Wincorp would earn
more interest than an ordinary savings or time deposit of the
same amount with Westmont Bank.
4.2. Money placements with Wincorp are profitable,
stable and secure because the funds are loaned to borrowers
who are extensively screened and who are required to provide
sufficient security in accordance with generally accepted
banking standards and practices like those observed by
Westmont Bank.
4.3. Wincorp is stable since Wincorp and Westmont
Bank were owned or controlled by the same shareholders and
thus, has the backing of Westmont Bank.
4.4. Being a depositor of Westmont Bank, I could
easily make or withdraw my money placements by merely
instructing Westmont Bank and Wincorp to transfer the funds
from my accounts and remit the same to the other.
5. Relying on said representations, I placed substantial amounts of
money in my own name and in the names of others with Wincorp on several

occasions. Some of my outstanding placements with Wincorp, which were
loaned by Wincorp, are in the names of Robert Tabada Tan, Elizabeth Ng Wee,
Alex Lim Tan and Angela Archangel who hold said placements in trust for me.
6. Each money placement I gave to Wincorp and Wincorps receipt
thereof is evidenced by a confirmation advice issued by Wincorp.
7. I was assured by the officers of Wincorp with whom I transacted that
upon maturity of each money placement, the maturity value thereof can be
withdrawn from Wincorp or the same can be rolled over as principal for
another money placement at the prevailing interest rate at the time of the roll-
over. I was also assured by the officers of Wincorp that they would allow me,
being a valued client, to pre-terminate my accounts/placements if I needed to
withdraw the proceeds thereof before their maturity dates. However, I would
usually roll-over most of the placements, upon the advice and enticement of
Wincorp.
8. Sometime in February 2000, I received disturbing news about the
financial condition and the questionable operations of Wincorp and its
borrowers.
9. Considering that I had sizeable placements with Wincorp, I
conducted inquiries and investigated the veracity of the news reports.
10. Based on my inquiries and the documents, which came to my
possession as a result thereof, I discovered the following:
x x x x
11. It must be noted that my money placements were transferred to the
loan account of Power Merge by Wincorp and its officers/directors, without my
prior knowledge and consent. Later, however, through false representations by
Wincorp and its officers/directors, I was enticed to roll over the placements
which were loaned to Virata/Power Merge because I was made to believe that
the latter were not in default of their loan obligations; otherwise, Wincorp and
its officers/directors would not have renewed the loans or grant additional loans
to Virata/Power Merge.
12. The principal amount of my money placements/funds which were
loaned by Wincorp to Virata/Power Merge, is at least Two Hundred Ten
Million Five Hundred Ninety-Five Thousand Nine Hundred Ninety-One
and 62/100 Pesos (P210,595,991.62). [cf. Confirmation Advices (Annexes S,
S-1 to S-35 of the Complaint)]
13. Said money placements have all matured and are now all past due
and owing.
14. However, despite demand, Virata/Power Merge have refused and
continue to refuse to pay me the said outstanding loan obligations. [cf. Annexes
T, T-1, T-2 and T-3 of the Complaint]
15. Based on the foregoing, it is evident that I have a sufficient cause of
action for the payment of the outstanding loan obligation to me in the principal
amount of Two Hundred Ten Million Five Hundred Ninety-Five Thousand Nine
Hundred Ninety-One and 62/100 Pesos (P210,595,991.62), plus all stipulated
interests, liquidated damages and attorneys fees against Power Merge and
attachment against the properties not exempt from execution of all the defendants in the civil case
subject, among others, to petitioners filing of a P50M-bond.
54[9]
The writ was, consequently, issued
on November 6, 2000.
55[10]

Arguing that the writ was improperly issued and that the bond furnished was grossly
insufficient, respondent, on December 22, 2000, moved for the discharge of the attachment.
56[11]
The
other defendants likewise filed similar motions.
57[12]
On October 23, 2001, the RTC, in an Omnibus
Order,
58[13]
denied all the motions for the discharge of the attachment. The defendants, including
respondent herein, filed their respective motions for reconsideration
59[14]
but the trial court denied the
same on October 14, 2002.
60[15]

Incidentally, while respondent opted not to question anymore the said orders, his co-
defendants, Virata and UEM-MARA Philippines Corporation (UEM-MARA), assailed the same via
certiorari under Rule 65 before the CA [docketed as CA-G.R. SP No. 74610]. The appellate court,
however, denied the certiorari petition on August 21, 2003,
61[16]
and the motion for reconsideration
thereof on March 16, 2004.
62[17]
In a petition for review on certiorari before this Court, in G.R. No.
162928, we denied the petition and affirmed the CA rulings on May 19, 2004 for Viratas and UEM-

Virata who beneficially owns all the shares of stock of the latter and who
personally used and/or benefited from my placements/funds. I also have a cause
of action against Wincorp and its officers and directors considering that the
damage and prejudice to me could not have been caused without their
participation and connivance with Virata/Power Merge in granting loans to the
latter using my funds/placements.
16. From the foregoing facts, it clearly appears that the acts of Wincorp
and its officers and directors in granting loans to Virata/Power Merge using my
funds/placements with the latter having no intention nor capacity to pay said
loan obligation, constitute fraud both in contracting the debt or incurring the
obligation, and in the performance thereof under Section 1, Rule 57 of the Rules
of Court.
17. There is no other security for my legitimate claims in the principal
amount of at least Two Hundred Ten Million Five Hundred Ninety-Five
Thousand Nine Hundred Ninety-One and 62/100 Pesos (P210,595,991.62), plus
all stipulated interests, liquidated damages and attorneys fees, which amount is
likewise the amount to which I am entitled and for which the order of
attachment is sought above all legal counterclaims.
54[9]
Id. at 384-386.
55[10]
Id. at 387.
56[11]
Id. at 390-393. This is respondents first motion to discharge the
attachment.
57[12]
Id. at 400.
58[13]
Id. at 400-404.
59[14]
Id. at 405-410.
60[15]
Id. at 412-417.
61[16]
Id. at 419-433. The August 21, 2003 Decision of the appellate court in
CA-G.R. SP No. 74610 was penned by Associate Justice Arsenio J. Magpale,
with Associate Justices Bienvenido L. Reyes and Rebecca De Guia-Salvador
concurring.
62[17]
Id. at 435.
MARAs failure to sufficiently show that the appellate court committed any reversible error.
63[18]
We
subsequently denied the petition with finality on August 23, 2004.
64[19]

On September 30, 2004, respondent filed before the trial court another Motion to
Discharge Attachment,
65[20]
re-pleading the grounds he raised in his first motion but raising the
following additional grounds: (1) that he was not present in Wincorps board meetings approving the
questionable transactions;
66[21]
and (2) that he could not have connived with Wincorp and the other
defendants because he and Pearlbank Securities, Inc., in which he is a major stockholder, filed cases
against the company as they were also victimized by its fraudulent schemes.
67[22]

Ruling that the grounds raised were already passed upon by it in the previous orders
affirmed by the CA and this Court, and that the additional grounds were respondents affirmative
defenses that properly pertained to the merits of the case, the trial court denied the motion in its
January 6, 2005 Order.
68[23]

With the denial of its motion for reconsideration,
69[24]
respondent filed a certiorari
petition before the CA docketed as CA-G.R. SP No. 90130. On September 14, 2005, the appellate
court rendered the assailed Decision
70[25]
reversing and setting aside the aforementioned orders of the
trial court and lifting the November 6, 2000 Writ of Preliminary Attachment
71[26]
to the extent that it
concerned respondents properties. Petitioner moved for the reconsideration of the said ruling, but
the CA denied the same in its January 6, 2006 Resolution.
72[27]

Thus, petitioner filed the instant petition on the following grounds:

A.

IT IS RESPECTFULLY SUBMITTED THAT THE COURT OF APPEALS
SHOULD NOT HAVE GIVEN DUE COURSE TO THE PETITION FOR
CERTIORARI FILED BY RESPONDENT, SINCE IT MERELY RAISED
ERRORS IN JUDGMENT, WHICH, UNDER PREVAILING
JURISPRUDENCE, ARE NOT THE PROPER SUBJECTS OF A WRIT OF
CERTIORARI.

B.

MOREOVER, IT IS RESPECTFULLY SUBMITTED THAT THE COURT
OF APPEALS COMMITTED SERIOUS LEGAL ERROR IN RESOLVING
FAVORABLY THE GROUNDS ALLEGED BY RESPONDENT IN HIS
PETITION AND (SIC) LIFTING THE WRIT OF PRELIMINARY
ATTACHMENT, SINCE THESE GROUNDS ALREADY RELATE TO
THE MERITS OF CIVIL CASE NO. 00-99006 WHICH, UNDER

63[18]
Id. at 436.
64[19]
Id. at 437.
65[20]
Id. at 448-461. This is respondents second motion to discharge the
attachment.
66[21]
Id. at 451-453.
67[22]
Id. at 453-455.
68[23]
Id. at 508-510.
69[24]
Id. at 511.
70[25]
Supra note 1.
71[26]
Supra note 10.
72[27]
Supra note 2.
PREVAILING JURISPRUDENCE, CANNOT BE USED AS BASIS (SIC)
FOR DISCHARGING A WRIT OF PRELIMINARY ATTACHMENT.

C.

LIKEWISE, IT IS RESPECTFULLY SUBMITTED THAT THE COURT OF
APPEALS ERRED IN SUSTAINING THE ERRORS IN JUDGMENT
ALLEGED BY RESPONDENT, NOT ONLY BECAUSE THESE ARE
BELIED BY THE VERY DOCUMENTS HE SUBMITTED AS PROOF OF
SUCH ERRORS, BUT ALSO BECAUSE THESE HAD EARLIER BEEN
RESOLVED WITH FINALITY BY THE LOWER COURT.
73[28]

For his part, respondent counters, among others, that the general and sweeping allegation
of fraud against respondent in petitioners affidavitrespondent as an officer and director of
Wincorp allegedly connived with the other defendants to defraud petitioneris not sufficient basis
for the trial court to order the attachment of respondents properties. Nowhere in the said affidavit
does petitioner mention the name of respondent and any specific act committed by the latter to
defraud the former. A writ of attachment can only be granted on concrete and specific grounds and
not on general averments quoting perfunctorily the words of the Rules. Connivance cannot also be
based on mere association but must be particularly alleged and established as a fact. Respondent
further contends that the trial court, in resolving the Motion to Discharge Attachment, need not
actually delve into the merits of the case. All that the court has to examine are the allegations in the
complaint and the supporting affidavit. Petitioner cannot also rely on the decisions of the appellate
court in CA-G.R. SP No. 74610 and this Court in G.R. No. 162928 to support his claim because
respondent is not a party to the said cases.
74[29]

We agree with respondents contentions and deny the petition.

In the case at bench, the basis of petitioners application for the issuance of the writ of
preliminary attachment against the properties of respondent is Section 1(d) of Rule 57 of the Rules
of Court which pertinently reads:

Section 1. Grounds upon which attachment may issue.At the

x x x x

(d) In an action against a party who has been guilty of a fraud in
contracting the debt or incurring the obligation upon which the action is
brought, or in the performance thereof.

For a writ of attachment to issue under this rule, the applicant must sufficiently show the
factual circumstances of the alleged fraud because fraudulent intent cannot be inferred from the
debtors mere non-payment of the debt or failure to comply with his obligation.
75[30]
The applicant

73[28]
Rollo, pp. 17-18.
74[29]
Id. at 661-685.

75[30]
See Philippine National Construction Corporation v. Dy, G.R. No.
156887, October 3, 2005, 472 SCRA 1, 9-12.
must then be able to demonstrate that the debtor has intended to defraud the creditor.
76[31]
In Liberty
Insurance Corporation v. Court of Appeals,
77[32]
we explained as follows:

To sustain an attachment on this ground, it must be shown that the
debtor in contracting the debt or incurring the obligation intended to defraud
the creditor. The fraud must relate to the execution of the agreement and must
have been the reason which induced the other party into giving consent which
he would not have otherwise given. To constitute a ground for attachment in
Section 1 (d), Rule 57 of the Rules of Court, fraud should be committed upon
contracting the obligation sued upon. A debt is fraudulently contracted if at
the time of contracting it the debtor has a preconceived plan or intention not to
pay, as it is in this case. Fraud is a state of mind and need not be proved by
direct evidence but may be inferred from the circumstances attendant in each
case.
78[33]

In the instant case, petitioners October 12, 2000 Affidavit
79[34]
is bereft of any factual
statement that respondent committed a fraud. The affidavit narrated only the alleged fraudulent
transaction between Wincorp and Virata and/or Power Merge, which, by the way, explains why this
Court, in G.R. No. 162928, affirmed the writ of attachment issued against the latter. As to the
participation of respondent in the said transaction, the affidavit merely states that respondent, an
officer and director of Wincorp, connived with the other defendants in the civil case to defraud
petitioner of his money placements. No other factual averment or circumstance details how
respondent committed a fraud or how he connived with the other defendants to commit a fraud in the
transaction sued upon. In other words, petitioner has not shown any specific act or deed to support
the allegation that respondent is guilty of fraud.

The affidavit, being the foundation of the writ,
80[35]
must contain such particulars as to
how the fraud imputed to respondent was committed for the court to decide whether or not to issue
the writ.
81[36]
Absent any statement of other factual circumstances to show that respondent, at the
time of contracting the obligation, had a preconceived plan or intention not to pay, or without any
showing of how respondent committed the alleged fraud, the general averment in the affidavit that
respondent is an officer and director of Wincorp who allegedly connived with the other defendants
to commit a fraud, is insufficient to support the issuance of a writ of preliminary attachment.
82[37]
In
the application for the writ under the said ground, compelling is the need to give a hint about what
constituted the fraud and how it was perpetrated
83[38]
because established is the rule that fraud is
never presumed.
84[39]
Verily, the mere fact that respondent is an officer and director of the company
does not necessarily give rise to the inference that he committed a fraud or that he connived with the

76[31]
Spouses Godinez v. Hon. Alano, 362 Phil. 597, 609 (1999).
77[32]
G.R. No. 104405, May 13, 1993, 222 SCRA 37.
78[33]
Id. at 45.
79[34]
Rollo, pp. 377-383.
80[35]
Jardine-Manila Finance, Inc. v. Court of Appeals, G.R. No. 55272,
April 10, 1989, 171 SCRA 636, 645.
81[36]
See Philippine Bank of Communications v. Court of Appeals, 405 Phil.
271, 280 (2001).
82[37]
See PCL Industries Manufacturing Corporation v. Court of Appeals,
G.R. No. 147970, March 31, 2006, 486 SCRA 214, 222-226.
83[38]
Ting v. Villarin, G.R. No. 61754, August 17, 1989, 176 SCRA 532,
535.
84[39]
Benitez v. Intermediate Appellate Court, No. L-71535, September 15,
1987, 154 SCRA 41, 46.
other defendants to commit a fraud. While under certain circumstances, courts may treat a
corporation as a mere aggroupment of persons, to whom liability will directly attach, this is only
done when the wrongdoing has been clearly and convincingly established.
85[40]

Let it be stressed that the provisional remedy of preliminary attachment is harsh and
rigorous for it exposes the debtor to humiliation and annoyance.
86[41]
The rules governing its issuance
are, therefore, strictly construed against the applicant,
87[42]
such that if the requisites for its grant are
not shown to be all present, the court shall refrain from issuing it, for, otherwise, the court which
issues it acts in excess of its jurisdiction.
88[43]
Likewise, the writ should not be abused to cause
unnecessary prejudice. If it is wrongfully issued on the basis of false or insufficient allegations, it
should at once be corrected.
89[44]

Considering, therefore, that, in this case, petitioner has not fully satisfied the legal
obligation to show the specific acts constitutive of the alleged fraud committed by respondent, the
trial court acted in excess of its jurisdiction when it issued the writ of preliminary attachment against
the properties of respondent.

We are not unmindful of the rule enunciated in G.B. Inc., etc. v. Sanchez, et al.,
90[45]
that

[t]he merits of the main action are not triable in a motion to discharge an
attachment otherwise an applicant for the dissolution could force a trial of the
merits of the case on his motion.
91[46]

However, the principle finds no application here because petitioner has not yet fulfilled the
requirements set by the Rules of Court for the issuance of the writ against the properties of
respondent.
92[47]
The evil sought to be prevented by the said ruling will not arise, because the
propriety or impropriety of the issuance of the writ in this case can be determined by simply reading
the complaint and the affidavit in support of the application.

Furthermore, our ruling in G.R. No. 162928, to the effect that the writ of attachment is
properly issued insofar as it concerns the properties of Virata and UEM-MARA, does not affect
respondent herein, for, as correctly ruled by the CA, respondent is never a party thereto.
93[48]
Also,
he is not in the same situation as Virata and UEM-MARA since, as aforesaid, while petitioners
affidavit detailed the alleged fraudulent scheme perpetrated by Virata and/or Power Merge, only a
general allegation of fraud was made against respondent.

85[40]
Solidbank Corporation v. Mindanao Ferroalloy Corporation, G.R. No.
153535, July 28, 2005, 464 SCRA 409, 424-425.
86[41]
Benitez v. Intermediate Appellate Court, supra note 39, at 48.
87[42]
D.P. Lub Oil Marketing Center, Inc. v. Nicolas, G.R. No. 76113,
November 16, 1990, 191 SCRA 423, 428.
88[43]
Philippine Bank of Communications v. Court of Appeals, supra note 36,
at 282.
89[44]
Benitez v. Intermediate Appellate Court, supra note 39, at 48.

90[45]
98 Phil. 886 (1956); see Chuidian v. Sandiganbayan, 402 Phil. 795,
816 (2001); see also FCY Construction Group, Inc. v. Court of Appeals, 381
Phil. 282 (2000).
91[46]
Id. at 891.
92[47]
See Villongco, et al. v. Panlilio etc., et al., 94 Phil. 15 (1953).
93[48]
CA rollo, p. 341.

We state, in closing, that our ruling herein deals only with the writ of preliminary
attachment issued against the properties of respondentit does not concern the other parties in the
civil case, nor affect the trial courts resolution on the merits of the aforesaid civil case.

WHEREFORE, premises considered, the petition is DENIED. The September 14, 2005
Decision and the January 6, 2006 Resolution of the Court of Appeals in CA-G.R. SP No. 90130 are
AFFIRMED.

SO ORDERED.

ANTONIO EDUARDO B. NACHURA
Associate Justice

WE CONCUR:

Associate Justice
Chairperson

MA. ALICIA AUSTRIA-MARTINEZ
Associate Justice
RENATO C. CORONA
Associate Justice

RUBEN T. REYES
Associate Justice

A T T E S T A T I O N

I attest that the conclusions in the above Decision were reached in consultation before the
case was assigned to the writer of the opinion of the Courts Division.

Associate Justice
Chairperson, Third Division

C E R T I F I C A T I O N

Pursuant to Section 13, Article VIII of the Constitution and the Division Chairperson's
Attestation, I certify that the conclusions in the above Decision had been reached in consultation
before the case was assigned to the writer of the opinion of the Courts Division.

REYNATO S. PUNO
Chief Justice

SECOND DIVISION

METRO, INC. and
SPOUSES FREDERICK JUAN
and LIZA JUAN,
Petitioners,

- versus -

LARAS GIFTS AND
DECORS, INC.,
LUIS VILLAFUERTE, JR.
and LARA MARIA R.
VILLAFUERTE,
Respondents.
G.R. No. 171741

Present:

CARPIO, J., Chairperson,
LEONARDO-DE CASTRO,
*

BRION,
DEL CASTILLO, and
ABAD, JJ.

Promulgated:

November 27, 2009
x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x

D E C I S I O N

CARPIO, J .:

The Case

This is a petition for review
94[1]
of the 29 September 2004 Decision
95[2]
and 2 March 2006
Resolution
96[3]
of the Court of Appeals in CA-G.R. SP No. 79475. In its 29 September 2004
Decision, the Court of Appeals granted the petition for certiorari of respondents Laras Gifts and
Decors, Inc., Luis Villafuerte, Jr., and Lara Maria R. Villafuerte (respondents). In its 2 March 2006
Resolution, the Court of Appeals denied the motion for reconsideration of petitioners Metro, Inc.,
Frederick Juan and Liza Juan (petitioners).

The Facts

Laras Gifts and Decors Inc. (LGD) and Metro, Inc. are corporations engaged in the
business of manufacturing, producing, selling and exporting handicrafts. Luis Villafuerte, Jr. and
Lara Maria R. Villafuerte are the president and vice-president of LGD respectively. Frederick Juan
and Liza Juan are the principal officers of Metro, Inc.

Sometime in 2001, petitioners and respondents agreed that respondents would endorse to
petitioners purchase orders received by respondents from their buyers in the United States of
America in exchange for a 15% commission, to be shared equally by respondents and James R.
Paddon (JRP), LGDs agent. The terms of the agreement were later embodied in an e-mail labeled

*
Designated additional member per Special Order No. 776.
94[1]
Under Rule 45 of the Rules of Court.
95[2]
Rollo, pp. 36-45. Penned by Associate Justice Portia Alio-
Hormachuelos, with Associate Justices Rebecca de Guia-Salvador and Aurora
Santiago-Lagman, concurring.
96[3]
Id. at 46-47.
as the 2001 Agreement.
97[4]

In May 2003, respondents filed with the Regional Trial Court, Branch 197, Las Pias
City (trial court) a complaint against petitioners for sum of money and damages with a prayer for the
issuance of a writ of preliminary attachment. Subsequently, respondents filed an amended
complaint
98[5]
and alleged that, as of July 2002, petitioners defrauded them in the amount of
$521,841.62. Respondents also prayed for P1,000,000 as moral damages, P1,000,000 as exemplary
damages and 10% of the judgment award as attorneys fees. Respondents also prayed for the
issuance of a writ of preliminary attachment.
In its 23 June 2003 Order,
99[6]
the trial court granted respondents prayer and issued the
writ of attachment against the properties and assets of petitioners. The 23 June 2003 Order provides:

WHEREFORE, let a Writ of Preliminary Attachment issue against
the properties and assets of Defendant METRO, INC. and against the
properties and assets of Defendant SPOUSES FREDERICK AND LIZA
JUAN not exempt from execution, as may be sufficient to satisfy the
applicants demand of US$521,841.62 US Dollars or its equivalent in Pesos
upon actual attachment, which is about P27 Million, unless such Defendants
make a deposit or give a bond in an amount equal to P27 Million to satisfy the
applicants demand exclusive of costs, upon posting by the Plaintiffs of a
Bond for Preliminary Attachment in the amount of twenty five million pesos
(P25,000,000.00), subject to the approval of this Court.

SO ORDERED.
100[7]

On 26 June 2003, petitioners filed a motion to discharge the writ of attachment.
Petitioners argued that the writ of attachment should be discharged on the following grounds: (1)
that the 2001 agreement was not a valid contract because it did not show that there was a meeting of
the minds between the parties; (2) assuming that the 2001 agreement was a valid contract, the same
was inadmissible because respondents failed to authenticate it in accordance with the Rules on
Electronic Evidence; (3) that respondents failed to substantiate their allegations of fraud with
specific acts or deeds showing how petitioners defrauded them; and (4) that respondents failed to
establish that the unpaid commissions were already due and demandable.

After considering the arguments of the parties, the trial court granted petitioners motion
and lifted the writ of attachment. The 12 August 2003 Order
101[8]
of the trial court provides:

Premises considered, after having taken a second hard look at the
Order dated June 23, 2003 granting plaintiffs application for the issuance of a
writ of preliminary attachment, the Court holds that the issuance of a writ of
preliminary attachment in this case is not justified.

WHEREFORE, the writ of preliminary attachment issued in the instant case is hereby
ordered immediately discharged and/or lifted.

SO ORDERED.
102[9]

Respondents filed a motion for reconsideration. In its 10 September 2003 Order, the trial

97[4]
CA rollo, p. 47.
98[5]
Rollo, pp. 48-60.
99[6]
Id. at 61-63. Penned by Judge Manuel N. Duque.
100[7]
Id. at 63.
101[8]
Id. at 64-67.
102[9]
Id. at 67.
court denied the motion.

Respondents filed a petition for certiorari before the Court of Appeals. Respondents
alleged that the trial court gravely abused its discretion when it ordered the discharge of the writ of
attachment without requiring petitioners to post a counter-bond.

In its 29 September 2004 Decision, the Court of Appeals granted respondents petition.
The 29 September 2004 Decision provides:

WHEREFORE, finding merit in the petition, We GRANT the
same. The assailed Orders are hereby ANNULLED and SET ASIDE.
However, the issued Writ of Preliminary Attachment may be ordered
discharged upon the filing by the private respondents of the proper counter-
bond pursuant to Section 12, Rule 57 of the Rules of Civil Procedure.

SO ORDERED.
103[10]

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

Hence, this petition.

The 12 August 2003 Order of the Trial Court

According to the trial court, respondents failed to sufficiently show that petitioners were
guilty of fraud either in incurring the obligation upon which the action was brought, or in the
performance thereof. The trial court found no proof that petitioners were motivated by malice in
entering into the 2001 agreement. The trial court also declared that petitioners failure to fully
comply with their obligation, absent other facts or circumstances to indicate evil intent, does not
automatically amount to fraud. Consequently, the trial court ordered the discharge of the writ of
attachment for lack of evidence of fraud.

The 29 September 2004 Decision of the Court of Appeals

According to the Court Appeals, the trial court gravely abused its discretion when it
ordered the discharge of the writ of attachment without requiring petitioners to post a counter-bond.
The Court of Appeals said that when the writ of attachment is issued upon a ground which is at the
same time also the applicants cause of action, courts are precluded from hearing the motion for
dissolution of the writ when such hearing would necessarily force a trial on the merits of a case on a
mere motion.
104[11]
The Court of Appeals pointed out that, in this case, fraud was not only alleged as
the ground for the issuance of the writ of attachment, but was actually the core of respondents
complaint. The Court of Appeals declared that the only way that the writ of attachment can be
discharged is by posting a counter-bond in accordance with Section 12,
105[12]
Rule 57 of the Rules of

103[10]
Id. at 44.
104[11]
Citing Chuidian v. Sandiganbayan, 402 Phil. 795 (2001); FCY
Construction Group, Inc. v. Court of Appeals, 381 Phil. 282 (2000); and
Liberty Insurance Corporation v. Court of Appeals, G.R. No. 104405,
13 May 1993, 222 SCRA 37.
105[12]
Section 12, Rule 57 of the Rules of Court provides:

SEC. 12. Discharge of attachment upon giving
counter-bond. - After a writ of attachment has been enforced,
the party whose property has been attached, or the person
Court.
The Issue

Petitioners raise the question of whether the writ of attachment issued by the trial court
was improperly issued such that it may be discharged without the filing of a counter-bond.

The Ruling of the Court

The petition has no merit.

Petitioners contend that the writ of attachment was improperly issued because
respondents amended complaint failed to allege specific acts or circumstances constitutive of fraud.
Petitioners insist that the improperly issued writ of attachment may be discharged without the
necessity of filing a counter-bond. Petitioners also argue that respondents failed to show that the
writ of attachment was issued upon a ground which is at the same time also respondents cause of
action. Petitioners maintain that respondents amended complaint was not an action based on fraud
but was a simple case for collection of sum of money plus damages.

On the other hand, respondents argue that the Court of Appeals did not err in ruling that
the writ of attachment can only be discharged by filing a counter-bond. According to respondents,
petitioners cannot avail of Section 13,
106[13]
Rule 57 of the Rules of Court to have the attachment set

appearing on his behalf, may move for the discharge of the
attachment wholly or in part on the security given. The court
shall, after due notice and hearing, order the discharge of the
attachment if the movant makes a cash deposit, or files a
counter-bond executed to the attaching party with the clerk of
the court where the application was made, in an amount equal
to that fixed by the court in the order of attachment, exclusive
of costs. But if the attachment is sought to be discharged with
respect to a particular property, the counter-bond shall be
equal to the value of that property as determined by the court.
In either case, the cash deposit or the counter-bond shall
secure the payment of any judgment that the attaching party
may recover in the action. A notice of the deposit shall
forthwith be served on the attaching party. Upon the
discharge of an attachment in accordance with the provisions
of this section, the property attached, or the proceeds of any
sale thereof, shall be delivered to the party making the deposit
or giving the counter-bond, or to the person appearing on his
behalf, the deposit or counter-bond aforesaid standing in place
of the property so released. Should such counter-bond for any
reason be found to be, or become insufficient, and the party
furnishing the same fail to file an additional counter-bond, the
attaching party may apply for a new order of attachment.
106[13]
Section 13, Rule 57 of the Rules of Court provides:

SEC. 13. Discharge of attachment on other grounds.
- The party whose property has been ordered attached may file
aside because the ground for the issuance of the writ of attachment is also the basis of respondents
amended complaint. Respondents assert that the amended complaint is a complaint for damages for
the breach of obligation and acts of fraud committed by petitioners.

In this case, the basis of respondents application for the issuance of a writ of preliminary
attachment is Section 1(d), Rule 57 of the Rules of Court which provides:

attached as security for the satisfaction of any judgment that maybe recovered
in the following cases: x x x

(d) In an action against a party who has been guilty of fraud in contracting the debt or
incurring the obligation upon which the action is brought, or in the performance thereof; x x x

In Liberty Insurance Corporation v. Court of Appeals,
107[14]
we explained:

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.
108[15]

The applicant for a writ of preliminary attachment must sufficiently show the factual circumstances
of the alleged fraud because fraudulent intent cannot be inferred from the debtors mere non-
payment of the debt or failure to comply with his obligation.
109[16]

a motion with the court in which the action is pending, before
or after a levy or even after the release of the attached
property, for an order to set aside or discharge the attachment
on the ground that the same was improperly or irregularly
issued or enforced, or that the bond is insufficient. If the
attachment is excessive, the discharge shall be limited to the
excess. If the motion be made on affidavits on the part of the
movant but not otherwise, the attaching party may oppose the
motion by counter-affidavits or other evidence in addition to
that on which the attachment was made. After due notice and
hearing, the court shall order the setting aside or the
corresponding discharge of the attachment if it appears that it
was improperly or irregularly issued or enforced, or that the
bond is insufficient, or that the attachment is excessive, and
the defect is not cured forthwith.
107[14]
Supra note 11.
108[15]
Id. at 45.
109[16]
Foundation Specialists, Inc. v. Betonval Ready Concrete, Inc., G.R. No.
170674, 24 August 2009; Tanchan v. Allied Banking Corporation, G.R. No.

In their amended complaint, respondents alleged the following in support of their prayer
for a writ of preliminary attachment:

5. Sometime in early 2001, defendant Frederick Juan approached
plaintiff spouses and asked them to help defendants export business.
Defendants enticed plaintiffs to enter into a business deal. He proposed to
plaintiff spouses the following:

a. That plaintiffs transfer and endorse to defendant Metro some of the Purchase Orders
(POs) they will receive from their US buyers;

b. That defendants will sell exclusively and only thru
plaintiffs for their US buyer;

x x x

6. After several discussions on the matter and further inducement
on the part of defendant spouses, plaintiff spouses agreed. Thus, on April 21,
2001, defendant spouses confirmed and finalized the agreement in a letter-
document entitled 2001 Agreement they emailed to plaintiff spouses, a
copy of which is hereto attached as Annex A.

x x x

20. Defendants are guilty of fraud committed both at the inception
of the agreement and in the performance of the obligation. Through
machinations and schemes, defendants successfully enticed plaintiffs to enter
into the 2001 Agreement. In order to secure plaintiffs full trust in them and
lure plaintiffs to endorse more POs and increase the volume of the orders,
defendants during the early part, remitted to plaintiffs shares under the
Agreement.
21. However, soon thereafter, just when the orders increased and the amount involved
likewise increased, defendants suddenly, without any justifiable reasons and in pure bad faith and
fraud, abandoned their contractual obligations to remit to plaintiffs their shares. And worse,
defendants transacted directly with plaintiffs foreign buyer to the latters exclusion and damage.
Clearly, defendants planned everything from the beginning, employed ploy and machinations to
defraud plaintiffs, and consequently take from them a valuable client.

22. Defendants are likewise guilty of fraud by violating the trust and confidence
reposed upon them by plaintiffs. Defendants received the proceeds of plaintiffs LCs with the
clear obligation of remitting 15% thereof to the plaintiffs. Their refusal and failure to remit
the said amount despite demand constitutes a breach of trust amounting to malice and
fraud.
110[17]
(Emphasis and underscoring in the original) (Boldfacing and italicization supplied)

We rule that respondents allegation that petitioners undertook to sell exclusively and
only through JRP/LGD for Target Stores Corporation but that petitioners transacted directly with
respondents foreign buyer is sufficient allegation of fraud to support their application for a writ of
preliminary attachment. Since the writ of preliminary attachment was properly issued, the only way

164510, 25 November 2008, 571 SCRA 512; Ng Wee v. Tankiansee,
G.R. No. 171124, 13 February 2008, 545 SCRA 263; and Philippine National
Construction Corporation v. Dy, G.R. No. 156887, 3 October 2005, 472 SCRA
1.
110[17]
Rollo, pp. 49, 52-53.
it can be dissolved is by filing a counter-bond in accordance with Section 12, Rule 57 of the Rules of
Court.

Moreover, the reliance of the Court of Appeals in the cases of Chuidian v.
Sandiganbayan,
111[18]
FCY Construction Group, Inc. v. Court of Appeals,
112[19]
and Liberty Insurance
Corporation v. Court of Appeals
113[20]
is proper. The rule that when the writ of attachment is issued
upon a ground which is at the same time the applicants cause of action, the only other way the writ
can be lifted or dissolved is by a counter-bond
114[21]
is applicable in this case. It is clear that in
respondents amended complaint of fraud is not only alleged as a ground for the issuance of the writ
of preliminary attachment, but it is also the core of respondents complaint. The fear of the Court of
Appeals that petitioners could force a trial on the merits of the case on the strength of a mere motion
to dissolve the attachment has a basis.

WHEREFORE, we DENY the petition. We AFFIRM the 29 September 2004
Decision and 2 March 2006 Resolution of the Court of Appeals in CA-G.R. SP No. 79475.

SO ORDERED.

111[18]
Chuidian v. Sandiganbayan, supra note 11.
112[19]
FCY Construction Group, Inc. v. Court of Appeals, supra note 11.
113[20]
Liberty Insurance Corporation v. Court of Appeals, supra note 11.
114[21]
Chuidian v. Sandiganbayan, supra note 11, at 817-818.

SECTION 2

G.R. No. 84034 December 22, 1988
ALBERTO SIEVERT vs. COURT OF APPEALS

THIRD DIVISION
[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.

SYLLABUS
1. REMEDIAL LAW; PROVISIONAL REMEDIES; PETITION FOR PRELIMINARY
ATTACHMENT; CAN BE ACTED ONLY AFTER THE COURT HAS ALREADY ACQUIRED
JURISDICTION OVER THE DEFENDANT IN THE MAIN CASE. 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 determination 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. Where, 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.
2. ID.; ID.; ID.; MUST BE SERVED SIMULTANEOUSLY WITH THE SUMMONS
AND A COPY OF THE COMPLAINT IN THE PRINCIPAL ACTION. 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. A 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.
3. ID.; ID.; ID.; REQUIREMENTS OF THE RULES OF COURT MUST BE STRICTLY
COMPLIED WITH BEFORE ISSUANCE OF THE WRIT. 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, 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)
4. ID.; SPECIAL CIVIL ACTION; CERTIORARI; ADEQUATE REMEDY IN THE
CASE AT BAR. 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.

D E C I S I O N

FELICIANO, J p:
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. LLpr
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." (Emphasis 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 plaintiff's 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
determination 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. 4 A
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. LexLib
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. prcd
SO ORDERED.
Fernan, (C.J.), Gutierrez, Jr., Bidin and Cortes, JJ., concur.

Footnotes

1. Rollo, p. 4.
2. Rollo, pp. 16-17.
3. Rollo, p. 5.
4. We should perhaps make explicit that we are here addressing the situation of known,
resident defendants only. Where the defendant is a non-resident, attachment of property may be
sought in order to bring a res within the jurisdiction of the court, in substitution, as it were, of the
body of the defendant (Section 1 [fl, Rule 57, Revised Rules of Court). Jurisdiction over the res and
the person of the defendant is, in such case, acquired by service of summons by publication
(Sections 16, 17 and 18, Rule 14, id.) though that jurisdiction may be made effective only in respect
of the res attached. In Lincoln Tavern v. Snader, et al., 165 Ohio St., 61, 133 NE, 2d 606 [1956], the
Supreme Court of Ohio said:

". . . under our present law the only notice is that of the principal action and it
is upon such notice, i.e., personal or constructive service of summons, that jurisdiction rests; and,
even though, where the defendant is a nonresident, it is necessary that there be an attachment of
property of the defendant in order to clothe the court with jurisdiction to render a judgment, the
attachment is an ancillary proceeding and there must be a proper service of summons for the court to
become invested with jurisdiction to make an order which will affect the attached res.

xxx xxx xxx

Under the provisions of the Ohio statute, an attachment may issue at or after
the commencement of an action for the recovery of money, where the defendant is a nonresident of
the state. Section 11819, General Code, Section 2715.01, Revised Code. However, an attachment is
a provisional remedy; an ancillary proceeding which must be appended to a principal action and
whose very validity must necessarily depend upon the validity of the commencement of the principal
action.

xxx xxx xxx

Thus it may be seen that, although in an action based upon constructive
service an attachment may issue prior to the completion of service by publication, such attachment
has only a tentative validity which ripens into a completely valid attachment when and if service is
completed as provided by law. If, for any reason, such as defective service, the court is found
wanting in jurisdiction in the principal action, then it follows that the attachment never attained more
than a tentative validity and falls with the principal action.

xxx xxx xxx
(Emphasis supplied).

5. 90 SCRA 121 (1979).
6. 90 SCRA at 125.

G.R. No. 93262 November 29, 1991
DAVAO LIGHT & POWER CO. vs. COURT OF APPEALS

EN BANC
[G.R. No. 93262. November 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.

SYLLABUS
1. REMEDIAL LAW; ACTIONS; JURISDICTION; HOW ACQUIRED. An action or
proceeding is commenced by the filing of the complaint or other initiatory pleading. 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; and it is thus that the court acquires jurisdiction over said subject matter or
nature of the action. 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. 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.
2. ID.; PROVISIONAL REMEDIES; PRELIMINARY ATTACHMENT; DEFINED. A
preliminary attachment may be defined, paraphrasing the Rules of Court, as the provisional remedy
in virtue of which a plaintiff or other proper party may, at the commencement of the action or at any
time thereafter, have the property of the adverse party taken into the custody of the court as security
for the satisfaction of any judgment that may be recovered. It is a remedy which is purely statutory
in respect of which the law requires a strict construction of the provisions granting it. Withal no
principle, statutory or jurisprudential, prohibits its issuance by any court before acquisition of
jurisdiction over the person of the defendant.
3. ID.; ID.; ID.; PHRASE "AT THE COMMENCEMENT OF THE ACTION,"
CONSTRUED. Rule 57 in fact speaks of the grant of the remedy "at the commencement of the
action or at any time thereafter." The phrase, "at the commencement of the action," obviously refers
to the date of the filing of the complaint which, as above pointed out, is the date that marks "the
commencement of the action;" and the reference plainly is to a time before summons is served on the
defendant, or even before summons issues.
4. ID.; ID.; ID.; WRIT MAY BE ISSUED EX-PARTE. What the rule is saying quite
clearly is that after an action is properly commenced by the filing of the complaint and the
payment of all requisite docket and other fees the plaintiff may apply for and obtain a writ of
preliminary attachment upon fulfillment of the pertinent requisites laid down by law, and that he
may do so at any time, either before or after service of summons on the defendant. And this indeed,
has been the immemorial practice sanctioned by the courts: for the plaintiff or other proper party to
incorporate the application for attachment in the complaint or other appropriate pleading
(counterclaim, cross-claim, third-party claim) and for the Trial Court to issue the writ ex-parte at the
commencement of the action if it finds the application otherwise sufficient in form and substance.
5. ID.; ID.; ID.; HEARING ON APPLICATION THEREON, GENERALLY NOT
NECESSARY. In Toledo v. Burgos 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. And in Filinvest Credit Corporation v. Relova, 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."
6. ID.; ID.; ID.; ID.; BASIS OF GRANT. The only pre-requisite is that the Court be
satisfied, upon consideration of "the affidavit of the applicant or of some other person who
personally knows the facts, that a sufficient cause of action exists, that the case is one of those
mentioned in Section 1 . . . (Rule 57), that there is no other sufficient security for the claim sought to
be enforced by the action, and that the amount due to the applicant, or the value of the property the
possession of which he is entitled to recover, is as much as the sum for which the order (of
attachment) is granted above all legal counterclaims." If the court be so satisfied, the "order of
attachment shall be granted," and the writ shall issue upon the applicant's posting of a bond executed
to the adverse party in an amount to be fixed by the judge, not exceeding the plaintiff's claim,
conditioned that the latter will pay all the costs which may be adjudged to the adverse party and all
damages which he may sustain by reason of the attachment, if the court shall finally adjudge that the
applicant was not entitled thereto."
7. ID.; ID.; ID.; ID.; REASON. In Mindanao Savings & Loan Association, Inc. v. Court
of Appeals, decided on April 18, 1989, decided on April 18, 1989, 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, such a procedure would warn absconding debtors-defendants of the
commencement of the suit against them and the probable seizure of their properties, and thus give
them the advantage of time to hide their assets, leaving the creditor-plaintiff holding the proverbial
empty bag; it would place the creditor-applicant in danger of losing any security for a favorable
judgment and thus give him only an illusory victory.
8. ID.; ID.; ID.; HOW DISCHARGED. 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.
9. ID.; ID.; ID.; ID.; BY COUNTERBOND. The submission of a counterbond is an
efficacious mode of lifting an attachment already enforced against property, or even of preventing its
enforcement altogether. When property has already been seized under attachment, the attachment
may be discharged upon counterbond in accordance with Section 12 of Rule 57. 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.
10. ID.; ID.; ID.; ID.; BY MOTION TO DISCHARGE ON GROUND THAT THE SAME
WAS IRREGULARLY OR IMPROPERLY ISSUED. 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 beer 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.
11. ID.; ID.; ID.; ID.; FIRST MODE SPEEDIER THAN THE SECOND. 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.
12. ID.; ID.; ID.; MAY NOT BE DISSOLVED BY A SHOWING OF ITS IRREGULAR OR
IMPROPER ISSUANCE. (a) When an attachment may not be dissolved by a showing of its
irregular or improper issuance:
". . . (W)hen the preliminary attachment is issued upon a ground which is at the same time the
applicant's cause of action e.g., 'an action for money or property embezzled or fraudulently
misapplied or converted to his own use by a public officer, or an officer of a corporation, or an
attorney, factor, broker, agent, or clerk, in the course of his employment as such, or by any other
person in a fiduciary capacity, or for a willful violation of duty.' (Sec. 1 [b], Rule 57), or 'an action
against a party who has been guilty of fraud in contracting the debt or incurring the obligation upon
which the action is brought' (Sec. 1 [d], Rule 57), the defendant is not allowed to file a motion to
dissolve the 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 (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)."
13. ID.; ID.; ID.; DISSOLUTION OF PRELIMINARY ATTACHMENT DOES NOT
DISCHARGE SURETIES ON BOND; REASON. ". . . 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' (SEC.
4, Rule 57). Hence, until that determination is made, as to the applicant's entitlement to the
attachment, his bond must stand and cannot be withdrawn."

D E C I S I O N

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. 19613-89). 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
en 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. LibLex
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 in the complaint, as is usually done, it is likewise true that the Court does not acquire
jurisdiction over the person of the defendant until he in 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 " critical time is the time of the vesting
of jurisdiction in the court over the person of the defendant in the main case."
Reversal of this Decision of the Court of Appeals of May 4, 1990 is what Davao Light seeks in the
present appellate proceedings. cdrep
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 dependent on, or held in suspension until, the
actual obtention of jurisdiction over the defendant's person. The obtention by the court of jurisdiction
over the person of the defendant is one thing; quite another is the acquisition of jurisdiction over the
person of the plaintiff or over the subject-matter or nature of the action, or the res or object thereof.
An action or proceeding is commenced by the filing of the complaint or other initiatory pleading. 4
By that act, the jurisdiction of the court over the subject matter or nature of the action or proceeding
is invoked or called into activity; 5 and it is thus that the court acquires 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 of unquestionable validity and
propriety. Among these, for example, are the appointment of a guardian ad litem, 9 the grant of
authority to the plaintiff to prosecute the suit as a pauper litigant, 10 the amendment of the
complaint by the plaintiff as a matter of right without leave of court, 11 authorization by the Court
of service of summons by publication, 12 the dismissal of the action by the plaintiff on mere notice.
13
This, too, is true with regard to the provisional remedies of preliminary attachment, preliminary
injunction, receivership or replevin. 14 They may be validly and properly applied for and granted
even before the defendant is summoned or is heard from. LibLex
A preliminary attachment may be defined, paraphrasing the Rules of Court, as the provisional
remedy in virtue of which a plaintiff or other proper party may, at the commencement of the action
or at any time thereafter, have the property of the adverse party taken into the custody of the court as
security for the satisfaction of any judgment that may be recovered. 15 It is a remedy which is
purely statutory in respect of which the law requires a strict construction of the provisions granting
it. 16 Withal no principle, statutory or jurisprudential, prohibits its issuance by any court before
acquisition of jurisdiction over the person of the defendant.
Rule 57 in fact speaks of the grant of the remedy "at the commencement of the action or at any time
thereafter." 17 The phrase, "at the commencement of the action," obviously refers to the date of the
filing of the complaint which, as above pointed out, is the date that marks "the commencement of
the action;" 18 and the reference plainly is to a time before summons is served on the defendant, or
even before summons issues. What the rule is saying quite clearly is that after an action is properly
commenced by the filing of the complaint and the payment of all requisite docket and other fees
the plaintiff may apply for and obtain a writ of preliminary attachment upon fulfillment of the
pertinent requisites laid down by law, and that he may do so at any time, either before or after
service of summons on the defendant. And this indeed, has been the immemorial practice sanctioned
by the courts: for the plaintiff or other proper party to incorporate the application for attachment in
the complaint or other appropriate pleading (counterclaim, cross-claim, third-party claim) and for the
Trial Court to issue the writ ex-parte at the commencement of the action if it finds the application
otherwise sufficient in form and substance.
In Toledo v. Burgos, 19 this Court ruled that a hearing on a motion or application for preliminary
attachment is not generally necessary unless otherwise directed by the Trial Court in its discretion.
20 And in Filinvest Credit Corporation v. Relova, 21 the Court declared that "(n)othing in the Rules
of Court makes notice and hearing indispensable and mandatory requisites for the issuance of a writ
of attachment." The only pre-requisite is that the Court be satisfied, upon consideration of "the
affidavit of the applicant or of some other person who personally knows the facts, that a sufficient
cause of action exists, that the case is one of those mentioned in Section 1 . . . (Rule 57), that there is
no other sufficient security for the claim sought to be enforced by the action, and that the amount
due to the applicant, or the value of the property the possession of which he is entitled to recover, is
as much as the sum for which the order (of attachment) is granted above all legal counterclaims." 22
If the court be so satisfied, the "order of attachment shall be granted," 23 and the writ shall issue
upon the applicant's posting of a bond executed to the adverse party in an amount to be fixed by the
judge, not exceeding the plaintiff's claim, conditioned that the latter will pay all the costs which may
be adjudged to the adverse party and all damages which he may sustain by reason of the attachment,
if the court shall finally adjudge that the applicant was not entitled thereto." 24
In Mindanao Savings & Loan Association, Inc. v. Court of Appeals, decided on April 18, 1989, 25
this Court had occasion to emphasize the postulate that no hearing is required on an application for
preliminary attachment, with notice to the defendant, for the reason that this "would defeat the
objective of the remedy . . . (since the) time which such a hearing would take, could be enough to
enable the defendant to abscond or dispose of his property before a writ of attachment issues." As
observed by a former member of this Court, 26 such a procedure would warn absconding debtors-
defendants of the commencement of the suit against them and the probable seizure of their
properties, and thus give them the advantage of time to hide their assets, leaving the creditor-plaintiff
holding the proverbial empty bag; it would place the creditor-applicant in danger of losing any
security for a favorable judgment and thus give him only an illusory victory. Cdpr
Withal, ample modes of recourse against a preliminary attachment are secured by law to the
defendant. The relative ease with which a preliminary attachment may be obtained is matched and
paralleled by the relative facility with which the attachment may legitimately be prevented or
frustrated. These modes of recourse against preliminary attachments granted by Rule 57 were
discussed at some length by the separate opinion in Mindanao Savings & Loans Asso. Inc. v. C.A.,
supra.
That separate opinion stressed that there are two (2) ways of discharging an attachment: first, by the
posting of a counterbond; and second, by a showing of its improper or irregular issuance.
1.0. The submission of a counterbond is an efficacious mode of lifting an attachment already
enforced against property, or even of preventing its enforcement altogether.
1.1. When property has already been seized under attachment, the attachment may be
discharged upon counterbond in accordance with Section 12 of Rule 57.
'SEC. 12. Discharge of attachment upon giving counterbond. At any time after an order of
attachment has been granted, the party whose property has been attached or the person appearing in
his behalf, may, upon reasonable notice to the applicant, apply to the judge who granted the order, or
to the judge of the court in which the action is pending, for an order discharging the attachment
wholly or in part on the security given . . . in an amount equal to the value of the property attached as
determined by the judge to secure the payment of any judgment that the attaching creditor may
recover in the action . . .'
1.2. But even before actual levy on property, seizure under attachment may be prevented also
upon counterbond. The defendant need not wait until his property is seized before seeking the
discharge of the attachment by a counterbond. This is made possible by Section 5 of Rule 57.
'SEC. 5. Manner of attaching property. The officer executing the order shall without delay
attach, to await judgment and execution in the action, all the properties of the party against whom
the order is issued in the province, not exempt from execution, or so much thereof as may be
sufficient to satisfy the applicant's demand, unless the former makes a deposit with the clerk or judge
of the court from which the order issued, or gives a counter-bond executed to the applicant, in an
amount sufficient to satisfy such demand besides costs, or in an amount equal to the value of the
property which is about to be attached, to secure payment to the applicant of any judgment which he
may recover in the action. . . .' (Italics 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 ar attachment may be resorted to
even before any property has beer 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.: cdphil
'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. . . .'
(Italics 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 in contracting the debt or incurring the obligation upon
which the action is brought' (Sec. 1 [d], Rule 57), the defendant is not allowed to file a motion to
dissolve the 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 (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 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' (SEC. 4, Rule 57). Hence, until that determination is made, as to
the applicant's entitlement to the attachment, his bond must stand and cannot be withdrawn." LexLib
With respect to the other provisional remedies, i.e., preliminary injunction (Rule 58), receivership
(Rule 59), replevin or delivery of personal property (Rule 60), the rule is the same: they may also
issue ex parte. 29
It goes without saying that whatever be the acts done by the Court prior to the acquisition of
jurisdiction over the person of the defendant, as above indicated issuance of summons, order of
attachment and writ of attachment (and/or appointment of guardian ad litem, or grant of authority to
the plaintiff to prosecute the suit as a pauper litigant, or amendment of the complaint by the plaintiff
as 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
explicitly required by Section 5 of Rule 57, but also the summons addressed to said defendant as
well as a copy of the complaint and order for appointment of guardian ad litem, if any, as also
explicitly directed by Section 3, Rule 14 of the Rules of Court. Service of all such documents is
indispensable not only for the acquisition of jurisdiction over the person of the defendant, but also
upon considerations of fairness, to apprise the defendant of the complaint against him, of the
issuance of a writ of preliminary attachment and the grounds therefor and thus accord him the
opportunity to prevent attachment of his property by the posting of a counterbond in an amount
equal to the plaintiff' 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.
Melencio-Herrera, Gutierrez, Jr., Cruz, Paras, Feliciano, Padilla, Bidin, Grio-Aquino, Medialdea,
Regalado and Romero, JJ., concur.
Fernan, C.J., is on leave.
Davide, Jr., J, took no part.

