1
Rule 57 be declared the owners in fee simple, has not changed the
PRELIMINARY ATTACHMENT
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:
(a) In an action for the recovery of a specified amount of money or
damages, other than moral and exemplary, on a cause of action
arising from law, contract, quasi-contract, delict or quasi-delict
against a party who is about to depart from the Philippines with
intent to defraud his creditors;
(b) In an action for money or property embezzled or fraudulently
misapplied or converted to his own use by a public officer, or an
officer of a corporation, or an attorney, factor, broker, agent, or
clerk, in the course of his employment as such, or by any other
person in a fiduciary capacity, or for a willful violation of duty;
(c) In an action to recover the possession of property unjustly or
fraudulently taken, detained or converted, when the property, or
any part thereof, has been concealed, removed, or disposed of to
prevent its being found or taken by the applicant or an authorized
person;
(d) In an action against a party who has been guilty of a fraud in
contracting the debt or incurring the obligation upon which the
action is brought, or in the performance thereof;
(e) In an action against a party who has removed or disposed of his
property, or is about to do so, with intent to defraud his creditors;
or
(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. (1a)
Calo vs. Roldan (1946)
Regino Relova and Teodula Bartolome filed a complaint against
Tranquilino Calo and Doroteo San Jose, alleging that they are the
owners and possessors of parcels of land (unplanted rice land and
coconut land). Also alleged that defendants connived, used force,
stealth, threats and intimidation to enter and work or harvest the
existing fruits found in aforementioned lands. Also alleged that
defendants destroyed and took away the madre-cacao fence and
barbed wires built on the northwestern portion of the coconut land.
Prayed for a writ of preliminary injunction.
Defendants filed an opposition, on the ground that they are the
owners of the land and have been in actual possession since 1925.
Petition for writ of preliminary injunction was denied after hearing.
Plaintiffs filed urgent petition ex-parte, praying that their MR of
the order denying their petition be granted and/or for the appointment
of a receiver of the properties described on the ground that (a) the
plaintiffs have an interest in the properties in question, and the fruits
thereof were in danger of being lost unless a receiver was appointed;
and that (b) the appointment of a receiver was the most convenient
and feasible means of preserving, administering and or disposing of
the properties in litigation which included their fruits.
Judge Roldan considered the MR and granted that appointment
of a receiver.
ISSUE: WON Judge Roldan acted in excess of his jurisdiction or
with GAD in issuind the order appointing a receiver
Yes. Plaintiff's action is one of ordinary injunction, since they
allege that they are the owners of the lands and were in actual
possession, and that the defendants entered, worked or harvested the
existing fruits found on said lands, violating plaintiffs proprietary
rights.
This nature of plaintiffs action was corroborated by the fact that
they petitioned for a preliminary prohibitory injuction, which was
denied. They moved for MR, reiterating that they were the actual
possessors of the lands.
The fact that plaintiffs, in their reply dated September 4, after
reiterating their claim that they are the owners in fee simple and
possessors in good faith of the properties in question, pray that they
nature of the action alleged in the complaint or added a new
cause of action because the allegations in plaintiffs' reply were in
answer to defendants' defenses, and the nature of plaintiffs' cause of
action, as set forth in their complaint, was not and could not be
amended or changed by the reply, which plaintiffs had the right to
present as a matter of course.
Respondents' contention in paragraph I of their answer that the
action filed by them against petitioners in the case No. 7951 of the CFI
of Laguna is not only for injunction, but also to quiet title over the two
parcels of land described in the complaint, is untenable because an
equitable action to quiet title may be filed in courts only where no other
remedy at law exists or where the legal remedy invokable would not
afford adequate remedy.
The provisional remedies denominated attachment, preliminary
injunction, receivership, and delivery of personal property, provided in
Rules 59, 60, 61, and 62 of the Rules of Court, respectively, are
remedies to which parties litigant may resort for the preservation or
protection of their rights or interest, and for no other purpose, during
the pendency of the principal action. If an action, by its nature, does
not require such protection or preservation, said remedies can not be
applied for and granted. To each kind of action or actions a proper
provisional remedy is provided for by law. The Rules of Court clearly
specify the case in which they may be properly granted.
Attachment may be issued only in the case or actions specifically
stated in section 1, Rule 59, in order that the defendant may not
dispose of his property attached, and thus secure the satisfaction of
any judgment that may be recovered by plaintiff from defendant. A
property subject of litigation between the parties, or claimed by
plaintiff as his, can not be attached upon motion of the same plaintiff.
The special remedy of preliminary prohibitory injunction lies
when the plaintiff's principal action is an ordinary action of injunction,
that is, when the relief demanded in the plaintiff's complaint consists
in restraining the commission or continuance of the act complained
of, either perpetually or for a limited period, and the other conditions
required by section 3 of Rule 60 are present. The purpose of this
provisional remedy is to preserve the status quo of the things subject
of the action or the relation between the parties, in order to protect the
rights of the plaintiff respecting the subject of the action during the
pendency of the suit. Because, otherwise or if no preliminary
prohibition injunction were issued, the defendant may, before final
judgment, do or continue the doing of the act which the plaintiff asks
the court to restrain, and thus make ineffectual the final judgment
rendered afterwards granting the relief sought by the plaintiff. But, as
this court has repeatedly held, a writ of preliminary injunction should
not be granted to take the property out of the possession of one party
to place it in the hands of another whose title has not been clearly
established.
A receiver may be appointed to take charge of personal or real
property which is the subject of an ordinary civil action, when it
appears that the party applying for the appointment of a receiver has
an interest in the property or fund which is the subject of the action or
litigation, and that such property or fund is in danger of being lost,
removed or materially injured unless a receiver is appointed to guard
and preserve it (section 1 [b], Rule 61); or when it appears that the
appointment of a receiver is the most convenient and feasible means
of preserving, administering or disposing of the property in litigation.
If the property is not in litigation and is in actual possession of the
plaintiff, the latter can not apply for and obtain the appointment of a
receiver thereof, for there would be no reason for such appointment.
Delivery of personal property as a provisional remedy consists in
the delivery, by order of the court, of a personal property by the
defendant to the plaintiff, who shall give a bond to assure the return
thereof or the payment of damages to the defendant in the plaintiff's
action to recover possession of the same property fails, in order to
protect the plaintiff's right of possession of said property, or prevent
the defendant from damaging, destroying or disposing of the same
during the pendency of the suit.
In the case at bar, the provisional remedy proper to plaintiffs'
action of injunction is a preliminary prohibitory injunction if they are
the owner and in actual possession of said property. However, the LC
found at the hearing that the defendants were in possession of the
lands, the LC denied their petition in accordance with the law, although

in plaintiffs pending MR, they insisted that they are in actual
possession of the lands.
Hence, Judge Roldan acted in excess of his jurisdiction in
appointing a receiver. Appointment of a receiver is not proper or does
not lie in an action of injunction such as the one filed by the plaintiff.
The petition for appointment of a receiver filed by the plaintiffs is based
on the ground that it is the most convenient and feasible means of
preserving, administering and disposing of the properties in litigation;
and according to plaintiffs' theory or allegations in their complaint,
neither the lands nor the palay harvested therein, are in litigation. The
litigation or issue raised by plaintiffs in their complaint is not the
ownership or possession of the lands and their fruits. It is whether or
not defendants intend or were intending to enter or work or harvest
whatever existing fruits could then be found in the lands described in
the complaint, alleged to be the exclusive property and in the actual
possession of the plaintiffs. It is a matter not only of law but of plain
common sense that a plaintiff will not and legally can not ask for the
appointment or receiver of property which he alleges to belong to him
and to be actually in his possession. For the owner and possessor of a
property is more interested than persons in preserving and
administering it.
Even if plaintiffs amended their complaint and alleged that the
lands and palay harvested are being claimed by defendants, and
consequently the ownership and possession were in litigation, Judge
Roldan would have acted in excess of jurisdiction or with GAD in
appointing a receiver because relief by way of receivership is equitable
in nature, and a court of equity will not ordinarily appoint a receiver
where the rights of the parties depend on the determination of adverse
claims of legal title to real property and one party is in possession.
In Mendoza vs. Arellano, appointments of receivers of real estate
in cases of this kind lie largely in the sound discretion of the court, and
where the effect of such an appointment is to take real estate out of
the possession of the defendant before the final adjudication of the
rights of the parties, the appointment should be made only in extreme
cases and on a clear showing of necessity therefor in order to save the
plaintiff from grave and irremediable loss or damage.
Therefore, the order appointing the receiver is null and void.
KO Glass Construction vs. Valenzuela (1982)
6 Oct 77: Antonio Pinzon filed an action to recover from Kenneth
Glass the sum of P37,190, alleged to be the the agreed rentals of his
truck, as well as the value of spare parts which have not been returned
to him upon termination of the lease. He asked for an attachment
against the property of the defendant consisting of collectibles and
payables with the Philippine Geothermal, Inc., on the grounds that the
defendant is a foreigner; that he has sufficient cause of action against
the said defendant; and that there is no sufficient security for his claim
against the defendant in the event a judgment is rendered in his favor.
Judge Valenzuela ordered the issuance of a writ of attachment.
Thereupon, Glass moved to quash the writ on the grounds that there
is no COA against him since the transactions or claims of the plaintiff
were entered into by and between the plaintiff and the K.O. Glass
Construction Co., that there is no ground for the issuance of the writ
as Glass never intended to leave the Philippines, and even if he does,
plaintiff cannot be prejudiced thereby because his claims are against
a corporation which has sufficient funds and property to satisfy his
claim; and that the money being garnished belongs to the K.O. Glass
Corporation Co., Inc. and not to defendant.
By reason thereof, Pinzon amended his complaint to include KO
Glass Const. Co. as co-defendant.
Defendants filed supplementary motion to discharge and/or
dissolve the writ of preliminary attachment upon the ground that the
affidavit filed in support of the motion for preliminary attachment was
not sufficient or wanting in law for the reason that: (1) the affidavit did
not state that the amount of plaintiff's claim was above all legal set-
offs or counterclaims, as required by Sec. 3, Rule 57 of ROC ; (2) the
affidavit did not state that there is no other sufficient security for the
claim sought to be recovered by the action as also required by said
Sec. 3; and (3) the affidavit did not specify any of the grounds
enumerated in Sec. 1 of Rule 57.
However, Judge Valenzuela denied the motion and ordered Phil.
Geothermal Inc. to deliver the amount to the court which shall remain
deposited to await judgment to be rendered.
2
Defendants filed a bond in same amount and asked court
to release the same amount deposited with the Clerk but Judge
Valenzuela did not order the release.
ISSUE: WON Judge Valenzuela gravely abused his discretion in issuing
the writ of preliminary attachment and in not ordering the release of
the money deposited with the Clerk
Yes. First, there was no ground for the issuance of the writ of
preliminary attachment. Sec. 1, Rule 57 lists the grounds for such
issuance to be proper. Pinzon, in his complaint, did not allege that the
defendant Glass "is a foreigner (who) may, at any time, depart from
the Philippines with intent to defraud his creditors including the
plaintiff." He merely stated that defendant Glass is a foreigner. Even in
his Amended Complaint, he stated that Glass is an American citizen.
There being no showing, much less an allegation, that the defendants
are about to depart from the Philippines with intent to defraud their
creditor, or that they are non-resident aliens, the attachment of their
properties is not justified.
Second, the affidavit submitted by Pinzon does not comply with
the Rules. Under the Sec. 3, Rule 57, an affidavit for attachment must
state that (a) sufficient cause of action exists, (b) the case is one of
those mentioned in Section I (a) of Rule 57; (c) there is no other
sufficient security 'or the claim sought to be enforced by the action,
and (d) the amount due to the applicant for attachment or the value
of the property the possession of which he is entitled to recover, is as
much as the sum for which the order is granted above all legal
counterclaims.
While Pinzon may have stated in his affidavit that a sufficient COA
exists against the defendant Glass, he did not state therein that "the
case is one of those mentioned in Section 1 hereof; that there is no
other sufficient security for the claim sought to be enforced by the
action; and that the amount due to the applicant is as much as the
sum for which the order granted above all legal counter-claims." It has
been held that the failure to allege in the affidavit the requisites
prescribed for the issuance of a writ of preliminary attachment,
renders the writ of preliminary attachment issued against the property
of the defendant fatally defective, and the judge issuing it is deemed
to have acted in excess of his jurisdiction.
Finally, it appears that the petitioner has filed a counterbond in
the amount of P37,190.00 to answer for any judgment that may be
rendered against the defendant. Upon receipt of the counter-bond,
Judge Valenzuela should have discharged the attachment pursuant to
Section 12, Rule 57. The filing of the counter-bond will serve the
purpose of preserving the defendant's property and at the same time
give the plaintiff security for any judgment that may be obtained
against the defendant.
General vs. De Venecia (1947)
4 Jun 46: Gregorio Ruedas filed a complaint against Luis General
to recover the value of a promissory note. The PN stated that Ruedas
promised to pay General P4K within 6 mos after peace has been
declared and government established in the Philippines. Ruedas also
prayed for a preliminary attachment of defendants property upon the
allegation that the latter was about to dispose of his assets to defraud
creditors. Two days later, the writ of attachment was issued upon the
filing of a suitable bond.
General submitted a motion praying for dismissal of the
complaint and dissolution of the attachment, claiming that it was
premature in view of the provisions of the debt moratorium orders of
the President (EO #25 and #32). Said motion was denied, as well as
the MR. General filed a special civil action.
ISSUE: WON the writ of attachment was improvidently issued,
considering the debt are within the terms of the decree of moratorium
Yes. Upon objection by the debtor, no court may now proceed to
hear a complaint that seeks to compel payment of a monetary
obligation coming within the purview of the moratorium. And the
issuance of a writ of attachment upon such complaint may not, of
course, be allowed. Such levy is necessarily one step in the
enforcement of the obligation, enforcement which, as stated in the
order, is suspended temporarily, pending action by the Government.

But the case for petitioner is stronger when we reflect that
his promise is to pay P4K "within six months after peace has been
declared." It being a matter of contemporary history that the peace
treaty between the United States and Japan has not even been drafted,
and that no competent official has formally declared the advent of
peace, it is obvious that the 6-month period has not begun; and
General has at present and in June, 1946, no demandable duty to
make payment to plaintiffs, independently of the moratorium directive.
As to the question of validity of the attachment, the general rule
is that, unless the statute expressly so provides, the remedy by
attachment is not available in respect to a demand which is not due
and payable, and if an attachment is issued upon such a demand
without statutory authority it is void.
The person seeking a preliminary attachment must show that "a
sufficient cause of action exists" and that the amount due him is as
much as the sum for which the order of attachment is granted".
Inasmuch as the commitment of General has not as yet become
demandable, there existed no cause of action against him, and the
complaint should have been dismissed and the attachment lifted.
And although it is the general principle that certiorari is not
available to correct judicial errors that could be straightened out in an
appeal, we have adopted the course that where an attachment has
been wrongly levied the writ may be applied for, because the remedy
by appeal is either unavailable or inadequate.
Therefore, the writ of attachment is quashed and complaint in
dismissed.
Miailhe vs. De Lencquesaing (1986)
William Alain Miailhe, his two sisters and mother Madame Victoria
are co-owners of several registered real properties in MM. By their
common consent, William has been administering said properties
since 1960.
As they failed to secure an out-of-court partition due to the
unwillingness or opposition of sister Elaine, they filed an action for
partition. 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, 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 William Alain.
However, Elaine filed a criminal complaint for estafa against
William Alain, alleging 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, Elaine flew back to Paris, the City of her residence.
William Alain filed a complaint against Elaine for damages,
allegedly sustained by him by reason of the filing by Elaine of a
criminal complaint for estafa, solely for the purpose of embarrassing
him and besmirching his honor and reputation as a private person and
as an Honorary Consul of the Republic of the Philippines in Bordeaux,
France. Also charged her with causing to publish a libelous news item.
He prayed for the issuance of a writ of preliminary attachment of the
properties of Elaine consisting of 1/6 undivided interests in certain real
properties in the City of Manila on the ground that she 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.
Judge Barbers granted the application for preliminary attachment
upon a bond to be filed by William in the amount of P2M. William filed
said bond, which was approved, and hence, the writ of preliminary
attachment was issued.
Elaine filed 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 and that petitioner's claim was for unliquidated damages.
This was denied so respondent filed a special action for certiorari,
alleging that Judge Barbers had acted with grave abuse of discretion
in the premises.
The writ was declared null and void. William filed MR but denied.
ISSUE: WON Sec. 1(f) of Rule 57 applied only in cases where the claim
is for liquidated damages, and not for recovery of unliquidated
damages arising from a crime or tort
3
Yes. 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.
While it is true that from Sec. 1, Rule 57, 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, 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.
Insular Savings Bank vs. CA (2005)
11 Dec 91: FEB instituted an arbitration case against Insular
Savings Bank before the Arbitration Committee of PCHC. The dispute
involved 3 unfunded checks with total value of P25.2M. Checks were
drawn against FEB and were presented by Insular for clearing. FEB
returned the checks beyond the reglementary period but after Insulars
account with PCHC was credited with the amount, Insular refused to
refund the money to FEB.
While dispute was pending arbitration, FEB instituted a civil case
and prayed for issuance of writ of preliminary attachment. RTC Makati
issued an order, granting the application upon posting by respondent
of an attachment bond in amount of P6M. The writ was issued.
During the hearing before the Arbitration Committee, the 2 banks
agreed to temporarily divide between them the disputed amount of
P25.2M while dispute has not yet been resolved. As result, the sum of
P12.6M is in possession of FEB.
Insular filed motion to discharge attachment by counter-bond in
the amount of P12.6M. Judge Amin issued an order, denying the
motion. Insular filed MR but was again denied.
Insular filed petition for certiorari. CA denied and dismissed the
petition. According to CA, the RTCs order may be defended by the
provision of Sec 12 of Rule 57 and assuming that the RTC erred on
the computation, its error does not amount to GAD.
Insulars contention: the starting point in computing the amount
of counter-bond is the amount of FEBs demand or claim only, in this
case P25.2M, excluding contingent expenses and unliquidated amount
of damages. And since there was a mutual agreement between them
to temporarily, but equally, divide between themselves the said
amount pending and subject to the final outcome of the arbitration,
the amount of P12.6M should be the basis for computing the amount
of the counter-bond.
ISSUE: WON CA erred in not ruling that the RTC commited GAD in
denying Insulars motion to discharge attachment by counter-bond in
the amount of P12.6M
Yes. The amount of the counter-attachment bond is, under the
terms of 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. 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.
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.
The trial court, therefore, committed GAD when it denied Insulars
motion to discharge attachment by counter-bond in the amount of
P12.6M, an amount more than double the attachment bond required
of, and given by, FEB.
It bears to stress, as a final consideration, that the certiorari
proceedings before CA 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. And unlike
the former Section 12 of Rule 57 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.
ISSUE: WON the writ of preliminary attachment was properly issued
Yes. Records show that the principal claim of Insular is in the
amount of P25.2M representing the 3 unfunded checks drawn against,
and presented for clearing to, FEB. Jurisprudence teaches that a writ
of attachment cannot be issued for moral and exemplary damages,
and other unliquidated or contingent claim.
FEBs principal claim against Insular immediately prior to the
filing of the motion to discharge attachment has effectively been
pruned down to P12.6M. 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 FEB. 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
Insular 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 FEB applied for and the corresponding writ issued
was only for the amount of P25.2M. FEB 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 FEBs 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 P25.2M threshold, as later
reduced to P12.6M.
Tan vs. Zandueta (1935)
Tiu Chay obtained a writ of preliminary attachment against Isidro
Tan upon filing of bond in the amount of P5K. On 26 Feb 35, Judge
Zandueta issued the writ, authorizing the attachment of the properties
of Tan to the amount of P22,500.
1 Apr 35: Upon motion of Tan, Judge issued order lifting the writ
of attachment conditioned on the filing of a counter-bond in the
amount of P5K.
20 Apr: Judge issued another order, requiring Tan to put up the
required counter-bond and immediately thereafter, to withdraw from
PNB the amount P22K which had been attached.
23 Apr: Tiu Chay asked Tan to be required to put up another
counter-bond in the amount of P22,500 instead of P5K already filed.
2 May: Judge ordered Tan to file an additional counter-bond in
the amount of P10k, within 10 days.
6 May: Judge entered another order requiring Tan to put up a
counter bond of P17k instead of P15k, or in default, to deposit anew
in PNB P17k.
For failure to file either the counter-bond of P10k or P17K, Judge
required Tan to appear before him and show cause why he should not
be punished for contempt of court. But Tan was granted another day
4
to comply with the counter-bond order, reducing the counter-
bond required to P12K. However, Tan did not file any additional
counter-bond nor made the deposit and so, Judge ordered his arrest.
Tans contentions: under the provisions of section 440 of Act No.
190, after filing the counter bond of P5K required of him by the court
in its order of April 20, 1935, he was authorized and had a perfect
right to withdraw from PNB the amount of his deposit which was
attached by virtue of the orders of February 26 and April 20, 1935. In
truth, when he withdrew the aforesaid amount, there was still no order
preventing or restraining him from doing so, and requiring him to file
an additional counter bound, because the order which imposed upon
him that obligation was issued very much later, that is, on May 2, 1935,
or twelve days after the said withdrawal.
ISSUE:
When the property released from an attachment cannot be
returned by the party who secured its release upon the filing of a bond,
the bond takes the place of said property, that is, answers therefor,
because the law on the points is couched in the following language:
"the obligation aforesaid standing in place of the property so released."
Moreover, the provision of said section, to the effect that the defendant
and surety will, on demand, pay to the plaintiff the full value of the
property released, proceeds on the assumption that a judgment has
been rendered in favor of the plaintiff. Up to the present, no judgment
has been rendered against Isidro Tan, the question of whether or not
the respondent Tiu Chay is entitled to the amount claimed by him as
plaintiff in the said case, being still pending resolution.
Tiu Chay's contention that the Judge proceeded according to law
in requiring an additional counter bond of P12K and in later ordering
the confinement of Tan pending the filing of said bond or the deposit
of an equal amount with the bank, because he had not lost jurisdiction
over the property released pursuant to the provisions of section 440
of Act No. 90, is not only without merit but also untenable.
From the moment Tiu Chay authorized Tan to put up the counter
bond of P5K and from the moment Tan filed said counter bond in
order to be able to withdraw his deposit in PNB, it can be said that the
Judge lost jurisdiction over the said property, although he retained
jurisdiction to resolve the principal question whether or not the
respondent Tiu Chay was entitled to the relief prayed for in his
complaint, because he permitted and the law likewise permits that the
counter bond of the petitioner stand and answer for the said property.
In view of the foregoing, we are of the opinion, and so hold, that
Tan is in fact deprived of his liberty by virtue of an illegal order;
wherefore, we order his immediate release.
Walter Olsen vs. Olsen (1925)
Walter Olsen appealed from a judgment of the CFI Manila,
sentencing him to pay Olsen & Co. the sum of P66,207.62 with legal
interest, and dismissing the cross-complaint and counterclaim set up
by him.
He cited the ff. errors: (1) he holding that the Walter Olsen
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 Walter Olsen from the complaint of the Olsen & Co.
and of not having given judgment for Olsen and against the company
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 Walter Olsen.
ISSUE: WON an order denying motion for annulment of preliminary
attachment may be reviewed through appeal
No. 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 judgment which gives an end to the litigation.
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.
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. 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.
ISSUE: WON the trial court committed an error in denying the motion
for the annulment of the preliminary attachment
No. Walter Olsen admitted that he is indebted to the company but
denied that he has contracted said debt fraudulently.
The evidence shows that Walter was president-treasurer and general
manager of the 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. He 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, Walter Olsen 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 todispose 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 Walter Olsen 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. His conduct in
connection with the funds of the corporation he represented was more
than an irregularity; and while it is not sufficiently serious to constitute
5
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.
Santos vs. Bernabe (1929)
Urbano Santos deposited in Jose Bernabes warehouse 778
cavans and 38 kilos of palay. Pablo Tiongson also deposited 1,026
cavans and 9 kilos of the same grain.
Tiongson filed with CFI Bulacan a complaint against Bernabe to
recover from him the 1,026 cavans and 9 kilos of palay deposited in
the latters warehouse. At the same time, Tiongson applied for a writ
of attachment, which was granted. The attachable property of Bernabe,
including 924 cavans and 31.5 kilos of palay were attached, sold at
public auction, and proceeds delivered to Tiongson.
Santos interevened in the attachment. But upon Tiongsons
proper bond, the sheriff proceeded with the attachment. Santos filed
complaint.
It does not appear that the sacks of palay of Urbano Santos and
those of Pablo Tiongson, deposited in Jose C. Bernabe's warehouse,
bore any marks or signs, nor were they separated one from the other.
Santos contention: Tiongson cannot claim the 924 cavans and
31 kilos of palay attached by sheriff as part of those deposited by
him in Bernabe's warehouse, because, in asking for the attachment
thereof, he impliedly acknowledged that the same belonged to Jose C.
Bernabe and not to him.
ISSUE: WON the writ of attachment was properly issued
Yes. The action brought by Tiongson against Bernabe is that
provided in section 262 of the Code of Civil Procedure for the delivery
of personal property. Although it is true that the Santos and his
attorney did not follow strictly the procedure provided in said section
for claiming the delivery of said personal property nevertheless, the
procedure followed by him may be construed as equivalent thereto,
considering the provisions of section 2 of the Code of Civil Procedure
of the effect that "the provisions of this Code, and the proceedings
under it, shall be liberally construed, in order to promote its object and
assist the parties in obtaining speedy justice."
Liberally construing, therefore, the above cited provisions of
section 262 of the Code of Civil Procedure, the writ of attachment
applied for by Tiongson against the property of Bernabe may be
construed as a claim for the delivery of the sacks of palay deposited
by the former with the latter.
State Investment House vs. CA (1988)
Pedro Valdez and Rudy Sales executed 2 Comprehensive Surety
Agreements to secure any and all loans of PO Valdez, Inc. not
exceeding the sums of P500k and P4.934k from State Investment
House, Inc.
4 yrs later, SIHI and PO Valdez, Inc. entered into an agreement for
discounting with SIHI the receivables of PO Valdez, Inc. When Valdezs
2 checks were deposited by SIHI upon maturity, they bounced for
insufficient funds. Despite demands, Valdez failed to pay the obligation
amounting to P6,342,855.
SIHI foreclosed its real estate mortgage on the 2 lots in Benguet
of Valdez and acquired them as highest bidder. SIHI then filed a
collection suit with prayer for preliminary attachment. Judge Martinez
issued a writ of preliminary attachment against Valdezs properties.
Tropical Homes, Inc. filed a third-party claim to certain properties
in the name of Pedro Valdez. As sheriff failed to act on the claim,
Tropical Homes filed motion to lift the attachment on those properties.
This was opposed by SIHI. Judge Caneba denied the motion.
Valdez filed answer, admitting they he obtained loans from SIHI
to finance their construction projects. Valdez filed motion to discharge
the attachment on the ground that there was no fraud in contracting
the loans, and if any fraud existed, it was in the performance of the
obligations. This was denied.
Valdez filed MR. Judge Caeba granted the MR and discharged
the preliminary attachment on the properties of Pedro O. Valdez and
Remedios Valdez on the ground that their conjugal properties may not

be attached to answer for the debts of the corporation which has
a juridical personality distinct from its incorporators. Found that
there was no fraud.
ISSUE: WON the order lifting the writ of preliminary attachment was
proper
Yes, no fraud. The CA found the ff: (1) With respect to the shares
of stock which Valdez pledged as additional security for the loan, the
decline in their value did not mean that Valdez entered into the loan
transaction in bad faith or with fraudulent intent for Valdez could not
have foreseen how the stocks would fare in the market. And if SIHI
thought they were worthless at the time, it should have rejected them
as collateral. (2) With respect to the two parcels of land which were
mortgaged to SIHI, the latter should also have declined to accept them
as collateral if it believed they were worth less than their supposed
value. (3) With respect to the 2 postdated checks which bounced, since
they were "sold" to SIHI after the loan had been granted to Valdez, their
issuance did not fraudulently induce the petitioner to grant the loan
applied for. They were "mere evidence of Valdezs standing loan
obligation to the SIHI" or "mere collaterals for the loan granted by SIHI
to Valdez.
The main thrust of the prayer for preliminary attachment is the
alleged misrepresentation of the debtor P.O. Valdez, Inc., in the
Agreement for Discounting Receivables and in the deeds of sale of said
receivables; that the two checks or receivables" issued by Pedro Valdez
were payment for "actual sales of its merchandise and/or personalities
made to its customers or otherwise arising from its other legitimate
business transactions" and "that the receivables . . . were genuine, valid
and subsisting and represent bona fide sales of merchandise and/or
personalities made in the ordinary course of business".
It can hardly be doubted that those representations in SIHI's
printed deeds of sale were false. But false though they were, SIHI
cannot claim to have been deceived or deluded by them because it
knew, or should have known, that the issuer of the checks, Pedro O.
Valdez, was not a "buyer" of the "merchandise and personalities made
in the ordinary course of business" by P.O. Valdez, Inc. of which he was
the president.
Since SIHI failed to prove during the hearing of Valdezs motion
to lift the preliminary writ of attachment, that P.O. Valdez, Inc. received
from it independent consideration for the "sale" of Pedro Valdez'
checks to it, apart from the loans previously extended to the
corporations, We are constrained to affirm the finding of the CA that
Valdez's checks are "mere evidence of the outstanding obligation of
P.O. Valdez, Inc. to the petitioner." The petition was not defrauded by
their issuance for the loans had been contracted and released to P.O.
Valdez, Inc. long before the checks were issued.
Aboitiz vs. Cotabato Bus Co. (1981)
Aboitiz filed a complaint against Cotabato Bus Co. for collection
of money in the sum of P155,739.41, which the latter owed Aboitiz.
CFI Davao issued a writ of preliminary attachment.
By virtue of the writ, the provincial sheriff attached personal
properties of the Cotabato Bus 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 Aboitiz, that Cotabato Bus "has removed or disposed of its
properties or assets, or is about to do so, with intent to defraud its
creditors."
Cotabato Bus 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 and that it has been acquiring and
buying more assets. This was denied.
MR was filed but again, denied. Cotabato Bus went to CA on a
petition for certiorari. CA issued a restraining order restraining the trial
court from enforcing further the writ of attachment and from
proceeding with the hearing. CA then declared the writ of attachment
as null and void, and ordered the release of the attached properties.
Aboitizs contention: Cotabato Bus has disposed, or is about to
dispose, of its properties, in fraud of its creditors. Also cited the alleged
6
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 P12k, and the rescue and removal of five
attached buses.
ISSUE: WON the writ of attachment was properly issued
No. 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. 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 Aboitiz 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, the DBP should
not have failed to take proper court action, both civil and criminal,
which apparently has not been done.
The dwindling of Cotabato Bus' bank account despite its daily
income of from P10k to P14k 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.
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, Aboitiz,
has adduced no proof of any sale or transfer of any of them, which
should have been easily obtainable.
Peoples Bank & Trust Co. vs. Syvels Inc. (1988)
PBTC filed an action for foreclosure of chattel mortgage against
Syvels Inc. on its stocks of goods, personal properties and other
materials owned by it and located at its stores or warehouses. The
chattel mortgage was in connection with a credit commercial line in
the amount of P900k.
20 May 65: Antonio V. Syyap and Angel Y. Syyap executed an
undertaking in favor of PBTC whereby they both agreed to guarantee
absolutely and unconditionally and without the benefit of excussion
the full and prompt payment of any indebtedness to be incurred on
account of the said credit line.
In view of the failure of Syvels Inc. to make payment in
accordance with the terms and conditions agreed upon in the
Commercial Credit Agreement, PBTC started to foreclose
extrajudicially the chattel mortgage. However, because of an attempt
to have the matter settled, the extra-judicial foreclosure was not
pushed thru. As no payment had been paid, this case was eventually
filed in this Court.
On the contention that Syvels Inc. is disposing of their properties
with intent to defraud their creditors, a preliminary writ of attachment
was issued.
Syyap proposed to have the case settled amicably and to that end
a conference was held. Syyap requested that PBTC dismiss this case
because he did not want to have the goodwill of Syvel's Inc. impaired,
and offered to execute a real estate mortgage on his real property
located in Bacoor, Cavite.
ISSUE: WON the writ of attachment was properly issued
Yes. The grant or denial of a writ of attachment rests upon the
sound discretion of the court. Records are bereft of any evidence that
grave abuse of discretion was committed by respondent judge in the
issuance of the writ of attachment.

