Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. L-48080 August 31, 1942
JOSE DE BORJA, petitioner,
vs.
SERVILLANO PLATON and FRANCISCO DE BORJA, respondents.
Vicente J. Francisco for petitioner.
E. V. Filamor for respondents.
No appearance for respondent judge
BOCOBO, J .:
Petitioner seeks the setting aside of an order of preliminary attachment issued on November 6, 1940, and
reiterated on January 13, 1941, by the respondent Judge of the Court of First Instance against petitioner's
properties.
On August 12, 1936, petitioner brought a civil action in the Court of First Instance of Rizal against Hermogena
Romero, Francisco de Borja, Josefa Tangco and Crisanto de Borja to annul a second sale by Francisco de Borja
to Hermogena Romero, of a large estate known as the Hacienda Jalajala, and to recover damages in the amount
of P25,000. On August 29, 1936, Francisco de Borja and his wife Josefa Tangco filed an answer with three
counterclaims, and on September 29, 1936, they presented two more counterclaims. Trial began September 30,
1936. Under date of August 4, 1937, defendants Francisco de Borja, Josefa Tangco and Crisanto de Borja
submitted their amended answer, consisting of a general denial, special defenses, and five counterclaims and
cross-complaints. In these causes for counter-claim and cross-complaint, it was alleged that plaintiff, being a
son of defendants Francisco de Borja and Josefa Tangco, had been entrusted with the administration of the
extensive interests of his parents, but had been unfaithful to his trust. Said defendants, therefore, prayed, inter
alia, that the spouses Borja and Tangco be declared owners of the Hacienda Jalajala in question; that plaintiff be
required to render an accounting of the products of said hacienda that he had received and to pay said spouses at
least P100,000 illegally retained by him; that plaintiff be ordered to account for the proceed of rice and bran and
to pay at least P700,000 unlawfully retained by him; that plaintiff be made to deliver P20,000 which he had
collected from a debtor of said spouses; that plaintiff be likewise ordered to pay another sum of P9,034
collected by him from the same debtor; and that plaintiff be required to turn over to defendants Francisco de
Borja and Josefa Tangco the amount of P40,000 collected by him as indemnity of an insurance policy on
property belonging to said spouses.
On July 27, 1940, Francisco de Borja and his wife filed their petition for preliminary attachment to cover their
third, fourth, and fifth, grounds for cross-complaint, involving a total of P69,035. In said motion, the defendants
Borja and wife stated that they did not include the first and second causes for cross-complaint because the
visible property of plaintiff that could then be attached was only worth about P2,000. On August 21, 1940,
plaintiff presented an amended answer setting up a counterclaim against defendants Borja and wife in the sum
of P99,175.46.
The order for preliminary attachment is questioned upon several grounds, among which are: (1) that no writ of
attachment can be issued in favor of a defendant who presents a counterclaim; (2) and the defendants' affidavit
was fatally defective.
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. In the present case we see no reason why the order of the trial court should be
disturbed, this question being a matter within its discretion and we find no grave abuse of that discretion.
As to be the second objection of petitioner, his counsel strenuously advances the theory that the affidavit
attached to the petition for a writ of preliminary attachment was fatally defective because it failed to allege that
"the amount due to the plaintiff is as much as the sum for which the order is granted above all legal
counterclaims" as required in section 426, Code of Civil Procedure and section 3, Rule 59, Rules of Court.
Petitioner contends that his counterclaim against that of Francisco de Borja and wife being P99,175.46 whereas
the latter's counterclaim totalled only P69,035, the omission of the allegation referred to is a serious defect. The
trial court found, however, that the counterclaim of Francisco de Borja and wife exceed those of the petitioner
Jose de Borja. It should be borne in mind that the aggregate counterclaims of Francisco de Borja and wife
amounted to P869,000, which exceeds petitioner's counterclaim by P769,000 in round figures. Moreover, as the
trial court had before it the evidence adduce by both sides, the petition for a writ of preliminary attachment
having been filed four years after the trial had begun, we presume that the lower court, having in mind such
evidence, ordered the attachment accordingly.
The order appealed from is hereby affirmed, with costs against the petitioner. So ordered.
Yulo, C.J., Moran, Ozaeta and Paras, JJ., concur.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 155504 June 26, 2009
PROFESSIONAL VIDEO, INC., Petitioner,
vs.
TECHNICAL EDUCATION AND SKILLS DEVELOPMENT AUTHORITY, Respondent.
D E C I S I O N
BRION, J .:
We resolve the petition filed by Professional Video, Inc. (PROVI)
1
to annul and set aside the Decision
2
of the
Court of Appeals (CA) in CA-G.R. SP No. 67599, and its subsequent Order denying PROVIs motion for
reconsideration.
3
The assailed CA decision nullified:
a. the Order
4
dated July 16, 2001 of the Regional Trial Court (RTC), Pasig City, in Civil Case No. 68527,
directing the attachment/garnishment of the properties of respondent Technical Education and Skills
Development Authority (TESDA) amounting to Thirty Five Million Pesos (P35,000,000.00); and
b. the RTCs August 24, 2001 Order
5
denying respondent TESDAs motion to discharge/quash writ of
attachment.
THE FACTUAL BACKGROUND
PROVI is an entity engaged in the sale of high technology equipment, information technology products and
broadcast devices, including the supply of plastic card printing and security facilities.
TESDA is an instrumentality of the government established under Republic Act (R.A.) No. 7796 (the TESDA
Act of 1994) and attached to the Department of Labor and Employment (DOLE) to "develop and establish a
national system of skills standardization, testing, and certification in the country."
6
To fulfill this mandate, it
sought to issue security-printed certification and/or identification polyvinyl (PVC) cards to trainees who have
passed the certification process.
TESDAs Pre-Qualification Bids Award Committee (PBAC) conducted two (2) public biddings on June 25,
1999 and July 22, 1999 for the printing and encoding of PVC cards. A failure of bidding resulted in both
instances since only two (2) bidders PROVI and Sirex Phils. Corp. submitted proposals.
Due to the failed bidding, the PBAC recommended that TESDA enter into a negotiated contract with PROVI.
On December 29, 1999, TESDA and PROVI signed and executed their "Contract Agreement Project: PVC ID
Card Issuance" (the Contract Agreement) for the provision of goods and services in the printing and encoding of
PVC cards.
7
Under this Contract Agreement, PROVI was to provide TESDA with the system and equipment
compliant with the specifications defined in the Technical Proposal. In return, TESDA would pay PROVI the
amount of Thirty-Nine Million Four Hundred and Seventy-Five Thousand Pesos (P39,475,000) within fifteen
(15) days after TESDAs acceptance of the contracted goods and services.
On August 24, 2000, TESDA and PROVI executed an "Addendum to the Contract Agreement Project: PVC ID
Card Issuance" (Addendum),
8
whose terms bound PROVI to deliver one hundred percent (100%) of the
enumerated supplies to TESDA consisting of five hundred thousand (500,000) pieces of security foil; five (5)
pieces of security die with TESDA seal; five hundred thousand (500,000) pieces of pre-printed and customized
identification cards; one hundred thousand (100,000) pieces of scannable answer sheets; and five hundred
thousand (500,000) customized TESDA holographic laminate. In addition, PROVI would install and maintain
the following equipment: one (1) unit of Micropoise, two (2) units of card printer, three (3) units of flatbed
scanner, one (1) unit of OMR scanner, one (1) unit of Server, and seven (7) units of personal computer.
TESDA in turn undertook to pay PROVI thirty percent (30%) of the total cost of the supplies within thirty (30)
days after receipt and acceptance of the contracted supplies, with the balance payable within thirty (30) days
after the initial payment.
According to PROVI, it delivered the following items to TESDA on the dates indicated:
Date Particulars Amount
26 April 2000 48,500 pre-printed cards P 2,764,500.00
07 June 2000 330,000 pre-printed cards 18,810,000.00
07 August 2000 121,500 pre-printed cards 6,925,500.00
26 April 2000 100,000 scannable answer sheets 600,000.00
06 June 2000 5 Micro-Poise customized die 375,000.00
13 June 2000 35 boxes @ 15,000 imp/box
Custom hologram Foil
10,000,000.00
Total P 39,475,000.00
PROVI further alleged that out of TESDAs liability of P39,475,000.00, TESDA paid PROVI only
P3,739,500.00, leaving an outstanding balance of P35,735,500.00, as evidenced by PROVIs Statement of
Account.
9
Despite the two demand letters dated March 8 and April 27, 2001 that PROVI sent TESDA,
10
the
outstanding balance remained unpaid.
On July 11, 2001, PROVI filed with the RTC a complaint for sum of money with damages against TESDA.
PROVI additionally prayed for the issuance of a writ of preliminary attachment/garnishment against TESDA.
The case was docketed as Civil Case No. 68527. In an Order dated July 16, 2001, the RTC granted PROVIs
prayer and issued a writ of preliminary attachment against the properties of TESDA not exempt from execution
in the amount of P35,000,000.00.
11

TESDA responded on July 24, 2001 by filing a Motion to Discharge/Quash the Writ of Attachment, arguing
mainly that public funds cannot be the subject of garnishment.
12
The RTC denied TESDAs motion, and
subsequently ordered the manager of the Land Bank of the Philippines to produce TESDAs bank statement for
the garnishment of the covered amount.
13

Faced with these rulings, TESDA filed a Petition for Certiorari with the CA to question the RTC orders,
imputing grave abuse of discretion amounting to lack or excess of jurisdiction on the trial court for issuing a
writ of preliminary attachment against TESDAs public funds.
14

The CA set aside the RTCs orders after finding that: (a) TESDAs funds are public in nature and, therefore,
exempt from garnishment; and (b) TESDAs purchase of the PVC cards was a necessary incident of its
governmental function; consequently, it ruled that there was no legal basis for the issuance of a writ of
preliminary attachment/garnishment.
15
The CA subsequently denied PROVIs motion for reconsideration;
16

hence, the present petition.
THE PETITION
The petition submits to this Court the single issue of whether or not the writ of attachment against TESDA and
its funds, to cover PROVIs claim against TESDA, is valid. The issue involves a pure question of law and
requires us to determine whether the CA was correct in ruling that the RTC gravely abused its discretion in
issuing a writ of attachment against TESDA.
PROVI argues that the CA should have dismissed TESDAs petition for certiorari as the RTC did not commit
any grave abuse of discretion when it issued the Orders dated July 16, 2001 and August 24, 2001. According to
PROVI, the RTC correctly found that when TESDA entered into a purely commercial contract with PROVI,
TESDA went to the level of an ordinary private citizen and could no longer use the defense of state immunity
from suit. PROVI further contends that it has alleged sufficient ultimate facts in the affidavit it submitted to
support its application for a writ of preliminary attachment. Lastly, PROVI maintains that sufficient basis
existed for the RTCs grant of the writ of preliminary attachment, since TESDA fraudulently misapplied or
embezzled the money earmarked for the payment of the contracted supplies and services, as evidenced by the
Certification as to Availability of Funds.
TESDA claims that it entered the Contract Agreement and Addendum in the performance of its governmental
function to develop and establish a national system of skills standardization, testing, and certification; in the
performance of this governmental function, TESDA is immune from suit. Even assuming that it had impliedly
consented to be sued by entering into a contract with PROVI, TESDA posits that the RTC still did not have the
power to garnish or attach its funds since these are public funds. Lastly, TESDA points out that PROVI failed to
comply with the elements for the valid issuance of a writ of preliminary attachment, as set forth in Section 1,
Rule 57 of the 1997 Rules of Civil Procedure.
THE COURTS RULING
We find, as the CA did, that the RTCs questioned order involved a gross misreading of the law and
jurisprudence amounting to action in excess of its jurisdiction. Hence, we resolve to DENY PROVIs petition
for lack of merit.
TESDA is an instrumentality of the government undertaking governmental functions.
R.A. No. 7796 created the Technical Education and Skills Development Authority or TESDA under the
declared "policy of the State to provide relevant, accessible, high quality and efficient technical education and
skills development in support of the development of high quality Filipino middle-level manpower responsive to
and in accordance with Philippine development goals and priorities."
17
TESDA replaced and absorbed the
National Manpower and Youth Council, the Bureau of Technical and Vocational Education and the personnel
and functions pertaining to technical-vocational education in the regional offices of the Department of
Education, Culture and Sports and the apprenticeship program of the Bureau of Local Employment of the
DOLE.
18
Thus, TESDA is an unincorporated instrumentality of the government operating under its own charter.
Among others, TESDA is empowered to: approve trade skills standards and trade tests as established and
conducted by private industries; establish and administer a system of accreditation of both public and private
institutions; establish, develop and support the institutions' trainors' training and/or programs; exact reasonable
fees and charges for such tests and trainings conducted, and retain such earnings for its own use, subject to
guidelines promulgated by the Authority; and perform such other duties and functions necessary to carry out the
provisions of the Act, consistent with the purposes of the creation of TESDA.
19

Within TESDAs structure, as provided by R.A. No. 7769, is a Skills Standards and Certification Office
expressly tasked, among others, to develop and establish a national system of skills standardization, testing and
certification in the country; and to conduct research and development on various occupational areas in order to
recommend policies, rules and regulations for effective and efficient skills standardization, testing and
certification system in the country.
20
The law likewise mandates that "[T]here shall be national occupational
skills standards to be established by TESDA-accredited industry committees. The TESDA shall develop and
implement a certification and accreditation program in which private groups and trade associations are
accredited to conduct approved trade tests, and the local government units to promote such trade testing
activities in their respective areas in accordance with the guidelines to be set by the TESDA. The Secretary of
Labor and Employment shall determine the occupational trades for mandatory certification. All certificates
relating to the national trade skills testing and certification system shall be issued by the TESDA through its
Secretariat."
21