Footnotes

1. Jorge S. Imperial, J., ponente: Reynato J. Puno and Artemon Luna, JJ., concurring.
2. Branch 8, presided over by Hon. Milagros C. Nartatez.
3. G.R. No. 84034, Dec. 22, 1988, 168 SCRA 692 (1988).
4. Sec. 6, Rule 2, Rules of Court.
N.B. The action is not deemed commenced, however, and will not be deemed to interrupt
the running of the period of prescription, unless and until the docket and other court fees are fully
paid. SEE Manchester Development Corporation v. Court of Appeals, 149 SCRA 562 (1987); Sun
Insurance Office, Ltd., et al. v. Asuncion, et al., G.R. No. 79937-38, Feb. 13, 1989; Tacay v.
Regional Trial Court of Tagum, G.R. No. 88075-77, Dec. 20, 1989; Ayala Corporation, et al. v.
Madayag, G.R. No. 88421, Jan. 30, 1990; Hodges v. Court of Appeals, G.R. No. 87617, April 6,
1990; SEE also Lacson v. Luis Reyes, etc., G.R. No. 86250, Feb. 26, 1990; Sapugay v. Court of
Appeals, G.R. No. 86791, March 21, 1990.
5. Moran, Comments on the Rules, 1979 ed. Vol. 1, p. 54, citing Caluag v. Pecson, 82 Phil.
8; Francisco, The Revised Rules of Court, 1973 ed., Vol. 1, p. 120; Feria, Civil Procedure, 1969 ed.,
pp. 17-18.
6. Defined as the power to hear and determine cases of the general class to which the
proceedings in question belong . . ., conferred by the sovereign authority which organizes the court
and defines its powers. Francisco, The Revised Rules of Court, 1973 ed., Vol. I, p. 117, citing Reyes
v. Diaz, 73 Phil. 484, 486.
7. Feria, op cit., p. 19, citing Manila Railroad Co. v. Attorney-General, 20 Phil 523, King
Mau Wu v. Sycip, 94 Phil. 784, and 21 C.J.S., 122; Moran, op cit., p. 55, citing M.R.R. Co. v.
Attorney-General, 20 Phil. 623 (in turn citing Ayers v. Watson, 113 U.S. 594), and Toledano v.
Severino, 78 Phil. 783; Francisco, op cit., p. 125 citing, additionally, 21 C.J.S., 122.
8. Feria, op cit., p. 20, citing 21 C.J.S., 123; Pennoyer v. Neff, 95 U.S. 714, Banco Espaol-
Filipino v. Palanca, 37 Phil. 921, and Perkins v. Dizon, 69 Phil. 186; Moran, op cit., citing Banco
Espaol-Filipino v. Palanca, 37 Phil. 921, Infante v. Toledo, 44 Phil. 834, and Nilo v. Romero, L-
15195, March 29, 1961; Francisco, op cit., p. 126; citing Sharruf v. Bubla, et al., No. L-17029, Sept.
30, 1964.
9. Sec. 5, Rule 3.
10. Sec. 22, Rule 3.
11. Sec. 2, Rule 10.
12. Sec. 16 or 17, Rule 14.
13. Sec. 1, Rule 17.
14. Rules 57, 58, 59 and 60, respectively; SEE footnote 29, infra.
15. SEC. 1, Rule 57, Rules of Court. Another definition, given in 4 Words and Phrases 727
(1940), citing cases, is that it is "a provisional remedy, auxiliary or incidental to the main action,
whereby the debtor's property capable of being taken under levy and execution is placed under
custody of the law pending the determination of the cause, to secure the payment of any judgment
that may be recovered therein."
16. SEE Salas v. Adil, 90 SCRA 125, cited in Sievert v. C.A., 168 SCRA 698.
17. Sec. 1.
18. SEE footnote 6, supra.
19. 168 SCRA 513 (Dec. 19, 1988). In this case, this Court ultimately ruled that the
application for preliminary attachment ex parte should have been denied because the fundamental
requisites under Rule 57, Section 1 did not exist, and not because ex parte applications are per se
illegal.
20. La Granja, Inc. v. Samson, 58 Phil. 378, 380.
21. 117 SCRA 420, 428-429, cited in Francisco, op cit., 1985 ed., "Provisional Remedies,"
pp. 31-32.
22. SEC. 3, Rule 57.
23. Id., SEE Central Capiz v. Salas, 43 Phil. 930, 931.
24. SEC 4, Rule 57.
25. 172 SCRA 480, 484 (April 18, 1989), per Grio-Aquino, J., citing Belisle Investment &
Finance Co., Inc. v. State Investment House, Inc., 72927, June 30, 1987; Filinvest Credit Corp. v.
Relova, 117 SCRA 420).
26. Hon. Abraham F. Sarmiento, who retired on October 9, 1991.
27. 172 SCRA 480, 488.
28. At pp. 488-489.
29. (1) Sec. 5, Rule 58 declares that while, generally, "No preliminary injunction shall be
granted without notice to the defendant," nevertheless, "If it shall appear from the facts shown by
affidavits or by the verified complaint that great or irreparable injury would result to the applicant
before the matter can be heard on notice, the judge to whom the application for preliminary
injunction was made, may issue a restraining order to be effective only for a period of twenty days
from date of its issuance. . . .
"(2) Sec. 3, Rule 59 provides that, "If a receiver be appointed upon an ex parte
application, the court, before making the order, may require the person applying for such
appointment to file a bond executed to the party against whom the application is presented in an
amount to be fixed by the court to the effect that the applicant will pay such party all damages he
may sustain by reason of the appointment of such receiver in case the applicant shall have procured
such appointment without sufficient cause . . .
"(3) And Rule 60 provides that "Whenever the complaint in an action prays for the
recovery of possession of personal property, the plaintiff may, at the commencement of action or at
any time before answer, apply for an order for the delivery of such property to him . . ." (Sec. 1); and
upon compliance by the plaintiff with the prescribed requisites (affidavit and bond [Sec. 2]), the
judge . . . shall issue an order describing the property alleged to be wrongfully detained, and
requiring the sheriff or other proper officer . . . forthwith to take such property into his custody"
(Sec. 3).
30. SEE footnotes 9 to 13, supra.
31. 168 SCRA 692 (1988).
32. G.R. No. 96784, Aug. 2, 1991.

G.R. No. 102448 August 5, 1992
RICARDO CUARTERO vs. COURT OF APPEALS, ET AL.

THIRD DIVISION
[G.R. No. 102448. August 5, 1992.]

RICARDO CUARTERO, petitioner, vs. COURT OF APPEALS, ROBERTO EVANGELISTA and
FELICIA EVANGELISTA, respondents.

Abesamis, Medialdea & Abesamis for petitioner.
Eufrenio Law Offices for private respondent.

SYLLABUS
1. REMEDIAL LAW; PROVISIONAL REMEDIES; WRIT OF PRELIMINARY
ATTACHMENT; DEFINED. A writ of preliminary attachment is defined as a provisional
remedy issued upon order of the court where an action is pending to be levied upon the property or
properties of the defendant therein, the same to be held thereafter by the sheriff as security for the
satisfaction of whatever judgment might be secured in said action by the attaching creditor against
the defendant (Adlawan v. Tomol, 184 SCRA 31 [1990] citing Virata v. Aquino, 53 SCRA 30-31
[1973]).
2. ID.; ID.; ID.; REQUISITES FOR THE ISSUANCE THEREOF. Under Section 3,
Rule 57 of the Rules of Court, the only requisites for the issuance of the writ are the affidavit and
bond of the applicant. As has been expressly ruled in BF Homes, Inc. v. Court of Appeals, 190
SCRA 262 {1990), citing Mindanao Savings and Loan Association, Inc. v. Court of Appeals, 172
SCRA 480 (1989), no notice to the adverse party or hearing of the application is required inasmuch
as the time which the hearing will take could be enough to enable the defendant to abscond or
dispose of his property before a writ of attachment issues. In such a case, a hearing would render
nugatory the purpose of this provisional remedy. The ruling remains good law. There is, thus, no
merit in the private respondents' claim of violation of their constitutionally guaranteed right to due
process.
3. ID.; ID.; ID.; CAN BE APPLIED FOR AND GRANTED AT THE COMMENCEMENT
OF THE ACTION OR AT ANY TIME. The writ of preliminary attachment can be applied for
and granted at the commencement of the action or at any time thereafter (Section 1, Rule 57, Rules
of Court). In Davao Light and Power Co., Inc. v. Court of Appeals, (G.R. No. 93262, November 29,
1991), the phrase "at the commencement of the action" is interpreted as referring to the date of the
filing of the complaint which is a time before summons is served on the defendant or even before
summons issues. The court added that ". . . after an action is properly commenced by filing of
the complaint and the payment of all requisite docket and other fees the plaintiff may apply and
obtain a writ of preliminary attachment upon the 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."
4. ID.; ID.; ID.; CANNOT BIND AND AFFECT THE DEFENDANT UNTIL
JURISDICTION OVER HIS PERSON IS EVENTUALLY OBTAINED. The Court also pointed
out that: ". . . It is incorrect to theorize that after an action or proceeding has been commenced and
jurisdiction over the person of the plaintiff has been vested in the Court, but before acquisition of
jurisdiction over the person of the defendant (either by service of summons or his voluntary
submission to the Court's authority), nothing can be validly done by the plaintiff or the Court. It is
wrong to assume that the validity of acts done during the period should be dependent on, or held in
suspension until, the actual obtention of jurisdiction over the defendant's person. The obtention by
the court of jurisdiction over the person of the defendant is one thing; quite another is the acquisition
of jurisdiction over the person of the plaintiff or over the subject matter or nature of the action, or the
res or object thereof." It is clear from our pronouncements that a writ of preliminary attachment may
issue even before summons is served upon the defendant. However, we have likewise ruled that the
writ cannot bind and affect the defendant until jurisdiction over his person is eventually obtained.
Therefore, it is required that when the proper officer commences implementation of the writ of
attachment, service of summons should be simultaneously made.
5. ID.; ID.; ID.; STAGES IN GRANTING THEREOF. It must be emphasized that the
grant of the provisional remedy of attachment practically involves three stages: first, the court issues
the order granting the application; second, the writ of attachment issues pursuant to the order
granting the writ; and third, the writ is implemented. For the initial two stages, it is not necessary
that jurisdiction over the person of the defendant should first be obtained. However, once the
implementation commences, it is required that the court must have acquired jurisdiction over the
defendant for without such jurisdiction, the court has no power and authority to act in any manner
against the defendant. Any order issuing from the Court will not bind the defendant.
6. ID.; ID.; ID.; MAY BE ISSUED EX PARTE PROVIDED SUMMONS AND COPY OF
THE COMPLAINT WERE SIMULTANEOUSLY SERVED. In Sievert v. Court of Appeals, 168
SCRA 692 (1988), cited by the Court Of Appeals in its questioned decision, the writ of attachment
issued ex-parte was struck down because when the writ of attachment was being implemented, no
jurisdiction over the person of the defendant had as yet been obtained. The court had failed to serve
the summons to the defendant. The circumstances in Sievert are different from those in the case at
bar. When the writ of attachment was served on the spouses Evangelista, the summons and copy of
the complaint were also simultaneously served. It is appropriate to reiterate this Court's exposition in
the Davao Light and Power case cited earlier, to wit: ". . . writs of attachment may properly issue ex-
parte provided that the Court is satisfied that the relevant requisites therefore 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."
7. ID.; ID.; ID.; QUESTION AS TO WHETHER A PROPER GROUND EXISTED FOR
THE ISSUANCE THEREOF; MUST BE DETERMINED IN AN APPROPRIATE PROCEEDING.
The question as to whether a proper ground existed for the issuance of the writ is a question of
fact the determination of which can only be had in appropriate proceedings conducted for the
purpose (Peroxide Philippines Corporation v. Court of Appeals, 199 SCRA 882 [1991]). It must be
noted that the spouses Evangelista's motion to discharge the writ of preliminary attachment was
denied by the lower court for lack of merit. There is no showing that there was an abuse of discretion
on the part of the lower court in denying the motion. Moreover, an attachment may not be dissolved
by a showing of its irregular or improper issuance if it is upon a ground which is at the same time the
applicant's cause of action in the main case since an anomalous situation would result if the issues of
the main case would be ventilated and resolved in a mere hearing of a motion (Davao Light and
Power Co., Inc. v. Court of Appeals, supra, The Consolidated Bank and Trust Corp. (Solidbank) v.
Court of Appeals, 197 SCRA 663 [1991]).

D E C I S I O N

GUTIERREZ, JR., J p:
This is a petition for review on certiorari seeking to annul the decision of the Court of Appeals
promulgated on June 27, 1991 as well as the subsequent resolution dated October 22, 1991 denying
the motion for reconsideration in CA-G.R. SP No. 23199 entitled "Spouses Roberto and Felicia
Evangelista v. Honorable Cesar C. Peralejo, Presiding Judge Regional Trial Court of Quezon City,
Branch 98, and Ricardo Cuartero," which nullified the orders of the trial court dated August 24, 1990
and October 4, 1990 and cancelled the writ of preliminary attachment issued on September 19, 1990.
Following are the series of events giving rise to the present controversy.
On August 20, 1990, petitioner Ricardo Cuartero filed a complaint before the Regional Trial Court
of Quezon City against the private respondents, Evangelista spouses, for a sum of money plus
damages with a prayer for the issuance of a writ of preliminary attachment. The complaint was
docketed as Civil Case No. Q-90-6471.
On August 24, 1990, the lower court issued an order granting ex-parte the petitioner's prayer for the
issuance of a writ of preliminary attachment.
On September 19, 1990, the writ of preliminary attachment was issued pursuant to the trial court's
order dated August 24, 1990. On the same day, the summons for the spouses Evangelista was
likewise prepared.
The following day, that is, on September 20, 1990, a copy of the writ of preliminary attachment, the
order dated August 24, 1990, the summons and the complaint were all simultaneously served upon
the private respondents at their residence. Immediately thereafter, Deputy Sheriff Ernesto L. Sula
levied, attached and pulled out the properties in compliance with the court's directive to attach all the
properties of private respondents not exempt from execution, or so much thereof as may be sufficient
to satisfy the petitioner's principal claim in the amount of P2,171,794.91.
Subsequently, the spouses Evangelista filed a motion to set aside the order dated August 24, 1990
and discharge the writ of preliminary attachment for having been, irregularly and improperly issued.
On October 4, 1990, the lower court denied the motion for lack of merit. LexLib
Private respondents, then, filed a special civil action for certiorari with the Court of Appeals
questioning the orders of the lower court dated August 24, 1990 and October 4, 1990 with a prayer
for a restraining order or writ of preliminary injunction to enjoin the judge from taking further
proceedings below.
In a Resolution dated October 31, 1990, the Court of Appeals resolved not to grant the prayer for
restraining order or writ of preliminary injunction, there being no clear showing that the spouses
Evangelista were entitled thereto.
On June 27, 1991, the Court of Appeals granted the petition for certiorari and rendered the
questioned decision. The motion for reconsideration filed by herein petitioner Cuartero was denied
for lack of merit in a resolution dated October 22, 1991. Hence, the present recourse to this Court.
The petitioner raises the following assignment of errors:
I
THE COURT OF APPEALS ERRED AND COMMITTED A GRAVE ABUSE OF DISCRETION,
AMOUNTING TO LACK OF JURISDICTION WHEN IT HELD THAT THE REGIONAL TRIAL
COURT DID NOT ACQUIRE JURISDICTION OVER RESPONDENT SPOUSES.
II
THE COURT OF APPEALS ERRED AND ACTED WITH GRAVE ABUSE OF DISCRETION
WHEN IT HELD THAT THE REGIONAL TRIAL COURT COULD NOT VALIDLY ISSUE THE
SUBJECT WRIT OF PRELIMINARY ATTACHMENT WHICH IS AN ANCILLARY REMEDY.
(Rollo, p. 13)
The Court of Appeals' decision is grounded on its finding that the trial court did not acquire any
jurisdiction over the person of the defendants (private respondents herein). It declared that:
" . . . the want of jurisdiction of the trial court to proceed in the main case as well as the ancillary
remedy of attachment is quite clear. It is not disputed that neither service of summons with a copy of
the complaint nor voluntary appearance of petitioners was had in this case before the trial court
issued the assailed order dated August 24, 1990, as well as the writ of preliminary attachment dated
September 19, 1990. This is reversible error and must be corrected on certiorari." (Rollo, p. 24).
The appellate tribunal relied on the case of Sievert v. Court of Appeals, 168 SCRA 692 (1988) in
arriving at the foregoing conclusion. It stated that: cdll
"Valid service of summons and a copy of the complaint vest jurisdiction in the court over the
defendant both for the purpose of the main case and for purposes of the ancillary remedy of
attachment and a court which has not acquired jurisdiction over the person of defendant, cannot bind
the defendant whether in the main case or in any ancillary proceeding such as attachment
proceedings (Sievert v. Court of Appeals, 168 SCRA 692)." (Rollo, p. 24)
The private respondents, in their comment, adopted and reiterated the aforementioned ruling of the
Court of Appeals. They added that aside from the want of jurisdiction, no proper ground also existed
for the issuance of the writ of preliminary attachment. They stress that the fraud in contracting the
debt or incurring the obligation upon which the action is brought which comprises a ground for
attachment must have already been intended at the inception of the contract. According to them,
there was no intent to defraud the petitioner when the postdated checks were issued inasmuch as the
latter was aware that the same were not yet funded and that they were issued only for purposes of
creating an evidence to prove a pre-existing obligation.
Another point which the private respondents raised in their comment is the alleged violation of their
constitutionally guaranteed right to due process when the writ was issued without notice and hearing.
In the later case of Davao Light and Power Co., Inc. v. Court of Appeals, G.R. No. 93262,
November 29, 1991, we had occasion to deal with certain misconceptions which may have arisen
from our Sievert ruling. The question which was resolved in the Davao Light case is whether or not
a writ of preliminary attachment may issue ex-parte against a defendant before the court acquires
jurisdiction over the latter's person by service of summons or his voluntary submission to the court's
authority. The Court answered in the affirmative. This should have clarified the matter but
apparently another ruling is necessary.
A writ of preliminary attachment is defined as a provisional remedy issued upon order of the court
where an action is pending to be levied upon the property or properties of the defendant therein, the
same to be held thereafter by the sheriff as security for the satisfaction of whatever judgment might
be secured in said action by the attaching creditor against the defendant (Adlawan v. Tomol, 184
SCRA 31 [1990] citing Virata v. Aquino, 53 SCRA 30-31 [1973]).
Under section 3, Rule 57 of the Rules of Court, the only requisites for the issuance of the writ are the
affidavit and bond of the applicant. As has been expressly ruled in BF Homes, Inc. v. Court of
Appeals, 190 SCRA 262 (1990), citing Mindanao Savings and Loan Association, Inc. v. Court of
Appeals, 172 SCRA 480 (1989), no notice to the adverse party or hearing of the application is
required inasmuch as the time which the hearing will take could be enough to enable the defendant
to abscond or dispose of his property before a writ of attachment issues. In such a case, a hearing
would render nugatory the purpose of this provisional remedy. The ruling remains good law. There
is, thus, no merit in the private respondents' claim of violation of their constitutionally guaranteed
right to due process. llcd
The writ of preliminary attachment can be applied for and granted at the commencement of the
action or at any time thereafter (Section 1, Rule 57, Rules of Court). In Davao Light and Power, Co.
Inc. v. Court of Appeals, supra, the phrase "at the commencement of the action" is interpreted as
referring to the date of the filing of the complaint which is a time before summons is served on the
defendant or even before summons issues. The Court added that
" . . . after an action is properly commenced by filing of the complaint and the payment of all
requisite docket and other fees the plaintiff may apply and obtain a writ of preliminary attachment
upon the 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,
crossclaim, 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."
The Court also pointed out that:
" . . . It is incorrect to theorize that after an action or proceeding has been commenced and
jurisdiction over the person of the plaintiff has been vested in the Court, but before acquisition of
jurisdiction over the person of the defendant (either by service of summons or his voluntary
submission to the Court's authority), nothing can be validly done by the plaintiff or the Court. It is
wrong to assume that the validity of acts done during the period should be dependent on, to held in
suspension until, the actual obtention of jurisdiction over the defendant's person. The obtention by
the court of jurisdiction over the person of the defendant is one thing; quite another is the acquisition
of jurisdiction over the person of the plaintiff or over the subject matter or nature of the action, or the
res or object thereof."
It is clear from our pronouncements that a writ of preliminary attachment may issue even before
summons is served upon the defendant. However, we have likewise ruled that the writ cannot bind
and affect the defendant until jurisdiction over his person is eventually obtained. Therefore, it is
required that when the proper officer commences implementation of the writ of attachment, service
of summons should be simultaneously made.
It must be emphasized that the grant of the provisional remedy of attachment practically involves
three stages: first, the court issues the order granting the application; second, the writ of attachment
issues pursuant to the order granting the writ; and third, the writ is implemented. For the initial two
stages, it is not necessary that jurisdiction over the person of the defendant should first be obtained.
However, once the implementation commences, it is required that the court must have acquired
jurisdiction over the defendant for without such jurisdiction, the court has no power and authority to
act in any manner against the defendant. Any order issuing from the Court will not bind the
defendant.
In Sievert v. Court of Appeals, supra, cited by the Court of Appeals in its questioned decision, the
writ of attachment issued ex-parte was struck down because when the writ of attachment was being
implemented, no jurisdiction over the person of the defendant had as yet been obtained. The court
had failed to serve the summons to the defendant. prcd
The circumstances in Sievert are different from those in the case at bar. When the writ of attachment
was served on the spouses Evangelista, the summons and copy of the complaint were also
simultaneously served.
It is appropriate to reiterate this Court's exposition in the Davao Light and Power case cited earlier,
to wit:
" . . . writs of attachment may properly issue ex-parte provided that the Court is satisfied that the
relevant requisites therefore 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."
The question as to whether a proper ground existed for the issuance of the writ is a question of fact
the determination of which can only be had in appropriate proceedings conducted for the purpose
(Peroxide Philippines Corporation v. Court of Appeals, 199 SCRA 882 [1991]). It must be noted that
the spouses Evangelista's motion to discharge the writ of preliminary attachment was denied by the
lower court for lack of merit. There is no showing that there was an abuse of discretion on the part of
the lower court in denying the motion.
Moreover, an attachment may not be dissolved by a showing of its irregular or improper issuance if
it is upon a ground which is at the same time the applicant's cause of action in the main case since an
anomalous situation would result if the issues of the main case would be ventilated and resolved in a
mere hearing of a motion (Davao Light and Power Co., Inc. v. Court of Appeals, supra, The
Consolidated Bank and Trust Corp. (Solidbank) v. Court of Appeals, 197 SCRA 663 [1991]).
In the present case, one of the allegations in petitioner's complaint below is that the defendant
spouses induced the plaintiff to grant the loan by issuing postdated checks to cover the installment
payments and a separate set of postdated checks for payment of the stipulated interest (Annex "B").
The issue of fraud, then , is clearly within the competence of the lower court in the main action.
WHEREFORE, premises considered, the Court hereby GRANTS the petition. The challenged
decision of the Court of Appeals is REVERSED, and the order and writ of attachment issued by
Hon. Cesar C. Peralejo, Presiding Judge of Branch 98, Regional Trial Court of Quezon City against
spouses Evangelista are hereby REINSTATED. No pronouncement as to costs. llcd
SO ORDERED.
Feliciano, Bidin and Davide, Jr., JJ., concur.
Romero, J., took no part.

G.R. No. L-46009 May 14, 1979
RICARDO T. SALAS, ET AL. vs. MIDPANTAO L. ADIL, ET AL.

SECOND DIVISION
[G.R. No. L-46009 May 14, 1979]

RICARDO T. SALAS and MARIA SALAS, petitioners, vs. HON. MIDPANTAO L. ADIL, as
Judge of Branch II, Court of First Instance of Iloilo, ROSITA BEDRO and BENITA YU,
respondents.

Castro Law Office for petitioners.
Tirso Espelete and Fortunato A. Padilla for private respondents.

SYNOPSIS

In an action for "annulment of a deed of sale and recovery of damages", the trial judge, on plaintiff's
motion, issued an ex parte writ of attachment against the properties of defendants upon plaintiffs'
filing a bond. Without first availing of the remedy provided under Section 13, Rule 57 of the
Revised Rules of Court for the discharge of an improperly or illegally issued attachment, the
defendants filed this petition for certiorari to nullify the order of the attachment as well as the writ of
execution.

The Supreme Court held that the instant petition is premature because defendants have an adequate
remedy in the course of law which they failed to avail of. Petition is denied in order to enable
petitioners to move before respondent court for the discharge of the attachment pursuant to Section
13, Rule 57 of the Rules of Court and for the aforesaid court to act thereon.

SYLLABUS
1. CERTIORARI; EXHAUSTION OF REMEDY. In certiorari proceedings, the cardinal
rule is that the court must be given the opportunity to correct itself. Thus, for the special civil action
of certiorari to prosper, there must be no appeal nor any plain, speedy and adequate remedy in the
ordinary course of law. Petitioners, therefore, must exhaust all available remedies before filing a
petition for certiorari, otherwise the petition shall be held to be premature.
2. ID.; IMPROPER OR IRREGULAR ISSUANCE OF ATTACHMENT. Where an
order of attachment is improperly or irregularly issued, the party whose property has been attached
could file an application with the court a quo for the discharge of the attachment under Section 13,
Rule 57 of the Rules of Court. The failure of such party to avail of the remedy provided under the
Rules renders his petition for certiorari premature.
3. ATTACHMENT; DUTY OF COURT TO INSURE COMPLIANCE WITH
REQUISITES OF LAW. A preliminary attachment is a rigorous remedy which exposes the
debtor to humiliation and annoyance. 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 avoid.
4. ID.; ID.; PROCEDURAL DUE PROCESS. When the affidavit in support of the
preliminary attachment on the ground that defendants are disposing their properties in fraud of
creditors 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 is incumbent upon the judge to give notice to defendants and to allow them to present
their position at a hearing wherein evidence is to be received.
5. ID.; ATTACHMENT NOT AVAILABLE IN SUIT FOR DAMAGES WHERE
AMOUNT IS CONTINGENT. The writ of attachment is not available in a suit for damages
where the amount claimed is contingent or unliquidated.

D E C I S I O N

ANTONIO, J p:
Certiorari to nullify the Order of Attachment of May 13, 1977, as well as the Writ of Attachment
dated May 16, 1977, issued by respondent Judge in Civil Case No. 10770 of the Court of First
Instance of Iloilo, entitled "Rosita Bedro and Benita Yu v. Spouses Ricardo T. Salas and Maria
Salas, et al."
On September 10, 1976, respondents Rosita Bedro and Benita Yu filed the afore-mentioned civil
action with the Court of First Instance of Iloilo against herein petitioners Ricardo T. Salas and Maria
Salas, the Philippine Commercial & Industrial Bank, in its capacity as Administrator of the Testate
Estate of the deceased Charles Newton Hodges, and Avelina A. Magno, in her capacity as
Administratrix of the Testate Estate of the deceased Linnie Jane Hodge, to annul the deed of sale of
Lot No. 5 executed by administrators of the Hodges Estate in favor of the Spouses Ricardo T. Salas
and Maria Salas and for damages. The action for annulment was predicated upon the averment that
Lot No. 5, being a subdivision road, is intended for public use and cannot be sold or disposed of by
the Hodges Estate. The claim for damages was based on the assertion that after defendant spouses
purchased Lots Nos. 2 and 3, they also purchased Lot No. 5 and thereafter "erected wooden posts,
laid and plastered at the door of the house on Lot No. 3, with braces of hardwood, lumber and
plywood nailed to the post", thereby preventing Rosita Bedro and Benita Yu from using the road on
the afore-mentioned lot, Lot No. 5, and that as a result of such obstruction, private respondents
Rosita Bedro and Benita Yu sustained actual damages in the amount of P114,000.00, plus the sum of
P1,000.00 as damages daily from June 30, 1976 due to the stoppage in the construction of their
commercial buildings on Lot No. 3, and moral damages in the amount of P200,000.00.
In their answer to the complaint, the Salas spouses, after specifically denying the material allegations
in the complaint, stated that Lot No. 5 had been registered in the name of the C. N. Hodges as their
exclusive private property and was never subjected to any servitude or easement of right of way in
favor of any person; that any occupants of Lots Nos. 2 and 3 have direct access to Bonifacio Drive, a
National Highway, hence, Lot No. 5 is neither needed nor required for the egress or ingress of the
occupants thereof; and that private respondents, as a matter of fact, since 1964 had excluded and
separated completely their property (Lots Nos. 2 and 3) from Lot No. 5 by building a concrete wall
on the boundary thereon without providing any gate as entrance or exit towards Lot No. 5; and that
private respondents have no personality to question the validity of the deed of sale over Lot No. 5
since they were not parties to the same and the sale was duly approved by the probate court. Cdpr
In a motion dated May 12, 1977, private respondents filed a Motion for Attachment, alleging, among
others, that the case was "for annulment of a deed of sale and recovery of damages" and that the
defendants have removed or disposed of their properties or are about to do so with intent to defraud
their creditors especially the plaintiffs in this case.
On May 13, 1977, respondent Judge issued ex-parte a Writ of Attachment "against the properties of
the defendants particularly Lots Nos. 1 and 4 of Psc-2157 less the buildings standing thereon upon
the plaintiffs filing a bond in the amount of P200,000.00 subject to the approval of this Court." After
a surety bond in the amount of P200,000.00, executed on May 11, 1977 by the Central Surety and
Insurance Company as surety was filed, the writ itself was issued by respondent Judge on May 16,
1977, directing the Sheriff to attach the properties above-mentioned. On May 17, 1977, the Deputy
Sheriff of Iloilo levied upon the aforesaid properties of petitioners.
Contending that respondent Judge gravely abused his discretion in issuing the said Writ of
Attachment, petitioners filed the present petition.
In certiorari proceedings, the cardinal rule is that the court must be given the opportunity to correct
itself. Thus, for the special civil action of certiorari to prosper, there must be no appeal nor any plain,
speedy and adequate remedy in the ordinary course of law. Petitioners, therefore, must exhaust all
available remedies in the lower court before filing a petition for certiorari, otherwise the petition
shall be held to be premature.
In the instant case, it appears that petitioners have adequate remedy under the law. They could have
filed an application with the court a quo for the discharge of the attachment for improper or irregular
issuance under section 13, Rule 57, of the Revised Rules of Court, which provides the following:
"SEC. 13. Discharge of attachment for improper or irregular issuance. The party whose property
has been attached may also, at any time either before or after the release of the attached property, or
before any attachment shall have been actually levied, upon reasonable notice to the attaching
creditor, apply to the judge who granted the order, or to the judge of the court in which the action is
pending, for an order to discharge the attachment on the ground that the same was improperly or
irregularly issued. If the motion be made on affidavits on the part of the party whose property has
been attached, but not otherwise, the attaching creditor may oppose the same by counter-affidavits or
other evidence in addition to that on which the attachment was made. After hearing, the judge shall
order the discharge of the attachment if it appears that it was improperly or irregularly issued and the
defect is not cured forthwith."
Considering that petitioners have not availed of this remedy, the instant petition is premature.
We deem it necessary, however, for the guidance of respondent Court and of the parties, to stress
herein the nature of attachment as an extraordinary provisional remedy.
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. 1
In Carpio v. Macadaeg, 2 this Court said:
"Respondent Judge should not have issued the two writs of preliminary attachment (Annexes C and
C-1) on Abaya's simple allegation that the petitioner was about to dispose of his property, thereby
leaving no security for the satisfaction of any judgment. Mere removal or disposal of property, by
itself, is not ground for issuance of preliminary attachment, notwithstanding absence of any security
for the satisfaction of any judgment against the defendant. The removal or disposal, to justify
preliminary attachment, must have been made with intent to defraud defendant's creditors.
"Respondent Judge in fact corrected himself. Acting on petitioner's motion to discharge attachment
and apparently believing the correctness of the grounds alleged therein, he set aside the orders of
attachment (Order of March 11, 1960, Annex F)
"But reversing himself again, he set aside his order of March 11, 1960 (Annex K, dated March 29,
1960). This he did apparently on Abaya's contention that petitioner was about to remove or dispose
of his property in order to defraud his creditors, as examples of which disposals he pointed to the
alleged sale of the horses and of petitioner's office furniture. . . . These averments of fraudulent
disposals were controverted by petitioner who . . . reiterated the defenses against preliminary
attachment which he had previously enumerated in his petition to discharge the two orders of
attachment. Thus the question of fraudulent disposal was put in issue; and respondent Judge, before
issuing the preliminary attachment anew, should have given the parties opportunity to prove their
respective claims or, at the very least, should have provided petitioner with the chance to show that
he had not been disposing of his property in fraud of creditors." (citing National Coconut
Corporation v. Pecson, L-4296, Feb. 25, 1952, Villongco v. Panlilio, L-6214, Nov. 20, 1953).
And in Garcia v. Reyes, 3 considering the allegation that the debtors were removing or disposing of
some of their properties with intent to defraud their creditors, this Court said that "(a)ll in all due
process would seem to require that both parties further ventilate their respective contentions in a
hearing that could indeed reveal the truth. Fairness would be served thereby, the demand of reason
satisfied."
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.
Moreover, it appears from the records that private respondents are claiming unliquidated damages,
including moral damages, from petitioners. The authorities agree that the writ of attachment is not
available in a suit for damages where the amount claimed is contingent or unliquidated. Cdpr
"We think, however, that a rule sufficient for the determination of this case has been suggested and
acted upon, and that the remedy does not exist where unliquidated damages were demanded . . . In
Warwick v. Chase, 23 Md. 161, it is said: 'It is necessary that the standard for ascertaining the
amount of damages claimed should not only appear, but that it should be fixed and certain, and in no
degree dependent on facts either speculative or uncertain. . . . The general rule is, that unliquidated
damages, . . . cannot be recovered by attachment, unless the contract affords a certain measure or
standard for ascertaining the amount of the damages . . . '" 4
Further:
"The statute authorizing the issuance of the writ of garnishment and that relating to the issuance of
the writ of attachment . . . have not been construed as authorizing the writs to be issued when the
plaintiff's suit is technically an action for debt. Neither of the writs may be issued when the suit is for
damages for tort, but they may be issued when the plaintiff's claim arises out of contract either
express or implied, and the demand is liquidated, that is, the amount of the claim is not contingent, is
capable of being definitely ascertained by the usual means of evidence, and does not rest in the
discretion of the jury." 5
WHEREFORE, the instant petition is hereby DENIED, in order to enable petitioners to move before
respondent Court for the discharge of the attachment on the ground of its improper and irregular
issuance, pursuant to section 13, Rule 57, of the Revised Rules of Court, and for the aforesaid Court
to act thereon in accordance with the foregoing.
Fernando, Aquino, Concepcion, Jr. and Santos JJ., concur.
Abad Santos J., took no part.
Barredo, J., is on leave.

Footnotes

1. Guzman v. Catolico, No. 45720, December 29, 1937, 65 Phil. 257, 261.
2. L-17797, November 29, 1963, 9 SCRA 552, 554-556.
3. L-27419, October 31, 1969, 30 SCRA 162, 171.
4. Hochstadder, et al. v. Sam, 11 SW 408-409.
5. Cleveland v. San Antonio Building and Loan Association, 223 SW 2d 226, 228.

G.R. No. 40054 September 14, 1933
LA GRANJA, INC. vs. FELIX SAMSON, ET AL.
058 Phil 378

EN BANC
[G.R. No. 40054. September 14, 1933.]

LA GRANJA, INC., petitioner, vs. FELIX SAMSON, Judge of First Instance of Cagayan, CHUA
BIAN, CHUA YU LEE and CHUA KI, respondents.

Miguel P. Pio, for petitioner.
The Respondent Judge in his own behalf.
No appearance for other respondents.

SYLLABUS
1. ATTACHMENT; AFFIDAVIT TO OBTAIN ISSUANCE OF ORDER OF; JUDICIAL
DISCRETION. The mere filing of an affidavit executed in due form is not sufficient to compel a
judge to issue an order of attachment, but it is necessary that by such affidavit it be made to appear
to the court that there exists sufficient cause for the issuance thereof, the determination of such
sufficiency being discretionary on the part of the court.

D E C I S I O N

VILLA-REAL, J p:
In this original petition for mandamus filed by the corporate entity, La Granja, Inc., against Felix
Samson, as Judge of the Court of First Instance of Cagayan, Chua Bian, Chua Yu Lee and Chua Ki,
the petitioner herein, for the reasons stated in its petition, prays that a writ of mandamus be issued
against the respondent judge compelling him to issue a writ of attachment against the properties of
the other respondents herein, who are defendants in civil case No. 1888 of the Court of First Instance
of Cagayan.
The pertinent facts necessary for the solution of the questions raised in the present case are as
follows:
On July 5, 1932, the petitioner herein, La Granja, Inc., filed a complaint in the Court of First
Instance of Cagayan, against Chua Bian, Chua Yu Lee and Chua Ki, for the recovery of the sum of
P2,418.18 with interest thereon at the rate of 12 per cent per annum, which case was docketed as
civil case No. 1888. The plaintiff, at the same time, also prayed for the issuance of an order of
attachment against the aforementioned defendants' property and accompanied said complaint with an
affidavit of the manager of the aforesaid petitioner, La Granja, Inc., wherein it was alleged, among
other essential things, that the said defendants have disposed or are disposing of their properties in
favor of the Asiatic Petroleum Co., with intent to defraud their creditors. The respondent judge,
wishing to ascertain or convince himself of the truth of the alleged disposal, required the petitioner
herein to present evidence to substantiate its allegation, before granting its petition. Inasmuch as the
petitioner refused to comply with the court's requirement, alleging as its ground that it was not
obliged to do so, the respondent judge dismissed said petition for an order of attachment.
The only question to decide in the present case is whether or not the mere filing of an affidavit
executed in due form is sufficient to compel a judge to issue an order of attachment.
Section 426 of the Code of Civil Procedure provides the following:
"SEC. 426.Granting order of attachment. A judge or justice of the peace shall grant an order of
attachment when it is made to appear to the judge or justice of the peace by the affidavit of the
plaintiff, or of some other person who knows the facts, that a sufficient cause of action exists, and
that the case is one of those mentioned in section four hundred and twenty-four, and that there is no
other sufficient security for the claim sought to be enforced by the action, and that the amount due to
the plaintiff above all legal set-offs or counterclaims is as much as the sum for which the order is
granted."
It will be seen that the legal provision just cited orders the granting of a writ of attachment when it
has been made to appear by affidavit that the facts mentioned by law as sufficient to warrant the
issuance thereof, exist. Although the law requires nothing more than the affidavit as a means of
establishing the existence of such facts, nevertheless, such affidavit must be sufficient to convince
the court of their existence, the court being justified in rejecting the affidavit if it does not serve this
purpose and in denying the petition for an order of attachment. The affidavit filed by the petitioner,
La Granja, Inc., must not have satisfied the respondent judge inasmuch as he desired to ascertain or
convince himself of the truth of the facts alleged therein by requiring evidence to substantiate them.
The sufficiency or insufficiency of an affidavit depends upon the amount of credit given it by the
judge, and its acceptance or rejection, upon his sound discretion.
Hence, the respondent judge, in requiring the presentation of evidence to establish the truth of the
allegation of the affidavit that the defendants had disposed or were disposing of their property to
defraud their creditors, has done nothing more than exercise his sound discretion in determining the
sufficiency of the affidavit.
In view of the foregoing considerations, we are of the opinion and so hold that the mere filing of an
affidavit executed in due form is not sufficient to compel a judge to issue an order of attachment, but
it is necessary that by such affidavit it be made to appear to the court that there exists sufficient
cause for the issuance thereof, the determination of such sufficiency being discretionary on the part
of the court.
Wherefore, the petition for a writ of mandamus is hereby denied and the same is dismissed, with
costs against the petitioner. So ordered.
Malcolm, Abad Santos, Hull and Imperial, JJ., concur.


SECTION 3

G.R. No. L-48756 September 11, 1982
K.O. GLASS CONSTRUCTION CO., INC. vs. MANUEL VALENZUELA
202 Phil. 141

SECOND DIVISION
[G.R. No. L-48756. September 11, 1982.]

K.O. GLASS CONSTRUCTION CO., INC., petitioner, vs. THE HONORABLE MANUEL
VALENZUELA, Judge of the Court of First Instance of Rizal, and ANTONIO D. PINZON,
respondents.

Guillermo E. Aragones for petitioner.
Ruben V. Lopez for respondent Antonio D. Pinzon.

SYNOPSIS
Antonio D. Pinzon, herein private respondent, sued Kenneth O. Glass and petitioner Company for
the recovery of a sum of money. In his verified complaint, private respondent asked for the issuance
of a writ of preliminary attachment against the property of the defendants consisting of collectibles
and payables with the Philippine Geothermal, Inc., on the grounds that the defendant Glass is a
foreigner; that he has a sufficient cause of action against the said defendant; and that there is no
sufficient security for his claim against the defendant in the event a judgment is rendered in his
favor. The trial court issued the writ against the properties of the defendant upon the plaintiff's filing
of a bond. After their motion to quash the writ of attachment was denied, defendants filed a
counterbond and prayed that the writ of attachment be discharged. Respondent Judge did not order
the discharge. Hence, this petition.
On review, the Supreme Court held that: (a) the issuance of the writ of attachment is not justified
there being no showing, much less an allegation, that the defendants are about to depart from the
Philippines with intent to defraud their creditor, or that they are non-resident aliens; (b) the plaintiff's
failure to allege in his affidavit for attachment the requisites prescribed for the issuance of a writ of
preliminary attachment under Section 3, Rule 57 of the Rules of Court renders the writ issued
against the property of defendant fatally defective; and (c) upon receipt of defendants' counterbond,
respondent Judge should have discharged the attachment pursuant to Section 12, Rule 57 of the
Revised Rules of Court.
Petition granted.

SYLLABUS
1. REMEDIAL LAW; PROVISIONAL REMEDIES; ATTACHMENT; ISSUANCE OF A
WRIT OF PRELIMINARY ATTACHMENT NOT JUSTIFIED IN CASE AT BAR. Where there
is no showing, much less an allegation, that the defendant is about to depart from the Philippines
with intent to defraud his creditor, or that he is a non-resident alien, the attachment of his properties
is not justified. In the case at bar, plaintiff merely stated in his complaint that the defendant is a
foreigner, but he did not allege that the defendant "is a foreigner (who) may, at any time, depart from
the Philippines with intent to defraud his creditors including the plaintiff."
2. ID.; ID.; ID.; FAILURE TO ALLEGE IN THE AFFIDAVIT THE REQUISITES
PRESCRIBED FOR ISSUANCE OF THE WRIT OF PRELIMINARY ATTACHMENT, FATAL;
CASE AT BAR. The failure to allege in the affidavit the requisites prescribed in Section 3, Rule
57 of the Rules of Court for the issuance of a writ of preliminary attachment, renders the writ issued
against the property of the defendant fatally defective, and the judge issuing it is deemed to have
acted in excess of his jurisdiction. (Guzman vs. Catolico, 65 Phil. 257.) In the instant case, while
plaintiff may have stated in his affidavit that a sufficient cause of action exists against the defendant,
he did not state therein 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 is as much as the sum for which the order granted above all legal counterclaims."
3. ID.; ID.; ID.: COUNTERBOND; FILING THEREOF WARRANTS DISCHARGE OF
THE ATTACHMENT. Where it appears that petitioner has filed a counter-bond to answer for
any judgment that may he rendered against the defendant, respondent judge, upon receipt of the
counter-bond, should have discharged the attachment pursuant to Section 12, Rule 57 of the Revised
Rules of Court.
4. ID.; ID.; ID.; ID.; PURPOSES OF. The filing of the counter-bond will serve the
purpose of preserving the defendant's property and at the same time give the plaintiff security for any
judgment that may be obtained against the defendant. (G.B. Inc. vs. Sanchez, 98 Phil. 886, 891.)