Syvels contends that the affidavits of Messrs. Rivera and
Berenguer on which the lower court based the issuance of the writ
of preliminary attachment relied on the reports of credit investigators
sent to the field and not on the personal knowledge of the affiants.
Such contention deserves scant consideration. Evidence adduced
during the trial strongly shows that the witnesses have personal
knowledge of the facts stated in their affidavits in support of the
application for the writ. They testified that Syvel's Inc. had disposed of
all the articles covered by the chattel mortgage but had not remitted
the proceeds to PBTC; that the Syvel's Stores at the Escolta, Rizal
Avenue and Morayta Street were no longer operated by Syvels and
that the latter were disposing of their properties to defraud PBTC.
Hence, the attachment sought on the ground of actual removal of
property is justified where there is physical removal thereof by the
debtor.
Besides, the actuations of Syvels were clearly seen by the
witnesses who "saw a Fiat Bantam Car-Fiat Car, a small car and about
three or four persons hurrying; they were carrying goods coming from
the back portion of this store of Syvels at the Escolta, between 5:30
and 6:00 o'clock in the evening.
In any case, intent to defraud may be and usually is inferred from
the facts and circumstances of the case; it can rarely be proved by
direct evidence. It may be gleaned also from the statements and
conduct of the debtor, and in this connection, the principle may be
applied that every person is presumed to intend the natural
consequences of his acts.
Not only has PBTC acted in perfect good faith but also on facts
sufficient in themselves to convince an ordinary man that the
defendants were obviously trying to spirit away a portion of the stocks
of Syvel's Inc. in order to render ineffectual at least partially any
judgment that may be rendered in favor of the PBTC."
Syvels having failed to adduce evidence of bad faith or malice on
the part of PBTC in the procurement of the writ of preliminary
attachment, the claim of the former for damages is evidently negated.
In fact, the allegations in the PBTC's complaint more than justify the
issuance of the writ of attachment.
Adlawan vs. Torres (1994)
Aboitiz filed a complaint against Eleazar and Elena Adlawan to
collect a sum of money representing payments for: (1) the unpaid
amortizations of a loan; (2) technical and managerial services
rendered; and (3) the unpaid installments of the equipment provided
by Aboitiz to petitioners.
Judge issued an order directing the issuance of a writ of
preliminary attachment against the property of petitioners upon the
filing by Aboitiz of an attachment bond.
The writ was issued. Sheriff enforced the writ, resulting in the
seizure of heavy construction equipment, motor vehicle spare parts,
and other personal property with the aggregate value of P15M. The
said court also granted the motion of Aboitiz to take possession and
custody of the attached property of petitioners and ordered the
Provincial Sheriff of Davao to deliver the property to Aboitiz.
Adlawan moved for bill of particulars and to set aside the ex-parte
writ of attachment. The writ was lifted and the properties levied were
discharged. Aboitiz filed motion, praying for the stay of the order for it
to be able to appeal. However, Aboitiz subsequently filed a notice of
dismissal of its complaint, which was granted.
Adlawan filed motion praying that the order lifting the writ be
implemented and enforced. This was denied on account of the filing
by Aboitiz of an action for delivery of personal property and the filing
of Adlawan of an action for damages in connection with the seizure of
his property.
In the replevin suit, Court ordered the seizure and delivery of the
property described in the complaint. Alleging that while his office was
situated in Cebu City, Adlawan was a resident of Minglanilla, and
therefore, the Lapu-lapu City court should not entertain the action for
replevin, Adlawan filed an omnibus motion praying for the
reconsideration and dissolution of the writ of seizure, the retrieval of
the property seized, and the dismissal of the complaint. Also averred
that the property seized were in custodia legis by virtue of the writ of
attachment. Again, denied.
7
Adlawan filed petition for certiorari and mandamus, which
was considered by CA. CA ordered the attached properties in the
custody of Aboitiz be returned to Adlawan.
Aboitiz filed MR, contending that the replevin case was distinct
and separate from the case where the writ of attachment was issued.
Denied.
Aboitiz filed second MR, asserting that because the writ of
preliminary attachment was different from the writ of replevin, Court
should rule that the property subject of the latter writ should remain
in custodia legis of the court issuing the said writ. Court resolved and
stated that "the properties to be returned to petitioner are only those
held by Aboitiz by virtue of the writ of attachment which has been
declared non-existent." This became final and executory.
9 Sep 83: Aboitiz filed against Adlawan 2 complaints for
collection of sums of money with prayers for issuance of writs of
attachment, alleging that Adlawan was awarded a contract for the
construction of the Tago Diversion Works for the Tago River Irrigation
Project by the National Irrigation Administration and that Aboitiz
loaned him money and equipment.
Judge ordered the issuance of a writ of attachment upon filing of
bond of P5M by Aboitiz. In the other case the Judge also ordered the
issuance of a writ of attachment upon filing of bond of P2.5M. However,
no writ was issued for the second case.
Adlawan filed urgent motions to hold in abeyance the
enforcement of the writs of attachments, alleging in the main that since
their property had been previously attached and said attachment was
being questioned before the SC, the filing of the two cases, as well as
the issuance of the writs of attachment, constituted undue interference
with the processes of this court in the then pending petition involving
the same property.
Aboitiz alleged that issuance of the writ of attachment was
justified because petitioners were intending to defraud Aboitiz by
mortgaging 11 parcels of land to the PCIB in consideration of the loan
of P1.1M, thereby making PCIB a preferred creditor to the prejudice of
Aboitiz.
Adlawan contended that since the property subject of the writ of
attachment have earlier been attached or replevied, the same property
were under custodia legis and therefore could not be the subject of
other writs of attachment.
Judge issued order finding no merit in Adlawans MR and directed
sheriffs to proceed with the enforcement and implementation of the
writs. Judge ruled that the writs of attachment were issued on the basis
of the supporting affidavits alleging that petitioner had removed or
disposed of their property with intent to defraud Aboitiz.
Adlawan filed petition for certiorari and mandamus, alleging that
Judge Torres gravely abused his discretion in ordering the issuance of
the writs of preliminary attachment inasmuch as the real estate
mortgage executed by them in favor of PCIB did not constitute
fraudulent removal, concealment or disposition of property. Argued
that granting the mortgage constituted removal or disposition of
property, it was not per se a ground for attachment lacking proof of
intent to defraud the creditors of the defendant.
ISSUE: WON the writ of attachment was properly issued
No. The affidavit submitted by Aboitiz in support of its prayer for
the writ of attachment does not meet the requirements of Rule 57
regarding the allegations on impending fraudulent removal,
concealment and disposition of defendant's property.
To justify a preliminary attachment, the removal or disposal must
have been made with intent to defraud defendant's creditors. Proof of
fraud is mandated by paragraphs (d) and (e) of Section 1, Rule 57 on
the grounds upon which attachment may issue. Thus, the factual basis
on Adlawans intent to defraud must be clearly alleged in the affidavit
in support of the prayer for the writ of attachment if not so specifically
alleged in the verified complaint.
From the affidavit of Aboitiz, it is evident that the prayer for
attachment rests on the mortgage by petitioners of 11 parcels of land
in Cebu, which encumbrance Aboitiz considered as fraudulent
concealment of property to its prejudice. We find, however, that there
is no factual allegation which may constitute as a valid basis for the
contention that the mortgage was in fraud of Aboitiz. The general rule
is that the affidavit is the foundation of the writ, and if none be filed or
one be filed which wholly fails to set out some facts required by law to

be stated therein, there is no jurisdiction and the proceedings are
null and void.
Bare allegation that an encumbrance of a property is in fraud of
the creditor does not suffice. Factual bases for such conclusion must
be clearly averred.
The execution of a mortgage in favor of another creditor is not
conceived by the Rules as one of the means of fraudulently disposing
of one's property. By mortgaging a piece of property, a debtor merely
subjects it to a lien but ownership thereof is not parted with.
Furthermore, the inability to pay one's creditors is not necessarily
synonymous with fraudulent intent not to honor an obligation.
Consequently, when petitioners filed a motion for the
reconsideration of the order directing the issuance of the writ of
attachment, Judge should have considered it as a motion for the
discharge of the attachment and should have conducted a hearing or
required submission of counter-affidavits from the petitioners, if only
to gather facts in support of the allegation of fraud. This is what Sec
13, Rule 57 mandates.
This procedure should be followed because, as the Court has time
and again said, attachment is a harsh, extraordinary and summary
remedy and the rules governing its issuance must be construed strictly
against the applicant. Verily, 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.
The judge before whom the application is made exercises full
discretion in considering the supporting evidence proffered by the
applicant. One overriding consideration is that a writ of attachment is
substantially a writ of execution except that it emanates at the
beginning, instead of at the termination of the suit.
Claude Neon Lights vs. Phil. Advertising Corp. (1932)
Phil. Advertising Corp. filed a suit against Claude Neon Lights,
claiming P300k as damages for alleged breach of the agency contract
existing between them. PAC filed an application for writ of attachment
duly verified, stating that Claude is a foreign corporation having its
principal place of business in the City of Washington, District of
Columbia. It is not alleged that Claude was about to depart from the
Philippine Islands with intent to defraud its creditors or that it was
insolvent or had removed or disposed of its property or was about to
do so with intent to defraud its creditors. The only statutory ground
relied upon in the court below and in this court for the issuance of the
writ of attachment against Claude is paragraph 2 of section 424 of the
Code of Civil Procedure, which provides that Claude may have the
property of PAC attached "in an action against a defendant not residing
in the Philippine Islands".
Judge issued the writ of attachment. Sheriff attached all the
properties of Claude in the PH. A receiver was likewise appointed.
Claude filed motion to dissolve writ of attachment and
receivership, contending that Claude is not indebted to PAC in any sum
whatever nor has it in any way breached any contracts with PAC or at
any time interfered in the management of its business in the Philippine
Islands as carried on by its agent, PAC, and it has faithfully complied
with every condition of said contract; that the attachment of the
machinery and plants of the Claude, as well as its other assets, is highly
prejudicial to it as it is unable to proceed with its business in the
Philippine Islands and irreparable loss will result to it unless such
attachment be raised; that the filing of said suit was malicious, without
foundation, and intended only to injure Claude and to depreciate the
value of its holdings in the Philippine Islands.
ISSUE: WON the writ of attachment was properly issued
Claude Neon Lights is a corporation duly organized under the
laws of the District of Columbia; it had complied with all the
requirements of the Philippine laws and the was duly licensed to do
business in the Philippine Islands on the date said writ of attachment
was issues. It was actively engaged in doing business in the Philippine
Islands and had considerable property therein, which consisted to its
manufacturing plant, machinery, merchandise and a large income
under valuable contracts, all of which property was in the possession
and under the control and management of Philippine Advertising
Corporation, as agent, on the date said attachment was levied.
8
The words of Sec. 424 taken in their literal sense seem to
refer to a physical defendant who is capable of being "arrested"
or who is "not residing in the Philippine Islands". It is only by a fiction
that it can be held that a corporation is "not residing in the Philippine
Islands". A corporation has no home or residence in the sense in which
those terms are applied to natural persons. For practical purposes, a
corporation is sometimes said, in a metaphorical sense, to be "a
resident" of a certain state or a "citizen" of a certain country, which is
usually the state or country by which or under the laws of which it was
created.
There is not the same reason for subjecting a duly licensed foreign
corporation to the attachment of its property by a plaintiff under
section 424, paragraph 2, as may exist in the case of a natural person
not residing in the Philippine Islands. The law does not require the
latter, as it does the former, to appoint a resident agent for service of
process; nor to prove to the satisfaction of the Government before he
does business here, as the foreign corporation must prove, that he "is
solvent and in sound financial condition". He pays no license fee nor is
his business subject at any time to investigation by the Secretary of
Finance and the Governor-General; nor is his right to continue to do
business revocable by the Government.
Corporations, as a rule, are less mobile than individuals. This is a
specially true of foreign corporations that are carrying on business by
proper authority in these Islands.
If, as we believe, section 424, paragraph 2, should not be held
applicable to foreign corporations duly licensed to do business in the
Philippine Islands both because the language and the reason of the
statute limit it to natural persons, we sustain and reinforce the
provisions of section 71 of the Corporation Law, Act No. 1459, which
provides in substance that if the Secretary of Finance or the Secretary
of Commerce and Communications and the Governor-General find a
duly licensed foreign corporation to be insolvent or that its continuance
in business will involve probable loss to its creditors, they may revoke
its license and "the Attorney-General shall take such proceedings as
may be proper to protect creditors and the public".
Obviously, the benefit of that section will be minimized, if not
entirely defeated, if a creditor or a few creditors can obtain privileged
liens by writs of attachment based on the sole allegation, which is
easily and safely made, that the corporation is "not residing in the
Philippine Islands".
Paragraph 2 of section 424, supra does not apply to a domestic
corporation. We think it would be entirely out of line with this policy
should we make a discrimination against a foreign corporation, like
Claude, and subject its property to the harsh writ of seizure by
attachment when it has complied not only with every requirement of
law made especially of foreign corporations, but in addition with every
requirement of law made of domestic corporations.
As the Claude's business was a going concern, which the sheriff,
who levied the writ, obviously could not manage, it became necessary
on the same day for the court to appoint a receiver. This receiver, as
the demurrer admits, "was and is an employee working under the
president of PAC, so that to all intents and purposes, all the property
of PAC in the Philippine Islands was seized and delivered into the
hands of PAC.
The prayer of the Claude is granted. The order and writ of
attachment complained of are annulled and set aside.
State Investment House, Inc. vs. Citibank, N.A. (1991)
Foreign banks Bank of America NT & SA, Citibank NA, and HSBC
jointly filed a petition for involuntary insolvency of Consolidated Mines,
Inc.
The petition alleged that CMI had obtained loans from Bank of
America, Citibank, HSBC. In Nov 81, SIHI and State Financing Center,
Inc. had separately instituted actions for collection of sums of money
and damages in the CFI Rizal against CMI and that on application of
SIHI and SFCI, writs of preliminary attachment had been issued which
were executed on "the royalty/profit sharing payments due CMI from
Benguet CMI.
This petition was opposed by SIHI and SFCI, alleging that the
foreign banks had come to court with unclean hands in that they filed
the petition when it fact, a few days earlier, they had received
substantial payments aggregating P10.8M. Also that Court has no
jurisdiction because the alleged acts of insolvency were false, and that

the banks are not resident creditors of CMI in contemplation of
the Insolvency Law, and that the Court has no power to set aside
the attachment issued in favor of SIHI and SCFI.
CMI filed its Answer, asserting that it was not insolvent.
SIHI and SFCI filed Motion for Summary Judgment on the ground
that the TC had no jurisdiction to adjudicate CMI as insolvent since the
foreign banks are not resident creditors of CMI as required under the
Insolvency Law.
RTC found merit in the motion, ruling that if the creditors
petitioning for adjudication of insolvency are not "residents" of the
Philippines, court could not acquire jurisdiction to adjudicate the
debtor CMI as insolvent. Also declared that since SIHI and SFCI had
been merely licensed to do business in the PH, they could not be
deemed residents thereof.
ISSUE:
The concept of a foreign corporation under Section 123 of the
Corporation Code is of "one formed, organized or existing under laws
other than those of the Philippines and . . . (which) laws allow Filipino
citizens and corporations to do business . . . ."
There is no question that the three banks are foreign corporations
in this sense, with principal offices situated outside of the Philippines.
There is no question either that said banks have been licensed to do
business in this country and have in fact been doing business here for
many years, through branch offices or agencies, including "foreign
currency deposit units.
The National Internal Revenue Code declares that the term
"'resident foreign corporation' applies to a foreign corporation engaged
in trade or business within the Philippines," as distinguished from a "
"non-resident foreign corporation" . . . (which is one) not engaged in
trade or business within the Philippines."
The Offshore Banking Law, Presidential Decree No. 1034, states
"that branches, subsidiaries, affiliation, extension offices or any other
units of corporation or juridical person organized under the laws of
any foreign country operating in the Philippines shall be considered
residents of the Philippines."
The General Banking Act, Republic Act No. 337, places "branches
and agencies in the Philippines of foreign banks . . . (which are) called
Philippine branches," in the same category as "commercial banks,
savings associations, mortgage banks, development banks, rural
banks, stock savings and loan associations" (which have been formed
and organized under Philippine laws), making no distinction between
the former and the later in so far, as the terms "banking institutions"
and "bank" are used in the Act.
A foreign corporation licitly doing business in the Philippines,
which is a defendant in a civil suit, may not be considered a non-
resident within the scope of the legal provision authorizing attachment
against a defendant not residing in the Philippine Islands. In other
words, a preliminary attachment may not be applied for and granted
solely on the asserted fact that Citibank is a foreign corporation
authorized to do business in the Philippines and is consequently
and necessarily, "a party who resides out of the Philippines."
Parenthetically, if it may not be considered as a party not residing in
the Philippines, or as a party who resides out of the country, then,
logically, it must be considered a party who does reside in the
Philippines, who is a resident of the country.
It would be entirely out of line with this policy should we make a
discrimination against a foreign corporation and subject its property
to the harsh writ of seizure by attachment when it has complied not
only with every requirement of law made specially of foreign
corporations, but in addition with every requirement of law made of
domestic corporations.
Obviously, the assimilation of foreign corporations authorized to
do business in the Philippines "to the status of domestic corporations,"
subsumes their being found and operating as corporations, hence,
residing, in the country.
The Court cannot thus accept the SIHI's theory that corporations
may not have a residence (i.e., the place where they operate and
transact business) separate from their domicile (i.e., the state of their
formation or organization), and that they may be considered by other
states as residents only for limited and exclusive purposes. Of course,
it is not really the grant of a license to a foreign corporation to do
business in this country that makes it a resident; the license merely
9
gives legitimacy to its doing business here. What effectively
makes such a foreign corporation a resident corporation in the
Philippines is its actually being in the Philippines and licitly doing
business here.
Neither can the Court accept the theory that the omission by the
banks in their petition for involuntary insolvency of an explicit and
categorical statement that they are "residents of the Philippine
Islands," is fatal to their cause. In truth, in light of the concept of
resident foreign corporations just expounded, when they alleged in
that petition that they are foreign banking corporations, licensed to do
business in the Philippines, and actually doing business in this Country
through branch offices or agencies, they were in effect stating that they
are resident foreign corporations in the Philippines.
There is, of course, as petitioners argue, no substantive law
explicitly granting foreign banks the power to petition for the
adjudication of a Philippine corporation as a bankrupt. This is
inconsequential, for neither is there any legal provision expressly giving
domestic banks the same power, although their capacity to petition for
insolvency can scarcely be disputed and is not in truth disputed by
petitioners. The law plainly grants to a juridical person, whether it be a
bank or not or it be a foreign or domestic corporation, as to natural
persons as well, such a power to petition for the adjudication of
bankruptcy of any person, natural or juridical, provided that it is a
resident corporation and joins at least two other residents in
presenting the petition to the Bankruptcy Court.
The petitioners allege that three days before respondent banks
filed their petition for involuntary insolvency against CMI, they received
from the latter substantial payments on account in the aggregate
amount of P6,010,800.00, with the result that they were "preferred in
the distribution of CMI's assets thereby defrauding other creditors of
CMI." Non sequitur. It is in any case a circumstance that the
Bankruptcy Court may well take into consideration in determining the
manner and proportion by which the assets of the insolvent company
shall be distributed among its creditors; but it should not be
considered a ground for giving the petition for insolvency short shrift.
Hence, the petition for insolvency was denied.
Mabanag vs. Gallemore (1948)
Roman Mabanag filed an action to recover P735.18 from Joseph
Gallemore. Said amount was paid by Mabanag to Gallemore for the 2
parcels of land whose sale was afterward annulled. Gallemore was said
to be residing in Los Angeles, California. He has no property in the
Philippines except an alleged debt owing him by a resident of the
municipality of Occidental Misamis. This debt, upon petition of
Mabanag, after the filing of the complaint and before the suit was
dismissed, was attached to the extent of Mabanag's claim for the
payment of which the action was brought. But the attachment was
dissolved in the same order dismissing the case.
ISSUE: WON the dissolution of the attachment was proper
No. As a general rule, when the defendant is not residing and is
not found in the Philippines, the Philippine courts cannot try any case
against him because of the impossibility of acquiring jurisdiction over
his person, unless he voluntarily appears in court. But, when the action
affects the personal status of the plaintiff residing in the Philippines,
or is intended to seize or dispose of any property, real or personal, of
the defendant, located in the Philippines, it may be validly tried by the
Philippine courts, for then, they have jurisdiction over the res, i.e., the
personal status of the plaintiff or the property of the defendant, and
their jurisdiction over the person of the non-resident defendant is not
essential. Venue in such cases may be laid in the province where the
plaintiff whose personal status is in question resides, or where the
property of the defendant or a part thereof involved in the litigation is
located.
Jurisdiction over the property which is the subject of litigation
may result either from a seizure of the property under legal process,
whereby it is brought into the actual custody of the law, or it may result
from the institution of legal proceedings wherein, under special
provisions of law, the power of the court over the property is
recognized and made effective. In the latter case the property, though
at all times within the potential power of the court, may never be taken
into actual custody at all. An illustration of the jurisdiction acquired by

actual seizure is found in attachment proceedings, where the
property is seized at the beginning of the action, or some
subsequent stage of its progress, and held to abide the final event of
the litigation. An illustration of what we term potential jurisdiction over
the res, is found in the proceeding to register the title of land under
our system for the registration of land. Here the court, without taking
actual physical control over the property assumes, at the instance of
some person claiming to be owner, to exercise a jurisdiction in remover
the property and to adjudicate the title in favor of the petitioner against
all the world.
In an ordinary attachment proceeding, if the defendant is not
personally served, the preliminary seizure is to be considered
necessary in order to confer jurisdiction upon the court. In this case
the lien on the property is acquired by the seizure; and the purpose of
the proceeding is to subject the property to that lien. If a lien already
exists, whether created by mortgage, contract, or statute, the
preliminary seizure is not necessary; and the court proceeds to enforce
such lien in the manner provided by law precisely as though the
property had been seized upon attachment. It results that the mere
circumstance that in an attachment the property may be seized at the
inception of the proceedings, while in the foreclosure suit it is not taken
into legal custody until the time comes for the sale, does not materially
affect the fundamental principle involved in both cases, which is that
the court is here exercising a jurisdiction over the property in a
proceeding directed essentially in rem.
When, however, the action relates to property located in the
Philippines, the Philippine courts may validly try the case, upon the
principles that a "State, through its tribunals, may subject property
situated within its limit owned by non-residents to the payment of the
demand of its own citizens against them; and the exercise of this
jurisdiction in no respect infringes upon the sovereignty of the State
were the owners are domiciled.
The main action in an attachment or garnishment suit is in rem
until jurisdiction of the defendant is secured. Thereafter, it is in
personam and also in rem, unless jurisdiction of the res is lost as by
dissolution of the attachment. If jurisdiction of the defendant is
acquired but jurisdiction of the res is lost, it is then purely in personam.
. . a proceeding against property without jurisdiction of the person of
the defendant is in substance a proceeding in rem; and where there is
jurisdiction of the defendant, but the proceedings against the property
continues, that proceedings is none the less necessarily in rem,
although in form there is but a single proceeding.
As the remedy is administered in some states, the theory of an
attachment, whether it is by process against or to subject the property
or effects of a resident or non-resident of the state, is that it partakes
essentially of the nature and character of the proceeding in personam
and not of a proceeding in rem. And if the defendant appears the
action proceeds in accordance with the practice governing
proceedings in personam. But were the defendant fails to appear in
the action, the proceeding is to be considered as one in the nature of
a proceeding in rem. And where the court acts directly on the property,
the title thereof being charged by the court without the intervention of
the party, the proceeding unquestionably is one in rem in the fullest
meaning of the term.
In attachment proceedings against a non-resident defendant
where personal service on him is lacking, it is elementary that the court
must obtain jurisdiction of the property of the defendant. If no steps
have been taken to acquire jurisdiction of the defendant's person, and
he has not appeared and answered or otherwise submitted himself to
the jurisdiction of the court, the court is without jurisdiction to render
judgment until there has been a lawful seizure of property owned by
him within the jurisdiction of the court.
In the case at bar, the Court has acquired jurisdiction by virtue of
the attachment of Gallemores credit. Hence, the dismissal of the case
and the dissolving of the attachment was improper.
Phil. Bank of Communications vs. CA (2001)
PBC filed a complaint against Bernardino Villanueva, Filipinas
Textile Mills and Sochi Villanueva. It 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 PBC with Filipinas Textile Mills as
10
obligor; which, in turn, were covered by surety agreements
executed by Bernardino Villanueva and Sochi Villanueva.
In their Answer, Villanueva and Filipinas Textile Mills admitted the
existence of the surety agreements and trust receipts but countered
that they had already made payments.
31 May 93: PBC filed Motion for Attachment, 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. Also
claimed that attachment was necessary Villanueva and Filipinas Textile
Mills were disposing of their properties to its detriment as a creditor.
Finally, PBC offered to post a bond for the issuance of such writ of
attachment.
Writ of preliminary attachment was issued. Petitions for certiorari
were filed assailing the order granting the writ. Both petitions were
granted. CA held 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. Also found
that the grounds cited by PBC in its Motion do not provide sufficient
basis for the issuance of a writ of preliminary attachment, they being
mere general averments. Neither embezzlement, misappropriation nor
incipient fraud may be presumed; they must be established in order
for a writ of preliminary attachment to issue.
ISSUE: WON the grounds were sufficient to grant a writ of preliminary
injunction
No. The instant case is based on the failure of Villanueva and
Filipinas Textile Mills as entrustee to pay or remit the proceeds of the
goods entrusted by PBC to Villanueva and Filipinas Textile Mills as
evidenced by the trust receipts nor to return the goods entrusted
thereto, in violation of their fiduciary duty as agent or entrustee. Under
Section 13 of P.D. 115, as amended, violation of the trust receipt law
constitutes estafa (fraud and/or deceit) punishable under Article 315
par. 1[b] of RPC
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. PBC cannot merely cite Section
1(b) and (d), Rule 57 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.
The supporting Affidavit also lacks particulars upon which the
court can discern whether or not a writ of attachment should issue.
PBC cannot insist that its allegation that Villanueva and Filipinas
failed to remit the proceeds of the sale of the entrusted goods nor to
return the same is sufficient for attachment to issue. 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.
We find an absence of factual allegations as to how the fraud
alleged by PBC was committed. 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. On the other hand, 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 P400k had already been paid, leaving
only P19,613.96 as balance.
Hence, neither PBCs Motion or its supporting Affidavit provides
sufficient basis for the issuance of the writ of attachment prayed for.
Also, the lower ocurt should have conducted a hearing and required
PBC to substantiate its allegations of fraud, embezzlement and
misappropriation.