All these measures are undertaken pursuant to the constitutional command that "[T]he State affirms labor as a
primary social economic force," and shall "protect the rights of workers and promote their welfare";
22
that
"[T]he State shall protect and promote the right of all citizens to quality education at all levels, and shall take
appropriate steps to make such education accessible to all";
23
in order "to afford protection to labor" and
"promote full employment and equality of employment opportunities for all."
24

Under these terms, both constitutional and statutory, we do not believe that the role and status of TESDA can
seriously be contested: it is an unincorporated instrumentality of the government, directly attached to the DOLE
through the participation of the Secretary of Labor as its Chairman, for the performance of governmental
functions i.e., the handling of formal and non-formal education and training, and skills development. As an
unincorporated instrumentality operating under a specific charter, it is equipped with both express and implied
powers,
25
and all State immunities fully apply to it.
26

TESDA, as an agency of the State, cannot be sued without its consent.
The rule that a state may not be sued without its consent is embodied in Section 3, Article XVI of the 1987
Constitution and has been an established principle that antedates this Constitution.
27
It is as well a universally
recognized principle of international law that exempts a state and its organs from the jurisdiction of another
state.
28
The principle is based on the very essence of sovereignty, and on the practical ground that there can be
no legal right as against the authority that makes the law on which the right depends.
29
It also rests on reasons of
public policy that public service would be hindered, and the public endangered, if the sovereign authority
could be subjected to law suits at the instance of every citizen and, consequently, controlled in the uses and
dispositions of the means required for the proper administration of the government.
30

The proscribed suit that the state immunity principle covers takes on various forms, namely: a suit against the
Republic by name; a suit against an unincorporated government agency; a suit against a government agency
covered by a charter with respect to the agencys performance of governmental functions; and a suit that on its
face is against a government officer, but where the ultimate liability will fall on the government. In the present
case, the writ of attachment was issued against a government agency covered by its own charter. As discussed
above, TESDA performs governmental functions, and the issuance of certifications is a task within its function
of developing and establishing a system of skills standardization, testing, and certification in the country. From
the perspective of this function, the core reason for the existence of state immunity applies i.e., the public
policy reason that the performance of governmental function cannot be hindered or delayed by suits, nor can
these suits control the use and disposition of the means for the performance of governmental functions. In
Providence Washington Insurance Co. v. Republic of the Philippines,
31
we said:
[A] continued adherence to the doctrine of non-suability is not to be deplored for as against the inconvenience
that may be caused private parties, the loss of governmental efficiency and the obstacle to the performance of its
multifarious functions are far greater if such a fundamental principle were abandoned and the availability of
judicial remedy were not thus restricted. With the well known propensity on the part of our people to go to
court, at the least provocation, the loss of time and energy required to defend against law suits, in the absence of
such a basic principle that constitutes such an effective obstacle, could very well be imagined.
PROVI argues that TESDA can be sued because it has effectively waived its immunity when it entered into a
contract with PROVI for a commercial purpose. According to PROVI, since the purpose of its contract with
TESDA is to provide identification PVC cards with security seal which TESDA will thereafter sell to TESDA
trainees, TESDA thereby engages in commercial transactions not incidental to its governmental functions.
TESDAs response to this position is to point out that it is not engaged in business, and there is nothing in the
records to show that its purchase of the PVC cards from PROVI is for a business purpose. While TESDA
admits that it will charge the trainees with a fee for the PVC cards, it claims that this fee is only to recover their
costs and is not intended for profit.
We agree with TESDA. As the appellate court found, the PVC cards purchased by TESDA from PROVI are
meant to properly identify the trainees who passed TESDAs National Skills Certification Program the
program that immediately serves TESDAs mandated function of developing and establishing a national system
of skills standardization, testing, and certification in the country.
32
Aside from the express mention of this
function in R.A. No. 7796, the details of this function are provided under DOLE Administrative Order No. 157,
S. 1992, as supplemented by Department Order Nos. 3 thru 3-F, S. 1994 and Department Order No. 13, S.
1994.
33

Admittedly, the certification and classification of trainees may be undertaken in ways other than the issuance of
identification cards, as the RTC stated in its assailed Order.
34
How the mandated certification is to be done,
however, lies within the discretion of TESDA as an incident of its mandated function, and is a properly
delegated authority that this Court cannot inquire into, unless its exercise is attended by grave abuse of
discretion.
That TESDA sells the PVC cards to its trainees for a fee does not characterize the transaction as industrial or
business; the sale, expressly authorized by the TESDA Act,
35
cannot be considered separately from TESDAs
general governmental functions, as they are undertaken in the discharge of these functions. Along this line of
reasoning, we held in Mobil Philippines v. Customs Arrastre Services:
36

Now, the fact that a non-corporate government entity performs a function proprietary in nature does not
necessarily result in its being suable. If said non-governmental function is undertaken as an incident to its
governmental function, there is no waiver thereby of the sovereign immunity from suit extended to such
government entity.
TESDAs funds are public in character, hence exempt from attachment or garnishment.
Even assuming that TESDA entered into a proprietary contract with PROVI and thereby gave its implied
consent to be sued, TESDAs funds are still public in nature and, thus, cannot be the valid subject of a writ of
garnishment or attachment. Under Section 33 of the TESDA Act, the TESDA budget for the implementation of
the Act shall be included in the annual General Appropriation Act; hence, TESDA funds, being sourced from
the Treasury, are moneys belonging to the government, or any of its departments, in the hands of public
officials.
37
We specifically spoke of the limits in dealing with this fund in Republic v. Villasor
38
when we said:
This fundamental postulate underlying the 1935 Constitution is now made explicit in the revised charter. It is
therein expressly provided, The State may not be sued without its consent. A corollary, both dictated by logic
and sound sense, from such a basic concept, is that public funds cannot be the object of garnishment
proceedings even if the consent to be sued had been previously granted and the state liability adjudged. Thus in
the recent case of Commissioner of Public Highways vs. San Diego, such a well-settled doctrine was restated in
the opinion of Justice Teehankee:
The universal rule that where the State gives its consent to be sued by private parties either by general or special
law, it may limit claimant's action 'only up to the completion of proceedings anterior to the stage of execution'
and that the power of the Courts ends when the judgment is rendered, since government funds and properties
may not be seized under writs of execution or garnishment to satisfy such judgments, is based on obvious
considerations of public policy. Disbursements of public funds must be covered by the corresponding
appropriation as required by law. The functions and public services rendered by the State cannot be allowed to
be paralyzed or disrupted by the diversion of public funds from their legitimate and specific objects, as
appropriated by law. [Emphasis supplied.]
We reiterated this doctrine in Traders Royal Bank v. Intermediate Appellate Court,
39
where we said:
The NMPCs implied consent to be sued notwithstanding, the trial court did not have the power to garnish
NMPC deposits to answer for any eventual judgment against it. Being public funds, the deposits are not within
the reach of any garnishment or attachment proceedings. [Emphasis supplied.]
As pointed out by TESDA in its Memorandum,
40
the garnished funds constitute TESDAs lifeblood in
government parlance, its MOOE
41
whose withholding via a writ of attachment, even on a temporary basis,
would paralyze TESDAs functions and services. As well, these funds also include TESDAs Personal Services
funds from which salaries of TESDA personnel are sourced. Again and for obvious reasons, the release of these
funds cannot be delayed.
PROVI has not shown that it is entitled to the writ of attachment.
Even without the benefit of any immunity from suit, the attachment of TESDA funds should not have been
granted, as PROVI failed to prove that TESDA "fraudulently misapplied or converted funds allocated under the
Certificate as to Availability of Funds." Section 1, Rule 57 of the Rules of Court sets forth the grounds for
issuance of a writ of preliminary attachment, as follows:
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:
(a) In an action for 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 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 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 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 does not reside and is not found in the Philippines, or on whom
summons may be served by publication. [Emphasis supplied.]
Jurisprudence teaches us that the rule on the issuance of a writ of attachment must be construed strictly in favor
of the defendant. Attachment, a harsh remedy, must be issued only on concrete and specific grounds and not on
general averments merely quoting the words of the pertinent rules.
42
Thus, the applicants affidavit must contain
statements clearly showing that the ground relied upon for the attachment exists.
Section 1(b), Rule 57 of the Rules of Court, that PROVI relied upon, applies only where money or property has
been embezzled or converted by a public officer, an officer of a corporation, or some other person who took
advantage of his fiduciary position or who willfully violated his duty.
PROVI, in this case, never entrusted any money or property to TESDA. While the Contract Agreement is
supported by a Certificate as to Availability of Funds (Certificate) issued by the Chief of TESDAs Accounting
Division, this Certificate does not automatically confer ownership over the funds to PROVI. Absent any actual
disbursement, these funds form part of TESDAs public funds, and TESDAs failure to pay PROVI the amount
stated in the Certificate cannot be construed as an act of fraudulent misapplication or embezzlement. In this
regard, Section 86 of Presidential Decree No. 1445 (The Accounting Code) provides:
Section 86. Certificate showing appropriation to meet contract. Except in a case of a contract for personal
service, for supplies for current consumption or to be carried in stock not exceeding the estimated consumption
for three months, or banking transactions of government-owned or controlled banks, no contract involving the
expenditure of public funds by any government agency shall be entered into or authorized unless the proper
accounting official or the agency concerned shall have certified to the officer entering into the obligation that
funds have been duly appropriated for the purpose and that the amount necessary to cover the proposed contract
for the current fiscal year is available for expenditure on account thereof, subject to verification by the auditor
concerned. The certification signed by the proper accounting official and the auditor who verified it, shall be
attached to and become an integral part of the proposed contract, and the sum so certified shall not thereafter be
available for expenditure for any other purpose until the obligation of the government agency concerned under
the contract is fully extinguished. [Emphasis supplied.]
By law, therefore, the amount stated in the Certification should be intact and remains devoted to its purpose
since its original appropriation. PROVI can rebut the presumption that necessarily arises from the cited
provision only by evidence to the contrary. No such evidence has been adduced.
Section 1 (d), Rule 57 of the Rules of Court applies where a party is guilty of fraud in contracting a debt or
incurring an obligation, or in concealing or disposing of the property for the taking, detention or conversion of
which the action is brought. In Wee v. Tankiansee,
43
we held that 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. The affidavit, being the foundation of the writ, must contain particulars showing how the imputed
fraud was committed for the court to decide whether or not to issue the writ. To reiterate, 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.
44

The affidavit filed by PROVI through Elmer Ramiro, its President and Chief Executive Officer, only contained
a general allegation that TESDA had fraudulent misapplied or converted the amount of P10,975,000.00 that was
allotted to it. Clearly, we cannot infer any finding of fraud from PROVIs vague assertion, and the CA correctly
ruled that the lower court acted with grave abuse of discretion in granting the writ of attachment despite want of
any valid ground for its issuance.1avvphi1
For all these reasons, we support the appellate courts conclusion that no valid ground exists to support the grant
of the writ of attachment against TESDA. The CAs annulment and setting aside of the Orders of the RTC were
therefore fully in order.
WHEREFORE, premises considered, we hereby DENY the petition filed by petitioner Professional Video,
Inc., and AFFIRM the Court of Appeals Decision dated July 23, 2002, and Resolution of September 27, 2002,
in CA-G.R. SP No. 67599. Costs against the petitioner.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION

G.R. No. 104405 May 13, 1993
LIBERTY INSURANCE CORPORATION, petitioner,
vs.
THE HONORABLE COURT OF APPEALS, HON. NAPOLEON K. FLOJO, Presiding Judge of Branch
II, RTC Manila; ATILLA ARKIN, the CITY SHERIFF OF MANILA, the REGISTER OF DEEDS OF
MANILA and the REGISTER OF DEEDS OF MAKATI, METRO MANILA, respondents.
Cochico, Lopez, Delgado , Aquino & De la Merced for petitioner.
Edgar Dennis A. Padernal for private respondent.