D E C I S I O N

CONCEPCION, JR., J p:
Petition for certiorari to annul and set aside the writ of preliminary attachment issued by the
respondent Judge in Civil Case No. 5902-P of the Court of First Instance of Rizal, entitled: "Antonio
D. Pinzon, plaintiff, versus K.O. Glass Construction Co., Inc., and Kenneth O. Glass, defendants,"
and for the release of the amount of P37,190.00, which had been deposited with the Clerk of Court,
to the petitioner.
On October 6, 1977, an action was instituted in the Court of First Instance of Rizal by Antonio D.
Pinzon to recover from Kenneth O. Glass the sum of P37,190.00, alleged to be the agreed rentals of
his truck, as well as the value of spare parts which have not been returned to him upon termination of
the lease. In his verified complaint, the plaintiff asked for an attachment against the property of the
defendant consisting of collectibles and payables with the Philippine Geothermal, Inc., on the
grounds that the defendant is a foreigner; that he has sufficient cause of action against the said
defendant; and that there is no sufficient security for his claim against the defendant in the event a
judgment is rendered in his favor. 1
Finding the petition to be sufficient in form and substance, the respondent Judge ordered the
issuance of a writ of attachment against the properties of the defendant upon the plaintiff's filing of a
bond in the amount of P37,190.00. 2
Thereupon, on November 22, 1977, the defendant Kenneth O. Glass moved to quash the writ of
attachment on the grounds that there is no cause of action against him since the transactions or
claims of the plaintiff were entered into by and between the plaintiff and the K.O. Glass
Construction Co., Inc., a corporation duly organized and existing under Philippine laws; that there is
no ground for the issuance of the writ of preliminary attachment as defendant Kenneth O. Glass
never intended to leave the Philippines, and even if he does, plaintiff can not be prejudiced thereby
because his claims are against a corporation which has sufficient funds and property to satisfy his
claim; and that the money being garnished belongs to the K.O. Glass Corporation Co., Inc. and not
to defendant Kenneth O. Glass. 3
By reason thereof, Pinzon amended his complaint to include K.O. Glass Construction Co., Inc. as
co-defendant of Kenneth O. Glass. 4
On January 26, 1978, the defendants therein filed a supplementary motion to discharge and or
dissolve the writ of preliminary attachment upon the ground that the affidavit filed in support of the
motion for preliminary attachment was not sufficient or wanting in law for the reason that: (1) the
affidavit did not state that the amount of plaintiff's claim was above all legal set-offs or
counterclaims, as required by Sec. 3, Rule 57 of the Revised Rules of Court; (2) the affidavit did not
state that there is no other sufficient security for the claim sought to be recovered by the action as
also required by said Sec. 3; and (3) the affidavit did not specify any of the grounds enumerated in
Sec. 1 of Rule 57, 5 but, the respondent Judge denied the motion and ordered the Philippine
Geothermal, Inc. to deliver and deposit with the Clerk of Court the amount of P37,190.00
immediately upon receipt of the order which amount shall remain so deposited to await the judgment
to be rendered in the case. 6
On June 19, 1978, the defendants therein filed a bond in the amount of P37,190.00 and asked the
court for the release of the same amount deposited with the Clerk of Court, 7 but, the respondent
Judge did not order the release of the money deposited. 8
Hence, the present recourse. As prayed for, the Court issued a temporary restraining order,
restraining the respondent Judge from further proceeding with the trial of the case. 9
We find merit in the petition. The respondent Judge gravely abused his discretion in issuing the writ
of preliminary attachment and in not ordering the release of the money which had been deposited
with the Clerk of Court for the following reasons:
First, there was no ground for the issuance of the writ of preliminary attachment. Section 1, Rule 57
of the Revised Rules of Court, which enumerates the grounds for the issuance of a writ of
preliminary attachment, reads, as follows:
"Sec. 1. Grounds upon which attachment may issue. A plaintiff or any proper party may, at the
commencement of the action or at any time thereafter, have the property of the adverse party
attached as security for the satisfaction of any judgment that may be recovered in the following
cases:
"(a) In an action for the recovery of money or damages on a cause of action arising from
contract, express or implied, against a party who is about to depart from the Philippines with intent
to defraud his creditor;
"(b) In 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;
"(c) In an action to recover the possession of personal property unjustly detained, when the
property, or any part thereof, has been concealed, removed, or disposed of to prevent its being found
or taken by the applicant or an officer;
"(d) In an action against the 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;
"(e) In an action against a party who has removed or disposed of his property, or is about to
do so, with intent to defraud his creditors;
"(f) In an action against a party who resides out of the Philippines, or on whom summons
may be served by publication."
In ordering the issuance of the controversial writ of preliminary attachment, the respondent Judge
said and We quote:
"The plaintiff filed a complaint for a sum of money with prayer for Writ of Preliminary Attachment
dated September 14, 1977, alleging that the defendant who is a foreigner may, at any time, depart
from the Philippines with intent to defraud his creditors including the plaintiff herein; that there is no
sufficient security for the claim sought to be enforced by this action; that the amount due the plaintiff
is as much as the sum for which an order of attachment is sought to be granted; and that defendant
has sufficient leviable assets in the Philippines consisting of collectibles and payables due from
Philippine Geothermal, Inc., which may be disposed of at any time, by defendant if no Writ of
Preliminary Attachment may be issued. Finding said motion and petition to be sufficient in form and
substance." 10
Pinzon, however, did not allege that the defendant Kenneth O. Glass "is a foreigner (who) may, at
any time, depart from the Philippines with intent to defraud his creditors including the plaintiff." He
merely stated that the defendant Kenneth O. Glass is a foreigner. The pertinent portion of the
complaint reads, as follows:
"15. Plaintiff hereby avers under oath that defendant is a foreigner and that said defendant has
a valid and just obligation to plaintiff in the total sum of P32,290.00 arising out from his failure to
pay (i) service charges for the hauling of construction materials; (ii) rentals for the lease of plaintiff's
Isuzu Cargo truck, and (iii) total cost of the missing/destroyed spare parts of said leased unit; hence,
a sufficient cause of action exists against said defendant. Plaintiff also avers under oath that there is
no sufficient security for his claim against the defendant in the event a judgment be rendered in favor
of the plaintiff. However, defendant has sufficient assets in the Philippines in the form of collectible
and payables due from the Philippine Geothermal, Inc. with office address at Citibank Center, Paseo
de Roxas, Makati, Metro Manila, but which properties, if not timely attached, may be disposed of by
defendant and would render ineffectual the reliefs prayed for by plaintiff in this Complaint." 11
In his Amended Complaint, Pinzon alleged the following:
"15. Plaintiff hereby avers under oath that defendant GLASS is an American citizen who
controls most, if not all, the affairs of defendant CORPORATION. Defendants CORPORATION
and GLASS have a valid and just obligation to plaintiff in the total sum of P32,290.00 arising out for
their failure to pay (i) service charges for the hauling of construction materials, (ii) rentals for the
lease of plaintiff's Isuzu Cargo truck, and (iii) total cost of the missing/destroyed spare parts of said
leased unit; hence, a sufficient cause of action exist against said defendants. Plaintiff also avers
under oath that there is no sufficient security for his claim against the defendants in the event a
judgment be rendered in favor of the plaintiff. However, defendant CORPORATION has sufficient
assets in the Philippines in the form of collectibles and payables due from the Philippine
Geothermal, Inc. with office address at Citibank Center, Paseo de Roxas, Makati, Metro Manila, but
which properties, if not timely attached, may be disposed of by defendants and would render
ineffectual the reliefs prayed for by plaintiff in this Complaint." 12
There being no showing, much less an allegation, that the defendants are about to depart from the
Philippines with intent to defraud their creditor, or that they are non-resident aliens, the attachment
of their properties is not justified.
Second, the affidavit submitted by Pinzon does not comply with the Rules. Under the Rules, an
affidavit for attachment must state that (a) sufficient cause of action exists, (b) the case is one of
those mentioned in Section 1 (a) of Rule 57; (c) there is no other sufficient security for the claim
sought to be enforced by the action, and (d) the amount due to the applicant for attachment 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. Section 3, Rule 57 of the Revised Rules of
Court reads, as follows:
"Section 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 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."
In his affidavit, Pinzon stated the following:
"I, ANTONIO D. PINZON, Filipino, of legal age, married and with residence and postal address at
1422 A. Mabini Street, Ermita, Manila, subscribing under oath, depose and states that"
"1. On October 6, 1977, I filed with the Court of First Instance of Rizal, Pasay City Branch, a
case against Kenneth O. Glass entitled 'ANTONIO D. PINZON vs. KENNETH O. GLASS',
docketed as Civil Case No. 5902-P;
"2. My Complaint against Kenneth O. Glass is based on several causes of action, namely:
"(i) On February 15, 1977, we mutually agreed that I undertake to haul his construction
materials from Manila to his construction project in Bulalo, Bay, Laguna and vice-versa, for a
consideration of P50.00 per hour;
"(ii) Also, on June 18, 1977, we entered into a separate agreement whereby my Isuzu cargo
truck will be leased to him for a consideration of P4,000.00 a month payable on the 15th day of each
month;
"(iii) On September 7, 1977, after making use of my Isuzu truck, he surrendered the same
without paying the monthly rentals for the leased Isuzu truck and the peso equivalent of the spare
parts that were either destroyed or misappropriated by him;
"3. As of today, October 11, 1977, Mr. Kenneth O. Glass still owes me the total sum of
P32,290.00 representing his obligation arising from the hauling of his construction materials,
monthly rentals for the lease Isuzu truck and the peso equivalent of the spare parts that were either
destroyed or misappropriated by him;
"4. I am executing this Affidavit to attest to the truthfulness of the foregoing and in
compliance with the provisions of Rule 57 of the Revised Rules of Court." 13
While Pinzon may have stated in his affidavit that a sufficient cause of action exists against the
defendant Kenneth O. Glass, he did not state therein 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 is as much as the sum for which the order granted
above all legal counterclaims." It has been held that the failure to allege in the affidavit the requisites
prescribed for the issuance of a writ of preliminary attachment, renders the writ of preliminary
attachment issued against the property of the defendant fatally defective, and the judge issuing it is
deemed to have acted in excess of his jurisdiction. 14
Finally, it appears that the petitioner has filed a counter-bond in the amount of P37,190.00 to answer
for any judgment that may be rendered against the defendant. Upon receipt of the counter-bond the
respondent Judge should have discharged the attachment pursuant to Section 12, Rule 57 of the
Revised Rules of Court which reads, as follows:
"Section 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 on his behalf, may upon reasonable notice to the applicant, apply to the judge who granted
the order, or to the judge of the court in which the action is pending, for an order discharging the
attachment wholly or in part on the security given. The judge shall, after hearing; order the discharge
of the attachment if a cash deposit is made, or a counterbond executed to the attaching creditor is
filed, on behalf of the adverse party, with the clerk or judge of the court where the application is
made, in an amount equal to the value of the property attached as determined by the judge, to secure
the payment of any judgment that the attaching creditor may recover in the action. Upon the filing of
such counter-bond, copy thereof shall forthwith be served on the attaching creditor or his lawyer.
Upon the discharge of an attachment in accordance with the provisions of this section the property
attached, or the proceeds of any sale thereof, shall be delivered to the party making the deposit or
giving the counter-bond, or the person appearing on his behalf, the deposit or counter-bond aforesaid
standing in the place of the property so released. Should such counter-bond for any reason be found
to be, or become, insufficient, and the party furnishing the same fail to file an additional counter-
bond the attaching creditor may apply for a new order of attachment."
The filing of the counter-bond will serve the purpose of preserving the defendant's property and at
the same time give the plaintiff security for any judgment that may be obtained against the
defendant. 15
WHEREFORE, the petition is GRANTED and the writ prayed for is issued. The orders issued by the
respondent Judge on October 11, 1977, January 26, 1978, and February 3, 1978 in Civil Case No.
5902-P of the Court of First Instance of Rizal, insofar as they relate to the issuance of the writ of
preliminary attachment, should be as they are hereby ANNULLED and SET ASIDE and the
respondents are hereby ordered to forthwith release the garnished amount of P37,190.00 to the
petitioner. The temporary restraining order, heretofore issued, is hereby lifted and set aside. Costs
against the private respondent Antonio D. Pinzon.
SO ORDERED.
Barredo (Chairman), Guerrero, Abad Santos, De Castro and Escolin JJ., concur.
Aquino, J., In the result.

Footnotes

1. Rollo, p. 10.
2. Id., p 18.
3. Id., p. 20.
4. Id., p. 23.
5. Id., p. 31.
6. Id., p. 35.
7. Id. 39.
8. Par 3, Petition, Rollo, p. 7.
9. Rollo, p. 49.
10. Id., p. 18.
11. Id., p. 13.
12. Id., pp. 26-27.
13. Id., p. 17.
14. Guzman vs. Catolico, 65 Phil. 257.
15. G.B., Inc. vs. Sanchez, 98 Phil. 886, 891.

G.R. No. 45720 December 29, 1937
VENTURA GUZMAN vs. ALFREDO CATOLICO
065 Phil 257

SECOND DIVISION
[G.R. No. 45720. December 29, 1937.]

VENTURA GUZMAN, petitioner, vs. ALFREDO CATOLICO and SIMEON RAMOS, Judge of
First Instance of Isabela, respondents.

Arnaldo J. Guzman for the petitioner.
Alfredo Catolico in his own behalf.
No appearance for respondent Judge.

SYLLABUS
1. PRELIMINARY ATTACHMENT; FAILURE TO ALLEGE IN THE COMPLAINT OR
IN THE AFFIDAVIT SOLEMNIZING IT THE LEGAL REQUISITES FOR THE ISSUANCE OF
THE WRIT OF ATTACHMENT; JURISDICTION. Failure to allege in a complaint or in the
affidavit solemnizing it, or in a separate one, the requisites prescribed by section 426 of the Code of
Civil Procedure for the issuance of a writ of preliminary attachment that there is no other sufficient
security for the claim sought to be enforced by the action, and that the amount due to the plaintiff
above all legal set-offs or counterclaims is as much as the sum for which the order is sought, renders
a writ of preliminary attachment issued against the property of a defendant fatally defective, and the
judge issuing it acts in excess of his jurisdiction.

D E C I S I O N

VILLA-REAL, J p:
This is a petition filed by Ventura Guzman, praying this court, after proper proceedings, to render
judgment declaring illegal and void and setting aside the writ of preliminary attachment issued by
the respondent judge, Honorable Simeon Ramos, as judge of the Court of First Instance of Isabela,
and ordering the dissolution thereof.
The pertinent facts necessary for the resolution of the legal question raised in the present case are as
follows:
On March 8, 1937, the respondent Alfredo Catolico brought an action against the herein petitioner
Ventura Guzman in the Court of First Instance of Isabela, for the recovery from the latter of the
amount of his fees for services rendered by him as attorney, praying, at the same time, for the
issuance of a writ of preliminary attachment against all of the properties adjudicated to said
petitioner in special proceedings No. 179 of said court. As grounds for the issuance of said writ of
preliminary attachment, he alleged: "That the herein defendant is trying to sell and dispose of the
properties adjudicated to him, with intention to defraud his creditors, particularly the herein plaintiff,
thereby rendering illusory the judgment that may be rendered against him, inasmuch as he has no
other properties outside the same to answer for the fees the court may fix in favor of the plaintiff,
this case being one of those mentioned by the Code of Civil Procedure warranting the issuance of
writ of preliminary attachment" (paragraph 8 of the complaint). At the foot of the complaint there
appears the following affidavit: "I, Alfredo Catolico, of age, married and resident of Tuguegarao,
Cagayan, after being duly sworn, declare: That I am the same plaintiff in this case; that I have
prepared and read the same (complaint) and that all the allegations thereof are certain and true, to the
best of my knowledge and belief."
In view of said complaint and affidavit, the respondent judge, on March 10, 1937, issued an order
granting the petition and ordering the issuance of a writ of preliminary attachment, after the filing of
the corresponding bond by the plaintiff.
On April 15, 1937, said defendant Ventura Guzman filed a motion for the cancellation of said writ of
preliminary attachment on the ground that it had been improperly, irregularly and illegally issued,
there being no allegation, either in the complaint or in the affidavit solemnizing it, that there is no
other sufficient security for the claim sought to be enforced by the action; that the amount due to the
plaintiff, above the legal set-off and counterclaim, is as much as the sum for which the preliminary
attachment has been granted, and that the affidavit of the plaintiff is based on mere information and
belief.
Said motion was denied by the respondent judge in an order of July 10, 1937.
The only question to be decided in this case is whether or not the requisites prescribed by law for the
issuance of a writ of preliminary attachment have been complied with.
Section 426 of the Code of Civil Procedure provides that "A judge or justice of the peace shall grant
an order of attachment when it is made to appear to the judge or justice of the peace by the affidavit
of the plaintiff, or of some other person who knows the facts, that a sufficient cause of action exists,
and that the case is one of those mentioned in section four hundred and twenty-four, and that there is
due to the plaintiff above all legal set-offs or counterclaims is as much as the sum for which the
order is granted."
The petitioner, in attacking the legality and validity of the writ of preliminary attachment, which is
the subject matter of this petition, relies on the alleged lack of an allegation in the complaint or in the
affidavit to the effect "that there is no sufficient security for the claim sought to be enforced by the
action and that the amount alleged to be due to the plaintiff above all legal set-offs and
counterclaims is as much as the sum for which the writ has been granted", and on the fact that the
affidavit is based on mere information and belief of the plaintiff.
With respect to the last requisite just stated above, the affidavit is not defective because in it the
therein plaintiff and herein respondent Alfredo Catolico states "that all the allegations thereof are
certain and true, to the best of my knowledge and belief", and not that they are so according to his
information and belief.
As to the other two requisites, there is no allegation, either in the complaint or in the affidavit
solemnizing it, to the effect that there is no other sufficient security for the claim which the plaintiff
seeks to enforce by his action, and that the amount due him from the defendant, above all legal set-
offs and counterclaims, is as much as the sum for which the writ of preliminary attachment has been
granted. Now then, does the omission of these two requisites constitute a defect preventing a judge
of the Court of First Instance from issuing a writ of preliminary attachment?
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, granting 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 (sec. 428, Act No. 190), or by filing a
copy of said writ with the register of deeds for the province in which the real property is situated,
whether standing upon the records in the name of the defendant or not appearing at all upon the
record, which constitutes a limitation of ownership or the right to enjoy or dispose of a thing without
further limitations than those established by law (art. 348, Civil Code), since the owner of the
property attached cannot dispose of the same free of all liens and encumbrances. The law authorizing
the issuance of a writ of preliminary attachment should, therefore, be construed strictly 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. If he does so in spite of noncompliance with said requisites, he acts in excess of his
jurisdiction and the writ so issued by him will be null and void.
"The jurisdiction of attachment proceedings being a special one, it cannot be legitimately exercised
unless the attaching creditor pursues substantially the essential requirements of the statute, and the
court can act only under the special power limited by the statute and according to the forms of
procedure it prescribes. . . ." (6 C. J., 88, paragraph 121.)
"Where the statute requires the affidavit to show that defendant is indebted to plaintiff in an amount
specified, or that the latter is entitled to recover such an amount, over and above all legal payments,
set-offs, or counterclaims, compliance with this requirement is essential to confer jurisdiction to
issue the writ." (6 C. J., 132, paragraph 201.)
"An affidavit is fatally defective where it fails to comply, at least substantially, with a statutory
requirement that it shall state that the indebtedness for which the action is brought has not been
secured by any mortgage or lien upon real or personal property, or any pledge of personal property,
or, if so secured, that the security has become valueless. . . ." (6 C. J., 146, paragraph 231.)
For the foregoing considerations, this court is of the opinion and so holds that failure to allege in a
complaint or in the affidavit solemnizing it, or in a separate one, the requisites prescribed by section
426 of the Code of Civil Procedure for the issuance of a writ of preliminary attachment that there is
due to the plaintiff above all legal set-offs or counterclaims is as much as the sum for which the
order is sought, renders a writ of preliminary attachment issued against the property of a defendant
fatally defective, and the judge issuing it acts in excess of his jurisdiction.
Wherefore, the writ of certiorari applied for is granted, and the writ of preliminary attachment issued
by the respondent judge in civil case No. 1460 of the Court of First Instance of Isabela, wherein the
herein respondent Alfredo Catolico is plaintiff and the herein petitioner Ventura Guzman is
defendant, is declared null and void, with costs to respondent Alfredo Catolico. So ordered.
Abad Santos, Imperial, Diaz, Laurel and Concepcion, JJ., concur.

THIRD DIVISION
[G.R. No. 55272. April 10, 1989.]

JARDINE-MANILA FINANCE, INC., petitioner, vs. COURT OF APPEALS, IMPACT
CORPORATION, RICARDO DE LEON and EDUARDO DE LEON, respondents.

Angara, Abello, Concepcion, Regala & Cruz for petitioner.
Ramon Quisumbing, Jr. & Associates for private respondents.

SYLLABUS
1. REMEDIAL LAW; PROVISIONAL REMEDY; PRELIMINARY ATTACHMENT;
AUTHORITY TO ISSUE WRIT; MUST BE STRICTLY CONSTRUED. The authority to issue
an attachment, like the jurisdiction of the court over such proceedings rests on express statutory
provisions and unless there is authority in the statute, there is no power to issue the writ, and such
authority as the statute confers must be strictly construed. In fact, "(E)ven where liberal construction
is the rule, the statute or the right to attachment thereby granted may not be extended by judicial
interpretation beyond the meaning conveyed by the words of the statute." Petitioner's application for
a writ of preliminary attachment must therefore be scrutinized and assessed by the requisites and
conditions specifically prescribed by law for the issuance of such writ. Since the attachment is a
harsh and rigorous remedy which exposes the debtor to humiliation and annoyance, the rule
authorizing its issuance must be strictly construed in favor of defendant. It is the duty of the court
before issuing the writ to ensure that all the requisites of the law have been complied with.
Otherwise, a judge acquires no jurisdiction to issue the writ.
2. ID.; ID.; ID.; REQUISITES CASE OF K.O GLASS CONSTRUCTION CO., INC. vs.
VALENZUELA (116 SCRA 568), CITED. The stringent conditions for the issuance of the writ
have been echoed in all subsequent cases, even as late as K.O. Glass Construction Co. Inc. vs.
Valenzuela, wherein the writ of preliminary attachment issued was annulled and set aside on the
findings that while the plaintiff "may have stated in his affidavit that a sufficient cause of action
exists against the defendant Kenneth O. Glass, he did not state therein 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 is as much as the sum for which the
order is granted above all legal counterclaims."
3. ID.; ID.; ID.; FAILURE TO ALLEGE IN THE AFFIDAVIT REQUISITES FOR THE
ISSUANCE OF WRIT; RENDERS THE WRIT EFFECTIVE AND CANNOT BE CURED BY
AMENDMENT. It has been held that the failure to allege in the affidavit the requisites prescribed
for the issuance of the writ of preliminary attachment, renders the writ of preliminary attachment
issued against the property of the defendant fatally defective, and the judge issuing it is deemed to
have acted in excess of his jurisdiction. In fact, in such cases, the defect cannot even be cured by
amendment.
4. ID.; ID.; ID.; AFFIDAVIT REQUIRED UNDER SEC. 3, RULE 57;
JURISDICTIONAL. The general rule is that the affidavit is the foundation of the writ, and if
none be filed or one be filed which wholly fails to set out some facts required by law to be stated
therein, there is no jurisdiction and the proceedings are null and void. Thus, while not unmindful of
the fact that the property seized under the writ and brought into court is what the court finally
exercises jurisdiction over, the court cannot subscribe to the proposition that the steps pointed out by
statutes to obtain such writ are inconsequential, and in no sense jurisdictional.

D E C I S I O N

FERNAN, C.J p:
This is a petition for review on certiorari seeking to reverse and set aside: (a) the August 29, 1980
decision of the Court of Appeals 1 in Special Proceedings CA-G.R. No. SP-09972-R entitled
"Impact Corporation, et al. v. Hon. Buenaventura Guerrero, etc., et al." annulling the order and the
writ of attachment issued by the Court of First Instance of Rizal in Civil Case No. 34617 entitled
"Jardine-Manila Finance, Inc. v. Impact Corporation, et al." 2 and (b) the Resolution dated October
7, 1980 denying herein petitioner's motion for reconsideration. 3
On September 28, 1979, petitioner Jardine-Manila Finance, Inc. (JARDINE) filed a complaint in the
then Court of First Instance (CFI) of Rizal, docketed as Civil Case No. 34617, against private
respondents Impact Corporation (IMPACT), Ricardo de Leon and Eduardo de Leon, to collect
various sums of money allegedly due from therein defendant IMPACT under a credit
accommodation by way of a discounting line agreement. 4 Herein private respondents Ricardo de
Leon and Eduardo de Leon were included as defendants by virtue of their undertaking covered by a
Surety Agreement under which they bound themselves jointly and severally with defendant
IMPACT to pay herein petitioner all of IMPACT's obligations under the aforesaid agreement. 5
It was alleged that in April and May 1979, IMPACT assigned its receivables to JARDINE on the
condition that IMPACT was to collect them on their due dates from their issuers and remit the
collected amounts to JARDINE and/or repurchase the assigned receivables; 6 but despite the fact
that IMPACT had collected the amounts due on said receivables, it failed or refused to turn over the
amounts so collected to JARDINE. Cdpr
JARDINE thus demanded payment of P1,000,212.64, the total amount due under said various deeds
of assignment, plus interest of P16,614.64 as of September 6, 1979 and 25% of the aforesaid amount
as attorney's fees, exemplary damages and other expenses of litigation.
Likewise contained in said complaint is petitioner's application for a writ of preliminary attachment
against private respondents. The allegations in support of said petition for a writ of preliminary
attachment are quoted in full:
"Special Allegations for Preliminary Attachment"
"A. The foregoing allegations are hereby repleaded and made integral parts hereof.
"B. The defendant corporation at the time of the execution of the aforesaid deeds of
assignment had reservation not to remit to plaintiff the proceeds of the receivables assigned to
plaintiff as confirmed by their refusal to remit the same to plaintiff although the issuers of the
receivables assigned to plaintiff had already paid to defendant corporation their obligations on said
receivables to the latter.
"C. Defendants Ricardo de Leon and Eduardo de Leon who are likewise officers of defendant
corporation in order to elicit plaintiffs approval to enter into said deeds of assignment with defendant
corporation, executed the aforesaid surety agreement (Annex L), likewise, with reservation in their
minds not to honor their obligations under the same as what they actually did when they refused to
pay the obligations of defendant corporation to plaintiff pursuant to the provisions of said surety
agreement. (Annex L)
"D. Defendant corporation, Ricardo de Leon and Eduardo de Leon have no visible other
sufficient security for the claim sought to be enforced by this action of plaintiff other than their real
and personal properties which are located in Metro Manila and in the province of Rizal, Province of
Nueva Ecija or elsewhere. (emphasis ours)
"E. Plaintiff's action against defendant corporation is based upon documents and therefrom a
sufficient cause of action exists.
"F. Plaintiff is willing to post a bond in an amount to be fixed by the Honorable Court, not
exceeding plaintiff's claim which will be conditioned to the effect that plaintiff will pay all the costs
which may be adjudged to the adverse party and all damages which they may sustain by reason of
attachment, if the Honorable Court should finally adjudge that the applicant plaintiff is not entitled
thereto." 7
On the basis of the foregoing allegations, the lower court granted JARDINE's petition for the
issuance of a writ of preliminary attachment on October 16, 1979. 8
On October 19, 1979, therein defendants filed a motion to set aside the writ of preliminary
attachment. They also submitted to the court a quo a memorandum in support of their motion to
dissolve the attachment contending that the grounds alleged by the plaintiff in its application for a
writ of attachment are not among the grounds specified under Section 1 of Rule 57; that the
defendants have other sufficient security; that there was no affidavit of merit to support the
application for attachment as required by Section 3 of Rule 57 and that the verification of the
complaint was defective as it did not state that the amount due to the plaintiff above all legal setups
or counterclaims is as much as the sum for which the order is sought. 9
JARDINE opposed said motion arguing that the mental reservation of defendants at the time of the
execution of the deeds of assignment constituted fraud; that such fraud was further confirmed by the
fact that defendants actually failed to remit the proceeds of the collection of receivables assigned by
them; that defendants failed to disclose to the plaintiff the fact that they had already collected the
receivables assigned by them; that the amounts collected by defendant corporation were received by
defendants in trust for plaintiff and defendant corporation appropriated for itself said collection. 10
On November 7, 1979, the trial court denied defendant's motion to annul the writ of preliminary
attachment. Thereupon, defendant Impact Corporation went to the appellate court on a petition for
certiorari seeking to annul said writ. 11
The findings of the Court of Appeals are as follows: LLphil
"To our mind there is no question that the allegations of the complaint proper which were repleaded
and made integral part of the application for preliminary attachment (paragraph A) made out a case
of conversion or misappropriation of property held in trust which is the subject of the complaint for
said allegations stated that IMPACT had assigned to JARDINE certain receivables with the
understanding that it was to collect the same from the issuers of said receivables and deliver the
amounts collected to JARDINE, but in spite of the fact that IMPACT had actually collected said
amounts, it failed to turn over said receivables to JARDINE. There was, therefore, in the allegations
of said complaint true conversion of the amounts received by defendant in trust for plaintiff.
Defendants in their motion to discharge the attachment and the memorandum filed by them in
support of said motion had in effect, admitted the conversion of the amounts collected by defendant
IMPACT, but justified the use of said amounts to meet its operational expenses to prevent a
complete shutdown of its operations.
"While we find that the grounds alleged by plaintiff, the herein private respondent, to support its
application for preliminary attachment are among those enumerated in Section 1 of Rule 57 as
grounds upon which an attachment may be issued, we are constrained nonetheless to rule against the
regularity or legality of the attachment issued by respondent Court because there was no allegation
made by plaintiff in its application for the issuance of a writ of attachment to the effect `that there is
no sufficient security for the claim sought to be enforced, by the action, and the amount due to the
applicant or the value of the property on the basis of which is entitled to recover, is as much as the
sum for which the order is granted above all legal counterclaims, a requirement for the granting of an
order of attachment under Section 3 of Rule 57." 12
Thus, on August 29, 1980, the Court of Appeals annulled the assailed writ of attachment for having
been issued improperly and irregularly, the dispositive portion of which reads:
"IN VIEW OF THE FOREGOING, the petition to annul the order and the writ of attachment issued
by respondent Court is hereby GRANTED and judgment is rendered declaring said order and writ of
attachment null and void for having been issued improperly and irregularly. The restraining order
issued by this Court on November 9, 1979 restraining respondents from enforcing the writ of
attachment issued by respondent Judge on October 16, 1979 is hereby made PERMANENT. With
costs against private respondents." 13
Hence this recourse.
Reduced to bare essentials, the records show that in the exercise of its discretion, the lower court
found justification in the issuance of the attachment. On the other hand, the Court of Appeals while
in accord with the lower court that a sufficient cause of action exists for petitioner and that the
ground for its application for attachment is one of those mentioned in Section 1, Rule 57 of the Rules
of Court, found the issuance of the attachment irregular or illegal in the absence of the following
allegations in the application for attachment: (1) that "there is no sufficient security for the claim
sought to be enforced by the action; and (2) that "the amount due to the applicant or the value of the
property on the basis of which he is entitled to recover, is as much as the sum for which the order is
granted above all legal counterclaims."
Ultimately, the issue therefore, is whether or not non-compliance with the formal requirements
invalidate the writ of attachment.
On both counts, petitioner admits not having used the exact words of the Rules in making the
requisite allegations, but nonetheless it alleged that it presented ultimate and specific facts, first in
showing that there is indeed no other sufficient security for the claim sought to be enforced as shown
in paragraph D of the Complaint earlier quoted; and second while it did not specifically state that
the sum due is above all legal counterclaims, such conclusion of fact is no longer necessary in the
face of actual proof in the answer which did not carry any counterclaim. In fine, petitioner stresses
that mere forms must not be given more weight than substance. 14
In excusing the deficiencies of its application for a writ of preliminary attachment, petitioner relies
heavily on the case of De Borja v. Platon, 15 where this Court sustained the writ of attachment
issued by the lower court in favor of the defendants based on the counterclaim of the latter despite
the lack of allegations in the affidavit attached to the petition for the issuance of the writ of
attachment that the amount due the counterclaim was as much as the sum for which the order is
granted above all legal counterclaims.
It will be noted however, that the trial court found that the counterclaim of the defendants exceeded
the claims of the plaintiff. Thus, this Court held that "as the trial court had before it the evidence
adduced by both sides, the petition for a writ of preliminary attachment having been filed four years
after the trial court had begun, we presume that the lower court having in mind such evidence,
ordered the attachment accordingly." 16
In sharp contrast, in the case at bar, where the records undeniably reveal that: (1) the complaint was
filed on September 28, 1979; 17 (2) the writ of preliminary attachment was issued on October 16,
1979; 18 (3) the motion to annul preliminary attachment dated October 19, 1979 was filed on the
same day; 19 (4) the answer of defendant IMPACT dated October 30, 1979 20 was received by the
RTC Pasig only on November 5, 1979, 21 it is evident that the questioned writ was issued ex parte;
and at a time when the Court a quo had yet no basis for concluding that the amount due to petitioner
is as much as the sum for which the order is granted above all legal counterclaims.
It is therefore, readily apparent that the conclusions in the De Borja case cannot be applied to the
case at bar. In fact even petitioner's plea for liberality as it vigorously invokes the doctrine on said
case which refused "to sanction that formalism and that technicality which are discountenanced by
the modern laws of procedure" is an obvious misreading of the ruling of this Court which states:
prLL
"On the first point, we believe a writ of preliminary attachment may be issued in favor of a
defendant who sets up a counterclaim. For the purpose of the protection afforded by such
attachment, it is immaterial whether the defendants Borja and wife simply presented a counterclaim
or brought a separate civil action against Jose de Borja, plaintiff in the previous case and petitioner
herein. To lay down a subtle distinction would be to sanction that formalism and that technicality
which are discountenanced by the modern laws of procedure for the sake of speedy and substantial
justice . . ." 22
as a liberal approached to the required allegation sin the application for a writ of preliminary
attachment when what this Court actually allowed was the presentation of a counterclaim by the
defendant instead of a separated civil action in compliance with one of the basic requirements for the
issuance of said writ.
The authority to issue an attachment, like the jurisdiction of the court over such proceedings rest on
express statutory provisions and unless there is authority in the statute, there is no power to issue the
writ, and such authority as the statute confers must be strictly construed. 23 In fact, "(E)ven where
liberal construction is the rule, the statute or the right to attachment thereby granted may not be
extended by judicial interpretation beyond the meaning conveyed by the words of the statute." 24
Petitioner's application and assessed by the requisites and conditions specifically prescribed by law
for the issuance of such writ.
Section 3, Rule 57 of the Revised Rules of Court governs the issuance of a writ of attachment, to
wit:
"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 some other person who personally knows of 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 sufficient security for the claim sought to be enforced by the action, and that
the amount due to applicant or the value of the property the possession of which he is entitled to
recover is a much as the sum for which the order is granted above all legal counterclaims."
The stringent conditions for the issuance of the writ have been echoed in all subsequent cases, even
as late as K.O. Glass Construction Co. Inc. vs. Valenzuela, 25 wherein the writ of preliminary
attachment issued was annulled and set aside on the findings that while the plaintiff "may have
stated in his affidavit that a sufficient cause of action exists against the defendant Kenneth O. Glass,
he did not state therein 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 is as much as the sum for which the order is granted above all legal counterclaims."
More specifically, it has been held that the failure to allege in the affidavit the requisites prescribed
for the issuance of the writ of preliminary attachment, renders the writ of preliminary attachment
issued against the property of the defendant fatally defective, and the judge issuing it is deemed to
have acted in excess of his jurisdiction. 26 In fact, in such cases, the defect cannot even be cured by
amendment. 27
Since the attachment is a harsh and rigorous remedy which exposes the debtor to humiliation and
annoyance, the rule authorizing its issuance must be strictly construed in favor of defendant. It is the
duty of the court before issuing the writ to ensure that all the requisites of the law have been
complied with. 28 Otherwise, a judge acquires no jurisdiction to issue the writ.
The general rule is that the affidavit is the foundation of the writ, and if none be filed or one be filed
which wholly fails to set out some facts required by law to be stated therein, there is no jurisdiction
and the proceedings are null and void. Thus, while not unmindful of the fact that the property seized
under the writ and brought into court is what the court finally exercises jurisdiction over, the court
cannot subscribe to the proposition that the steps pointed out by statutes to obtain such writ are
inconsequential, and in no sense jurisdictional. 29
Considering that petitioner's application for the subject writ of preliminary attachment did not fully
comply with the requisites prescribed by law, said writ is, as it is hereby declared null and void and
of no effect whatsoever.
This conclusion renders a discussion of petitioner's other argument unnecessary. Cdpr
WHEREFORE, the decision of the Court of Appeals dated August 29, 1980 is hereby AFFIRMED.
Costs against petitioner.
SO ORDERED.
Gutierrez, Jr., Feliciano, Bidin and Cortes, JJ., concur.

Footnotes

1. Penned by Justice Lino M. Patajo, concurred in by Justices Emilio A. Gancayco and
B.uenaventura S. de la Fuente.
2. C.A. Records, p. 230.
3. C.A. Records, p. 248.
4. Records, p. 36.
5. Rollo, p. 13; C.A. Records, p. 102.
6. Rollo, p. 12.
7. Rollo, pp. 14-15.
8. Rollo, p. 15; C.A. Records, p. 116.
9. Annex G, pp. 138-143, C.A. Records.
10. Annex I, p. 146, C.A. Records.
11. Annex J, p. 160, Records.
12. Rollo, pp. 17-18.
13. Rollo, p. 21.
14. Rollo, p. 7.
15. 73 Phil. 659.
16. Ibid., p. 660.
17. Annex "C", C.A. Records, p. 36.
18. Annex "E", Rollo, p. 15, C.A. Records, p. 116.
19. Annex "F", C.A. Records, p. 117.
20. Annex "D", Rollo, p. 115.
21. Annex "D", Rollo. p. 104.
22. Ibid., p. 660.
23. 7 C.J.S. 324; 1980 ed.
24. 7 C.J.S. 242; 1980 ed.
25. L-18756, September 11, 1982, 116 SCRA 568.
26. Ibid., Guzman v. Catolico, 65 Phil. 261-262 (1937).
27. Cu Unjeng and Cu Unjeng v. Goddard, 58 Phil. 489 (1933).
28. Salgado v. C.A., 128 SCRA 395, citing Giani v. Ramirez, 54 Pacific Reporter (2d) 91-92.
29. Duxerry v. Dahle, 81 NW 198-199 (1899).

G.R. No. 61754 August 17, 1989
ROBERTO TING, ET AL. vs. AUGUSTO E. VILLARIN, ET AL.

SECOND DIVISION
[G.R. No. 61754. August 17, 1989.]

ROBERTO TING and DOLORES TING, petitioners, vs. HON. AUGUSTO E. VILLARIN,
FELICIANO GERVACIO, FERDINAND J. GUERRERO, and CONSOLIDATED BANK &
TRUST COMPANY, respondents.

Santos, Valmonte & Associates for petitioners.
C.M. De los Reyes & Associates for respondents.

SYLLABUS
1. REMEDIAL LAW; PROVISIONAL REMEDIES; ATTACHMENT; WRIT MUST BE
ISSUED BASED ON A RECITATION OF FACTUAL CIRCUMSTANCES AND NOT MERELY
ON A GENERAL AVERMENT; CASE AT BAR. The complaint did not provide for a sufficient
basis for the issuance of a writ of preliminary attachment. It is not enough for the complaint to
ritualistically cite, as here, that the defendants are "guilty of fraud in contracting an obligation." An
order of attachment cannot be issued on a general averment, such as one ceremoniously quoting
from a pertinent rule. The need for a recitation of factual circumstances that support the application
becomes more compelling here considering that the ground relied upon is "fraud in contracting an
obligation." The complaint utterly failed to even give a hint about what constituted the fraud and
how it was perpetrated. Fraud cannot be presumed.
2. ID.; ID.; ID.; ID.; WRIT ISSUED BASED ON A GENERAL AVERMENT, NULL
AND VOID. The respondent judge thus failed in this duty to ensure that, before issuing the writ
of preliminary attachment, all the requisites of the law have been complied with. He acted in excess
of his jurisdiction and the writ he so issued is thus null and void.
3. ID.; ACTIONS; JOINDER OF CAUSES OF ACTION; SUBJECT TO RULES ON
JOINDER OF PARTIES. Joinder of causes of action is, among others, subject to the rules on
joinder of parties.
4. ID.; PROVISIONAL REMEDIES; ATTACHMENT; CONJUGAL PROPERTIES NOT
SUBJECT THERETO WHERE THE HUSBAND ASSUMES THE OBLIGATION OF A
GUARANTOR; REASON; CASE AT BAR. That the attachment ordered by the respondent
judge called for the sheriffs to "attach the estate, real and personal of . . . Spouses Roberto Ting and
Dolores Lim Ting" (Order of September 23, 1981) likewise gives cause for this Court to strike it
down for being null and void. The attached property of the spouses Ting are conjugal, the same
cannot be validly brought under the painful process of attachment because: (a) First, the wife
Dolores was impleaded merely because of the fact that she is the spouse of Roberto; (b) Second, the
conjugal partnership cannot possibly be benefitted (again, here, Consolidated Bank's allegation that
the act of the husband redounded to the benefit of the conjugal partnership is mere "book form")
when the husband binds himself, as guarantor, because this act does not conserve or augment
conjugal hinds but instead threatens to dissipate them by unnecessary and unwarranted risks to the
partnership's financial stability. When the husband assumes the obligation of a guarantor, the
presumption that he acts, as administrator, for the benefit of the conjugal partnership, is lost.

D E C I S I O N

SARMIENTO, J p:
On September 17, 1981, private respondent Consolidated Bank and Trust Company (hereinafter
"Consolidated Bank") filed a complaint 1 for a sum of money with prayer for a writ of preliminary
attachment against Perlon Textile Mills and its directors. prLL
Roberto Ting, a director, was impleaded with his wife Dolores Lim Ting. The complaint recites that
the wife was impleaded as a party defendant in order to bind their conjugal partnership of gains
which allegedly benefitted from the transactions subject of the complaint. The spouses Ting are the
present petitioners.
Consolidated Bank actually sued on two (2) causes of action. The first was targeted at recovering on
several promissory notes the amount of P2,972,955.51, allegedly obtained for the defendant
corporation by its duly authorized officers Lu Cheng Peng, Teng See, and Roberto Ting. These
officers allegedly signed the promissory notes in their personal and official capacities thereby
binding themselves jointly and severally to Consolidated Bank for the payment of the promissory
notes.
The second cause of action dwells on several violations of trust receipt agreements which the
defendant corporation executed in favor of Consolidated Bank. The defendant corporation's faithful
compliance with the trust receipt agreements appears to have been secured by the continuing
guaranty of defendants Lin Suy Lin, Angelo Leonar, and Lu Cheng Peng.
In support of the application for preliminary attachment, Consolidated Bank averred the ground of
"fraud in contracting an obligation" thus
16. Defendants are guilty of fraud in contracting their obligations more specifically
illustrated by their violation of the trust receipt agreement which is a ground defined under Sec. 1,
Rule 57 of the Rules of Court for the issuance of a writ of preliminary attachment. 2
On September 23, 1981, acting on the application for a writ of attachment by Consolidated Bank, the
respondent judge issued the order under question, to writ:
xxx xxx xxx
We, therefore, command you [Deputy Sheriffs Feliciano Gervacio and Ferdinand J. Guerrero] that
you attach the estate, real and personal, of the said defendants Perlon Textile Mills, Inc., Lu Cheng
Peng and Spouse; Teng See @ Teng Tik Hua and Spouse; Spouses Roberto Ting and Dolores Lim
Ting; Angelo Leonor and Spouse, Liu Suy Lin and Spouse, and Yap Chi and Spouse, within your
province to the value of said demands, and costs of suit, and that you keep safely the same according
to the Rules of Court, unless the defendant gives security to pay such judgment as may be
recovered in this action in the manner provided for by the Rules of Court; and that you return
immediately this order after executing the same with a full statement of your proceedings and a
complete inventory of the properties attached. 3
Oh March 5, 1982, acting on the petitioners' Motion to Quash Attachment, the respondent judge
issued a second order, to wit:
xxx xxx xxx
Acting on defendants Roberto and Dolores Ting's motion to quash attachment and plaintiffs'
opposition thereto, it appearing from plaintiffs' allegations that the alleged fraud was effected
through the collective action of the defendants, the court finds the motion to be without sufficient
merit. 4
xxx xxx xxx
On July 19, 1982, acting on the petitioners' motion for reconsideration, the respondent judge issued
the last disputed order the dispositive portion of which states:
xxx xxx xxx
WHEREFORE, under the circumstances, and finding no sufficient justification for the
reconsideration of the order of March 3, 1982, the motion for reconsideration is hereby DENIED. 5
xxx xxx xxx
The petitioners came to this Court via a petition for certiorari. They are questioning the writ of
preliminary attachment principally on the ground that the application therefor hinges on "fraud in
contracting" the trust receipt agreements under the second cause of action. On the other hand, the
petitioners are impleaded in the complaint merely under the first cause of action.
Moreover, the petitioners challenge the writ of preliminary attachment issued because, in effect, it
pierced the veil of corporate fiction. The petitioners explain that the corporation alone should be held
liable for the violation of the trust receipt agreements.
Finally, the petitioners ask that the writ of preliminary attachment be struck down by this Court
because it authorized an attachment over the petitioners' conjugal partnership property. LLpr
We agree with the petitioners.
The complaint did not provide for a sufficient basis for the issuance of a writ of preliminary
attachment. It is not enough for the complaint to ritualistically cite, as here, that the defendants are
"guilty of fraud in contracting an obligation." An order of attachment cannot be issued on a general
averment, such as one ceremoniously quoting from a pertinent rule. 6 The need for a recitation of
factual circumstances that support the application becomes more compelling here considering that
the ground relied upon is "fraud in contracting an obligation." The complaint utterly failed to even
give a hint about what constituted the fraud and how it was perpetrated. Fraud cannot be presumed. 7
The respondent judge thus failed in this duty to ensure that, before issuing the writ of preliminary
attachment, all the requisites of the law have been complied with. He acted in excess of his
jurisdiction and the writ he so issued is thus null and void. 8
What is more, the respondent judge plainly ignored that, as correctly pointed out by the petitioners,
the application for preliminary attachment rests on "fraud in contracting" the trust receipt
agreements. The complaint itself save for the unwarranted sweeping reference to "defendants,"
alleged that only Consolidated Bank, as principals, and Liu Suy Lin, Angelo Leonar, and Lu Cheng
Peng, as guarantors, were privy to the trust receipt agreements under the second cause of action.
Petitioner Roberto Ting's involvement is limited only to the promissory notes under the first cause of
action. The complaint thus relevantly alleges
FIRST CAUSE OF ACTION
7. On March 15, 1979, defendant corporation, through its duly authorized officers Lu Cheng
Peng, Tang See and Roberto Ting obtained from plaintiff loan accommodations in the amount of
P2,972,955.51 and as evidence thereof, the aforementioned defendants in their personal and official
capacities executed promissory notes undertaking therein jointly and severally with the corporation
to pay plaintiff the abovementioned amount with interest . . .
SECOND CAUSE OF ACTION
8. On different occasions in 1978-1979, defendants applied to plaintiff for the opening of
numerous letters of credit to finance its purchase of goods from various suppliers.
xxx xxx xxx
ALLEGATIONS COMMON TO ALL CAUSES OF ACTION
12. In order to secure the credit accommodations obtained and all those that the defendant
Perlon Textile Mills, Inc. may thereafter obtain from plaintiff, defendants Liu Suy Lin, Angelo
Leonar and Lu Cheng Peng executed a continuing guaranty . . . 9
The sweeping nature of the attachment order probably stemmed from the respondent judge's failure
to detect that the two (2) causes of action had been misproperly joined. Joinder of causes of action is,
among others, subject to the rules on joinder of parties. 10 And the rule on joinder of parties is
enunciated in Sec. 6, Rule 3, Revised Rules of Court, thus
Sec. 6. Permissive joinder of parties. All persons . . . against whom any right to relief in
respect to or arising out of the same transaction or series of transactions is alleged to exist, whether
jointly, severally, or in the alternative, may, except as otherwise provided in these rules . . . be joined
as defendants in one complaint, where any question of law or fact common to all such . . . defendants
may arise in the action . . .
Here, the two causes of action arose from different transactions. There was no "series of
transactions" to speak of. But above all, the complaint can conceivably affect adversely petitioner
Roberto Ting under the first cause of action only but not in the second cause of action. 11
That the attachment ordered by the respondent judge called for the sheriffs to "attach the estate, real
and personal of . . . Spouses Roberto Ting and Dolores Lim Ting" (Order of September 23, 1981)
likewise gives cause for this Court to strike it down for being null and void. The attached property of
the spouses Ting are conjugal, the same cannot be validly brought under the painful process of
attachment because:
(a) First, the wife Dolores was impleaded merely because of the fact that she is the spouse of
Roberto;
(b) Second, the conjugal partnership cannot possibly be benefitted (again, here, Consolidated
Bank's allegation that the act of the husband redounded to the benefit of the conjugal partnership is
mere "book form") when the husband binds himself, as guarantor, because this act does not conserve
or augment conjugal hinds but instead threatens to dissipate them 12 by unnecessary and
unwarranted risks to the partnership's financial stability. When the husband assumes the obligation
of a guarantor, the presumption that he acts, as administrator, for the benefit of the conjugal
partnership, is lost.
WHEREFORE, the petition is hereby GRANTED. The questioned Orders, dated September 23,
1981, March 3, 1982, and July 19, 1982, of the respondent judge, and the levy on attachment made
by the deputy sheriff's against the parcel of land covered by TCT No. T-7232 and registered in the
names of the petitioners, are declared NULL AND VOID. cdphil
Costs against the private respondent.
SO ORDERED.
Melencio-Herrera, (Chairman), Paras and Regalado, JJ., concur.
Padilla, J., took no part.

Footnotes

1. Rollo, 15-22.
2. Rollo, 20.
3. Rollo, 23.
4. Rollo, 33.
5. Rollo, 45.
6. Dy v. Enage, No. L-35351, March 17, 1976, 70 SCRA 96.
7. Filinvest Credit Corp. vs. Relova, No. 50378, September 30, 1982, 117 SCRA 420.
8. Salas vs. Adil, No. L-46089, May 14, 1979, 90 SCRA 121.
9. Rollo. 16,17,19.
10. Sec. 5, Rule 2, Revised Rules of Court.
11. Gacula vs. Martinez, et al., L-3038, January 31, 1951,88 Phil. 142.
12. Luzon Surety Co., Inc. v. De Garcia, G.R. No. 25659, October 31, 1969, 30 SCRA 111.

G.R. No. 38284 September 27, 1933
GUILLERMO A. CU UNJIENG, ET AL. vs. LEONARD S. GODDARD, ET AL.
058 Phil 482

EN BANC
[G.R. No. 38284. September 27, 1933.]

GUILLERMO A. CU UNJIENG and MARIANO CU UNJIENG, petitioners, vs. LEONARD S.
GODDARD, acting as Judge of First Instance of Manila, and HONGKONG & SHANGHAI
BANKING CORPORATION, respondents.

Gibbs & McDonough and Duran, Lim & Tuason, for petitioners.
DeWitt, Perkins & Brady, for respondents.

SYLLABUS
1. ATTACHMENT; AFFIDAVIT FOR ATTACHMENT; AMENDMENT OF
AFFIDAVIT; STATUTORY CONSTRUCTION. At the time sections 110 and 441 of our Code
of Civil Procedure were adopted, the similar provisions of the California Code had already been
construed by the Supreme Court of California. "On a motion to discharge a writ of attachment, on
the ground that it was improperly or irregularly issued, the affidavit on which the writ was issued is
not amendable. This, in our opinion, is in accordance with section 558 of the Code of Civil
Procedure, which provides that if, on such an application, it satisfactorily appears that the writ was
improperly or irregularly issued, it must be discharged. To allow the affidavit to be made good by
amendment, and upon such action refuse to discharge the writ, would, in our judgment, violate the
requirements of the section just above cited." (Winters vs. Pearson, 2 Cal., 553.)
2. ID.; ID.; ID.; CERTIORARI. It therefore follows that where the affidavit for
attachment is fatally defective, the attachment must be held to have been improperly or irregularly
issued and must be discharged, and such fatal defects cannot be cured by amendment. The writ of
attachment in this case should therefore have been discharged. Writ of certiorari granted.