Not only was PBC'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 PBC. 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 Filipinas Textile
Mills could not have done these as it had ceased its operations starting
in June of 1984 due to workers' strike.
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.
PCIB vs. Alejandro (2007)
PCIB filed against Joseph Anthony Alejandro a complaint for sum
of money with prayer for the issuance of a writ of preliminary
attachment. It alleged that on September 10, 1997, Alejandro, a
resident of Hong Kong, executed in favor of PCIB a promissory note
obligating himself to pay P249,828,588.90 plus interest. In view of the
fluctuations in the foreign exchange rates which resulted in the
insufficiency of the deposits assigned by Alejandro as security for the
loan, PCIB requested the latter to put up additional security for the
loan. Alejandro, however, sought a reconsideration of said request
pointing out PCIBs alleged mishandling of his account due to its
failure to carry out his instruction to close his account as early as April
1997, when the prevailing rate of exchange of the US Dollar to
Japanese yen was US$1.00:JPY127.50.
PCIB alleged that (1) Alejandro fraudulently withdrew his
unassigned deposits notwithstanding his verbal promise to PCIB
Assistant Vice President Nepomuceno not to withdraw the same prior
to their assignment as security for the loan; and (2) that Alejandro is
not a resident of the Philippines.
TC granted the application and issued the writ ex parte after PCIB
posted a bond.
Alejandro filed motion to quash the writ, contending that the
withdrawal of his unassigned deposits was not fraudulent as it was
approved by PCIB. He also alleged that PCIB knew that he maintains a
permanent residence at Calle Victoria, Ciudad Regina, Batasan Hills,
Quezon City, and an office address in Makati City at the Law Firm
Romulo Mabanta Buenaventura Sayoc & De los Angeles, where he is a
partner. In both addresses, PCIB regularly communicated with him
through its representatives. Alejandro added that he is the managing
partner of the Hong Kong branch of said Law Firm; that his stay in
Hong Kong is only temporary; and that he frequently travels back to
the Philippines.
TC quashed the writ, holding that the withdrawal of Alejandros
unassigned deposits was not intended to defraud PCIB. Also found that
the representatives of PCIB personally transacted with Alejandro
through his home address in QC and/or his office in Makati City. It thus
concluded that PCIB misrepresented and suppressed the facts
regarding Alejandros residence considering that it has personal and
official knowledge that for purposes of service of summons, Alejandros
residence and office addresses are located in the Philippines.
20 May 98: Alejandro filed a claim for damages in the amount of
P25M on the attachment bond on account of the wrongful
garnishment of his deposits. He presented evidence showing that
hisP150,000.00 RCBC check payable to his counsel as attorneys fees,
was dishonored by reason of the garnishment of his deposits.
ISSUE: WON PCIB is entitled to a writ of attachment
No. It must be noted that the ruling of the trial court that PCIB is
not entitled to a writ of attachment because Alejandro is a resident of
the Philippines and that his act of withdrawing his deposits with PCIB
was without intent to defraud, can no longer be passed upon by this
Court. More importantly, the conclusions of the court that PCIB
misrepresented that Alejandro was residing out of the Philippines and
suppressed the fact that Alejandro has a permanent residence in Metro
Manila where he may be served with summons, are now beyond the
power of this Court to review having been the subject of a final and
executory order. The rule on conclusiveness of judgment, which
11
obtains under the premises, precludes the relitigation of a
particular fact or issue in another action between the same
parties even if based on a different claim or cause of action. The
judgment in the prior action operates as estoppel as to those matters
in issue or points controverted, upon the determination of which the
finding or judgment was rendered.
PCIBs contentions: That it acted in good faith. Even if Alejandro
is considered a resident of the Philippines, attachment is still proper
under Section 1, paragraph (f), Rule 57 since he is a resident who is
temporarily out of the Philippines upon whom service of summons
may be effected by publication.
ISSUE: WON PCIB is liable for damages for the improper issuance of
the writ of attachment against Alejandro
Yes. There was a final judgment holding PCIB is guilty of
misrepresentation and suppression of a material fact. While the final
order of the trial court which quashed the writ did not categorically use
the word "bad faith" in characterizing the representations of PCIB, the
tenor of said order evidently considers the latter to have acted in bad
faith by resorting to a deliberate strategy to mislead the court.
In the hearings of the motion, and oral arguments of counsels
before the Court, it appears that PCIB through its contracting officers
VP Nepomuceno and Executive VP Revilla, personally transacted with
defendant mainly through Alejandros permanent residence in MM,
either in Alejandros home address in Quezon City or his main
business address at the Romulo Mabanta Buenaventura Sayoc & Delos
Angeles in Makati and while at times follow ups were made through
hiss temporary home and business addresses in Hongkong. It is
therefore clear that PCIB could not deny their personal and official
knowledge that Alejandros permanent and official residence for
purposes of service of summons is in the Philippines.
As to the second ground of attachment, the amount withdrawn
was not part of Alejandros peso deposits assigned with the bank to
secure the loan and as proof that the withdrawal was not intended to
defraud PCIB as creditor is that PCIB approved and allowed said
withdrawals. It is even noted that when the Court granted the prayer
for attachment it was mainly on the first ground under Section 1(f) of
Rule 57 of the 1997 Rules of Civil Procedure, that Alejandro resides
out of the Philippines.
On the above findings, it is obvious that PCIB already knew from
the beginning the deficiency of its second ground for attachment [i.e.,]
disposing properties with intent to defraud his creditors, and therefore
PCIB had to resort to this misrepresentation that Alejandro was
residing out of the Philippines and suppressed the fact that Alejandros
permanent residence is in MM where he could be served with
summons.
PCIB is therefore barred by the principle of conclusiveness of
judgment from again invoking good faith in the application for the
issuance of the writ.
Finally, there is no merit in PCIBs contention that Alejandro can
be considered a resident who is temporarily out of the Philippines
upon whom service of summons may be effected by publication, and
therefore qualifies as among those against whom a writ of attachment
may be issued under Section 1(f), Rule 57.
In so arguing, PCIB attempts to give the impression that although
it erroneously invoked the ground that Alejandro does not reside in the
Philippines, it should not be made to pay damages because it is in fact
entitled to a writ of attachment had it invoked the proper ground under
Rule 57. However, even on this alternative ground, PCIB is still not
entitled to the issuance of a writ of attachment.
The purposes of preliminary attachment are: (1) to seize the
property of the debtor in advance of final judgment and to hold it for
purposes of satisfying said judgment, as in the grounds stated in
paragraphs (a) to (e) of Section 1, Rule 57 of the Rules of Court; or (2)
to acquire jurisdiction over the action by actual or constructive seizure
of the property in those instances where personal or substituted
service of summons on the defendant cannot be effected, as in
paragraph (f) of the same provision.
Corollarily, in actions in personam, such as the instant case for
collection of sum of money, summons must be served by personal or
substituted service, otherwise the court will not acquire jurisdiction
over the defendant. In case the defendant does not reside and is not
found in the Philippines (and hence personal and substituted service

cannot be effected), the remedy of the plaintiff in order for the
court to acquire jurisdiction to try the case is to convert the action
into a proceeding in rem or quasi in rem by attaching the property of
the defendant. Thus, in order to acquire jurisdiction in actions in
personam where defendant resides out of and is not found in the
Philippines, it becomes a matter of course for the court to convert the
action into a proceeding in rem or quasi in rem by attaching the
defendants property. The service of summons in this case (which may
be by publication coupled with the sending by registered mail of the
copy of the summons and the court order to the last known address
of the defendant), is no longer for the purpose of acquiring jurisdiction
but for compliance with the requirements of due process.
However, where the defendant is a resident who is temporarily out
of the Philippines, attachment of his/her property in an action in
personam, is not always necessary in order for the court to acquire
jurisdiction to hear the case. Substituted service of summons (under
the present Section 7, Rule 14 of the Rules of Court) is the normal
mode of service of summons that will confer jurisdiction on the court
over the person of residents temporarily out of the Philippines.
Meaning, service of summons may be effected by (a) leaving copies of
the summons at the defendants residence with some person of
suitable discretion residing therein, or (b) by leaving copies at the
defendants office or regular place of business with some competent
person in charge thereof.
Thus, in actions in personam against residents temporarily out of
the Philippines, the court need not always attach the defendants
property in order to have authority to try the case. Where the plaintiff
seeks to attach the defendants property and to resort to the
concomitant service of summons by publication, the same must be
with prior leave, precisely because, if the sole purpose of the
attachment is for the court to acquire jurisdiction, the latter must
determine whether from the allegations in the complaint, substituted
service (to persons of suitable discretion at the defendants residence
or to a competent person in charge of his office or regular place of
business) will suffice, or whether there is a need to attach the property
of the defendant and resort to service of summons by publication in
order for the court to acquire jurisdiction over the case and to comply
with the requirements of due process.
In the case at bar, the writ was issued by the trial court mainly on
the representation of PCIB that Alejandro is not a resident of the
Philippines. Obviously, the trial courts issuance of the writ was for the
sole purpose of acquiring jurisdiction to hear and decide the case. Had
the allegations in the complaint disclosed that respondent has a
residence in Quezon City and an office in Makati City, the trial court, if
only for the purpose of acquiring jurisdiction, could have served
summons by substituted service on the said addresses, instead of
attaching the property of Alejandro. The rules on the application of a
writ of attachment must be strictly construed in favor of the Alejandro.
It is clear from the foregoing that even on the allegation that
Alejandro is a resident temporarily out of the Philippines, PCIB is still
not entitled to a writ of attachment because the trial court could
acquire jurisdiction over the case by substituted service instead of
attaching the property of the Alejandro. The misrepresentation of PCIB
that Alejandro does not reside in the Philippines and its omission of
his local addresses was thus a deliberate move to ensure that the
application for the writ will be granted.
Therefore, PCIB is liable for damages for the wrongful issuance of
a writ of attachment against Alejandro.
Wee vs. Tankiansee (2008)
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.
In Feb 2000, Wee received disturbing news on Wincorp's financial
condition prompting him to inquire about and investigate the
company's operations and transactions with its borrowers. He then
discovered that the company extended a loan equal to his total money
placement to a corporation [Power Merge] with a subscribed capital of
only P37.5M. This credit facility originated from another loan of about
P1.5B extended by Wincorp to another corporation [Hottick Holdings].
When the latter defaulted in its obligation, Wincorp instituted a case
12
against it and its surety. Settlement was, however, reached in
which Hottick's president, Virata, assumed the obligation of the
surety.
Under the scheme agreed upon by Wincorp and Hottick's
president, Wee's money placements were transferred without his
knowledge and consent to the loan account of Power Merge through
an agreement that virtually freed the latter of any liability. Allegedly,
through the false representations of Wincorp and its officers and
directors, Wee was enticed to roll over his placements so that Wincorp
could loan the same to Virata/Power Merge.
Finding that Virata purportedly used Power Merge as a conduit
and connived with Wincorp's officers and directors to fraudulently
obtain for his benefit without any intention of paying the said
placements, Wee instituted a case for damages.
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 to Wees filing of a P50M bond.
Writ was subsequently issued.
Manuel Tankiansee argued that the writ was improperly issued
and the bond was grossly insufficient. Moved for the discharge of the
attachment. Denied. Filed for another Motion for Discharge
Attachment, alleging additionally (1) that he was not present in
Wincorp's board meetings approving the questionable transactions;
and (2) that he could not have connived with Wincorp and the other
defendants because he and Pearlbank Securities, Inc., in which he is a
major stockholder, filed cases against the company as they were also
victimized by its fraudulent schemes.
Tankiansees contentions: the general and sweeping allegation of
fraud against Tankiansee in Wees affidavitTankiansee as an officer
and director of Wincorp allegedly connived with the other defendants
to defraud Weeis not sufficient basis for the trial court to order the
attachment of Tankiansees properties. Nowhere in the said affidavit
does Wee mention the name of Tankiansee and any specific act
committed by the latter to defraud the former.
ISSUE: WON Wee is entitled to a writ of preliminary attachment
No. For a writ of attachment to issue under this rule, the applicant
must sufficiently show the factual circumstances of the alleged fraud
because fraudulent intent cannot be inferred from the debtor's mere
non-payment of the debt or failure to comply with his obligation. The
applicant must then be able to demonstrate that the debtor has
intended to defraud the creditor.
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.
In the case at bar, Wee's October 12, 2000 Affidavit is bereft of
any factual statement that Tankiansee 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 Tankiansee in the said transaction, the
affidavit merely states that Tankiansee, an officer and director of
Wincorp, connived with the other defendants in the civil case to
defraud Wee of his money placements. No other factual averment or
circumstance details how Tankiansee committed a fraud or how he
connived with the other defendants to commit a fraud in the
transaction sued upon. In other words, Wee has not shown any specific
act or deed to support the allegation that Tankiansee is guilty of fraud.
The affidavit, being the foundation of the writ, must contain such
particulars as to how the fraud imputed to Tankiansee was committed
for the court to decide whether or not to issue the writ. Absent any
statement of other factual circumstances to show that Tankiansee, at
the time of contracting the obligation, had a preconceived plan or
intention not to pay, or without any showing of how Tankiansee
committed the alleged fraud, the general averment in the affidavit that
he 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.
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 because established is the rule that fraud is never
presumed. Verily, the mere fact that Tankiansee 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.
The provisional remedy of preliminary attachment is harsh and
rigorous for it exposes the debtor to humiliation and annoyance.
Likewise, the writ should not be abused to cause unnecessary
prejudice. If it is wrongfully issued on the basis of false or insufficient
allegations, it should at once be corrected.
Considering, therefore, that, in this case, Wee has not fully
satisfied the legal obligation to show the specific acts constitutive of
the alleged fraud committed by Tankiansee, the trial court acted in
excess of its jurisdiction when it issued the writ of preliminary
attachment against the properties of the latter.
As to ruling in GB Inc. vs. Sanchez, 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. Such principle finds no application here because Wee
has not yet fulfilled the requirements set by the Rules of Court for the
issuance of the writ against the properties of Tankiansee. 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.
Also, the 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 Tankiansee herein, for, as
correctly ruled by the CA, he is "never a party thereto." Also, he is not
in the same situation as Virata and UEM-MARA since, as aforesaid,
while Wee's affidavit detailed the alleged fraudulent scheme
perpetrated by Virata and/or Power Merge, only a general allegation of
fraud was made against Tankiansee.
Section 2. Issuance and contents of order. An order of attachment
may be issued either ex parte or upon motion with notice and hearing
by the court in which the action is pending, or by the Court of Appeals
or the Supreme Court, and must require the sheriff of the court to
attach so much of the property in the Philippines of the party against
whom it is issued, not exempt from execution, as may be sufficient to
satisfy the applicant's demand, unless such party makes deposit or
gives a bond as hereinafter provided in an amount equal to that fixed
in the order, which may be the amount sufficient to satisfy the
applicant's demand or the value of the property to be attached as
stated by the applicant, exclusive of costs. Several writs may be issued
at the same time to the sheriffs of the courts of different judicial
regions. (2a)
Sievert vs. CA (1988)
Alberto Sievert, a citizen and resident of the PH, received by mail a
petition for issuance of a preliminary attachment filed with RTC Manila.
He had not previously received any summons and copy of a complaint
against him.
On day set for hearing of the petition, Sieverts counsel went before
the TC and entered a special appearance for the purpose of objecting
to the jurisdiction of the court. Prayed for denial of that Petition for
lack of jurisdiction over the person of Sievert upon the ground that
since no summons had been served upon him in the main case, no
jurisdiction over the person of Sievert had been acquired by the court.
However, court denied his objection. Sievert filed petition for
certiorari, which the CA dismissed.
ISSUE: WON judge may issue a writ of preliminary attachment against
Sievert before summons is served on him / WON a court which has
not acquired jurisdiction over the person of the defendant in the main
case, may bind such defendant or his property by issuing a writ of
preliminary attachment
No. RTC and CA erred when it held that the defendant may be bound
by a writ of preliminary attachment even before summons together
with a copy of the complaint in the main case has been validly served
upon him.
13
There is no question that a writ of preliminary attachment
may be applied for a plaintiff "at the commencement of the
action or at any time thereafter" in the cases enumerated in Section 1
of Rule 57 of the Revised Rules of Court. The issue posed in this case,
however, is not to be resolved by determining when an action may be
regarded as having been commenced, a point in time which, in any
case, is not necessarily fixed and Identical regardless of the specific
purpose for which the deter. nation is to be made. The critical time
which must be Identified is, rather, when the trial court acquires
authority under law to act coercively against the defendant or his
property in a proceeding in attachment. We believe and so hold that
critical time is the time of the vesting of jurisdiction in the court over
the person of the defendant in the main case.
Attachment is an ancillary remedy. It is not sought for its own sake
but rather to enable the attaching party to realize upon relief sought
and expected to be granted in the main or principal action. A court
which has not acquired jurisdiction over the person of defendant,
cannot bind that defendant whether in the main case or in any
ancillary proceeding such as attachment proceedings. The service of a
petition for preliminary attachment without the prior or simultaneous
service of summons and a copy of the complaint in the main case
and that is what happened in this case does not of course confer
jurisdiction upon the issuing court over the person of the defendant.
Ordinarily, the prayer in a petition for a writ of preliminary
attachment is embodied or incorporated in the main complaint itself
as one of the forms of relief sought in such complaint. Thus, valid
service of summons and a copy of the complaint will in such case vest
jurisdiction in the court over the defendant both for purposes of the
main case and for purposes of the ancillary remedy of attachment. In
such case, notice of the main case is at the same time notice of the
auxiliary proceeding in attachment. Where, however, the petition for a
writ of preliminary attachment is embodied in a discrete pleading,
such petition must be served either simultaneously with service of
summons and a copy of the main complaint, or after jurisdiction over
the defendant has already been acquired by such service of summons.
Notice of the separate attachment petition is not notice of the main
action. If a court has no jurisdiction over the subject matter or over the
person of the defendant in the principal action, it simply has no
jurisdiction to issue a writ of preliminary attachment against the
defendant or his property.
It is basic that the requirements of the Rules of Court for issuance
of preliminary attachment must be strictly and faithfully complied with
in view of the nature of this provisional remedy.
In the case at bar, the want of jurisdiction of the trial court to proceed
in the main case against the defendant is quite clear. It is not disputed
that neither service of summons with a copy of the complaint nor
voluntary appearance of Sievert was had in this case.
Davao Light vs. CA (1991)
Davao Light filed a verified complaint for recovery of a sum of money
and damages against Queensland Hotel and Teodorico Adarna. The
complaint contained an ex parte application for writ of preliminary
attachment.
Judge Nartatez issued an order granting the ex-parte application
and fixed the attachment bond at P4.6M. Davao Light submitted the
bond and subsequently, writ of attachment was issued.
Summons and copy of the complaint, as well as writ of attachment
and copy of attachment bond, were served on Queensland and Adarna.
Pursuant thereto, the sheriff seized properties belonging to the latter.
Queensland and Adarna filed a motion to discharge the attachment
for lack of jurisdiction to issue the same because at the time the order
of attachment was promulgated (May 3, 1989) and the attachment
writ issued (May 11, 1989), the TC had not yet acquired jurisdiction
over the cause and over the persons of the defendants. However, TC
denied the motion to discharge.
Queensland and Adarna went to the CA in a special civil action of
certiorari. The order was annulled by the CA.
ISSUE: WON a writ of preliminary attachment may issue ex parte
against a defendant before acquisition of jurisdiction of the latters
person by service of summons or his voluntary submission to the
Courts authority

Yes. It is incorrect to theorize that after an action or proceeding
has been commenced and jurisdiction over the person of the
plaintiff has been vested in the court, but before the acquisition of
jurisdiction over the person of the defendant (either by service of
summons or his voluntary submission to the court's authority), nothing
can be validly done by the plaintiff or the court. It is wrong to assume
that the validity of acts done during this period should be defendant
on, or held in suspension until, the actual obtention of jurisdiction over
the defendant's person. The obtention by the court of jurisdiction over
the person of the defendant is one thing; quite another is the
acquisition of jurisdiction over the person of the plaintiff or over the
subject-matter or nature of the action, or the res or object hereof.
An action or proceeding is commenced by the filing of the complaint
or other initiatory pleading. By that act, the jurisdiction of the court
over the subject matter or nature of the action or proceeding is invoked
or called into activity; and it is thus that the court acquires jurisdiction
over said subject matter or nature of the action. And it is by that self-
same act of the plaintiff (or petitioner) of filing the complaint (or other
appropriate pleading) by which he signifies his submission to the
court's power and authority that jurisdiction is acquired by the court
over his person. On the other hand, jurisdiction over the person of the
defendant is obtained, as above stated, by the service of summons or
other coercive process upon him or by his voluntary submission to the
authority of the court.
After the complaint is filed, summons issues to the defendant, the
summons is then transmitted to the sheriff, and finally, service of the
summons is effected on the defendant in any of the ways authorized
by the Rules of Court. There is thus ordinarily some appreciable
interval of time between the day of the filing of the complaint and the
day of service of summons of the defendant. During this period,
different acts may be done by the plaintiff or by the Court, which are
unquestionable validity and propriety.
This, too, is true with regard to the provisional remedies of
preliminary attachment, preliminary injunction, receivership or
replevin. They may be validly and properly applied for and granted
even before the defendant is summoned or is heard from.
A preliminary attachment may be defined, paraphrasing the Rules
of Court, as the provisional remedy in virtue of which a plaintiff or other
party may, at the commencement of the action or at any time
thereafter, have the property of the adverse party taken into the
custody of the court as security for the satisfaction of any judgment
that may be recovered.
Rule 57 in fact speaks of the grant of the remedy "at the
commencement of the action or at any time thereafter." The phase, "at
the commencement of the action," obviously refers to the date of the
filing of the complaint which, as above pointed out, is the date that
marks "the commencement of the action;" and the reference plainly is
to a time before summons is served on the defendant, or even before
summons issues. What the rule is saying quite clearly is that after an
action is properly commenced by the filing of the complaint and the
payment of all requisite docket and other fees the plaintiff may
apply for and obtain a writ of preliminary attachment upon fulfillment
of the pertinent requisites laid down by law, and that he may do so at
any time, either before or after service of summons on the defendant.
Two ways of discharging an attachment: (1) by posting of a counter
bond, and (2) by a showing of its improper or irregular issuance. The
submission of a counterbond is an efficacious mode of lifting an
attachment already enforced against property, or even of preventing
its enforcement altogether. When property has already been seized
under attachment, the attachment may be discharged upon
counterbond in accordance with Section 12 of Rule 57. But even
before actual levy on property, seizure under attachment may be
prevented also upon counterbond. The defendant need not wait until
his property is seized before seeking the discharge of the attachment
by a counterbond. This is made possible by Section 5 of Rule 57. Aside
from the filing of a counterbond, a preliminary attachment may also
be lifted or discharged on the ground that it has been irregularly or
improperly issued, in accordance with Section 13 of Rule 57. Like the
first, this second mode of lifting an attachment may be resorted to
even before any property has been levied on. Indeed, it may be availed
of after property has been released from a levy on attachment.
With respect to the other provisional remedies, i.e., preliminary
injunction (Rule 58), receivership (Rule 59), replevin or delivery of
14
personal property (Rule 60), the rule is the same: they may also
issue ex parte.
It goes without saying that whatever be the acts done by the Court
prior to the acquisition of jurisdiction over the person of defendant, as
above indicated issuance of summons, order of attachment and writ
of attachment (and/or appointments of guardian ad litem, or grant of
authority to the plaintiff to prosecute the suit as a pauper litigant, or
amendment of the complaint by the plaintiff as a matter of right
without leave of court 30 and however valid and proper they might
otherwise be, these do not and cannot bind and affect the defendant
until and unless jurisdiction over his person is eventually obtained by
the court, either by service on him of summons or other coercive
process or his voluntary submission to the court's authority. Hence,
when the sheriff or other proper officer commences implementation
of the writ of attachment, it is essential that he serve on the defendant
not only a copy of the applicant's affidavit and attachment bond, and
of the order of attachment, as explicity required by Section 5 of Rule
57, but also the summons addressed to said defendant as well as a
copy of the complaint and order for appointment of guardian ad litem,
if any, as also explicity directed by Section 3, Rule 14 of the Rules of
Court.
The Court reiterates and reaffirms the proposition that writs of
attachment may properly issue ex parte provided that the Court is
satisfied that the relevant requisites therefor have been fulfilled by the
applicant, although it may, in its discretion, require prior hearing on
the application with notice to the defendant; but that levy on property
pursuant to the writ thus issued may not be validly effected unless
preceded, or contemporaneously accompanied, by service on the
defendant of summons, a copy of the complaint (and of the
appointment of guardian ad litem, if any), the application for
attachment (if not incorporated in but submitted separately from the
complaint), the order of attachment, and the plaintiff's attachment
bond.
Therefore, the writ of attachment was reinstated.
Cuartero vs. CA (1992)
Cuartero filed complaint before RTC Quezon City against Sps.
Roberto and Felicia Evangelista for a sum of money plus damages with
prayer for issuance of writ of preliminary attachment.
RTC issued an order granting ex parte the prayer for the writ.
19 Sep 90: the writ was issued. And on the same day, summons for
Sps. Evangelista was prepared.
Following day, a copy of the writ, summons and complaint were all
simultaneously served upon the Sps. at their residence. Immediately,
the sheriff levied, attached and pulled out the properties in compliance
with the courts order, for so much as to satisfy the claim of P2.171M.
Subsequently, Sps. Evangelista filed motion to set aside the order
and discharge the writ of preliminary attachment for having been
irregularly and improperly issued. This was denied for lack of merit.
Sps. Evangelista then filed a SCA for certiorari with the CA. This was
granted.
Sps. Evangelistas contention: no proper ground also existed for the
issuance of the writ of preliminary attachment. The fraud in contracting
the debt or incurring the obligation upon which the action is brought
which comprises a ground for attachment must have already been
intended at the inception of the contract. No intent to defraud Cuartero
when the postdated checks were issued inasmuch as the latter was
aware that the same were not yet funded and that they were issued
only for purposes of creating an evidence to prove a pre-existing
obligation. Also, there was violation of right to due process when the
writ was issued without notice and hearing.
ISSUE: WON RTC could validly issue the writ of preliminary attachment
which is an ancillary remedy
Yes. The CA decision is grounded on its finding that the trial court
did not acquire any jurisdiction over the person of Sps. Evangelista.
A writ of preliminary attachment is defined as a provisional remedy
issued upon order of the court where an action is pending to be levied
upon the property or properties of the defendant therein, the same to
be held thereafter by the sheriff as security for the satisfaction of
whatever judgment might be secured in said action by the attaching
creditor against the defendant.