BIDIN, J .:
This is a petition for review on certiorari seeking to set aside and to declare null and void the decision dated
September 17, 1991 of the respondent Court of Appeals dismissing petitioner's petition for review and its
resolution dated February 7, 1992 denying petitioner's Motion for Reconsideration.
On May 4, 1988 Jose H. Imperial Organizations, Pty., thru Atty. Jose H. Imperial entered into an agreement
with Coca-Cola Bottlers Philippines to promote two concerts featuring a group known as "Earth, Wind and
Fire" on June 12 and 13, 1988 with Coca-Cola sponsoring the concerts and the former promoting the same.
To ensure compliance with the terms of the agreement, Coca-Cola required Imperial Organizations to put up a
performance bond. Petitioner Liberty Insurance, upon application of Imperial Organization put up the
performance bond in the amount of Three Million Pesos (P3,000,000.00), the principal condition of which was
to "fully and faithfully guarantee the terms and conditions" of the agreement dated May 24, 1988 entered into
between Coca-Cola and Imperial Organizations. More particularly, the bond was to guarantee the return to
Coca-Cola of "whatever portion of the cash sponsorship and cash advances to be made by Coca-Cola to finance
the holding of the concerts on the dates aforesaid . . . ." (Rollo, pp. 37)
In turn, and as a condition for the issuance of said performance bond, petitioner required Imperial
Organizations, Jose H. Imperial, Atilla Arkin, and Carmen Madlangbayan to execute an indemnity agreement in
its favor to indemnify it for any and all damages including attorney's fees which the petitioner may incur by
reason of the issuance of the bond.
It appears that while the concerts took place, Imperial Organizations and private respondents failed to comply
with their obligations to Coca Cola, as a result of which petitioner became liable upon its performance bond
paying Coca-Cola Three Million Pesos. Petitioner, demanded reimbursement from Imperial, Arkin And
Madlangbayan based on their indemnity bond but to no avail.
On August 7, 1988 petitioner filed with the Regional Trial Court, National Capital Region, Branch 2, Manila a
complaint for damages with application for the issuance of a writ of preliminary attachment against private
respondents.
On September 20, 1988, the Trial Court thru the Hon. Rosario A. de Leon, issued an order allowing the issuance
of the writ, stating that.:
. . . There could have been fraud committed by the defendants Arkin and Madlangbayan in
promising to give as security or collateral to their Indemnity Agreement, which caused the
plaintiff to release the security bond, when as it turned out, the Transfer Certificate of Title of a
parcel of land supposedly issued by the Register of Deeds of Rizal turned out to be fake, as the
true land title number was issued over a different parcel of land issued in the name of a person
other than defendant Madlangbayan, while defendant Atilla Arkin delivered an official receipt in
the name of a third party but which vehicle was allegedly sold to him free from lien and
encumbrance, when it turned out that the car was heavily mortgaged to a third party, . . . .
The conclusion of fraud is inevitable in view of the above circumstances, for any (sic) rate fraud
is a state of mind that maybe inferred from the circumstances extant in the case (Republic vs.
Gonzales, 13 SCRA 633).
In addition to the fact that these representations/promises of Arkin and Madlangbayan were
made prior to the release of the bond (the bond by then had already been executed), it can still be
said that this fraud existed when the obligation was contracted in line with Sec. 1, par (d), Rule
57, which reads: An attachment may issue in an action against a party who has been guilty of
fraud in contracting or incurring the obligation upon which the action is brought.
A debt is fraudulently contracted if at the time of contracting it, the debtor entertained an
intention not to pay, or an intention not to keep a collateral agreement regarding the disposition
of a property purchased on credit. (Francisco, Rules of Court, Second [1985] Edition, p. 21) . . .
(Rollo, pp. 38-39)
On May 10, 1989 respondent Arkin filed a motion to Quash/ Recall Writ of Attachment. On October 19, 1989,
the trial court, this time presided by respondent judge Napoleon K. Flojo, denied the motion, reasoning out as
follows:
Defendant Atilla Arkin posits that no ground existed for the issuance of the preliminary
attachment because he was not guilty of fraud in incurring the obligation under the indemnity
agreement.
The Court granted the prayer for a writ of preliminary attachment after a finding of fraud from
the evidence adduced by the parties. This conclusion was supported by substantial evidence.
There is no cogent reason from the arguments posed by the movant to warrant and/or recall of
the writ.
Furthermore, the complaint invokes another ground for the grant of the writ and that is, "in an
action against a party who has removed be (sic) disposed of his property, or is about to do so,
with the intent to defraud his creditors," . . ., evidenced by three conveyances or disposals of
properties by defendant Atilla Arkin though made before the institution of the action, is a
circumstance tending to show fraudulent conveyance with intent to defraud his creditors.
Especially so, when the payment of herein claim which the action is brought is not secured by
any mortgage or pledge of real (sic) personal property and plaintiff had no other sufficient
security for the enforcement of the claim. (Rollo, p. 58; emphasis supplied).
After more than a year, or on December 14, 1990, Arkin filed a Motion for Reconsideration of the
aforementioned order of denial.
On March 6, 1991, respondent judge reversed his earlier ruling and instead issued two orders, (1) granting
Arkin's Motion for Reconsideration and directing the lifting of the writ of preliminary attachment earlier issued,
and (2) ordering the deputy sheriff assigned to said court to immediately discharge or lift said writ. The first
order, among other things, states:
xxx xxx xxx
The Court, presided at the time by Judge Rosalio De Leon, found that the defendant has been
guilty of fraud in inveigling the plaintiff to issue the surety bond by offering false collaterals.
The ground relied upon by the Court to issue the attachment was based on Section 1 (d) of Rule
57 of the Rules of Court , which states:
"Sec. 1. Grounds upon which attachment may issue. A plaintiff or any party
may, at the commencement of the action or at anytime thereafter, have the
property of the adverse party attached as security for the satisfaction of any
judgment that may be recovered in the following cases:
xxx xxx xxx
(d) In action (sic) against a party who has been guilty of fraud in contracting the
obligation upon which the action is brought, . . . ."
To constitute a ground for attachment, fraud should be committed prior to or simultaneous with
the birth of the obligation sued upon, which in this case is the May 30, 1988 surety bond.
xxx xxx xxx
A close examination of the evidence on record shows that the delivery of the fake collaterals
were made to Eduardo Cunanan on June 1, 1988, or two (2) days after the issuance by the
plaintiff of the surety bond. Thus, the offering of the fake Transfer Certificate of Title and
encumbered Mercedes Benz car was not prior to or simultaneous with the execution of the
Surety Bond. Such being the case, the offer of the collaterals were not the cause which induced
the plaintiff to issue the surety bond. It is therefore clear that the issuance of the surety bond on
May 30, 1988 was not based on the alleged fraud of the defendant Arkin offering the fake
collaterals.
xxx xxx xxx
With regards (sic) to the allegations that the defendant Arkin has removed or disposed of his
property, with intent to defraud his creditors, suffice it to say that (when) the law authorizes the
issuance of a writ preliminary attachment (it) should be construed in favor of the defendant and
before issuing an Order to that effect, the judge should require that all the requisites prescribed
by law be complied (with), without which a judge acquires no jurisdiction to issue the writ.
xxx xxx xxx
Furthermore, allegations that debtors were removing or disposing some of the properties with
intent to defraud creditors must be specific.
xxx xxx xxx
In the present case the plaintiff did not prove the intent of defendant Arkin to defraud creditors.
Aside From the fact that the alleged dispositions were made long prior to the filing of the case,
the alleged dispositions were made of conjugal partnership property which were then the subjects
of partition between Arkin and his estranged wife. . . . (Rollo, pp. 42-43).
Aggrieved, petitioner filed a special civil action for certiorari with respondent Court of Appeals to set aside the
above orders of respondent judge.
Respondent court dismissed the petition on the ground that the filing of the said petition was premature
considering that there was yet a remedy available in the ordinary course of law, i.e., filing a motion for
reconsideration of the challenged orders. Hence, this petition with the following assignment of errors:
I. A MOTION FOR RECONSIDERATION IS NOT ALWAYS A CONDITION PRECEDENT
TO THE FILING OF A SPECIAL CIVIL ACTION FOR CERTIORARI, AS THERE IS NO
APPEAL OR ANY PLAIN, SPEEDY AND ADEQUATE REMEDY IN THE ORDINARY
COURSE OF LAW AVAILABLE TO HEREIN PETITIONER;
II. RESPONDENT HONORABLE COURT OF APPEALS ERRED IN UPHOLDING THE
DISSOLUTION OF THE WRIT OF PRELIMINARY ATTACHMENT ON THE BASIS OF
SECTION 13, RULE 57, OF THE RULES OF THE COURT SUPPORTED (SIC) BY ANY
EVIDENCE;
III. RESPONDENT COURT OF APPEALS COMMITTED GRAVE ERROR OF LAW IN
CONCLUDING THAT HEREIN PETITIONER FAILED TO RAISE AS AN ISSUE THE
DELAYED FILING OF PRIVATE RESPONDENT'S MOTION FOR RECONSIDERATION
DATED DECEMBER 14, 1990, IN PETITIONER'S OPPOSITION THERETO.
IV. THE APPREHENSION OF THE HEREIN PETITIONER REGARDING THE
PROPENSITY OF PRIVATE RESPONDENT TO DISPOSE OF HIS PROPERTIES IN
FRAUD OF HIS CREDITORS TURNED OUT TO BE TRUE AND CORRECT. (Rollo, pp. 24-
26, 30).
In brief, the questions posited by the instant petition may be consolidated into two issues, namely:
1) Whether or not the writ of preliminary attachment in question was properly or regularly issued and 2)
Whether or not petitioner's failure to file a motion for reconsideration of the questioned orders of the court a
quo bars the filing of a special civil action for certiorari before the respondent court.
In an action against a party who has been guilty of fraud in contracting the debt or incurring the obligation upon
which the action is brought, Section 1 (d) of Rule 57 authorizes the plaintiff or any proper party to have the
property of the adverse party attached as security for the satisfaction of any judgment that may be recovered
therein. Thus:
Rule 57, Sec. 1. Grounds upon which attachment may
issue.
(d): In an action against a party who has been guilty of a fraud of contracting the debt or
incurring the obligation upon which the action is brought, or in concealing or disposing of the
property for the taking, detention or conversion of which the action is brought;
To sustain an attachment on this ground, it must be shown that the debtor in contracting the debt or incurring
the obligation intended to defraud the creditor. The fraud must relate to the execution of the agreement and must
have been the reason which induced the other party into giving consent which he would not have otherwise
given. To constitute a ground for attachment in Section 1 (d), Rule 57 of the Rules of Court, fraud should be
committed upon contracting the obligation sued upon. A debt is fraudulently contracted if at the time of
contracting it the debtor has a preconceived plan or intention not to pay, as it is in this case. Fraud is a state of
mind and need not be proved by direct evidence but may be inferred from the circumstances attendant in each
case (Republic v. Gonzales, 13 SCRA 633 [1965]).
Here, it has been established that all the collaterals given by the respondent Arkin as security for the bond were
either fraudulent or heavily encumbered. Records show that Transfer Certificate of Title No. 300011 supposedly
issued by the Register of Deeds of Rizal covering a parcel of land with an area of 25,750 square meters located
at Muntinlupa, Las Pias, M.M. and registered in the name of Carmen Madlangbayan, used as one of the
collaterals, turned out to be fake and spurious as the genuine TCT No. 300011 of the Office of the Register of
Deeds of Rizal covers a parcel of land located in
Angono, Rizal with an area of 514 square meters registered in the name of persons other than respondents
Imperial, Arkin, and Madlangbayan. Likewise, the supposed lien-free motor vehicle offered as collateral turned
out to be heavily mortgaged and was even disposed of without informing petitioner. Furthermore, it has also
been proven that subsequent to the issuance of the May 30, 1988 surety bond, respondent Arkin started
disposing of his other properties. Prior to the filing of the complaint, respondent not only had sold the motor
vehicle given as collateral but that his two other condominium units were also alienated in favor of a company
of which respondent Arkin is the president. All these circumstances unerringly point to the devious scheme of
respondent Arkin to defraud petitioner.
It is therefore clear that fraud was present when private respondent, among others, entered into an indemnity
agreement with petitioner. The actuations of respondent Arkin indubitably lead to the conclusion that he never
entertained the idea of fulfilling his obligations under the agreement and was bent on defrauding petitioner from
the very beginning.
Under the circumstances, we perceive no impropriety or irregularity in the issuance of the writ of attachment
especially so where petitioner has fully complied with the requirements for the issuance thereof.
On the contrary, what we see as having been attended by irregularity is the assailed order of respondent judge
lifting the writ of attachment based on grounds which are contradicted by the evidence on record. It is a fact that
respondent Arkin gave fake land titles as collaterals and even disposed of real properties in his obvious attempt
to defraud petitioner. And yet, respondent judge concluded that petitioner's allegation that respondent Arkin's
fraudulent alienation of his properties has no foundation in fact. This is plain absurdity. As respondent judge
himself noted in his earlier order denying respondent Arkin's motion to quash writ of attachment, the latter's
three (3) conveyances, "though made before the institution of the action, is a circumstance tending to show
fraudulent conveyance with intent to defraud his creditors. Especially so, when the payment of herein claim
upon which the action is brought is not secured by any mortgage or pledge of real (or) personal property and
plaintiff had no other sufficient security for the enforcement of the claim" (Rollo, p. 58). Such being the case,
respondent Arkin's claim that the writ of attachment has been irregularly issued should not have merited serious
consideration by respondent judge.
Be that as it may, the instant case being "an action against a party who has been guilty of fraud in contracting
the obligation upon which the action is brought", respondent Arkin is not allowed to file a motion to dissolve
the attachment on the ground that the writ has been improperly or irregularly issued. As we held in Mindanao
Savings and Loan Assoc. vs. Court of Appeals (172 SCRA 480 [1989]):
. . ., when the preliminary attachment is issued upon a ground which is at the same time the
applicant's cause of action: e.g., . . . an action against a party who has been guilty of fraud in
contracting the debt or incurring the obligation upon which the action is brought, the defendant is
not allowed to file a motion to dissolve the attachment under Section 13 of Rule 57 by offering to
show the falsity of the factual averments in the plaintiff's application and affidavits on which the
writ was based and consequently that the writ based therein had been improperly, or irregularly,
issued the reason being that the hearing on such motion for dissolution of the writ would be
tantamount to a trial on the merits. In other words, the merits of the action would be ventilated at
a mere hearing of a motion, instead of the regular trial. Therefore, when the writ of attachment is
of this nature, the only way it can be dissolved is by a counterbond.
Petitioner next contends that motion for reconsideration need not at all times be resorted to before a special civil
action for certiorari may be instituted before respondent court.
Ordinarily, certiorari will not lie unless an inferior court, through a motion for reconsideration, had been given
an opportunity to correct the imputed errors. However, this rule admits of exceptions such as 1) when the issue
raised is one purely, of law; 2) where public interest is involved; 3) in cases of urgency (Quirino vs. Grospe,
169 SCRA 702 [1989]); or 4) where special circumstances warrant immediate or more direct action (People vs.
Dacudao, 170 SCRA 489 [1989]).
In the case at bar, petitioner's failure to file a motion for reconsideration in the trial court before commencing
certiorari proceedings in the Court of Appeals is not fatal considering the existence of special circumstances
that warrant immediate and more direct action (Saldaa vs. CA, 190 SCRA 396 [1990]).
The indecent haste with which respondent Arkin had been disposing of his properties demonstrates the
imperative need for a more adequate relief requiring an immediate and more direct action. There was an
urgency which caused the present case to fall under one of the exceptions thereby allowing petitioner to file a
petition for certiorari without the need of first filing a motion for reconsideration.
Filing a motion for reconsideration would have served no useful purpose nor can it be considered a plain,
speedy and adequate remedy since the order directing the sheriff to discharge or lift the writ of attachment was
issued on the same day the order granting the quashal was made. It would not have automatically forestalled
Arkin from further disposing of his properties. It is rather disturbing how respondent judge, after ruling in his
order of October 19, 1989, denying respondent's motion to quash, that the trial court's finding of fraud in
incurring the obligation under the indemnity agreement was supported by substantial evidence, would, in his
order of March 6, 1991 granting the motion for reconsideration, based on the same substantial evidence
supporting a finding of fraud, later reverse himself and declare that "the plaintiff (petitioner herein) did not
prove the intent of defendant Arkin to defraud creditors."
Through the order for the "immediate" lifting of the writ, respondent Judge, in one swift stroke, completely
subverted the valid order of attachment issued after a finding of fraud, which finding he himself has declared as
supported by substantial evidence. We hold that respondent judge in issuing the contested orders has acted
capriciously, whimsically and arbitrarily and with grave abuse of discretion amounting to lack or in excess of
jurisdiction correctible by the special writ of certiorari.
WHEREFORE, the petition is GRANTED. The assailed order of respondent judge dated March 6, 1991 is SET
ASIDE and the order dated October 19, 1989 is hereby REINSTATED. Costs against private respondent.
SO ORDERED.
Feliciano, Davide, Jr., Romero and Melo, JJ., concur.
G.R. No. 23237, Walter E. Olsen & Co. v. Olsen, 48 Phil. 238
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
November 14, 1925
G.R. No. 23237
WALTER E. OLSEN & CO., plaintiff-appellee,
vs.
WALTER E. OLSEN, defendant-appellant.
Ross, Lawrence and Selph and Antonio T. Carrascoso, Jr., for appellant.
Gibbs and McDonough for appellee.
VILLA-REAL, J .:
This is an appeal taken by the defendant from a judgment of the Court of First Instance of Manila, sentencing
him to pay plaintiff corporation the sum of P66,207.62 with legal interest thereon at the rate of 6 per cent per
annum from February 1, 1923, the date of the filing of the complaint, until full payment and the costs, and
dismissing the cross-complaint and counterclaim set up by him.
As ground of his appeal, the defendant assigns four errors as committed by the trial court, to wit: (1) The
holding that the defendant-appellant contracted fraudulently the debt which the plaintiff-appellee seeks to
recover in its complaint; (2) its failure to set aside the writ of preliminary attachment issued by it ex parte; (3)
the fact of it not having absolved the defendant from the complaint of the plaintiff corporation and of not having
given judgment for the defendant and against the plaintiff for the amount of his counterclaim, after deducing the
debt due from him to the plaintiff corporation in the sum of P66,207.62; and (4) its action in denying the motion
for new trial of the defendant.
As the first two supposed errors are intimately connected with each other, we will discuss them jointly.
The first question that arises is whether or not an order denying a motion for the annulment of a preliminary
attachment may be reviewed through an appeal.
The preliminary attachment is an auxiliary remedy the granting of which lies within the sound discretion of the
judge taking cognizance of the principal case upon whose existence it depends. The order of the judge denying
a motion for the annulment of a writ of preliminary attachment, being of an incidental or interlocutory and
auxiliary character, cannot be the subject of an appeal independently from the principal case, because our
procedural law now in force authorizes an appeal only from a final judgement which gives an end to the
litigation. (Section 143, Act No. 190: 3 C. J., 549 par. 389.) This lack of ordinary remedy through an appeal
does not mean, however, that any excess a lower court may commit in the exercise of its jurisdiction is without
remedy; because there are the especial remedies, such as certiorari, for the purpose. (Leung Ben vs. O'Brien, 38
Phil., 182.)
While it is true that an order denying a motion for the annulment of a preliminary attachment is not subject to
review through an appeal independently from the principal case, it not consisting a final order, yet when the writ
of preliminary attachment becomes final by virtue of a final judgment rendered in the principal case, said writ is
subject to review jointly with the judgment rendered in the principal case through an ordinary appeal. The
appellate court has the power to revoke or confirm said order, in like manner as a judgment on the merits;
because it is a ruling to which an exception may be taken, and therefore is subject to review in an appeal by bill
of exceptions. (Secs. 141-143, Act No. 190.) The fact that section 441 of the Code of Civil Procedure does not
provide any remedy against the granting or denial of a motion for the annulment of a writ of preliminary
attachment, except in case of excess of jurisdiction, does not confer upon said order a final and irrevocable
character, taking it out from the general provisions as to appeal and review, for a special provision is necessary
for that purpose.
Having arrived at the conclusion that an order denying a motion for the annulment of a preliminary attachment
may be reviewed in an appeal taken from a final judgment rendered in the principal case, in which said order
was entered as an auxiliary remedy, we will now turn to consider the question whether or not the trial court
committed error in denying the motion for the annulment of the preliminary attachment levied upon the
property of the defendant-appellant.
It is admitted by the defendant-appellant that he is indebted to the plaintiff-appellee corporation in the sum of
P66,207.62, but denies that he has contracted said debt fraudulently.
The evidence shows that the defendant-appellant was president-treasurer and general manager of the plaintiff-
appellee corporation and exercised direct and almost exclusive supervision over its function, funds and books of
account until about the month of August, 1921. During that time he has been taking money of the corporation
without being duly authorized to do so either by the board of directors or by the by-laws, the money taken by
him having amounted to the considerable sum of P66,207.62. Of this sum, P19,000 was invested in the purchase
of the house and lot now under attachment in this case, and P50,000 in the purchase of 500 shares of stock of
Prising at the price of P100 per share for himself and Marker. A few days afterwards he began to sell the
ordinary shares of the corporation for P430 each. The defendant-appellant attempted to justify his conduct,
alleging that the withdrawal of the funds of the corporation for his personal use was made in his current account
with said corporation, in whose treasury he deposited his own money and the certificates of title of his shares, as
well as of his estate, and that at the first meeting of the stockholders, which took place on February 1, 1919, a
statement of his account with a debit balance was submitted and approved.
Having, as he had, absolute and almost exclusive control over the function of the corporation and its funds by
virtue of his triple capacity as president, treasurer and general manager, the defendant-appellant should have
been more scrupulous in the application of the funds of said corporation to his own use. As a trustee of said
corporation, it was his duty to see by all legal means possible that the interests of the stockholders were
protected, and should not abuse the extraordinary opportunity which his triple position offered him to dispose of
the funds of the corporation. Ordinary delicacy required that in the disposition of the funds of the corporation
for his personal use, he should be very careful, so as to do it in such a way as would be compatible with the
interest of the stockholders and his fiduciary character. And let it not also be said that he did every thing openly
and with the security of his shares of stock, because as he could dispose of the funds of the corporation so he
could dispose of his won shares and with greater freedom. And let it not also be said that other officers of the
corporation, such as the vice-president, the secretary and other chiefs and employees, were doing the same
thing, because that does not show but that his bad example had spread among his subordinates and all believed
themselves with the same right as their chief to dispose of the funds of the corporation for their personal use,
although it were merely by way of loan, without any security of whatever kind of course. The approval of his
account at the first meeting of the stockholders cannot be considered as a justification of his conduct, nor does it
remove every suspicion of bad faith, because the corporation was constituted exclusively by the defendant-
appellant himself and his cospeculator, Marker, and nothing else could be expected from it. As to the debt he
owed to the corporation, Walter E. Olsen was in effect a lender and a borrower at the same time. The conduct of
the defendant-appellant in connection with the funds of the corporation he represented was more than an
irregularity; and while it is not sufficiently serious to constitute a criminal fraud, it is undoubtedly a fraud of a
civil character, because it is an abuse of confidence to the damage of the corporation and its stockholders, and
constitutes one of the grounds enumerated in section 424, in connection with section 412, of the Code of Civil
Procedure for the issuance of a preliminary attachment, and the order of the Court of First Instance of Manila,
denying the motion for the annulment of the injunction in question, is in accordance with law.
As to the counterclaim set up by the defendant-appellant, we have nothing to add to the considerations of the
trial court which we make ours.
For the foregoing, and no error having been found in the judgment appealed from, the same is hereby affirmed,
with the costs against the defendant-appellant. So ordered.
Avancea, C. J., Street, Malcolm, Villamor, Ostrand, Johns, and Romualdez, JJ., concur.
Johnson, J., took no part.
Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 171124 February 13, 2008
ALEJANDRO NG WEE, petitioner,
vs.
MANUEL TANKIANSEE, respondent.
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
1
of the Court of Appeals (CA) in CA-G.R. SP No. 90130 and its January 6, 2006
Resolution
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 bank's affiliate, Westmont
Investment Corporation (Wincorp), a domestic entity engaged in the business of an investment house with the
authority and license to extend credit.
3