D E C I S I O N

HULL, J p:
Original action for certiorari praying that a writ of attachment levied against the properties of the
petitioners and defendants in a civil action in the Court of First Instance of Manila, brought by
respondent Hongkong & Shanghai Banking Corporation, be declared null and void.
In the civil action it was alleged in substance that the defendants, the petitioners in this proceeding,
entered into a fraudulent conspiracy or combination with one Fernandez, by which the conspirators
would hypothecate and pledge forged securities of various kinds with the various banking
institutions and other commercial firms of the City of Manila, and pursuant to said fraudulent
conspiracy, secured credit with the bank, and the plaintiff was defrauded by the defendants and
Fernandez in the sum of P1,411,312.80. Simultaneously with the filing of the complaint, plaintiffs
asked for a writ of attachment, which was granted.
The affidavit filed at that time reads:
"AFFIDAVIT
"B. C. M. Johnston, of legal age and resident of the City of Manila, being duly sworn, states:
"That he is the Manager of the Hongkong & Shanghai Banking Corporation, the plaintiff in the
above-entitled cause, and that he knows that there exists a cause of action in favor of said plaintiff
and against the defendants as appears in the complaint on file in this case, reference to which is
hereby made as an integral part of this affidavit;
"That the complaint is one for the recovery of money on a cause of action arising from a fraud; and
"That, as set out in the complaint, the defendants in said cause have been guilty of fraud in
contracting the debt and in incurring the obligation upon which this action is brought.
(Sgd.) "B. C. M. JOHNSTON"
About one week thereafter, on October 20, 1931, petitioners herein filed a motion to discharge the
attachment on the ground that it had been improperly and irregularly issued, which motion contains
eight paragraphs.
Paragraph (4) alleges that the affidavit was defective in that it fails to state that there is no other
sufficient security for the claim sought to be enforced by the action and that the amount due the
plaintiff involves as much as the sum for which the order of attachment was granted, while
paragraph (5) alleges that the affidavit for attachment fails to state that the allegation contained in the
unverified complaint to which it refers are true and that likewise the affidavit fails to state that
affiant knows the facts.
Shortly after the hearing to discharge the attachment had begun, plaintiff asked leave to file an
amended affidavit in support of its petition for a writ of attachment.
After oral and written arguments, the respondent judge on November 25, 1931, entered an order
admitting the amended affidavit of attachment. The amended affidavit consists of three pages and is
admitted to be in full compliance with the provisions of section 426 of the Code of Civil Procedure,
which sets out what must be shown to the court before a writ of attachment shall issue.
Further proceedings were had in the trial court, and on March 4 and April 11, 1932, it entered an
order refusing on the showing so far made to dissolve the attachment. On October 4, 1932, these
proceedings were instituted, based on the two propositions (1) that an affidavit of attachment cannot
be amended and (2) that if a cause of action arises ex delicto, it is not within the terms of our
attachment statutes.
Respondents claim that petitioners had not exhausted their rights in the trial court and that if the
petitioner regarded the order of April 11 as a final order, petitioners are guilty of laches by waiting
until October before filing a complaint.
Without considering the minor questions raised by respondents, we believe it is for the best interests
of all concerned to dispose of the case on the points raised by petitioners.
As to whether amendments should be admitted, respondents rely upon section 110 of the Code of
Civil Procedure, which reads:
"SEC. 110.Amendments in General. The court shall, in furtherance of justice, and on such terms,
if any, as may be proper, allow a party to amend any pleading or proceeding and at any stage of the
action, in either the Court of First Instance or the Supreme Court, by adding or striking out the name
of any party, either plaintiff or defendant, or by correcting a mistake in the name of a party, or a
mistaken or inadequate allegation or description in any other respect, so that the actual merits of the
controversy may speedily be determined, without regard to technicalities, and in the most
expeditious and inexpensive manner. The court may also, upon like terms allow an answer or other
pleading to be made after the time limited by the rules of the court for filing the same. Orders of the
court upon the matters provided in this section shall be made upon motion filed in court, and after
notice to the adverse party, and an opportunity to be heard." and claim it should be read in
connection with section 2 of the same Code:
"SEC. 2. Construction of Code. The provisions of this Code, and the proceedings under it, shall
be liberally construed, in order to promote its object and assist the parties in obtaining speedy
justice."
This court has held in the case of Central Capiz vs. Salas (43 Phil., 930), that section 2 applies to
applications for writs of attachment and that the affidavit may be read in connection with the
complaint.
In the original affidavit, affiant did not swear on information and belief but expressly swore on
knowledge. It is also clear from the affidavit that the ground on which the attachment was sought to
be secured, is paragraph 4 of section 412 of the Code of Civil Procedure. It is defective in (a) that
there is no allegation, either in the affidavit or the complaint, that there was no other sufficient
security for the claim sought to be enforced by the action and (b) that the amount due to the plaintiff
above all legal set-offs or counterclaims is as much as the sum for which the order is granted. The
claim of petitioners that the original affidavit is defective is virtually admitted by respondents by
their having filed an amended affidavit and by their insistence upon their right to amend.
Our section 110 of the Code of Civil Procedure is based on section 473 of the California Code of
Civil Procedure and is a general statute authorizing, in the discretion of the court, any amendment, in
the further interest of justice, of pleadings or procedure at any stage of the action. Proceedings in the
Court of First Instance to discharge the attachment were taken under section 441 of the Code of Civil
Procedure, which reads:
"SEC. 441.Discharge of Attachment on Motion. The defendant 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 plaintiff, apply to the judge or justice of the peace who granted the
order of attachment, 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 defendant, but not otherwise, the plaintiff may
oppose the same by affidavits or other evidence in addition to those on which the attachment was
made.
"If upon such application it satisfactorily appears that the writ of attachment was improperly or
irregularly issued, it must be discharged."
The corresponding sections of the California Code, namely sections 556, 557, and 558, read:
"SEC. 556.When a motion to discharge attachment may be made, and upon what grounds. The
defendant may also at any time, either before or after the release of the attached property, or before
any attachment shall have been actually levied, apply, on motion, upon reasonable notice to the
plaintiff, to the court in which the action is brought, or to a judge thereof, that the writ of attachment
be discharged on the ground that the same was improperly or irregularly issued.
"SEC. 557.When motion made on affidavit, it may be opposed by affidavit. If the motion be
made upon affidavits on the part of the defendant, but not otherwise, the plaintiff may oppose the
same by affidavits or other evidence, in addition to those on which the attachment was made.
"SEC. 558.When writ must be discharged. If upon such application, it satisfactorily appears that
the writ of attachment was improperly or irregularly issued it must be discharged; provided that such
attachment shall not be discharged if at or before the hearing of such application, the writ of
attachment, or the affidavit, or undertaking upon which such attachment was based shall be amended
and made to conform to the provisions of this chapter."
In a long line of decisions from Castle Bros., Wolf & Sons vs. Go-Juno (7 Phil., 144), where it was
said:
"Inasmuch as this section 95 is taken bodily from the California Code of Procedure, we feel justified
in following the decisions of the Supreme Court of California in the interpretation of the same."
to Pando vs. Kette and Sellner (54 Phil., 683), where this court uses the following language:
"The provision of our Code of Civil Procedure having been adopted from section 692 of the
California Code, it must be understood that our law was promulgated with the construction placed
upon it by the State of California." where a provision of our Code of Civil Procedure has been
adopted bodily from one of the States of the Union, we have followed the rule that it was
undoubtedly the intention of the Legislature to promulgate the law with the construction that had
already been placed upon it.
At the time sections 110 and 441 were adopted, the similar provisions of the California Code had
already been construed by the Supreme Court of California. In Winters vs. Pearson (72 Phil., 553),
that court used the following language:
"On a motion to discharge a writ of attachment, on the ground that it was improperly or irregularly
issued, the affidavit on which the writ was issued is not amendable. This, in our opinion, is in
accordance with section 558 of the Code of Civil Procedure, which provides that if on such an
application, it satisfactorily appears that the writ was improperly or irregularly issued, it must be
discharged.
"To allow the affidavit to be made good by amendment, and upon such action refuse to discharge the
writ, would, in our judgment, violate the requirements of the section just above cited."
In Tibbet vs. Tom Sue (122 Cal., 206), the court follows Winters vs. Pearson, saying:
"Respondents asks the privilege of amending the undertaking, if it be held defective by this court.
From such relief he invokes section 473 of the Code of Civil Procedure, wherein amendments are
allowed to pleadings or proceedings in furtherance of justice. In speaking as to an application to
discharge a writ of attachment, the Code says: `If upon such application it satisfactorily appears that
the writ of attachment was improperly or irregularly issued, it must be discharged.' (Code Civ. Proc.,
sec. 558.) This section is specific and expressly directed to the subject of attachments. It must be
held to control and limit the general provisions of the aforesaid section 473. The lawmaking body
has declared what shall be the action of the court under the circumstances here presented, and such
action demands that the writ should be discharged. It is said in Winters vs. Pearson (72 Cal., 553),
that the affidavit on attachment is not amendable. The undertaking upon attachment stands upon the
same ground."
The fact that California in 1909 changed the law by permitting amendments of a defective affidavit
for attachment under certain specified circumstances, does not affect this case, as our Legislature has
allowed the law to stand unchanged.
It therefore follows that where the affidavit for attachment is fatally defective, the attachment must
be held to have been improperly or irregularly issued and must be discharged, and such fatal defect
cannot be cured by amendment. The writ of attachment in this case should therefore have been
discharged.
In view of the above views, the second ground for the discharge of the writ of attachment presented
by petitioners herein, is reserved for discussion in another case.
The writ of certiorari herein prayed for must be granted.
So ordered.
Avancea, C.J., Street, Malcolm, Villa-Real, Abad Santos and Butte, JJ., concur.

Separate Opinions

IMPERIAL, J., dissenting:
Petitioners brought this certiorari proceeding to annul the writ of attachment issued by the Court of
First Instance of Manila on October 14, 1931, as well as the orders of November 25, 1931, March 4
and April 11, 1932, granting the admission of an amended affidavit and denying the motion to
dissolve the attachment, respectively.
It is the purpose of this opinion to show: (a) That the averments of the complaint, which were made
integral part of the affidavit supporting the petition for the issuance of the writ of attachment, meet
substantially the requirements of the statute on attachment; (b) that the affidavit on which the
petition for attachment was based is sufficient and has substantially complied with the grounds
required by section 426 of the Code of Civil Procedure, and (c) that the respondent judge did not act
in excess of his jurisdiction when issued the writ of attachment and denied the motion for
dissolution.
The complaint filed in the civil action in which the writ of attachment was issued contains, among
others, the following allegations:
"III
"That during the years 1930 and 1931, the said defendants entered into a fraudulent conspiracy or
combination with one Rafael Fernandez, who has been adjudicated an involuntary insolvent by the
Court of First Instance of Manila, and for that reason is not made a defendant in this action, pursuant
to which fraudulent conspiracy and combination, it was agreed that the said Fernandez, or the said
Fernandez, or the said defendant Guillermo A. Cu Unjieng, or the said Mariano Cu Unjieng should
hypothecate and pledge forged share certificates, forged warehouse receipts, and forged securities of
other kinds, in large amounts, with various banking institutions and other commercial firms of the
City of Manila, with a view to a division of the proceeds among the said fraudulent conspirators.
"IV
"That pursuant to said fraudulent combination and conspiracy the said Guillermo A. Cu Unjieng
employed a forger to forge the signatures of the proper officers on a large number of warehouse
receipts and share certificates of the Pampanga Sugar Development Company, Inc., a corporation
organized under the laws of the Philippine Islands, and operating a large sugar central in the
Province of Pampanga, Philippine Islands, after the said Rafael Fernandez, pursuant to said
fraudulent combination and conspiracy, had caused a large number of said share certificates and
warehouse receipts to be printed in blank, for the purpose of having them so forged.
"V
"That pursuant to said fraudulent combination and conspiracy, the said defendants, Guillermo and
Mariano Cu Unjieng and the said Rafael Fernandez pledged and hypothecated said forged share
certificates and said forged warehouse receipts in large amounts with various banking institutions
and commercial firms of the City of Manila, using the proceeds in some cases for the purpose of
taking up the forged certificates and warehouse receipts so pledged and hypothecated in other cases,
so as to continue the scheme for the longest possible time, and in other cases, dividing among
themselves the proceeds of the loans obtained on the security of said forged share certificates and
forged warehouse receipts so fraudulently pledged and hypothecated.
"VI
"That pursuant to said fraudulent conspiracy and combination, the said Rafael Fernandez, at various
dates, on and after June 16th, 1931, pledged and hypothecated various forged warehouse receipts
and promissory notes to the plaintiff herein, as security for loans in account current granted said
Fernandez by the plaintiff in reliance therein, on which there was a total debit balance due of
P1,411,312.80, on the date of the adjudication of Fernandez as an insolvent, that is, on the 1st day of
August, 1931, together with interest at 9 per cent per annum on P1,010,886.96 thereof from the 1st
day of July, 1931, and interest on the balance at the rate of 9 per cent per annum from July 8, 1931.
"VII
"That of the amounts so obtained by the said Fernandez from this plaintiff by the fraudulent pledging
and hypothecation of said forged warehouse receipts and promissory notes, pursuant to said
fraudulent combination and conspiracy, as hereinbefore alleged, said Fernandez, pursuant to said
combination and conspiracy, paid directly to the defendant herein, Guillermo A. Cu Unjieng, sums
aggregating P325,000; to the defendant herein, Mariano Cu Unjieng, the sum of P10,000; caused
other large amounts to be paid said defendants indirectly through other banking institutions in the
City of Manila; and utilized the balance in covering overdrafts and loans obtained in his name with
other banking institutions in the City of Manila, on the security of forged share certificates,
warehouse receipts and other forged securities the proceeds of which were divided between him and
the defendants herein pursuant to said fraudulent combination and conspiracy.
VIII
"That as a result of said fraudulent conspiracy and combination, between the defendants herein and
the said insolvent, Rafael Fernandez, and the pledging and hypothecation by said Fernandez of said
forged warehouse receipts and promissory notes with the plaintiff herein, the said plaintiff has been
defrauded by the defendants herein and by the said Fernandez in the sum of P1,411,312.80, with
interest on P1,010,886.96 thereof at the rate of 9 per cent per annum from July 1, 1931, and with
interest on the balance thereof at the rate of 9 per cent per annum from July 8, 1931."
The affidavit above referred to reads as follows:
"AFFIDAVIT
"B. C. M. Johnston, of legal age and a resident of the City of Manila, being duly sworn states:
"That he is the Manager of the Hongkong & Shanghai Banking Corporation, the plaintiff in the
above entitled cause, and that he knows that there exists a cause of action in favor of said plaintiff
and against the defendant, as appears in the complaint on file in this case, reference to which is
hereby made as an integral part of this affidavit.
"That the complaint is one for the recovery of money on a cause of action arising from a fraud; and
"That as set out in the complaint, the defendant is said cause has been guilty of fraud in contracting
the debt and in incurring the obligation upon which this action is brought.
(Sgd.) "B. C. M. JOHNSTON
"Subscribed and sworn to before me this 11th day of July, 1931, affiant exhibiting to me his cedula
certificate No. F-14401, issued at Manila, P. I., January 19, 1931.

"Doc. No. 420 (Sgd.) "DOMINGO A. GUEVARA
"Page 71 Notary Public
"Book III "Until December 31, 1932"

Section 426 of Act No. 190 provides:
"Sec. 426. Granting order of attachment. A judge or justice of the peace shall grant an order of
attachment when it is made to appear to the judge or justice of the peace by the affidavit of the
plaintiff, or of some other person who knows the facts, that a sufficient cause of action exists, and
that the case is one of those mentioned in section four hundred and twenty-four, and that there is no
other sufficient security for the claim sought to be enforced by the action, and that the amount due to
the plaintiff above all legal set-offs or counterclaims is as much as the sum for which the order is
granted."
From a perusal of said section it is obvious that the law does not require conclusive evidence to
establish the requisites necessary in order a justice or judge may issue a writ of attachment; all what
the law requires is the presentation of prima facie evidence which shows the existence of said
grounds. This is the reason why it calls for affidavit in lieu of other material and competent
evidence.
As alleged in the affidavit affiant made a part of his statement all material and necessary averments
contained in the complaint undoubtedly for the purpose of making a complete narration of the facts
and at the same time to avoid superfluous repetition. In substance, it was alleged in the complaint
that the defendants in the civil action were guilty of fraud at the time they incurred in the obligations
set forth and that Rafael Fernandez secured from the plaintiff the amount of over P1,000,000, which
is the subject matter of the action, thru conspiracy and collusion with the defendants-petitioners,
having delivered said Fernandez warehouse receipts and share certificates which were forged and
valueless.
It is argued that the original affidavit was fatally defective because it failed to recite: (1) That the
plaintiff in the action has no other sufficient security for the claims sought to be enforced, and (2)
that the amount due to it above all legal set-offs or counterclaims is as much as the sum for which
the order is prayed for. While it may be conceded that the original affidavit as well as the complaint
are lacking of such specific averments, still from the above quoted allegations the same facts can be
reasonably inferred. If the action was brought by plaintiff to recover the amount of over P1,000,000
which it lost in the manner above described and if it is especifically alleged that the security given by
the defendants became valueless because they were all forged it is hard to conceive how one could
not deduce the inference that no other security has been given the plaintiff with the exception of
those especifically alleged in the complaint. The same inference was undoubtedly gathered by the
respondent judge when he granted the attachment upon said original affidavit and as far as I am
concerned I believe he did not exceed in the exercise of the jurisdiction conferred upon him by the
law. As to the other ground, the same thing could be said.
In deciding this case I believe technicalities of law should be overlooked in order to attain the ends
of justice. If the main action fails the petitioners, as defendants, will get compensation for any
damage or injury they may have suffered upon the bond given by plaintiff-respondent, while should
the action prosper and the attachment is already quashed plaintiff would not get anything so much so
as there are other creditors who are claiming big amounts from the same defendants.
Based on the foregoing reasons I dissent from the majority's decision and I am of the opinion that the
liberal construction of the statute on attachment should have been applied in this particular instance
and the petition denied.

SECOND DIVISION

JUAN DE DIOS CARLOS, G.R. No. 135830
Petitioner,
Present:

PUNO, J .,
- versus - Chairman,
AUSTRIA-MARTINEZ,
CALLEJO, SR.,
TINGA, and
FELICIDAD SANDOVAL, also CHICO-NAZARIO, J J .
known as FELICIDAD S. VDA.
DE CARLOS or FELICIDAD S.
CARLOS or FELICIDAD Promulgated:
SANDOVAL DE CARLOS,
and TEOFILO CARLOS II,
Respondents. September 30, 2005

x-------------------------------------------------------------------x

SIDDCOR (now MEGA PACIFIC) G.R. No. 136035
INSURANCE CORPORATION,
Petitioner,

- versus -

FELICIAD SANDOVAL VDA. DE
CARLOS and TEOFILO CARLOS II,
Respondents.

x------------------------------------------------------------------x

SIDDCOR (now MEGA PACIFIC) G.R. No. 137743
INSURANCE CORPORATION,
Petitioner,

- versus -

HON. COURT OF APPEALS (FORMER
SPECIAL FOURTH DIVISION), HON.
ALBERTO L. LERMA and/or the
REGIONAL TRIAL COURT OF THE
CITY OF MUNTINLUPA, BRANCH 256,
FELICIDAD SANDOVAL, also known as
FELICIDAD S. VDA. DE CARLOS OR
FELICIDAD S. CARLOS OR FELICIDAD
SANDOVAL CARLOS OR FELICIDAD
SANDOVAL VDA. DE CARLOS and
TEOFILO CARLOS II,
Respondents.

x-------------------------------------------------------------------x

D E C I S I O N

TINGA, J.:

These consolidated petitions emanated from a civil case filed by Juan de Dios Carlos (Carlos)
against respondents Felicidad Sandoval (Sandoval) and Teofilo Carlos II (Teofilo II) docketed
with the Regional Trial Court (RTC) of Muntinlupa City as Civil Case No. 95-135.

In his Complaint before the RTC, Carlos asserted that he was the sole surviving compulsory
heir of his parents, Felix B. Carlos and Felipa Elemia,
[1]
who had acquired during their marriage, six
parcels of land (subject properties). His brother, Teofilo (Teofilo), died intestate in 1992. At the
time of his death, Teofilo was apparently married to Sandoval, and cohabiting with her and their
child, respondent Teofilo II. Nonetheless, Carlos alleged in his Complaint that Teofilo and Sandoval
were not validly married as they had not obtained any marriage license.
[2]
Furthermore, Carlos also
asserted that Teofilo II could not be considered as Teofilos child. As a result, Carlos concluded that
he was also the sole heir of his brother Teofilo, since the latter had died without leaving any heirs.

Carlos also claimed that Teofilo, prior to their father Felixs death in 1963, developed a scheme
to save the elder Carloss estate from inheritance taxes. Under the scheme, the properties of the
father would be transferred to Teofilo who would, in turn, see to it that the shares of the legal heirs
are protected and delivered to them. Felix assented to the plan, and the subject properties were
transferred in the name of Teofilo. After Teofilos death, Carlos entered into certain agreements with
Sandoval in connection with the subject properties. Carlos did so, believing that the latter was the
lawful wife of his brother Teofilo. Subsequently though, Carlos discovered that Sandoval and his
brother were never validly married, as their marriage was contracted without a marriage license.
[3]

Carlos now sought to nullify these agreements with Sandoval for want of consideration,
the premise for these contracts being non-existent. Thus, Carlos prayed of the RTC to declare the
alleged marriage between Teofilo and Sandoval void ab initio, provided that Teofilo died without
issue, order that new titles covering the subject properties be issued in the name of Carlos, and
require Sandoval to restitute Carlos in the amount of P18,924,800.00.
[4]

Carlos likewise prayed for the issuance of the provisional relief of preliminary attachment. The
RTC issued an Order dated 7 September 1995 granting the prayer for preliminary attachment, and
on 15 September 1995, a writ of preliminary attachment. Carlos posted a bond for P20,000,000.00
issued by herein petitioner

SIDDCOR Insurance Corporation (SIDDCOR).
[5]
Shortly thereafter, a Notice of Garnishment was
served upon the Philippine National Bank (PNB) over the deposit accounts maintained by
respondents.

Respondents filed an Urgent Motion to Discharge the Writ of Attachment, which was
opposed by Carlos. On 4 December 1995, the RTC rendered an order denying the motion. This
caused respondents to file a Petition for Certiorari with the Court of Appeals, seeking to set aside
the RTC order granting the writ of preliminary attachment denying the motion for the discharge of
the writ. This case was docketed as CA-G.R. SP No. 39267.
[6]

On 27 February 1996, the Court of Appeals Second Division promulgated its Decision in
CA-G.R. SP No. 39267, wherein it granted the Petition for Certiorari and ordered the discharge and
dissolution of the Writ of Attachment and Notice of Garnishment.
[7]
The Court of Appeals found that
there was no sufficient cause of action to warrant the preliminary attachment, since Carlos had
merely alleged general averments in order to support his prayer.
[8]
Carlos elevated the said Decision
to this Court by way of Petition for Review on Certiorari, which was docketed as G.R. No. L-
125717. In a Resolution dated 21 October 1996, the Court denied Carloss Petition, and thus the
Court of Appeals Decision ordering the dissolution of the Writ of Attachment and Notice of
Garnishment became final.

In the meantime, the hearing on Carloss Complaint ensued before the RTC. Respondents duly
filed their Answer and thereafter filed a Motion for Summary Judgment. Carlos opposed the motion
and countered with his own Motion for Summary Judgment. On 8 April 1996, the RTC rendered a
summary judgment in favor of Carlos. Carloss victory was wholesale, with the RTC making the
following pronouncements:

1. Declaring the marriage between defendant Felicidad Sandoval and
Teofilo Carlos solemnized at Silang, Cavite, on May 14, 1962, evidenced by the
Marriage Contract submitted in this case, null and void ab initio for lack of the
requisite marriage license;

2. Declaring that the defendant minor, Teofilo S. Carlos II, is not the
natural, illegitimate, or legally adopted child of the late Teofilo E. Carlos;

3. Ordering defendant Sandoval to pay and restitute to plaintiff the sum
of P18,924,800.00, together with the interest thereon at the legal rate from date of
filing of the instant complaint until fully paid;

4. Declaring plaintiff as the sole and exclusive owner of the parcel of
land, less the portion adjudicated to the plaintiffs in Civil Case No. 11975, covered
by TCT No. 139061 of the Register of Deeds of Makati City, and ordering said
Register of Deeds to cancel said title and to issue another title in the sole name of
plaintiff herein;

5. Declaring the Contract, Annex K of the Complaint, between plaintiff
and defendant Sandoval null and void, and ordering the Register of Deeds of Makati
City to cancel TCT No. 139058 in the name of Teofilo Carlos, and to issue another
title in the sole name of the plaintiff herein;

6. Declaring the Contract, Annex M of the Complaint, between plaintiff
and defendant Sandoval null and void;

7. Ordering the cancellation of TCT No. 210877 in the names of
defendant Sandoval and defendant minor Teofilo S. Carlos II and ordering the
Register of Deeds of Manila to issue another title in the exclusive name of plaintiff
herein.

8. Ordering the cancellation of TCT No. 210878 in the names of
defendant Sandoval and defendant minor Teofilo S. Carlos II and ordering the
Register of Deeds of Manila to issue another title in the sole name of plaintiff
herein.
[9]

Upon promulgation of the Summary Judgment, Carlos moved before the RTC for execution
pending appeal. The RTC granted the motion for execution pending appeal upon the filing of a
bond.
[10]
On 27 May 1996, the RTC issued a Writ of Execution.

Meanwhile, respondents filed a Motion for Reconsideration of the Summary Judgment,
which was denied in an Order dated 20 May 1996. Respondents then appealed the RTC Decision to
the Court of Appeals, wherein such appeal was docketed as CA-G.R. CV No. 53229. The case was
raffled to the appellate courts Fourteenth Division for completion of records. Sandoval and Carlos
also filed a Petition for Certiorari with Temporary Restraining Order dated 2 June 1996. This
special civil action primarily attacked the allowance of execution pending appeal, and prayed for the
annulment of the Order granting execution pending appeal, and of the Writ of Execution

On 10 December 1996, in CA-G.R. CV No. 53229, respondents filed a Motion for Judgment
On the Attachment Bond. They noted that the Court of Appeals had already ruled that the Writ of
Preliminary Attachment issued by the RTC was improperly granted and that its Decision, as
affirmed by the Supreme Court, had attained finality. Accordingly, they were entitled to damages
under Section 20, Rule 57 of the then Rules of Civil Procedure, which governed claims for damages
on account of unlawful attachment. In support of their allegation of damages, they cite the Notice of
Garnishment served on PNB Malolos Branch, where Felicidad Carlos maintained
deposits amounting to P15,546,121.98.
[11]
Also presented in support of the motion was a Notice of
Delivery/Payment by the RTC Sheriff, directing the PNB Malolos Branch to deliver the amounts
previously garnished by virtue of the Writ of Execution dated 27 May 1996;
[12]
a Manifestation filed
by PNB dated 19 July 1996 in CA-G.R. SP No. 40819, stating that PNB had already delivered to the
RTC Sheriff on 27 June 1996 the amount of P15,384,509.98 drawn against the accounts of Carlos;
and a Certification to the same effect issued by the PNB Malolos Branch. In an Addendum to Motion
for Judgment on the Attachment Bond, respondents additionally prayed for moral and exemplary
damages.
[13]

After various pleadings were duly filed by the parties, the Court of Appeals Special Fourth
Division issued a Resolution dated 23 March 1998, certifying that all the necessary pleadings have
been filed, and that the case may already be referred to the Raffle Committee for assignment to a
ponente for study and report. The same Resolution likewise denied without elaboration a Motion to
Dismiss on the ground of forum-shopping filed earlier by Carlos.
[14]

On such denial, Carlos filed a Motion for Reconsideration. Respondents likewise filed a
Motion for Partial Reconsideration dated 17 April 1998, arguing that under the Revised Internal
Rules of the Court of Appeals (RIRCA), the case may be re-raffled for assignment for study and
report only after there is a resolution that the case is deemed submitted for decision.
[15]
They pointed
out that re-raffle could not yet be effected, as there were still pending incidents, particularly the
motions for reconsideration of Carlos and themselves, as well as the Motion for Judgment on
Attachment Bond.

On 26 June 1998, the Court of Appeals Former Special Fourth Division promulgated two
resolutions.
[16]
The first, in response to Carloss Motion for Reconsideration, again denied Carloss
Motion to Dismiss the Appeal and Motion for Suspension, but explained the reasons for such denial.

The second resolution is at the center of the present petitions. The assailed Resolution agreed
with respondents that it was first necessary to resolve the pending incidents before the case could be
re-raffled for study and report. Accordingly, the Court of Appeals
proceeded to rule on these pending incidents. While the first resolution dwelt on the pending motions
filed by Carlos, this Resolution tackled the other matter left unresolved, the Motion for Judgment on
Attachment Bond. The Court of Appeals found the claim for damages meritorious, citing the earlier
decisions ruling that Carlos was not entitled to the preliminary attachment. Invoking Section 20,
Rule 57 of the Rules of Court, as well as jurisprudence,
[17]
the Court of Appeals ruled that it was not
necessary for the determination of damages on the injunction bond to await the decision on appeal.

The Court of Appeals then proceeded to determine to what damages respondents were entitled
to. In ruling that the award of actual damages was warranted, the court noted:

It is also not disputed that the PNB, on June 27, 1996, issued
two managers checks: MC No. 938541 for P4,932,621.09 and MC
938542 for P10,451,888.89 payable to the order of Luis C. Bucayon II,
Sheriff IV, RTC, Branch 256, Muntinlupa, duly received by the latter in
the total amount of PESOS FIFTEEN MILLION THREE HUNDRED
EIGHTY FOUR THOUSAND FIVE HUNDRED NINE & 98/100
(P15,384,509.98), drawn against the accounts of Ms. Felicidad Sandoval
Vda. de Carlos which were earlier garnished for the satisfaction of the
above-mentioned writ of attachment (Annex E, Motion for Judgment
on the Attachment Bond, pp. 7-8)
[18]

. . . .

The contention of [Carlos] that the writ of attachment was
not implemented falls flat on the face of the manifestation of PNB that
the delivery of the garnished P15,384,509.98 to him was effected
through the sheriff.
[19]

The Court of Appeals found that moral and exemplary damages were not warranted, there being
no malice in pursuing the attachment. The appellate court also found the claim of P2,000,000.00 for
attorneys fees as excessive, and reduced the sum by half. Correspondingly, the dispositive portion
of the assailed Resolution reads:

WHEREFORE, premises considered, judgment is hereby rendered against
the attachment bond, ordering SIDDCOR INSURANCE CORPORATION
and plaintiff-appellee to pay defendants-appellants, jointly and severally, the
sum of P15,384,509.98 and 12% interest per annum from June 27, 1996
when the unlawful garnishment was effected until fully paid and
P1,000,000.00 as attorneys fees with 6% interest thereon from the trial
courts decision on April 8, 1986 until fully paid.

SO ORDERED.
[20]

Both Carlos and SIDDCOR filed their respective motions for reconsideration of the Resolution.
For their part, respondents filed a Motion for Immediate Execution dated 7 August 1998 in regard to
the Resolution of 26 June 1998 awarding them damages.

In the Resolution dated 10 October 1998,
[21]
the Court of Appeals denied the motions for
reconsideration and granted the Motion for Immediate Execution. In granting the Motion for
Immediate Execution, the Court of Appeals cited the reasons that the appeal to be undertaken from
the 26 June 1998 Resolution was patently dilatory; that there were no material and substantial
defenses against the motion for judgment on the attachment bond, rendering the appeal pro-forma
and dilatory; that Sandoval was of advanced age and might not enjoy the fruits of the judgment on
the attachment bond; and that immediate execution would end her suffering due to the arbitrary
garnishment of her account pursuant to an improper attachment.
[22]

In its Motion for Reconsideration, SIDDCOR explicitly assailed the allowance of the
Motion for Immediate Execution.
[23]
This was denied by the Court of Appeals in a Resolution dated
22 December 1998.
[24]

From these antecedents, the following petitions were filed before this Court:

G.R. No. 135830

This Appeal by Certiorari with Prayer for Temporary Restraining Order/Preliminary
Injunction dated 26 October 1998 filed by Carlos assailed the two resolutions of the Court of
Appeals both dated 26 June 1998, as well as the Resolution of 10 October 1998, which denied
Carloss motion for reconsideration. Carlos argues that the Court of Appeals, through the Former
Special Fourth Division, could not have resolved the Motion for Judgment on the Attachment Bond
since the case had not yet been re-raffled under the two-raffle system for study and report; that the
Court of Appeals erred in resolving the motion without conducting any hearing; that the Court of
Appeals had no jurisdiction over the motion as the docketing fees had not yet been filed; that the
motion for judgment, which did not contain any certification against forum-shopping, was an
application subject to the requirements of certification against forum-shopping; that there was no
supporting evidence to support the award of damages; and that the Court of Appeals committed
grave abuse of discretion in denying the Motion for Reconsideration without adverting to specific
reasons mentioned for the denial of each issue.
[25]

Carlos likewise ascribes grave abuse of discretion to the Court of Appeals in its other
Resolution dated 26 June 1998 for its refusal to dismiss CA-G.R. CV No. 53229 on the ground of
forum-shopping, adding that the appellate court should have deferred resolution of the Motion for
Judgment on the Attachment Bond considering the prejudicial question raised in Carloss motion to
dismiss the main case on the ground of forum-shopping.

G.R. No. 136035

This concerns a Petition for Review filed by SIDDCOR, likewise challenging the Resolution of
26 June 1998 of the Court of Appeals and the 10 October 1998 Resolution wherein Siddcors Motion
for Reconsideration, among others, was denied. Siddcor argues therein that the Court of Appeals
erred in ruling on the motion for damages without awaiting judgment in the main case; granting that
damages may be awarded, these should encompass only such damages incurred during the pendency
of the appeal; and that a hearing was necessary to prove the claim for damages and the appellate
court erred in granting the award for damages despite lack of hearing.

G.R. No. 137743

The third petition for adjudication, a Petition for Certiorari under Rule 65 with Prayer for
Temporary Restraining Order or Preliminary Injunction, was also filed by SIDDCOR. This petition,
dated 8 March 1999, specifically assails the allowance by the Court of Appeals of the immediate
execution of the award of damages, made through the resolutions dated 10 October 1998 and 22
December 1998.

SIDDCOR hereunder argues that Section 2, Rule 39 of the Rules of Civil Procedure
requires that execution of a judgment or final order pending appeal may be made only on motion of
the prevailing party and may be made even before the expiration of the period to appeal.
[26]

Respondents had argued in their Motion for Immediate Execution that the judgment sought to be
executed (that on the attachment bond) was interlocutory and not appealable, yet cited rulings on
execution pending appeal under Section 2, Rule 39 in support of their position. SIDDCOR cites this
inconsistency as proof of a change of theory on the part of respondents which could not be done for
the theories are incompatible. Such being the case, SIDDCOR argues, the Court of Appeals gravely
abused its discretion in granting immediate execution since respondents had filed its motion on the
premise that the award on the judgment bond was interlocutory and not appealable. SIDDCOR also
claims that the judgment on the attachment bond is not interlocutory, citing Stronghold Insurance
Co., Inc. v. Court of Appeals
[27]
wherein it was ruled that such indeed constitutes a final and
appealable order.

SIDDCOR points out that no hearing was conducted on the Motion for Immediate
Execution despite the requirement in Section 2, Rule 39 that discretionary execution may only issue
upon good reasons to be stated in a special order after due hearing. SIDDCOR likewise notes that
the motion granting immediate execution was granted in the very same resolution which had denied
the motion for reconsideration of the resolution sought to be immediately executed. For SIDDCOR,
such constituted a denial of procedural due process insofar as its statutory right to appeal was
concerned, as the resolution that it intended to appeal from was already the subject of immediate
execution.

Finally, SIDDCOR contests the special reasons cited by the Court of Appeals in granting
the Motion for Immediate Execution.

Facts Arising Subsequent to the Filing of Instant Petitions

On 7 May 1999, the Court of Appeals issued a Writ of Execution directing the
enforcement of the judgment on the attachment bond.
[28]
However, in a Resolution dated 9 June
1999, this Court through the First Division issued a Temporary Restraining Order, enjoining the
enforcement of the said Writ of Execution.

On 15 October 2002, the Court of Appeals First Division rendered a Decision
[29]
on the
merits of CA-G.R. CV No. 53229, setting aside the Summary Judgment and ordering the remand of
the case for further proceedings.
[30]
Both parties filed their respective motions for reconsideration.
[31]

In addition, Carlos filed a motion to inhibit the author of the assailed decision, Justice Rebecca de
Guia-Salvador,
[32]
who thereafter agreed to inhibit herself.
[33]
Then on 7 August 2003, the Court of
Appeals Former First Division issued a Resolution deferring action on the motions for
reconsideration in light of the temporary restraining order issued by this Court until the resolution of
the present petitions.

The factual background may be complicated, but the court need only concern itself with
the propriety of the judgment on the attachment bond and the subsequent moves to secure immediate
execution of such judgment. Should this Court be called upon to tackle the merits of the original
action, Carloss complaint, it shall be in the review of the final resolution of the Court of Appeals in
CA-G.R. CV No. 53229.

Consolidation of Issues in
G.R. Nos. 135830 and 136035

The petitions in G.R. Nos. 135830 and 136035 are concerned with the award of damages
on the attachment bond. They may be treated separately from the petition in G.R. No. 137743, which
relates to the immediate execution of the said award.

We consolidate the main issues in G.R. Nos. 135830 and 136035, as follows: (1) whether
the assailed judgment on the attachment bond could have been rendered, as it was, prior to the
adjudication of the main case; (2) whether the Court of Appeals properly complied with the hearing
requirement under Section 20, Rule 57 prior to its judgment on the attachment bond; and (3) whether
the Court of Appeals properly ascertained the amount of damages it awarded in the judgment on the
attachment bond.

Resolving these issues requires the determination of the proper scope and import of
Section 20, Rule 57 of the 1997 Rules of Civil Procedure. The provision governs the disposal of
claims for damages on account of improper, irregular or excessive attachment.

SECTION 20. Claim for damages on account of improper, irregular or
excessive attachment.An application for damages on account of improper,
irregular or excessive attachment must be filed before the trial or before appeal is
perfected or before the judgment becomes executory, with due notice to the
attaching obligee or his surety or sureties, setting forth the facts showing his right to
damages and the amount thereof. Such damages may be awarded only after
proper hearing and shall be included in the judgment on the main case.

If the judgment of the appellate court be favorable to the party against
whom the attachment was issued, he must claim damages sustained during the
pendency of the appeal by filing an application in the appellate court with notice to
the party in whose favor the attachment was issued or his surety or sureties, before
the judgment of the appellate court becomes executory. The appellate court may
allow the application to be heard and decided by the trial court.

Nothing herein contained shall prevent the party against whom the
attachment was issued from recovering in the same action the damages awarded to
him from any property of the attaching obligee not exempt from execution should
the bond or deposit given by the latter be insufficient or fail to fully satisfy the
award. (Emphasis supplied.)

Section 20 essentially allows the application to be filed at any time before the judgment
becomes executory. It should be filed in the same case that is the main action, and cannot be
instituted separately.
[34]
It should be filed with the court having jurisdiction over the case at the time
of the application.
[35]
The remedy provided by law is exclusive and by failing to file a motion for the
determination of the damages on time and while the judgment is still under the control of the court,
the claimant loses his right to damages.
[36]

There is no question in this case that the Motion for Judgment on the Attachment Bond
filed by respondents on 10 December 1996 was properly filed since it was filed with the Court of
Appeals during the pendency of the appeal in the main case and also as an incident thereto. The core
questions though lie in the proper interpretation of the condition under Section 20, Rule 57 that
reads: Such damages may be awarded only after proper hearing and shall be included in the
judgment on the main case. Petitioners assert that there was no proper hearing on the application for
damages and that the Court of Appeals had wrongfully acted on the application in that it resolved it
prior to the rendition of the main judgment.

Such Damages May Be Awarded
Only After Proper Hearing.

We first discuss whether the proper hearing requirement under Section 20, Rule 57 had been
satisfied prior to the award by the Court of Appeals of damages on the attachment bond.

Section 20 of Rule 57 requires that there be a proper hearing before the application for
damages on the attachment bond may be granted. The hearing requirement ties with the
indispensable demand of procedural due process. Due notice to the adverse party and its surety
setting forth the facts supporting the applicant's right to damages and the amount thereof under the
bond is essential. No judgment for damages may be entered and executed against the surety without
giving it an opportunity to be heard as to the reality or reasonableness of the damages resulting
from the wrongful issuance of the writ.
[37]

In Paramount Insurance v. Court of Appeals,
[38]
the Court held that under the rule, it was
neither mandatory nor fatal that there should be a separate hearing in order that damages upon the
bond can be claimed, ascertained and awarded.
[39]
What is necessary only is for the attaching party
and his surety or sureties to be duly notified and given the opportunity to be heard.
[40]

In this case, both Carlos and SIDDCOR were duly notified by the appellate court of the
Motion for Judgment on the Attachment Bond and were required to file their respective comments
thereto.
[41]
Carlos and SIDDCOR filed their respective comments in opposition to private

respondents motion.
[42]
Clearly, all the relevant parties had been afforded the bare right to be heard
on the matter.

Concededly, the facts of this case differ from that in Paramount, wherein the award of
damages was predicated under Section 8, Rule 58, and the trial on the merits included the claim for
damages on the attachment bond. The Court did note therein that the counsel of the surety was
present during the hearings.
[43]
In this case, unlike in Paramount, there were no open court hearings
conducted by the Court of Appeals, and it is precisely this absence that the petitioners assert as fatal.

Plainly, there is no express requirement under the rule that the hearing be done in open
court, or that the parties be allowed to confront adverse witnesses to the claim of damages on the
bond. The proper scope of the hearing requirement was explained before Paramount in Peroxide
Philippines Corp. v. Court of Appeals,
[44]
thus:

. . . [It] is undeniable that when the attachment is challenged for having been
illegally or improperly issued, there must be a hearing with the burden of proof to
sustain the writ being on the attaching creditor. That hearing embraces not only the
right to present evidence but also a reasonable opportunity to know the claims of the
opposing parties and meet them. The right to submit arguments implies that
opportunity, otherwise the right would be a barren one. It means a fair and open
hearing.

From this pronouncement, we can discern that the proper hearing contemplated would not
merely encompass the right of the parties to submit their respective positions, but also to present
evidence in support of their claims, and to rebut the submissions and evidence of the adverse party.
This is especially crucial considering that the necessary elements to be established in an application
for damages are essentially factual: namely, the fact of damage or injury, and the quantifiable
amount of damages sustained. Such matters cannot be established on the mere say-so of the
applicant, but require evidentiary support. At the same time, there was no equivocal statement from
the Court in Peroxide that the hearing required under the rule should be a full-blown hearing on the
merits

In this case, we rule that the demands of a proper hearing were satisfied as of the time the
Court of Appeals rendered its assailed judgment on the attachment bond. The circumstances in this
case that we consider particularly telling are the settled premises that the judicial finding on the
wrongfulness of the attachment was then already conclusive and beyond review, and that the amount
of actual damages sustained was likewise indubitable as it indeed could be found in the official case
record in CA-G.R. CV No. 53229. As a result, petitioners would have been precluded from either
raising the defenses that the preliminary attachment was valid or disputing the amount of actual
damages sustained by reason of the garnishment. The only matter of controversy that could be
litigable through the traditional hearing would be the matter of moral and exemplary damages, but
the Court of Appeals appropriately chose not to award such damages.

Moreover, petitioners were afforded the opportunity to counter the arguments extended by the
respondents. They fully availed of that right by submitting their respective comments/oppositions. In
fine, the due process guarantee has been satisfied in this case.

It should be noted that this case poses a situation different from what is normally
contemplated under Section 20, Rule 57wherein the very wrongfulness of the attachment remains
one of the issues in contention in the main case. In such a case, there would be a greater demand for
a more extensive hearing on the application of damages. The modality of hearing should remain
within the discretion of the court having jurisdiction to hear the application for damages. The only
demand, concordant to due process, would be the satisfaction of the right to be heard, to present
evidence, and to rebut the evidence and arguments of the opposing party.

Some disquisition is necessary on whether or not, as petitioners submit, a full-blown
hearing in open court is compulsory under Section 20, Rule 57. To impose this as a mandatory
requirement would ultimately prove too onerous to our judicial system. Perhaps such a demand
would be less burdensome on the regional trial courts, which, as a matter of routine, receive
testimonial or documentary evidence offered de novo, and to formulate conclusions on the
admissibility and credibility of the same.

However, a different situation applies if it is the Court of Appeals or the Supreme Court before
which the application for damages is filed. Both these courts, which are capacitated to receive and
act on such actions, are generally not triers of facts, and do not, in the course of daily routine,
conduct hearings. It is partly for such reason that Section 20, Rule 57 authorizes these appellate
courts to refer the application for damages to the trial court for hearing and decision. The trial courts
are functionally attuned to ascertain and evaluate at the first instance the necessary factual premises
that would establish the right to damages. Still, reference of the application for damages to the trial
court is discretionary on the part of the appellate courts. The latter, despite their traditional appellate
jurisdiction and review function, are still empowered under Section 20 to rule on the application for
damages, notwithstanding the factual dimension such question presents.

To impose as mandatory on the Court of Appeals or the Supreme Court to hear the application
for damages through full-blown hearings in open court is supremely unwise and beyond the demands
of Section 20, Rule 57. The effect would be unduly disruptive on the daily workflow of appellate
courts such as the Court of Appeals and the Supreme Court, which rarely conduct open court
hearings. Neither could the Court see what is so markedly special about an application for damages,
fact-oriented as it may be, that would require it to be heard by the appellate courts in open court
when no such mandatory rule applies to other judicial matters for resolution that are also factual in
nature.

For example, the review of death penalty convictions by the Court of Appeals and the
Supreme Court necessitates a thorough evaluation of the evidence presented, notwithstanding the
prior factual appreciation made by the trial court.
[45]
Notwithstanding the factual nature of the
questions involved, there is no rule requiring the Court of Appeals or the Supreme Court to call
death penalty cases for hearing or oral argument. If no such mandatory rule for hearing is imposed
on the appellate courts when the supreme penalty of death is involved, why then should an
exceptional rule be imposed in the case for the relatively insignificant application for damages on the
attachment bond?

If open court hearings are ever resorted to by appellate courts, such result from the
exercise of discretion rather than by imposition by statute or procedural rule. Indeed, there is no
existing statute, procedural rule, or jurisprudential fiat that makes it mandatory on the Court of
Appeals or the Supreme Court to conduct an open-court hearing on any matter for resolution. There
is nothing demonstrably urgent with an application for damages under Section 20, Rule 57 that
would necessitate this Court to adopt an unprecedented rule mandating itself or the Court of Appeals
to conduct full-blown open court hearings on a particular type of action.

This pronouncement does not contradict our ruling in Hanil Development v. IAC,
[46]
which
Carlos interprets as requiring the Court of Appeals to conduct a proper hearing on an application for
damages on the attachment bond. Hanil concerned the refusal by the Intermediate Appellate Court
(now Court of Appeals) to take cognizance of the application for damages on the attachment bond,
such refusal being reversed by the Court, which ruled that the Intermediate Appellate Court (IAC)
had jurisdiction to accept and rule on such application. While the Court therein recognized that the
IAC was empowered to try cases and conduct hearings, or otherwise perform acts necessary to
resolve factual issues in cases,
[47]
it did not require the appellate court to conduct a hearing in open
court, but merely to reinstate the application for damages.

Admittedly, the dispositive portion of Hanil required the Court of Appeals to conduct
hearings on the application for damages,
[48]
but nowhere in the decision was a general rule laid down
mandating the appellate court to conduct such hearings in open court. The ascertainment of the need
to conduct full-blown hearings is best left to the discretion of the appellate court which chooses to
hear the application. At the same time, the Court cautions the appellate courts to carefully exercise
their discretion in determining the need for open-court hearings on the application for damages on
the attachment bond. The Court does not sanction the indolent award of damages on the attachment
bond by the appellate court without affording the adverse party and the bonding company concerned
the opportunity to present their sides and adduce evidence in their behalf, or on the basis of
unsubstantiated evidence.

And Shall be Included in the
Judgment on the Main Case

Section 20, Rule 57 does state that the award of damages shall be included in the
judgment on the main case, and seemingly indicates that it should not be rendered prior to the
adjudication of the main case.

The rule, which guarantees a right to damages incurred by reason of wrongful
attachment, has long been recognized in this jurisdiction.
[49]
Under Section 20, Rule 57 of the 1964
Rules of Court, it was provided that there must be first a judgment on the action in favor of the party
against whom attachment was issued before damages can be claimed by such party.
[50]
The Court
however subsequently clarified that under the rule, recovery for damages may be had by the party
thus prejudiced by the wrongful attachment, even if the judgment be adverse to him.
[51]

The language used in the 1997 revision of the Rules of Civil Procedure leaves no doubt
that there is no longer need for a favorable judgment in favor of the party against whom attachment
was issued in order that damages may be awarded. It is indubitable that even a party who loses the
action in main but is able to establish a right to damages by reason of improper, irregular, or
excessive attachment may be entitled to damages. This bolsters the notion that the claim for damages
arising from such wrongful attachment may arise and be decided separately from the merits of the
main action. As noted by the Court in Philippine Charter Insurance Corp. v. Court of Appeals:
[52]

The surety does not, to be sure, become liable on its bond simply
because judgment is subsequently rendered against the party who obtained the
preliminary attachment. The surety becomes liable only when and if "the court
shall finally adjudge that the applicant was not entitled to the attachment."
This is so regardless of the nature and character of the judgment on the merits
of the principal claims, counterclaims or cross-claims, etc. asserted by the
parties against each other. Indeed, since an applicant's cause of action may be
entirely different from the ground relied upon by him for a preliminary
attachment, it may well be that although the evidence warrants judgment in
favor of said applicant, the proofs may nevertheless also establish that said
applicant's proferred ground for attachment was inexistent or specious and
hence, the writ should not have issued at all; i.e., he was not entitled thereto in
the first place. In that event, the final verdict should logically award to the applicant
the relief sought in his basic pleading, but at the same time sentence himusually
on the basis of a counterclaimto pay damages caused to his adversary by the
wrongful attachment. [Emphasis supplied.]