Under section 3, Rule 57 of the Rules of Court, the only
requisites for the issuance of the writ are the affidavit and bond of
the applicant. No notice to the adverse party or hearing of the
application is required inasmuch as the time which the hearing will
take could be enough to enable the defendant to abscond or dispose
of his property before a writ of attachment issues. In such a case, a
hearing would render nugatory the purpose of this provisional remedy.
The ruling remains good law. There is, thus, no merit in the
Evangelistas claim of violation of their constitutionally guaranteed
right to due process.
The writ of preliminary attachment can be applied for and granted
at the commencement of the action or at any time thereafter. Cited
Davao Light and Power as to phrase at the commencement of the
action.
It is clear from our pronouncements that a writ of preliminary
attachment may issue even before summons is served upon the
defendant. However, we have likewise ruled that the writ cannot bind
and affect the defendant. However, we have likewise ruled that the writ
cannot bind and affect the defendant until jurisdiction over his person
is eventually obtained. Therefore, it is required that when the proper
officer commences implementation of the writ of attachment, service
of summons should be simultaneously made.
It must be emphasized that the grant of the provisional remedy of
attachment practically involves three stages: first, the court issues the
order granting the application; second, the writ of attachment issues
pursuant to the order granting the writ; and third, the writ is
implemented. For the initial two stages, it is not necessary that
jurisdiction over the person of the defendant should first be obtained.
However, once the implementation commences, it is required that the
court must have acquired jurisdiction over the defendant for without
such jurisdiction, the court has no power and authority to act in any
manner against the defendant. Any order issuing from the Court will
not bind the defendant.
As to ruling in Sievert. The circumstances in Sievert are different
from those in the case at bar. In Sievert, the writ of attachment issued
ex-parte was struck down because when the writ of attachment was
being implemented, no jurisdiction over the person of the defendant
had as yet been obtained. The court had failed to serve the summons
to the defendant. However, in the case at bar, when the writ of
attachment was served on the spouses Evangelista, the summons and
copy of the complaint were also simultaneously served.
Again, writs of attachment may properly issue ex-parte provided that
the Court is satisfied that the relevant requisites therefore have been
fulfilled by the applicant, although it may, in its discretion, require prior
hearing on the application with notice to the defendant, but that levy
on property pursuant to the writ thus issued may not be validly
effected unless preceded, or contemporaneously accompanied by
service on the defendant of summons, a copy of the complaint (and of
the appointment of guardian ad litem, if any), the application for
attachment (if not incorporated in but submitted separately from the
complaint), the order of attachment, and the plaintiff's attachment
bond.
It must be noted that the spouses Evangelista's motion to discharge
the writ of preliminary attachment was denied by the lower court for
lack of merit. There is no showing that there was an abuse of discretion
on the part of the lower court in denying the motion.
Moreover, an attachment may not be dissolved by a showing of its
irregular or improper issuance if it is upon a ground which is at the
same time the applicant's cause of action in the main case since an
anomalous situation would result if the issues of the main case would
be ventilated and resolved in a mere hearing of a motion
In the present case, one of the allegations in petitioner's complaint
below is that the defendant spouses induced the plaintiff to grant the
loan by issuing postdated checks to cover the installment payments
and a separate set of postdated cheeks for payment of the stipulated
interest. The issue of fraud, then, is clearly within the competence of
the lower court in the main action.
Salas vs. Adil (1979)
10 Sep 76: Rosita Bedro and Benita Yu filed civil action with CFI
Iloilo against Ricardo Salas and Maria Salas, Philippine Commercial &
Industrial Bank, and Avelina Magno to annul the DOS of Lot No. 5
executed by administrators of the Hodges Estate in favor of the Sps.
15
Ricardo Salas and Maria Salas and for damages. The action for
annulment was predicated upon the averment that Lot No. 5,
being a subdivision road, is intend for public use and cannot be sold
or disposed of by the Hodges Estate. The claim for damages was based
on the assertion that after Sps. Salas purchased Lots Nos. 2 and 3,
they also purchased Lot No. 5 and thereafter "erected wooden posts,
laid and plastered at the door of the house on Lot No. 3, with braces
of hardwood, lumber and plywood nailed to the post", thereby
preventing Rosita Bedro and Benita Yu from using the road on Lot No.
5, and that as a result of such obstruction, Rosita Bedro and Benita Yu
sustained actual damages in the amount of P114k as well as moral
damages of P200k.
Sps. Salas contention: denied the material allegations. Lot No. 5
had been registered in the name of the C. N. Hodges as their exclusive
private property and was never subjected to any servitude or easement
of right of way in favor of any person
12 May 77: Bedro and Yu filed Motion for Attachment, alleging that
the case was "for annulment of a DOS and recovery of damages" and
that Sps. Salas have removed or disposed of their properties or are
about to do so with intent to defraud their creditors especially Bedro
and Yu.
Judge issued ex parte a writ of attachment against the properties of
Sps. Salas, particularly Lot Nos. 1 and 4. The writ was then issued and
the sheriff proceeded to attach the properties mentioned.
Sps. Salas filed for certiorari.
ISSUE: WON the writ of attachment was properly issued
No. In certiorari proceedings, the cardinal rule is that the court must
be given the opportunity to correct itself, Thus, for the special civil
action of certiorari to prosper, there must be no appeal nor any plain,
speedy and adequate remedy in the ordinary course of law. Salas,
therefore, must exhaust all available remedies in the lower court before
filing a petition for certiorari, otherwise the petition shall be held to be
premature. In the instant case, it appears that Sps. Salas have
adequate remedy under the law. They could have filed an application
with the court a quo for the discharge of the attachment for improper
or irregular issuance under Sec. 13, Rule 57, of the Revised ROC.
Considering that Sps. Salas have not availed of this remedy, the
instant petition is premature.
Nevertheless, the Court ruled as to the issue.
A preliminary attachment is a rigorous remedy, which exposes the
debtor to humiliation and annoyance, such it should not be abused as
to cause unnecessary prejudice. It is, therefore, the duty of the court,
before issuing the writ, to ensure that all the requisites of the law have
been complied with; otherwise the judge acts in excess of his
jurisdiction and the so issued shall be null and void.
Considering the gravity of the allegation that Sps. Salas have
removed or disposed of their properties or are about to do so with
intent to defraud their creditors, and further considering that the
affidavit in support of the pre-attachment merely states such ground
in general terms, without specific allegations of instances to show the
reason why Bedro and Yu believe that Sps. Salas are disposing of their
properties in fraud of creditors, it was incumbent upon respondent
Judge to give notice to Sps. Salas and to allow wherein evidence is
them to present their position. Moreover, it appears from the records
that Bedro and Yu are claiming unliquidated damages, including moral
damages, from Sps. Salas. The authorities agree that the writ of
attachment is not available in a suit for damages where the amount
claimed is contingent or unliquidated.
The general rule is, that unliquidated damages cannot be recovered
by attachment, unless the contract affords a certain measure or
standard for ascertaining the amount of the damages. The statute
authorizing the issuance of the writ of garnishment and that relating
to the issuance of the writ of attachment ... have not been construed
as authorizing the writs to be issued when the plaintiff's suit is
technically an action for debt. Neither of the writs may be issued when
the suit is for damages for tort, but they may be issued when the
plaintiff's claim arises out of contract either express or implied, and
the demand is liquidated, that is, the amount of the claim is not
contingent, is capable of being definitely ascertained by the usual
means of evidence, and does not rest in the discretion of the jury.
 16

La Granja, Inc. vs. Samson (1933)

5 Jul 32: La Granja filed complaint in CFI Cagayan against Chua

Bian, Chua Yu Lee and Chua Ki, for recovery of sum of P2,418.18 with
interest. Also prayed for the issuance of an order of attachment against
the defendants property and accompanied said complaint with an
affidavit of the manager of La Granja, Inc., wherein it was alleged
among other essential things, that the said defendants have disposed
or are disposing of their properties in favor of the Asiatic Petroleum
Co., with intent to defraud their creditors.
The respondent judge, wishing to ascertain or convince himself of
the truth of the alleged disposal, required La Granja to present
evidence to substantiate its allegation, before granting its petition.
Inasmuch as La Granja refused to comply with the court's
requirement, alleging as its ground that was not obliged to do so, the
respondent judge dismissed said petition for an order of attachment.
La Granja then filed a petition for mandamus against Judge Samson,
to compel him to issue a writ of attachment against the properties of
the defendants.

ISSUE: WON the mere filing of an affidavit in due form is sufficient to

compel a judge to issue an order of attachment

No. The law applicable is Sec. 426 of the Code of Civil Procedure,
which provides: A judge or justice of the peace shall grant an order of
attachment when it is made to appear to the judge or justice of the peace
by the affidavit of the plaintiff, or of some other person who knows the
facts, that a sufficient cause of action exists, and that the case is one of
those mentioned in section four hundred and twenty-four, and that there
is no other sufficient security for the claim sought to be enforced by the
action, and that the amount due to the plaintiff above all legal set-offs or
counterclaims is as much as the sum for which the order is granted.
Although the law requires nothing more than the affidavit as a
means of establishing the existence of such facts, nevertheless, such
affidavit must be sufficient to convince the court of their existence, the
court being justified in rejecting the affidavit if it does not serve this
purpose and in denying the petition for an order of attachment.
The affidavit filed by La Granja, Inc. must not have satisfied the
Judge Samson inasmuch as he desired to ascertain or convince
himself of the truth of the facts alleged therein by requiring evidence
to substantiate them. The sufficiency or insufficiency of an affidavit
depends upon the amount of credit given it by the judge, and its
acceptance or rejection, upon his sound discretion.
Hence, Judge Samson in requiring the presentation of evidence
to establish the truth of the allegation of the affidavit that the
defendants had disposed or were disposing of their property to
defraud their creditors, has done nothing more than exercise his sound
discretion in determining the sufficiency of the affidavit.
Hence, the mere filing of an affidavit executed in due form is not
sufficient to compel a judge to issue an order of attachment, but it is
necessary that by such affidavit it be made to appear to the court that
there exists sufficient cause for the issuance thereof, the determination
of such sufficiency being discretionary on the part of the court.
Therefore, the writ of mandamus was denied.

Section 3. Affidavit and bond required. An order of attachment
shall be granted only when it appears by the affidavit of the applicant,
or of some other person who personally knows the facts, that a sufficient
cause of action exists, that the case is one of those mentioned in section
1 hereof, that there is no other sufficient security for the claim sought to
be enforced by the action, and that the amount due to the applicant, or
the value of the property the possession of which he is entitled to recover,
is as much as the sum for which the order is granted above all legal
counterclaims. The affidavit, and the bond required by the next
succeeding section, must be duly filed with the court before the order
issues. (3a)
K.O. Glass vs. Valenzuela (1982)
6 Oct 77: Antonio Pinzon filed an action to recover from Kenneth
Glass the sum of P37,190, alleged to be the the agreed rentals of his
truck, as well as the value of spare parts which have not been returned
to him upon termination of the lease. He asked for an attachment
against the property of the defendant consisting of collectibles and
payables with the Philippine Geothermal, Inc., on the grounds that the
defendant is a foreigner; that he has sufficient cause of action against
the said defendant; and that there is no sufficient security for his claim
against the defendant in the event a judgment is rendered in his favor.
Judge Valenzuela ordered the issuance of a writ of attachment.
Thereupon, Glass moved to quash the writ on the grounds that there
is no COA against him since the transactions or claims of the plaintiff
were entered into by and between the plaintiff and the K.O. Glass
Construction Co., that there is no ground for the issuance of the writ
as Glass never intended to leave the Philippines, and even if he does,
plaintiff cannot be prejudiced thereby because his claims are against
a corporation which has sufficient funds and property to satisfy his
claim; and that the money being garnished belongs to the K.O. Glass
Corporation Co., Inc. and not to defendant.
By reason thereof, Pinzon amended his complaint to include KO
Glass Const. Co. as co-defendant.
Defendants filed supplementary motion to discharge and/or
dissolve the writ of preliminary attachment upon the ground that the
affidavit filed in support of the motion for preliminary attachment was
not sufficient or wanting in law for the reason that: (1) the affidavit did
not state that the amount of plaintiff's claim was above all legal set-
offs or counterclaims, as required by Sec. 3, Rule 57 of ROC ; (2) the
affidavit did not state that there is no other sufficient security for the
claim sought to be recovered by the action as also required by said
Sec. 3; and (3) the affidavit did not specify any of the grounds
enumerated in Sec. 1 of Rule 57.
However, Judge Valenzuela denied the motion and ordered Phil.
Geothermal Inc. to deliver the amount to the court which shall remain
deposited to await judgment to be rendered.
Defendants filed a bond in same amount and asked court to
release the same amount deposited with the Clerk but Judge
Valenzuela did not order the release.
ISSUE: WON the writ of attachment was properly issued
No. The affidavit submitted by Pinzon does not comply with the
Rules. Under the Rules, an affidavit for attachment must state that (a)
sufficient cause of action exists, (b) the case is one of those mentioned
in Sec. 1(a) of Rule 57; (c) there is no other sufficient security 'or the
claim sought to be enforced by the action, and (d) the amount due to
the applicant for attachment or the value of the property the
possession of which he is entitled to recover, is as much as the sum
for which the order is granted above all legal counterclaims.
While Pinzon may have stated in his affidavit that a sufficient cause
of action exists against Kenneth O. Glass, he did not state therein that
"the case is one of those mentioned in Section 1 hereof; that there is
no other sufficient security for the claim sought to be enforced by the
action; and that the amount due to the applicant is as much as the
sum for which the order granted above all legal counter-claims."
It has been held that the failure to allege in the affidavit the
requisites prescribed for the issuance of a writ of preliminary
attachment, renders the writ of preliminary attachment issued against
the property of the defendant fatally defective, and the judge issuing it
is deemed to have acted in excess of his jurisdiction.
17
Guzman vs. Catolico (1937)
8 Mar 37: Alfredo Catolico brought an action against Ventura
Guzman for the recovery of the amount of his fees for services
rendered by him as attorney. Also prayed for issuance of a writ of
preliminary attachment. As grounds for the issuance of the writ, he
alleged: "That the herein defendant is trying to sell and dispose of the
properties adjudicated to him, with intention to defraud his creditors,
particularly the herein plaintiff, thereby rendering illusory the
judgment that may be rendered against him, inasmuch as he has no
other properties outside the same to answer for the fees the court may
fix in favor of the plaintiff.
Judge issued an order granting the petition and ordering the
issuance of the writ of preliminary attachment.
Guzman filed a motion for the cancellation of the writ on the ground
that it had been improperly, irregularly and illegally issued, there being
no allegation, either in the complaint or in the affidavit solemnizing it,
that there is no other sufficient security for the claim sought to be
enforced by the action; that the amount due to Catolico, above the
legal set-off and counterclaim, is as much as the sum of which the
preliminary attachment has been granted, and that the affidavit of the
plaintiff is base in mere information and belief. This was denied.
ISSUE: WON the requisites prescribed by law for the issuance of the
writ have been complied with
No, writ is null and void. With respect to the contention that the
affidavit is based on mere information and belief of Guzman, the
affidavit is not defective because in it Guzman and Catolico states "that
all the allegations thereof are certain and true, to the best of my
knowledge and belief", and not that they are so according to his
information and belief.
Also, there is no allegation, either in the complaint or in affidavit
solemnizing it, to the effect that there is no other sufficient security for
the claim which Catolico seeks to enforce by his action, and that the
amount due him from Guzman, above all legal set-offs and
counterclaims, is as much as the sum for which the writ of preliminary
attachment has been granted. The question is: does the omission of
these two requisites constitute a defect preventing a judge of CFI from
issuing a writ of preliminary attachment?
Attachment is a juridical institution which has for its purpose to
secure the outcome of the trial, that is, the satisfaction of the pecuniary
obligation really contracted by a person or believed to have been
contracted by him, either by virtue of a civil obligation emanating from
contract or law, or by virtue of some crime or misdemeanor that he
might have committed, and the writ issued, granting it, is executed by
attaching and safely keeping all the movable property of the defendant,
or so much thereof as may be sufficient to satisfy the plaintiff's
demands, or by filing a copy of said writ with the register of deeds for
the province in which the real property is situated, whether standing
upon the records in the name of the defendant or not appearing at all
upon the record, which constitutes a limitation of ownership or the
right to enjoy or dispose of a thing without further limitations than
those established by law since the owner of the property attached
cannot dispose of the same free of all liens and encumbrances. The
law authorizing the issuance of a writ of preliminary attachment
should, therefore, be construed strictly in favor of the judge should
require that all the requisites prescribed by law be complied with,
without which a judge acquires no jurisdiction to issue the writ. If he
does so in spite of noncompliance with said requisites, he acts in
excess of his jurisdiction and with the writ so issued by him will be null
and void.
The jurisdiction of attachment proceedings being a special one, it
cannot be legitimately exercised unless the attaching creditor pursues
substantially the essential requirements of the statute. Where the
statutes requires the affidavit to show that defendant is indebted to
plaintiff in an amount specified, or that the latter is entitled to recover
such an amount, over and above all legal payments, set-offs, or
counterclaims, compliance with this requirement is essential to confer
jurisdiction to issue the writ.
The failure to allege in a complaint or in the affidavit solemnizing it,
or in a separate one, the requisites prescribed by section 426 of the
Code of Civil Procedure for the issuance of a writ of preliminary
attachment that there is no other sufficient security for the claim

sought to be enforced by the action, and that the amount due to
the plaintiff above all legal set-offs or counterclaims is as much as
the sum for which the order is sought, renders a writ of preliminary
attachments issued against the property of a defendant fatally
defective.
Jardine-Manila Finance vs. CA (1989)
Jardine-Manila Finance, Inc. filed a complaint against Impact Corp.,
Ricardo de Leon and Eduardo de Leon to collect various sums of
money allegedly due from Impact under a credit accommodation by
way of a discounting line agreement.
It was alleged that Impact assigned its receivables to Jardine on the
condition that Impact was to collect them on their due dates from their
issuers and remit the collected amounts to Jardine and/or repurchase
the assigned receivables but despite the fact that Impact had collected
the amounts due on said receivables, it failed or refused to turn over
the amounts so collected to Jardine.
Jardine thus demanded payment of P 1,000,212.64, the total
amount due under said various deeds of assignment, plus interest.
Likewise contained in said complaint is Jardines application for a writ
of preliminary attachment against respondents. The application
contains the pertinent allegation: Defendant corporation, Ricardo de
Leon and Eduardo de Leon have no visible other sufficient security for
the claim sought to be enforced by this action of plaintiff other than
their real and personal properties which are located in Metro Manila and
in the province of Rizal, Province of Nueva Ecija or elsewhere.
The lower court granted the application. Respondents, subsequently,
filed a motion to set aside the writ of preliminary attachment.
Respondents contentions: the grounds alleged by Jardine in its
application for the writ are not among the grounds specified under
Section 1 of Rule 57; that the defendants have other sufficient security;
that there was no affidavit of merit to support the application for
attachment as required by Section 3 of Rule 57 and that the
verification of the complaint was defective as it did not state that the
amount due to the plaintiff above all legal set-ups or counterclaims is
as much as the sum for which the order is sought.
Jardines contentions: the mental reservation of defendants at the
time of the execution of the deeds of assignment constituted fraud;
that such fraud was further confirmed by the fact that defendants
actually failed to remit the proceeds of the collection of receivables
assigned by them; that defendants failed to disclose to Jardine the fact
that they had already collected the receivables assigned by them
Motion to annul the writ of preliminary attachment was denied.
ISSUE: WON the writ of preliminary attachment was properly issued
No. Jardine admits not having used the exact words of the Rules in
making the requisite allegations, but nonetheless it alleged that it
presented ultimate and specific facts, first in showing that there is
indeed no other sufficient security for the claim sought to be enforced;
and second, while it did not specifically state that the sum due is above
all legal counterclaims, such conclusion of fact is no longer necessary
in the face of actual proof in the answer which did not carry any
counterclaim. In fine, Jardine stresses that mere forms must not be
given more weight than substance.
It has been held that the failure to allege in the affidavit the
requisites prescribed for the issuance of the writ of preliminary
attachment, renders the writ of preliminary attachment issued against
the property of the defendant fatally defective, and the judge issuing it
is deemed to have acted in excess of his jurisdiction. In fact, in such
cases, the defect cannot even be cured by amendment.
Since the attachment is a harsh and rigorous remedy which exposes
the debtor to humiliation and annoyance, the rule authorizing its
issuance must be strictly construed in favor of defendant. It is the duty
of the court before issuing the writ to ensure that all the requisites of
the law have been complied with.
The general rule is that the affidavit is the foundation of the writ, and
if none be filed or one be filed which wholly fails to set out some facts
required by law to be stated therein, there is no jurisdiction and the
proceedings are null and void. Thus, while not unmindful of the fact
that the property seized under the writ and brought into court is what
the court finally exercises jurisdiction over, the court cannot subscribe
18
to the proposition that the steps pointed out by statutes to
obtain such writ are inconsequential, and in no sense
jurisdictional.
Ting vs. Villarin (1989)
Consolidated Bank and Trust Co. filed a complaint for sum of money
with prayer for writ of preliminary attachment against Perlon Textile
Mills and its directors. Ting, a director, was impleaded with his wife
Dolores Lim Ting, in order to bind their conjugal partnership of gains
which allegedly benefited from the transactions.
Consolidated Bank sued on 2 COAs. The first was targeted at
recovering on several P/Ns the amount of P2,972,955.51, allegedly
obtained for Perlon by its duly authorized officers Lu Cheng Peng, Teng
See, and Roberto Ting. These officers allegedly signed the P/Ns in their
personal and official capacities thereby binding themselves jointly and
severally to Consolidated Bank for the payment of the P/Ns.
The second COA dwells on several violations of trust receipt
agreements which Perlon executed in favor of Consolidated Bank.
Perlons faithful compliance with the trust receipt agreements appears
to have been secured by the continuing guaranty of defendants Liu
Suy Lin Angelo Leonar, and Lu Cheng Peng.
In support of the application for preliminary attachment,
Consolidated Bank averred the ground of fraud in contracting an
obligation, iluustrated by their violation of the trust receipt agreement.
The writ was granted. A motion to quash was filed but was denied.
ISSUE: WON the writ of preliminary attachment was properly issued
No. The complaint did not provide for a sufficient basis for the
issuance of a writ of preliminary attachment. It is not enough for the
complaint to ritualistically cite, as here, that the defendants are "guilty
of fraud in contracting an obligation." An order of attachment cannot
be issued on a general averment. The need for a recitation of factual
circumstances that support the application becomes more compelling
here considering that the ground relied upon is "fraud in contracting
an obligation." The complaint utterly failed to even give a hint about
what constituted the fraud and how it was perpetrated. Fraud cannot
be presumed.
The respondent judge thus failed in this duty to ensure that, before
issuing the writ of preliminary attachment, all the requisites of the law
have been complied with. He acted in excess of his jurisdiction and the
writ he so issued is thus null and void.
What is more, the respondent judge plainly ignored that the
application for preliminary attachment rests on "fraud in contracting"
the trust receipt agreements. The complaint alleged that only
Consolidated Bank, as principals, and Liu Suy Lin Angelo Leonar, and
Lu Cheng Peng, as guarantors, were privy to the trust receipt
agreements under the second cause of action. Roberto Ting's
involvement is limited only to the P/Ns under the first COA.
The sweeping nature of the attachment order probably stemmed
from the respondent judge's failure to detect that the 2 COAs had been
misproperly joined. The 2 COAs arose from different transactions.
There was no series of transactions to speak of.
Also, that the attachment ordered by the respondent judge called
for the sheriffs to attach the estate, real and personal of Sps. Ting
likewise gives cause for this Court to strike it down for being null and
void. The attached property of the spouses Ting are conjugal, the same
cannot be validly brought under the painful process of attachment.
Cu Unjieng vs. Goddard (1933)
HSBC filed a civil action against Guillermo Cu Unjieng. It was alleged
in substance that Cu Unjieng entered into a fraudulent conspiracy or
combination with one Fernandez, by which the conspirators would
hypothecate and pledge forged securities of various kinds with the
various banking institutions and other commercial firms of the City of
Manila, and pursuant to said fraudulent conspiracy, secured credit with
the bank, and HSBC was defrauded by Cu Unjieng and Fernandez in
the sum of P1,411,312.80. Simultaneously with the filing of the
complaint, HSBC asked for a writ of attachment, which was granted.
Cu Unijeng filed a motion to discharge the attachment on the
ground that it had been improperly and irregularly issued. It alleged
that the affidavit was defective in that it fails to state that there is no

other sufficient security for the claim sought to be enforced by the
action and that the amount due to HSBC involves as much as the
sum for which the order of attachment was granted, and that the
affidavit for attachment fails to state that the allegations contained in
the unverified complaint to which it refers are true and that likewise
the affidavit fails to state that affiant knows the facts.
HSBC asked leave to file an amended affidavit in support of its
petition for a writ of attachment. Judge Goddard admitted the
amended affidavit of attachment.
ISSUE: WON the writ of attachment was properly issued
No. In the original affidavit, affiant did not swear on information and
relief but expressly on knowledge. It is also clear from the affidavit that
the ground on which the attachment was sought to be secured, is
paragraph 4 of section 412 of the Code of Civil Procedure. It is
defective in (a) that there is no allegation, either in the affidavit or the
complaint, that there was no other sufficient security for the claim
sought to be enforced by the action and (b) that the amount due to
the plaintiff above all legal set-offs or counterclaims is as much as the
sum for which the order is granted.
The claim of Cu Unjieng that the original affidavit is defective is
virtually admitted by HSBC by their having filed a amended affidavit
and by their insistence upon their right to amend.
It has been held that on a motion to discharge a writ of attachment,
on the ground that it was improperly or irregularly issued, the affidavit
on which the writ was issued is not amendable. To allow the affidavit
to be made good by amendment, and upon such action refused to
discharge the writ, would, in our judgment, violate the requirements of
the section just above cited.
It therefore allows that where the affidavit for attachment is fatally
defective, the attachment must be held to have been improperly or
irregularly issued and must be discharged, and such fatal defect
cannot be cured by amendment.
Carlos vs. Sandoval (2005)
Juan de Dios Carlos filed a complaint, asserting that he was the sole
surviving compulsory heir of his parents, Felix B. Carlos and Felipa
Elemia, who had acquired during their marriage, six parcels of land.
His brother Teofilo died intestate. At the time of his death, Teofilo was
apparently married to Sandoval, and cohabiting with her and their
child, Teofilo II. Nonetheless, Carlos alleged that Teofilo and Sandoval
were not validly married as they had not obtained any marriage
license. Furthermore, Carlos also asserted that Teofilo II could not be
considered as Teofilos child. As a result, Carlos concluded that he was
also the sole heir of his brother Teofilo, since the latter had died
without leaving any heirs.
Carlos also claimed that Teofilo, prior to their father Felixs death in
1963, developed a scheme to save the elder Carloss estate from
inheritance taxes. Under the scheme, the properties of the father would
be transferred to Teofilo who would, in turn, see to it that the shares of
the legal heirs are protected and delivered to them. Felix assented to
the plan, and the subject properties were transferred in the name of
Teofilo. After Teofilos death, Carlos entered into certain agreements
with Sandoval in connection with the subject properties. Carlos did so,
believing that the latter was the lawful wife of his brother Teofilo.
Subsequently though, Carlos discovered that Sandoval and his brother
were never validly married, as their marriage was contracted without a
marriage license.
Carlos sought to nullify these agreements with Sandoval for want of
consideration, the premise for these contracts being non-existent.
Thus, Carlos prayed of the RTC to declare the alleged marriage
between Teofilo and Sandoval void ab initio, provided that Teofilo died
without issue, order that new titles covering the subject properties be
issued in the name of Carlos, and require Sandoval to restitute Carlos
in the amount of P18,924,800. Carlos likewise prayed for the issuance
of the provisional relief of preliminary attachment. The court granted
the writ.
Sandoval filed an Urgent Motion to Discharge the Writ of
Attachment. RTC denied the motion.
CA ordered the discharge and dissolution of the writ. There was no
sufficient cause of action to warrant the preliminary attachment, since
19
Carlos had merely alleged general averments in order to
support his prayer.
ISSUE: WON the affidavit was valid
No. There was no sufficient cause of action and only general
averments were stated. The Court of Appeals found that there was no
sufficient cause of action to warrant the preliminary attachment, since
Carlos had merely alleged general averments in order to support his
prayer.
Salgado vs. CA (1984)
Phil. Commercial and Industrial Bank filed an action against Sps.
Julieta and Jose Salgado to recover on a P/N in the amount of
P1,510,905.96. It also prayed for the issuance of a writ of attachment.
It alleged that Sps. Salgado had fraudulently misappropriated and/or
converted to their own personal use and benefit the sugar proceeds
given as security for the payment of the indebtedness; that Sps.
Salgado are guilty of fraud in contracting their obligation and have
concealed, removed or disposed of the properties mortgaged or
assigned to PCIB, or are concealing, removing or disposing or about to
do so, with intent to defraud their creditor; that the obligation sought
to be enforced is genuine and, therefore, a sufficient cause of action
exists; and that there is no sufficient security for the claim sought to
be enforced by the action.
Attached to the complaint was the affidavit of Mrs. Helen Osias,
Senior Branch Credit Division Manager of the Bank, wherein she stated,
among others, "that there is no sufficient security for the claim sought
to be enforced by this action."
Trial Court issued an order granting the Banks preliminary
attachment.
Salgado moved to quash the writ of attachment on the ground that
PCIB made fraudulent misrepresentation in securing the writ by
deleting the words "REM" or "Real Estate Mortgage" from the xerox
copy of the P/N attached to the complaint, thereby "making it appear
that the note was unsecured when in truth and in fact it was fully
secured by a series of valid and existing real estate mortgages duly
registered and annotated in the titles of the affected real properties in
favor of PCIB.
Trial Court granted the motion and lifted the writ of attachment
previously issued.
ISSUE: WON the writ of attachment was properly issued
No. The chief purpose of the remedy of attachment is to secure a
contingent lien on defendants property until plaintiff can, by
appropriate proceedings, obtain a judgment and have such property
applied to its satisfaction, or to make some provision for unsecured
debts in cases where the means of satisfaction thereof are liable to be
removed beyond the jurisdiction, or improperly disposed of or
concealed, or otherwise placed beyond the reach of creditors.
It is provide under Sec. 3 of Rule 57 that "an order of attachment shall
be granted only when it is made to appear by the affidavit of the applicant
or some other person who personally knows the facts, thatthere is no
other sufficient security for the claim sought to be enforced by the action."
The reason for the rule prohibiting attachment where indebtedness
was already secured is to prevent the secured creditors from attaching
additional property and thus tying up more of the debtors property
than was necessary to secure the indebtedness. Thus, to sustain an
order of attachment, "it is incumbent upon plaintiff to establish either
of these two facts, to wit: (a) that the obligation had not been secured
originally, or (b) that, if secured at its beginning, the security later
became valueless."
In the instant case, the allegation in the affidavit of the Banks Credit
Division Manager, Mrs. Helen Osias, to the effect that "there is no
sufficient security for the claim sought to be enforced by this action"
has been shown to be false. It is undisputed that the note sued upon
"is fully secured by a series of valid and existing real estate mortgages
duly registered and annotated in the titles of the affected real property
in favor of PCIB."