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

Under the scheme agreed upon by Wincorp and Hottick's president, petitioner's money placements were
transferred without his knowledge and consent to the loan account of Power Merge through an agreement that
virtually freed the latter of any liability. Allegedly, through the false representations of Wincorp and its officers
and directors, petitioner was enticed to roll over his placements so that Wincorp could loan the same to
Virata/Power Merge.
5

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

On October 26, 2000, on the basis of the allegations in the complaint and the October 12, 2000 Affidavit
8
of
petitioner, the trial court ordered the issuance of a writ of preliminary attachment against the properties not
exempt from execution of all the defendants in the civil case subject, among others, to petitioner's filing of a
P50M-bond.
9
The writ was, consequently, issued on November 6, 2000.
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.
11
The other defendants likewise filed similar
motions.
12
On October 23, 2001, the RTC, in an Omnibus Order,
13
denied all the motions for the discharge of
the attachment. The defendants, including respondent herein, filed their respective motions for reconsideration
14

but the trial court denied the same on October 14, 2002.
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,
16
and the motion for reconsideration thereof on March 16, 2004.
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 Virata's and UEM-MARA's failure to sufficiently show that the appellate court committed any
reversible error.
18
We subsequently denied the petition with finality on August 23, 2004.
19

On September 30, 2004, respondent filed before the trial court another Motion to Discharge Attachment,
20
re-
pleading the grounds he raised in his first motion but raising the following additional grounds: (1) that he was
not present in Wincorp's board meetings approving the questionable transactions;
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.
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 respondent's affirmative defenses that properly pertained to the
merits of the case, the trial court denied the motion in its January 6, 2005 Order.
23

With the denial of its motion for reconsideration,
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
25

reversing and setting aside the aforementioned orders of the trial court and lifting the November 6, 2000 Writ of
Preliminary Attachment
26
to the extent that it concerned respondent's properties. Petitioner moved for the
reconsideration of the said ruling, but the CA denied the same in its January 6, 2006 Resolution.
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 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.
28

For his part, respondent counters, among others, that the general and sweeping allegation of fraud against
respondent in petitioner's affidavit-respondent as an officer and director of Wincorp allegedly connived with the
other defendants to defraud petitioner-is not sufficient basis for the trial court to order the attachment of
respondent's 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.
29

We agree with respondent's contentions and deny the petition.
In the case at bench, the basis of petitioner's 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 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:
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 debtor's mere non-payment of the debt
or failure to comply with his obligation.
30
The applicant must then be able to demonstrate that the debtor has
intended to defraud the creditor.
31
In Liberty Insurance Corporation v. Court of Appeals,
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.
33

In the instant case, petitioner's October 12, 2000 Affidavit
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,
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.
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.
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
38
because established is the rule that fraud is
never presumed.
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 other defendants to
commit a fraud. While under certain circumstances, courts may treat a corporation as a mere aggroupment of
persons, to whom liability will directly attach, this is only done when the wrongdoing has been clearly and
convincingly established.
40