Moreover, a separate ruleSection 8, Rule 58 covers instances when it is the trial
court that awards damages upon the bond for preliminary injunction of the adverse party. Tellingly,
it requires that the amount of damages to be awarded be claimed, ascertained, and awarded under the
same procedure prescribed in Section 20 of Rule 57.

In this case, we are confronted with a situation wherein the determination that the
attachment was wrongful did not come from the trial court, or any court having jurisdiction over the
main action. It was rendered by the Court of Appeals in the exercise of its certiorari jurisdiction in
the original action reviewing the propriety of the issuance of the Writ of Preliminary Attachment
against the private respondents. Said ruling attained finality when it was affirmed by this Court.

The courts are thus bound to respect the conclusiveness of this final judgment, deeming
as it does the allowance by the RTC of preliminary attachment as improper. This conclusion is no
longer subject to review, even by the court called upon to resolve the application for damages on the
attachment bond. The only matter left for adjudication is the proper amount of damages.

Nevertheless, Section 20, Rule 57 explicitly provides that the award for damages be
included in the judgment on the main case. This point was apparently not lost on the Court of
Appeals when it rendered its Resolution dated 23 March 1998, certifying that the case may now be
referred to the Raffle Committee for assignment to a ponente. The appellate court stated therein:
The Resolution of defendants-appellants motion for judgment on the attachment may be
incorporated in the decision by the ponente for study and report,
[53]
and such observation is in
conformity with Section 20.

However, this reasoning was assailed by respondents, who argued that the motion for
judgment on the attachment bond was a pending incident that should be decided before the case can
be re-raffled to a ponente for decision. Respondents may be generally correct on the point that a case
can only be deemed submitted for decision only after all pending incidents are resolved. Yet since
Section 20, Rule 57 provides that their application for damages on the attachment bond shall be
included in the judgment on the main case, it is clear that the award for damages need not be
resolved before the case is submitted for decision, but should instead be resolved and included in the
judgment on the main case, or the decision on the Appeal by Certiorari filed by the respondents.

Thus, the action of the Court of Appeals in resolving the application for damages even
before the main judgment was issued does not conform to Section 20, Rule 57. However, the special
particular circumstances of this case lead us to rule that such error is not mortal to the award of
damages.

As noted earlier, the award of damages was made after a proper hearing had occurred
wherein all the concerned parties had been given the opportunity to present their arguments and
evidence in support and in rebuttal of the application for damages. The premature award of damages
does not negate the fact that the parties were accorded due process, and indeed availed of their right
to be heard.

Moreover, we are compelled to appreciate the particular circumstance in this case that the
right of private respondents to acquire relief through the award of damages on account of the
wrongful preliminary attachment has been conclusively affirmed by the highest court of the land.
This differs from the normal situation under Section 20, Rule 57 wherein the court having
jurisdiction over the main action is still required to ascertain whether the applicant actually has a
right to damages. To mandatorily require that the award of damages be included in the judgment in
the main case makes all the sense if the right to damages would be ascertained at the same time the
main judgment is made. However, when the said right is already made viable by reason of a final
judgment which is no longer subject to review, there should be no unnecessary impediments to its
immediate implementation.

And finally, any ruling on our part voiding the award of damages solely for the reason that it
was not included in the judgment on the main case, and remanding the motion to the Court of
Appeals for proper adjudication together with the main case may exhibit fealty to the letter of the
procedural rule, but not its avowed aims of promoting a just and speedy disposition of every action
and proceeding. After all, if we were to compel the Court of Appeals to decide again on the
application for damages and incorporate its ruling in the judgment on the main action, the appellate
court will be examining exactly the same evidence and applying exactly the same rules as it already
did when it issued the assailed resolution awarding damages on the bond. This would be
unnecessarily redundant especially considering that the Supreme Court had already affirmed that
there was wrongful attachment in this case.

There is also the fact that remanding the question of damages, singly for the purpose of
adhering to the letter of the procedural rule, would further prolong the resolution of the main case,
which has been with the Court of Appeals for more than nine years now.
[54]
Our Rules of Court
precisely requires liberal construction of the procedural rules to promote the objective of securing a
just, speedy and inexpensive disposition of every action and proceeding.
[55]
With this precept, all the
more justification is supplied for allowing the award for damages despite its apparent prematurity, if
it is in all other respects proper.

The same reasons apply in resolving the question of whether the Court of Appeals could
have decided the Motion for Judgment on the Attachment Bond considering that the case had not yet
been re-raffled under the two-raffle system for study and report. Under Section 5, Rule 3 of the
RIRCA, a case filed with the Court of Appeals undergoes two raffles for assignment to a particular
Justice. The first raffle is made for completion of records.
[56]
Afterwards, all raffled appealed cases,
the records of which have been completed and submitted for decision, shall be re-raffled for
assignment to a Justice for study and report.
[57]

The fact that Section 20, Rule 57 provides that the award of damages on the attachment
bond shall be included in the judgment on the main case necessarily implies that it is to be made
only after the case has been re-raffled for study and report, and concurrently decided with the
judgment of the ponente in the main case. Again, the Court of Appeals failed to consider Section 20,
Rule 57 when it acted upon the application even before the second raffle was made.

Had Section 20, Rule 57 been faithfully complied with, a different Justice of the Court of
Appeals would have penned the ruling on the application for damages, in accordance with the
RIRCA. Yet this circumstance does not outweigh the other considerations earlier mentioned that
would warrant a liberal interpretation of the procedural rules in favor of respondents. The parties had
adduced all their arguments and evidence before the Court of Appeals, and indeed, these were
appreciated on first instance by Justice Demetria, who eventually penned the assailed resolutions.
There was already a final determination that the attachment was wrongful. And any delay brought
about by requiring that it be the ponencia, determined after the second raffle, who decides the
application for damages may bear pro forma adherence to the letter of the rule, but would only cause
the delay of the resolution of this long-pending case. Procedural rules are designed, and must
therefore be so interpreted as, to give effect to lawful and valid claims and not to frustrate them.
[58]

Even SIDDCOR acknowledges that there are recognized instances where the award of
damages or judgment on the attachment bond may not be included in the decision on the main case,
such as if the main case was dismissed for lack of jurisdiction and no claim for damages could have
been presented in the main case.
[59]

Scope of Damages
Properly Awardable

Next, we examine the particular award of damages made in this case, consisting of
P15,384,509.98, plus interest, as well as P1,000,000.00 as attorneys fees. There seems to be no
dispute that the former amount constituted the amount drawn against the account of Sandoval by
reason of the writ of execution issued by the trial court on 27 May 1996. This fact was confirmed by
the PNB, in its Manifestation dated 19 July 1996, confirming the garnishment.

Respondents burden in proving damages in this case was considerably lessened by the fact that
there was already a final judgment, no longer subject to review, that the preliminary attachment
allowed by the trial court was indeed wrongful. Hence, all that was necessary to be proved was the
amount of damage actually sustained by respondents by reason of the wrongful attachment. It is
unquestioned that by virtue of the writ of preliminary attachment, a Notice of Garnishment was
served upon the PNB over deposit accounts maintained by respondents. Said Notice of Garnishment
placed under the control of the RTC all the accounts maintained by respondents, and prevented the
transfer or disposition of these accounts.
[60]
Then the subsequent Writ of Execution dated 27 May
1996 ordered the delivery to Carlos of these accounts earlier subjected to garnishment.
[61]

Clearly, the amount of actual pecuniary loss sustained by respondents has been well
established. The Manifestation submitted by the PNB further affirmed the actual amount seized by
Carlos, an amount which could not have been acquired had it not been for the writ of preliminary
attachment which was wrongfully issued.

Carlos lamely argues in his petition that there was no concrete or supporting evidence to justify
the amount of actual damages, a claim that is belied by the official case records. The more
substantive argument is presented by SIDDCOR, which submits that any damages that may be
awarded to respondents can include only those that were incurred, if any, during the pendency of the
appeal. But this contention is belied by Section 4, Rule 57 of the 1997 Rules of Civil Procedure,
which provides that the bond issued for preliminary attachment is 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.
[62]

The case Paramount Insurance Corp. v. Court of Appeals
[63]
is instructive. It discusses the
scope of the bond executed by upon an application for preliminary injunction,
[64]
which similarly
covers all damages which [may be] sustain[ed] by reason of the injunction or temporary restraining
order if the court should finally decide that the applicant was not entitled thereto.
[65]
The surety in
that case claimed that it could be liable only to the amount of damages accruing from the time the
injunction bond was issued until the termination of the case, and not from the time the suit was
commenced.
[66]
In rebutting this claim, the Court ruled:

. . . . Rule 58, Section 4(b), provides that a bond is executed in favor of the party
enjoined to answer for all damages which he may sustain by reason of the
injunction. This Court already had occasion to rule on this matter in Mendoza v.
Cruz, where it held that "(t)he injunction bond is intended as a security for damages
in case it is finally decided that the injunction ought not to have been granted. It is
designed to cover all damages which the party enjoined can possibly suffer. Its
principal purpose is to protect the enjoined party against loss or damage by
reason of an injunction." No distinction was made as to when the damages
should have been incurred.
[67]

Our ruling in Philippine Charter Insurance Corp. v. Court of Appeals, relied upon by the Court
of Appeals, squarely applies to this case:

Under the circumstances, too, there can be no gainsaying the suretys full
awareness of its undertakings under its bond: that, as the law puts it: "the plaintiff
will pay all costs which may be adjudged to the defendant(s), and all damages
which may be sustained by reason of the attachment, if the same shall finally be
adjudged to have been wrongful and without cause," and that those damages plainly
comprehended not only those sustained during the trial of the action but also those
during the pendency of the appeal. This is the law, and this is how the surety's
liability should be understood. The surety's liability may be enforced whether the
application for damages for wrongful attachment be submitted in the original
proceedings before the Trial Court, or on appeal, so long as the judgment has not
become executory. The surety's liability is not and cannot be limited to the
damages caused by the improper attachment only during the pendency of the
appeal. That would be absurd. The plain and patent intendment of the law is
that the surety shall answer for all damages that the party may suffer as a
result of the illicit attachment, for all the time that the attachment was in force;
from levy to dissolution. . . .

The fact that the second paragraph of the rule speaks only of
"damages sustained during the pendency of the appeal" is of no moment; it
obviously proceeds from the assumption in the first paragraph that the award
for the damages suffered during the pendency of the case in the trial court was
in fact "included in the final judgment" (or applied for therein before the appeal
was perfected or the judgment became executory); hence, it states that the damages
additionally suffered thereafter, i.e., during the pendency of the appeal, should be
claimed before the judgment of the appellate tribunal becomes executory. It
however bears repeating that where. as in the case at bar, the judgment of the
Trial Court has expressly or impliedly sustained the attachment and thus has
given rise to no occasion to speak of, much less, file an application for damages
for wrongful attachment, and it is only in the decision of the Court of Appeals
that the attachment is declared wrongful and that the applicant "was not
entitled thereto," the rule is, as it should be, that it is entirely proper at this
time for the application for damages for such wrongful attachment to be
filedi.e., for all the damages sustained thereby, during all the time that
it was in force, not only during the pendency of the appeal. . . .
[68]

The rule is thus well-settled that the bond issued upon an application for preliminary
attachment answers for all damages, incurred at whatever stage, which are sustained by reason of the
attachment. The award of actual damages by the Court of Appeals is thus proper in amount.
However, we disagree that the rate of legal interest be counted from the date of the unlawful
garnishment, or on 27 June 1996. Properly, interest should start to accrue only from the moment it
had been finally determined that the attachment was unlawful, since it is on that basis that the right
to damages comes to existence. In this case, legal interest commences from the date the Court of
Appeals decision in CA-G.R. SP No. 39267 became final, by reason of its affirmation by this Court.

The award of attorneys fees in the amount of P1,000,000.00 is also questioned before this
Court, considering that the Court of Appeals did not award moral or exemplary damages. The
general rule may be that an award of attorneys fees should be deleted where the award of moral and
exemplary damages are eliminated.
[69]
Nonetheless, attorneys fees may be awarded under the Civil
Code where the court deems it just and equitable that attorneys fees and expenses of litigation
should be recovered,
[70]
even if moral and exemplary damages are unavailing.
[71]

Particularly, the Court has recognized as just and equitable that attorney's fees be awarded when
a party is compelled to incur expenses to lift a wrongfully issued writ of attachment.
[72]
The amount
of money garnished, and the length of time respondents have been deprived from use of their money
by reason of the wrongful attachment, all militate towards a finding that attorneys fees are just and
equitable under the circumstances. However, we deem the amount of P1,000,000.00 as excessive,
and modify the award of attorneys fees to P500,000.00 which represents merely approximately
three percent of the actual damages suffered by and awarded to respondents. We also delete the
imposition of legal interest made by the Court of Appeals on the awarded attorneys fees.

Other Issues Raised in G.R. No. 135830

The issues raised in G.R. No. 136035 have been dispensed with, and the remaining issues in
G.R. No. 135830 are relatively minor. There is no need to dwell at length on them.

Carlos insists that respondents were liable to have paid docket fees upon filing of their Motion
for Judgment on Attachment Bond, on the theory that they claimed therein for the first time the
alleged damages resulting from the dissolved attachment. The said motion is characterized as an
initiatory proceeding because it is claimed therein for the first time, the damages arising from the
attachment. In the same vein, Carlos argues that the absence of a certification against forum-
shopping attached to the motion renders the said motion as fatal. Again, it is pointed out that
initiatory pleadings must contain the said certification against forum-shopping.

Our ruling in Santo Tomas University Hospital v. Surla
[73]
is instructive. It was argued therein
that the requirement of the certification against forum-shopping, as contained in Administrative
Circular No. 04-94,
[74]
covered compulsory counterclaims. The Court ruled otherwise:

It bears stressing, once again, that the real office of Administrative
Circular No. 04-94, made effective on 01 April 1994, is to curb the malpractice
commonly referred to also as forum-shopping. . . . The language of the circular
distinctly suggests that it is primarily intended to cover an initiatory pleading or
an incipient application of a party asserting a claim for relief.

It should not be too difficult, the foregoing rationale of the circular
aptly taken, to sustain the view that the circular in question has not, in fact,
been contemplated to include a kind of claim which, by its very nature as
being auxiliary to the proceeding in the suit and as deriving its substantive
and jurisdictional support therefrom, can only be appropriately pleaded in
the answer and not remain outstanding for independent resolution except by
the court where the main case pends. Prescinding from the foregoing, the
proviso in the second paragraph of Section 5, Rule 8, of the 1997 Rules of Civil
Procedure, i.e., that the violation of the anti-forum shopping rule "shall not be
curable by mere amendment . . . but shall be cause for the dismissal of the case
without prejudice," being predicated on the applicability of the need for a
certification against forum shopping, obviously does not include a claim which
cannot be independently set up.
[75]
(Emphasis supplied.)

It is clear that under Section 20, Rule 57, the application for damages on the attachment bond
cannot be independently set up, but must be filed in the main case, before the judgment therein
becomes final and executory. Santo Tomas squarely applies in determining that no certification
against forum-shopping was required in the Motion for Judgment on the Attachment Bond. The same
reasoning also sustains a ruling that neither legal fees were required for the filing of the said motion.
Section 1, Rule 141 of the Rules of Court provides that legal fees are prescribed upon the filing of
the pleading or other application which initiates an action or proceeding.
[76]
Since the said
application for judgment on the attachment bond cannot be considered as an initiatory pleading, as it
cannot be independently set up from the main action, it is not likewise chargeable with legal fees.

As to the issue relating to the other Resolution dated 26 June 1998 denying the motion to
dismiss appeal on the ground of forum-shopping, we find Carloss arguments as unmeritorious.
Forum-shopping allegedly existed because petitioners had filed two cases before the Court of
Appeals, CA-G.R. CV No. 53229, and the Petition for Certiorari with Temporary Restraining Order
dated 2 June 1996 attacking the allowance of execution pending appeal. Evidently, the two causes of
action in these two petitions are different, CA-G.R. CV No. 53229 being an appeal from the
Summary Judgment rendered by the RTC, and the second petition assailing the subsequent
allowance by the RTC of execution pending appeal. There is no identity between these two causes of
action that would warrant a finding of forum-shopping.

Issues Raised in G.R. No. 137743

To recount, respondents, having obtained a favorable decision on their Motion for Judgment on
the Attachment Bond, filed a Motion for Immediate Execution of the award of damages. This was
granted by the Court of Appeals in its Resolution dated 16 October 1998, said resolution now
specifically assailed by SIDDCOR in G.R. No. 137743.

In their Motion for Immediate Execution, respondents theory in seeking the immediate
execution of the award of damages was that said award was not subject to appeal, the ruling
thereupon being an interlocutory order.
[77]
This position was not adopted by the Court of Appeals in
its 16 October 1998 Resolution, which was otherwise favorably disposed to respondents. Instead, the
Court of Appeals predicated the immediate execution on the following grounds: (1) that the judicial
finding that the writ of preliminary attachment was wrongful was already final and beyond review;
(2) there were no material and substantial defenses against the motion for the issuance of the
judgment bond; (3) Sandoval was elderly and sickly, without means of livelihood and may not be
able to enjoy the fruits of the judgment on the attachment bond; (4) that immediate execution would
end her suffering caused by the arbitrary garnishment of her PNB account.

There is no doubt that a judgment on the attachment bond is a final and appealable order. As
stated earlier, it is, under normal course, included in the main judgment, which in turn is final and
appealable. Respondents admit that they had erred in earlier characterizing the said judgment as an
interlocutory order. Still, SIDDCOR argues that such earlier error is fatal, and that the Court of
Appeals abused its discretion in ruling on the motion on a theory different from that urged on by
respondents.

By no means could respondents be deemed as estopped from changing their legal theory, since
the rule on estoppel applies to questions of fact and not questions of law.
[78]
Moreover, courts are
empowered to decide cases even if the parties raise legal rationales other than that which would
actually apply in the case. The basis of whether respondents are entitled to immediate execution
arises from law, particularly Section 2(a), Rule 39 of the Rules of Court, and not solely on whatever
allegations may be raised by the movant.

Thus, we find no grave abuse of discretion on the part of the Court of Appeals, even though it
allowed execution pending appeal on a legal basis different from that originally adduced by
respondents. After all, the reasoning ultimately employed by the appellate court is correct, and it
hardly would be judicious to require the lower court to adhere to the movants erroneous
ratiocination and preclude the proper application of the law.

We need not review in length the justification of the Court of Appeals in allowing execution
pending appeal. The standard set under Section 2(a), Rule 39 merely requires good reasons, a
special order, and due hearing. Due hearing would not require a hearing in open court, but
simply the right to be heard, which SIDDCOR availed of when it filed its opposition to the motion
for immediate execution. The Resolution dated 16 October 1998 satisfies the special order
requirement, and it does enumerate at length the good reasons for allowing execution pending
appeal. As to the appreciation of good reasons, we simply note that the advanced age alone of
Sandoval would have sufficiently justified execution pending appeal, pursuant to the well-settled
jurisprudential rule.
[79]
The wrongfulness of the attachment, and the length of time respondents have
been deprived of their money by reason of the wrongful attachment further justifies execution
pending appeal under these circumstances.

WHEREFORE, the petitions are DISMISSED. The Temporary Restraining Order issued in the
Resolution dated 9 June 1999 is hereby LIFTED. The assailed Resolution of the Court of Appeals
Special Fourth Division dated 26 June 1998 is AFFIRMED with the MODIFICATIONS that the
legal interest on the award of actual damages should commence from the date of the finality of the
Decision of the Court of Appeals in CA G.R. SP No. 39267 and that the award of attorneys fees is
in the amount of P500,000. Costs against petitioners.

SO ORDERED.

DANTE O.
TINGA Associate Justice

WE CONCUR:

REYNATO S. PUNO
Associate Justice
Chairman

MA. ALICIA AUSTRIA-MARTINEZ ROMEO J. CALLEJO, SR.
Associate Justice Associate Justice

MINITA V. CHICO-NAZARIO
Associate Justice

ATTESTATION

I attest that the conclusions in the above Decision had been in consultation before the case was
assigned to the writer of the opinion of the Courts Division.

REYNATO S. PUNO
Associate Justice
Chairman, Second Division

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairmans
Attestation, it is hereby certified that the conclusions in the above Decision had been reached in
consultation before the case was assigned to the writer of the opinion of the Courts Division.

HILARIO G. DAVIDE, JR.
Chief Justice

[1]
Carlos alleged that there were other compulsory heirs of his parents, but they had
waived all their claims, rights and participations in the properties in the estate. See G.R. No. 136035,
Rollo, p. 83.

[2]
Id. at 87.

[3]
Ibid.

[4]
Id. at 99-101.

[5]
G.R. No. 135830 Rollo, p. 4. SIDDCOR is now known as Mega Pacific Insurance
Corporation.

[6]
Ibid.

[7]
In a Decision penned by then Court of Appeals Justice Fidel T. Purisima, and concurred
in by Justices F. Martin, Jr. and C. Carpio-Morales. Justices Purisima and Carpio-Morales were
subsequently elevated to the Supreme Court. Justice Purisima has retired from the Court.

[8]
Records, p. 31.

[9]
G.R. No. 136035, Rollo, pp. 137-138.

[10]
Records, p. 163.

[11]
Records, p. 18. Sandoval maintained a Savings Account with P546,121.98, a Time
Deposit Account of P10,000,000.00, and Treasury Bills worth P5,000,000.00.

[12]
Records, p. 34. Strangely enough, the Notice of Delivery/Payment is actually
addressed to the Branch Manager of the Bank of the Philippine Islands, Malolos Branch, though
respondents characterized the document in their Motion as having been addressed to the Branch
Manager of PNB Malolos. See Records, p. 13.

[13]
Records, p. 42.

[14]
Records, p. 433.

[15]
Id. at 450.

[16]
Both resolutions penned by Justice D. Demetria, concurred in by Justices O. Amin
and R. Barcelona.

[17]
Particularly the cases of Raymundo v. Carpio, 33 Phil. 395 (1904) and Hanil
Development Co., Ltd. v. ICA, 228 Phil. 529 (1986). Record, pp. 458-460.

[18]
Records, p. 463.

[19]
Id. at 468.

[20]
G.R. No. 135830, Rollo, p. 59.

[21]
Records, pp. 1023-1026.

[22]
Id. at 1024-1025.

[23]
G.R. No. 137743, Rollo, pp. 96-105.

[24]
Id. at 32.

[25]
G.R. 135830, Rollo, p. 10.

[26]
See Section 2, Rule 39, 1997 Rules of Civil Procedure; Records, p. 1114.

[27]
G.R. No. 84979, 6 November 1989, 179 SCRA 117.

[28]
G.R. No. 136035 Rollo, pp. 228-231.

[29]
Penned by Justice R. de Guia-Salvador, concurred in by Justices C. Garcia (now
Associate Justice of this Court) and B. Abesamis.

[30]
Records, p. 1565.

[31]
Respondents argued that the Court of Appeals should decide the case itself rather than
remand the matter to the trial court. Records, pp. 1868-1870.

[32]
See Records, pp. 1930-1936.

[33]
In a Resolution dated 11 February 2003.

[34]
See Paramount Insurance Corp. v. Court of Appeals, 369 Phil. 641 (1999).

[35]
A necessary conclusion following our pronouncement in Rivera v. Talavera, 112 Phil.
209 (1961). Upon the other hand, it was improper for the plaintiffs to ask the Court of First Instance
to assess damages against the sureties while the appeal was pending, unless the Court of Appeals had
granted permission to do so. The reason is plain: It was the Court of Appeals that had jurisdiction
over the case. The trial court had lost jurisdiction upon perfection of the appeal, and could no longer
act except to adopt conservatory measures. It follows then . . . that the Court of First Instance could
not validly entertain the supplemental complaint seeking to hold the sureties liable, unless the Court
of Appeals referred the matter to it.

[36]
See Heirs of Maningo v. IAC, G.R. Nos. 73559-62, 26 March 1990, 183 SCRA 691
citing Cantos v. Mair, 36 Phil. 350 (1970); Japco v. The City of Manila, 48 Phil. 851 ((1926); Cruz
v. Manila Surety & Fidelity Co., Inc., et al., 92 Phil. 699 (1953).

[37]
International Terminal Container Services v. Court of Appeals, G.R. No. 90530, 7
October 1992, 214 SCRA 456.

[38]
369 Phil. 641 (1999).

[39]
Id. at 652.

[40]
Ibid.

[41]
Records, p. 69.

[42]
See Records, pp. 53-59, 64-66.

[43]
Paramount Insurance Corp. v. Court of Appeals, supra note 34 at 652.

[44]
G.R. No. 92813, 31 July 1991, 199 SCRA 882.

[45]
Where life and liberty are at stake, all possible avenues to determine his guilt or
innocence must be accorded an accused, and no care in the evaluation of the facts can ever be
overdone. People v. Mateo, G.R. Nos. 147678-87, 433 SCRA 640 (2004).

[46]
Supra note 17.

[47]
Id. at 567.

[48]
Id. at 570.

[49]
See, e.g., Raymundo v. Carpio, 33 Phil. 395, 396 (1916).

[50]
The relevant portion of Section 20, Rule 57 of the 1964 Rules of Court reads:

SECTION 20. Claim for damages on account of improper, irregular or
excessive attachment.If the judgment on the action be in favor of the party
against whom attachment was issued, he may recover, upon the bond given or
deposit made by the attaching creditor, any damages resulting from the
attachment. Such damages may be awarded only upon application and after proper
hearing, and shall be included in the final judgment. The application must be filed
before the trial or before appeal is perfected or before the judgment becomes
executory, with due notice to the attaching creditor and his surety or sureties, setting
forth the facts showing his right to damages and the amount thereof. . . . (Emphasis
supplied.)

[51]
See Zaragosa v. Fidelino, G.R. No. L-29723, 163 SCRA 443 (1988). It thus seems
indeed that the first sentence of Section 20 precludes recovery of damages by a party against whom
an attachment is issued and enforced if the judgment be adverse to him. This is not however correct.
Although a party be adjudged liable to another, if it be established that the attachment issued at the
latter's instance was wrongful and the former had suffered injury thereby, recovery for damages may
be had by the party thus prejudiced by the wrongful attachment, even if the judgment be adverse to
him. Slight reflection will show the validity of this proposition. For it is entirely possible for a
plaintiff to have a meritorious cause of action against a defendant but have no proper ground for a
preliminary attachment. In such a case, if the plaintiff nevertheless applies for and somehow
succeeds in obtaining an attachment, but is subsequently declared by final judgment as not entitled
thereto, and the defendant shows that he has suffered damages by reason of the attachment, there can
be no gainsaying that indemnification is justly due the latter.

[52]
G.R. No. 88379, 179 SCRA 468 (1989).

[53]
Records, p. 433.

[54]
As noted earlier, a judgment on the main case was rendered by the Court of Appeals in
2002, but the motions for reconsideration filed by the parties were deferred resolution, pending
adjudication of these petitions now before the Court. Supra note 29.

[55]
See Section 6, Rule 1, 1997 Rules of Civil Procedure.

[56]
See Section 5(a), Rule 3, RIRCA.

[57]
See Section 5(b), ibid.

[58]
Mobil Oil, Philippines v. Court of Appeals, G.R. No. 103072, 20 August 1993, 225
SCRA 486.

[59]
G.R. No. 136035, Rollo, p. 42, citing Santos v. Court of Appeals, 95 Phil. 360 (1954).

[60]
Records, p. 33.

[61]
Id. at 34.

[62]
Section 4, Rule 57, Rules of Court.

[63]
Supra note 34.

[64]
Under Section 4(b), Rule 58, Rules of Court.

[65]
Ibid.

[66]
Paramount Insurance Corp. v. Court of Appeals, supra note 34 at 653.

[67]
Ibid. Emphasis supplied.

[68]
Supra note 52 at 477-478.

[69]
See PAL v. Miano, 312 Phil. 287 (1995); Ibaan Rural Bank v. Court of Appeals, 378
Phil. 707 (1999); Cathay Pacific v. Spouses Vazquez, 447 Phil. 306 (2003).

[70]
See Article 2208(11), Civil Code.

[71]
See Escobin v. NLRC, 351 Phil. 973 (1998); People v. Torpio, G.R. No. 138984, 4
June 2004, 342 SCRA 213; Wildvalley Shipping Corp. v. Court of Appeals, G.R. No. 119602, 6
October 2000, 342 SCRA 213.

[72]
MC Engineering, Inc. v. Court of Appeals, 429 Phil. 634, 667 (2002); Lazatin v.
Twao, 112 Phil. 733 (1961).

[73]
355 Phil. 804 (1998).

[74]
Since incorporated in Section 5, Rule 7, 1997 Rules of Civil Procedure.

[75]
Santo Tomas University Hospital v. Surla, supra note 73 at 813-815.

[76]
See Section 1, Rule 141, Rules of Court.

[77]
G.R. No. 137743, Rollo, pp. 89-90.

[78]
Taada and Macapagal v. Cuenco, 103 Phil. 1093 (1958).

[79]
See Borja v. Court of Appeals, G.R. No. L-37944, 30 June 1988, 163 SCRA 175; De
Leon v. Soriano, 95 Phil. 806 (1954); Philippine Bank of Communications v. Court of Appeals, 344
Phil. 777 (1997).

G.R. No. L-55381 March 26, 1984
JULIETA SALGADO, ET AL. vs. COURT OF APPEALS, ET AL.

SECOND DIVISION
[G.R. No. L-55381. March 26, 1984.]

SPOUSES JULIETA SALGADO and JOSE SALGADO, petitioners, vs. HON. COURT OF
APPEALS and PHILIPPINE COMMERCIAL & INDUSTRIAL BANK, respondents.

Reyes & Reyes Law Office for petitioners.
San Juan Africa, Gonzales & San Agustin Law Office for private respondent.

SYLLABUS
1. REMEDIAL LAW; PROVISIONAL REMEDIES; ATTACHMENT; PURPOSE. The
chief purpose of the remedy of attachment 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 (7 C.J.S. 190).
2. ID.; ID.; ID.; REQUISITES FOR ISSUANCE SHALL NOT ISSUE WHERE DEBTS
SUFFICIENTLY SECURED; REASON. The grounds upon which attachment may issue are set
forth in Section 1, Rule 57 of the Rules of Court. But quite apart from the grounds stated therein, it is
further provided in Section 3 of Rule 57 that "an order of attachment shall be granted only when it is
made to appear by the affidavit of the applicant or some other person who personally knows the
facts, that . . . there is no other sufficient security for the claim sought to be enforced by the action."
The reason for the rule prohibiting attachment where indebtedness was already secured is to prevent
the secured creditors from attaching additional property and thus tying up more of the debtor's
property than was necessary to secure the indebtedness (Blankenship vs. Myers, 54 P. 2d 314, 316;
97 Idaho 356 [1975]). Thus, to sustain an order of attachment, "it is incumbent upon plaintiff to
establish either of these two facts, to wit: (a) that the obligation had not been secured originally, or
(b) that, if secured at its beginning, the security later became valueless." (Giandini vs. Ramirez, 54
Pacific Reporter [2d] 91-92).
3. ID.; ID.; ID.; DISCHARGE THEREOF, WHEN PROPER. Section 13, Rule 57 of the
Rules of Court authorizes the discharge of an attachment where the same had been improperly or
irregularly issued. In National Coconut Corporation vs. Hon. Potenciano Pecson, 90 Phil. 809, this
Court 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 of attachment may be considered as improperly or irregularly issued.
4. ID.; ID.; ID.; ISSUANCE THEREOF STRICTLY CONSTRUED IN FAVOR OF
DEFENDANT. Since attachment is a harsh and rigorous remedy which exposes the debtor to
humiliation and annoyance, the rule authorizing its issuance must be strictly construed in favor of the
defendant. It should not be abused as to cause unnecessary prejudice. It is the duty of the court
before issuing the writ to ensure that all the requisites of the law has been complied with (Guzman
vs. Catolico, 65 Phil. 257; Salas vs. Adil, 90 SCRA 125).
AQUINO, J., dissenting:
1. REMEDIAL LAW; PROVISIONAL REMEDY; ATTACHMENT; MAY ISSUE EVEN
IF DEBT IS SECURED; CASE AT BAR. A writ of attachment may be validly issued although
the debt sued upon is secured by mortgages where such mortgages covered not only the debt sued
upon but also the debtors' other obligations; where the debtors failed to assign to the creditor bank
their sugar proceeds which they had given as security for their loan; and where the writ is supported
by a sufficient bond.

D E C I S I O N

ESCOLIN, J p:
This is a petition for review filed by the spouses Jose Salgado and Julieta Salgado to set aside the
resolution of the then Court of Appeals in CA-G.R. No. SP-09407-R, dated September 18, 1980,
which authorized the issuance of a writ of attachment against the property of said petitioners.
The pertinent facts that gave rise to this petition are as follows: On May 8, 1978, the Philippine
Commercial and Industrial Bank, hereinafter referred to as the Bank, filed an action against
petitioners, docketed as Civil Case No. 29392 of the then Court of First Instance of Rizal, to recover
on a promissory note in the amount of P1,510,905.96, inclusive of interest and other bank charges.
In its verified complaint, the Bank further prayed for the issuance of a writ of attachment. As
grounds therefor it alleged that petitioners had fraudulently misappropriated and/or converted to their
own personal use and benefit the sugar proceeds given as security for the payment of the
indebtedness; that petitioners are guilty of fraud in contracting their obligation and have concealed,
removed or disposed of the properties mortgaged or assigned to the plaintiff, or are concealing,
removing or disposing or about to do so, with intent to defraud their creditor; that the obligation
sought to be enforced is genuine and, therefore, a sufficient cause of action exists; and that there is
no sufficient security for the claim sought to be enforced by the action. Attached to the complaint
was the affidavit of Mrs. Helen Osias, Senior Branch Credit Division Manager of the Bank, wherein
she stated, among others, "that there is no sufficient security for the claim sought to be enforced by
this action."
On May 9, 1978, the trial court issued an order granting the Bank's prayer for preliminary
attachment upon a bond in the sum of P1,510,905.96. Upon the filing of said bond, the Deputy
Provincial Sheriff levied upon several parcels of land of petitioners situated in the province of
Negros Occidental.
On September 15, 1978, petitioners Salgado moved to quash the writ of attachment on the ground
that respondent Bank made fraudulent misrepresentation in securing the writ by deleting the words
"R E M" or "Real Estate Mortgage" from the xerox copy of the promissory note attached to the
complaint, thereby "making it appear that the note was unsecured when in truth and in fact it was
fully secured by a series of valid and existing real estate mortgages duly registered and annotated in
the titles of the affected real properties in favor of the plaintiff Bank." In the same motion,
petitioners stressed the lack of factual basis of the Bank's claim as to their alleged fraudulent
misappropriation or conversion of the sugar proceeds given as security for their obligation.
After due hearing, the trial court issued an order dated January 31, 1979 granting petitioners' motion
and lifting the writ of attachment previously issued.
Upon denial of its motion for reconsideration the Bank went to the Court of Appeals on a petition for
certiorari to annul the order of the trial court lifting the writ of attachment. LexLib
On November 29, 1979, the respondent Court of Appeals, finding that the order of the trial court was
not arbitrarily issued, dismissed the petition for lack of merit.
However, on motion of the Bank, the respondent Court reconsidered its decision of November 29,
1979 and issued the questioned resolution dated September 18, 1980, which authorized the issuance
of a writ of attachment.
Hence, the present recourse.
We find the petition impressed with merit, The chief purpose of the remedy of attachment 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. 1
The grounds upon which attachment may issue are set forth in Section 1, Rule 57 of the Rules of
Court. But quite apart from the grounds stated therein, it is further provided in Section 3 of Rule 57
that "an order of attachment shall be granted only when it is made to appear by the affidavit of the
applicant or some other person who personally knows the facts, that . . . there is no other sufficient
security for the claim sought to be enforced by the action."
The reason for the rule prohibiting attachment where indebtedness was already secured is to prevent
the secured creditors from attaching additional property and thus tying up more of the debtor's
property than was necessary to secure the indebtedness. 2 Thus, to sustain an order of attachment, "it
is incumbent upon plaintiff to establish either of these two facts, to wit: (a) that the obligation had
not been secured originally, or (b) that, if secured at its beginning, the security later became
valueless." 3
In the instant case, the allegation in the affidavit of the Bank's Credit Division Manager, Mrs. Helen
Osias, to the effect that "there is no sufficient security for the claim sought to be enforced by this
action" has been shown to be false. It is undisputed that the note sued upon "is fully secured by a
series of valid and existing real estate mortgages duly registered and annotated in the titles of the
affected real property in favor of the plaintiff Bank."
Section 13, Rule 57 of the Rules of Court authorizes the discharge of an attachment where the same
had been improperly or irregularly issued. In National Coconut Corporation vs. Hon. Potenciano
Pecson, 4 this Court 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 of attachment may be considered as improperly or
irregularly issued.
Since attachment is a harsh and rigorous remedy which exposes the debtor to humiliation and
annoyance, the rule authorizing its issuance must be strictly construed in favor of the defendant. It
should not be abused as to cause unnecessary prejudice. It is the duty of the court before issuing the
writ to ensure that all the requisites of the law has been complied with. 5
Accordingly, the resolution of the respondent Court of Appeals, now the Intermediate Appellate
Court, dated September 18, 1980, is hereby set aside. No costs.
SO ORDERED.
Concepcion, Jr., Guerrero, Abad Santos and De Castro, JJ., concur.

Separate Opinions

AQUINO, J., dissenting:
I dissent with deference to Justice Escolin's opinion. On May 8, 1978, the Philippine Commercial &
Industrial Bank filed an ordinary action against the Salgado spouses (residents of Kabankalan,
Negros Occidental) in the Court of First Instance of Pasig, Rizal for the collection of the sum of
P1,510.905.96 as the debt due from the Salgado spouses on their loan for the crop-year 1975-76,
with a prayer for a writ of attachment, considering that there was allegedly no sufficient security for
the debt.
The attachment was granted by Judge Nelly L. Romero Valdellon on the following day, May 9,
subject to the filing of a bond in the amount of the obligation, P1,510,905.96. The Salgados moved
to quash it on the ground that there was misrepresentation on the part of the bank that there was no
security for the loan. They charged that the bank tampered with the promissory note by erasing the
acronym "REM" (meaning real estate mortgages), thus giving the false impression that there was no
security.
The bank countered that it did not resort to foreclosure because the mortgages (Exh. 6 to 10) covered
not only the debt of the Salgados for the crop-year 1975-76 but also their obligations for the crop-
years 1976-77 and 1977-78 and an additional commercial loan. The Salgados admitted that they did
not assign to the bank their sugar for the 1975-76 crop-year. That was why the loan was not paid.
On January 31, 1979, Judge Valdellon dissolved the attachment. About a month later, Julieta Chua
Salgado transferred four pieces of real property covered by the attachment to her sisters Jimema
Chua Ang and Soledad Chua Montilla, her brother Romeo G. Chua and her daughter, Mary Jane
Salgado.
The bank assailed the dissolution order by certiorari in the Court of Appeals. In a decision dated
November 29, 1979, Justices Nocon, Samuel F. Reyes and Victoriano upheld the dissolution order
because the bank allegedly acted fraudulently in tampering with the note, making it appear that the
loan was unsecured when in fact it was secured by mortgages.
The bank filed a motion for reconsideration. In the resolution of September 18, 1980, the same three
Justices set aside their decision and sustained the attachment. They held that the dissolution was
made on grounds not mentioned in section 13 of Rule 57. LexLib
The Salgados appealed to this Court or December 3, 1980. The instant appeal was dismissed for lack
of merit in this Court's resolution of June 26, 1981. The Salgados filed a motion for reconsideration
wherein they stated that Judge Valdellon in a decision dated July 16, 1981 dismissed the bank's
complaint and ordered it to pay the Salgados one million two hundred fifty thousand pesos as moral
and exemplary damages and attorney's fees.
The bank opposed the motion. In a manifestation dated June 10, 1982, it apprised this Court that
Judge Pineda issued an order dated January 4, 1982 wherein he set aside Judge Valdellon's decision
and ordered the Salgados to pay the bank P1,300,000 plus interest and penalties, bank charges and
attorney's fees as stipulated in the promissory note, Exhibit A. Judge Pineda denied the Salgados'
motion for reconsideration. (The Salgados appealed to the Intermediate Appellate Court, AC-G.R.
No. 00119.)
I am of the opinion that the writ of attachment was properly issued. It is supported by a sufficient
bond. The bank posted a bond of P1,510,905.96. The 1981 resolution dismissing the instant appeal
should be reaffirmed.
Makasiar, Actg. C.J., dissent.

Footnotes

1. 7 C.J.S. 190.
2. Blankenship vs. Myers, 54 P. 2d 314, 316; 97 Idaho 356 (1975).
3. Giandeini vs. Ramirez, 54 Pacific Reporter (2d) 91-92.
4. 90 Phil. 809.
5. Guzman vs. Catolico, 65 Phil. 257; Salas vs. Adil, 90 SCRA 125.


THIRD DIVISION

PHILIPPINE COMMERCIAL G.R. No. 175587
INTERNATIONAL BANK,
Petitioner, Present:

Ynares-Santiago, J.
(Chairperson),
- versus - Austria-Martinez,
Chico-Nazario,
Nachura, and
Reyes, JJ.
JOSEPH ANTHONY M. ALEJANDRO,
Respondent. Promulgated:

September 21, 2007
x ---------------------------------------------------------------------------------------- x

DECI SI ON


This petition for review assails the May 31, 2006 Decision
115[1]
of the Court of Appeals in
CA-G.R. CV No. 78200 affirming the August 30, 2000 Decision
116[2]
Makati, which granted respondent Joseph Anthony M. Alejandros claim for damages arising from
petitioner Philippine Commercial International Banks (PCIB) invalid garnishment of respondents
deposits.

On October 23, 1997, petitioner filed against respondent a complaint
117[3]
for sum of
money with prayer for the issuance of a writ of preliminary attachment. Said complaint alleged that
on September 10, 1997, respondent, a resident of Hong Kong, executed in favor of petitioner a
promissory note obligating himself to pay P249,828,588.90 plus interest. In view of the fluctuations
in the foreign exchange rates which resulted in the insufficiency of the deposits assigned by
respondent as security for the loan, petitioner requested the latter to put up additional security for the
loan. Respondent, however, sought a reconsideration of said request pointing out petitioners
alleged mishandling of his account due to its failure to carry out his instruction to close his account
as early as April 1997, when the prevailing rate of exchange of the US Dollar to Japanese yen was
US$1.00:JPY127.50.
118[4]
It appears that the amount of P249,828,588.90 was the consolidated

115[1]
Rollo, pp. 199-220. Penned by Associate Justice Magdangal M. De Leon
and concurred in by Associate Justices Conrado M. Vasquez, Jr. and Mariano C.
Del Castillo.
116[2]
Record on appeal, vol. 1, pp. 357-365.
117[3]
Id. at 13-16.
118[4]
Id. at 40.
amount of a series of yen loans granted by petitioner to respondent during the months of February
and April 1997.
119[5]

In praying for the issuance of a writ of preliminary attachment under Section 1
paragraphs (e) and (f) of Rule 57 of the Rules of Court, petitioner alleged that (1) respondent
fraudulently withdrew his unassigned deposits notwithstanding his verbal promise to PCIB Assistant
Vice President Corazon B. Nepomuceno not to withdraw the same prior to their assignment as
security for the loan; and (2) that respondent is not a resident of the Philippines. The application for
the issuance of a writ was supported with the affidavit of Nepomuceno.
120[6]

On October 24, 1997, the trial court granted the application and issued the writ ex
parte
121[7]
after petitioner posted a bond in the amount of P18,798,734.69, issued by Prudential
Guarantee & Assurance Inc., under Bond No. HO-46764-97. On the same date, the bank deposits of
respondent with Rizal Commercial Banking Corporation (RCBC) were garnished. On October 27,
1997, respondent, through counsel, filed a manifestation informing the court that he is voluntarily
submitting to its jurisdiction.
122[8]

Subsequently, respondent filed a motion to quash
123[9]
the writ contending that the
withdrawal of his unassigned deposits was not fraudulent as it was approved by petitioner. He also
alleged that petitioner knew that he maintains a permanent residence at Calle Victoria, Ciudad
Regina, Batasan Hills, Quezon City, and an office address in Makati City at the Law Firm Romulo
Mabanta Buenaventura Sayoc & De los Angeles,
124[10]
where he is a partner. In both addresses,
petitioner regularly communicated with him through its representatives. Respondent added that he is
the managing partner of the Hong Kong branch of said Law Firm; that his stay in Hong Kong is only
temporary; and that he frequently travels back to the Philippines.

On December 24, 1997, the trial court issued an order quashing the writ and holding that
the withdrawal of respondents unassigned deposits was not intended to defraud petitioner. It also
found that the representatives of petitioner personally transacted with respondent through his home
address in Quezon City and/or his office in Makati City. It thus concluded that petitioner
misrepresented and suppressed the facts regarding respondents residence considering that it has
personal and official knowledge that for purposes of service of summons, respondents residence and
office addresses are located in the Philippines. The dispositive portion of the courts decision is as
follows:

WHEREFORE, the URGENT MOTION TO QUASH, being
meritorious, is hereby GRANTED, and the ORDER of 24 October 1997 is
hereby RECONSIDERED and SET ASIDE and the WRIT OF attachment of
the same is hereby DISCHARGED.

SO ORDERED.
125[11]

With the denial
126[12]
of petitioners motion for reconsideration, it elevated the case to the
Court of Appeals (CA-G.R. SP No. 50748) via a petition for certiorari. On May 10, 1999, the
petition was dismissed for failure to prove that the trial court abused its discretion in issuing the

119[5]
Id. at 34-35.
120[6]
Id. at 17.
121[7]
Id. at 22-28.
122[8]
TSN, vol. II, set I, pp. 633-639.
123[9]
124[10]
Also spelled as Delos Angeles in some parts of the records and rollo.
125[11]
Id. at 67-69. Penned by Judge Fernando V. Gorospe, Jr.
126[12]
Id. at 128.
aforesaid order.
127[13]
Petitioner filed a motion for reconsideration but was denied on October 28,
1999.
128[14]
On petition with this Court, the case was dismissed for late filing in a minute resolution
(G.R. No. 140605) dated January 19, 2000.
129[15]
Petitioner filed a motion for reconsideration but
was likewise denied with finality on March 6, 2000.
130[16]

Meanwhile, on May 20, 1998, respondent filed a claim for damages in the amount of P25
Million
131[17]
on the attachment bond (posted by Prudential Guarantee & Assurance, Inc., under
JCL(4) No. 01081, Bond No. HO-46764-97) on account of the wrongful garnishment of his deposits.
He presented evidence showing that his P150,000.00 RCBC check payable to his counsel as
attorneys fees, was dishonored by reason of the garnishment of his deposits. He also testified that
he is a graduate of the Ateneo de Manila University in 1982 with a double degree of Economics and
Management Engineering and of the University of the Philippines in 1987 with the degree of
Bachelor of Laws. Respondent likewise presented witnesses to prove that he is a well known lawyer
in the business community both in the Philippines and in Hong Kong.
132[18]
For its part, the lone
witness presented by petitioner was Nepomuceno who claimed that she acted in good faith in
alleging that respondent is a resident of Hong Kong.
133[19]

On August 30, 2000, the trial court awarded damages to respondent in the amount of P25
Million without specifying the basis thereof, thus:

WHEREFORE, premises above considered, and defendant having
duly established his claim in the amount of P25,000,000.00, judgment is
hereby rendered ordering Prudential Guarantee & [Assurance] Co., which is
solidarily liable with plaintiff to pay defendant the full amount of bond under
Prudential Guarantee & Assurance, Inc. JCL(4) No. 01081, [Bond No. HO-
46764-97], dated 24 October 1997 in the amount of P18,798,734.69. And,
considering that the amount of the bond is insufficient to fully satisfy the
award for damages, plaintiff is hereby ordered to pay defendant the amount of
P6,201,265.31.

SO ORDERED.
134[20]

The trial court denied petitioners motion for reconsideration on October 24, 2000.
135[21]

Petitioner elevated the case to the Court of Appeals which affirmed the findings of the
trial court. It held that in claiming that respondent was not a resident of the Philippines, petitioner
cannot be said to have been in good faith considering that its knowledge of respondents Philippine
residence and office address goes into the very issue of the trial courts jurisdiction which would
have been defective had respondent not voluntarily appeared before it.

The Court of Appeals, however, reduced the amount of damages awarded to petitioner
and specified their basis. The dispositive portion of the decision of the Court of Appeals states:

127[13]
Rollo, pp. 328-334. The Decision was penned by Associate Justice Hector
L. Hofilea and concurred in by Associate Justices Bernardo P. Abesamis and
Presbitero J. Velasco, Jr. (now a member of this Court).
128[14]
Id. at 335-336.
129[15]
Id. at 337.
130[16]
Id. at 338.
131[17]
132[18]
Id. at 359-361.
133[19]
Id. at 362.
134[20]
Id. at 365. Penned by Judge Fernando V. Gorospe, Jr.
135[21]
Id. at 392-394.