PCIB vs. Alejandro (2007)
~ supra ~
Republic vs. Garcia (2007)
A petition for forfeiture of unlawfully acquired properties, with a
verified urgent ex-parte application for the issuance of a writ of
preliminary attachment, was filed by the Republic of the Philippines
against Maj. Gen. Carlos F. Garcia, his wife and children in the
Sandiganbayan. In praying for the issuance of a writ of preliminary
attachment, the Republic maintained that, as a sovereign political
entity, it was exempt from filing the required attachment bond.
The Sandiganbayan issued a resolution ordering the issuance of a
writ of preliminary attachment against the properties of the Garcias
upon the filing by the Republic of a P1M attachment bond. Republic
posted the required attachment bond to avoid any delay in the
issuance of the writ as well as to promptly protect and secure its claim.
Republic filed MR for partial reconsideration, claiming that it was
exempt from filing an attachment bond and praying for its release.
ISSUE: WON the Republic is exempt from filing an attachment bond
Yes. Under Sec. 3 and 4 of Rule 57, before a writ of attachment may
issue, a bond must first be filed to answer for all costs which may be
adjudged to the adverse party and for the damages he may sustain by
reason of the attachment. However, this rule does not cover the State.
The State as represented by the government is exempt from filing an
attachment bond on the theory that it is always solvent.
In other words, the issuance of a writ of preliminary attachment is
conditioned on the filing of a bond unless the applicant is the State.
Where the State is the applicant, the filing of the attachment bond is
excused.
The attachment bond is contingent on and answerable for all costs
which may be adjudged to the adverse party and all damages which
he may sustain by reason of the attachment should the court finally
rule that the applicant is not entitled to the writ of attachment. Thus, it
is a security for the payment of the costs and damages to which the
adverse party may be entitled in case there is a subsequent finding
that the applicant is not entitled to the writ. The Republic of the
Philippines need not give this security as it is presumed to be always
solvent and able to meet its obligations.
The government is exempt from filing an attachment bond and that
the State need not file an attachment bond. Where the Republic of the
Philippines as a party to an action asks for a writ of attachment against
the properties of a defendant, it need not furnish a bond. This is so
because the State is presumed to be solvent. When plaintiff is the
Republic of the Philippines, it need not file a bond when it applies for
a preliminary attachment. This is on the premise that the State is
solvent.
And then again, we note the significant fact that Secs. 3 and 4, Rule
57 of the 1964 Rules of Court were substantially incorporated as Secs.
3 and 4, Rule 57 of the 1997 Rules of Court. There is thus no reason
why the Republic should be made to file an attachment bond.
Section 4. Condition of applicant's bond. The party applying for the
order must thereafter give a bond executed to the adverse party in the
amount fixed by the court in its order granting the issuance of the writ,
conditioned that the latter will pay all the costs which may be adjudged
to the adverse party and all damages which he may sustain by reason
of the attachment, if the court shall finally adjudge that the applicant
was not entitled thereto. (4a)
Arellano vs. Flojo (1994)
Teresita Arellano filed a verified complaint for neglect of duty,
misconduct, bias and partiality against Judge Flojo for having
irregularly issued an order for the issuance of a writ of attachment in
the said case on the same date despite lack of legal basis therefor, and
against Felino Bangalan for issuing the writ in said case despite failure
of the plaintiffs therein to post the required attachment bond of P100k.
Justice Barcelona of CA found Judge Bangalan (then Clerk of Court)
guilty of negligence for having issued the writ of attachment in spite of
failure to post the acceptable bond as required, for what appears in
20
the record is only a P/N in the form of an affidavit was executed.
Recommended that Bangalan be suspended for 1 month
without pay.
ISSUE: WON the penalty imposed was proper
No, fine of P5k is the commensurate penalty for the irregularity that
attended the civil case. Indeed, Bangalan issued the Writ of Attachment
although the plaintiffs have not yet posted the required attachment
bond. It is explicitly stated in his Comment that what was filed was
merely an undertaking. The fact that the "Undertaking" was subscribed
by the branch clerk of court does not necessarily follow that it carried
the imprimatur of the presiding judge thereof. As a lawyer, Bangalan,
who is now a Judge should have known the glaring distinctions
between a plain undertaking and a real attachment bond.
As ruled by Judge Talamayan, no bond can be confiscated to answer
for the damages sustained by defendants. He discovered that only a
promissory note in the form of an affidavit executed by the bondsmen
denominated as an attachment bond appears on the record. Had
Bangalan carefully examined the undertaking filed before he issued
the writ of attachment, such a situation could have been obviated.
Where a statute authorizing attachment requires, as a condition to
the issuance of the writ, that a bond shall be given by plaintiff to
indemnify defendant for any loss or injury resulting from the
attachment in case it proves to be wrongful, a failure to give such bond
is fatal, and an attachment issued without the necessary bond is
invalid.
Calderon vs. IAC (1987)
Jose Calderon purchased Luzon Brokerage Corp. and its 5 affiliate
companies from George Schulze, et. al. 21 days after, Bureau of
Customs suspended the operations of LBC for failure to pay customs
taxes and duties incurred prior to the sale.
Calderon filed complaint against private respondents to recover
amount of P1,475,840 with damages by reason of breach of warranty.
Also prayed for preliminary attachment alleging that private
respondents had deliberately and willfully concealed from his
knowledge such staggering liability of LBC for the purpose of
misleading him into buying the 6 companies; and that Schulze is
about to depart from the Philippines in order to defraud his creditors.
To support the petition for preliminary attachment, Calderon posted
a surety bond of P1,475,840. Trial Court issued a writ of preliminary
attachment, whereupon properties of the private respondents were
attached and their bank deposits were garnished. Subsequently,
Calderon filed an amended complaint, alleging that while the liabilities
of LBC are reflected in its books, the aforesaid amount was fraudulently
withdrawn and misappropriated by Schulze.
Private respondents filed a counterbond, whereupon the trial court
issued an order directing the sheriff to return all real and personal
properties already levied upon and to lift the notices of garnishment
issued in connection with the said attachment.
After trial, court dismissed the complaint, holding Calderon and his
surety jointly and severally liable to pay damages.
ISSUE: WON the writ of attachment was validly issued
No. That Calderon was clearly in bad faith when he asked for the
attachment is indicated by the fact that he failed to appear in court to
support his charge of misappropriation by Schulze, and in effect,
preventing his being cross-examined, no document on the charges was
presented by him. Indeed, the CA found that Calderon failed to
produce any evidence in support of his sworn charge that Schulze had
deliberately and willfully concealed the liabilities of LBC. But even
though Calderon failed to prove his serious charges of fraud, malice
and bad faith, Schulze et. al. took it upon themselves to show that they
did not conceal or withhold from Calderons knowledge the deposits
made by Philippine Refining Co., Inc. with LBC and that they did not
withdraw and misappropriate the deposits made by Philippine
Refining Co., Inc. with LBC.
It is evident from the foregoing that the attachment was maliciously
sued out and that as already pointed out, Schulze was not in bad faith.
While as a general rule, the liability on the attachment bond is
limited to actual damages, moral and exemplary damages may be

recovered where the attachment was alleged to be maliciously
sued out and established to be so.
Calderons contention: the dissolution of the attachment
extinguishes its obligation under the bond, for the basis of its liability,
which is wrongful attachment no longer exists, the attachment bond
having been rendered void & ineffective, by virtue of Sec. 12, Rule 57.
Untenable. While Section 12, Rule 57 of the Rules of Court provides
that upon the filing of a counterbond, the attachment is discharged or
dissolved, nowhere is it provided that the attachment bond is rendered
void and ineffective upon the filing of counterbond.
The liability of the attachment bond is defined in Section 4, Rule 57.
It is clear from Sec. 4 that the responsibility of the surety arises "if the
court shall finally adjudge that the plaintiff was not entitled thereto."
Liability attaches if the plaintiff is not entitled to the attachment
because the requirements entitling him to the writ are wanting, or if
the plaintiff has no right to the attachment because the facts stated in
his affidavit, or some of them, are untrue. It is, therefore, evident that
upon the dismissal of an attachment wrongfully issued, the surety is
liable for damages as a direct result of said attachment.
Suretys contention: by filing a counterbond, private respondents
waived any defect or flaw in the issuance of the attachment writ, for
they could have sought, without need of filing any counterbond, the
discharge of the attachment if the same was improperly or irregularly
issued.
Untenable. Whether the attachment was discharged by either of the
2 ways indicated in the law, i.e., by filing a counterbond or by showing
that the order of attachment was improperly or irregularly issued, the
liability of the surety on the attachment bond subsists because the
final reckoning is when "the Court shall finally adjudge that the
attaching creditor was not entitled" to the issuance of the attachment
writ in the first place.
The attachment debtor cannot be deemed to have waived any defect
in the issuance of the attachment writ by simply availing himself of one
way of discharging the attachment writ, instead of the other. Moreover,
the filing of a counterbond is a speedier way of discharging the
attachment writ maliciously sought out by the attaching creditor
instead of the other way, which, in most instances like in the present
case, would require presentation of evidence in a full-blown trial on the
merits and cannot easily be settled in a pending incident of the case.
Section 5. Manner of attaching property. The sheriff enforcing the
writ shall without delay and with all reasonable diligence attach, to
await judgment and execution in the action, only so much of the
property in the Philippines of the party against whom the writ is issued,
not exempt from execution, as may be sufficient to satisfy the
applicant's demand, unless the former makes a deposit with the court
from which the writ is issued, or gives a counter-bond executed to the
applicant, in an amount equal to the bond fixed by the court in the
order of attachment or to the value of the property to be attached,
exclusive of costs. No levy on attachment pursuant to the writ issued
under section 2 hereof shall be enforced unless it is preceded, or
contemporaneously accompanied, by service of summons, together
with a copy of the complaint, the application for attachment the
applicant's affidavit and bond, and the order and writ of attachment,
on the defendant within the Philippines.
The requirement of prior or contemporaneous service of summons
shall not apply where the summons could not be served personally or
by substituted service despite diligent efforts, or the defendant is a
resident of the Philippines temporarily absent therefrom, or the
defendant is a non-resident of the Philippines, or the action is one in
rem or quasi in rem. (5a)
Gotauco vs. ROD (1934)
12 Aug 32: when Exhibits A and B were presented to the register,
by which a levy of execution against the judgment debtor, Rafael Vilar
was made on fifteen contracts of land described in Exhibit B and
registered in the name of Florentino Vilar, the register properly denied
the inscription of said levy of execution because the title to the lands
was in the name of Florentino Vilar and no evidence was submitted
that Rafael Vilar had any present or possible future interest in the land.
17 Sept: there was presented to him a copy of a petition filed in the
CFI entitled, "Intestado del Finado Florentino Vilar", from which he
21
could properly infer that Florentino Vilar was dead and that the
judgment debtor Rafael Vilar is one of the heirs of the deceased
Florentino Vilar. Although the value of the participation of Rafael Vilar
in the estate of Florentino Vilar was indeterminable before the final
liquidation of the estate, nevertheless, the right of participation in the
estate and the lands thereof may be attached and sold.
This is an appeal from a judgment of the Fourth Branch of the Court
of First Instance of Manila in a consulta submitted by the ROD of
Tayabas.
ISSUE:
The real test was laid down by this court in the case of Reyes vs.
Grey, namely: Does the judgment debtor hold such a beneficial interest
in the property that he can sell or otherwise dispose of it for value?
Nothing appears in this record to indicate that Rafael Vilar being sui
juris could not dispose of his interest or share as heir in the estate of
Florentina Vilar. Having this right, he could by a conveyance defeat pro
tanto the provisions of section 450 of the Code of Civil Procedure and
thus deprive the judgment creditor of the benefit of a lawful execution.
On October 12, 1932, with the knowledge which he them had, the
register should have accepted and inscribed Exhibit A, B and D.
The judgment in this consulta is reversed without special
pronouncement as to costs.
Oate vs. Abrogar, 2nd Div. (1994)
23 Dec 91: Sun Life Assurance Co. of Canada filed a complaint for
sum of money with prayer for immediate issuance of a writ of
attachment against the petitioners and Noel Dio. The judge issued an
order granting the issuance of a writ of attachment, which was
subsequently actually issued on 27 Dec 91.
3 Jan 92: Upon Sun Lifes ex parte motion, the TC amended the
writ of attachment to reflect the alleged amount of the indebtedness.
That same day, Deputy Sheriff Flores, accompanied by a representative
of Sun Life, attempted to serve summons and a copy of the amended
writ of attachment upon petitioners at their known office address at
108 Aguirre St., Makati but was not able to do so since there was no
responsible officer to receive the same.
Nonetheless, Sheriff Flores proceeded, over a period of several days,
to serve notices of garnishment upon several commercial banks and
financial institutions, and levied on attachment a condominium unit
and a real property belonging to petitioner Oate.
9 Jan: summons was eventually served upon the petitioners while
Dio was served with summons on 16 Jan.
Petitioners filed an Urgent Motion to Discharge/Dissolve Writ of
Attahment. On the other hand, Sun Life filed an ex-parte motion to
examine the books of accounts and ledgers of petitioner Brunner
Development Corp. at the Urban Bank, Legaspi Village Branch, and to
obtain copies thereof, which motion was granted by Judge Abrogar.
Judge Abrogar issued an order (1) denying petitioners' and the co-
defendants' motion to discharge the amended writ of attachment, (2)
approving Sun Life's additional attachment, (3) granting Sun Life's
motion to examine the BPI account, and (4) denying petitioners'
motion to nullify the proceedings.
Petitioners filed MR. Denied.
Petitioners contentions: Judge had acted with GAD amounting to
lack or in excess of jurisdiction in (1) issuing ex parte the original and
amended writs of preliminary attachment and the corresponding
notices of garnishment and levy on attachment since the trial court
had not yet acquired jurisdiction over them; and (2) allowing the
examination of the bank records though no notice was given to them.
ISSUE: WON the grant of the writ of attachment was improper because
the court has not acquired jurisdiction over the petitioners
No. A writ of preliminary attachment may be validly applied for and
granted even before the defendant is summoned or is heard from. A
preliminary attachment may be defined, paraphrasing the Rules of
Court, as the provisional remedy in virtue of which a plaintiff or other
proper party may, at the commencement of the action or any time
thereafter, have the property of the adverse party taken into the
custody of the court as security for the satisfaction of any judgment
that may be recovered.

Rule 57 in fact speaks of the grant of the remedy "at the
commencement of the action or at any time thereafter." The
phrase "at the commencement of the action," obviously refers to the
date of the filing of the complaint which, as above-pointed out, its
the date that marks "the commencement of the action;" and the
reference plainly is to a time before summons is served on the
defendant or even before summons issues. What the rule is saying
quite clearly is that after an action is properly commenced by the
filing of the complaint and the payment of all requisite docket and
other fees the plaintiff may apply for and obtain a writ of preliminary
attachment upon fulfillment of the pertinent requisites laid down by
law, and that he may do so at any time, either before or after service
of summons on the defendant. And this indeed, has been the
immemorial practice sanctioned by the courts: for the plaintiff or other
proper party to incorporate the application for attachment in the
complaint or other appropriate pleading (counterclaim, cross-claim,
third-party claim) and for the Trial Court to issue the writ ex-parte at
the commencement of the action if it finds the application otherwise
sufficient in form and substance.
Petitioners contention: the writ should have been discharged since
the ground on which it was issued fraud in contracting the obligation
was not present.
No. This cannot be considered a ground for lifting the writ since this
delves into the very complaint of the Sun Life. Moreover, an attachment
may not be dissolved by a showing of its irregular or improper issuance
if it is upon a ground which is at the same time the applicant's cause
of action in the main case since an anomalous situation would result
if the issues of the main case would be ventilated and resolved in a
mere hearing of the motion.
The fact that a criminal complaint for estafa filed by Sun Life against
the petitioners was dismissed by the Provincial Prosecutor of Rizal for
Makati on April 21, 1992 and was upheld by the Provincial Prosecutor
on July 13, 1992 is of no moment since the same can be indicative
only of the absence of criminal liability, but not of civil liability.
Petitioners contention: the enforcement of the writ was invalid
since it undisputedly preceded the actual service of summons by six
days at most.
No. True, this Court had held in a recent decision that the
enforcement of writ of attachment may not validly be effected until and
unless proceeded or contemporaneously accompanied by service of
summons. But we must distinguish the case at bar from the Sievert
and BAC Manufacturing cases. In those two cases,summons was never
served upon the defendants. The plaintiffs therein did not even attempt
to cause service of summons upon the defendants, right up to the time
the cases went up to this Court. This is not true in the case at bar.
The records reveal that Sheriff Flores and Sun Life did attempt a
contemporaneous service of both summons and the writ of
attachment on January 3, 1992, but was stymied by the absence of a
responsible officer in petitioners' offices. Note is taken of the fact that
petitioners Oate and Econ Holdings admitted in their answer that the
offices of both Brunner Development Corporation and Econ Holdings
were located at the same address and that petitioner Oate is the
President of Econ Holdings while petitioner Dio is the President of
Brunner Development Corporation as well as a stockholder and
director of Econ Holdings.
Thus, an exception to the established rule on the enforcement of the
writ of attachment can be made where a previous attempt to serve the
summons and the writ of attachment failed due to factors beyond the
control of either the plaintiff or the process server, provided that such
service is effected within a reasonable period thereafter.
Several reasons can be given for the exception. First, there is a
possibility that a defendant, having been alerted of plaintiffs action by
the attempted service of summons and the writ of attachment, would
put his properties beyond the reach of the plaintiff while the latter is
trying to serve the summons and the writ anew. By the time the
plaintiff may have caused the service of summons and the writ, there
might not be any property of the defendant left to attach.
Second, the court eventually acquired jurisdiction over the
petitioners six days later. To nullify the notices of garnishment issued
prior thereto would again open the possibility that petitioners would
transfer the garnished monies while Sun Life applied for new notices
of garnishment.
Third, the ease by which a writ of attachment can be obtained is
counter-balanced by the ease by which the same can be discharged:
22
the defendant can either make a cash deposit or post a counter-
bond equivalent to the value of the property attached.
The petitioners herein tried to have the writ of attachment
discharged by posting a counter-bond, the same was denied by Judge
on the ground that the amount of the counter-bond was less than that
of Sun Life's bond.
Oate vs. Abrogar, En Banc (1995)
Petitioners contention: the attachment of their properties was void
because the trial court had not at that time acquired jurisdiction over
them and that the subsequent service of summons on them did not
cure the invalidity of the levy.
Sun Lifes contention: the trial court eventually acquired jurisdiction
over petitioners and contends that this cured the invalidity of the
attachment of petitioners' properties.
ISSUE: WON the writ of attachment was properly issued
No. Petitioners' contention respecting the validity of the attachment
of their properties is well taken. The attachment of petitioners'
properties prior to the acquisition of jurisdiction by the court is void
and that the subsequent service of summons on petitioners did not
cure the invalidity of such attachment.
The records show that before the summons and the complaint were
served on Oate and Econ Holdings Corporation on January 9, 1992,
Deputy Sheriff Arturo C. Flores had already served on January 3, 1992
notices of garnishment on the PNB Head office and on all its Metro
Manila branches and an A.B capital. In addition, he made other levies
before the service of summons on petitioners.
First. The Deputy Sheriff claims that he had tried to serve the
summons with a copy of the complaint on petitioners on January 3,
1992 but that there was no one in the offices of petitioners on whom
he could make a service. This is denied by petitioners who claim that
their office was always open and that Adeliza M. Jaranilla, Econ's Chief
Accountant who eventually received summons on behalf of Oate and
Econ, was present that day. Whatever the truth is, the fact is that no
other attempt was made by the sheriff to serve the summons except
on January 9, 1992, in the case of Oate and Econ, and on January
16, 1992, in the case of Dio.
Second. Sun Life invokes the ruling in Davao Light & Power Co. v. CA,
in support of its contention that the subsequent acquisition of
jurisdiction by the court cured the defect in the proceedings for
attachment.
While the petition for a writ of preliminary attachment may be
granted and the writ itself issued before the defendant is summoned,
the writ of attachment cannot be implemented until jurisdiction over
the person of the defendant is obtained. Levy on property pursuant to
the writ thus issued may not be validly effected unless preceded, or
contemporaneously accompanied, by service on the defendant of
summons, a copy of the complaint (and of the appointment of
guardian ad litem, if any), the application for attachment (if not
incorporated in but submitted separately from the complaint), the
order of attachment, and the plaintiff's attachment bond.
It must be emphasized that the grant of the provisional remedy of
attachment practically involves three stages; first, the court issues the
order granting the application; second, the writ of attachment issues
pursuant to the order granting the writ; and third, the writ is
implemented. For the initial two stages, it is not necessary that
jurisdiction over the person of the defendant should first be obtained.
However, once the implementation commences, it is required that the
court must have acquired jurisdiction over the defendant for without
such jurisdiction, the court has no power and authority to act in any
manner against the defendant (Cuartero vs. CA).
Sun Lifes contention: Cuartero itself provides for an exception as
shown in the statement that "the court in issuing the writ of preliminary
attachment cannot bind and affect the defendant until jurisdiction is
eventually obtained" and that since petitioners were subsequently
served with summons, no question can be raised against the validity
of the attachment of petitioners' properties before such service.
No merit. True, a writ of preliminary attachment may issue even
before summons is served upon the defendant. However, we have
likewise ruled that the writ cannot bind and affect the defendant until
jurisdiction over his person is eventually obtained.Therefore, it is

required that when proper officer commences implementation of
the writ of attachment service of summons should be
simultaneously made.
The attachment of properties before the service of summons on the
defendant is invalid, even though the court later acquires jurisdiction
over the defendant. At the very least, then, the writ of attachment must
be served simultaneously with the service of summons before the writ
may be enforced. As the properties of the petitioners were attached by
the sheriff before he had served the summons on them, the levies
made must be considered void.
Third. Nor can the attachment of petitioners' properties before the
service of summons on them was made be justified and the ground
that unless the writ was then enforced, petitioners would be alerted
and might dispose of their properties before summons could be served
on them.
The Rules of Court do not require that issuance of the writ be kept
a secret until it can be enforced. Otherwise in no case may the service
of summons on the defendant precede the levy on attachment. To the
contrary, Rule 57, 13 allows the defendant to move to discharge the
attachment even before any attachment is actually levied upon, thus
negating any inference that before its enforcement, the issuance of the
writ must be kept secret.
To authorize the attachment of property even before jurisdiction
over the person of the defendant is acquired through the service of
summons or his voluntary appearance could lead to abuse. It is
entirely possible that the defendant may not know of the filing of a
case against him and consequently may not be able to take steps to
protect his interests.
Nor may sheriff's failure to abide by the law be excused on the
pretext that after all the court later acquired jurisdiction over
petitioners. More important than the need for insuring success in the
enforcement of the writ is the need for affirming a principle by insisting
on that "most fundamental of all requisites the jurisdiction of the
court issuing attachment over the person of the defendant." It may be
that the same result would follow from requiring that a new writ be
served all over again. The symbolic significance of such an act,
however, is that it would affirm our commitment to the rule of law.
H.B. Zachry vs. CA (1994)
17 Jul 87: VBC entered into a written Subcontract Agreement with
Zachry, a foreign corporation. Zachry had been engaged by the United
States Navy to design and construct 264 Family Housing Units at the
US Naval Base at Subic, Zambales. Under the agreement, specifically
under Section 3 on Payment, VBC was to perform all the construction
work on the housing project and would be paid "for the performance
of the work the sum of $6,468,000, subject to additions and
deductions for changes.
When VBC had almost completed the project, Zachry complained of
the quality of work, making it a reason for its decision to take over the
management of the project. However, prior to such take-over, the
parties executed on 18 December 1989 a Supplemental Agreement.
VBC submitted to Zachry on 10 Jan 1990 a detailed computation of
the cost to complete the subcontract on the housing project. According
to VBC's computation, there remains a balance of $1,103,000 due in
its favor as of 18 Jan 1990.
Zachry, however, not only refused to acknowledge the indebtedness
but continually failed to submit to VBC a statement of accumulated
costs, as a result of which VBC was prevented from checking the
accuracy of the said costs.
20 Mar 90: VBC filed a Complaint with the RTC of Makati against
Zachry for the collection of the payments due it with a prayer for a writ
of preliminary attachment over Zachry's bank account in Subic Base
and over the remaining thirty-one undelivered housing units which
were to be turned over to the US Navy by Zachry on 30 Mar 1990.
Complaint alleges that Zachry "is a foreign corporation with address at
527 Longwood Street, San Antonio, Texas, U.S.A. and has some of its
officers working at U.S. Naval Base, Subic Bay, Zambales where it may
be served with summons.
21 Mar: TC granted the application for the issuance of the writ of
preliminary attachment and fixed the attachment bond at
P24,266,000. VBC put up the required bond and on 26 March 1990,
the trial court issued the writ of attachment, which was served, together
with the summons, a copy of the complaint with annexes, the bond,
23
and a copy of the order of attachment, on 27 March 1990 in
the manner described in the Sheriff's Partial Return: upon
defendant H.B. Zachry Company (International) at its field office in U.S.
Naval Base, Subic Bay, Zambales thru Ruby Apostol who acknowledged
receipt thereof. Mr. James M. Cupit, defendant's authorized officer was in
their Manila office at the time of service.
Also further states: That on March 28, 1990, the undersigned sheriff
went to the office of defendant H. B. Zachry Company (International) at
c/o A.M. Oreta & Co. at 5th Floor, Ermita Building, Arquiza corner
Alhambra streets, Ermita, Manila to serve the Court's processes but was
informed by Atty. Felix Lobiro of A.M. Oreta & Co., that defendant H.B.
Zachry Company has its own office at Room 600, 6th Floor of the same
building (Ermita Building). However, said defendant's office was closed
and Zachry only holds office during Mondays and Tuesdays of the week
as per information gathered from the adjacent office.
6 Apr 90: Zachry filed a motion to dismiss the complaint on the
ground of lack of jurisdiction over its person because the summons
was not validly served on it. Alleged that it is a foreign corporation duly
licensed on 13 Nov 1989 by the SEC to do business in the Philippines
and, pursuant to Section 128 of the Corporation Code of the
Philippines, had appointed Atty. Lucas Nunag as its resident agent on
whom any summons and legal processes against it may be served.
Summons and a copy of the Amended Complaint were served on
24 April 1990 on Zachry through Atty. Nunag. VBC filed a
Manifestation to inform the court of the above service of summons on
Zachry which it claimed rendered moot and academic the MTD.
Zachry filed an Omnibus Motion (a) to dismiss the complaint for lack
of jurisdiction over its person since the subsequent service of
summons did not cure the jurisdictional defect it earlier pointed out
and (b) to dissolve the writ of attachment of 26 March 1990 "for having
been issued without jurisdiction, having been issued prior to the
service of summons."
CAs decision: Dissolved the writ. Summons was served on Zachry
only on 24 April 1990; hence, applying Sievert vs. Court of Appeals,
the trial court "had no authority yet to act coercively against the
defendant" when it issued the writ of attachment on 21 March 1990.
ISSUE: WON the issuance of the writ of preliminary attachment prior
to the service of summons and a copy of the amended complaint on
the respondent is valid
Yes. It was error for the CA to declare, on the ground of grave abuse
of discretion, the nullity of the writ of attachment. In the first place, the
writ was in fact issued only on 26 March 1990 and served, together
with the summons, copy of the complaint, the Order of 21 March 1990,
and the bond, on 27 March 1990 on Zachry at its field office in Subic
Bay, Zambales, through one Ruby Apostol. What the CA referred to as
having been issued on 21 March 1990 is the order granting the
application for the issuance of a writ of preliminary attachment upon
the posting of a bond of P24,266,000. In the second place, even
granting arguendo that the CA had indeed in mind the 26 March 1990
writ of attachment, its issuance, as well as the issuance of the 21 March
1990 Order, did not suffer from any procedural or jurisdictional defect;
the trial court could validly issue both.
However, the writ of attachment cannot be validly enforced through
the levy of Zachry's property before the court had acquired jurisdiction
over Zachry's person either through its voluntary appearance or the
valid service of summons upon it. To put it in another way, a distinction
should be made between the issuance and the enforcement of the writ.
The trial court has unlimited power to issue the writ upon the
commencement of the action even before it acquires jurisdiction over
the person of the defendant, but enforcement thereof can only be
validly done after it shall have acquired such jurisdiction.
The validity then of the order granting the application for a writ of
preliminary attachment on 21 March 1990 and of the issuance of the
writ of preliminary attachment on 26 March 1990 is beyond dispute.
However, the enforcement of the preliminary attachment on 27 March
1990, although simultaneous with the service of the summons and a
copy of the complaint, did not bind Zachry because the service of the
summons was not validly made. When a foreign corporation has
designated a person to receive service of summons pursuant to the
Corporation Code, that designation is exclusive and service of
summons on any other person is inefficacious. The valid service of
summons and a copy of the amended complaint was only made upon
 24

it on 24 April 1990, and it was only then that the trial court Motion was denied by Judge on the ground that the records
acquired jurisdiction over Zachry's person. Accordingly, the levy on belied petitioners' claim that the auction sale occurred very
attachment made by the sheriff on 27 April 1990 was invalid. However, much ahead of the notice of levy.
the writ of preliminary attachment may be validly served anew. Petitioners sought relief from the CA by filing a "Petition for certiorari
and Prohibition with Preliminary Injunction and Preliminary
Section 6. Sheriff's return. After enforcing the writ, the sheriff must Mandatory Injunction" assailing and asking to vacate the Orders issued
likewise without delay make a return thereon to the court from which in Civil Case No. 89692 by Judge as well as the Writs, notices and other
the writ issued, with a full statement of his proceedings under the writ processes emanating therefrom.
and a complete inventory of the property attached, together with any Roque filed the present petition, claiming that he is a purchaser in
counter-bond given by the party against whom attachment is issued, good faith and for valuable consideration, having actually paid the total
and serve copies thereof on the applicant. (6a) amount of P354,689 to the Cotabato Visayan Devt Corp for 3 barges.
Roques contention: The levy was illegal because the Writ was
Roque vs. CA (1979) implemented more than 60 days after its issuance so that they need
not have complied with Section 14, Rule 57.
31 Jan 73: Associated Banking Corp. instituted an action against
ISSUE: WON the levy was illegal because the writ was implemented
Fil-Eastern Wood Industries, Inc., a domestic corporation, for recovery
more than 60 days after its issuance
of a sum of money.
Upon ex-parte application by the Bank for a Writ of Preliminary
The Rules do not provide any lifetime for a Writ of Attachment unlike
Attachment, Judge Sundiam, after the filing and approval of the
a Writ of Execution. But even granting that a Writ of Attachment is valid
required bond of P220k, issued, on February 4, 1974, an Order of
for only sixty days, yet, since there was constructive levy within that
Attachment commanding the Sheriff to attach the estate, real and
period the fact that actual seizure was effected only thereafter cannot
personal, of Fil-Eastern.
affect the validity of that levy.
7 Feb 74: The Sheriff's "Notice of Levy Pursuant to the Writ of
Neither can it be said that Judge committed GAD in issuing the
Attachment" was registered in the Office of the Commander of the First
challenged Order of April 14, 1975, supra, whereby it commanded the
Coast Guard, District of Manila. The said notice read, "levy is hereby
immediate implementation of the Order of execution of March 7, 1975
made upon all the rights, titles, interest, shares and participation which
and ordered petitioners to surrender possession of the barge to the
Fil-Eastern Wood Industries, Inc. has or might have over a sea vessel or
Sheriff under pain of contempt. A trial Court is enjoined by law to bring
barge named Fil-Eastern V.
about a prompt dispatch of the controversy pending before it. As it
It appears that prior to the issuance of said Writ of Attachment, Fil-
was, it took the trial Court more than a year to cause the enforcement
Eastern had delivered the barge to the Cotabato Visayan Development
of its Writs and processes. Moreover, its Decision of October 9, 1974
Corporation sometime in April, 1973, for repair. The job was
had become final and executory, and execution then became purely a
completed in June 1973, but Fil-Eastern failed to pay the cost of
ministerial phase of adjudication. It had no jurisdiction to pass upon
repairs of P261,190.59. In the public auction sale conducted by said
petitioners' claim of ownership not only because trial in that, case had
Notary Public on April 24, 1974, Eligio Roque acquired the barge as
already been terminated but also considering that petitioners were not
the highest bidder and was accordingly issued a Certificate of Sale by
parties in the case below nor had they filed any third-party claim for
the Notary Public.
the enforcement of their rights.
29 Aug 74: Bank filed a "Motion for the Issuance of Another Writ of
Verily, petitioners' remedy was to ventilate their claims of ownership
Attachment" stating that at the time of the issuance of the Writ on
in a separate and independent reivindicatory action, as even then
February 4, 1974, the barge in question could not be located within
suggested by the Court of Appeals. That was the arena where the
the jurisdiction of the Court, having been anchored somewhere in the
question of preferential rights, if any, impliedly raised in the first
Visayas, and that actual levy on the barge could not be made as "the
assigned error, could have been fully threshed out. In the interest of
original Order of attachment is allegedly in the possession of the Branch
justice, petitioners can still file an independent civil action to establish
Deputy Sheriff appointed by the Honorable Court, who has not reported
their ownership over the barge, if they have not yet done so.
to the office since August 26, 1974, and, therefore, could not implement
Roques contention: he could not avail of the remedy under Sec. 17,
the writ."
Rule 39 inasmuch as the vessel was not in the actual custody of the
On the same date, the Court denied the issuance of another Writ
Sheriff nor of the Court, since the supposed levy by the Sheriff on
because it was deemed unnecessary, but instead ordered the Deputy
February 7, 1974 was a mere paper levy which, in legal contemplation,
Sheriff of Branch XXVIII to coordinate with the City Sheriff of Manila in
is no levy at all.
the implementation of the Writ previously issued.
It is a fact that Sheriff could not effect seizure immediately, first,
30 Aug 74, Deputy Sheriff Garvida actually seized and levied upon
because the barge could nowhere be found in this vicinity, and
the vessel.
subsequently when found, because petitioners would not deliver
7 Oct: Bank and Fil-Eastern submitted a Compromise Agreement
possession to the Sheriff. It was not until the trial Court granted the
whereby Fil-Eastern bound itself to pay to the Bank the principal
Sheriff's Motion praying for an Order directing petitioners or their
amount of P200,000.00, with 1417, interest, plus other amounts
agents to surrender the barge to the custody of the Court, that the
stated therein. Judge approved the agreement.
Sheriff was able to take physical custody. As a general rule, however, a
6 Nov: Bank moved for the issuance of a Writ of Execution for failure
levy of an attachment upon personal property may be either actual or
of Fil-Eastern to make payments within the period agreed upon.
constructive.
Meanwhile, without prior authority from Deputy Sheriff Garvida the
In this case, levy had been constructively made by the registration
barge in question was "spirited away" to Bacolod City by a certain
of the same with the Philippine Coast Guard on February 7, 1974.
Captain Marcelino Agito, who claimed to have been given the right to
Constructive possession should be held sufficient where actual
use the same by Fil-Eastern.
possession is not feasible, particularly when it was followed up by the
6 Jan 75: Judge issued an Order requiring Capt. Marcelino Agito, in
actual seizure of the property as soon as that could possibly be
coordination with Deputy Sheriff Benjamin E. Garvida to bring back to
effected.
Manila the barge in question. Judge subsequently issued a Writ of
Execution and ordered the sale of the barge at public auction.
Capt. Marcelino Aguito and Deputy Sheriff Benjamin Garvida filed a
Manifestation stating that petitioner Rodrigo Malonjao, acting for and
in behalf of his co-petitioner Eligio Roque, refused to-surrender the
barge on the ground that Eligio Roque is now the new owner.
24 Apr: Petitioners filed before the Court an Urgent Manifestation
and Motion seeking to set aside the Order of April 14, 1975, claiming
that Roque is now the new owner of the barge having acquired the
same at a public auction sale arising from a mechanic's lien. The