Let it be stressed that the provisional remedy of preliminary attachment is harsh and rigorous for it exposes the
debtor to humiliation and annoyance.
41
The rules governing its issuance are, therefore, strictly construed against
the applicant,
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.
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.
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.,
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.
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.
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."
48
Also, he is not in the same situation as Virata and
UEM-MARA since, as aforesaid, while petitioner's affidavit detailed the alleged fraudulent scheme perpetrated
by Virata and/or Power Merge, only a general allegation of fraud was made against respondent.
We state, in closing, that our ruling herein deals only with the writ of preliminary attachment issued against the
properties of respondent-it does not concern the other parties in the civil case, nor affect the trial court's
resolution on the merits of the aforesaid civil case.
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.
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 123358 February 1, 2000
FCY CONSTRUCTION GROUP, INC., and FRANCIS C. YU, petitioners,
vs.
THE COURT OF APPEALS, THE HON. JOSE C. DE LA RAMA, Presiding Judge, Branch 139,
Regional Trial Court, NCJR, Makati City, Metro-Manila, and LEY CONSTRUCTION AND
DEVELOPMENT CORPORATION, respondents.
YNARES-SANTIAGO, J .:
On June 29, 1993, private respondent Ley Construction and Development Corporation filed a Complaint for
collection of a sum of money with application for preliminary attachment against petitioner FCY Construction
Group, Inc. and Francis C. Yu with the Makati Regional Trial Court which was docketed as Civil Case No. 93-
2112. Private respondent alleged that it had a joint venture agreement with petitioner FCY Construction Group,
Inc. (wherein petitioner Francis C. Yu served as President) over the Tandang Sora Commonwealth Flyover
government project, for which it had provided funds and construction materials. The Complaint was filed in
order to compel petitioners to pay its half share in the collections received in the project as well as those yet to
be received therein. In support of its application for a writ of attachment, private respondent alleged that
petitioners were guilty of fraud in incurring the obligation and had fraudulently misapplied or converted the
money paid them, to which it had an equal share.
On July 6, 1993, following an ex-parte hearing, the lower court issued an Order for the issuance of a writ of
preliminary attachment, conditioned upon the filing of a P7,000,000.00 attachment bond.
Petitioners moved for the lifting of the writ of preliminary attachment on the following grounds: (1) the
attachment was heard, issued and implemented even before service of summons upon them; (2) failure of the
attaching officer to serve a copy of the affidavit of merit upon them; and (3) that there was no fraud in incurring
the obligation. As an alternative prayer in their Motion, petitioners prayed that the attachment be limited to their
receivables with the Department of Public Works and Highways. This alternative prayer was later withdrawn by
petitioners in a Manifestation and Motion.
On May 25, 1994, the lower court issued another Order denying petitioners' Motion to Lift Attachment.
1
It,
however, reduced and confined the attachment to receivables due petitioners from the Tandang Sora
Commonwealth Flyover project.
Subsequently, petitioners filed a Motion for Reconsideration
2
as well as an Omnibus Motion for Leave to file
Amended Answer and/or to delete Francis C. Yu as party-defendant.
3

With the denial of both Motions by the lower court on September 4, 1994,
4
petitioners filed a Petition for
Certiorari before the Court of Appeals on September 16, 1994.
5
The Petition was, however, denied on July 31,
1995;
6
so was petitioners' Motion for Reconsideration.
7

Hence, the instant Petition.
It is evident that the questioned writ of attachment was anchored upon Section 1(d), Rule 57 of the Revised
Rules of Court, to wit
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:
x x x x x 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 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
Petitioners, however, insist that the writ of preliminary attachment was irregularly issued inasmuch as there was
no evidence of fraud in incurring the obligations sued upon.
In support of their stand, petitioners alleged that private respondent's principal witness admitted that it was the
Department of Public Works and Highways (DPWH) that induced it to deliver materials and cash for the
Tandang Sora Commonwealth Flyover project, to wit
COURT:Now . . . as of January 5, 1993 you delivered to him (referring to defendant FCY corporation)
in cash and in kind amounting to Fifteen Million Pesos (P15,000,000,00), now why did you keep on
delivering cash and materials to him if you were not paid a single centavo?
A &nsbp Because of every need for the project, and the Public Works official assured me that I will be given a
new project after the Tandang Sora will be finished.
Q &nsbp Who is this public official that promised you?
A &nsbp Director Pendosa, Teodoro Encarnacion and Secretary de Jesus your Honor. (TSN, 6 July 1993, pp.
47-48).
x x x x x x x x x
Q &nsbp What about these officials of the Department of Public Highways, what would they do to project their
sub alleged project?
A &nsbp Secretary de Jesus is no longer connected there, your Honor.
Q &nsbp At the time?
A &nsbp At that time, he resigned.
Q &nsbp Before he resigned.
A &nsbp He gave me assurance that they will soon give assurance, they will soon give me another project . . .
(TSN, 6 July 1993, p. 55)
8

A cursory reading of the above-cited testimony, however, readily shows that said reassurance from the DPWH
officials came, not at the inception of the obligation or contract, but during its performance. On the other hand,
the fraud of which petitioners are accused of and which was the basis for the issuance of the questioned
attachment, is fraud alleged to have been committed upon contracting the obligation sued upon. Thus,
petitioners' argument that "the inducement was the mouth-watering temptation of a DPWH promise of a "new
project after the Tandang Sora Flyover project will be finished" is clearly off-tangent as such inducement, if
any, came not at the inception of the obligation.
Similarly, petitioners' arguments that it was private respondent who admittedly prepared the letter embodying
the alleged joint venture agreement
9
and had petitioner Francis Yu sign it must fail. The written agreement
referred to was signed by petitioner Francis Yu only on January 5, 1993, long after the project had commenced.
Thus, it was only a written confirmation of an arrangement that had already been existing and operational.
Similarly then, such written confirmation did not occur at the inception of the obligation sued upon.
In Liberty Insurance Corporation vs. Court Appeals,
10
this Court, discussing Section 1(d), Rule 57, cautioned 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).
From the foregoing, therefore, the alleged inducement by the DPWH officials upon private respondent as well
as the circumstances surrounding the execution of the joint venture agreement, both appear immaterial as they
were not committed upon contracting the obligation sued upon but occurred long after the obligation has been
established.
The fact that petitioners have paid a substantial amount of money to private respondent cannot save the day for
them either. As per their own accounting, such payments were for accounts payable for labor supplied,
construction materials and cash advances.
11
It is not denied that no payment of profits has been given to private
respondent, which is precisely what it issuing for.
Finally, considering that the writ of preliminary attachment has been issued on account of allegations of fraud in
contracting the obligation upon which the action is brought petitioners' efforts to have the writ of preliminary
attachment dissolved on the ground that it was improperly or irregularly issued is in vain. Indeed, in Liberty
Insurance Corporation, supra, which cited Mindanao Savings and Loan Assoc. vs. Court of Appeals (172 SCRA
480), we ruled
. . ., when the preliminary attachment is issued upon a ground which is at the same time the applicant's
cause of action: e.g., . . . an action against a party who has been guilty of fraud in contracting the debtor
incurring the obligation upon which the action is brought, the defendant is not allowed to file a motion
to dissolve the attachment under Section 13 of Rule 57 by offering to show the falsity of the factual
averments in the plaintiffs application and affidavits on which the writ was based and consequently that
the writ based therein had been improperly or irregularly issued the reason being that the hearing on
such motion for dissolution of the writ would be tantamount to a trial on the merits. In other words, the
merits of the action would be ventilated at a mere hearing of a motion; instead of the regular trial.
Therefore, when the writ of attachment is of this nature, the only way it can be dissolved is by a
counterbond.
We now come to the issue of whether or not petitioner Francis Yu should remain as party-defendant. Petitioners
argue that since the transactions were corporation to corporation only, petitioner Francis Yu should be dropped
as party-defendant considering the hornbook law that corporate personality is a shield against personal liability
of its officers. We agree that petitioner Francis Yu cannot be made liable in his individual capacity if he indeed
entered into and signed the contract in his official capacity as President, in the absence of stipulation to that
effect, due to the personality of the corporation being separate and distinct from the persons composing it.
12

However, while we agree that petitioner Francis Yu cannot be held solidarily liable with petitioner corporation
merely because he is the President thereof and was involved in the transactions with private corporation, we
also note that there exists instances when corporate officers may be held personally liable for corporate acts.
Such exceptions were outlined in Tramat Mercantile, Inc. vs. Court of Appeals,
13
as follows
Personal liability of a corporate director, trustee or officer along (although not necessarily) with the
corporation may so validly attach, as a rule, only when
1.He assents (a) to a patently unlawful act of the corporation, or (b) for bad faith or gross negligence in
directing its affairs, or (c) for conflict of interest, resulting in damages to the corporation, its
stockholders or other persons;
2.He consents to the issuance of watered down stocks or who, having knowledge thereof, does not
forthwith file with the corporate secretary his written objection thereto;
3.He agrees to hold himself personally and solidarily liable with the corporation; or
4.He is made, by a specific provision of law, to personally answer for his corporate action.
The attendance of these circumstances, however, cannot be determined at this stage and should properly be
threshed out during the trial on the merits. Stated differently, whether or not petitioner Francis Yu should be
held personally and solidarily liable with petitioner corporation is a matter that should be left to the trial court's
discretion, dependent as it is on evidence during trial.
WHEREFORE, in view of the foregoing, the instant Petition is hereby DISMISSED. No pronouncement as to
costs.1wphi1.nt
SO ORDERED.
Davide, Jr., C.J., Puno, Kapunan and Pardo, JJ., concur.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. L-35990 June 17, 1981
ABOITIZ & COMPANY, INC., HONORABLE VICENTE N. CUSI JR., Judge of the Court of First
Instance of Davao, and the PROVINCIAL SHERIFF OF DAVAO DEL SUR, petitioners,
vs.
COTABATO BUS COMPANY, INC., respondent.

DE CASTRO, J .:
The instant petition stemmed from Civil Case No. 7329 of the Court of First Instance of Davao (Branch 1) in
which a writ of preliminary attachment was issued ex-parte by the Court on the strength of an affidavit of merit
attached to the verified complaint filed by petitioner herein, Aboitiz & Co., Inc., on November 2, 1971, as
plaintiff in said case, for the collection of money in the sum of P 155,739.41, which defendant therein, the
respondent in the instant case, Cotabato Bus Co., owed the said petitioner.
By virtue of the writ of preliminary attachment, the provincial sheriff attached personal properties of the
defendant bus company consisting of some buses, machinery and equipment. The ground for the issuance of the
writ is, as alleged in the complaint and the affidavit of merit executed by the Assistant Manager of petitioner,
that the defendant "has removed or disposed of its properties or assets, or is about to do so, with intent to
defraud its creditors."
Respondent company filed in the lower court an "Urgent Motion to Dissolve or Quash Writ of Attachment" to
which was attached an affidavit executed by its Assistant Manager, Baldovino Lagbao, alleging among other
things that "the Cotabato Bus Company has not been selling or disposing of its properties, neither does it intend
to do so, much less to defraud its creditors; that also the Cotabato Bus Company, Inc. has been acquiring and
buying more assets". An opposition and a supplemental opposition were filed to the urgent motion. The lower
court denied the motion stating in its Order that "the testimony of Baldovino Lagbao, witness for the defendant,
corroborates the facts in the plaintiff's affidavit instead of disproving or showing them to be untrue."
A motion for reconsideration was filed by the defendant bus company but the lower court denied it. Hence, the
defendant went to the Court of Appeals on a petition for certiorari alleging grave abuse of discretion on the part
of herein respondent Judge, Hon. Vicente R. Cusi Jr. On giving due course to the petition, the Court of Appeals
issued a restraining order restraining the trial court from enforcing further the writ of attachment and from
proceeding with the hearing of Civil Case No. 7329. In its decision promulgated on October 3, 1971, the Court
of Appeals declared "null and void the order/writ of attachment dated November 3, 1971 and the orders of
December 2, 1971, as well as that of December 11, 1971, ordered the release of the attached properties, and
made the restraining order originally issued permanent.
The present recourse is an appeal by certiorari from the decision of the Court of Appeals reversing the assailed
orders of the Court of First Instance of Davao, (Branch I), petitioner assigning against the lower court the
following errors:
ERROR I
THE COURT OF APPEALS ERRED IN HASTILY AND PERFUNCTORILY RENDERING,
ON OCTOBER 3, 1971, A DECISION WITHOUT CONSIDERING MOST OF THE
EVIDENCE SUCH THAT
l) EVEN AN IMPORTANT FACT, ESTABLISHED BY DOCUMENTARY EVIDENCE AND
NOT DENIED BY RESPONDENT, IS MENTIONED ONLY AS A "CLAIM" OF
PETITIONER COMPANY;
2) THE DECISION CONTAINS NO DISCUSSION AND APPRECIATION OF THE FACTS
AS PROVED, ASSEMBLED AND PRESENTED BY PETITIONER COMPANY SHOWING
IN THEIR TOTALITY THAT RESPONDENT HAS REMOVED, DIVERTED OR
DISPOSED OF ITS BANK DEPOSITS, INCOME AND OTHER LIQUID ASSETS WITH
INTENT TO DEFRAUD ITS CREDITORS, ESPECIALLY ITS UNSECURED SUPPLIERS;
3) THE DECISION IGNORES THE SIGNIFICANCE OF THE REFUSAL OF RESPONDENT
TO PERMIT, UNDER REP. ACT NO. 1405, THE METROPOLITAN BANK & TRUST CO.
TO BRING, IN COMPLIANCE WITH A subpoena DUCES TECUM TO THE TRIAL COURT
ALL THE RECORDS OF RESPONDENT'S DEPOSITS AND WITHDRAWALS UNDER ITS
CURRENT AND SAVINGS ACCOUNTS (NOW NIL) FOR EXAMINATION BY
PETITIONER COMPANY FOR THE PURPOSE OF SHOWING DIRECTLY THE
REMOVAL, DIVERSION OR DISPOSAL OF RESPONDENT'S DEPOSITS AND INCOME
WITH INTENT TO DEFRAUD ITS CREDITORS.
ERROR II
THE COURT OF APPEALS ERRED IN NOT APPRECIATING THE FACTS THAT
RESPONDENT'S BANK DEPOSITS ARE NIL AS PROOF WHICH - TOGETHER WITH
RESPONDENT'S ADMISSION OF AN INCOME OF FROM P10,000.00 to P 14,000.00 A
DAY AND THE EVIDENCE THAT IT CANNOT PRODUCE P 634.00 WITHOUT USING A
PERSONAL CHECK OF ITS PRESIDENT AND MAJORITY STOCKHOLDER, AND
OTHER EVIDENCE SHOWS THE REMOVAL OR CHANNELING OF ITS INCOME TO
THE LATTER.
ERROR III
THE COURT OF APPEALS ERRED IN NOT APPRECIATING THE RESCUE AND
REMOVAL BY RESPONDENT OF FIVE ATTACHED BUSES, DURING THE
DEPENDENCY OF ITS MOTION TO DISSOLVE THE ATTACHMENT IN THE, TRIAL
COURT, AS A FURTHER ACT OF REMOVAL OF PROPERTIES BY RESPONDENT WITH
INTENT TO DEFRAUD PETITIONER COMPANY, FOR WHOSE BENEFIT SAID BUSES
HAD BEEN ATTACHED.
The questions raised are mainly, if not solely, factual revolving on whether respondent bus company has in fact
removed its properties, or is about to do so, in fraud of its creditors. This being so, the findings of the Court of
Appeals on said issues of facts are generally considered conclusive and final, and should no longer be disturbed.
However, We gave due course to the petition because it raises also a legal question of whether the writ of
attachment was properly issued upon a showing that defendant is on the verge of insolvency and may no longer
satisfy its just debts without issuing the writ. This may be inferred from the emphasis laid by petitioner on the
fact that even for the measly amount of P 634.00 payment thereof was made with a personal check of the
respondent company's president and majority stockholder, and its debts to several creditors, including secured
ones like the DBP, have remained unpaid, despite its supposed daily income of an average of P 12,000.00, as
declared by its assistant manager, Baldovino Lagbao.
1