WHEREFORE, the appeal is PARTIALLY GRANTED and the
decision appealed from is hereby MODIFIED. The award of damages in the
amount of P25,000,000.00 is deleted. In lieu thereof, Prudential Guarantee &
[Assurance, Inc.], which is solidarily liable with appellant [herein petitioner],
is ORDERED to pay appellee [herein respondent] P2,000,000.00 as nominal
damages; P5,000,000.00 as moral damages; and P1,000,000.00 as attorneys
fees, to be satisfied against the attachment bond under Prudential Guarantee &
Assurance, Inc. JCL (4) No. 01081.

SO ORDERED.
136[22]

Both parties moved for reconsideration. On November 21, 2006, the Court of Appeals
denied petitioners motion for reconsideration but granted that of respondents by ordering petitioner
to pay additional P5Million as exemplary damages.
137[23]

Hence, the instant petition.

At the outset, it must be noted that the ruling of the trial court that petitioner is not
entitled to a writ of attachment because respondent is a resident of the Philippines and that his act of
withdrawing his deposits with petitioner was without intent to defraud, can no longer be passed upon
by this Court. More importantly, the conclusions of the court that petitioner bank misrepresented
that respondent was residing out of the Philippines and suppressed the fact that respondent has a
permanent residence in Metro Manila where he may be served with summons, are now beyond the
power of this Court to review having been the subject of a final and executory order. Said findings
were sustained by the Court of Appeals in CA-G.R. SP No. 50784 and by this Court in G.R. No.
140605. The rule on conclusiveness of judgment, which obtains under the premises, precludes the
relitigation of a particular fact or issue in another action between the same parties even if based on a
different claim or cause of action. The judgment in the prior action operates as estoppel as to those
matters in issue or points controverted, upon the determination of which the finding or judgment was
rendered. The previous judgment is conclusive in the second case, as to those matters actually and
directly controverted and determined.
138[24]
Hence, the issues of misrepresentation by petitioner and
the residence of respondent for purposes of service of summons can no longer be questioned by
petitioner in this case.

The core issue for resolution is whether petitioner bank is liable for damages for the
improper issuance of the writ of attachment against respondent.

We rule in the affirmative.

Notwithstanding the final judgment that petitioner is guilty of misrepresentation and
suppression of a material fact, the latter contends that it acted in good faith. Petitioner also contends
that even if respondent is considered a resident of the Philippines, attachment is still proper under
Section 1, paragraph (f), Rule 57 of the Rules of Court since he (respondent) is a resident who is
temporarily out of the Philippines upon whom service of summons may be effected by publication.

Petitioners contentions are without merit.

While the final order of the trial court which quashed the writ did not categorically use
the word bad faith in characterizing the representations of petitioner, the tenor of said order

136[22]
Rollo, p. 220.
137[23]
Id. at 223-225.
138[24]
Tan v. Court of Appeals, G.R. No. 142401, August 20, 2001, 363 SCRA
444, 445 and 449-450.
evidently considers the latter to have acted in bad faith by resorting to a deliberate strategy to
mislead the court. Thus

In the hearings of the motion, and oral arguments of counsels
before the Court, it appears that plaintiff BANK through its contracting
officers Vice President CORAZON B. NEPOMUCENO and Executive Vice
President JOSE RAMON F. REVILLA, personally transacted with defendant
mainly through defendants permanent residence in METRO-MANILA, either
in defendants home address in Quezon City or his main business address at
the ROMULO MABANTA BUENAVENTURA SAYOC & DELOS
ANGELES in MAKATI and while at times follow ups were made through
defendants temporary home and business addresses in Hongkong. It is
therefore clear that plaintiff could not deny their personal and official
knowledge that defendants permanent and official residence for purposes of
service of summons is in the Philippines. In fact, this finding is further
confirmed by the letter of Mr. JOHN GOKONGWEI, JR. Chairman,
Executive Committee of plaintiff BANK, in his letter dated 6 October 1997 on
the subject loan to defendant of the same law firm was addressed to the
ROMULO LAW FIRM in MAKATI.

[Anent the] second ground of attachment x x x [t]he Court finds
that the amount withdrawn was not part of defendants peso deposits assigned
with the bank to secure the loan and as proof that the withdrawal was not
intended to defraud plaintiff as creditor is that plaintiff approved and allowed
said withdrawals. It is even noted that when the Court granted the prayer for
attachment it was mainly on the first ground under Section 1(f) of Rule 57 of
the 1997 Rules of Civil Procedure, that defendant resides out of the
Philippines.

On the above findings, it is obvious that plaintiff already knew
from the beginning the deficiency of its second ground for attachment [i.e.,]
disposing properties with intent to defraud his creditors, and therefore plaintiff
had to resort to this misrepresentation that defendant was residing out of the
Philippines and suppressed the fact that defendants permanent residence is in
METRO MANILA where he could be served with summons.

On the above findings, and mainly on the misrepresentations made
by plaintiff on the grounds for the issuance of the attachment in the verified
complaint, the Court concludes that defendant has duly proven its grounds in
the MOTION and that plaintiff is not entitled to the attachment.
139[25]

Petitioner is therefore barred by the principle of conclusiveness of judgment from again
invoking good faith in the application for the issuance of the writ. Similarly, in the case of Hanil
Development Co., Ltd. v. Court of Appeals,
140[26]
the Court debunked the claim of good faith by a
party who maliciously sought the issuance of a writ of attachment, the bad faith of said party having
been previously determined in a final decision which voided the assailed writ. Thus

Apropos the Application for Judgment on the Attachment Bond,
Escobar claims in its petition that the award of attorneys fees and injunction
bond premium in favor of Hanil is [contrary] to law and jurisprudence. It
contends that no malice or bad faith may be imputed to it in procuring the
writ.

139[25]
Record on appeal, Vol. II, pp. 67-68.
140[26]
G.R. Nos. 113176 & 113342, July 30, 2001, 362 SCRA 1, 15.

Escobars protestation is now too late in the day. The question of
the illegality of the attachment and Escobars bad faith in obtaining it has long
been settled in one of the earlier incidents of this case. The Court of Appeals,
in its decision rendered on February 3, 1983 in C.A.-G.R. No. SP-14512,
voided the challenged writ, having been issued with grave abuse of discretion.
Escobars bad faith in procuring the writ cannot be doubted. Its Petition for
the Issuance of Preliminary Attachment made such damning allegations that:
Hanil was already able to secure a complete release of its final collection from
the MPWH; it has moved out some of its heavy equipments for unknown
destination, and it may leave the country anytime. Worse, its Ex Parte Motion
to Resolve Petition alleged that after personal verification by (Escobar) of
(Hanils) equipment in Cagayan de Oro City, it appears that the equipments
were no longer existing from their compound. All these allegations of
Escobar were found to be totally baseless and untrue.

Even assuming that the trial court did not make a categorical pronouncement of
misrepresentation and suppression of material facts on the part of petitioner, the factual backdrop of
this case does not support petitioners claim of good faith. The facts and circumstances omitted are
highly material and relevant to the grant or denial of writ of attachment applied for.

Finally, there is no merit in petitioners contention that respondent can be considered a
resident who is temporarily out of the Philippines upon whom service of summons may be effected
by publication, and therefore qualifies as among those against whom a writ of attachment may be
issued under Section 1, paragraph (f), Rule 57 of the Rules of Court which provides:

(f) In an action against a party x x x on whom summons
may be served by publication.

In so arguing, petitioner attempts to give the impression that although it erroneously
invoked the ground that respondent does not reside in the Philippines, it should not be made to pay
damages because it is in fact entitled to a writ of attachment had it invoked the proper ground under
Rule 57. However, even on this alternative ground, petitioner is still not entitled to the issuance of a
writ of attachment.

The circumstances under which a writ of preliminary attachment may be issued are set
forth in Section 1, Rule 57 of the Rules of Court, to wit:


(a) In an action for the recovery of a specified amount of
money or damages, other than moral and exemplary, on a cause of action
arising from law, contract, quasi-contract, delict or quasi-delict against a party
who is about to depart from the Philippines with intent to defraud his
creditors;

(b) In 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;

(c) In an action to recover the possession of personal
property unjustly or fraudulently taken, detained, or converted, when the
property, or any part thereof, has been concealed, removed, or disposed of to
prevent its being found or taken by the applicant or an authorized person;

(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 the performance thereof;

(e) In an action against a party who has removed or
disposed of his property, or is about to do so, with intent to defraud his
creditors;

(f) In an action against a party who resides out of the
Philippines, or on whom summons may be served by publication.

The purposes of preliminary attachment are: (1) to seize the property of the debtor in
advance of final judgment and to hold it for purposes of satisfying said judgment, as in the grounds
stated in paragraphs (a) to (e) of Section 1, Rule 57 of the Rules of Court; or (2) to acquire
jurisdiction over the action by actual or constructive seizure of the property in those instances
where personal or substituted service of summons on the defendant cannot be effected, as in
paragraph (f) of the same provision.
141[27]

Corollarily, in actions in personam, such as the instant case for collection of sum of
money,
142[28]
summons must be served by personal or substituted service, otherwise the court will not
acquire jurisdiction over the defendant. In case the defendant does not reside and is not found in the
Philippines (and hence personal and substituted service cannot be effected), the remedy of the
plaintiff in order for the court to acquire jurisdiction to try the case is to convert the action into a
proceeding in rem or quasi in rem by attaching the property of the defendant.
143[29]
Thus, in order to
acquire jurisdiction in actions in personam where defendant resides out of and is not found in the
Philippines, it becomes a matter of course for the court to convert the action into a proceeding in rem
or quasi in rem by attaching the defendants property. The service of summons in this case (which
may be by publication coupled with the sending by registered mail of the copy of the summons and
the court order to the last known address of the defendant), is no longer for the purpose of acquiring
jurisdiction but for compliance with the requirements of due process.
144[30]

However, where the defendant is a resident who is temporarily out of the Philippines,
attachment of his/her property in an action in personam, is not always necessary in order for the
court to acquire jurisdiction to hear the case.

Section 16, Rule 14 of the Rules of Court reads:

Sec. 16. Residents temporarily out of the Philippines. When an
action is commenced against a defendant who ordinarily resides within the

141[27]
Herrera, Remedial Law, vol. III, pp. 2 and 8; Regalado, Remedial Law
Compendium, vol. I, ninth revised edition, p. 678.
142[28]
Obaa v. Court of Appeals, G.R. No. 78635, April 27, 1989, 172 SCRA
866, 874.
143[29]
Consolidated Plywood Industries, Inc. v. Breva, G.R. No. L-82811,
October 18, 1988, 166 SCRA 589, 593-594; Obaa v. Court of Appeals, supra
at 874.
144[30]
Sahagun v. Court of Appeals, G.R. No. 78328, June 3, 1991, 198 SCRA
44, 54.
Philippines, but who is temporarily out of it, service may, by leave of court, be
also effected out of the Philippines, as under the preceding section.

The preceding section referred to in the above provision is Section 15 which provides for
extraterritorial service (a) personal service out of the Philippines, (b) publication coupled with
the sending by registered mail of the copy of the summons and the court order to the last known
address of the defendant; or (c) in any other manner which the court may deem sufficient.

In Montalban v. Maximo,
145[31]
however, the Court held that substituted service of
summons (under the present Section 7, Rule 14 of the Rules of Court) is the normal mode of service
of summons that will confer jurisdiction on the court over the person of residents temporarily out of
the Philippines. Meaning, service of summons may be effected by (a) leaving copies of the summons
at the defendants residence with some person of suitable discretion residing therein, or (b) by
leaving copies at the defendants office or regular place of business with some competent person in
charge thereof.
146[32]
Hence, the court may acquire jurisdiction over an action in personam by mere
substituted service without need of attaching the property of the defendant.

The rationale in providing for substituted service as the normal mode of service for
residents temporarily out of the Philippines, was expounded in Montalban v. Maximo,
147[33]
in this
wise:

A man temporarily absent from this country leaves a definite place of
residence, a dwelling where he lives, a local base, so to speak, to which any
inquiry about him may be directed and where he is bound to return. Where
one temporarily absents himself, he leaves his affairs in the hands of one who
may be reasonably expected to act in his place and stead; to do all that is
necessary to protect his interests; and to communicate with him from time to
time any incident of importance that may affect him or his business or his
affairs. It is usual for such a man to leave at his home or with his business
associates information as to where he may be contacted in the event a question
that affects him crops up.

Thus, in actions in personam against residents temporarily out of the Philippines, the
court need not always attach the defendants property in order to have authority to try the case.

145[31]
131 Phil. 154, 165-166 (1968).
146[32]
The pronouncement of the Court in Castillo v. Court of First Instance of
Bulacan, Branch IV (G.R. No. L-55869, February 20, 1984, 127 SCRA 632)
that with respect to residents temporarily out of the Philippines, non-compliance
with the modes of service under Section 17 (now Section 15, i.e., service of
summons out of the Philippines by personal service, or by publication in a
newspaper of general circulation), is a denial of due process and renders the
proceedings void, does not mean that said modes of service are exclusive.
Substituted service of summons is still the normal mode of service for residents
temporarily out of the Philippines. The declaration of nullity of the proceedings
in the said case was by reason of the defective substituted service of summons to
a person not authorized to receive the same being a mere overseer of the lessee
in the conjugal property of the defendant, and not because substituted service of
summons per se is not among the valid modes of service upon a resident
temporarily out of the country.
147[33]
Supra at 164-165.
Where the plaintiff seeks to attach the defendants property and to resort to the concomitant service
of summons by publication, the same must be with prior leave, precisely because, if the sole
purpose of the attachment is for the court to acquire jurisdiction, the latter must determine
whether from the allegations in the complaint, substituted service (to persons of suitable discretion at
the defendants residence or to a competent person in charge of his office or regular place of
business) will suffice, or whether there is a need to attach the property of the defendant and resort to
service of summons by publication in order for the court to acquire jurisdiction over the case and to
comply with the requirements of due process.

In the instant case, it must be stressed that the writ was issued by the trial court mainly on
the representation of petitioner that respondent is not a resident of the Philippines.
148[34]
Obviously,
the trial courts issuance of the writ was for the sole purpose of acquiring jurisdiction to hear and
decide the case. Had the allegations in the complaint disclosed that respondent has a residence in
Quezon City and an office in Makati City, the trial court, if only for the purpose of acquiring
jurisdiction, could have served summons by substituted service on the said addresses, instead of
attaching the property of the defendant. The rules on the application of a writ of attachment must be
strictly construed in favor of the defendant. For attachment is harsh, extraordinary, and summary in
nature; it is a rigorous remedy which exposes the debtor to humiliation and annoyance.
149[35]
It
should be resorted to only when necessary and as a last remedy.

It is clear from the foregoing that even on the allegation that respondent is a resident
temporarily out of the Philippines, petitioner is still not entitled to a writ of attachment because the
trial court could acquire jurisdiction over the case by substituted service instead of attaching the
property of the defendant. The misrepresentation of petitioner that respondent does not reside in the
Philippines and its omission of his local addresses was thus a deliberate move to ensure that the
application for the writ will be granted.

In light of the foregoing, the Court of Appeals properly sustained the finding of the trial
court that petitioner is liable for damages for the wrongful issuance of a writ of attachment against
respondent.

Anent the actual damages, the Court of Appeals is correct in not awarding the same
inasmuch as the respondent failed to establish the amount garnished by petitioner. It is a well settled
rule that one who has been injured by a wrongful attachment can recover damages for the actual loss
resulting therefrom. But for such losses to be recoverable, they must constitute actual damages duly
established by competent proofs, which are, however, wanting in the present case.
150[36]

Nevertheless, nominal damages may be awarded to a plaintiff whose right has been
violated or invaded by the defendant, for the purpose of vindicating or recognizing that right, and not
for indemnifying the plaintiff for any loss suffered by him. Its award is thus not for the purpose of
indemnification for a loss but for the recognition and vindication of a right. Indeed, nominal
damages are damages in name only and not in fact.
151[37]
They are recoverable where some injury

148[34]
The pertinent portion of the December 24, 1997 Order of the trial court,
provides:
It is even noted that when the Court granted the prayer for attachment it was
mainly on the first ground under Section 1(f) of Rule 57 of the 1997 Rules of
Civil Procedure, that defendant resides out of the Philippines.
149[35]
Jardine-Manila Finance, Inc. v. Court of Appeals, G.R. No. 55272, April
10, 1989, 171 SCRA 636, 645.
150[36]
Philippine Commercial International Bank v. Intermediate Appellate
Court, G.R. No. 73610, April 19, 1991, 196 SCRA 29, 36-37.
151[37]
Almeda v. Cario, G.R. No. 152143, January 13, 2003, 395 SCRA 144,
149-150.
has been done but the pecuniary value of the damage is not shown by evidence and are thus subject
to the discretion of the court according to the circumstances of the case.
152[38]

In this case, the award of nominal damages is proper considering that the right of
respondent to use his money has been violated by its garnishment. The amount of nominal damages
must, however, be reduced from P2 million to P50,000.00 considering the short period of 2 months
during which the writ was in effect as well as the lack of evidence as to the amount garnished.

Likewise, the award of attorneys fees is proper when a party is compelled to incur
expenses to lift a wrongfully issued writ of attachment. The basis of the award thereof is also the
amount of money garnished, and the length of time respondents have been deprived of the use of
their money by reason of the wrongful attachment.
153[39]
It may also be based upon (1) the amount
and the character of the services rendered; (2) the labor, time and trouble involved; (3) the nature and
importance of the litigation and business in which the services were rendered; (4) the responsibility
imposed; (5) the amount of money and the value of the property affected by the controversy or
involved in the employment; (6) the skill and the experience called for in the performance of the
services; (7) the professional character and the social standing of the attorney; (8) the results secured,
it being a recognized rule that an attorney may properly charge a much larger fee when it is
contingent than when it is not.
154[40]

All the aforementioned weighed, and considering the short period of time it took to have
the writ lifted, the favorable decisions of the courts below, the absence of evidence as to the
professional character and the social standing of the attorney handling the case and the amount
garnished, the award of attorneys fees should be fixed not at P1 Million, but only at P200,000.00.

The courts below correctly awarded moral damages on account of petitioners
misrepresentation and bad faith; however, we find the award in the amount of P5 Million excessive.
Moral damages are to be fixed upon the discretion of the court taking into consideration the
educational, social and financial standing of the parties.
155[41]
Moral damages are not intended to
enrich a complainant at the expense of a defendant.
156[42]
They are awarded only to enable the
injured party to obtain means, diversion or amusements that will serve to obviate the moral suffering
he has undergone, by reason of petitioners culpable action. Moral damages must be commensurate
with the loss or injury suffered. Hence, the award of moral damages is reduced to P500,000.00.

152[38]
Robes-Francisco Realty & Development Corporation v. Court of First
Instance of Rizal, (Branch XXXIV), G.R. No. L-41093, October 30, 1978, 86
SCRA 59, 64; Pedrosa v. Court of Appeals, G.R. No. 118680, March 5, 2001,
353 SCRA 620, 630-631.
153[39]
Carlos v. Sandoval, G.R. No. 135830, September 30, 2005, 471 SCRA
266, 300.
154[40]
Prudential Bank v. Court of Appeals, G.R. No. 125536, March 16, 2000,
328 SCRA 264, 272.
155[41]
Philippine Commercial International Bank v. Intermediate Appellate
Court, supra at 38-39.
156[42]
Filinvest Credit Coporation v. Intermediate Appellate Court, G.R. No. L-
65935, September 30, 1988, 166 SCRA 155, 165-166.
Considering petitioners bad faith in securing the writ of attachment, we sustain the
award of exemplary damages by way of example or correction for public good. This should deter
parties in litigations from resorting to baseless and preposterous allegations to obtain writs of
attachments. While as a general rule, the liability on the attachment bond is limited to actual (or in
some cases, temperate or nominal) damages, exemplary damages may be recovered where the
attachment was established to be maliciously sued out.
157[43]
Nevertheless, the award of exemplary
damages in this case should be reduced from P5M to P500,000.00.

Finally, contrary to the claim of petitioner, the instant case for damages by reason of the
invalid issuance of the writ, survives the dismissal of the main case for sum of money. Suffice it to
state that the claim for damages arising from such wrongful attachment may arise and be decided
separately from the merits of the main action.
158[44]

WHEREFORE, the petition is PARTIALLY GRANTED. The May 31, 2006 Decision
of the Court of Appeals in CA-G.R. CV No. 78200 is AFFIRMED with MODIFICATIONS. As
modified, petitioner Philippine Commercial International Bank is ordered to pay respondent Joseph
Anthony M. Alejandro the following amounts: P50,000.00 as nominal damages, P200,000.00 as
attorneys fees; and P500,000.00 as moral damages, and P500,000.00 as exemplary damages, to be
satisfied against the attachment bond issued by Prudential Guarantee & Assurance Inc.,
159[45]
under
JCL (4) No. 01081, Bond No. HO-46764-97.


157[43]
Hanil Development Co., Ltd. v. Court of Appeals, supra note 26 at 16.
158[44]
Carlos v. Sandoval, supra at 290-291.
159[45]
The surety, Prudential Guarantee & Assurance, Inc., was duly notified of
respondents application for damages (Record on appeal, p. 78) pursuant to
Section 20, Rule 57 of the Rules of Court.
SO ORDERED.

FIRST DIVISION

REPUBLIC OF THE PHILIPPINES, G.R. No. 167741
Petitioner,
Present:

PUNO, C.J., Chairperson,
SANDOVAL-
GUTIERREZ,
*

- v e r s u s - CORONA,
AZCUNA and
GARCIA, JJ.

MAJ. GEN. CARLOS FLORES
GARCIA, CLARITA DEPAKAKIBO
GARCIA, IAN CARL DEPAKAKIBO
GARCIA, JUAN PAULO
DEPAKAKIBO GARCIA, TIMOTHY
DEPAKAKIBO GARCIA and
THE SANDIGANBAYAN
(FOURTH DIVISION),
Respondents. Promulgated:

July 12, 2007

x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x

D E C I S I O N
CORONA, J .:

This petition for certiorari
160[1]
assails the January 14, 2005 and March 2, 2005
resolutions
161[2]
of the Fourth Division of the Sandiganbayan in Civil Case No. 0193 entitled
Republic of the Philippines v. Maj. Gen. Carlos Flores Garcia, Clarita Depakakibo Garcia, Ian Carl
Depakakibo Garcia, Juan Paulo Depakakibo Garcia and Timothy Mark Depakakibo Garcia.

Civil Case No. 0193 was a petition for forfeiture of unlawfully acquired properties, with a
verified urgent ex-parte application for the issuance of a writ of preliminary attachment, filed by the
Republic of the Philippines against Maj. Gen. Carlos F. Garcia, his wife
162[3]
and children
163[4]
in the
Sandiganbayan on October 27, 2004. In praying for the issuance of a writ of preliminary attachment,
the Republic maintained that, as a sovereign political entity, it was exempt from filing the required
attachment bond.

On October 29, 2004, the Sandiganbayan issued a resolution ordering the issuance of a
writ of preliminary attachment against the properties of the Garcias upon the filing by the Republic

*
On leave.
160[1]
Under Rule 65 of the Rules of Court.
161[2]
Both resolutions were penned by Associate Justice Jose R. Hernandez
with Associate Justices Gregory S. Ong and Rodolfo A. Ponferrada
concurring. Rollo, pp. 25-38, 39-50.
162[3]
Respondent Clarita D. Garcia.
163[4]
Respondents Ian Carl D. Garcia, Juan Paulo D. Garcia and Timothy
Mark D. Garcia.
of a P1 million attachment bond.
164[5]
On November 2, 2004, the Republic posted the required
attachment bond to avoid any delay in the issuance of the writ as well as to promptly protect and
secure its claim.

On December 7, 2004, the Republic filed a motion for partial reconsideration of the
October 29, 2004 resolution claiming that it was exempt from filing an attachment bond and praying
for the release thereof.

In a resolution dated January 14, 2005, the Sandiganbayan ruled that there was nothing in
the Rules of Court that exempted the Republic from filing an attachment bond. It reexamined
Tolentino v. Carlos
165[6]
which was invoked by the Republic to justify its claimed exemption. That
case was decided under the old Code of Civil Procedure enacted more than a century ago.

The Sandiganbayan denied the Republics motion. Reconsideration was also denied in a
resolution dated March 2, 2005.

As already stated, these two resolutions (January 14, 2005 and March 2, 2005) are the
subject of the present petition.

Did the Sandiganbayan commit grave abuse of discretion when it rejected the Republics
claim of exemption from the filing of an attachment bond? Yes.

Sections 3 and 4, Rule 57 of the Rules of Court provide:

Sec. 3. Affidavit and bond required. An order of attachment
shall be granted only when it appears by the affidavit of the applicant, or of
some other person who personally knows the facts, that a sufficient cause of
action exists, that the case is one of those mentioned in section 1 hereof, that
there is no other sufficient security for the claim sought to be enforced by the
action, and that the amount due to applicant, or the value of the property the
possession of which he is entitled to recover, is as much as the sum for which
the order is granted above all legal counterclaims. The affidavit, and the
bond required by the next succeeding section, must be duly filed with the
court before the order issues.

Sec. 4. Condition of applicants bond. The party applying for
the order must thereafter give a bond executed to the adverse party in
the amount fixed by the court in its order granting the issuance of the
writ, conditioned that the latter will pay all the costs which may be adjudged
to the adverse party and all damages which he may sustain by reason of the
attachment, if the court shall finally adjudge that the applicant was not
entitled thereto. (emphasis supplied)

Under these provisions, before a writ of attachment may issue, a bond must first be filed
to answer for all costs which may be adjudged to the adverse party and for the damages he may
sustain by reason of the attachment. However, this rule does not cover the State. In Tolentino,
166[7]

this Court declared that the State as represented by the government is exempt from filing an
attachment bond on the theory that it is always solvent.

2. Section 427 of the Code of Civil Procedure provides that before
the issuance of a writ of attachment, the applicant therefor or any person in

164[5]
Rollo, pp. 100-104.
165[6]
66 Phil. 140 (1938).
166[7]
Id.
his name, should file a bond in favor of the defendant for an amount not less
than P400 nor more than the amount of the claim, answerable for damages in
case it is shown that the attachment was obtained illegally or without
sufficient cause; but in the case at bar the one who applied for and
obtained the attachment is the Commonwealth of the Philippines, as
plaintiff, and under the theory that the State is always solvent it was not
bound to post the required bond and the respondent judge did not exceed
his jurisdiction in exempting it from such requirement. x x x
167[8]
(emphasis
supplied)

In other words, the issuance of a writ of preliminary attachment is conditioned on the filing of a
bond unless the applicant is the State. Where the State is the applicant, the filing of the attachment
bond is excused.
168[9]

The attachment bond is contingent on and answerable for all costs which may be
adjudged to the adverse party and all damages which he may sustain by reason of the attachment
should the court finally rule that the applicant is not entitled to the writ of attachment. Thus, it is a
security for the payment of the costs and damages to which the adverse party may be entitled in case
there is a subsequent finding that the applicant is not entitled to the writ. The Republic of the
Philippines need not give this security as it is presumed to be always solvent and able to meet its
obligations.

The Sandiganbayan thus erred when it disregarded the foregoing presumption and instead
ruled that the Republic should file an attachment bond. The error was not simply an error of
judgment but grave abuse of discretion.

There is grave abuse of discretion when an act is done contrary to the Constitution, the
law or jurisprudence.
169[10]
Here, the Sandiganbayans January 14, 2005 resolution was clearly
contrary to Tolentino.

Worse, the Sandiganbayan transgressed the Constitution and arrogated upon itself a
power that it did not by law possess. All courts must take their bearings from the decisions and
rulings of this Court. Tolentino has not been superseded or reversed. Thus, it is existing
jurisprudence and continues to form an important part of our legal system.
170[11]
Surprisingly, the
Sandiganbayan declared that Tolentino need(ed) to be carefully reexamined in the light of the
changes that the rule on attachment ha(d) undergone through the years.
171[12]
According to the court
a quo:

[Tolentino] was decided by the Supreme Court employing the old
Code of Civil Procedure (Act No. 190) which was enacted by the Philippine
Commission on August 7, 1901 or more than a century ago.

That was then, this is now. The provisions of the old Code of
Civil Procedure governing attachment have been substantially modified in

167[8]
Id.
168[9]
Martin, Ruperto, RULES OF COURT IN THE PHILIPPINES, volume
3, 1969 Second Edition, Philippine Graphic Arts Publications
Company, p. 17; Moran, Manuel, COMMENTS ON THE RULES OF
COURT, volume III, 1997 Edition, Rex Bookstore, p. 27.
169[10]
Information Technology Foundation of the Philippines v. Commission
on Elections, G.R. No. 159139, 13 January 2004, 419 SCRA 141.
170[11]
See Article 8, CIVIL CODE.
171[12]
Emphasis supplied.
the subsequent Rules of Court. In fact, Rule 57 of the present 1997 Rules of
Civil Procedure is an expanded modification of the provisions of the old
Code of Civil Procedure governing attachment. Unlike the old Code of Civil
Procedure, the present 1997 Rules of Civil Procedure is noticeably explicit
in its requirement that the party applying for an order of attachment should
file a bond.

On this, Article VIII, Section 4(3) of the Constitution provides:

(3) Cases or matters heard by a division shall be decided or resolved with the
concurrence of majority of the Members who actually took part in the
deliberations on the issues in the case and voted thereon, and in no case
without the concurrence of at least three of such Members. When the
required number is not obtained, the case shall be decided en banc;
Provided, that no doctrine or principle of law laid down by the court in a
decision rendered en banc or in division may be modified or reversed
except by the court sitting en banc. (emphasis supplied)

The Constitution mandates that only this Court sitting en banc may modify or reverse a
doctrine or principle of law laid down by the Court in a decision rendered en banc or in division.
Any court, the Sandiganbayan included, which renders a decision in violation of this constitutional
precept exceeds its jurisdiction.

Therefore, the Sandiganbayan could not have validly reexamined, much less reversed,
Tolentino. By doing something it could not validly do, the Sandiganbayan acted ultra vires and
committed grave abuse of discretion.

The fact was, the revisions of the Rules of Court on attachment, particularly those
pertaining to the filing of an attachment bond, did not quash Tolentino.

Tolentino applied Sec. 247 of Act No. 190 which provided:

Sec. 247. Obligation for damages in case of attachment.
Before the order is made, the party applying for it, or some person on his
behalf, must execute to the defendant an obligation in an amount to be
fixed by the judge, or justice of the peace, and with sufficient surety to
be approved by him, which obligation shall be for a sum not less than two
hundred dollars, and not exceeding the amount claimed by the plaintiff, that
the plaintiff will pay all the costs which may be adjudged to the defendant,
and all damages which he may sustain by reason of the attachment, if the
same shall finally be adjudged to have been wrongful or without sufficient
cause. (emphasis supplied)

Contrary to the pronouncement of the Sandiganbayan, Section 247 of Act No. 190
explicitly required the execution of an attachment bond before a writ of preliminary attachment
could be issued.

The relevant provisions of Act No. 190 on attachment were later substantially adopted as
Sections 3
172[13]
and 4, Rule 59 of the 1940 Rules of Court.

172[13]
The provision requiring the affidavit was formerly Section 246 of Act
No. 190.
Sec. 246. Granting order of attachment. A judge or justice
of the peace shall grant an order of attachment when it is made to
Sec. 3. Order issued only when affidavit and bond filed. An
order of attachment shall be granted only when it is made to appear by the
affidavit of the plaintiff, or of some other person who personally knows the
facts, that the case is one of those mentioned in section 1 hereof, that there is
no other sufficient security for the claim sought to be enforced by the action,
and that the amount due to the plaintiff, or the value of the property which he
is entitled to recover possession of, is as much as the sum for which the order
is granted above all legal counterclaims; which affidavit, and the bond
required by the next succeeding section, must be duly filed with the clerk
or judge of the court before the order issues. (emphasis supplied)

Sec. 4. Bond required from plaintiff. The party applying for the
order must give a bond executed to the defendant in an amount to be fixed
by the judge, not exceeding the plaintiffs claim, that the plaintiff will pay all
the costs which may be adjudged to the defendant and all damages which he
may sustain by reason of the attachment, if the court shall finally adjudge
that the plaintiff was not entitled thereto.

And with the promulgation of the 1964 Rules of Court, the rules on attachment were
renumbered as Rule 57, remaining substantially the same:

Sec. 3. Affidavit and bond required. An order of attachment
shall be granted only when it appears by the affidavit of the applicant, or of
some other person who personally knows the facts, that a sufficient cause of
action exists, that the case is one of those mentioned in section 1 hereof, that
there is no other sufficient security for the claim sought to be enforced by the
action, and that the amount due to applicant, or the value of the property the
possession of which he is entitled to recover, is as much as the sum for which
the order is granted above all legal counterclaims. The affidavit, and the
bond required by the next succeeding section, must be duly filed with the
clerk or judge of the court before the order issues. (emphasis supplied)

Sec. 4. Condition of applicants bond. The party applying for
the order must thereafter give a bond executed to the adverse party in an
amount to be fixed by the judge, not exceeding the applicants 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.

Clearly, the filing of an attachment bond before the issuance of a writ of preliminary
attachment was expressly required under the relevant provisions of both the 1940 and 1964 Rules of
Court.

appear to the judge or justice of the peace by the affidavit of the
plaintiff, or of some other person who knows the facts that a sufficient
cause of action exists, and that the case is one of those mentioned in
section four hundred and twenty-four, and that there is no other
sufficient security for the claim sought to be enforced by the action,
and that the amount due to the plaintiff above all legal setoffs or
counterclaims is as much as the sum for which the order is granted.
Commentaries on Sections 3 and 4 of the 1964 Rules of Court uniformly cited Tolentino.
They stated that the government is exempt from filing an attachment bond
173[14]
and that the State
need not file an attachment bond.
174[15]

Where the Republic of the Philippines as a party to an action asks
for a writ of attachment against the properties of a defendant, it need not
furnish a bond. This is so because the State is presumed to be solvent.
175[16]

When plaintiff is the Republic of the Philippines, it need not file a
bond when it applies for a preliminary attachment. This is on the premise
that the State is solvent.
176[17]

And then again, we note the significant fact that Sections 3 and 4, Rule 57 of the 1964
Rules of Court were substantially incorporated as Sections 3 and 4, Rule 57 of the present (1997)
Rules of Court.
177[18]
There is thus no reason why the Republic should be made to file an attachment
bond.

In fact, in Spouses Badillo v. Hon. Tayag,
178[19]
a fairly recent case, this Court declared
that, when the State litigates, it is not required to put up a bond for damages or even an appeal bond
because it is presumed to be solvent. In other words, the State is not required to file a bond because it
is capable of paying its obligations.
179[20]

The pronouncement in Spouses Badillo applies in this case even if Spouses Badillo
involved the filing of a supersedeas bond. The pronouncement that the State is not required to put
up a bond for damages or even an appeal bond is general enough to encompass attachment bonds.
Moreover, the purpose of an attachment bond (to answer for all costs and damages which the
adverse party may sustain by reason of the attachment if the court finally rules that the applicant is
not entitled to the writ) and a supersedeas bond (to answer for damages to the winning party in case
the appeal is found frivolous) is essentially the same.

In filing forfeiture cases against erring public officials and employees, the Office of the
Ombudsman performs the States sovereign functions of enforcing laws, guarding and protecting the
integrity of the public service and addressing the problem of corruption in the bureaucracy.

The filing of an application for the issuance of a writ of preliminary attachment is a
necessary incident in forfeiture cases. It is needed to protect the interest of the government and to

173[14]
Laureta, Wenceslao, COMMENTARIES AND JURISPRUDENCE
ON ATTACHMENT AND EXECUTION, 1972 First Edition,
National Bookstore, p. 64.
174[15]
Martin, Ruperto, supra.
175[16]
Id.
176[17]
Moran, Manuel, supra.
177[18]
There was no change in Section 3 except style by deleting the words
the clerk or judge of from the last sentence. The only change in
Section 4 was, instead of the amount of the bond to be fixed by the
judge, not exceeding the applicants claim, the present rule leaves the
amount to be fixed by the court in its order without any limitation.
(Herrera, Oscar, Remedial Law [Volume VII]: COMMENTS ON THE
1997 RULES OF CIVIL PROCEDURE AS AMENDED, 1997
Edition, Rex Bookstore, pp. 602-603.)
178[19]
448 Phil. 606 (2003).
179[20]
Id.
prevent the removal, concealment and disposition of properties in the hands of unscrupulous public
officers. Otherwise, even if the government subsequently wins the case, it will be left holding an
empty bag.

Accordingly, the petition is hereby GRANTED. The January 14, 2005 and March 2,
2005 resolutions of the Sandiganbayan are REVERSED and SET ASIDE. The Republic of the
Philippines is declared exempt from the payment or filing of an attachment bond for the issuance of
a writ of preliminary attachment issued in Civil Case No. 0193. The Sandiganbayan is hereby
ordered to release the P1,000,000 bond posted by the Republic of the Philippines to the Office of the
Ombudsman.

SO ORDERED.

Section 4

A.M. No. RTJ-93-1008 November 14, 1994
TERESITA P. ARELLANO vs. NAPOLEON R. FLOJO, ET AL.

THIRD DIVISION
[A.M. No. RTJ-93-1008. November 14, 1994.]

TERESITA P. ARELLANO, petitioner, vs. JUDGE NAPOLEON R. FLOJO, FELINO
BANGALAN-Clerk of Court III, HERMINIO DEL CASTILLO-RTC-OCC.; LUCINO JOVE-
Deputy Sheriff, respondents.

SYLLABUS
1. REMEDIAL LAW; PROVISION REMEDIES; ATTACHMENT; BOND REQUIRED;
EFFECT OF FAILURE TO POST; CASE AT BAR. Indeed, he issued the Writ of Attachment
although the plaintiffs have not yet posted the required attachment bond. It is explicitly stated in his
Comment that what was filed was merely an undertaking. The fact that the "Undertaking" was
subscribed by the branch clerk of court does not necessarily follow that it carried the imprimatur of
the presiding judge thereof. As a lawyer, respondent Bangalan, who is now a Judge, should have
known the glaring distinctions between a plain undertaking and a real attachment bond. The
differences between the two is not that hard to discern. As ruled by Judge Ernesto A. Talamayan in
his order of April 23, 1993 (Rollo, pp. 18-19), no bond can be confiscated to answer for the damages
sustained by defendants. He discovered that only a promissory note in the form of an affidavit
executed by the bondsmen denominated as an attachment bond appears on the record. Had
respondent Bangalan carefully examined the undertaking filed before he issued the writ of
attachment, such a situation could have been obviated. Where a statute authorizing attachment
requires, as a condition to the issuance of the writ, that a bond shall be given by plaintiff to
indemnify defendant for any loss or injury resulting from the attachment in case it proves to be
wrongful, a failure to give such bond is fatal, and an attachment issued without the necessary bond is
invalid (7 C.J.S. 326). However, we do not find that the delay in the issuance and service of
summons was deliberately done to prejudice the defendant. Bad faith cannot be inferred by the mere
fact of delay considering that it was issued by the Office of the Clerk of Court and not by the branch
clerk to whom the case was already assigned.
2. ID.; ID.; ID.; LIABILITY OF SHERIFF; CASE AT BAR. For seizing a vehicle which
is not owned by the defendant, respondent Sheriff Jove may be held administratively liable.
Although his actuation may not have been tainted with bad faith or malice, he failed to exercise due
prudence in attaching the truck. He should have verified first if the truck he seized was owned by the
judgment debtor, especially in this case where it was found in the possession of a person other than
its real owner. Consequently, the writ of attachment was ordered dissolved in the Decision of Judge
Tumacder dated August 9, 1989 (Rollo, pp. 25 to 41) as the property attached does not belong to the
judgment debtor but to her father, Ruperto Arellano. A sheriff incurs liability if he wrongfully levies
upon the property of a third person (47 Am Jr 857). A sheriff has no authority to attach the property
of any person under execution except that of the judgment debtor. If he does so, the writ of execution
affords him no justification, for the action is not in obedience to the mandate of the writ (Codesal
and Ocampo vs. Ascue, 38 Phil. 902). The sheriff maybe liable for enforcing execution on property
belonging to a third party (Sec. 17, Rule 39, Rules of Court). However, he cannot be faulted for
entrusting the custody thereof to the sheriff guards considering that he can not physically keep the
cargo truck under his custody. His stand is sustained by the Court in its Order of October 10, 1989,
holding the two (2) sheriff guards liable for the cannibalism of the truck.

R E S O L U T I O N

MELO, J p:
Teresita P. Arellano, defendant in Civil Case No. 11-1041 then pending before Branch 6 of the
Regional Trial Court of the Second Judicial Region and stationed in Aparri, Cagayan, filed a verified
complaint for neglect of duty, misconduct, bias, and partiality against
(a) Judge Napoleon R. Flojo, then Presiding Judge of the aforementioned Branch 6, now
assigned as Presiding Judge of Branch 2 of the Regional Trial Court of Manila, for having
irregularly issued an order dated January 21, 1986 for the issuance of a writ of attachment in the said
case on the same date despite the lack of legal basis therefor.
(b) Felino Bangalan, then Acting Clerk of Court III, of the Aparri RTC (now Presiding
Judge, MTC, Branch 1, Aparri, Cagayan) for issuing the writ of attachment in the said case
despite the failure of the plaintiffs to post the required attachment bond of P100,000.00 and for
deliberately delaying the issuance of service of summons to the defendant in that although the case
was filed on January 21, 1986, the defendant (complainant herein) was served summons only on
May 13, 1986 or four (4) months thereafter, and that she was not even furnished a copy of the Order
authorizing the issuance of a writ of attachment, the so-called attachment bond, as well as the writ of
attachment itself.
(c) Herminio del Castillo, Branch Clerk of Court of the Aparri RTC for deliberately delaying
the issuance of service of summons on the defendant.
(d) Luciano Jove, Deputy Sheriff, Aparri, Cagayan for seizing a vehicle not owned by the
defendant and entrusting the custody thereof to Sheriff Guards Rodolfo Auringan and Dioniso Co,
Jr., instead of personally keeping it under his custody, resulting in the said vehicle being
cannibalized to the damage and prejudice of the complainant and the heirs of the late Ruperto
Arellano.
The complaint against Clerk of Court Herminio del Castillo was dismissed for lack of merit by the
Court in its Resolution dated June 28, 1993, as he did not appear to have had any participation in the
issuance and service of summons on the defendant in the aforementioned civil case (pp. 42-43,
Rollo.)
With respect to Judge Napoleon R. Flojo, inasmuch as the charges against him were mere
reiterations of the charges filed by the same complainant in A.M. Case No. RTJ-86-52 which had
been earlier dismissed for lack of merit by the Court en banc on March 24, 1987, the instant
complaint against him was likewise dismissed in the resolution of the Court dated November 8, 1993
(p. 83, Rollo).
Thereafter, the case was referred to Justice Ramon A. Barcelona of the Court of Appeals, for
investigation, report, and recommendation in regard to the remaining respondents.
Justice Barcelona finds Judge Bangalan (then Clerk of Court III) guilty of negligence for (1) having
issued the writ of attachment on January 21, 1986 in spite of the applicants' failure to post an
acceptable bond as required under Section 4, Rule 57 of the Rules of Court for what appears in the
record is only a promissory note in the form of an affidavit executed by Victor Suguitan, Andres
Langaman, and Mariano Retreta; having caused the implementation through Sheriff Jove, of the said
writ of attachment on January 23, 1986, knowing fully well that no summons had as yet been issued
and served as of said date upon defendant therein in violation of Section 5, Rule 57 of the Rules of
Court and Section 3, Rule 14 of the same rules. LLjur
As for Sheriff Jove, Justice Barcelona found that in serving the writ of attachment, the sheriff did not
serve the same on the defendant but on somebody whom he suspected only as holding the property
of the complainant. He failed to verify the ownership of the cargo truck he attached. To compound
the sheriff's failure to exercise diligence in the execution of the writ of attachment, he surrendered
the custody of the property to the two alleged guards instead of depositing the same in a bonded
warehouse.
Finding both Judge Bangalan and Sheriff Jove remiss in the performance of their duties, Justice
Barcelona recommends that they each be suspended for one (1) month (not chargeable to their
accumulated leave) without pay. However, this Court is of the opinion and thus hereby holds that a
fine of P5,000.00 each for Judge Bangalan and Sheriff Jove is the commensurate penalty for the
irregularity that attended the civil case below. In this respect, we agree with the factual findings and
analysis of the Office of the Court Administrator, thus:
Indeed, he issued the Writ of Attachment although the plaintiffs have not yet posted the required
attachment bond. It is explicitly stated in his Comment that what was filed was merely an
undertaking. The fact that the "Undertaking" was subscribed by the branch clerk of court does not
necessarily follow that it carried the imprimatur of the presiding judge thereof. As a lawyer,
respondent Bangalan, who is now a Judge, should have known the glaring distinctions between a
plain undertaking and a real attachment bond. The differences between the two is not that hard to
discern. As ruled by Judge Ernesto A. Talamayan in his order of April 23, 1993 (Rollo, pp. 18-19),
no bond can be confiscated to answer for the damages sustained by defendants. He discovered that
only a promissory note in the form of an affidavit executed by the bondsmen denominated as an
attachment bond appears on the record. Had respondent Bangalan carefully examined the
undertaking filed before he issued the writ of attachment, such a situation could have been obviated.
Where a statute authorizing attachment requires, as a condition to the issuance of the writ, that a
bond shall be given by plaintiff to indemnify defendant for any loss or injury resulting from the
attachment in case it proves to be wrongful, a failure to give such bond is fatal, and an attachment
issued without the necessary bond is invalid (7 C.J.S. 326). However, we do not find that the delay
in the issuance and service of summons was deliberately done to prejudice the defendant. Bad faith
cannot be inferred by the mere fact of delay considering that it was issued by the Office of the Clerk
of Court and not by the branch clerk to whom the case was already assigned.
For seizing a vehicle which is not owned by the defendant, respondent Sheriff Jove may be held
administratively liable. Although his actuation may not have been tainted with bad faith or malice,
he failed to exercise due prudence in attaching the truck. He should have verified first if the truck he
seized was owned by the judgment debtor, especially in this case where it was found in the
possession of a person other than its real owner. Consequently, the writ of attachment was ordered
dissolved in the Decision of Judge Tumacder dated August 9, 1989 (Rollo, pp. 25 to 41) as the
property attached does not belong to the judgment debtor but to her father, Ruperto Arellano. A
sheriff incurs liability if he wrongfully levies upon the property of a third person (47 Am Jr 857). A
sheriff has no authority to attach the property of any person under execution except that of the
judgment debtor. If he does so, the writ of execution affords him no justification, for the action is not
in obedience to the mandate of the writ (Codesal and Ocampo vs. Ascue, 38 Phil. 902). The sheriff
maybe liable for enforcing execution on property belonging to a third party (Sec. 17, Rule 39, Rules
of Court). However, he cannot be faulted for entrusting the custody thereof to the sheriff guards
considering that he can not physically keep the cargo truck under his custody. His stand is sustained
by the Court in its Order of October 10, 1989 (Rollo, pp. 110 to 111), holding the two (2) sheriff
guards liable for the cannibalism of the truck.
(pp. 132-133. Rollo)
WHEREFORE, premises considered, Judge Felino Bangalan and Sheriff Lucinio Jove are hereby
each fined the amount of FIVE THOUSAND PESOS (P5,000.00), with the severe warning that a
repetition of the same or similar acts in the future will be dealt with more severely. LLphil
SO ORDERED.
Bidin, Romero and Vitug, JJ., concur.
Feliciano, J., is on leave.

G.R. No. 74696 November 11, 1987
JOSE D. CALDERON vs. INTERMEDIATE APPELLATE COURT, ET AL.

SECOND DIVISION
[G.R. No. 74696. November 11, 1987.]

JOSE D. CALDERON, petitioner, vs. THE INTERMEDIATE APPELLATE COURT, GEORGE
SCHULZE, GEORGE SCHULZE, JR., ANTONIO C. AMOR, MANUEL A. MOZO, and VICTOR
M. NALUZ, respondents.

[G.R. No. 73916. November 11, 1987.]

FIRST INTEGRATED BONDING AND INSURANCE COMPANY, INC., petitioner, vs. THE
INTERMEDIATE APPELLATE COURT, GEORGE SCHULZE, ANTONIO C. AMOR, MANUEL
A. MOZO and VICTOR M. NALUZ, respondents.

SYLLABUS
1. REMEDIAL LAW; ATTACHMENT BOND: LIABILITY EXTENDS TO MORAL
AND EXEMPLARY DAMAGES IN CASE ATTACHMENT WAS MALICIOUSLY SUED OUT
AND ESTABLISHED TO BE SO. While as a general rule, the liability on the attachment bond is
limited to actual damages, moral and exemplary damages may be recovered where the attachment
was alleged to be maliciously sued out and established to be so. (Lazatin vs. Twano et al, L-12736,
July 31, 1961). Well settled is the rule that the factual findings of the trial court are entitled to great
weight and respect on appeal, especially when established by unrebutted testimonial and
documentary evidence, as in this case.
2. ID.; ID.; NOT RENDERED VOID UPON FILING OF THE COUNTERBOUND;
DISABILITY OF ATTACHMENT, DEFINED. While Section 12, Rule 57 of the Rules of Court
provides that upon the filing of a counterbond, the attachment is discharged or dissolved, nowhere is
it provided that the attachment bond is rendered void and ineffective upon the filing of counterbond.
The liability of the attachment bond is defined in Section 4, Rule 57 of the Rules of Court. It is clear
from the above provision that the responsibility of the surety arises "if the court shall finally adjudge
that the plaintiff was not entitled thereto." In Rocco vs. Meads, 96 Phil. Reports 884, we held that the
liability attaches if the plaintiff is not entitled to the attachment because the requirements entitling
him to the writ are wanting, or if the plaintiff has no right to the attachment because the facts stated
in his affidavit, or some of them, are untrue. It is, therefore, evident that upon the dismissal of an
attachment wrongfully issued, the surety is liable for damages as a direct result of said attachment.
3. ID.; ID.; LIABILITY OF SURETY SUBSISTS UNTIL FINALLY RECKONED BY
THE COURT THAT THE CREDITOR WAS NOT ENTITLED TO ISSUANCE OF THE
ATTACHMENT WRIT. Whether the attachment was discharged by either of the two (2) ways
indicated in the law, i.e., by filing a counterbond or by showing that the order of attachment was
improperly or irregularly issued, the liability of the surety on the attachment bond subsists because
the final reckoning is when "the Court shall finally adjudge that the attaching creditor was not
entitled" to the issuance of the attachment writ in the first place. 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 like in the present case, would
require presentation of evidence in a fullblown trial on the merits and cannot easily be settled in a
pending incident of the case.
4. CIVIL LAW; DAMAGES; AWARD BEING EXCESSIVE ORDERED REDUCED.
We believe, however, that in the light of the factual situation in this case, the damages awarded by
the Intermediate Appellate Court are rather excessive. They must be reduced.