Section 7. Attachment of real and personal property; recording
thereof. Real and personal property shall be attached by the
sheriff executing the writ in the following manner:
(a) Real property, or growing crops thereon, or any interest
therein, standing upon the record of the registry of deeds of the
province in the name of the party against whom attachment is issued,
or not appearing at all upon such records, or belonging to the party
against whom attachment is issued and held by any other person, or
standing on the records of the registry of deeds in the name of any
other person, by filing with the registry of deeds a copy of the order,
together with a description of the property attached, and a notice that
it is attached, or that such real property and any interest therein held
by or standing in the name of such other person are attached, and by
leaving a copy of such order, description, and notice with the occupant
of the property, if any, or with such other person or his agent if found
within the province. Where the property has been brought under the
operation of either the Land Registration Act or the Property
Registration Decree, the notice shall contain a reference to the number
of the certificate of title, the volume and page in the registration book
where the certificate is registered, and the registered owner or owners
thereof.
The registrar of deeds must index attachments filed under this
section in the names of the applicant, the adverse party, or the person
by whom the property is held or in whose name it stands in the
records. If the attachment is not claimed on the entire area of the land
covered by the certificate of title, a description sufficiently accurate for
the identification of the land or interest to be affected shall be included
in the registration of such attachment;
(b) Personal property capable of manual delivery, by taking and
safely keeping it in his custody, after issuing the corresponding receipt
therefor.
(c) Stocks or shares, or an interest in stocks or shares, of any
corporation or company, by leaving with the president or managing
agent thereof, a copy of the writ, and a notice stating that the stock or
interest of the party against whom the attachment is issued is attached
in pursuance of such writ;
(d) Debts and credits, including bank deposits, financial interest,
royalties, commissions and other personal property not capable of
manual delivery, by leaving with the person owing such debts, or
having in his possession or under his control, such credits or other
personal property, or with his agent, a copy of the writ, and notice that
the debts owing by him to the party against whom attachment is
issued, and the credits and other personal property in his possession,
or under his control, belonging to said party, are attached in pursuance
of such writ;
(e) The interest of the party against whom attachment is issued
in property belonging to the estate of the decedent, whether as heir,
legatee, or devisee, by serving the executor or administrator or other
personal representative of the decedent with a copy of the writ and
notice that said interest is attached. A copy of said writ of attachment
and of said notice shall also be filed in the office of the clerk of the
court in which said estate is being settled and served upon the heir,
legatee or devisee concerned.
If the property sought to be attached is in custodia legis, a copy
of the writ of attachment shall be filed with the proper court or quasi-
judicial agency, and notice of the attachment served upon the
custodian of such property. (7a)
Siari Valley Estates vs. Lucasan (1960)
30 Jan 52: CFI Zamboanga del Norte rendered a decision ordering
Filemon Lucasan to deliver to Siari Valley Estates the cattle inside
Lucasans pasture or pay its value amounting to P40k and damages of
P40k. This was affirmed by SC. When it became final and executory, a
writ of execution was issued.
Sheriff proceeded to levy on certain parcels of lands belonging to
Lucasan. Lands were sold at public auction to Siari Valley as the
highest bidder.
Lucasan failed to redeem the land within 1 year. Hence, the sheriff
issued in favor of Siari Valley the final certificate of sale.
16 Feb 57: Upon petition of Siary Valley, a writ of possession was
issued directing the sheriff to place it in possession thereof. However,
25
it failed to take possession of the lands. So it filed a motion
reiterating its petition.
Lucasan filed an opposition, alleging that he was in possession of
one of the parcels of land sold at public auction on which he has
erected a house and which he has extra judicially constituted as a
family home.
The court overruled the opposition. Lucasan filed MR. Denied. But
later on, the court issued another order allowing Siari Valley to take
possession of all lands sold, with the exception of parcel 1 on which
the family home was constituted, holding that the levy and sale made
by the sheriff with regard to said parcel were not made in accordance
with law and so are null and void.
Lucasans contention: Said lot and house having been constituted
as a family home are beyond the reach of judicial execution.
Contended that the levy made by the sheriff on said property is legally
ineffective because it was not effected in accordance with what is
prescribed in Section 14, Rule 39, in relation to Section 7, Rule 59, of
the Rules of Court.
ISSUE: WON the levy and sale by the sheriff is valid
No. True that it appears that parcel 1 is a registered land, registered
in the ROD in the name of Filemon Lucasan. It appears that Lucasan
and his wife constituted this house and lot on which it stands into a
family home.
However, the evidence shows that when this property was levied on
execution by the sheriff to satisfy the judgment rendered against
Filemon Lucasan in favor of Siari Valley the notice of levy merely
described the property as unregistered land and the same was
registered under Act 3344 in the office of the register of deeds. It also
appears that in the notice of sale the property was merely described
according to the boundaries and area appearing in the tax declaration
and not according to what appears in the certificate of title.
On the other hand, the rule provides that real property shall "be
levied on in like manner and with like effect as under an order of
attachment" (Section 14, Rule 39), and the provision regarding
attachment of real property postulates that the attachment shall be
made "by filing with the register of deeds a copy of the order, together
with the description of the property attached, and a notice that it is
attached, and by leaving a copy of said order, description, and notice with
the occupant of the property, if any there be," and that "Where the
property has been brought under the operation of the Land Registration
Act, the notice shall contain a reference to the number of the certificate
of title and the volume and page in the registration book where the
certificate is registered" (Section 7 [a], Rule 59).
These provisions should be strictly construed if their purpose has to
be accomplished. The requirement that the notice of levy should
contain a reference to the number of the certificate of title and the
volume and page in the registration book where the certificate is
registered is made in order that the debtor as well as a third person
may be properly informed of the particular land or property that is
under the custody of the court. This can only be accomplished by
making a reference to the certificate of title covering the property. The
situation differs if the land is unregistered in which case it is enough
that the notice be registered under Act 3344.
An attachment levied on real estate not duly recorded in the registry
of property is not an encumbrance on the attached property, nor can
such attachment, unrecorded in the registry, serve as a ground for
decreeing the annulment of the sale of the property, at the request of
another creditor.
Since the notice of levy made by the sheriff as regards parcel 1
which is a registered land contains no reference to the number of its
certificate of title and the volume and page in the registry book where
the title is registered, it follows that said notice is legally ineffective and
as such did not have the effect of binding the property for purposes of
execution. Consequently, the sale carried out by virtue of said levy is
also invalid and of no legal effect.
ISSUE: WON the family home is exempt from execution
No. Article 243(2) of CC provides "The family home extra judicially
formed shall be exempt from execution" except "for debts incurred before
the declaration was recorded in the Registry of Property."

The reason why a family home constituted after a debt had
been incurred is not exempt from execution is to protect the
creditor against a debtor who may act in bad faith by resorting to such
declaration just to defeat the claim against him. If the purpose is to
protect the creditor from fraud it would be immaterial if the debt
incurred be undisputed or inchoate, for a debtor acting in good faith
would prefer to wait until his case is definitely decided before
constituting the family home. Indeed, it may result, as in this case, that
the Supreme Court may affirm the judgment of the lower court. If the
contention of respondent be sustained a debtor may be allowed to
circumvent this provision of the law to the prejudice of the creditor.
This the Court cannot countenance.
Hence, we are persuaded to conclude that the money judgment in
question comes within the purview of the word debt used in Article 243
(2) of the new CC.
Ravanera vs. Imperial (1979)
17 Oct 61: Roman Catholic Archiboshop of Caceres filed an action
for Rescission of Contract and Recovery of Possession against Felipe
Imperial. Court decided in favor of Roman Catholic.
17 Feb 66: Archbishop of Nueva Caceres filed a Motion for
Execution of the decision or to order Imperial to file a supersedeas
bond and to deposit P500 every month as rentals. Court granted the
motion pending appeal and ordered that to stay the execution,
Imperial should put up a supersedeas bond of P40k as rents due as of
Feb 66 for the amount of moral damages, and for the expenses of suit
and to deposit P500 as monthly rental of the property. This order
became the subject of a SCA for certiorari and prohibition.
SC dismissed the petition for certiorari on the ground that the order
of execution being incidental to the appeal, the same should be
addressed to CA.
21 Jun 68: Roman Catholic filed another motion for execution.
Court ordered the issuance of a writ of execution, but Imperial was
given 15 days from receipt of the order to put up the P40,000.00
supersedeas bond and to deposit the monthly rental of P500.00 in
order to stay the execution.
However, Imperial failed to post the required supersedeas bond and
to deposit the monthly rental. Thus, Archbishop filed a motion for the
issuance of a writ of execution. Court granted the motion, requiring
Archbishop to put up a bond of P20k to answer for any judgment that
may be awarded to Imperial should the decision be reversed on
appeal.
Archbishop posted the required bond and a writ of execution was
issued. Said writ was not enforced upon instance of the counsel for
Archbishop as an amicable settlement was proposed and after the 60
days period had lapsed the Sheriff made a return of the writ.
However, the amicable settlement failed to materialize so the Clerk
of Court issued an alias writ of execution. Sheriff issued a notice of
Levy by which certain properties of Imperial were attached or levied
upon.
25 Sep 69: the alias writ was personally served by the Sheriff upon
the petitioner.
7 Oct 69: Sheriff issued a Notice of Public Auction sale of the
properties levied upon which was published in the "Bicol Star" a weekly
newspaper of general circulation
Public auction sale was held and Erlinda Ravanera was the highest
bidder. A Provisional DOS was issued in her favor. Within the one-year
period of redemption, Imperial redeemed some of the properties
bought at auction sale, but he failed to redeem some others on account
of which at the end of the redemption period or on Dec 8, 1970. The
Sheriff executed a Definite DOS of said unredeemed properties in the
name of Erlinda Ravanera.
9 Feb 71: Ravanera filed a motion for writ of possession of the
properties. Granted. Imperial filed MR on the ground that there was no
formal hearing and reception of evidence on the motion and that the
order did not state the finding of facts which could be the basis for the
grant of the motion. Motion was denied.
Imperials contentions: Notice of levy was null and void and hence
the provisional as well as the definite deed of sale were likewise void,
and that Ravanera had no personality in the case, she not being a party
thereto. Also alleges that copies of the Notice of Levy and the Notice of
Sale were sent by Registered Mail which according to the certificate of
26
the Postmaster was received on Oct 15, 1969. Receipt of the
Notice of Levy is denied by Imperial.
CA ruled in favor of Imperial. Ravanera filed MR. Denied.
ISSUE: WON there was a valid levy upon the properties of Imperial
Yes. It appears in this case that the notice of levy was registered with
the ROD on Sep 29, 1969. From a certification of the Postmaster at
Naga City, it also appears that registered letter No. 13681 containing
the notice of levy and the notice of auction sale addressed to Imperial
was delivered on Oct 15, 1969 to Pelaguia Comba, member of the
household of the addressee. Imperial was, therefore, notified by
registered mail of the levy and the auction sale long before Nov 3,
1969, the date of the auction sale. What is required is that the
judgment debtor must be notified of the auction sale before the actual
date of sale which was done in the case at bar.
It cannot be gainsaid that if it were only to afford an opportunity to
Imperial to avoid the auction sale, he had ample opportunity to file his
objection to such sale because the auction sale took place on Nov 3,
1969. Imperial had nineteen days after he received the notice of levy
and the notice of auction sale on Oct 15, 1969 and 39 days from Sep
25, 1969 when he was served personally by the Sheriff a copy of the
writ of execution to avoid the sale had he wanted to. Moreover, he had
exactly one year from Nov 27, 1969 when the provisional DOS
executed in favor of Ravanera was registered with the Register of Deeds
to redeem the property.
Contention: CA erred in applying to one unregistered parcel of land
and the one unregistered residential house described in the Notice of
Levy the formal requirements of the ROC which are applicable only to
registered properties.
No merit. Section 7 (a) of Rule 57 is so explicit that only as to
property which has been brought under the operation of the Land
Registration Act should the notice of levy contain the volume and page
in the registration book where the certificate is registered, impliedly,
the requirement does not apply to property not registered under the
said Act. It is enough that the notice of levy upon unregistered land be
registered under Act 3344, as was done in this case.
From the records of the case, the notice of levy made by the sheriff
as regards the registered land contains reference to the number of its
certificate of title but not to the volume and page in the registry book
where the title is registered. Nevertheless from what was stated in the
case of Siari Valley Estate vs. Lucasan, it would seem that the purpose
of the requirement of Section 7(a), Rule 39 of the Revised Rules of
Court is substantially complied with. This is more so where as in this
case, there appears in the notice of levy the following certification: It
is hereby certified that this instrument has been duly registered proper
memorandum hereof made on transfer Certificate of Title No. 257 & 258
and on its owner's duplicate Reg. Book No. 3; File No. 1-248.
Reference to the number of the certificate of title of every registered
land in the notice of levy, together with the technical description
thereof, would certainly suffice to inform the debtor, as well as third
persons what particular land or property is brought to the custody of
the court, as is the purpose of the aforecited provision of the Rules of
Court. Incidentally, no third person appears, to be interested in the
matter now before this Court. From the fact that Imperial was able to
exercise his right of redemption with reference to three registered
parcels of land, it can be easily deduced that insofar as Imperial is
concerned, the purpose of the requirement of reference having to be
made to the number of the certificate of title, and also the volume and
page in the registration book where the certificate is registered, has
been fully served or attained.
We, therefore, find no substantial defect in the notice of levy on all
the properties levied upon and sold to Ravanera in the auction sale,
that should be a basis, as the respondent court deemed it to be, for
annulling the sale made pursuant to the levy.
Imperials contention: Brands the levy as irregular for failure of the
occupants of the attached or levied properties to be left with copy of
the order, notice of levy and description of the properties.
The finding of facts of the CA which was quoted in full above, fails
to disclose the existence of occupants of the properties levied upon
other than the owner, Imperial. It was incumbent on said Imperial to
prove by evidence duly submitted to the Court a fact that would tend
to support his claim that the levy is void or otherwise illegal. The levy

being an official act of a government functionary its regularity is
presumed.
In any event, Imperial as judgment debtor is in estoppel by his
failure to seasonably make an objection to the allegedly defective
notice of levy and notice of sale before the actual sale, or before
redeeming some of his properties despite the supposed defect of the
notice of levy. He should have interposed objection to the levy and the
sale from the very beginning, from Oct 15, 1969 when he received
notice of levy and notice of sale. A waiver on his part to question the
validity of the auction sale may also be said to arise from his failure to
pay the arrears in real estate taxes, or to redeem the mortgage of one
of the properties sold at public auction, during the period of
redemption. These are omissions which are clearly an indication of
acquiescence in the sale, or his awareness that the execution sale was
valid and legally unassailable. To allow him to turn back on his
manifest conformity to the levy and sale on execution of his properties,
after petitioners have bought the property as the highest bidder during
the auction sale, would be patently unjust to the said Ravanera, who
had every reason to rely on the presumed regularity of the proceedings
as official acts of both the judge and his own court officer, the sheriff.
Obaa vs. CA (1989)
Rafael Suntay was the former counsel of Liberty Dizon and her
minor children, Nicolas and Noel Patrick Torio, in an intestate
proceeding and in the petition for guardianship over said minors.
Suntay filed an Explanation and Motion for the approval of attorneys
fees. Court ordered the counsel to collect P5k from the wards
guardianship estate.
Suntay filed in the same proceedings a 'Motion to Order the
Guardian To Pay The Attorney's Fees,' with prayer that the guardian be
ordered to pay immediately the amount of P5k out of the ward's
guardianship estate. Acting upon said motion, the JDRC of Quezon City
issued an order dated Sep 14, 1972, requiring Liberty B. Dizon to show
proof of payment of attorney's fees and submit a new bond releasing
her former counsel as surety.
However, such order was not complied with by Dizon because
Suntay apparently filed an action for sum of money against her,
Nicolas and Noel Patrick Torio. Suntay averred that his attorneys fees
were not paid despite repeated demands. In connection with this,
Suntay moved for the issuance of an order of attachment upon a
certain parcel of land together with improvements belonging to Dizon
and her wards.
1 Dec 72: By virtue of said writ, a levy was made on said property
in Balintawak, QC. Levy was annotated at the back of the TCT.
Sheriff failed to serve the summons for the reason that Mrs. Dizon
and her wards no longer resided at the last known address at 34-H
Road, Cypress Village, QC, and that their present address cannot be
ascertained. Suntay filed a Motion for Service of Summons by
Publication which was granted by the court in its Order dated Feb 12,
1973. Accordingly, summons were served upon Mrs. Dizon and her
wards through publication.
Meanwhile, pursuant to a DOAS dated May 16, 1973 executed by
and between Dizon, et al., and Leonora Obaa involving the attached
property, the ROD of Quezon City cancelled TCT in the name of Liberty
H. Dizon and her wards, and, in lieu thereof, executed in favor of
Leonora Obaa a new TCT necessarily transferring in the process the
encumbrance consisting of notice of levy in favor of Suntay.
10 Aug 73: After summons by publication had been effected, upon
motion of Atty. Suntay, the court declared Liberty H. Dizon and her
wards, in default and allowed Suntays evidence to be presented ex-
parte. Consequently, a decision was rendered, awarding to Atty. Suntay
the amount of P10k representing his claim for attorney's fees relative
to the prosecution of said case. Pursuant to said decision, a writ of
execution was issued per order of the court, and then followed by a
Notice of Levy on Execution dated Aug 7, 1974, issued by the sheriff
of QC. Thereafter, a certificate of sale over the subject property (now
covered by TCT in the name of Leonora Obaa) was issued in favor of
Suntay, being the highest bidder.
Dizon failed to redeem the property hence, the Sheriff issued final
DOS. Annotated at the back of the TCT in the name of Obaa.
Suntay then filed a petition for the cancellation of the TCT in favor
of Obaa. CFI of QC directed the ROD of QC to issue a new title covering
the subject land in the name of Suntay.
27
Obaas contention: decision rendered in Civil Case No.
4238-M by the then CFI of Bulacan is null and void for the
reason that said court did not acquire jurisdiction over Liberty H. Dizon
and her wards, since they were not properly served with summons.
Also claimed that the proceedings before the sheriff were defective in
that the sheriff failed to comply with the jurisdictional requirements on
the manner of service of notice in the New Rules of Court thus
rendering the proceedings void ab initio.
Civil Case No. 4238-M was an action for sum of money filed by Atty.
Suntay against liberty Dizon and her minor children in an effort to
collect attorney's fees in the guardianship case he handled for them.
The judgment in Civil Case No. 4238-M, while against Dizon and her
children was executed against property belonging to Obaa. The house
and lot in QC which Dizon sold to Obaa for P150k was executed upon
by the Sheriff to satisfy the P10k attorney's fees in the Dizon
guardianship case and another P5k awarded to Suntay for his fees in
prosecuting his own collection case. The sheriffs sale was affected
without any personal notice to Liberty H. Dizon on the ground that she
had moved out of her old address and her "present address" was
unknown. No notice was served on Obaa because she was not a party
in the collection case. All notices and summonses in the collection case
filed on Nov 9, 1972 including the copy of the complaint, the original
summons, the alias summons, the notice of levy on attachment of the
disputed property, the notice of levy on execution and the notice of
sheriffs sale were served through mail to Dizon. Because the Sheriff
could not serve the complaint and the summons on Dizon who had
moved out of the above address, service by publication upon Dizon
was authorized by the court in the collection case.
ISSUE: WON there was a valid levy
No. Section 7 of Rule 57 requires that in attaching real property a
copy of the order, description, and notice must be served on the
occupant, in this case the occupant at 48 Damortiz Street, Damar
Village, Quezon City. The trial court in the annulment case ruled that
the attachment was void from the beginning. The action in personam
which required personal service was never converted into an action in
rem where service by publication would have been valid.
The propriety of service of summons by publication is not
dependent upon the technical characterization of the action as one in
rem or quasi in rem but upon compliance with the requirements for
the situations found in Sections 16, 17, and 18 of Rule 14 of the Rules
of Court. We declared the service of summons by publication as
"legally and constitutionally vitiated." In the present case, however, the
action was one in personam. The service was equally void and of no
effect.
The CA reversed the trial court principally on the ground that
Leonora Obaa was neither a defendant nor a party-in-interest in the
collection case. It ignored the fact that property already sold to her was
attached and then bedded out to Atty. Suntay without any notice to
her. And because the notice of lis pendens in the collection case was
secured ex-parte without Dizon and Obaa who were never brought to
court, having any inkling about it, the notice was not annotated on the
owner's duplicate copy on the TCT.
Suntay cannot claim ignorance of the sale to Obaa as a ground for
not bringing her into the picture. As stressed by Obaa, Liberty Dizon
filed her motion for the approval of the sale of the disputed house and
lot in the guardianship case SP-C-00565 through her counsel, Suntay.
He could not have been unaware that the house and lot he was
attaching had been sold to Obaa because the sale of the Dalmar
property was authorized by the guardianship court in the case where
he was counsel for the guardian.
Considering all the foregoing circumstances, the order in LRC 750
which is based on irregular proceedings in the prior case and which
directed the cancellation of Obaa's transfer certificate of title cannot
assume finality. There is the added factor that a land registration court
in a cancellation of title case could not possibly inquire into the
controversial matters raised in the annulment of judgment case.
The respondent court ruled that Dizon and her wards should have
been joined as plaintiffs by Obaa in the action to annul the judgment
in the collection case. This ruling ignores the fact that Dizon could not
even be summoned in the collection case; her whereabouts are
unknown: the judgment against her was a default judgment; she has

apparently no more interest whatsoever in the house and lot she
sold to Obaa and she still owes Atty. Suntay P10k.
Du vs. Stronghold Insurance (2004)
Aurora Olarte de Leon was the registered owner of Lot 10-A. in Jan
89, De Leon sold the property to Luz Du under a Conditional DOS.
Again, on 28 Apr 89, De Leon sold the same property to Sps. Caliwag
without prior notice to Luz Du. As a result, TCT in favor of De Leon was
cancelled and new TCT was issued in favor of Sps. Caliwag.
Meanwhile, Stronghold Insurance filed a case against Sps. Caliwag establish a lien or an encumbrance on the property affected. As the
for allegedly defrauding Stronghold and misappropriating the
companys fund by falsifying and simulating purchases of
documentary stamps. The action was accompanied by a prayer for a
writ of preliminary attachment duly annotated at the back of the TCT
on 7 Aug 90.
21 Dec 90: Luz Du filed a case against De Leon and Sps. Caliwag
for the annulment of sale by De Leon in favor of Sps. Caliwag.
3 Jan 91: Luz Du caused the annotation of a Notice of Lis Pendens
at the back of the TCT now in the name of Sps. Caliwag.
A decision was rendered in favor of Stronghold, ordering Sps.
Caliwag jointly and severally to pay Stronghold. When the decision
became final, on 12 Mar 91, a notice of levy on execution was
annotated on the TCT and the attached property was sold in public
auction. Stronghold was the highest bidder. New TCT was issued in the
name of Stronghold.
5 Aug 91: Luz Du was able to secure a favorable judgment in her
civil case against De Leon and Sps. Caliwag. This became final and
executory.
Hence, Luz Du filed a case to cancel the TCT in the name of
Stronghold with damages, claiming priority rights over the property by
virtue of her notice of lis pendens.
Dus contention: Her unregistered right over the property by way of
a prior conditional sale in 1989 enjoys preference over the lien of
Stronghold -- a lien that was created by the registration of respondents
levy on attachment in 1990.
ISSUE: WON a Notice of Levy on Attachment on the property is a
superior lien over that of the unregistered right of a buyer of a property
in possession pursuant to a Deed of Conditional Sale
Yes, lien created in favor of Du is not superior to the lien in favor
of Stronghold. Preference is given to a duly registered attachment
over a subsequent notice of lis pendens, even if the beneficiary of the
notice acquired the subject property before the registration of the
attachment. Under the torrens system, the auction sale of an attached
realty retroacts to the date the levy was registered.
The doctrine is well-settled that a levy on execution duly registered
takes preference over a prior unregistered sale; and that even if the
prior sale is subsequently registered before the sale in execution but
after the levy was duly made, the validity of the execution sale should
be maintained, because it retroacts to the date of the levy; otherwise,
the preference created by the levy would be meaningless and illusory.
The Court has steadfastly adhered to the governing principle set
forth in Sections 51 and 52 of Presidential Decree No. 1529: "SEC. 51.
Conveyance and other dealings by registered owner. - An owner of
registered land may convey, mortgage, lease, charge or otherwise deal
with the same in accordance with existing laws. He may use such forms
of deeds, mortgages, leases or other voluntary instruments as are
sufficient in law. But no deed, mortgage, lease, or other voluntary
instrument, except a will purporting to convey or affect registered land
shall take effect as a conveyance or bind the land, but shall operate only
as a contract between the parties and as evidence of authority to the
Registry of Deeds to make registration.
"The act of registration shall be the operative act to convey or affect the
land insofar as third persons are concerned, and in all cases under this
Decree, the registration shall be made in the office of the Register of
Deeds for the province or the city where the land lies.
"SEC. 52. Constructive notice upon registration. - Every conveyance,
mortgage, lease, lien, attachment, order, judgment, instrument or entry
affecting registered land shall, if registered, filed or entered in the office
of the Register of Deeds for the province or city where the land to which
it relates lies, be constructive notice to all persons from the time of such
registering, filing or entering."
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As the property in this case was covered by the torrens
system, the registration of Strongholds attachment was the
operative act that gave validity to the transfer and created a lien upon
the land in favor of Stronghold.
The preference created by the levy on attachment is not diminished
even by the subsequent registration of the prior sale. If either the third-
party claim or the subsequent registration of the prior sale was
insufficient to defeat the previously registered attachment lien, as ruled
by the Court in Capistrano, it follows that a notice of lis pendens is
likewise insufficient for the same purpose. Such notice does not
name suggests, a notice of lis pendens with respect to a disputed
property is intended merely to inform third persons that any of their
transactions in connection therewith -- if entered into subsequent to
the notation -- would be subject to the result of the suit.
Moreover, it is only after the notice of lis pendens is inscribed in the
Office of the Register of Deeds that purchasers of the property become
bound by the judgment in the case. As Stronghold is deemed to have
acquired the property -- not at the time of actual purchase but at the
time of the attachment -- it was an innocent purchaser for value and
in good faith.
Valdevieso vs. Damalerio (2005)
5 Dec 95: Bernardo Valdevieso bought from Sps. Uy a parcel of
land located at Bo. Tambler, GenSan City. DOS was not registered nor
was the title of the land transferred to Valdevieso.
19 Apr 96: Sps. Damalerio filed with RTC of GenSan City, a
complaint for a sum of money against Sps. Uy with application for the
issuance of a writ of preliminary attachment.
23 Apr: TC issued a Writ of Preliminary Attachment by virtue of
which the property, then still in the name of Uy but which had already
been sold to Valdevieso, was levied.
6 Jun 96: TCT in the name of Uy was cancelled and a new TCT was
issued in favor of Valdevieso. This new TCT carried with it the
attachment in favor of Damalerio.
14 Aug: Valdevieso filed a 3rd-party claim to discharge or annul the
attachment levied on the property, on the ground that the said
property belongs to him and no longer to Uy. TC ruled in favor of
Valdevieso, holding that the levy of the property by virtue of attachment
is lawful only when the levied property indubitably belongs to the
defendant.
Valdeviesos contention: He has a superior right over the
questioned property because when the same was attached on 23 Apr
1996, this property was no longer owned by Sps. Uy against whom
attachment was issued as it was already sold to him on 05 Dec 1995.
The ownership thereof was already transferred to Valdevieso pursuant
to Article 1477 in relation to Article 1498 of the Civil Code.
Damalerios contention: Registration of a deed of sale is the
operative act which binds the land and creates a lien thereon. Before
the registration of the deed, the property is not bound insofar as third
persons are concerned. Since the writ of attachment in favor of
Damalerio was registered earlier than the DOS to Valdevieso, Sps.
Damalerio were of the belief that their registered writ of attachment on
the subject property enjoys preference and priority over Valdeviesos
earlier unregistered DOS over the same property.
ISSUE: WON a registered writ of attachment on the land is a superior
lien than that of an earlier unregistered DOS
Yes. The law applicable to the facts of this case is Section 51 of PD
No. 1529.
It is to be noted that though the subject land was deeded to
Valdevieso as early as 05 Dec 1995, it was not until 06 Jun 1996 that
the conveyance was registered, and, during that interregnum, the land
was subjected to a levy on attachment. It should also be observed that,
at the time of the attachment of the property on 23 Apr 1996, the Sps.
Uy were still the registered owners of said property.
Under the cited law, the execution of the DOS in favor of Valdevieso
was not enough as a succeeding step had to be taken, which was the
registration of the sale from the Sps. Uy to him. Insofar as third persons
are concerned, what validly transfers or conveys a persons interest in
real property is the registration of the deed. Thus, when Valdevieso
bought the property on 05 Dec 1995, it was, at that point, no more