Going forthwith to this question of whether insolvency, which petitioners in effect claims to have been proven
by the evidence, particularly by company's bank account which has been reduced to nil, may be a ground for the
issuance of a writ of attachment, the respondent Court of Appeals correctly took its position in the negative on
the strength of the explicit ruling of this Court in Max Chamorro & Co. vs. Philippine Ready Mix Concrete
Company, Inc. and Hon. Manuel P. Barcelona.
2

Petitioner, however, disclaims any intention of advancing the theory that insolvency is a ground for the issuance
of a writ of attachment ,
3
and insists that its evidence -is intended to prove his assertion that respondent
company has disposed, or is about to dispose, of its properties, in fraud of its creditors. Aside from the reference
petitioner had made to respondent company's "nil" bank account, as if to show removal of company's funds,
petitioner also cited the alleged non-payment of its other creditors, including secured creditors like the DBP to
which all its buses have been mortgaged, despite its daily income averaging P12,000.00, and the rescue and
removal of five attached buses.
It is an undisputed fact that, as averred by petitioner itself, the several buses attached are nearly junks. However,
upon permission by the sheriff, five of them were repaired, but they were substituted with five buses which
were also in the same condition as the five repaired ones before the repair. This cannot be the removal intended
as ground for the issuance of a writ of attachment under section 1 (e), Rule 57, of the Rules of Court. The repair
of the five buses was evidently motivated by a desire to serve the interest of the riding public, clearly not to
defraud its creditors, as there is no showing that they were not put on the run after their repairs, as was the
obvious purpose of their substitution to be placed in running condition.
Moreover, as the buses were mortgaged to the DBP, their removal or disposal as alleged by petitioner to provide
the basis for its prayer for the issuance of a writ of attachment should be very remote, if not nil. If removal of
the buses had in fact been committed, which seems to exist only in petitioner's apprehensive imagination, the
DBP should not have failed to take proper court action, both civil and criminal, which apparently has not been
done.
The dwindling of respondent's bank account despite its daily income of from P10,000.00 to P14,000.00 is easily
explained by its having to meet heavy operating expenses, which include salaries and wages of employees and
workers. If, indeed the income of the company were sufficiently profitable, it should not allow its buses to fall
into disuse by lack of repairs. It should also maintain a good credit standing with its suppliers of equipment, and
other needs of the company to keep its business a going concern. Petitioner is only one of the suppliers.
It is, indeed, extremely hard to remove the buses, machinery and other equipments which respondent company
have to own and keep to be able to engage and continue in the operation of its transportation business. The sale
or other form of disposition of any of this kind of property is not difficult of detection or discovery, and
strangely, petitioner, has adduced no proof of any sale or transfer of any of them, which should have been easily
obtainable.
In the main, therefore, We find that the respondent Court of Appeals has not committed any reversible error,
much less grave abuse of discretion, except that the restraining order issued by it should not have included
restraining the trial court from hearing the case, altogether. Accordingly, the instant petition is hereby denied,
but the trial court is hereby ordered to immediately proceed with the hearing of Civil Case No. 7329 and decide
it in accordance with the law and the evidence. No special pronouncement as to costs.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. L-67715 July 11, 1986
WILLIAM ALAIN MIAILHE and THE HON. FELIX V. BARBERS, in his capacity as Presiding Judge,
RTC of Manila, Branch XXXIII, petitioners-appellants,
vs.
ELAINE M. DE LENCQUESAING and HERVE DE LENCQUESAING, respondents-appellees.
PARAS, J .:
This petition is an appeal by certiorari from the Decision of the Intermediate Appellate Court in AC-G.R. SP.
No. 01914 which declared null-and void, the Order of the Hon. Judge Felix V. Barbers, issued in Civil Case No.
83-16829, dated April 14, 1983, granting petitioner's application for the issuance of a writ of preliminary
attachment and the Order dated September 13, 1983 denying respondent's motion to lift said attachment.
The pertinent facts that gave rise to the instant petition are as follows: Petitioner William Alain Miailhe, his
sisters Monique Miailhe Sichere, Elaine Miailhe de Lencquesaing and their mother, Madame Victoria D.
Miailhe are co-owners of several registered real properties located in Metro Manila. By common consent of the
said co-owners, petitioner William Alain has been administering said properties since 1960. As Madame
Victoria D. Miailhe, her daughter Monique and son William Alain (herein petitioner) failed to secure an out-of
court partition thereof due to the unwillingness or opposition of respondent Elaine, they filed in the Court of
First Instance of Manila (now Regional Trial Court) an action for Partition, which was docketed as Civil Case
No. 105774 and assigned to Branch . . . thereof, presided over by Judge Pedro Ramirez. Among the issues
presented in the partition case was the matter of petitioner's account as administrator of the properties sought to
be partitioned. But while the said administrator's account was still being examined, respondent Elaine filed a
motion praying that the sum of P203,167.36 which allegedly appeared as a cash balance in her favor as of
December 31, 1982, be ordered delivered to her by petitioner William Alain. Against the opposition of
petitioner and the other co-owners, Judge Pedro Ramirez granted the motion in his Order dated December 19,
1983 which order is now the subject of a certiorari proceeding in the Intermediate Appellate Court under AC-
G.R. No. SP-03070.
Meanwhile however, and more specifically on February 28, 1983, respondent Elaine filed a criminal complaint
for estafa against petitioner William Alain, with the office of the City Fiscal of Manila, alleging in her
supporting affidavit that on the face of the very account submitted by him as Administrator, he had
misappropriated considerable amounts, which should have been turned over to her as her share in the net rentals
of the common properties. Two days after filing the complaint, respondent flew back to Paris, the City of her
residence. Likewise, a few days after the filing of the criminal complaint, an extensive news item about it
appeared prominently in the Bulletin Today, March 4, 1983 issue, stating substantially that Alain Miailhe, a
consul of the Philippines in the Republic of France, had been charged with Estafa of several million pesos by
his own sister with the office of the City Fiscal of Manila.
On April 12, 1983, petitioner Alain filed a verified complaint against respondent Elaine, for Damages in the
amount of P2,000,000.00 and attorney's fees of P250,000.00 allegedly sustained by him by reason of the filing
by respondent (then defendant) of a criminal complaint for estafa, solely for the purpose of embarrassing
petitioner (then plaintiff) and besmirching his honor and reputation as a private person and as an Honorary
Consul of the Republic of the Philippine's in the City of Bordeaux, France. Petitioner further charged
respondent with having caused the publication in the March 4, 1983 issue of the Bulletin Today, of a libelous
news item. In his verified complaint, petitioner prayed for the issuance of a writ of preliminary attachment of
the properties of respondent consisting of 1/6 undivided interests in certain real properties in the City of Manila
on the ground that "respondent-defendant is a non-resident of the Philippines", pursuant to paragraph (f),
Section 1, Rule 57, in relation to Section 17, Rule 14 of the Revised Rules of Court.
This case for Damages was docketed as Civil Case No. 83-16829 of the Regional Trial Court of Manila, Branch
XXXIII presided over by the Honorable Felix V. Barbers.
On April 14, 1983, Judge Barbers granted petitioner's application for preliminary attachment upon a bond to be
filed by petitioner in the amount of P2,000,000.00. Petitioner filed said bond and upon its approval, the Writ of
Preliminary Attachment was issued on April 18, 1983 which was served on the Deputy Clerk of Court of
Branch XXX before whom the action for Partition was pending.
On May 17, 1983, respondent thru counsel filed a motion to lift or dissolve the writ of attachment on the ground
that the complaint did not comply with the provisions of Sec. 3 of Rule 57, Rules of Court and that petitioner's
claim was for unliquidated damages. The motion to lift attachment having been denied, respondent filed with
the Intermediate Appellate Court a special action for certiorari under AC-G.R. SP No. 01914 alleging that Judge
Barbers had acted with grave abuse of discretion in the premises. On April 4, 1984, the IAC issued its now
assailed Decision declaring null and void the aforesaid Writ of preliminary attachment. Petitioner filed a motion
for the reconsideration of the Decision but it was denied hence, this present petition which was given due course
in the Resolution of this Court dated February 6, 1985.
We find the petition meritless. The most important issue raised by petitioner is whether or not the Intermediate
Appellate Court erred in construing Section 1 par. (f) Rule 57 of the Rules of Court to be applicable only in case
the claim of the plaintiff is for liquidated damages (and therefore not where he seeks to recover unliquidated
damages arising from a crime or tort).
In its now assailed decision, the IAC stated
We find, therefore, and so hold that respondent court had exceeded its jurisdiction in issuing the
writ of attachment on a claim based on an action for damages arising from delict and quasi delict
the amount of which is uncertain and had not been reduced to judgment just because the
defendant is not a resident of the Philippines. Because of the uncertainty of the amount of
plaintiff's claim it cannot be said that said claim is over and above all legal counterclaims that
defendant may have against plaintiff, one of the indispensable requirements for the issuance of a
writ of attachment which should be stated in the affidavit of applicant as required in Sec. 3 of
Rule 57 or alleged in the verified complaint of plaintiff. The attachment issued in the case was
therefore null and void.
We agree.
Section 1 of Rule 57 of the Rules of Court provides
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 fromcontract,
express or implied, 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 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 a party who has been guilty of a fraud in contracting the debt or incurring
the obligation upon which the action is brought, or in concealing or disposing of the property for
the taking, detention or conversion of which the action is brought;
(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. (emphasis supplied)
While it is true that from the aforequoted provision attachment may issue "in an action against a party who
resides out of the Philippines, " irrespective of the nature of the action or suit, and while it is also true that in the
case of Cu Unjieng, et al vs. Albert, 58 Phil. 495, it was held that "each of the six grounds treated ante is
independent of the others," still it is imperative that the amount sought be liquidated.
In view of the foregoing, the Decision appealed from is hereby AFFIRMED.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 75466 December 19, 1988
ANTONIO TOLEDO, petitioner,
vs.
HON. JOSE P. BURGOS, Presiding Judge of Branch XXV of the Regional Trial Court of Cebu, Region
VII, and PERCY CASTRO, respondents.