D E C I S I O N

PARAS, J p:
For review on certiorari is respondent appellate Court's decision 1 in AC-G.R. No. 01420, which
affirmed the Regional Trial Court's decision 2 appealed from holding the plaintiff Jose D. Calderon
(petitioner herein) and his bondsman the Integrated Bonding and Insurance Company, Inc., jointly
and severally liable to pay defendants (private respondents herein), damages caused by the filing by
Calderon of the allegedly unwarranted suit and the wrongful and malicious attachment of private
respondents properties.
The facts of the case are briefly as follows:
On November 2, 1976, petitioner Calderon purchased from the private respondents the following:
the Luzon Brokerage Corporation (LBC, for brevity) and its five (5) affiliate companies, namely
Luzon Air Freight, Inc., Luzon Port Terminals Services, Inc., Luzon (GS) Warehousing Corporation,
GS Industrial Management Corporation, and GS Luzon Trucking Corporation. Twenty one (21) days
thereafter or on November 23, 1976, the Bureau of Customs suspended the operations of LBC for
failure to pay the amount of P1,475,840.00 representing customs taxes and duties incurred prior to
the execution of the sale. In order to lift the suspension, Calderon paid the sum of P606,430.00 to the
Bureau of Customs.
On October 27, 1977, Calderon filed a complaint against private respondents to recover said amount
of P1,475,840.00, with damages by reason of breach of warranty. In the same complaint, the
petitioner prayed for a preliminary attachment, alleging: that private respondents had deliberately
and willfully concealed from his knowledge such staggering liability of the LBC for the purpose of
misleading him into buying the six aforesaid companies; and that private respondent Schulze is
about to depart from the Philippines in order to defraud his creditors.
To support the petition for preliminary attachment, the petitioner posted a surety bond of
P1,475,840.00. on October 28, 1977, the trial court issued a writ of preliminary attachment,
whereupon properties of the private respondents were attached and their bank deposits were
garnished.
On November 10, 1977, petitioner Calderon filed an amended complaint, alleging that while the
liabilities of LBC are reflected in its books, the aforesaid amount was fraudulently withdrawn and
misappropriated by private respondent Schulze. (pp. 7-18, Rollo).
On the other hand, private respondents claimed: that the amount of P1,475,840.00 due to the Bureau
of Customs represents the duties and taxes payable out of the advanced payments made by LBC's
client, Philippine Refining Company (PRC, for brevity) in August, September and October, 1976,
and in the first and second weeks of November 1976, after Calderon himself had taken control of the
management of LBC (Exhibit A); that these deposit payments were properly recorded in the books
of the corporation and existing as part of the corporate funds; that from the first week of June, 1976
up to October 30, 1976, private respondent Schulze fully disclosed and explained to Calderon that
these customer's advanced deposit payments (including those of the PRC) are to be paid to the
Bureau of Customs when their corresponding customs taxes and duties become due; that during this
phase of the negotiation, Calderon and his representatives inspected and studied the corporate books
and records at will and learned the daily operations and management of LBC; that the petitioner did
not pay out of his own pocket but out of the LBC funds the said amount of P606,430.30 demanded
by the Bureau of Customs, as evidenced by a manager's check No. FEBTC 25092 (Exhibits 9, 10, 11
& 38) and another facility negotiated with the Insular Bank of Asia and America (Exhibit K-2); and
that private respondents are setting up a counterclaim for actual, moral and exemplary damages as
well as attorney's fees, as a consequence of the filing of the baseless suit and the wrongful and
malicious attachment of their properties. (pp. 217-221, Rollo)
On November 17, 1977, private respondents filed a counter-bond, whereupon the trial court issued
an order directing the sheriff to return all real and personal properties already levied upon and to lift
the notices of garnishment issued in connection with the said attachment (Annex B, p. 42, Rollo).
After trial, the trial court dismissed the complaint, holding Calderon and his surety First Integrated
Bonding and Insurance Co., Inc., jointly and severally liable to pay the damages prayed for by the
private respondents.
Said decision was affirmed on appeal, although slightly modified in the sense that the award of
moral and exemplary damages in favor of private respondents Schulze and Amor was reduced. The
dispositive portion of the judgment of affirmance and modification reads:
"WHEREFORE, the judgment of the lower court is modified as follows:
To defendant-appellee George Schulze:
P650,000.00 as moral damages and
P200,000.00 as exemplary damages.
To defendant-appellee Antonio C. Amor:
P150,000.00 as moral damages and
P30,000.00 as exemplary damages.
"All other dispositions in the judgment appealed from, including the dismissal of the amended
complaint, are hereby affirmed in toto.
"SO ORDERED."
In his petition, petitioner Calderon asserts, among other things, that the court below erred:
I
IN HOLDING THAT THE PETITIONER FAILED TO ESTABLISH HIS CLAIMS.
II
IN HOLDING THAT THE PRELIMINARY ATTACHMENT HAD BEEN WRONGFULLY AND
MALICIOUSLY SUED OUT.
III
IN HOLDING THAT THE PETITIONER IS LIABLE NOT ONLY FOR ACTUAL DAMAGES
BUT MORAL AND EXEMPLARY DAMAGES AS WELL.
On the other hand, petitioner Insurance Company raises the following issues:
I
WHETHER OR NOT THE PETITIONER SURETY IS LIABLE FOR DAMAGES ON ITS
CONTRACTED SURETYSHIP NOTWITHSTANDING THE DISSOLUTION OF THE WRIT OF
PRELIMINARY ATTACHMENT, AS A CONSEQUENCE OF THE FILING OF THE
DEFENDANT'S COUNTER-BOND, WHEREBY LEVIED PROPERTIES WERE ORDERED BY
THE COURT RETURNED TO PRIVATE RESPONDENTS AND THE NOTICES OF
GARNISHMENT ISSUED IN CONNECTION THEREWITH ORDERED LIFTED.
II
WHETHER OR NOT THE SUBSEQUENT FILING BY PRIVATE RESPONDENTS OF A
COUNTER-BOND TO DISCHARGE THE WRIT OF PRELIMINARY ATTACHMENT
CONSTITUTE A WAIVER ON ANY DEFECT IN THE ISSUANCE OF THE ATTACHMENT
WRIT.
III
WHETHER OR NOT A SURETY IS A GUARANTOR OF THE EXISTENCE OF A GOOD
CAUSE OF ACTION IN THE COMPLAINT.
The petition is devoid of merit.
Whether or not the amount of P1,475,840.00 was duly disclosed as an outstanding liability of LBC
or was misappropriated by private respondent Schulze is purely a factual issue. That Calderon was
clearly in bad faith when he asked for the attachment is indicated by the fact that he failed to appear
in court to support his charge of misappropriation by Schulze, and in effect, preventing his being
cross-examined, no document on the charges was presented by him.
What the Appellate Court found in this regard need not he further elaborated upon. The Appellate
Court ruled: llcd
". . . The record shows that appellant Calderon failed to produce any evidence in support of his
sworn charge that appellee Schulze had deliberately and willfully concealed the liabilities of Luzon
Brokerage Corporation. Neither did appellant Calderon prove his sworn charges that appellee
Schulze had maliciously and fraudulently withdrawn and misappropriated the amount of
P1,475,840.00 and that all the defendants had maliciously and fraudulently concealed and withheld
from him this alleged liability of Luzon Brokerage Corporation in breach of the contract-warranty
that said corporation had no obligations or liabilities except those appearing in the books and records
of the said corporation. Indeed, appellant Calderon never appeared in the trial court to substantiate
the charges in his verified complaints and in his affidavit to support his petition for the issuance of a
writ of attachment. He distanced himself from the appellees and avoided cross-examination
regarding his sworn allegations. . . .
" . . . But even though appellant Calderon failed to prove his serious charges of fraud, malice and bad
faith, the appellees took it upon themselves to show that they did not conceal or withhold from
appellant's knowledge the deposits made by Philippine Refining Co., Inc. with Luzon Brokerage
Corporation and that they did not withdraw and misappropriate the deposits made by Philippine
Refining Co., Inc. with Luzon Brokerage Corporation.
"The books and records of Luzon Brokerage Corporation on which the Financial Statement of Luzon
Brokerage Corporation, as of October 31, 1976 was prepared by the auditing firm retained by
appellant Calderon himself (Exhibit 1), disclose that the liabilities of Luzon Brokerage Corporation
in the total amount of P4,574,498.32 appear under the heading 'Customers Deposit' (Exhibit 1-A)
this amount includes the deposit of Philippine Refining Co., Inc. in the sum of P1,475,840.00.
"But appellant Calderon contends that this financial statement was dated February 4, 1977 (see
Exhibit 1-C). There is nothing commendable in this argument because the bases of the financial
statement were the books, records and documents of Luzon Brokerage Corporation for the period
ending October 31, 1976, which were all turned over to and examined by appellant Calderon and his
executive, legal and financial staffs. There is also no merit in the contention of appellant Calderon
that the appellees have tampered the books of Luzon Brokerage Corporation because there is no
proof to back this charge, let alone the fact that appellant Calderon did not even present the said
books to support his charge.
"As stated above, the amount of customers' deposits in the sum of P4,574,498.32 includes the
deposits of Philippine Refining Co., Inc. (Exhibits 46-A, 46-B, 46-C, 46-D, 46-E:, 46-F, 46-G, 46-H,
46-I, 46-J, t.s.n. July 23, 1980, pp. 12-13, 14-15). The amounts deposited by Philippine Refining
Co., Inc. on various dates with Luzon Brokerage Corporation made before the execution of the sale
were all entered in three other corporate books of Luzon Brokerage Corporation namely, the Cash
Receipts Register (Exhibits 39-A-1 to 39-K-1 and 39-A-1-B to 39-K-1-B), the Journal Vouchers
(Exhibits 42 to 46 and 42-A to 45-A), and the Customer's Deposit Ledger (Exhibit 46-A to 46-J) . . .
Thus, the claim of appellant Calderon that the deposits made by Philippine Refining Co., Inc. with
Luzon Brokerage Corporation of P406,430.00 on August 24, 1976 (Exhibit N), P53,640.00 on
October 13, 1976 (Exhibit O), P406,430.00 on September 8, 1976 (Exhibit P), P199,508.00 on
September 24, 1976 (Exhibit Q), P52,738.00 on October 22, 1976 (Exhibit R), and P264,436.00 on
October 7, 1976 (Exhibit S) were not entered in the books of Luzon Brokerage Corporation, is
completely without merit. . . . (pp. 85-87, Rollo)
It is evident from the foregoing that the attachment was maliciously sued out and that as already
pointed out Schulze was not in bad faith.
While as a general rule, the liability on the attachment bond is limited to actual damages, moral and
exemplary damages may be recovered where the attachment was alleged to be maliciously sued out
and established to be so. (Lazatin vs. Twano et al, L-12736, July 31, 1961).
In the instant case, the issues of wrongful and malicious suing out of the writ of preliminary
attachment were joined not only in private respondents motion to discharge the attachment but also
in their answer to the amended complaint (p. 38, Rollo). The trial court observed that the books and
records of Luzon Brokerage Corporation disclose that the liabilities of the said corporation in the
total amount of P4,574,498.32 appear under the heading "Customs Deposit" (Exhibit 1-A) and this
amount includes the deposit of Philippine Refining Co., Inc. in the sum of P1,475,840.00 (p. 26,
Rollo). On the other hand, plaintiff never appeared in court, and failed to produce any evidence to
substantiate his charges (p. 26, Rollo). LLjur
Well settled is the rule that the factual findings of the trial court are entitled to great weight and
respect on appeal, especially when established by unrebutted testimonial and documentary evidence,
as in this case.
Anent the petition of the surety, We say the following:
Specifically, petitioner surety contends that the dissolution of the attachment extinguishes its
obligation under the bond, for the basis of its liability, which is wrongful attachment, no longer
exists, the attachment bond having been rendered void and ineffective, by virtue of Section 12, Rule
57 of the Rules of Court. (p. 5, Petition).
While Section 12, Rule 57 of the Rules of Court provides that upon the filing of a counterbond, the
attachment is discharged or dissolved, nowhere is it provided that the attachment bond is rendered
void and ineffective upon the filing of counterbond.
The liability of the attachment bond is defined in Section 4, Rule 57 of the Rules of Court, as
follows:
"Sec. 4. Condition of applicant's bond. The party applying for the order must give a bond
executed to the adverse party in an amount to be fixed by the judge, not exceeding the applicant s
claim, conditioned that the latter will pay all the costs which may be adjudged to the adverse party
and all damages which he may sustain by reason of the attachment, if the court shall finally adjudge
that the applicant was not entitled thereto."
It is clear from the above provision that the responsibility of the surety arises "if the court shall
finally adjudge that the plaintiff was not entitled thereto." In Rocco vs. Meads, 96 Phil. Reports 884,
we held that the liability attaches if the plaintiff is not entitled to the attachment because the
requirements entitling him to the writ are wanting, or if the plaintiff has no right to the attachment
because the facts stated in his affidavit, or some of them, are untrue. It is, therefore, evident that
upon the dismissal of an attachment wrongfully issued, the surety is liable for damages as a direct
result of said attachment.
Equally untenable is the Surety's contention that by filing a counterbond, private respondents waived
any defect or flaw in the issuance of the attachment writ, for they could have sought, without need of
filing any counterbond, the discharge of the attachment if the same was improperly or irregularly
issued, as provided in Section 13, Rule 57 of the Rules of Court.
Whether the attachment was discharged by either of the two (2) ways indicated in the law, i.e., by
filing a counterbond or by showing that the order of attachment was improperly or irregularly issued,
the liability of the surety on the attachment bond subsists because the final reckoning is when "the
Court shall finally adjudge that the attaching creditor was not entitled" to the issuance of the
attachment writ in the first place. 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 like in the present case, would require presentation of evidence in a
fullblown trial on the merits and cannot easily be settled in a pending incident of the case.
We believe, however, that in the light of the factual situation in this case, the damages awarded by
the Intermediate Appellate Court are rather excessive. They must be reduced. LLpr
WHEREFORE, the judgment of said Appellate Court is hereby modified as follows: Both petitioner
Calderon and petitioner First Integrated Bonding and Insurance Company, Inc. are hereby ordered to
give jointly and severally:
1. Respondent George Schulze, P250,000.00 as moral damages and P50,000.00 as
exemplary damages; and
2. Respondent Antonio C. Amor, P50,000.00 as moral damages and P10,000.00 as
exemplary damages.
The rest of the judgment of the Intermediate Appellate Court is hereby AFFIRMED.
SO ORDERED.
Yap (Chairman), Melencio-Herrera and Padilla, JJ., concur.
Sarmiento, J., took no part.

Footnotes

1. Penned by Justice Crisolito Pascual and concurred in by Justices Jose C. Campos, Jr.,
Serafin E. Camilon and Desiderio P. Jurado.
2. Penned by Judge Jose Castro.


Section 5

G.R. No. 39596 March 23, 1934
GOTAUCO & CO. vs. REGISTER OF DEEDS OF TAYABAS
059 Phil 756

SECOND DIVISION
[G.R. No. 39596. March 23, 1934.]

"CONSULTA" NO. 1013 OF THE REGISTER OF DEEDS OF TAYABAS. GOTAUCO & CO.,
applicant-appellant, vs. THE REGISTER OF DEEDS OF TAYABAS, oppositor-appellee.

Godofredo Reyes for appellant.
Solicitor-General Hilado for appellee.

SYLLABUS
1. WRIT OF EXECUTION; INSCRIPTION BY THE REGISTER OF DEEDS. The
register of deeds in this case denied the inscription of a levy of execution because the title to the
property was in the name of another person and not in the name of the judgment debtor, no evidence
having been submitted that the latter had any interest in the property. It having been afterwards
shown that the judicial debtor was one of the heirs of the person in whose name the property
appeared, and there being nothing to indicate that the judicial debtor, being sui juris, could not
dispose of his interest as an heir in the estate, by a conveyance, thus defeating, pro tanto, the
provisions of section 450, Code of Civil Procedure, judgment in this consulta was reversed.

D E C I S I O N

BUTTE, J p:
This is an appeal from a judgment of the Fourth Branch of the Court of First Instance of Manila in a
consulta submitted by the register of deeds of Tayabas.
Our decision upon this appeal has been facilitated because both the appellant and the appellee, the
latter being represented by the Solicitor-General, agreed that the judgment should be reversed.
On August 12, 1932, when Exhibits A and B were presented to the register, by which a levy of
execution against the judgment debtor, Rafael Vilar was made on fifteen tracts of land described in
Exhibit B and registered in the name of Florentino Vilar, the register properly denied the inscription
of said levy of execution because the title to the lands was in the name of Florentino Vilar and no
evidence was submitted that Rafael Vilar had any present or possible future interest in the land. On
September 17, 1932, there was presented to him a copy of a petition filed in the Court of First
Instance of the province, entitled, "Intestado del Finado Florentino Vilar", from which he could
properly infer that Florentino Vilar was a dead and that the judgment debtor Rafael Vilar is one of
the heirs of the deceased Florentino Vilar. Although the value of the participation of Rafael Vilar in
the estate of Florentino Vilar was indeterminable before the final liquidation of the estate,
nevertheless, the right of participation in the estate and the lands thereof may be attached and sold.
The real test was laid down by this court in the case of Reyes vs. Grey (21 Phil., 73, 76), namely:
Does the judgment debtor hold such a beneficial interest in the property that he can sell or otherwise
dispose of its for value? Nothing appears in this record to indicate that Rafael Vilar being sui juris
could not dispose of his interest or share as heir in the estate of Florentino Vilar. Having this right,
he could by a conveyance defeat pro tanto the provisions of section 450 of the Code of Civil
Procedure and thus deprive the judgment creditor of the benefit of a lawful execution. (See also
Consulta No. 441 de los Abogados de Smith, Bell & Co., 48 Phil., 656, 664, 665.)
On October 12, 1932, with the knowledge which he then had, the register should have accepted and
inscribed Exhibits A, B and D.
The judgment in this consulta is reversed without special pronouncement as to costs.
Street, Abad Santos, Goddard, and Diaz, JJ., concur.
G.R. No. 107303 February 21, 1994
EMMANUEL C. OATE, ET AL. vs. ZUES C. ABROGAR

SECOND DIVISION
[G.R. No. 107303. February 21, 1994.]

EMMANUEL C. OATE and ECON HOLDINGS CORPORATION, petitioners, vs. HON. ZUES
C. ABROGAR, as Presiding Judge of Branch 150 of the Regional Trial Court of Makati, and SUN
LIFE ASSURANCE COMPANY OF CANADA, respondents.

[G.R. No. 107491.]

BRUNNER DEVELOPMENT CORPORATION, petitioner, vs. HON. ZUES C. ABROGAR,
Presiding Judge of Branch 150 of the Regional Trial Court of Makati, and SUN LIFE ASSURANCE
COMPANY OF CANADA, respondents.

D E C I S I O N

NOCON, J p:
These are separate petitions for certiorari with a prayer for temporary restraining order filed by
Emmanuel C. Oate and Econ Holdings Corporation (in G.R. No. 107303), and Brunner
Development Corporation (in G.R. No. 107491), both of which assail several orders issued by
respondent Judge Zues C. Abrogar in Civil Case No. 91-3506.
The pertinent facts are as follows: On December 23, 1991, respondent Sun Life Assurance Company
of Canada (Sun Life, for brevity) filed a complaint for a sum of money with a prayer for the
immediate issuance of a writ of attachment against petitioners, and Noel L. Dio, which was
docketed as Civil Case No. 91-3506 and raffled to Branch 150 of the RTC Makati, presided over by
respondent Judge. The following day, December 24, 1991, respondent Judge issued an order
granting the issuance of a writ of attachment, and the writ was actually issued on December 27,
1991.
On January 3, 1992, upon Sun Life's ex-parte motion, the trial court amended the writ of attachment
to reflect the alleged amount of the indebtedness. That same day, Deputy Sheriff Arturo C. Flores,
accompanied by a representative of Sun Life, attempted to serve summons and a copy of the
amended writ of attachment upon petitioners at their known office address at 108 Aguirre St.,
Makati but was not able to do so since there was no responsible officer to receive the same. 1
Nonetheless Sheriff Flores proceeded, over a period of several days, to serve notices of garnishment
upon several commercial banks and financial institutions, and levied on attachment a condominium
unit and a real property belonging to petitioner Oate.
Summons was eventually served upon petitioners on January 9, 1992, while defendant Dio was
served with summons on January 16, 1992.
On January 21, 1992, petitioners filed an "Urgent Motion to Discharge/Dissolve Writ of
Attachment." That same day, Sun Life filed an ex-parte motion to examine the books of accounts
and ledgers of petitioner Brunner Development Corporation (Brunner, for brevity) at the Urban
Bank, Legaspi Village Branch, and to obtain copies thereof, which motion was granted by
respondent Judge. The examination of said account took place on January 23, 1992. Petitioners filed
a motion to nullify the proceedings taken thereat since they were not present.
On January 30, 1992, petitioners and their co-defendants filed a memorandum in support of the
motion of discharge attachment. Also on that same day, Sun Life filed another motion for
examination of bank accounts, this time seeking the examination of Account No. 0041-0277-03 with
the Bank of Philippine Islands (BPI) which, incidentally, petitioners claim not to be owned by
them and the records of Philippine National Bank (PNB) with regard to checks payable to
Brunner. Sun Life asked the court to order both banks to comply with the notice of garnishment.
On February 6, 1992, respondent Judge issued an order (1) denying petitioners' and the co-
defendants' motion to discharge the amended writ of attachment, (2) approving Sun Life's additional
attachment bond, (3) granting Sun Life's motion to examine the BPI account, and (4) denying
petitioners' motion to nullify the proceedings of January 23, 1992.
On March 12, 1992, petitioners filed a motion for reconsideration of the February 6, 1992 order. On
September 6, 1992, respondent Judge denied the motion for reconsideration.
Hence, the instant petitions. Petitioners' basic argument is that respondent Judge had acted with
grave abuse of discretion amounting to lack or in excess of jurisdiction in (1) issuing ex parte the
original and amended writs of preliminary attachment and the corresponding notices of garnishment
and levy on attachment since the trial court had not yet acquired jurisdiction over them; and (2)
allowing the examination of the bank records though no notice was given to them.
We find both petitions unmeritorious.
Petitioners initially argue that respondent Judge erred in granting Sun Life's prayer for a writ of
preliminary attachment on the ground that the trial court had not acquired jurisdiction over them.
This argument is clearly unavailing since it is well-settled that a writ of preliminary attachment may
be validly applied for and granted even before the defendant is summoned or is heard from. 2 The
rationale behind this rule was stated by the Court in this wise:
"A preliminary attachment may be defined, paraphrasing the Rules of Court, as the provisional
or any time thereafter, have the property of the adverse party taken into the custody of the court as
security for the satisfaction of any judgment that may be recovered. It is a remedy which is purely
statutory in respect of which the law requires a strict construction of the provisions granting it.
Withal no principle, statutory or jurisprudential, prohibits its issuance by any court before
"Rule 57 in fact speaks of the grant of the remedy 'at the commencement of the action or at any time
thereafter.' The phrase 'at the commencement of the action,' obviously refers to the date of the filing
of the complaint which, as abovepointed out, is the date that marks 'the commencement of the
action;' and the reference plainly is to a time before summons is served on the defendant, or even
before summons issues. What the rule is saying quite clearly is that after an action is properly
commence by the filing of the complaint and the payment of all requisite docket and other fees
the complaint or other appropriate pleading (counterclaim cross-claim, third-party claim) and for the
otherwise sufficient in form and substance. 3
Petitioners then contended that the writ should have been discharged since the ground on which it
was issued fraud in contracting the obligation was not present. This cannot be considered a
ground for lifting the writ since this delves into the very complaint of the Sun Life. As this Court
stated in Cuatro v. Court of Appeals: 4
"Moreover, an attachment may not be dissolved by a showing of its irregular or improper issuance if
it is upon a ground which is at the same time the applicant's cause of action in the main case since an
anomalous situation would result if the issues of the main case would be ventilated and resolved in a
mere hearing of the motion (Davao Light and Power Co., Inc. vs. Court of Appeals, supra, The
Consolidated Bank and Trust Corp. (Solidbank) vs. Court of Appeals, 197 SCRA 663 [1991]).
"In the present case, one of the allegation in petitioner's complaint below is that the defendant
spouses induced the plaintiff to grant the loan by issuing postdated checks to cover the installment
payments and a separate set of postdated checks for payment of the stipulated interest (Annex "B").
The issue of fraud, then, is clearly within the competence of the lower court in the main action. 5
The fact that a criminal complaint for estafa filed by Sun Life against the petitioners was dismissed
by the Provincial Prosecutor of Rizal for Makati on April 21, 1992 and was upheld by the Provincial
Prosecutor on July 13, 1992 is of no moment since the same can be indicative only of the absence of
criminal liability, but not of civil liability. Besides, Sun Life had elevated the case for review to the
Department of Justice, where the case is presently pending. LLjur
Finally, petitioners argue that the enforcement of the writ was invalid since it undisputedly preceded
the actual service of summons by six days at most. Petitioners cite the decisions in Sievert vs. Court
of Appeals, et al. 6 and BAC Manufacturing and Sales Corp. vs. Court of Appeals, et al., 7 wherein
this Court held that enforcement of the writ of attachment can not bind the defendant in view of the
failure of the trial court to acquire jurisdiction over the defendant through either summons or his
voluntary appearance.
We do not agree entirely with petitioners. True, this Court had held in a recent decision that the
enforcement of writ of attachment may not validly be effected until and unless proceeded or
contemporaneously accompanied by service of summons. 8
But we must distinguish the case at bar from the Sievert and BAC Manufacturing cases. In those two
cases, summons was never served upon the defendants. The plaintiffs therein did not even attempt to
cause service of summons upon the defendants, right up to the time the cases went up to this Court.
This is not true in the case at bar. The records reveal that Sheriff Flores and Sun Life did attempt a
contemporaneous service of both summons and the writ of attachment on January 3, 1992, but we
stymied by the absence of a responsible officer in petitioners' offices. Note is taken of the fact that
petitioners Oate and Econ Holdings admitted in their answer 9 that the offices of both Brunner
Development Corporation and Econ Holdings were located at the same address and that petitioner
Oate is the President of Econ Holdings while petitioner Dio is the President of Brunner
Development Corporation as well as a stockholder and director of Econ Holdings. cdphil
Thus, an exception to the established rule on the enforcement of the writ of attachment can be made
where a previous attempt to serve the summons and the writ of attachment failed due to factors
beyond the control of either the plaintiff or the process server, provided that such service is effected
within a reasonable period thereafter.
Several reasons can be given for the exception. First, there is a possibility that a defendant, having
been alerted of plaintiff's action by the attempted service of summons and the writ of attachment,
would put his properties beyond the reach of the plaintiff while the latter is trying to serve the
summons and the writ anew. By the time the plaintiff may have caused the service of summons and
the writ, there might not be any property of the defendant left to attach.
Second, the court eventually acquired jurisdiction over the petitioners six days later. To nullify the
notices of garnishment issued prior thereto would again open the possibility that petitioners would
transfer the garnished monies while Sun Life applied for new notices of garnishment.
Third, the ease by which a writ of attachment can be obtained is counter-balanced by the ease by
which the same can be discharged: the defendant can either make a cash deposit or post a counter-
bond equivalent to the value of the property attached. 10 The petitioners herein tried to have the writ
of attachment discharged by posting a counter-bond, the same was denied by respondent Judge on
the ground that the amount of the counter-bond was less than that of Sun Life's bond. cdrep
II.
Petitioners' second ground assail the acts of respondent Judge in allowing the examination of Urban
Banks' records and in ordering that the examination of the bank records of BPI and PNB as invalid
since no notice of said examinations were ever given them. Sun Life grounded its requests for the
examination of the bank accounts on Section 10, Rule 57 of the Rules of Court, which provided, to
wit:
"Sec. 10. Examination of party whose property is attached and persons indebted to him or
controlling his property; delivery of property to officer. Any person owing debts to the party
whose property is attached or having in his possession or under his control any credit or other
personal property belonging to such party, may be required to attend before the court in which the
action is pending, or before a commissioner appointed by the court and be examined on oath
respecting the same. The party whose property is attached may also be required to attend for the
purpose of giving information respecting his property, and may be examined on oath. The court may,
after such examination, order personal property capable of manual delivery belonging to him, in the
possession of the person so required to attend before the court, to be delivered to the clerk or court,
sheriff, or other proper officer on such terms as may be just, having reference to any lien thereon or
claim against the same, to await the judgment in the action.
It is clear from the foregoing provision that notice need only be given to the garnishee, but the
person who is holding property or credits belonging to the defendant. The provision does not require
that notice be furnished the defendant himself, except when there is a need to examine said
defendant "for the purpose of giving information respecting his property." llcd
Furthermore, Section 10 Rule 57 is not incompatible with Republic Act No. 1405, as amended, "An
Act Prohibiting Disclosure or Inquiry Into, Deposits With Any Banking Institution and Providing
Penalty Therefore," for Section 2 therefore provides an exception "in cases where the money
deposited or invested is the subject matter of the litigation."
The examination of the bank records is not a fishing expedition, but rather a method by which Sun
Life could trace the proceeds of the check it paid to petitioners. LexLib
WHEREFORE, the instant petitions are hereby DISMISSED. The temporary restraining order issued
on June 28, 1993 is hereby lifted.
SO ORDERED.
Narvasa, C.J., Padilla, Regalado and Puno, JJ., concur.

Footnotes

1. Sheriffs Return, Rollo in G.R. No. 107303, pp. 47-48.
2. Davao Light & Power., Inc. vs. Court of Appeals, et al., G.R. No. 93262, 204 SCRA 343
(1991); Cuartero vs. Court of Appeals, et al., G.R. No. 102448, 212 SCRA 260 (1992).
3. Davao Light & Power Co., Inc. vs. Court of Appeals, supra, 204 SCRA 343, 349-350.
Citations omitted.
4. 212 SCRA 260.
5. Id., at 267.
6. G.R. No. L-84034, 168 SCRA (1988).
7. G.R. No. 96748, 200 SCRA 130 (1991).
8. Id., p. 357.
9. Rollo in G.R. No. 107303, p. 90.
10. Rule 57, sec. 12, Rules of Court.

G.R. No. 107303 February 23, 1995
EMMANUEL C. OATE, ET AL. vs. ZEUS C. ABROGAR

EN BANC
[G.R. No. 107303. February 23, 1995.]

EMMANUEL C. OATE and ECON HOLDINGS CORPORATION, petitioners, vs. HON. ZEUS
C. ABROGAR, as Presiding Judge of Branch 150 of the Regional Trial Court of Makati, and SUN
LIFE ASSURANCE COMPANY OF CANADA, respondents.

[G.R. No. 107491.]

BRUNNER DEVELOPMENT CORPORATION, petitioners, vs. HON. ZEUS C. ABROGAR, as
Presiding Judge of Branch 150 of the Regional Trial Court of Makati, and SUN LIFE ASSURANCE
COMPANY OF CANADA, respondents.

SYLLABUS
1. REMEDIAL LAW; PROVISIONAL REMEDIES; ATTACHMENT; WRIT ISSUED
PRIOR TO THE ACQUISITION OF JURISDICTION OVER THE PERSON OF THE
DEFENDANT, CONSIDERED VOID; CASE AT BAR. It should be stated that the Court does
not in the least doubt the validity of the writ of attachment issued in these cases. The fact that a
criminal complaint for estafa which Sun Life had filed against petitioner Oate and Noel L. Dio,
president of Brunner, was dismissed by the Office of the Provincial Prosecutor is immaterial to the
resolution of the motions for reconsideration. In the first place, the dismissal, although later affirmed
by the Department of Justice, is pending reconsideration. In the second place, since the issue in the
case below is precisely whether petitioners were guilty of fraud in contracting their obligation,
resolution of the question must await the trial of the main case. However, we find petitioners'
contention respecting the validity of the attachment of their properties to be well taken. We hold that
the attachment of petitioners' properties prior to the acquisition of jurisdiction by the respondent
court is void and that the subsequent service of summons on petitioners did not cure the invalidity of
such attachment. The records show that before the summons and the complaint were served on
petitioners Oate and Econ Holdings Corporation (Econ) on January 9, 1992, Deputy Sheriff Arturo
C. Flores had already served on January 3, 1992 notices of garnishment on the PNB Head Office and
on all its Metro Manila branches and on A.B. Capital. In addition he made other levies before the
service of summons on petitioners. Private respondent invokes the ruling in Davao Light & Power
Co. v. Court of Appeals, (204 SCRA 343 [1991]) in support of its contention that the subsequent
acquisition of jurisdiction by the court cured the defect in the proceedings for attachment. In cites the
following portion of the decision in Davao Light and Power, written by Justice, now Chief Justice,
Narvasa: It goes without saying that whatever be the acts done by the Court prior to the acquisition
of jurisdiction over the person of the defendant, as above indicated issuance of summons, order of
as a matter of right without leave of court and however valid and proper they might otherwise be,
these do not and cannot bind and affect the defendant until and unless jurisdiction over his person is
eventually obtained by the court, either by service on him of summons or other coercive process or
well as a copy of the complaint and order for appointment of guardian ad litem, of any, as also
explicitly directed by Section 3, Rule 14 of the Rules of Court. It is clear from the above excerpt,
however, that while the petition for a writ of preliminary attachment may be granted and the writ
itself issued before the defendant is summoned, the writ of attachment cannot be implemented until
jurisdiction over the person of the defendant is obtained. As this Court explained, "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
submitted separately form the complaint), the order of attachment, and the plaintiff's attachment
bond."
2. ID.; ID.; ID.; ID.; NOT CURED BY SUBSEQUENT SERVICE OF SUMMONS.
Further clarification was made in Cuartero v. Court of Appeals, (212 SCRA 260, 266 [1992]) in
which it was held: It must be emphasized that the grant of the provisional remedy of attachment
practically involves three stages; first, the court issues the order granting the application; second, the
writ of attachment issues pursuant to the order granting the writ; and third, the writ is implemented.
For the initial two stages, it is not necessary that jurisdiction over the person of the defendant should
first be obtained. However, once the implementation commences, it is required that the court must
have acquired jurisdiction over the defendant for without such jurisdiction, the court has no power
and authority to act in any manner against the defendant. Any order issuing from the Court will not
bind the defendant. Private respondent argues that the case of Cuartero itself provides for an
exception as shown in the statement that "the court [in issuing the writ of preliminary attachment]
cannot bind and affect the defendant until jurisdiction is eventually obtained" and that since
petitioners were subsequently served with summons, no question can be raised against the validity of
the attachment of petitioners' properties before such service. The statement in question has been
taken out of context. The full statement reads: It is clear from our pronouncements that a writ of
preliminary attachment may issue even before summons is served upon the defendant. However, we
have likewise ruled that the writ cannot bind and affect the defendant until jurisdiction over his
person is eventually obtained. Therefore, it is required that when the proper officer commences
implementation of the writ of attachment, service of summons should be simultaneously made.
Indeed, as this Court through its First Division has ruled on facts similar to those in these cases, the
attachment of properties before the service of summons on the defendant is invalid, even though the
court later acquires jurisdiction over the defendant. At the very least, then, the writ of attachment
must be served simultaneously with the service of summons before the writ may be enforced. As the
properties of the petitioners were attached by the sheriff before he had served the summons on them,
the levies made must be considered void.
3. ID.; ID.; ID.; ID.; CANNOT BE CURED ON THE GROUND ON THE FEAR THAT
THE DEFENDANT MIGHT DISPOSE THE PROPERTY. Nor can the attachment of petitioners'
properties before the service of summons on them was made be justified on the ground that unless
writ the was then enforced, petitioners would be alerted and might dispose of their properties before
summons could be served on them. The Rules of Court do not require that issuance of the writ be
kept a secret until it can be enforced. Otherwise in no case may the service of summons on the
defendant precede the levy on attachment. To the contrary, Rule 57, sec. 13 allows the defendant to
move to discharge the attachment even before any attachment is actually levied upon, thus negating
any inference that before this enforcement, the issuance of the writ must be kept secret. As this Court
pointed out in Davao Light and Power, the lifting of an attachment "may be resorted to even before
any property has been levied on." It is indeed true that proceedings for the issuance of a writ of
attachment are generally ex parte. In Mindanao Savings and Loans Ass'n v. Court of Appeals (172
SCRA 480, 484 [1989]) it was held that no hearing is required for the issuance of a writ of
attachment because this "would defeat the objective of the remedy [because] the time which such
hearing would take could be enough to enable the defendant to abscond or dispose of his property
before a writ of attachment issues." It is not, however, notice to defendant that is sought to be
avoided but the "time which such hearing would take" because of the possibility that defendant may
delay the hearing to be able to dispose of his properties. On the contrary there may in fact be a need
for a hearing before the writ is issued as where the issue of fraudulent disposal of property is raised.
It is not true that there should be no hearing lest a defendant learns of the application for attachment
and he removes his properties before the writ can be enforced. On the other hand, to authorize the
attachment of property even before jurisdiction over the person of the defendant is acquired through
the service of summons or his voluntary appearance could lead to abuse. It is entirely possible that
the defendant may not know of the filing of a case against him and consequently may not be able to
take steps to protect his interests. Nor may sheriff's failure to abide by the law be excused on the
pretext that after all the court later acquired jurisdiction over petitioners. More important than the
need for insuring success in the enforcement of the writ is the need for affirming a principle by
insisting on that "most fundamental of all requisites the jurisdiction of the court issuing
attachment over the person of the defendant." It may be that the same result would follow from
requiring that a new writ be served all over again. The symbolic significance of such an act,
however, is that it would affirm our commitment to the rule of law.
4. ID.; ID.; ID.; ID.; EXAMINATION OF THE PROPERTY BY VIRTUE THEREOF;
CONSIDERED VOID. We likewise find petitioners' second contention to be meritorious. The
records show that, on January 21, 1992, respondent judge ordered the examination of the books of
accounts and ledgers of Brunner at the Urban Bank, Legaspi Village branch, and on January 30,
1992 the records of account of petitioner Oate at the BPI, even as he ordered the PNB to produce
the records regarding certain checks deposited in it. First, Sun Life defends these court orders on the
ground that the money paid by it to Brunner was subsequently withdrawn from the Urban Bank after
it had been deposited by Brunner and then transferred to petitioner Oate's account in the BPI and to
the unnamed account in the PNB. The issue before the trial court, however, concerns the nature of
the transaction between petitioner Brunner and Sun Life. In its complaint, Sun Life alleges that
Oate, in his personal capacity and as president of Econ, offered to sell to Sun Life P46,990,000.00
worth of treasury bills owned by Econ and Brunner at the discounted price of P39,526,500.82; that
on November 27, 1991, Sun Life paid the price by means of a check payable to Brunner; that
Brunner, through its president Noel L. Dio, issued to it a receipt with undertaking to deliver the
treasury bills to Sun Life; and that on December 4, 1991, Brunner and Dio delivered instead a
promissory note, dated November 27, 1991, in which it was made to appear that the transaction was
a money placement instead of sale of treasury bills. Thus the issue is whether the money paid to
Brunner was the consideration for the sale of treasury bills, as Sun Life claims, or whether it was
money intended for placement, as petitioners allege. Petitioners do not deny receipt of
P39,526,500.82 from Sun Life. Hence, whether the transaction is considered a sale or money
placement does not make the money the "subject matter of litigation" within the meaning of sec. 2 of
Republic Act No. 1405 which prohibits the disclosure or inquiry into bank deposits except "in cases
where the money deposited or invested is the subject matter of litigation." Nor will it matter whether
the money was "swindled" as Sun Life contends. Since, as already stated, the attachment of
petitioners' properties was invalid, the examination ordered in connection with such attachment must
likewise be considered invalid. Under Rule 57, sec.10, as quoted above, such examination is only
proper where the property of the person examined has been validly attached.

D E C I S I O N

MENDOZA, J p:
These are motions separately filed by petitioners, seeking reconsideration of the decision of the
Second Division holding that although the levy on attachment of petitioner's properties had been
made before the trial court acquired jurisdiction over them, the subsequent service of summons on
them cured the invalidity of the attachment. LLjur
The motions were referred to the Court en banc in view of the fact that in another decision rendered
by the Third Division on the same question, it was held that the subsequent acquisition of
jurisdiction over the person of a defendant does not render valid the previous attachment of his
property. 1 The Court en banc accepted the referral and now issues this resolution.
Petitioners maintain that, in accordance with prior decisions of this Court, the attachment of their
properties was void because the trial court had not at that time acquired jurisdiction over them and
that the subsequent service of summons on them did not cure the invalidity of the levy. They further
contend that the examination of the books and ledgers of the Bank of the Philippine Islands (BPI),
the Philippine National Bank (PNB) and the Urban Bank was a "fishing expedition" which the trial
court should not have authorized because petitioner Emmanuel C. Oate, whose accounts were
examined, was not a signatory to any of the documents evidencing the transaction between Sun Life
Assurance of Canada (Sun Life) and Brunner Development Corporation (Brunner).cdasia
On the other hand private respondent Sun Life stresses the fact that trial court eventually acquired
jurisdiction over petitioners and contends that this cured the invalidity of the attachment of
petitioner's properties. With respect to the second contention of petitioners, private respondent
argues that the examination of petitioner Oate's bank account was justified because it was he who
signed checks transferring huge amounts from Brunner's account in the Urban Bank to the PNB and
the BPI.
I.
At the outset, it should be stated that the Court does not in the least doubt the validity of the writ of
attachment issued in these cases. The fact that a criminal complaint for estafa which Sun Life had
filed against petitioner Oate and Noel L. Dio, president of Brunner, was dismissed by the Office
of the Provincial Prosecutor is immaterial to the resolution of the motions for reconsideration. In the
first place, the dismissal, although later affirmed by the Department of Justice, is pending
reconsideration. In the second place, since the issue in the case below is precisely whether
petitioners were guilty of fraud in contracting their obligation, resolution of the question must await
the trial of the main case.cdasia
However, we find petitioner's contention respecting the validity of the attachment of their properties
to be well taken. We hold that the attachment of petitioner's properties prior to the acquisition of
jurisdiction by the respondent court is void and that the subsequent service of summons on
petitioners did not cure the invalidity of such attachment. The records show that before the summons
and the complaint were served on petitioners Oate and Econ Holdings Corporation (Econ) on
January 9, 1992, Deputy Sheriff Arturo C. Flores had already served on January 3, 1992 notices of
garnishment on the PNB Head Office 2 and on all its Metro Manila branches and on A.B. Capital. 3
In addition he made other levies before the service of summons on petitioners, to wit:
On January 6, 1992, he served notices of garnishment on the Urban Bank Head Office and all its
Metro Manila branches, 4 and on the BPI. 5
On the same day, he levied on attachment Oate's condominium unit at the Amorsolo Apartments
Condominium Project, covered by Condominium Certificates of Title No. S-1758. 6
On January 7, 1992, he served notice of garnishment on the Union Bank of the Philippines. 7
On January 8, 1992, attached Oate's lot, consisting of 1,256 square meters, at the Ayala-Alabang
Subdivision, Alabang, Muntinlupa, covered by TCT No. 112673. 8
First. The Deputy Sheriff claims that he had tried to serve the summons with a copy of the complaint
on petitioners on January 3, 1992 but that there was no one in the offices of petitioners on whom he
could make a service. This is denied by petitioners who claim that their office was always open and
that Adeliza M. Jaranilla, Econ's Chief Accountant who eventually received summons on behalf of
Oate's and Econ, was present that day. Whatever the truth is, the fact is that no other attempt was
made by the sheriff to serve the summons except on January 9, 1992, in the case of Oate and Econ,
and on January 16, 1992, in the case of Dio. Meantime, he made several levies, which indicates a
predisposition to serve the writ of attachment in anticipation of the eventual acquisition by the court
of jurisdiction over petitioners.cdasia
Second. Private respondent invokes the ruling in Davao Light & Power Co. v. Court of Appeals 9 in
support of its contention that the subsequent acquisition of jurisdiction by the court cured the defect
in the proceedings for attachment. It cites the following portion of the decision in Davao Light and
Power, written by Justice, now Chief Justice Narvasa:
as a matter of right without leave of court and however valid and proper they might otherwise be,
these do not and cannot bind and affect the defendant until and unless jurisdiction over his person is
eventually obtained by the court, either by service on him of summons or other coercive process or
well as a copy of the complaint and order for appointment of Guardian ad litem, if any, as also
explicitly directed by Section 3, Rule 14 of the Rules of Court. 10
It is clear from the above excerpt, however, that while the petition for a writ of preliminary
attachment may be granted and the writ itself issued before the defendant is summoned, the writ of
attachment cannot be implemented until jurisdiction over the person of the defendant is obtained. As
this Court explained, "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." 11
Further clarification on this point was made in Cuartero v. Court of Appeals, 12 in which it was held:
It must be emphasized that the grant of the provisional remedy of attachment practically involves
three stages; first, the court issues the order granting the application; second, the writ of attachment
jurisdiction over the defendant for without such jurisdiction, the court has no power and authority to
act in any manner against the defendant. Any order issuing from the Court will not bind the
defendant.cdasia
Private respondent argues that the case of Cuartero itself provides for an exception as shown in the
statement that "the court [in issuing the writ of preliminary attachment] cannot bind and affect the
defendant until jurisdiction is eventually obtained" and that since petitioners were subsequently
served with summons, no question can be raised against the validity of the attachment of petitioner's
properties before such service.
The statement in question has been taken out of context. The full statement reads:
It is clear from our pronouncements that a writ of preliminary attachment may issue even before
summons is served upon the defendant. However, we have likewise ruled that the writ cannot bind
and affect the defendant until jurisdiction over his person is eventually obtained. Therefore it is
required that when the proper officer commences implementation of the writ of attachment, service
of summons should be simultaneously made. 13
Indeed, as this Court through its First Division has ruled on facts similar to those in these cases, the
attachment of properties before the service of summons on the defendant is invalid, even though the
court later acquires jurisdiction over the defendant. 14 At the very least, then, the writ of attachment
must be served simultaneously with the service of summons before the writ may be enforced. As the
properties of the petitioners were attached by the sheriff before he had served the summons on them,
the levies made must be considered void.cdasia
Third. Nor can the attachment of petitioner's properties before the service of summons on them was
made be justified on the ground that unless the writ was then enforced, petitioners would be alerted
and might dispose of their properties before summons could be served on them.
The Rules of Court do not require that issuance of the writ be kept a secret until it can be enforced.
Otherwise in no case may the service of summons on the defendant precede the levy on attachment.
To the contrary, Rule 57, 13 allows the defendant to move to discharge the attachment even before
any attachment is actually levied upon, thus negating any inference that before its enforcement, the
issuance of the writ must be kept secret. Rule 57, provides:
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 . . . . (Emphasis added).
At this Court pointed out in Davao Light and Power, 15 the lifting of an attachment "may be resorted
to even before any property has been levied on."
It is indeed true that proceedings for the issuance of a writ of attachment are generally ex parte. In
Mindanao Savings and Loans Ass'n v. Court of Appeals 16 it was held that no hearing is required for
the issuance of a writ of attachment because this "would defeat the objective of the remedy [because]
the time which such hearing would take could be enough to enable the defendant to abscond or
dispose of his property before a writ of attachment issues." It is not, however, notice to defendant
that is sought to be avoided but the "time which such hearing would take" because of the possibility
that defendant may delay the hearing to be able to dispose of his properties. On the contrary there
may in fact be a need for a hearing before the writ is issued as where the issue of fraudulent disposal
of property is raised. 17 It is not true that there should be no hearing lest a defendant learns of the
application for attachment and he removes his properties before the writ can be enforced.cdasia
On the other hand, to authorize the attachment of property even before jurisdiction over the person
of the defendant is acquired through the service of summons or his voluntary appearance could lead
to abuse. It is entirely possible that the defendant may not know of the filing of a case against him
and consequently may not be able to take steps to protect his interests.
Nor may sheriff's failure to abide by the law be excused on the pretext that after all the court later
acquired jurisdiction over petitioners. More important than the need for insuring success in the
enforcement of the writ is the need for affirming a principle by insisting on that "most fundamental
of all requisites the jurisdiction of the court issuing attachment over the person of the defendant."
18 It may be that the same result would follow from requiring that a new writ be served all over
again. The symbolic significance of such an act, however, is that it would affirm our commitment to
the rule of law. 19
II.
We likewise find petitioner's second contention to be meritorious. The records show that, on January
21, 1992, respondent judge ordered the examination of the books of accounts and ledgers of Brunner
at the Urban Bank, Legazpi Village branch, and on January 30, 1992 the records of account of
petitioner Oate at the BPI, even as he ordered the PNB to produce the records regarding certain
checks deposited in it.cdasia
First. Sun Life depends these court orders on the ground that the money paid by it to Brunner was
subsequently withdrawn from the Urban Bank after it had been deposited by Brunner and then
transferred to petitioner Oate's account in the BPI and to the unnamed account in the PNB.
The issue before the trial court, however, concerns the nature of the transaction between petitioner
Brunner and Sun Life. In its complaint, Sun Life alleges that Oate, in his personal capacity and as
president of Econ, offered to sell to Sun Life P46,990,000.00 worth of treasury bills owned by Econ
and Brunner at the discounted price of P39,526,500.82; that on November 27, 1991, Sun Life paid
the price by means of a check payable to Brunner; that Brunner, through its president Noel L. Dio,
issued to it a receipt with undertaking to deliver the treasury bills to Sun Life; and that on December
4, 1991, Brunner and Dio delivered instead a promissory note, dated November 27, 1991, in which
it was made to appear that the transaction was a money placement instead of sale of treasury bills.
Thus the issue is whether the money paid to Brunner was the consideration for the sale of treasury
bills, as Sun Life claims, or whether it was money intended for placement, as petitioners allege.
Petitioners do not deny receipt of P39,526,500.82 from Sun Life. Hence, whether the transaction is
considered a sale or money placement does not make the money the "subject matter of litigation"
within the meaning of 2 of Republic Act No. 1405 which prohibits the disclosure or inquiry into
bank deposits except "in cases where the money deposited or invested is the subject matter of
litigation." Nor will it matter whether the money was "swindled" as Sun Life contends.
Second. The examination of bank books and records cannot be justified under Rule 57, 10. This
provision states:cdasia
SEC. 10. Examination of party whose property is attached and persons indebted to him or
controlling his property; delivery of property to officer. Any person owing debts to the party
whose property is attached or having in his possession or under his control any credit or other
personal property belonging to such party, may be required to attend before the court in which the
action is pending, or before a commissioner appointed by the court, and be examined on oath
respecting the same. The party whose property is attached may also be required to attend for the
purpose of giving information respecting his property, and may be examined on oath. The court may,
after such examination, order personal property capable of manual delivery belonging to him, in the
possession of the person so required to attend before the court, to be delivered to the clerk of the
court, sheriff, or other proper officer on such terms as may be just, having reference to any lien
thereon or claims against the same, to await the judgment in the action.
Since, as already stated, the attachment of petitioner's properties was invalid, the examination
ordered in connection with such attachment must likewise be considered invalid. Under Rule 57,
10, as quoted above, such examination is only proper where the property of the person examined had
been validly attached.
WHEREFORE, the decision dated February 21, 1994 is RECONSIDERED and SET ASIDE and
another one is rendered GRANTING the petitions for certiorari and SETTING ASIDE the orders
dated February 26, 1992 and September 9, 1992, insofar as they authorize the attachment of
petitioner's properties and the examination of bank books and records pertaining to their accounts,
and ORDERING respondent Judge Zeus C. Abrogar
(1) forthwith to issue an alias writ of attachment upon the same bond furnished by
respondent Sun Life Assurance Company of Canada;
(2) direct the sheriff to lift the levy under the original writ of attachment and simultaneously
levy on the same properties pursuant to the alias writ so issued; andcdasia
(3) take such steps as may be necessary to insure that there will be no intervening period
between the lifting of the original attachment and the subsequent levy under the alias writ.
Petitioners may file the necessary counterbond to prevent subsequent levy or to dissolve the
attachment after such levy.
SO ORDERED.
Narvasa, C.J., Feliciano, Padilla, Bidin, Regalado, Davide, Jr., Romero, Bellosillo, Melo, Quiason,
Puno, Vitug, Kapunan and Francisco, JJ., concur.