than a private transaction between him and the Sps. Uy. It needed
to be registered before it could bind third parties, including
Damalerio. When the registration finally took place on 06 Jun 1996, it
was already too late because, by then, the levy in favor of Damalerio,
pursuant to the preliminary attachment ordered by the General Santos
City RTC, had already been annotated on the title.
The settled rule is that levy on attachment, duly registered, takes
preference over a prior unregistered sale. This result is a necessary
consequence of the fact that the property involved was duly covered
by the Torrens system which works under the fundamental principle
that registration is the operative act which gives validity to the transfer
or creates a lien upon the land.
The preference created by the levy on attachment is not diminished
even by the subsequent registration of the prior sale. This is so because
an attachment is a proceeding in rem. It is against the particular
property, enforceable against the whole world. The attaching creditor
acquires a specific lien on the attached property which nothing can
subsequently destroy except the very dissolution of the attachment or
levy itself. Such a proceeding, in effect, means that the property
attached is an indebted thing and a virtual condemnation of it to pay
the owners debt. The lien continues until the debt is paid, or sale is
had under execution issued on the judgment, or until the judgment is
satisfied, or the attachment discharged or vacated in some manner
provided by law.
Thus, in the registry, the attachment in favor of Damalerios
appeared in the nature of a real lien when Valdevieso had his purchase
recorded. The effect of the notation of said lien was to subject and
subordinate the right of Valdevieso, as purchaser, to the lien.
Valdevieso acquired ownership of the land only from the date of the
recording of his title in the register, and the right of ownership which
he inscribed was not absolute but a limited right, subject to a prior
registered lien of Damalerio, a right which is preferred and superior to
that of Valdevieso.
Walker vs. McMicking (1909)
Herbert Walker was the owner of a Filipino carriage factory. The
building in which the factory was operated and its contents were sold
to a partnership known as Arenas & Co. The contract was evidenced
by a writing. However, said company failed to pay the installments due.
Having failed to pay installments, Walker rescinded the sale and took
possession of said factory with its contents, by virtue of a provision in
their contract. Said company had failed for some months to pay the
rent for the land. Rohde, acting for himself and for Walker, took
possession of said factory and its contents. Rohde alleged that at the
time he took possession of said factory, representing himself and
Walker, there was no one in possession of said property except Arenas
& Co., and that Arenas & Co. turned said property over to him without
any objection.
However, on 16 Dec 08, Jose McMicking, acting as sheriff of Manila,
levied an attachment upon said factory and its contents, by virtue of a
judgment rendered against Arenas & Co.
Rohde testified that he had never heard of said attachment until
about the 29th of Jan 1909; that he continued in possession from the
time (about Jan 1); that Arenas & Co. was only permitted to enter the
premises thereafter for the purpose of preparing the contents of said
factory for sale.
5 Feb 1909: Herbert Walker commenced an action in CFI Manila to
recover the possession of certain personal property, or in default
thereof the sum of P1,500, its value and costs.
After hearing, the lower court rendered a judgment adjudging
Herbert Walker, the right to recover the articles mentioned in his
complaint, or in default the sum of P539, with interest at the rate of
5% per annum. McMicking appealed.
Walkers contention: the attachment was void for the reason that
McMicking, as sheriff, did not comply with the law in levying the said
attachment.
ISSUE: WON there was a valid levy
No. He did not attach and safely keep the movable property
attached. A verbal declaration of seizure or service of a writ of
attachment is not sufficient. There must be an actual taking of
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possession and placing the attached property under the control
of the officer or someone representing him.
To constitute a valid levy of an attachment, the officer levying it must
take actual possession of the property attached as far as under the
circumstances is practicable. He must put himself in position to, and
must assert and, in fact, enforce a dominion over the property adverse
to and exclusive of the attachment debtor, and such property must be
in his substantial presence and possession. This does not mean that
the attaching officer may not, under an arrangement satisfactory to
himself, put anyone in possession of the property for the purpose of
guarding it, but he can not in this way relieve himself from liability to
the parties interested in said attachment.
The attachment was not properly made in accordance with the
provisions of the Code of Procedure in Civil Actions. There is no
pretension, however, in the record, on the part of McMicking, that he
attached said property and held the same by virtue of such
attachment.
NBI vs. Tuliao (1997)
Santiago Salvador bought a passenger jeep from Lito Ignacio to be
paid in monthly installments. After remitting the down payment,
Salvador diligently paid all monthly amortizations until March 1994
when, in the absence of Ignacio, he was forced to pay to an unnamed
brother of the seller the amounts due for the months of April and May
1994. However, the brother failed to remit said amount to the seller.
Because of this, Ignacio filed a suit for collection against Salvador.
Subsequently, an order was issued by the RTC directing Sheriff
Tuliao to attach the passenger jeep. Salvador, through counsel, filed a
motion to discharge attachment upon filing of a counterbond for the
release of the vehicle in his favor.
TC issued an order, directing Sheriff Tuliao to release to Salvador
the attached vehicle. However, Tulaio refused to comply with said
order. Instead, he released the passenger jeep to Ignacio after the latter
had executed a receipt therefor together with an undertaking that he
would produce the jeep whenever required by the court. Tuliao
justified such release by saying that the court had no storage building
that would protect the jeep from damage or loss.
A complaint against Deputy Provincial Sheriff Rodolfo Tuliao of RTC
Cauayan, Isabela was filed by Santiago Salvador.
Tuliaos contention: His act of not taking into his official custody the
attached property was not unlawful but was in fact reasonable because
the court had no facility for its storage. That it could no longer be
returned to Salvador's possession in accordance with the court's order
was not his fault but that of the attaching creditor who had violated his
obligation to produce the same whenever required by the court.
ISSUE: WON Tuliao is administratively liable for failing to release the
property uner custodia legis to Salvador in accordance with the order
of the RTC
Yes. Tuliaos manner of attachment irregular and his reason therefor
totally unacceptable, under Sec. 5 and Sec. 7(c) of Rule 57, (c)
Personal property capable of manual delivery, by taking and safely keeping
it in his capacity, after issuing the corresponding receipt therefor.
Clearly, Tuliaos act of leaving the passenger jeep in the possession
and control of the creditor did not satisfy the foregoing requirements
of the Rules; neither did it conform to the plainly worded RTC order.
The note in the receipt that imposed on Ignacio the obligation to
produce the same whenever required by the court was no compliance
either, because it did not establish that the property was in respondent
sheriff's substantial presence and possession. Tuliao fell short of his
obligation to take and safely keep the attached property "in his
capacity." He cannot feign ignorance of this duty.
Again, a verbal declaration of seizure or service of a writ of
attachment is not sufficient. There must be an actual taking of
possession and placing of the attached property under the control of
the officer or someone representing him. To constitute a valid levy of
an attachment, the officer levying it must take actual possession of the
property attached as far as . . . practicable (under the circumstances).
He must put himself in a position to, and must assert and, in fact,
enforce a dominion over the property adverse to and exclusive of the
attachment debtor, and such property must be in his substantial
presence and possession.

That Ignacio was able to move the passenger jeep to an
unknown location is further proof that Tuliao had not taken and
safely kept it in his substantial presence, possession and control. His
claim that the RTC did not have any storage facility to house said
property is no justification. He could have deposited it in a bonded
warehouse.
Contrary to Tuliaos contention, compelling the attaching creditor to
release the property in question was not in order, because the proper
remedy provided by the Rules of Court was for the party whose
property had been attached to apply for the discharge of the
attachment by filing a counterbond. The effect of this remedy is the
delivery of possession of the attached property to the party giving the
counterbond. The attaching creditor was not authorized to have
possession of the attached property, contrary to the insistence of
respondent sheriff.
Leaving the attached property in the possession of the attaching
creditor makes a farce of the attachment. This is not compliance with
the issuing court's order. When a writ is placed in the hands of a sheriff,
it is his duty, in the absence of any instructions to the contrary, to
proceed with reasonable celerity and promptness to execute it
according to its mandate. He is supposed to execute the order of the
court strictly to the letter. If he fails to comply, he is liable to the person
in whose favor the process or writ runs.
Tuliao's pretense of having acted in utmost good faith for the
preservation of the attached property is hardly credible because there
was no reason for his having acted thus. In sum, he is unable to
satisfactorily explain why he failed to take such movable in his control.
By acceding to the request of Ignacio, Tuliao actually extended an
undue favor which prejudiced Ignacio as well as the orderly
administration of justice. He exceeded his powers which were limited
to the faithful execution of the court's orders and service of its
processes. His prerogatives did not give him any discretion to
determine who among the parties was entitled to possession of the
attacked property.
That he exerted efforts in going to the creditor's residence in
Tuguegarao, Cagayan to obtain possession of the attached property
was an act of compliance with the writ of attachment. This action,
belated as it was, did not mitigate his liability. Much less did it
exculpate him from penalty.
Hence, Tuliao is suspended for 6 months.
Villanueva-Fabella vs. Lee (2004)
In an administrative complaint, Attys. Vilma Hilda D. Villanueva-
Fabella and Wilmar T. Arugay charged Judge Ralph S. Lee of MeTC of
QC with manifest partiality, incompetence and gross ignorance of the
law; and Sheriff Justiniano C. de la Cruz Jr. of the same MeTC, with
unjust, oppressive, irregular and excessive enforcement of a writ of
attachment.
Attys. Villanueva-Fabella and Arugay are counsels for the defendants
in a civil case entitled Star Paper Corporation vs. Society of St. Paul
and Fr. Leonardo Eleazar for Sum of Money with Prayer for
Preliminary Attachment. They narrated that on 19 June 2002, their
clients were served a copy of the complaint and a Writ of Attachment
by Sheriff Dela Cruz based on the plaintiffs allegation that the
defendants contracted a debt in bad faith with no intention of paying
the same.
On the aforementioned day, a printing machine was levied and
delivered to Star Papers warehouse, although there was an offer by
the defendants to pay right there and then P223,457.75, the amount
fixed in the order of attachment, but Star Paper denied the defendants
plea not to attach the machine, saying that it] had already set its mind
on attaching the same.
Atty. Fabella, together with 3 priests, asked the sheriff to levy on a
less expensive machine but to no avail. She then told the sheriff that
he would unnecessarily levy on the machinery because a cash deposit
to discharge the attachment could be filed that same afternoon but he
just dismissed the same, saying that it takes time before the court
could approve the counterbond.
3 Jul 2002: Judge Lee granted defendants Urgent Motion to
Discharge Attachment. And thereafter, an Urgent Ex-Parte motion to
withdraw cash deposit was filed, without notice to the defendants and
despite failure of Star Paper to set such litigious motion for hearing
and contrary to existing laws and jurisprudence. Judge Lee granted the
30
same in his Order of 17 July 2002. Defendants only learned of
the withdrawal when they received a copy of the said Order.
Judge Lee rendered decision, that as to what had allegedly
transpired during the implementation of the subject Writ of
Attachment, he adopted the averments in Sheriff Dela Cruzs Comment
alleging the presumption of regularity in the discharge of official
functions.
Sheriff Dela Cruzs contention: Denied that there was abuse in the
levy, claiming that the machine was an old 1970 model. Moreover, he
said that, contrary to complainants allegation that the machine was
valuable, no receipt to prove its true value was ever shown. Added that
it was in his own belief and best judgment to temporarily place the
delicate printing machine in the warehouse of the plaintiff for
safekeeping. The machine was eventually returned to the defendants
by virtue of the Order discharging the Writ. In fact, one of the
complainants personally acknowledged receipt of the machine.
ISSUE: WON Judge Lee may be held administratively liable
Attachment is a juridical institution intended to secure the outcome
of a trial -- specifically, the satisfaction of a pecuniary obligation. Such
order is enforced through a writ that may be issued at the
commencement of an action, commanding the sheriff to attach
property, rights, credits or effects of a defendant to satisfy the plaintiffs
demand. Hence, the property of a defendant, when taken, is put in
custodia legis.
In order to prevent the sheriff from levying an attachment on
property, the defendant (also called the adverse party) may make a
deposit or give a counter-bond in an amount equal to that fixed in the
order of attachment. Such deposit or counter-bound is intended to
secure the payment of any judgment that the plaintiff (also called the
attaching party or the applicant to the writ) may recover in the action.
After a writ has been enforced, however, the adverse party may still
move for the discharge of the attachment, wholly or in part, by also
making a deposit or giving a counter-bond to secure the payment of
any judgment the attaching party may recover in the action. The
property attached shall then be released and delivered to the adverse
party; and the money deposited shall be applied under the direction
of the court to the satisfaction of any judgment that may be rendered
in favor of the prevailing party.
No. In the instant case, Judge Lee had ordered the withdrawal of the
cash deposit of the defendant and released it in favor of the plaintiff,
even before judgment was rendered. This action was clearly in violation
of the Rules mandating that after the discharge of an attachment, the
money deposited shall stand in place of the property released.
However, the inadvertence of respondent judge was not gross enough
to merit sanction. First, he rectified himself within the period given for
deciding motions. Second, respondent judge owned up to his mistake
in his Comment.
We have already ruled that as long as the judgment remains
unsatisfied, it would be erroneous to order the cancellation of a bond
filed for the discharge of a writ of attachment. In like manner, it would
be erroneous to order the withdrawal of a cash deposit before
judgment is rendered. Be that as it may, "a judge may not be held
administratively accountable for every erroneous order x x x he
renders." Otherwise, a judicial office would be untenable, for "no one
called upon to try the facts or interpret the law in the administration
of justice can be infallible." For liability to attach for ignorance of the
law, the assailed order of a judge must not only be erroneous; more
important, it must be motivated by bad faith, dishonesty, hatred or
some other similar motive. Certainly, mere error of judgment is not a
ground for disciplinary proceedings.
Villanueva-Fabellas contention: Judge Lee committed another
violation of the ROC when he granted the plaintiffs Urgent Ex-Parte
Motion to Withdraw Cash Deposit.
Indeed, the plaintiffs Motion to withdraw the cash deposit lacked
notice of hearing and proof of service. Judge Lee should not have acted
upon it. However, because he had erroneously thought that the rights
of the defendants would not be prejudiced thereby, he took action. His
poor judgment obviously resulted in his issuance of the erroneous
Order that granted the release of the deposit.
Similarly, the verified Motion for Reconsideration of the Order
declaring plaintiff as non-suited and allowing the ex-parte presentation
of evidence by the defense should have been heard in open court, not

granted in chamber. Judge Lee must have thought that this
Motion, which had been filed by the plaintiff, required immediate
action; and so the former granted it by ordering -- through a
handwritten note which we do not approve of -- the deferment of the
scheduled presentation. This Order should not have been issued,
because the Motion had been filed only a day before the scheduled
hearing. The rules on notice of hearing and proof of service should
have been observed by both the plaintiffs counsel and respondent
judge. Unfortunately, the latters poor judgment likewise prevailed, but
still fell short of gross ignorance of the law or procedure.
ISSUE: WON Sheriff Dela Cruz may be held administratively liable
Yes. Verily, he blatantly violated Section 7(b) of Rule 57 of the Rules
of Court when he deposited the machine in the warehouse of the
plaintiff. In enforcing a writ of attachment, a sheriff who takes personal
property capable of manual delivery shall safely keep it in custody after
issuing the corresponding receipt therefor. Sheriff failed to do so.
To constitute a valid levy of attachment, the officer levying it must
have "actual possession of the property attached. He must put himself
in a position to, and must assert and, in fact, enforce a dominion over
the property adverse to and exclusive of the attachment debtor. To this
rule we add that the officer cannot even deliver the property to the
attachment creditor, as the parties must await the judgment in the
action. The levied property must be in the "substantial presence and
possession" of the levying officer, who "cannot act as special deputy
sheriff of any party litigant." The officer may put someone "in
possession of the property for the purpose of guarding it," but the
former cannot be "relieved x x x from liability to the parties interested
in said attachment."
The duty of sheriffs to execute a writ issued by a court is purely
ministerial, not discretionary. Clearly, they must keep the levied
property safely in their custody, not in that of any of the parties. They
exercise no discretion in this regard, for attachment is harsh,
extraordinary and summary in nature -- a "rigorous remedy which
exposes the debtor to humiliation and annoyance." Contrary to the
claim of sheriff, his unusual zeal and precipitate decision to give
possession of the machine to the plaintiff effectively destroys, the
presumption of regularity in his performance of official duties. "Any
method of execution falling short of the requirement of the law
deserves reproach and should not be countenanced."
In implementing the Writ, Sheriff cannot afford to err without
adversely affecting the proper dispensation of justice. They play an
important role in the administration of justice. As agents of the law,
high standards are expected of them. His conduct, at all times, must
not only be characterized by propriety and decorum but must, and
above all else, be above suspicion.
As a public officer who is a repository of public trust, respondent
sheriff has the obligation to perform the duties of his office "honestly,
faithfully and to the best of his ability." He must be "circumspect and
proper in his behavior." Reasonable skill and diligence he must use in
the performance of official duties, especially when the rights of
individuals may be jeopardized by neglect.
At the grassroots of our judicial machinery, sheriffs are
indispensably in close contact with the litigants, hence, their conduct
should be geared towards maintaining the prestige and integrity of the
court, for the image of a court of justice is necessarily mirrored in the
conduct, official or otherwise, of the men and women who work thereat,
from the judge to the least and lowest of its personnel; hence, it
becomes the imperative sacred duty of each and everyone in the court
to maintain its good name and standing as a temple of justice.
Applying Section 8 of Rule 140 of the Rules of Court, Judge Lee is
found wanting in the exercise of good discretion only. His errors of
judgment fall short of gross ignorance of the law or procedure, yet
reflect poorly on his esteemed position as a public officer in a court of
justice. Judges must be conscientious, studious and thorough,
observing utmost diligence in the performance of their judicial
functions.
We find Sheriff guilty of simple neglect of duty for violating Section
7(b) of Rule 57 of the Rules of Court. Simple neglect of duty is the
"failure to give proper attention to a task expected" of an employee,
thus signifying a "disregard of a duty resulting from carelessness or
indifference." Classified as a less grave offense, it is punishable by a
suspension of one month and one day to six months. Considering that
31
the failure of sheriff to fulfill his duty seems to be his first
infraction during his stint in the judiciary, the Court considers
the recommended sanction appropriate.
Sheriff Dela Cruz is found guilty of simple neglect of duty and is
suspended for 1 month and a day without pay.
Sebastian vs. Valino (1993)
3 Mar 89: Private Devt Corp of the Philippines filed a replevin suit
against Marblecraft, Inc. in order to foreclose the chattels mortgaged
by Marblecraft.
30 Mar: RTC Makati issued a writ of seizure directed against
Marblecraft covering the chattels sought to be replevined.
However, the enforcement of the writ of seizure was delayed
because of the writ of preliminary injunction enjoining PDCP from
proceeding with the foreclosure sale issued by RTC Pasig in a civil case.
It was only on October 31, 1990, when the RTC Pasig dissolved the
writ of preliminary injunction.
9 Nov 90: Sheriff Valino accompanied by several policemen and
PDCP employees went to the office of Marblecraft to implement the
writ of seizure. Valino and his companions forcibly opened the lockers
and desk drawers of the employees of Marblecraft and took their
personal belongings, as well as some office equipment issued to them.
The employees filed with the Office of the Provincial Prosecutor of Rizal
two criminal complaints for robbery against respondent and his
companions.
Valino only showed to Marblecrafts counsel a copy of the writ but
did not furnish him with a copy of the application for the writ, the
supporting affidavit and the bond. In the course of the implementation
of the writ, which lasted for four days, several pieces of machinery and
equipment were destroyed or taken away by Valino.
Valino turned over the seized articles to the counsel of PDCP and
allowed these items to be stored in PDCP's warehouse in Taguig, Metro
Manila.
14 Nov 90: Marblecraft posted a counterbond in the RTC Makati,
which approved the bond and directed the immediate return of the
seized items. However, Valino did not implement the order.
Marblecraft filed an administrative complaint against Sheriff Alberto
Valino for gorss abuse of authority and refusal to enforce the TCs
order for the return of the seized items.
Valinos contention: Administrative complaint against him as pure
harassment filed by Marblecraft after he had refused to defer the
implementation of the writ of seizure. If he did not implement the writ,
he would have been accused by PDCP of non-performance of his
duties as a sheriff. Pointed out that the criminal complaints for theft
filed against him by the employees of complainant were dismissed by
the Provincial Prosecutor of Rizal.
ISSUE: WON Sheriff Valino is administratively liable
Yes. Under the Revised Rules of Court, the property seized under a
writ of replevin is not to be delivered immediately to the plaintiff. The
sheriff must retain it in his custody for five days and shall return it to
the defendant, If the latter, as in the case, requires its return and files
a counterbond (Sec. 4, Rule 60, Revised Rules of Court).
In violation of said Rule, Valino immediately turned over the seized
articles to PDCP. His claim that the Office of the Regional Sheriff did
not have a place to store the seized items, cannot justify his violation
of the Rule. As aptly noted by the Investigating Judge, the articles could
have been deposited in a bonded warehouse.
Valino must serve on Marblecraft not only a copy of the order of
seizure but also a copy of the application, affidavit and bond (Sec. 4,
Rule 60, Revised Rules of Court). He did not furnish Marblecraft with a
copy of the application, affidavit and bond. By his own admission, he
only served it with a copy of the order of seizure.
The more serious infraction of Valino is his refusal to implement the
order of the RTC Makati for him to return to Marblecraft the articles
seized pursuant to the writ of seizure dated March 30, 1990.
The only action taken by Valino to implement the Order dated
December 11, 1990 was to write a letter on December 12, 1990,
addressed to the counsel of PDCP, requesting the turnover of seized
articles. As expected, PDCP's counsel refused to part with the
possession of the seized articles and to issue a letter of authorization
to withdraw the same from the warehouse. Instead of taking

possession of the articles, Valino merely reported to the RTC that
"it is now clear that the undersigned cannot implement the Court
order dated December 11, 1990 by reason of the refusal of PDCP to
accept or to honor said Court order".
Valino could have avoided getting into his present predicament had
he not turned over the possession of the seized goods prematurely to
the PDCP.
Marblecraft cannot be blamed if it harbored the suspicion that
Valino was beholden to PDCP. The zeal with which Valino enforced the
order of seizure in favor of PDCP was in sharp contrast with his inaction
in enforcing the three orders of the trial court directing him to return
the seized items to complainant.
It is not for Valino to question the validity of the orders of the trial
court. It is for him to execute them. As observed by the Investigating
Judge, "there is therefore no excuse for respondent's wilfull refusal to
implement the Order of the Court". Disobedience by court employees
of orders of the court is not conducive to the orderly administration of
justice. The display of partially in favor of a party as against the other
party erodes public confidence in the integrity of the courts.
Therefore, Valino is guilty of serious misconduct and is suspended
for 4 months without pay, with a warning that a repetition of the same
or of acts calling for disciplinary action will be dealt with more severely.
Villareal vs. Rarama (1995)
Marianette Villareal filed a sworn complaint against Rolando
Rarama, Restituto Madrazo, Fidel Casuyon, and Aguinaldo del Campo
who are all serving as Sheriff III in Branches V, VII, II, and III,
respectively, of the MTCCs of Davao City, for allegedly "conniving and
confederating in maliciously serving a writ of execution intended for
another person who is living in another place.
It appears that Cooperative Rural Bank of Davao filed an action for
collection of sum of money against Sps. Villareal, Lito Lacorda and
Felimon Cangrejo. Summons were served upon Cangrelo, who was
declared in default for failure to file an answer.
19 Apr 89: Judgment was rendered against Cangrejo in favor of
Coop Rural Bank without prejudice to his right to proceed against his
co-debtors. Subsequently, an alias writ of execution was issued by the
TC against Cangrejo.
25 Apr 94, around 1:30pm: Rarama arrived at Sps. Villareals house
in Digos, Davao del Sur, together with the other respondents and three
employees of the Cooperative Rural Bank, including one Vic Belo who
is a collector of the bank. Rarama introduced himself as a sheriff of
Davao City and informed her that they were going to attach her
properties because she lost in a case. Villareal denied having been
charged in court, much more of having lost in a case, and that she did
not owe anything to the bank. When Rarama persisted in getting her
properties, she demanded and was shown the writ of execution. She
objected thereto, claiming that the same was not addressed to her but
to Felimon Cangrejo and that the writ was being served after more than
five years from the date the decision was rendered. The reply given her
was that she is the principal borrower and the only one who is solvent.
Despite the pleas of Villareal and a neighbor for the postponement
of the implementation of the writ until she shall have consulted her
lawyer, the sheriffs immediately proceeded to pull out from her house
the following items, viz.: one VHS player, one Singer sewing machine,
one Chinese cabinet, and another Chinese cabinet with glass shelves.
Allegedly, she was forced to sign an inventory receipt because she
would otherwise not be able to get back her things. She hastened to
add that when she signed the receipt, the words "with my conformity"
were not written thereon.
Next day, Sps. Villareal went to the bank to inquire about the status
of her loan and she was informed that, unless she settled her account,
her properties would not be released. Villareal avers that because of
this she was constrained to pay P10k despite earlier representations
made with the bank that she had fully paid her loan to the bank
collector. She further asserts that she was thereafter forced to write a
P/N as dictated by the assistant manager of the bank, Gerry Alag, and
the bank's lawyer, Atty. Herbert Arteg. Eventually, after she presented
the receipt of payment and the promissory note to Rarama, the
attached properties were released to her.
Raramas contentions: He went to Digos together with Vic Belo and
Bading dela Fuente, employees of the bank, to coordinate with
Provincial Sheriff Andres regarding the implementation of the alias writ
32
of execution issued in a civil case. However, he was informed
that he would have to implement the writ on his own because
the other sheriffs were not available. On their way out of the Hall of
Justice, they met respondents Madrazo, Casuyon and del Campo who,
upon learning that Rarama's group was going to Digos where they all
lived, decided to join the group so they could get a free ride. Upon the
suggestion of Vic Belo, the bank collector, the group first went to the
house of Villareal purportedly to ask for the exact address of Felimon
Cangrejo against whom the writ was issued. When they reached the
house of Villareal, Rarama introduced himself and his other
companions, and then inquired from the former about the address of
Cangrejo. When Villareal asked why they were asking her, Rarama
showed her the writ of execution and the court decision. It was then
that Villareal stated that she was the principal defendant in the case.
Further allege that Villareal requested Rarama not to implement the
writ against Cangrejo because he was merely her co-maker who never
benefited from the loan extended to her by the Rural Bank of Davao.
Rarama did not agree to the proposal since he was not authorized to
enter into that compromise but, at the same time, he suggested that
Villareal deposit some of her personal properties as security for the
settlement of her obligation, and the latter allegedly agreed. Much
later, the properties mentioned were released to complainant by virtue
of a letter from the creditor bank.
ISSUE: WON there was a valid levy on the properties of Villareal
notwithstanding that the writ of execution was directed against
Cangrejo
No. While there is evidence to show that indeed Marianette Villareal
is the principal debtor while Felimon Cangrejo is merely a co-maker,
the fact remains that Cangrejo was the sole debtor adjuged liable for
the loan obtained from the Cooperative Rural Bank of Davao City, Inc.
and the alias writ of execution was directed only against him. Hence,
Rarama had no authority to implement the same against Villareal
considering that, although she was named as a defendant in the
collection case, there was no judgment against her as of the date of
the incident.
The sheriff, as an officer of the court upon whom the execution of a
final judgment depends, must necessarily be circumspect and proper
in his behavior. Execution is the fruit and end of the suit and is the life
of the law. Thus, when a writ is placed in the hands of a sheriff it is his
duty, in the absence of any instructions to the contrary, to proceed with
reasonable celerity and promptness to execute it according to its
mandate. He is to execute the directives of the court therein strictly in
accordance with the letter thereof and without any deviation therefrom.
Hence, a sheriff has no authority to levy on execution upon the
property of any person other than that of the judgment debtor. If he
does so, the writ of execution affords him no justification, for such act
is not in obedience to the mandate of the writ. As long as the sheriff
confines his acts to the authority of the process, he is not liable, but all
of his acts which are not justified by the writ are without authority of
law. This is so because if an execution against one man would excuse
the sheriff for taking the property of another, every citizen would be at
his mercy and none could call his estate his own.
Rarama's improvidence in enforcing a judgment against
complainant who is not the judgment debtor in the case calls for
disciplinary action. Considering the ministerial nature of his duty in
enforcing writs of execution, it is incumbent upon him to ensure that
only that part of a decision ordained or decreed in the dispositive
portion should be the subject of execution, no more and no less. That
the title of the case specifically names complainant as one of the
defendants is of no moment as execution must conform to that which
is directed in the dispositive portion and not what appears in the title
of the case.
Therefore, Sheriff Rarama is declared guilty of serious misconduct.
He is ordered to pay a fine of P10k and warned that the commission
of the same or similar offense will be punished with a more severe
sanction.
Balantes vs. Ocampo III (1995)
Domingo Balantes is the defendant in an ejectment case filed by
Roberto Roco but which was decided by Judge Ocampo against
Balantes.