PARAS, J .:
This is a petition for certiorari and mandamus with a prayer for the issuance of a writ of preliminary prohibitory
injunction, questioning the respondent judge's denial of petitioner's "Application for Issuance of a Writ of
Preliminary Attachment" and the latter's subsequent "Motion for Reconsideration", in his orders dated 6 June
1986 and 23 June 1986, respectively.
As can be gleaned from the parties' memoranda, the following material facts have been established:
A complaint for Delivery of Personal Property was commenced by petitioner on 14 June 1985 against
respondent Castro but was subsequently denied. In connection therewith, a writ of Replevin was applied for.
Petitioner's subsequent reconsideration having been likewise denied, he went to the then Intermediate Appellate
Court on certiorari. The latter Court denied the same on 30 April 1986. *
Subsequently, on 14 May 1986, petitioner applied for the issuance of a writ of preliminary attachment with the
Court below, and which was requested by the former's counsel for it to be considered in the morning of 6 June
1986 "With or without the attendance of counsel and without oral arguments" (p. 28, Rollo). In said application,
it was alleged that respondent Castro, among others, "has removed and has deposed (sic) or is about to depose
(sic) of her property with intent to defraud the herein plaintiff" (p. 24, Rollo). To support such allegation, an
affidavit of one Rudolfo Inot (p. 29, Rollo) was attached to the application to prove that respondent Castro and
her spouse insistently offered to sell to him two (2) motor vehicles. Castro submitted her written opposition
thereto on 4 June 1986 (p. 57, Rollo). On the hearing of 6 June 1986, neither petitioner nor his counsel
appeared. Being present then, Castro assailed the allegations in the affidavit of Mr. Inot. She likewise argued
that petitioner had to prove by overwhelming evidence his allegation that she was about to dispose of her
properties in fraud of creditors, and that mere affidavits would not suffice. On the same date, respondent judge
denied the application.
On 17 June 1986, petitioner moved to reconsider the above denial. Once more, counsel for petitioner requested
that the consideration of said motion be scheduled in the morning session of 23 June 1986 "without need of
argument or appearance of counsel" (p. 35, Rollo). But like before, petitioner and his counsel failed to appear.
On said date, respondent Castro manifested that the two (2) vehicles, alleged to have been offered for sale by
her, were needed in her retail merchandising business, thus, had no intention of disposing of them. The
respondent judge then issued another order dated 23 June 1986 denying petitioner's motion. Hence, this present
petition was filed on 12 August 1986.
In a minute resolution dated 25 August 1986 (p. 90, Rollo), this Court denied the instant petition for being
without merit. And after respondent Castro had filed her answer and petitioner his motion for reconsideration,
this Court reconsidered the aforesaid resolution in a subsequent one dated 5 January 1987 (p. 94, Rollo) and
ordered the parties to submit their respective memoranda.
The sole issue in this case concerns the propriety of the respondent judge's denial of petitioner's application for
a writ of attachment. In branding the denial as improper, petitioner accuses respondent judge of having made it
"with undue haste and without proper notice of hearing" and with disregard of the "(strong) evidence in support
of the application". (Petition, p. 8, Rollo)
We disagree With the petitioner's accusations. Contrary to his claims, the respondent judge acted well within his
powers and in the highest regard for justice. Respondent judge acted correctly in denying petitioner's
"Application for Issuance of a Writ of Preliminary attachment". There was no need for him to, as against
petitioner's claim, set a hearing on the said application. This is because the issuance of a writ of preliminary
attachment may be made by the Court ex parte. As We held in the case of Filinvest Credit Corporation vs.
Relova, 117 SCRA 420, and reiterated in Belisle Investment and Finance Co., Inc. vs. State Investment House,
Inc., 151 SCRA 630:
Nothing in the Rules of Court makes notice and hearing indispensable and mandatory requisites
for the issuance of a writ of attachment. The statement in the case Blue Green Waters, Inc. vs.
Hon. Sundiam and Tan cited by private respondent, to the effect that the order of attachment
issued without notice to therein petitioner Blue Green Waters, Inc. and without giving it a chance
to prove that it was not fraudulently disposing of its properties is irregular, gives the wrong
implication. As clarified in the separate opinion of Mr. Justice Claudio Teehankee in the same
cited case, a writ of attachment may be issued ex parte.
And even if said notice is indeed necessary, petitioner can only blame himself for failing to attend the scheduled
hearing of 6 June 1986. This is because it was he, through his counsel, who requested that the application be set
for consideration and approval by the Court on the said date. It was, therefore, his duty to be present in Court on
that date.
Inasmuch as a writ of preliminary attachment may be issued without hearing, the judge before whom the
application is made has full discretion in considering the supporting evidence proffered by the applicant. And in
dealing with the affidavit of Mr. Inot, the respondent judge was empowered to decide whether or not such
should be given credit. As We enunciated in the early case of La Grande vs. Samson (58 Phil. 578); "the
sufficiency or insufficiency of an affidavit depends upon the amount of credit given to it by the judge, and its
acceptance of rejection upon his sound discretion."
It is unfortunate that counsel for petitioner, in his motion for reconsideration dated 13 October 1986, has made a
hasty accusation against the Honorable Judge Jose Burgos, the public respondent, as having "shown manifest
partiality towards private respondents, making statements and actions which clearly intimate that the private
respondents would win the case handsdown This is indeed unfortunate, improper and an affront to the dignity of
the judiciary." (p. 79, Rollo). We do not find any cogent and valid ground in the records of this case which
justify such a grave imputation upon a member of the Bench. Counsel for petitioner is hereby reminded of his
duties to the Court. And the attorney's duty of prime importance is to observe and maintain the respect due the
courts of justice and judicial officers (Rule 138, Sec. 20(b); Rheem of the Phil. vs. Ferrer, 60 SCRA 234). His
arguments, written or oral, should be gracious to both the court and opposing counsel and be of such words as
may be properly addressed by one gentleman to another (National Surety Co. v. Jarvis, 278 US 610 (1928).
WHEREFORE, premises considered, this petition is hereby DENIED with costs against petitioner.
SO ORDERED.


Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 115678 February 23, 2001
PHILIPPINES BANK OF COMMUNICATIONS, petitioner,
vs.
HON. COURT OF APPEALS and BERNARDINO VILLANUEVA, respondents.
x ---------------------------------------- x
G.R. No. 119723 February 23, 2001
PHILIPPINE BANK OF COMMUNICATIONS, petitioner,
vs.
HON. COURT OF APPEALS and FILIPINAS TEXTILE MILLS, INC., respondents.
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.1wphi1.nt
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 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
us 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 subparagraphs "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 debtor's 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 petitioner's
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, petitioner's Motion for Attachment fails to meet the standard set in D.P. Lub Oil Marketing Center,
Inc. v. Nicolas,
10
in applications for attachment. In the said case, this Court cautioned
The petitioner's 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 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 petitioner's 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.1wphi1.nt
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-7717 April 27, 1956
G.B., INC., ETC., petitioner,
vs.
THE HONORABLE JUDGE CONRADO V. SANCHEZ, ET AL., respondents.
Zafra, Lara, De Leon and Veneracion for petitioner.
Juan T. Chuidian for respondents.
PARAS, C.J .:
Petitioner herein G.B. Inc. is the Trustee of Juan Luna Subdivision Inc. Allison Gibbs is the President of the
petitioner and manager of Juan Luna Subdivision, Inc. Before December 31, 1953, herein respondent Juan T.
Chuidian and Allison Gibbs were partners of the law firm "Gibbs, Gibbs, Chuidian and Quasha", the retaining
counsel of Juan Luna Subdivision, Inc. On June 18, 1948, a loan of P40,000 was granted by Juan Luna
Subdivision, Inc. to respondent Chuidian, and an "Agreement to sell" was executed on that date whereby
respondent Chuidian acknowledge the receipt of said amount for which he agreed and promised to transfer
within 60 days to Juan Luna Subdivision, Inc. the land which he bought from one Florence Shuster the loan thus
obtained. On June 19, 1948, respondent Chuidian addressed a letter to Juan Luna Subdivision, Inc. indicating
his intention to secure a loan from the Rehabilitation Finance Corporation with which to pay his debt to Juan
Luna Subdivision, Inc. On May 5, 1953, in his letter to Juan Luna Subdivision, Inc. respondent Chuidian
acknowledged his indebtedness of P53,817.72, representing balance of principal and interest. Instead of
conveying the land bought from Florence Shuster to Juan Luna Subdivision, Inc. respondent Chuidian sold the
same to Elenita Hernandez for P25,000 in order to pay his wife's gambling death. On December 1, 1953,
Allison Gibbs and respondent Chuidian ceased to be law partners. On March 4, 1954, the petitioner filed a
complaint against respondent Chuidian in the Court of First Instance of Manila, Civil Case No. 22183, for the
collection of his indebtedness based on his "Agreement to Sell". At the commencement of the action, the
petitioner asked for the issuance ex-parte of a writ of preliminary attachment which as granted by the court upon
the filing by the petitioner of a bond of P57,000. On March 12, 1954, respondent Chuidian filed a "Motion to
Discharge Attachment" based on the ground that said attachment was improperly issued, to which the petitioner
filed an opposition on March 16, 1954. On March 31, 1954, the petition filed an urgent motion praying that
respondent Chuidian's "Motion to Discharge Attachment" be denied or that it be granted after the filing of a
counter bound or that the hearing of said "Motion to Discharge Attachment" be held after respondent Chuidian
shall have filed an answer to the complaint. The respondent Judge of the Court of First Instance of Manila
denied petitioner's urgent motion and set the hearing of the "Motion to Discharge Attachment" on April 3, 1954.
Such hearing was held on April 3 and 6, 1954. When the hearing in the afternoon of April 6 and was about to
end, counsel for petitioner requested that the latter be given a chance to present an absent witness, which the
court denied on the ground that it had previously warned the parties that will witnesses should be presented on
said date.
On April 22, 1954, the respondent Judge issued an order granting respondent Chuidian's "Motion to Discharge
Attachment" under section 13 of Rule 59 of the Rules of Court. A motion for reconsideration having been
denied, the petitioner filed the present petition for certiorari with preliminary injunction. On May 4, 1954, this
Court issued the preliminary injunction prayed for, restraining the respondent Judge and the sheriff of the City
of Manila from enforcing the order of April 22, 1945, discharging the writ of attachment.
The grounds advanced by the petitioner for the issuance of the writ of attachment were (a) respondent Chuidian
converted to his own use the land which he bought in a fiduciary capacity for Juan Luna Subdivision, Inc.; (b)
that respondent Chuidian is guilty of fraud in contracting his indebtedness and incurring the obligations upon
which the action is brought; and (c) that respondent Chuidian has removed or disposed of his property or is
about to do so with intent to defraud his creditor. the petitioner also points out that in addition to the grounds set
forth in the motion for the issuance of an ex parte writ of preliminary attachment, other grounds contained in the
allegations of the complaint were made a part of said ex parte motion by reference. Attached to the "Motion to
Discharge Attachment" filed by the respondent Chuidian, was an affidavit contradicting the grounds alleged by
the petitioner. Respondent Chuidian herein stresses the fact that while the writ of attachment was obtained by
petitioner ex parte, its discharge was ordered by the respondent Judge after extended hearings and the
submission of memoranda.
Stripped of non-essentials, the petitioner argues that respondent Chuidian converted to his own use the land
which he brought in the fiduciary for Juan Luna Subdivision, Inc., or at least is guilty of fraud in contracting his
indebtedness and incurring the obligation upon which the action in Civil Case No. 22138 is brought reliance
being placed on the "Agreement to Sell" executed by respondent Chuidian on June 18, 1948, and the letter
written by him to Juan Luna Subdivision, Inc., on June 19, 1948, herein above already referred to. Respondent
Chuidian in his testimony during the hearing of his "Motion to Discharge Attachment" alleged that said
"Agreement to Sell" did not express the true intentions of the parties; that all the papers relied upon by the
petitioner were mere formalities to avoid criticisms of the monitory stockholders of Juan Luna Subdivision,
Inc., conceived by Allison Gibbs; that the real and true intention of the parties was that the money would be
advanced by Allison Gibbs to respondent Chuidian and the former would pay the Juan Luna Subdivision, Inc.
Petitioner also alleges that if it had been allowed to present its absent witness, Elenita Hernandez, the following
facts would have been proven: (1) that Chuidian's wife's indebtedness to Elenita Hernandez was contracted
before the "Agreement to Sell"; (2) that such indebtedness has been outstanding for some time before such date
(June 18, 1948); and (3) that the "Agreement to Sell" dated June 18, 1948 and letter on June 19, 1948, were
executed with the preconceived intention of not complying with them. It is therefore obvious that, in order to
determine whether or not respondent Chuidian converted to his own use the land which he bought in a fiduciary
capacity for the Juan Luna Subdivision, Inc., or was guilty of fraud in contracting his debt and incurring the
obligations upon which the action is brought, considering that respondent Chuidian has alleged that the
"Agreement to Sell" executed by him and other papers relief upon by the petitioner, did not express the real
intentions of the parties; and considering that the grounds invoked by the petitioner for the issuance of the writ
attachment form the very basis of its complaint in Civil Case No. 22138,a trial of the merits, after answer shall
have been filed by respondent Chuidian, was necessary. In this case the hearings of the "Motion to Discharge"
were held before the issues have been joined (respondent Chuidian not having as yet filed his answer to the
complaint), and the order of the respondent Judge discharging the attachment would have the effect of deciding
or prejudging the main action. "The 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."
(4 Am. Jur., Sec. 635, 934.) The petitioner's case is rather strengthened by the fact that it was not given an
opportunity to present an absent material witness, in the person of Elenita Hernandez.
In holding that there was no fraud on the part of respondent Chuidian, the respondent Judge held as follows: "It
must be borne in mind that defendant did not pocket the money no money passed hands with that
conveyance to Elenita Hernandez. The conveyance was in the form of a dacion en pago. Defendant was
practically driven to the wall the family name must be reserved. If defendant received actually that sum of
P25,000 consideration for the conveyance, perhaps there may yet be reason for branding defendant as a fraud.
But such was not the case.' It is evident, however, that the fact that respondent Chuidian did not pocked the
money paid for the conveyance by Elenita Hernandez, is immaterial, inasmuch as the petitioner was deprived of
the same amount of P25,000, assuming that under its complaint respondent Chuidian was in fact indebted to the
petitioner in the manner stated in said complaint.
We are, therefore, of the opinion that, from what has been said, in a view of the return of the sheriff showing
financial instability on the part of respondent Chuidian, the most that the respondent Judge could have done in
his favor to which the petitioner has expressed its agreement was to discharge the attachment in question
upon the filing upon respondent Chuidian of a counter bond in the sum of P57,000, under section 12 of Rule 59
of the Rules of Court. This would have accomplished respondent Chuidian's purpose of preserving his property
and family name, at the same time giving the petitioner security for any judgment that it may obtain against
him. We are constrained to hold the respondent Judge acted with grave abuse of discretion.
Wherefore, the order of the respondent Judge dated April 22, 1954, is hereby set aside, and the writ of
preliminary attachment issued on March 4, 1954 maintained.
So ordered with costs against respondent Juan T. Chuidian.
Bengzon, Reyes, A., Jugo, Concepcion, Reyes, J. B. L., and Endencia, JJ., concur.

Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. NO. 123638 June 15, 2005
INSULAR SAVINGS BANK, Petitioner,
vs.
COURT OF APPEALS, JUDGE OMAR U. AMIN, in his capacity as Presiding Judge of Branch 135 of
the Regional Trial Court of Makati, and FAR EAST BANK AND TRUST COMPANY, Respondents.
D E C I S I O N
GARCIA, J .:
Thru this appeal via a petition for review on certiorari under Rule 45 of the Rules of Court, petitioner Insular
Savings Bank seeks to set aside the D E C I S I O N
1
dated October 9, 1995 of the Court of Appeals in CA-
G.R. SP No. 34876 and its resolution dated January 24, 1996,
2
denying petitioners motion for
reconsideration.
The assailed decision of October 9, 1995 cleared the Regional Trial Court (RTC) at Makati, Branch 135, of
committing, as petitioner alleged, grave abuse of discretion in denying petitioners motion to discharge
attachment by counter-bond in Civil Case No. 92-145, while the equally assailed resolution of January 24, 1996
denied petitioners motion for reconsideration.
The undisputed facts are summarized in the appellate courts decision
3
under review, as follows:
"On December 11, 1991, respondent Bank [Far East Bank and Trust Company] instituted Arbitration Case No.
91-069 against petitioner [Insular Savings Bank] before the Arbitration Committee of the Philippine Clearing
House Corporation [PCHC]. The dispute between the parties involved three [unfunded] checks with a total
value of P25,200,000.00. The checks were drawn against respondent Bank and were presented by petitioner for
clearing. As respondent Bank returned the checks beyond the reglementary period, [but after petitioners
account with PCHC was credited with the amount of P25,200,000.00] petitioner refused to refund the money to
respondent Bank. While the dispute was pending arbitration, on January 17, 1992, respondent Bank instituted
Civil Case No. 92-145 in the Regional Trial Court of Makati and prayed for the issuance of a writ of
preliminary attachment. On January 22, 1992, Branch 133 of the Regional Trial Court of Makati issued an
Order granting the application for preliminary attachment upon posting by respondent Bank of an attachment
bond in the amount of P6,000,000.00. On January 27, 1992, Branch 133 of the Regional Trial Court of Makati
issued a writ of preliminary attachment for the amount of P25,200,000.00. During the hearing on February 11,
1992 before the Arbitration Committee of the Philippine Clearing House Corporation, petitioner and respondent
Bank agreed to temporarily divide between them the disputed amount of P25,200,000.00 while the dispute has
not yet been resolved. As a result, the sum of P12,600,000.00 is in the possession of respondent Bank. On
March 9, 1994, petitioner filed a motion to discharge attachment by counter-bond in the amount of
P12,600,000.00. On June 13, 1994, respondent Judge issued the first assailed order denying the motion.
On June 27, 1994, petitioner filed a motion for reconsideration which was denied in the second assailed
order dated July 20, 1994" (Emphasis and words in bracket added).
From the order denying its motion to discharge attachment by counter-bond, petitioner went to the Court of
Appeals on a petition for certiorari thereat docketed as CA-G.R. SP No. 34876, ascribing on the trial court the
commission of grave abuse of discretion amounting to lack of jurisdiction.
While acknowledging that "[R]espondent Judge may have erred in his Order of June 13, 1994 that the counter-
bond should be in the amount of P27,237,700.00", in that he erroneously factored in, in arriving at such amount,
unliquidated claim items, such as actual and exemplary damages, legal interest, attorneys fees and expenses of
litigation, the CA, in the herein assailed decision dated October 9, 1995, nonetheless denied due course to and
dismissed the petition. For, according to the appellate court, the RTCs order may be defended by, among
others, the provision of Section 12 of Rule 57 of the Rules of Court, infra. The CA added that, assuming that the
RTC erred on the matter of computing the amount of the discharging counter-bond, its error does not amount to
grave abuse of discretion.
With its motion for reconsideration having been similarly denied, petitioner is now with us, faulting the
appellate court, as follows:
"I. THE COURT OF APPEALS ERRED IN NOT RULING THAT THE PRINCIPAL AMOUNT
CLAIMED BY RESPONDENT BANK SHOULD BE THE BASIS FOR COMPUTING THE
AMOUNT OF THE COUNTER-BOND, FOR THE PRELIMINARY ATTACHMENT WAS ISSUED
FOR THE SAID AMOUNT ONLY.
"II. THE COURT OF APPEALS ERRED IN NOT RULING THAT THE ARGUMENT THAT THE
AMOUNT OF THE COUNTER-BOND SHOULD BE BASED ON THE VALUE OF THE
PROPERTY ATTACHED CANNOT BE RAISED FOR THE FIRST TIME IN THE COURT OF
APPEALS.
"III. THE COURT OF APPEALS ERRED IN RULING THAT THE AMOUNT OF THE COUNTER-
BOND SHOULD BE BASED ON THE VALUE OF THE PROPERTY ATTACHED EVEN IF IT
WILL RESULT IN MAKING THE AMOUNT OF THE COUNTER-BOND EXCEED THE AMOUNT
FOR WHICH PRELIMINARY ATTACHMENT WAS ISSUED."
Simply put, the issue is whether or not the CA erred in not ruling that the trial court committed grave abuse of
discretion in denying petitioners motion to discharge attachment by counter-bond in the amount of
P12,600,000.00.
Says the trial court in its Order of June 13, 1994:
"xxx (T)he counter-bond posted by [petitioner] Insular Savings Bank should include the unsecured portion of
[respondents] claim of P12,600,000.00 as agreed by means of arbitration between [respondent] and
[petitioner]; Actual damages at 25% percent per annum of unsecured amount of claim from October 21, 1991 in
the amount of P7,827,500.00; Legal interest of 12% percent per annum from October 21, 1991 in the amount of
P3,805,200.00; Exemplary damages in the amount of P2,000,000.00; and attorneys fees and expenses of
litigation in the amount of P1,000,000.00 with a total amount of P27,237,700.00 (Adlawan vs. Tomol, 184
SCRA 31 (1990)".
Petitioner, on the other hand, argues that the starting point in computing the amount of counter-bond is the
amount of the respondents demand or claim only, in this case P25,200,000.00, excluding contingent expenses
and unliquidated amount of damages. And since there was a mutual agreement between the parties to
temporarily, but equally, divide between themselves the said amount pending and subject to the final outcome
of the arbitration, the amount of P12,600,000.00 should, so petitioner argues, be the basis for computing the
amount of the counter-bond.
The Court rules for the petitioner.
The then pertinent provision of Rule 57 (Preliminary Attachment) of the Rules of Court under which the
appellate court issued its assailed decision and resolution, provides as follows:
"SEC. 12. Discharge of attachment upon giving counter-bond. At any time after an order of attachment has
been granted, the party whose property has been attached, . . . may upon reasonable notice to the applicant,
apply to the judge who granted the order or to the judge of the court 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 counter-bond 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. x x x . 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"
4
(Emphasis supplied).
4

As may be noted, the amount of the counter-attachment bond is, under the terms of the aforequoted Section 12,
to be measured against the value of the attached property, as determined by the judge to secure the payment of
any judgment that the attaching creditor may recover in the action. Albeit not explicitly stated in the same
section and without necessarily diminishing the sound discretion of the issuing judge on matters of bond
approval, there can be no serious objection, in turn, to the proposition that the attached property - and logically
the counter-bond necessary to discharge the lien on such property - should as much as possible correspond in
value to, or approximately match the attaching creditors principal claim. Else, excessive attachment, which
ought to be avoided at all times, shall ensue. As we held in Asuncion vs. Court of Appeals:
5

"We, however, find the counter-attachment bond in the amount of P301,935.41 required of the private
respondent by the trial court as rather excessive under the circumstances. Considering that the principal amounts
claimed by the petitioner . . . total only P185,685.00, and that he had posted a bond of only P80,000.00 for the
issuance of the writ of preliminary attachment, we deem it reasonable to lower the amount of the counter-
attachment bond to be posted by the private respondent . . . to the sum of P185,685.00."
The following excerpts from Herrera, REMEDIAL LAW, Vol. VII, 1997 ed., p. 61, citing retired Justice Jose Y.
Feria, drive home the same point articulated in Asuncion:
"The sheriff is required to attach only so much of the property of the party against whom the order is issued as
may be sufficient to satisfy the applicants demand, the amount of which is stated in the order, unless a
deposit is made or a counter-bond is given equal to said amount. However, if the value of the property to be
attached is less than the amount of the demand, the amount of the applicants bond may be equal to the value of
said property, and the amount of the adverse partys deposit or counter-bond may be equal to the
applicants bond. The writ of preliminary attachment is issued upon approval of the requisite bond". (Emphasis
supplied).1avvphi1.net
Turning to the case at bar, the records show that the principal claim of respondent, as plaintiff a quo, is in the
amount of P25,200,000.00,
6
representing the three (3) unfunded checks drawn against, and presented for
clearing to, respondent bank. Jurisprudence teaches that a writ of attachment cannot be issued for moral and
exemplary damages, and other unliquidated or contingent claim.
7

The order of attachment dated January 22, 1992 fixed the bond to be posted by respondent, as applicant, at
P6,000,000.00. The writ of attachment issued on January 27, 1992, in turn, expressly indicated that petitioner is
justly indebted to respondent in the amount of P25,200,000.00.
8
On February 11, 1992, before the Arbitration
Committee of the Philippine Clearing House Corporation, petitioner and respondent, however, agreed to equally
divide between themselves, albeit on a temporary basis, the disputed amount of P25,200,000.00, subject to the
outcome of the arbitration proceedings. Thus, the release by petitioner of the amount of P12,600,000.00 to
respondent. On March 7, 1994, petitioner filed a motion to discharge attachment by counter-bond in the amount
of P12,600,000.00
9
which, to petitioner, is the extent that respondent may actually be prejudiced in the event its
basic complaint for recovery of money against petitioner prospers.
As things stood, therefore, respondents principal claim against petitioner immediately prior to the filing of the
motion to discharge attachment has effectively been pruned down to P12,600,000.00. The trial court was fully
aware of this reality. Accordingly, it should have allowed a total discharge of the attachment on a counter-bond
based on the reduced claim of respondent. If a portion of the claim is already secured, we see no justifiable
reason why such portion should still be subject of counter-bond. It may be that a counter-bond is intended to
secure the payment of any judgment that the attaching party may recover in the main action. Simple common
sense, if not consideration of fair play, however, dictates that a part of a possible judgment that has veritably
been preemptively satisfied or secured need not be covered by the counter-bond.
With the view we take of this case, the trial court, in requiring petitioner to post a counter-bond in the amount of
P27,237,700.00,
obviously glossed over one certain fundamental. We refer to the fact that the attachment respondent applied for
and the corresponding writ issued was only for the amount of P25.2 Million. Respondent, it bears to stress, did
not pray for attachment on its other claims, contingent and unliquidated as they were. Then, too, the attaching
writ rightly excluded such claims. While the records do not indicate, let alone provide a clear answer as to the
actual value of the property levied upon, it may reasonably be assumed that it is equal to respondents principal
claim. Be that as it may, it was simply unjust for the trial court to base the amount of the counter-bond on a
figure beyond the P25,200,000.00 threshold, as later reduced to P12,600,200.00.
The trial court, therefore, committed grave abuse of discretion when it denied petitioners motion to discharge
attachment by counter-bond in the amount of P12,600,000.00, an amount more than double the attachment bond
required of, and given by, respondent. As a necessary consequence, the Court of Appeals committed reversible
error when it dismissed petitioners recourse thereto in CA-G.R. SP No. 34876.
It bears to stress, as a final consideration, that the certiorari proceedings before the appellate court and the denial
of the motion to discharge attachment subject of such proceedings, transpired under the old rules on preliminary
attachment which has since been revised.
10
And unlike the former Section 12 of Rule 57 of the Rules of Court
where the value of the property attached shall be the defining measure in the computation of the discharging
counter-attachment bond, the present less stringent Section 12 of Rule 57 provides that the court shall order the
discharge of attachment if the movant "makes a cash deposit, or files a counter-bond . . . in an amount equal to
that fixed by the court in the order of attachment, exclusive of costs." Not being in the nature of a penal statute,
the Rules of Court cannot be given retroactive effect.
11

This disposition should be taken in the light of then Section 12, Rule 57 of the Rules of Court.
WHEREFORE, the instant petition is GRANTED. Accordingly, the assailed decision and resolution of the
Courts of Appeals are hereby REVERSED and SET ASIDE, along with the orders dated June 13, 1994 and
July 20, 1994 of the Regional Trial Court at Makati, Branch 135, in Civil Case No. 92-145 insofar they denied
petitioners motion to discharge attachment by counter-bond in the amount of P12,600,000.00, and a new one
entered GRANTING such motion upon the reposting of the same counter-bond.
SO ORDERED.