Footnotes

1. H.B. Zachry Co. v. Court of Appeals, 232 SCRA 329 (1994).
2. Per Sheriff's Report but see Petition, Annex G, Rollo in G.R. No. 107303, p. 51 and
Petition, Annex O, Rollo in G.R. No. 107491, p. 90 which show that the notice of levy of attachment
was received by PNB on January 2, 1992.
3. Petition, Annex H, Rollo in G.R. No. 107303, p. 52 and Petition, Annex P, Rollo in G.R.
No. 107491, p. 91.
4. Petition, Annex I, Rollo in G.R. No. 107303, p. 53 and Petition, Annex Um Rollo in G.R.
No. 107491, p. 99.
5. Petition, Annex J, Rollo in G.R No. 107303, p. 54 and Petition, Annex Q, Rollo in G.R.
No. 107491, p. 92.
6. Petition, Annex K, Rollo in G.R. No. 107303, p. 55 and Petition, Annex V, Rollo in G.R.
No. 107491, p. 100.
7. Petition, Annex L, Rollo in G.R. No. 107303, p. 57 and Petition, Annex W, Rollo in G.R.
No. 107491, p. 102.
8. Petition, Annex M, Rollo in G.R. No. 107303, p. 58 and Petition, Annex X, Rollo in G.R.
No. 107491, p. 103.
9. 204 SCRA 343 (1991).
10. Id. at 355-6 (Emphasis added).
11. Id. at 357.
12. 212 SCRA 260, 266 (1992).
13. Id. (Emphasis added).
14. H.B. Zachry Co. Inc. v. Court of Appeals, supra note 1.
15. Supra note 9 (Emphasis added).
16. 172 SCRA 480, 484 (1989).
17. See Carpio v. Macadaeg, 9 SCRA 552 (1963).
18. Sievert v. Court of Appeals, 168 SCRA 692, 698 (1989).
19. Compare Go v. Court of Appeals, 206 SCRA 138, 162 (1992): "It may be that to require
the State to accord petitioner his rights to a preliminary investigation and to bail at this point, could
turn out ultimately to be largely a ceremonial exercise. But the Court is not compelled to speculate.
And, in any case, it would not be idle ceremony; rather it would be a celebration by the State of the
rights and liberties of its own people and a re-affirmation of its obligation and determination to
respect those rights and liberties."

G.R. No. 106989 May 10, 1994
H.B. ZACHRY COMPANY INTERNATIONAL vs. COURT OF APPEALS, ET AL.

FIRST DIVISION
[G.R. No. 106989. May 10, 1994.]

H.B. ZACHRY COMPANY INTERNATIONAL, petitioner, vs. HON. COURT OF APPEALS and
VINNEL-BELVOIR CORPORATION, respondents.

[G.R. No. 107124.]

VINNEL-BELVOIR CORPORATION, petitioner, vs. THE COURT OF APPEALS and H.B.
ZACHRY COMPANY INTERNATIONAL, respondents.

D E C I S I O N

DAVIDE, J p:
Challenged in these petitions for review, which were ordered consolidated on 9 December 1992, 1 is
the decision of the Court of Appeals in CA-G.R. SP No. 24174, 2 promulgated on 1 July 1992, the
dispositive portion of which reads:
"WHEREFORE, premises considered, this Petition for Certiorari and Prohibition is hereby granted
in so far as it prayed for the dissolution of the writ of preliminary attachment inasmuch as it was
issued prior to the service of summons and a copy of the complaint on petitioner. The writ of
preliminary attachment issued by respondent Court on March 21, 1990 is hereby ordered lifted and
dissolved as having been issued in grave abuse of discretion by respondent Court.
With respect to the issue of whether or not parties should submit the instant dispute [to] arbitration,
We hereby order public respondent to conduct a hearing for the determination of the proper
interpretation of the provisions of the Subcontract Agreement.
No pronouncement as to costs." 3
and its September 1992 Resolution 4 which denied the motion for partial reconsideration of H.B.
Zachry Company International (hereinafter Zachry) and the motion for reconsideration of Vinnel-
Belvoir Corporation (hereinafter VBC).
The pleadings of the parties and the challenged decision disclose the following material facts:
On 17 July 1987, VBC entered into a written Subcontract Agreement 5 with Zachry, a foreign
corporation. The latter had been engaged by the United States Navy to design and construct 264
Family Housing Units at the US Naval Base at Subic, Zambales. Under the agreement, specifically
under Section 3 on Payment, VBC was to perform all the construction work on the housing project
and would be paid "for the performance of the work the sum of Six Million Four Hundred Sixty-
eight Thousand U.S. Dollars (U.S.$6,468,000.00), subject to additions and deductions for changes as
hereinafter provided." This "lump sum price is based on CONTRACTOR'S proposal, dated 21 May
1987 (including drawings), submitted to OWNER for Alternate Design-Apartments." It was also
provided "that substantial differences between the proposal and the final drawings and Specification
approved by the OWNER may be grounds for an equitable adjustment in price and/or time of
performance if requested by either party in accordance with Section 6 [on] Changes." 6 Section 27
of the agreement reads:
"Sec. 27. DISPUTES PROCEDURE.
A. In case of any dispute, except those that are specifically provided for in this
SUBCONTRACT, between the SUBCONTRACTOR and the CONTRACTOR, the
SUBCONTRACTOR agrees to be bound to the CONTRACTOR to the same extent that the
CONTRACTOR is bound to the OWNER by the terms of the GENERAL CONTRACT and by any
and all decisions or determinations made thereunder by the party or boards so authorized in the
GENERAL CONTRACT. The SUBCONTRACTOR, on items or issues relating or attributable to
the SUBCONTRACTOR, also agrees to be bound to the CONTRACTOR to the same extent that the
CONTRACTOR is bound to the OWNER by the final decision of a court of competent jurisdiction,
whether or not the SUBCONTRACTOR is a party to such proceeding. If such a dispute is
prosecuted or defended by the CONTRACTOR against the OWNER under the terms of the
GENERAL CONTRACT or in court action, the SUBCONTRACTOR agrees to furnish all
documents, statements, witnesses and other information required by the CONTRACTOR for such
purpose. It is expressly understood that as to any and all work done and agreed to be done by the
CONTRACTOR and as to any and all materials, equipment or services furnished or agreed to be
furnished by the SUBCONTRACTOR, and as to any and all damages incurred by the
SUBCONTRACTOR in connection with this SUBCONTRACT, the CONTRACTOR shall not be
liable to the SUBCONTRACTOR to any greater extent than the OWNER is liable to and pays the
CONTRACTOR for the use and benefit of the SUBCONTRACTOR for such claims, except those
claims arising from acts of the CONTRACTOR. No dispute shall interfere with the progress of the
WORK and the SUBCONTRACTOR agrees to proceed with his WORK as directed, despite any
disputes it may have with the CONTRACTOR, the OWNER, or other parties.
B. If at any time any controversy should arise between the CONTRACTOR and the
SUBCONTRACTOR, with respect to any matter or thing involved in, related to or arising out of this
SUBCONTRACT, which controversy is not controlled or determined by subparagraph 27. A. above
or other provisions in this SUBCONTRACT, then said controversy shall be decided as follows:
1. The SUBCONTRACTOR shall be conclusively bound and abide by the
CONTRACTOR'S written decision respecting said controversy, unless the SUBCONTRACTOR
shall commence arbitration proceedings as hereinafter provided within thirty (30) days following
receipt of such written decision. prLL
2. If the SUBCONTRACTOR decides to appeal from the written decision of the
CONTRACTOR, then the controversy shall be decided by arbitration in accordance with the then
current rules of the Construction Industry Arbitration Rules of the American Arbitration Association,
and the arbitration decision shall be final and binding on both parties; provided, however, that
proceedings before the American Arbitration Association shall be commenced by the
SUBCONTRACTOR not later than thirty (30) days following the CONTRACTOR'S written
decision pursuant to subparagraph 27.B.1 above. If the SUBCONTRACTOR does not file a demand
for arbitration with the American Arbitration Association and CONTRACTOR within this thirty (30)
day period, then the CONTRACTOR'S written decision is final and binding.
3. This agreement to arbitrate shall be specifically enforceable." 7
When VBC had almost completed the project, Zachry complained of the quality of work, making it a
reason for its decision to take over the management of the project, which paragraph c, Section 7 of
the Subcontract Agreement authorized. However, prior to such take-over, the parties executed on 18
December 1989 a Supplemental Agreement, 8 pertinent portions of which read as follows:
"2. All funds for progress as computed by the schedule of prices under the subcontract will
be retained by ZACHRY to insure sufficiency of funds to finish the lump sum project as scoped by
the subcontract. However, one month after the date of this agreement, when ZACHRY shall have
determined the cost to complete the subcontract, ZACHRY shall as appropriate, release to VBC the
corresponding portion of the amounts retained.
xxx xxx xxx
7. All costs incurred by ZACHRY chargeable to VBC under the subcontract from the date
of the takeover to complete the scope of the subcontract will be to the account of VBC and/or its
sureties. Zachry will advise both VBC and its sureties on a periodic basis as to progress and
accumulated costs.
xxx xxx xxx
9. VBC will be invited to participate in negotiations with the Navy in Change Orders
concerning its scope of work. VBC will accept as final, without recourse against ZACHRY the
Navy's decision regarding its interest in these Change Orders or modifications."
In accordance with the above conditions, VBC submitted to Zachry on 10 January 1990 a detailed
computation of the cost to complete the subcontract on the housing project. According to VBC's
computation, there remains a balance of $1,103,000.00 due in its favor as of 18 January 1990. This
amount includes the sum of $200,000.00 allegedly withheld by Zachry and the labor escalation
adjustment granted earlier by the US Navy in the amount of $282,000.00 due VBC. Zachry,
however, not only refused to acknowledge the indebtedness but continually failed to submit to VBC
a statement of accumulated costs, as a result of which VBC was prevented from cheking the
accuracy of the said costs. On 2 March 1990, VBC wrote Zachry a letter demanding compliance
with its obligations. 9 Zachry still failed to do so. VBC made representations to pursue its claim,
including a formal claim with the Officer-in-Charge of Construction, NAVFAC Contracts,
Southwest Pacific, 10 which also failed. prcd
Hence, on 20 March 1990, VBC filed a Complaint 11 with the Regional Trial Court (RTC) of
Makati against Zachry for the collection of the payments due it with a prayer for a writ of
preliminary attachment over Zachry's bank account in Subic Base and over the remaining thirty-one
undelivered housing units which were to be turned over to the US Navy by Zachry on 30 March
1990. The case was docketed as Civil Case No. 90-772 and was raffled to Branch 142 of the said
court presided over by Judge Salvador P. de Guzman, Jr. Paragraph 2 of the Complaint alleges that
defendant Zachry "is a foreign corporation with address at 527 Longwood Street, San Antonio,
Texas, U.S.A. and has some of its officers working at U.S. Naval Base, Subic Bay, Zambales where
it may be served with summons."
On 21 March 1990, the trial court issued an order granting the application for the issuance of the writ
of preliminary attachment and fixing the attachment bond at P24,266,000.00. 12 VBC put up the
required bond and on 26 March 1990, the trial court issued the writ of attachment, 13 which was
served, together with the summons, a copy of the complaint with annexes, the bond, and a copy of
the order of attachment, on 27 March 1990 in the manner described in the Sheriff's Partial Return 14
of 29 March 1990:
"upon defendant H.B. Zachry Company (International) at its field office in U.S. Naval Base, Subic
Bay, Zambales thru Ruby Apostol who acknowledged receipt thereof. Mr. James M. Cupit,
defendant's authorized officer was in their Manila Office at the time of service."
The return further states:
"That on March 28, 1990, the undersigned sheriff went to the office of defendant H. B. Zachry
Company (International) at c/o A.M. Oreta & Co. at 5th Floor, Ermita Building, Arquiza corner
Alhambra streets, Ermita, Manila to serve the Court's processes but was informed by Atty. Felix
Lobiro of A.M. Oreta & Co., that defendant H.B. Zachry Company has its own office at Room 600,
6th Floor of the same building (Ermita Building). However, said defendant's office was closed and
defendant company (ZACHRY) only holds office during Mondays and Tuesdays of the week as per
information gathered from the adjacent office." cdrep
On 27 March 1990, VBC filed an Amended Complaint 15 in Civil Case No. 90-772 to implead as
additional defendants the US Navy Treasury Office-Subic Naval Base and Captain A.L. Wynn, an
officer of the US Navy, against whom VBC payed for a restraining order or preliminary injunction
to restrain the latter from preparing the treasury warrant checks to be paid to Zachry and the former
from signing the said checks and to restrain both from making any further payments to Zachry. It
also amended paragraph 2 on the status and circumstances of Zachry as follows:
"2. Defendant, H.B. Zachry Co. (International) . . . is a foreign corporation with address at
527 Longwood Street, San Antonio, Texas, U.S.A. and may be served with summons and all other
legal processes at the following addresses: a) H.B. Zachry Company (International), U.S. Naval
Base, Subic Bay, Zambales; and b) H.B. Zachry Company (International) c/o A.M. Oreta & Co., 5th
Floor Ermita Building, Arquiza corner Alhambra Streets, Ermita, Manila, through its authorized
officer James C. Cupit." 16
On 6 April 1990, Zachry filed a motion to dismiss the complaint 17 on the ground of lack of
jurisdiction over its person because the summons was not validly served on it. It alleges that it is a
foreign corporation duly licensed on 13 November 1989 by the Securities and Exchange
Commission to do business in the Philippines 18 and, pursuant to Section 128 of the Corporation
Code of the Philippines, had appointed Atty. Lucas Nunag 19 as its resident agent on whom any
summons and legal processes against it may be served. Atty. Nunag's address is at the 10th Floor,
Shell House, 156 Valero St., Makati, Metro Manila.
Summons and a copy of the Amended Complaint were served on 24 April 1990 on Zachry through
Atty. Nunag as shown in the sheriff's return dated 24 April 1990. 20
On 26 April 1990, VBC filed a Manifestation 21 to inform the court of the above service of
summons on Zachry which it claimed rendered moot and academic the motion to dismiss. prcd
On 24 May 1990, Zachry filed an Omnibus Motion 22 (a) to dismiss the complaint for lack of
jurisdiction over its person since the subsequent service of summons did not cure the jurisdictional
defect it earlier pointed out and, in the alternative, to dismiss the case or suspend the proceedings
therein for failure of the plaintiff to submit the controversy in question to arbitration as provided for
in its contract with Zachry; and (b) to dissolve the writ of attachment of 26 March 1990 "for having
been issued without jurisdiction, having been issued prior to the service of summons." The
arbitration provision referred to is Section 27.B of the Subcontract Agreement quoted earlier. In
support of its alternative prayer for the suspension of proceedings, it cited Section 7 of R.A. No. 876,
otherwise known as the Arbitration Act which provides:
"Sec. 7. Stay of Civil Action If any suit or proceeding be brought upon an issue, arising out of
an agreement providing for the arbitration thereof, the Court in which such suit or proceeding is
pending, upon being satisfied that the issue involved in such suit or proceeding is referable to
arbitration, shall stay the action or proceeding until an arbitration has been had in accordance with
the terms of the agreement. . . ."
This provision is almost identical with Section 3 of the United States Arbitration Act.
As to the invalidity of the writ of attachment, Zachry avails of the decision in Sievert vs. Court of
Appeals 23 wherein this Court said:
"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. A court which has not acquired jurisdiction over the person of the 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." 24
VBC opposed the Omnibus Motion. Pleadings related to the Omnibus Motion were subsequently
filed. 25
In its Order of 19 September 1990, 26 the trial court resolved the Omnibus Motion and the related
incidents by declaring that "the merits of the case can only [be] reached after due presentation of
evidence." Hence, it denied the motion and directed the defendants to file their answer within the
period provided by law. llcd
On 8 October 1990, Zachry filed a motion for the reconsideration 27 of the above order assailing the
court's inaction on the second and third issues raised in its Omnibus Motion, viz., the necessity of
arbitration and the invalidity of the writ of attachment. VBC opposed the motion. 28 On 9 January
1991, the court issued an order denying the motion for reconsideration by ruling that the writ of
preliminary attachment was regularly issued and that the violations of the Subcontract Agreement
can be "tranced [sic] only after the case is heard on the merits."
Dissatisfied with the denial, Zachry filed with the Court of Appeals on 14 February 1991 a petition
for certiorari and prohibition, 29 which was docketed as CA-G.R. SP No. 24174. Zachry contends
therein that:
1. The proceedings before respondent trial court should be suspended, pending submission
of the dispute to arbitration pursuant to Section 27-B of the Subcontract Agreement;
2. Alternatively, the complaint should be dismissed, pending arbitration pursuant to Section
27-B of the Subcontract Agreement;
3. As a third alternative, the complaint should be dismissed, because the dispute has been
resolved with finality under Section 27-B of the Subcontract Agreement; and
4. The writ of preliminary attachment should be dissolved, as having been outside, or in
excess of respondent court's jurisdiction, having been issued prior to the service of summons on
petitioner.
It then prays that (a) the orders of the trial court of 19 September 1990 and 9 January 1991 be
annulled for having been issued without or in excess of jurisdiction or with grave abuse of
discretion; and (b) the trial court be directed to immediately suspend the proceedings in Civil Case
No. 90-772 pending arbitration proceedings in accordance with the terms of Section 27.B of the
Subcontract Agreement or, alternatively, to dismiss the amended complaint and dissolve the writ of
attachment. It also prays for the issuance of a temporary restraining order and a writ of preliminary
injunction to restrain the trial court from proceeding further in Civil Case No. 90-772. LibLex
On 18 February 1991, the Court of Appeals issued a temporary restraining order. 30
On 1 July 1991, the Court of Appeals promulgated the challenged decision 31 dissolving the writ of
preliminary attachment issued by the trial court and ordering it to conduct a hearing to determine the
proper interpretation of the provisions of the Subcontract Agreement. As to the writ of attachment,
the Court of Appeals held that summons was served on Zachry only on 24 April 1990; hence,
applying Sievert vs. Court of Appeals, 32 the trial court "had no authority yet to act coercively
against the defendant" when it issued the writ of attachment on 21 March 1990. As to arbitration, it
ruled:
"We are of the reasoned opinion that unlike in the factual situation in the cases cited by petitioner,
the contract involved in the case at bar is, with respect to its arbitration clause, vogue [sic] and
uncertain. Section 27.B which is the provision upon which petitioner anchors its claims is ambiguous
in its terminology when it states that 'if at anytime any controversy should arise between the
contractor and the subcontractor . . . which controversy is not controlled or determined by Section
27.A above or other provision of this subcontract. . . .' This provision states that only when a
controversy arises between the contractor and the subcontractor which is not covered by Section
27.A or any provision of the Subcontract Agreement will the parties submit to arbitration. As to what
controversies fall under Section 27.B, it is not clear from a mere perusal of the provisions. It is
therefore not correct for petitioner to say that any and all dispute arising between the contracting
parties should be resolved by arbitration prior to a filing of a suit in court." 33
VBC and Zachry filed a motion for reconsideration and a partial motion for reconsideration,
respectively. 34 The former urged the Court of Appeals to consider the decision of this Court of 29
November 1991 in Davao Light & Power Co. vs. Court of Appeals 35 wherein this Court ruled that a
writ of preliminary attachment may be issued ex-parte prior to the service of summons and a copy of
the complaint on the defendants. On the other hand, Zachry insists that "[t]here is nothing 'vague' or
'ambiguous about'" the provision on dispute procedures set forth in Subsections 27.B.1 to 27.B.3 of
the Subcontract Agreement. cdrep
In its Resolution of 2 September 1992, 36 the Court of Appeals denied the above motions of the
parties.
Hence, these petitions which were given due course in this Court's Resolution of 8 March 1993. 37
In G.R. No. 106989, petitioner Zachry reiterates all the issues it raised before the Court of Appeals,
except that regarding the validity of the writ of attachment which was decided in its favor.
In G.R. No. 107124, petitioner VBC raises the following issues:
"A. WHETHER THE ISSUANCE OF THE WRIT OF PRELIMINARY ATTACHMENT
PRIOR TO THE SERVICE OF THE SUMMONS AND A COPY OF THE AMENDED
COMPLAINT ON THE RESPONDENT IS VALID.
B. WHETHER RESORT TO ARBITRATION PRIOR TO FILING A SUIT IN COURT IS
REQUIRED BY THE SUBCONTRACT AGREEMENT UNDER THE FACTS OBTAINING IN
THE PRESENT CASES."
As to the first issue, VBC takes refuge in the ruling in Davao Light & Power Co. vs. Court of
Appeals 38 and argues that the issuance of the writ of attachment on 21 March 1990, although
before the service of the summons, was valid. Its issuance and implementation are two different and
separate things; the first is not affected by any defect in the implementation which may be corrected.
Moreover, assuming arguendo that the initial service of summons was defective, it was cured by the
numerous pleadings thereafter filed. Finally, whatever doubts existed on the effectiveness of the
implementation of the writ was erased by its re-service on the resident agent of Zachry. llcd
As to the issue on arbitration, VBC maintains that arbitration is not required under the facts
obtaining in the present case because the applicable provision of the Subcontract Agreement is
Section 3 on Payment and not Section 27.B on Arbitration. Zachry's fraudulent actuations and gross
violation of the Subcontract Agreement render prior resort to arbitration futile and useless. The
preliminary attachment, which was essential to secure the interest of the petitioner, could not have
been obtained through arbitration proceedings.
Zachry, in its Comment, 39 contends that pursuant to the Sievert and Davao Light rulings, the
issuance of the writ of attachment before the service of summons on Zachry's resident agent was
invalid and that the various pleadings filed by the parties did not cure its invalidity. It argues that the
arbitration procedure is set forth in Section 27.B of the Subcontract Agreement. If further maintains
that pursuant to General Insurance vs. Union Insurance, 40 the alleged fraudulent actuations which
relate to the merits of the case may be properly addressed to the arbitrators and that there is no merit
to the claim that arbitration would be useless since the arbitration proceeding would be presided over
by an independent and competent arbitral tribunal.
The issues in these petitions are properly defined by VBC in G.R. No. 107124.
We find for petitioner VBC.
It was error for the Court of Appeals to declare, on the ground of grave abuse of discretion, the
nullity of the writ of attachment issued by the trial court on 21 March 1990. In the first place, the
writ was in fact issued only on 26 March 1990 and served, together with the summons, copy of the
complaint, the Order of 21 March 1990, and the bond, on 27 March on Zachry at its field office in
Subic Bay, Zambales, through one Ruby Apostol. What the Court of Appeals referred to as having
been issued on 21 March 1990 is the order granting the application for the issuance of a writ of
preliminary attachment upon the posting of a bond of P24,266,000.00. 41 In the second place, even
granting arguendo that the Court of Appeals had indeed in mind the 26 March 1990 writ of
attachment, its issuance, as well as the issuance of the 21 March 1990 Order, did not suffer from any
procedural or jurisdictional defect; the trial court could validly issue both.
However, the writ of attachment cannot be validly enforced through the levy of Zachry's property
before the court had acquired jurisdiction over Zachry's person either through its voluntary
appearance or the valid service of summons upon it. 42 To put it in another way, a distinction should
be made between the issuance and the enforcement of the writ. The trial court has unlimited power
to issue the writ upon the commencement of the action even before it acquires jurisdiction over the
person of the defendant, but enforcement thereof can only be validly done after it shall have acquired
such jurisdiction. This is the rule enunciated in Davao Light & Power Co. vs. Court of Appeals. 43
In that case, this Court stated:
"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. cdrep
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 dependent on, or held in suspension until, the
actual obtention of jurisdiction over the defendant's person. The obtention by the court of jurisdiction
over the person of the defendant is one thing; quite another is the acquisition of jurisdiction over the
person of the plaintiff or over the subject-matter or nature of the action, or the res or object thereof.
44
xxx xxx xxx
A preliminary attachment may be defined, paraphrasing the Rules of Court, as the provisional
or at any time thereafter, have the property of the adverse party taken into the custody of the court as
security for the satisfaction of any judgment that may be recovered. It is a remedy which is purely
statutory in respect of which the law requires a strict construction of the provisions granting it.
Withal no principle, statutory of jurisprudential, prohibits its issuance by any court before
Rule 57 in fact speaks of the grant of the remedy 'at the commencement of the action or at any time
thereafter.' The phrase 'at the commencement of the action,' obviously refers to the date of the filing
of the complaint which, as above pointed out, is the date that marks 'the commencement of the
action;' and the reference plainly is to a time before summons is served on the defendant, or even
before summons issues. What the rule is saying quite clearly is that after an action is properly
commenced by the filing of the complaint and the payment of all requisite docket and other fees
the complaint or other appropriate pleading (counterclaim, cross-claim, third-party claim) and for the
otherwise sufficient in form and substance. 45
xxx xxx xxx
as a matter of right without leave of court) and however valid and proper they might otherwise
be, these do not and cannot bind and affect the defendant until and unless jurisdiction over his person
is eventually obtained by the court, either by service on him of summons or other coercive process or
well as a copy of the complaint and order for appointment of guardian ad litem, if any, as also
explicitly directed by Section 3, Rule 14 of the Rules of Court. Service of all such documents is
indispensable not only for the acquisition of jurisdiction over the person of the defendant, but also
upon consideration 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. 46
xxx xxx xxx
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
submitted separately from the complaint), the order of attachment, and the plaintiff's attachment
bond." 47
We reiterated the rule laid down in Davao Light in the subsequent case of Cuartero vs. Court of
Appeals 48 wherein we stated:
"It must be emphasized that the grant of the provisional remedy of attachment practically involves
three stages: first, the court issues the order granting the application; second, the writ of attachment
jurisdiction over the person of the defendant for without such jurisdiction, the court has no power
and authority to act in any manner against the defendant. Any order issuing from the Court will not
bind the defendant."
The validity then of the order granting the application for a writ of preliminary attachment on 21
March 1990 and of the issuance of the writ of preliminary attachment on 26 March 1990 is beyond
dispute. However, the enforcement of the preliminary attachment on 27 March 1990, although
simultaneous with the service of the summons and a copy of the complaint, did not bind Zachry
because the service of the summons was not validly made. When a foreign corporation has
designated a person to receive service of summons pursuant to the Corporation Code, that
designation is exclusive and service of summons on any other person is inefficacious. 49 The valid
service of summons and a copy of the amended complaint was only made upon it on 24 April 1990,
and it was only then that the trial court acquired jurisdiction over Zachry's person. Accordingly, the
levy on attachment made by the sheriff on 27 April 1990 was invalid. However, the writ of
preliminary attachment may be validly served anew. prLL
As to the second issue of arbitration, we find that although the order of the trial court denying the
motion to dismiss did not clearly state so, it is evident that the trial court perceived the ground of the
motion to be not indubitable; hence, it could defer its resolution thereon until the trial of the case. In
deciding a motion to dismiss, Section 3, Rule 16 of the Rules of Court grants the court four options:
(1) to deny the motion, (2) to grant the motion, (3) to allow amendment of pleadings, or (4) to defer
the hearing and determination of the motion until the trial, if the ground alleged therein does not
appear to be indubitable. Under the fourth option, the court is under no obligation to immediately
hold a hearing on the motion; it is vested with discretion to defer such hearing and the determination
of the motion until the trial of the case. 50 The lack of indubitability of the ground involved in
Zachry's motion to dismiss is confirmed by the Court of Appeals when it declared:
"Section 27.B which is the provision upon which petitioner [Zachry] anchors its claim is ambiguous
in its terminology when it states that 'if at any time any controversy should arise between the
contractor and the subcontractor . . . which controversy is not controlled or determined by Section
27.A above or other provisions of this subcontractor'. . . . This provision states that only when a
controversy arises between the contractor and subcontractor which is not covered by Section 27.A or
any provision of the Subcontractor will the parties submit to arbitration. As to what controversies fall
under Section 27.B, it is not clear from a mere perusal of the provisions."
Indeed, the parties could not even agree on what controversies fall within Section 27.B, and,
perhaps, rightly so because the said Section 27.B excludes controversies controlled or determined by
Section 27.A and other provisions of the Subcontract Agreement, which are themselves unclear. For
that reason, VBC insists that its cause of action in Civil Case No. 90-772 is based on Section 3 of the
Subcontract Agreement. It may further be emphasized that VBC's complaint was precipitated by
Zachry's refusal to comply with the Supplemental Agreement. Evidently, Section 3 of the
Subcontract Agreement and the Supplemental Agreement are excluded by Section 27.B. The trial
court was, therefore, correct in denying Zachry's motion to dismiss. prcd
However, we cannot give our assent to the Court of Appeals' order directing the trial court to
conduct a hearing for the determination of the proper interpretation of the provisions of the
Subcontract Agreement. It would re-open the motion to dismiss which, upon the trial court's
exercise of its discretion, was properly denied for lack of indubitability of the ground invoked and
thereby unduly interfere with the trial court's discretion. The proper interpretation could only be
done by the trial court after presentation of evidence during trial on the merits pursuant to the tenor
of its order denying the motion to dismiss. If the trial court should find that, indeed, arbitration is in
order, then it could apply Section 7 of R.A. No. 876 which reads as follows:
"Sec. 7. Stay of civil action. If any suit or proceeding be brought upon an issue arising out of
an agreement providing for the arbitration thereof, the court in which such suit or proceeding is
pending, upon being satisfied that the issue involved in such suit or proceeding is referable to
arbitration, shall stay the action or proceeding until an arbitration has been had in accordance with
the terms of the agreement: Provided, That the applicant for the stay is not in default in proceeding
with such arbitration."
WHEREFORE, the petition in G.R. No, 107124 is GRANTED while that in G.R. No. 106989 is
DENIED for lack of merit. The challenged Decision of 1 July 1992 and Resolution of 2 September
1992 are hereby SET ASIDE. The orders of Branch 142 of the Regional Trial Court of Makati in
Civil Case No. 90-772 of 19 September 1990 denying the motion to dismiss and of 8 October 1990
denying the motion to reconsider the former are REINSTATED. However, the service of the writ of
preliminary attachment on 26 March 1990 is hereby declared invalid. The writ may, nevertheless, be
served anew. LLpr
SO ORDERED.
Cruz, Bellosillo, Quiason and Kapunan, JJ., concur.

Section 6

G.R. No. L-42594 October 18, 1979
ELIGIO ROQUE vs. COURT OF APPEALS

FIRST DIVISION
[G.R. No. L-42594. October 18, 1979.]

ELIGIO ROQUE and RODRIGO G. MALONJAO, petitioners, vs. HON. COURT OF APPEALS,
HON. JUDGE CARLOS L. SUNDIAM, (CFI-Manila, Branch XXVIII) ASSOCIATED BANKING
CORPORATION FIL-EASTERN WOOD INDUSTRIES, INC., CITY SHERIFF OF MANILA,
DEPUTY SHERIFFS ADRIEL GARCIA and BENJAMIN GARVIDA, respondents.

Laurel Law Office for petitioner.
Paterno C. Pajares for respondents.

D E C I S I O N

MELENCIO-HERRERA, J p:
Treating this Petition as a special civil action for Certiorari, we affirm the Decision of the Court of
Appeals denying petitioners' prayer to set aside the trial Court Order, dated April 14, 1975, to
surrender the barge in question under pain of contempt, and its subsequent Orders denying their
Motion for Reconsideration. Cdpr
There is no dispute as to the following background facts:
On January 31, 1973, respondent Associated Banking Corporation (the Bank, for short) instituted an
action, Civil Case No. 89692, in the Court of First Instance of Manila, Branch XXVIII, respondent
Judge, presiding, against private respondent Fil-Eastern Wood Industries, Inc. (Fil-Eastern, for
brevity), a domestic corporation, for recovery of a sum of money.
Upon ex-parte application by the Bank for a Writ of Preliminary Attachment, respondent Judge, after
the filing and approval of the required bond of P220,000.00, issued, on February 4, 1974, an Order
of Attachment commanding the Sheriff to attach the estate, real and personal, of Fil-Eastern. 1
On February 7, 1974, the Sheriff's "Notice of Levy Pursuant to the Writ of Attachment" was
registered in the Office of the Commander of the First Coast Guard, District of Manila, 2 pursuant to
Sec. 805 of the Tariff and Customs Code, as amended by Presidential Decree No. 34, requiring the
registration of documents affecting titles of vessels with that entity. The said notice read, "levy is
hereby made upon all the rights, titles, interest, shares and participation which the defendant Fil-
Eastern Wood Industries, Inc. has or might have over a sea vessel or barge named Fil-Eastern V."
It appears that prior to the issuance of said Writ of Attachment, Fil-Eastern had delivered the barge
to the Cotabato Visayan Development Corporation sometime in April, 1973, for repair. The job was
completed in June 1973, but Fil-Eastern failed to pay the cost of repairs of P261,190.59. Pursuant to
the provisions of Article 2112 3 in relation to Article 1731 4 of the Civil Code, the Cotabato Visayan
Development Corporation proceeded before Notary Public Clemente R. Gonzales of Manila to the
sale of said barge. In the public auction sale conducted by said Notary Public on April 24, 1974,
petitioner Eligio Roque acquired the barge as the highest bidder, and was accordingly issued a
Certificate of Sale by the Notary Public. On the same date, the Cotabato Visayan Development
Corporation issued an Affidavit of Release of mechanic's lien against Fil-Eastern. The Certificate of
Sale was received in the office of the Philippine Coast Guard on May 3, 1974. 5 It was not until
December 24, 1974, however, that Certificate of Ownership No. 8647, a Certificate of Philippine
Register, a Certificate of Change of Name of Vessel from "Fil-Eastern V" to "Satellite II," as well as
a Coastwise License, were issued to Roque by the Philippine Coast Guard. 6 These muniments of
title were issued only after counsel for Eligio Roque had assured the Philippine Coast Guard, in a
letter dated November 13, 1974, that "without touching on the merit of the preference of our client's
claim in relation to the levy registered by other claimants, such levy is not in any manner a legal
obstacle to the registration of the vessels in our client's name." 7 Acting thereon, the Acting
Commandant of the Philippine Coast Guard in a letter dated November 23, 1974, authorized the
issuance of a new certificate of registration "annotating thereon any levy validly registered against
said vessel(s)." 8 However, neither the Certificate of Ownership nor the Certificate of Philippine
Register appended as Annexes "C" and "D", respectively, to petitioners' Urgent Manifestation and
Motion filed before the lower Court 9 carry that annotation.
On August 29, 1974, the Bank filed a "Motion for the Issuance of Another Writ of Attachment"
stating that at the time of the issuance of the Writ on February 4, 1974, the barge in question could
not be located within the jurisdiction of the trial Court, having been anchored somewhere in the
Visayas, and that actual levy on the barge could not be made as "the original Order of attachment is
allegedly in the possession of the Branch Deputy Sheriff appointed by the Honorable Court, who has
not reported to the office since August 26, 1974, and, therefore, could not implement the writ." 10
On the same date, August 29, 1974, the trial Court (Judge Rafael S. Sison, presiding) denied the
issuance of another Writ (apparently because it was deemed unnecessary), but instead ordered the
Deputy Sheriff of Branch XXVIII to coordinate with the City Sheriff of Manila in the
implementation of the Writ previously issued. 11 On August 30, 1974, Deputy Sheriff Garvida
actually seized and levied upon the vessel. cdll
On October 7, 1974, respondent Bank and respondent Fil-Eastern submitted a Compromise
Agreement whereby Fil-Eastern bound itself to pay to the Bank the principal amount of
P200,000.00, with 14% interest, plus other amounts stated therein. On October 9, 1974, respondent
Judge approved the Agreement and rendered judgment accordingly. On November 6, 1974, the Bank
moved for the issuance of a Writ of Execution for failure of Fil-Eastern to make payments within the
period stipulated in the Compromise Agreement.

Meanwhile, without prior authority from Deputy Sheriff Garvida, the barge in question was "spirited
away" to Bacolod City by a certain Captain Marcelino Agito, who claimed to have been given the
right to use the same by Fil-Eastern. 12
On January 6, 1975, respondent Judge issued an Order requiring Capt. Marcelino Agito in
coordination with Deputy Sheriff Benjamin E. Garvida to bring back to Manila the barge in
question. 13
On March 7, 1975, respondent Judge issued a Writ of Execution and ordered the sale of the barge at
public auction, as follows:
"ORDER
"The Decision rendered by this Court under date of October 9, 1974 having already become final
and executory, let a Writ of Execution be issued to be enforced by Sheriff Adriel V. Garcia by
conducting an auction sale on the vessel placed under attachment. The satisfaction of the judgment
in this case shall be given preference and the payment of the third party claim of Alfredo H.
Maligaya for and in behalf of Leonardo M. Caoso shall be satisfied from whatever remaining
proceeds of the auction sale on the aforesaid vessel, if there be any.
"SO ORDERED." 14
On April 7, 1975, Capt. Marcelino Aguito and Deputy Sheriff Benjamin Garvida filed a
Manifestation stating that petitioner Rodrigo Malonjao, acting for and in behalf of his co-petitioner
Eligio Roque, refused to surrender the barge on the ground that Eligio Roque is now the new owner,
having acquired the same by purchase at public auction, and praying that petitioners, and all persons
claiming under them, be directed to surrender the barge to the custody of the Court through its duly
authorized representative.
On April 14, 1975, respondent Judge issued the following Order:
"Upon motion filed by Capt. Marcelino Agito and Deputy Sheriff Benjamin Garvida, and
considering the absence of a formal claim with this Court filed by Eulogio Roque, personally or
through counsel, relative to the barge 'SATELLITE II, EX-FIL-EASTERN V', subject of the writ of
Attachment issued by this Court on February 7, 1974, and in order to prevent further delay in the
implementation of the Order of this Court dated March 7, 1975, Rodrigo Malonjao and Eulogio
Roque and all persons claiming right under them over the aforesaid vessel, including those acting
under their direction or supervision, are hereby ordered under pain of being cited in contempt of
Court to forthwith surrender possession of the above said vessel to Sheriff Adriel V. Garcia so that
the latter may be able to implement fully and expeditiously the aforesaid Order of this Court dated
March 7, 1975. . ." 15
On April 24, 1975, petitioners filed before the trial Court an Urgent Manifestation and Motion
seeking to set aside the Order of April 14, 1975, claiming that Roque is now the new owner of the
barge having acquired the same at a public auction sale arising from a mechanic's lien. The Motion
was denied by respondent Judge on the ground that the records belied petitioners' claim that the
auction sale occurred very much ahead of the notice of levy. Petitioners' first and second Motion for
Reconsideration were similarly denied. On July 16, 1975, respondent Deputy Sheriff Adriel V.
Garcia submitted a report informing the Court that the barge in question had been turned over to him
and was anchored along Pasig River, under guard.
On August 28, 1975, petitioners sought relief from the Court of Appeals by filing a "Petition for
Certiorari and Prohibition with Preliminary Injunction and Preliminary Mandatory Injunction"
assailing and seeking to vacate the Orders issued in Civil Case No. 89692 by respondent Judge as
well as the Writs, notices and other processes emanating therefrom. The Court of Appeals, * in
denying the Petition in its Decision promulgated on November 24, 1975, ruled that Certiorari did not
lie as petitioner was not without sufficient and adequate remedy to obtain relief from the damaging
effects of the Orders complained of. LLphil
Petitioner filed the present Petition on March 1, 1976 before this Court, claiming that they are
purchasers in good faith and for valuable consideration, having actually paid the total amount of
P354,689.00 to the Cotabato Visayan Development Corporation for three barges, one of which is the
barge in question. They have also raised the following legal issues:
"1. The decision of the respondent Court of Appeals sustaining the challenged orders, writs
and other processes issued by the respondent Judge is contrary to the provisions of Art. 1731 in
relation to Art. 2112 of the New Civil Code and to the ruling laid down in Bank of P.I. vs. Walter A.
Smith & Co., 55 Phil 533 and Bachrach Motor Co. vs. Mendoza, 43 Phil. 410.
2. If the levy and/or attachment by the sheriff of the barge in question are illegal, will herein
petitioner be required to avail of Section 14, Rule 57 and/or Section 17, Rule 39 of the Revised
Rules of Court?"
On July 19, 1976, we issued a Restraining Order enjoining respondents from proceeding with the
projected sale at public auction of the barge, subject of this litigation. We also declared the case
submitted for decision. On January 18, 1977, the Bank filed a Motion for Authority to Sell the barge
under attachment. This was opposed, however, by petitioners and we resolved to defer resolution
until decision on the merits is rendered.
On May 31, 1979, the Bank filed a Motion for Early Resolution, but the same was agendaed only on
September 24, 1979. We take note of the Bank's contention that ever since the Sheriff took custody
of the vessel on July 16, 1975, the same has been lying idle, moored at the Muelle de la Industria,
Pasig River, exposed to the elements, and has deteriorated rapidly, hence the need for early
resolution.
It should be reiterated that this is a special civil action for Certiorari, the main requisites for the
issuance of which Writ are: 1) that the Writ be directed against a tribunal, board or officer exercising
judicial functions; 2) that such tribunal, board or officer has acted without or in excess of jurisdiction
or with grave abuse of discretion; and 3) that there is no appeal, nor any plain, speedy and adequate
remedy in the ordinary course of law. 16 While the first requisite has been met, the second and the
third have not.
We agree with the findings of the Court of Appeals that petitioners were not without any plain,
speedy and adequate remedy in the ordinary course of law. For one, upon the issuance of the Order,
dated August 29, 1974, commanding the implementation of the Writ of Attachment, petitioners
could have availed themselves of the remedy provided for in Section 14, Rule 57 of the Rules of
Court, which reads:
"If the property taken be claimed by any person other than the party against whom attachment had
been issued or his agent, and such person makes an affidavit of his title thereto or right to the
possession thereof, stating the grounds of such right or title, and serves such affidavit upon the
officer while the latter has possession of the property, and a copy thereof upon the attaching creditor,
the officer shall not be bound to keep the property under attachment, unless the attaching creditor or
his agent, on demand of the said officer, secures him against such claim by a bond in a sum not
greater than the value of the property attached . . ."
For another, when respondent Sheriff seized the vessel in question to be sold at public auction in
accordance with the Order of execution of March 7, 1975, petitioner could have availed of the
remedy under Section 17, Rule 39 of the Rules of Court which provides: prLL
"If the property levied on be claimed by any other person than the judgment debtor or his agent, and
such person make an affidavit of his title thereto or right to the possession thereof, stating the
grounds of such right or title, and serve the same upon the officer making the levy, and a copy
thereof upon the judgment creditor, the officer shall not be bound to keep the property, unless such
judgment creditor or his agent, on demand of the officer, indemnify the officer against such claim by
a bond in a sum not greater than the value of the property levied on . . ."
Petitioner Eligio Roque argues, however, that he could not avail of the foregoing Rules inasmuch as
the vessel was not in the actual custody of the Sheriff nor of the Court, since the supposed levy by
the Sheriff on February 7, 1974 was a mere paper levy which, in legal contemplation, is no levy at
all. It is a fact that respondent Sheriff could not effect seizure immediately, first, because the barge
could nowhere be found in this vicinity, and subsequently when found, because petitioners would
not deliver possession to the Sheriff. It was not until the trial Court granted the Sheriff's Motion
praying for an Order directing petitioners or their agents to surrender the barge to the custody of the
Court, that the Sheriff was able to take physical custody. As a general rule, however, a levy of an
attachment upon personal property may be either actual or constructive. 17 In this case, levy had
been constructively made by the registration of the same with the Philippine Coast Guard on
February 7, 1974. Constructive possession should be held sufficient where actual possession is not
feasible, 18 particularly when it was followed up by the actual seizure of the property as soon as that
could possibly be effected.
Petitioners further argue that the levy was illegal because the Writ was implemented more than sixty
days after its issuance so that they need not have complied with Section 14, Rule 57, supra. The
Rules do not provide any lifetime for a Writ of Attachment unlike a Writ of Execution. But even
granting that a Writ of Attachment is valid for only sixty days, yet, since there was constructive levy
within that period the fact that actual seizure was effected only thereafter cannot affect the validity of
that levy.
Neither can it be said that respondent Judge committed grave abuse of discretion in issuing the
challenged Order of April 14, 1975, supra, whereby it commanded the immediate implementation of
the Order of execution of March 7, 1975 and ordered petitioners to surrender possession of the barge
to the Sheriff under pain of contempt. A trial Court is enjoined by law to bring about a prompt
dispatch of the controversy pending before it. As it was, it took the trial Court more than a year to
cause the enforcement of its Writs and processes. Moreover, its Decision of October 9, 1974 had
become final and executory, and execution then became purely a ministerial phase of adjudication. It
had no jurisdiction to pass upon petitioners' claim of ownership not only because trial in that case
had already been terminated but also considering that petitioners were not parties in the case below
nor had they filed any third-party claim for the enforcement of their rights.
Verily, petitioners' remedy was to ventilate their claims of ownership in a separate and independent
reivindicatory action, as even then suggested by the Court of Appeals. That was the arena where the
question of preferential rights, if any, impliedly raised in the first assigned error, could have been
fully threshed out.
". . . a third person claiming to be the owner of the property attached or levied upon is required to
file a separate or independent action to determine whether the property should answer for the claim
of the attaching or judgment creditor instead of being allowed to raise that issue in the case where
the writ of attachment or execution was issued (Sec. 17, Rule 39 and sec. 14, Rule 57, Rules of
Court; Bayer Philippines, Inc. vs. Agana, L-38701, April 8, 1975, 63 SCRA 355)." 19
In the interest of justice, petitioners can still file an independent civil action to establish their
ownership over the barge, if they have not yet done so.
WHEREFORE, in the absence of jurisdictional errors, this Petition is dismissed, and the Restraining
Order, heretofore issued, hereby lifted effective immediately.
No costs. prcd
SO ORDERED.
Teehankee, Acting C.J. (Chairman), Makasiar, Guerrero and De Castro, JJ., concur.
Fernandez, J., took no part.

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Rule 57: Preliminary Attachment | 1

G.R. No. L-825 July 20, 1948

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