23 Oct 89: On motion of Roco, RTC issued a Writ of Execution
and Demolition pending appeal, ordering removal of portion of
Balantes residential house found to be built inside the titled property
of Roco.
Subsequently, the decision on appeal was affirmed by the same RTC
and the records of the case were remanded to Judge Ocampos sala
for execution.
25 Nov 91: Judge Ocampo issued a writ ordering the demolition of
the remaining half portion of Balantes residential house found
standing on a public property. Balantes filed MR but was denied.
19 Aug 92: A second writ of demolition was issued by Judge
Ocampo, followed by a third one.
Balantes contention: Judge Ocampo issued the orders granting
Rocos motion for issuance of writ of demolition with precipitate haste,
hence, he was deprived of his right to oppose the same, that the effect
of these writs of demolition is to demolish his entire house,
notwithstanding that the appellate court's writ of execution and
demolition issued pending appeal ordered the demolition only of the
half portion of his house found standing on Rocos land.
Judge Ocampos contention: A writ of demolition, being merely
incidental to the execution of a final judgment, is immediately
enforceable after hearing the arguments of both parties; that though
the writ of demolition was issued on the same day the court issued its
order of Aug 19, 1992, the writ was implemented only on Sep 2, 1992.
Further argues that the restraining order issued on Sep 2, 1992 cannot
be complied with because by the time it was received by the City
Sheriff, the writ of demolition had already been effected and the
premises delivered to Roco.
ISSUE: WON Judge Ocampo may be held administratively liable
Yes. Judge Ocampo grossly abused his authority in issuing the
questioned writs of demolition.
Records show that previous to the issuance of the writ of execution
and demolition pending appeal, said judge ordered the deputy sheriff
with the assistance of a geodetic engineer to determine the metes and
bounds of Rocos property. The Sheriff's Return clearly showed that 2
meters of Rocos property had been more or less encroached upon by
Balantes house while it occupied 3 meters, more or less, of the legal
easement formed by accretion. The writ of demolition thus issued by
the CA contained specifications in accordance with such findings and
was returned fully satisfied on Jan 20, 1990.
Judge Ocampo, therefore, was fully aware of the previous delineation
of the property of Roco. Nevertheless, when the records were
remanded to him and upon motion of the plaintiff's counsel, he issued
another writ of demolition which sought to demolish the remaining
portion of the defendant's house which, as already found by the
appellate court(s), was standing upon a public property.
The order of demolition was the subject of a petition for certiorari
where Judge Manio declared said order of demolition and the writ
issued pursuant thereto as null and void, having been issued with grave
abuse of discretion and enjoined Judge Ocampo from issuing any
further writs of demolition. Despite this directive, Judge Ocampo
exhibited a defiant attitude by issuing another writ of demolition.
ISSUE: WON Sheriff Buena may be held administratively liable
No. Buena was not aware of the existing TRO which she received
within the hour after the demolition had taken place, thus rendering
said restraining order a fait accompli. The rule is that when a writ is
placed in the hands of a sheriff, it is his duty, in the absence of
instructions, to proceed with reasonable celerity and promptness to
execute it according to its mandate. He may not apply his discretion
as to whether to execute it or not.
Therefore, Judge Ocampo III is ordered to pay a fine of P5k with
warning. Complaint against Sheriff Buena is dismissed.
Elipe vs. Fabre (1995)
An administrative complaint was filed against Honesto Fabre,
charging him with nonfeasance and incompetence in the performance
of his duties as Deputy Sheriff of Branch 3, MTCC Cagayan De Oro.
It appears that on 19 Jun 92, MTCC Branch 3 issued a writ of
execution for the enforcement of a barangay agreement in a civil case
33
for collection of unpaid rentals and construction materials
amounting to P100k.
Victor Elipe testified that on Jun 25, 1992, at 9AM, Fabre served the
writ on judgment debtors Michael dela Cerna and his wife but was able
to levy only upon a dilapidated vehicle and an old piano. At 10PM of
the same day, the judgment debtors surreptitiously removed several
pieces of furniture from the house which they rented.
On Jun 26 and 30 and again on Jul 4, 11, 18 and 19, 1992, they
removed appliances and other personal properties and destroyed
building fixtures on the property owned by Elipe. On these occasions,
Fabre did not make any effort to prevent the judgment debtors from
removing leviable properties to implement the writ, despite the fact
that he had been told by Elipe of said activities.
10 Jul 92: Fabre sold to Elipe, as the highest bidder at public
auction, personal properties of the judgment debtors for 10k. Also
levied on a parcel of land owned by the judgment debtors which was
also sold to Elipe. Personal properties of the judgment debtors which
had been levied upon were sold, also to Elipe as highest bidder. The
result is that the judgment debt of P100k was only partially satisfied
to the extent of P27,007.
Fabres contention: Denied the allegations. He levied on several
properties of the judgment debtors, but unfortunately the bid price
paid for them at the public auction was only P10k. He justified his
action in levying only on the personal properties which he found at the
business establishment and in desisting from enforcing the writ with
respect to properties on the second floor of the residence of the
judgment debtors on two grounds: (1) the judgment debtors refused
to let him in; and (2) he did not have any order from the MTCC to force
open the door which had been locked.
Memorandum report of Deputy Court Administrator Bernad:
Because of Fabres inaction and lack of diligence in enforcing the writ
of execution, the judgment debtors were able to cart away properties
which he could have levied upon execution. Deputy Sheriff correctly
argued that he was not directed by any Judge by court orders to stop
the carting away of properties or the demolition of the fixtures. But
Sheriff should understand that by virtue of the writ of execution issued
in favor of Elipe, Sheriff was mandated to levy upon properties of
judgment debtor to satisfy an obligation amounting to P100k.
However, in disregard of this Order, Sheriff chose to levy the properties
of the judgment debtor which amounted only to P27k. If indeed Sheriff
is dedicated in his work, Sheriff could have chosen to stop the carting
away of the valuable properties of judgment debtor for the very
purpose of levying it and for the purpose of complying with the Order.
If the arguments of Sheriff will be sustained, all judgment debtors can
easily circumvent the orders of the court by carting away their
properties thinking that sheriffs have no authority to stop them. This
line of thinking and reasoning will create chaos and instability in the
administration of justice. Furthermore, Sheriff exhibited an utter
disregard of what is incumbent upon him when he failed to inform
Elipe that in order to levy properties of the defendant on the second
floor of the establishment, a special order of the court is necessary to
force or break-open the closed door in accordance with Section 14,
Rule 39 of the Rules of Court. The Sheriff's duty was apparent but he
did not comply with it as he should have.
ISSUE: WON Sheriff Fabre may be held administratively liable
Yes. In the Manual of Clerk of Courts, a sheriff, to whom a valid writ
or process is delivered to be levied upon a property within his
jurisdiction, is liable to the person in whose favor the process or writ
runs if he fails to make a levy upon property owned by the judgment
debtor within his jurisdiction and by reason thereof the judgment
creditor is injured. It is omission not dependent upon intentional wrong
or negligent omission to seize property of judgment debtor.
He is bound to discharge his duties with prudence, caution and
attention which careful men usually exercise in the management of
their affairs. The sheriff, an officer of the court upon whom the
execution of a final judgment depends, must be circumspect and
proper in his behavior. Execution is the fruit and end of the suit and is
the life of the law.
In the case at bar, it is not that Sheriff Fabre did not know what he
should do, given the problem that he was confronted with. In his
answer, he tried to excuse himself from what was his duty, claiming
that he did not force his way into the second floor where the judgment

debtors resided because a special court order was needed to
enable him to do this. Knowing this to be the case, it was his duty
to see to it that such an order was secured from the court.
The fact is that he has shown himself to be less than energetic and
zealous in the performance of his duty. His lackadaisical attitude
betrays his inefficiency and incompetence.
Therefore, he is liable for a fine of P2k with a stern warning that a
repetition of the same or of any act calling for disciplinary action will
be dealt with more severely.
Roque vs. CA (1979) ~supra~
Roques contention: he could not avail of the remedy under Sec. 17,
Rule 39 inasmuch as the vessel was not in the actual custody of the
Sheriff nor of the Court, since the supposed levy by the Sheriff on
February 7, 1974 was a mere paper levy which, in legal contemplation,
is no levy at all.
It is a fact that Sheriff could not effect seizure immediately, first,
because the barge could nowhere be found in this vicinity, and
subsequently when found, because petitioners would not deliver
possession to the Sheriff. It was not until the trial Court granted the
Sheriff's Motion praying for an Order directing petitioners or their
agents to surrender the barge to the custody of the Court, that the
Sheriff was able to take physical custody. As a general rule, however, a
levy of an attachment upon personal property may be either actual or
constructive.
In this case, levy had been constructively made by the registration
of the same with the Philippine Coast Guard on February 7, 1974.
Constructive possession should be held sufficient where actual
possession is not feasible, particularly when it was followed up by the
actual seizure of the property as soon as that could possibly be
effected.
Roques contention: levy was illegal because the Writ was
implemented more than sixty days after its issuance so that they need
not have complied with Section 14, Rule 57, supra.
No merit. The Rules do not provide any lifetime for a Writ of
Attachment unlike a Writ of Execution. But even granting that a Writ of
Attachment is valid for only sixty days, yet, since there was constructive
levy within that period the fact that actual seizure was effected only
thereafter cannot affect the validity of that levy.
Summit Trading & Development Corp. vs. Avendano (1985)
1973: Segundo Pilipinia and Edgardo Mindo acquired under Land
Authority Administrative Order No. 4 two registered lots with a total
area of 2 hectares located at Barrio San Vicente, San Pedro, Laguna.
The titles of the lots contain the annotation that should Pilipinia and
Mindo sell the same, they have the right to redeem the lots within five
years from the date of the sale.
Pilipinia and Mindo sold the lots for P16k and P12k to Gavino Ortega
on February 14 and April 19, 1977. They have retained possession of
the lots which are ricelands. They became tenants.
At the instance of Ortega, Judge Avendao cancelled the annotation
on the titles because the lots would be converted into commercial,
industrial or residential sites. That conversion has not taken place. At
present the two lots are still ricelands.
16 Oct 79: Ortega advised Ernesto Pilipinia (attorney-in-fact of
Segundo and Mindo) that he and his father would have the right of
first refusal in case the lots were sold.
Ortega resold the 2 lots to Summit Trading through President
Balaguer.
10 Aug 81, within the 5 yr period: Pilipinia and Mindo filed a
complaint against Ortega and Summit Trading for the redemption or
repurchase of the lots. They deposited P100k for that purpose.
Ortega was duly summoned but failed to answer, so he was declared
in default. Summit Trading was also declared in default.
29 Oct 81: Judge Avendano gave Pilipinia and Mindo 15 days from
notice within which to redeem the lots for P16k and P12k and ordered
Summit Trading to execute the corresponding deeds of sale and
surrender the Torrens titles. If it failed to do so, the clerk of court was
directed to perform that task. The register of deeds was ordered to
issue new titles to Pilipinia and Mindo.
Default judgment was rendered on the assumption that Summit
Trading was duly summoned through Marina Saquilayan as its
34
secretary. She received the summons on 28 Aug 81. A copy of
the judgment was also served on her on 13 Nov 81. Actually,
Saquilayan received the summons as secretary of Balaguer, already
mentioned as the president of Summit Trading which purchased the
lots from Ortega. Bonifacio Tiongson was the corporate secretary.
Summit Trading filed MR on the ground that the trial court did not
acquire jurisdiction over it because summons was not served upon it
in accordance with Sec 13, Rule 14 of the Rules of Court: Service upon
private domestic corporation or partnership.-If the defendant is a
corporation organized under the laws of the Philippines or a partnership
duly registered, service may be made on the president, manager,
secretary, cashier, agent, or any of its directors.
ISSUE: WON summons was validly served upon Summit Trading
Yes. It is true that Saquilayan is not among the persons mentioned
in section 13. However, she, being under the control of Summit
Trading, has not explained what she has done with the summons and
complaint. The logical assumption is that she delivered it to her boss,
the president of Summit Trading. As already stated, she received a
copy of the decision and Summit Trading became aware of it. Summit
Trading's motion for reconsideration was denied.
While Summit Trading is technically correct in contending that there
was no strict compliance with section 13, we cannot close our eyes to
the realities of the situation. Under the facts of this case, Saquilayan,
being the secretary of the president (whose contact with the outside
world is normally through his secretary), may be regarded as an
"agent" within the meaning of section 13.
Hence summons was validly served upon Summit Trading. Its
negligence in not answering the complaint was inexcusable. In fact, up
to this time, Summit Trading has not bothered to state its defenses to
the action nor stated whether it has a meritorious case warranting the
setting aside of the default judgment.
In the instant case, service was made on the president's secretary
who could have easily notified the president that an action was filed
against the corporation just as she had apprised him of the judgment
in this case.
We are not saying that service on such a secretary is always proper.
Generally, it is improper. The president himself must be served
personally with the summons if it is desired to effect the service on
that particular officer. But, as already stated, under the facts of this
case, the president's secretary may be regarded as the "agent" within
the meaning of section 13 since service upon her of the judgment itself
came to the notice of Summit Trading.
Chemphil Export vs. CA (1995)
25 Sep 84: Dynetics, Inc. and Antonio M. Garcia filed a complaint
for declaratory relief and/or injunction against the PISO, BPI, LBP, PCIB
and RCBC or the consortium with RTC Makati, Branch 45, seeking
judicial declaration, construction and interpretation of the validity of
the surety agreement that Dynetics and Garcia had entered into with
the consortium and to perpetually enjoin the latter from claiming,
collecting and enforcing any purported obligations which Dynetics and
Garcia might have undertaken in said agreement.
The consortium filed their respective answers with counterclaims
alleging that the surety agreement in question was valid and binding
and that Dynetics and Garcia were liable under the terms of the said
agreement. It likewise applied for the issuance of a writ of preliminary
attachment against Dynetics and Garcia.
23 Apr 85: Dynetics, Garcia and Matrix filed a complaint for
declaratory relief and/or injunction against Security Bank & Trust Co.
2 Jul: TC granted SBTCs prayer for issuance of writ of preliminary
attachment and on 9 Jul, a notice of garnishment covering Garcias
shares in CIP/Chemphil was erved on Chemphil through its then
President. Notice of garnishment was duly annotated in the stock and
transfer books of Chemphil.
6 Sep 85: Writ of attachment in favor of SBTC was lifted. But was
reinstated.
Meantime, 12 Jul 85: RTC denied the application of Dynetics and
Garcia for preliminary injunction and instead granted the consortium's
prayer for a consolidated writ of preliminary attachment. Hence, on 19
Jul 1985, after the consortium had filed the required bond, a writ of
attachment was issued and various real and personal properties of

Dynetics and Garcia were garnished, including the disputed
shares. This garnishment, however, was not annotated in
Chemphil's stock and transfer book.
8 Sep 87: PCIB filed a motion to dismiss the complaint of Dynetics
and Garcia for lack of interest to prosecute and to submit its
counterclaims for decision, adopting the evidence it had adduced at
the hearing of its application for preliminary attachment.
25 Mar 88: RTC dismissed the complaint of Dynetics and Garcia.
Also, the MR filed by the consortium were denied by the TC. The
consortium appealed.
During pendency of appeal, Garcia and the consortium entered into
a Compromise Agreement which the CA approved and became the
basis of its judgment of compromise. Garcia was dropped as a party
to the appeal leaving the consortium to proceed solely against
Dynetics, Inc.
It appears that on 15 Jul 88, Garcia under a DOS transferred to
Ferro Chemicals Inc. the disputed shares and other properties. It was
agreed upon that part of the purchase price shall be paid by FCI
directly to SBTC for whatever judgment credits that may be adjudged
in the latter's favor and against Antonio Garcia in the aforementioned
SBTC case.
6 Mar 89: FCI, through its President Garcia, issued a Bank of
America Check No. 860114 in favor of SBTC in the amount of
P35,462,869.62. SBTC refused to accept the check claiming that the
amount was not sufficient to discharge the debt. The check was thus
consigned by Antonio Garcia and Dynetics with the RTC as payment of
their judgment debt in the SBTC case.
26 Jun 89: FCI assigned its 4,119,614 shares in Chemphil, which
included the disputed shares, to CEIC. The shares were registered and
recorded in the corporate books of Chemphil in CEIC's name and the
corresponding stock certificates were issued to it.
Meanwhile, Antonio Garcia, in the consortium case, failed to comply
with the terms of the compromise agreement he entered into with the
consortium on 17 Jan 1989. As a result, on 18 July 1989, the
consortium filed a motion for execution which was granted by the trial
court on 11 August 1989. Among Garcia's properties that were levied
upon on execution were his 1,717,678 shares in Chemphil (the
disputed shares) previously garnished on 19 July 1985.
On 22 Aug 1989, the consortium acquired the disputed shares of
stock at the public auction sale conducted by the sheriff for P85M. On
same day, a Certificate of Sale covering the disputed shares was issued
to it.
On 30 Aug 1989, the consortium filed a motion (dated 29 Aug 1989)
to order the corporate secretary of Chemphil to enter in its stock and
transfer books the sheriff's certificate of sale dated 22 Aug 1989, and
to issue new certificates of stock in the name of the banks concerned.
The trial court granted said motion.
26 Sep: CEIC filed a motion to intervene in the consortium case
seeking the recall of the abovementioned order on grounds that it is
the rightful owner of the disputed shares. It further alleged that the
disputed shares were previously owned by Garcia but subsequently
sold by him on 15 July 1988 to FCI which in turn assigned the same
to CEIC in an agreement dated 26 June 1989. Granted.
2 Oct 1989: The consortium filed their opposition to CEIC's motion
for intervention alleging that their attachment lien over the disputed
shares of stocks must prevail over the private sale in favor of the CEIC
considering that said shares of stock were garnished in the
consortium's favor as early as 19 July 1985.
4 Oct 1989: The consortium filed their opposition to CEIC's motion
to set aside the 4 September 1989 order and moved to lift the 27 Sep
1989 order.
12 Oct 1989: The consortium filed a manifestation and motion to
lift the 27 Sep 1989 order, to reinstate the 4 Sep 1989 order and to
direct CEIC to surrender the disputed stock certificates of Chemphil in
its possession within 24 hours, failing in which the President,
Corporate Secretary and stock and transfer agent of Chemphil be
directed to register the names of the banks making up the consortium
as owners of said shares, sign the new certificates of stocks evidencing
their ownership over said shares and to immediately deliver the stock
certificates to them.
CEICs contention: the consortium's attachment lien over the
disputed Chemphil shares is null and void and not binding on third
parties due to the latter's failure to register said lien in the stock and
transfer books of Chemphil.
35
ISSUE: WON the attachment of shares of stock, in order to bind
3rd persons, must be recorded in the stock and transfer book of the
corporation
No. The attachment lien acquired by the consortium is valid and
effective. Both the Revised Rules of Court and the Corporation Code
do not require annotation in the corporation's stock and transfer books
for the attachment of shares of stock to be valid and binding on the
corporation and third party.
Section 74 of the Corporation Code which enumerates the instances
where registration in the stock and transfer books of a corporation
provides: Stock corporations must also keep a book to be known as the
stock and transfer book, in which must be kept a record of all stocks in
the names of the stockholders alphabetically arranged; the installments
paid and unpaid on all stock for which subscription has been made, and
the date of payment of any settlement; a statement of every alienation,
sale or transfer of stock made, the date thereof, and by and to whom
made; and such other entries as the by-laws may prescribe. The stock and
transfer book shall be kept in the principal office of the corporation or in
the office of its stock transfer agent and shall be open for inspection by
any director or stockholder of the corporation at reasonable hours on
business days.
Also, Sec 63 of the same Code states: The capital stock of stock
corporations shall be divided into shares for which certificates signed by
the president or vice-president, countersigned by the secretary or assistant
secretary, and sealed with the seal of the corporation shall be issued in
accordance with the by-laws. Shares of stock so issued are personal
property and may be transferred by delivery of the certificate or certificates
indorsed by the owner or his attorney-in-fact or other person legally
authorized to make the transfer. No transfer, however, shall be valid,
except as between the parties, until the transfer is recorded in the books
of the corporation so as to show the names of the parties to the
transaction, the date of the transfer, the number of the certificate or
certificates and the number of shares transferred. xxx"
Attachments of shares of stock are not included in the term
transfer provided in Sec. 63 of the Corporation Code. As held in the
Monserrat case, chattel mortgage over shares of stock need not be
registered in the corporation's stock and transfer book inasmuch as
chattel mortgage over shares of stock does not involve a "transfer of
shares," and that only absolute transfers of shares of stock are required
to be recorded in the corporation's stock and transfer book in order to
have "force and effect as against third persons.
"Transfer" means any act by which property of one person is vested
in another, and "transfer of shares", as used in Uniform Stock Transfer
Act, implies any means whereby one may be divested of and another
acquire ownership of stock. A "transfer" is the act by which the owner
of a thing delivers it to another with the intent of passing the rights
which he has in it to the latter, and a chattel mortgage is not within the
meaning of such term.
Although the Monserrat case refers to a chattel mortgage over
shares of stock, the same may be applied to the attachment of the
disputed shares of stock in the present controversy since an
attachment does not constitute an absolute conveyance of property
but is primarily used as a means "to seize the debtor's property in
order to secure the debt or claim of the creditor in the event that a
judgment is rendered.
Shares of stock being personal property, may be the subject matter
of pledge and chattel mortgage. Such collateral transfers are however
not covered by the registration requirement of Section 63, since our
Supreme Court has held that such provision applies only to absolute
transfers thus, the registration in the corporate books of pledges and
chattel mortgages of shares cannot have any legal effect.
The requirement that the transfer shall be recorded in the books of
the corporation to be valid as against third persons has reference only
to absolute transfers or absolute conveyance of the ownership or title
to a share.
Consequently, the entry or notation on the books of the corporation
of pledges and chattel mortgages on shares is not necessary to their
validity (although it is advisable to do so) since they do not involve
absolute alienation of ownership of stock. To affect third persons, it is
enough that the date and description of the shares pledged appear in
a public instrument. (Art. 2096, Civil Code.) With respect to a chattel

mortgage constituted on shares of stock, what is necessary is its
registration in the Chattel Mortgage Registry.
ISSUE: WON the consortiums attachment lien over the disputed
shares is valid
CEICs contention: the consortium's writ of attachment over the
disputed shares of Chemphil is null and void, insisting as it does, that
the notice of garnishment was not validly served on the designated
officers on 19 July 1985. CEIC presented the sheriff's notice of
garnishment dated 19 July 1985 which showed on its face that said
notice was received by one Thelly Ruiz who was neither the president
nor managing agent of Chemphil. It makes no difference, CEIC further
avers, that Thelly Ruiz was the secretary of the President of Chemphil,
for under the above-quoted provision she is not among the officers so
authorized or designated to be served with the notice of garnishment.
No merit. A secretary's major function is to assist his or her superior.
He/she is in effect an extension of the latter. Obviously, as such, one of
her duties is to receive letters and notices for and in behalf of her
superior, as in the case at bench. The notice of garnishment was
addressed to and was actually received by Chemphil's president
through his secretary who formally received it for him. Thus, in one
case, we ruled that the secretary of the president may be considered
an "agent" of the corporation and held that service of summons on him
is binding on the corporation.
Moreover, the service and receipt of the notice of garnishment on
19 July 1985 was duly acknowledged and confirmed by the corporate
secretary of Chemphil, Rolando Navarro and his successor Avelino
Cruz through their respective certifications dated 15 August 1989 and
21 August 1989.
We rule, therefore, that there was substantial compliance with Sec.
7(d), Rule 57 of the Rules of Court.
ISSUE: WON the Compromise Agreement between Garcia and the
consortium discharge the latters attachment lien over the disputed
shares?
CEICs contention: A writ of attachment is a mere auxiliary remedy
which, upon the dismissal of the case, dies a natural death. Thus, when
the consortium entered into a compromise agreement, which resulted
in the termination of their case, the disputed shares were released
from garnishment.
No merit. To subscribe to CEIC's contentions would be to totally
disregard the concept and purpose of a preliminary attachment.
A writ of preliminary attachment is a provisional remedy issued
upon order of the court where an action is pending to be levied upon
the property or properties of the defendant therein, the same to be
held thereafter by the Sheriff as security for the satisfaction of whatever
judgment might be secured in said action by the attaching creditor
against the defendant. Attachment is a juridical institution which has
for its purpose to secure the outcome of the trial, that is, the satisfaction
of the pecuniary obligation really contracted by a person or believed to
have been contracted by him, either by virtue of a civil obligation
emanating from contract or from law, or by virtue of some crime or
misdemeanor that he might have committed, and the writ issued,
granted it, is executed by attaching and safely keeping all the movable
property of the defendant, or so much thereof may be sufficient to
satisfy the plaintiff's demands.
An attachment lien continues until the debt is paid, or sale is had
under execution issued on the judgment or until judgment is satisfied,
or the attachment discharged or vacated in the same manner provided
by law.
The case at bench admits of a peculiar character in the sense that
it involves a compromise agreement. Nonetheless, the rule established
in the aforequoted cases still applies, even more so since the terms of
the agreement have to be complied with in full by the parties thereto.
The parties to the compromise agreement should not be deprived of
the protection provided by an attachment lien especially in an instance
where one reneges on his obligations under the agreement, as in the
case at bench, where Antonio Garcia failed to hold up his own end of
the deal, so to speak.
Moreover, a violation of the terms and conditions of a compromise
agreement entitles the aggrieved party to a writ of execution.
36
If we were to rule otherwise, we would in effect create a back
door by which a debtor can easily escape his creditors.
Consequently, we would be faced with an anomalous situation where
a debtor, in order to buy time to dispose of his properties, would enter
into a compromise agreement he has no intention of honoring in the
first place. The purpose of the provisional remedy of attachment would
thus be lost. It would become, in analogy, a declawed and toothless
tiger.
From the foregoing, it is clear that the consortium and/or its
assignee Jaime Gonzales have the better right over the disputed
shares. When CEIC purchased the disputed shares from Antonio Garcia
on 15 July 1988, it took the shares subject to the prior, valid and
existing attachment lien in favor of and obtained by the consortium.
Tayabas Land vs. Sharruf (1921)
10 Dec 14: Salvador Farre recovered a joint and several judgment
against Salomon M. Sharruf and Farham M. Sharruf in the CFI of
Manila for the sum of P1,300, with legal interest. This judgment having
remained unsatisfied, and execution was upon April 3, 1916, issued
thereon at the instance of Farre.
Meanwhile on March 27, 1915, Salomon M. Sharruf had himself
recovered a judgment against the Tayabas Land Company and A.M.
Ginainati, for the sum of P6,841.36, with interest and costs; and as
there seems to have been no visible property belonging to Salomon M.
Sharruf and Farham M. Sharruf subject to seizure by the sheriff to
satisfy the execution in favor of Salvador Farre, it became important
for Farre to subject the judgment in favor of Salomon M. Sharruf
against the Tayabas Land Company and A.M. Ginainati to the payment
of his own claim.
To this end process of garnishment (notification de embargo) was,
on April 6, 1916, issued at the instance of Salvador Farre in aid of his
execution against the Sharrufs and was on the same or succeeding
day duly served upon the Tayabas Land Company. By this process,
Tayabas Land was informed that levy had, by virtue of the execution
aforesaid, been made upon all the property of S. M. Sharruf in the
possession of Tayabas Land and upon all debts owing by the latter to
said Sharruf, and in particular upon all participation and interest of S.
M. Sharruf in the judgment rendered in his favor in the action
prosecuted by him against the Tayabas Land and others.
In pursuance of the levy thus effected upon the judgment in favor of
Salomon M. Sharruf against the Tayabas Land Company, the sheriff of
Manila, as in ordinary cases of levy upon chattels of real property,
proceeded upon April 15, 1916, to expose to sale all right, title, and
interest of said Sharruf in the judgment aforesaid. At this sale Salvador
Farre, the execution creditor himself, became the purchaser of the
judgment in question for the sum of P200; but Tayabas Land, with a
legitimate view to its own protection, afterwards stepped in, and acting
through Mr. Francisco Alvarez, as attorney and intermediary,
purchased from Farre, on October 6, 1917, the judgment of Salomon
M. Sharruf against itself.
4 Apr 16: Salomon M. Sharruf, by a public document, which was
duly incorporated in the record in his case against the Tayabas Land
Company, et al., sold and transferred unto O'Brien & Company, a
corporation, his right, title, and interest in the judgment aforesaid to
the extent necessary to satisfy a debt for P988.14, owing to O'Brien &
Company, for merchandise purchased from said entity by Sharruf; and
upon the same date Messrs. Crossfield & O'Brien, as attorneys, filed a
memorandum of an attorney's lien in their favor to the extent of 25%
of the amount of the judgment.
As a consequence of the facts above narrated, the Tayabas Land
Company supposes that the judgment obtained by Salomon M.
Sharruf against it and A.M. Ginainati has been wholly satisfied, while
Salomon M. Sharruf and those interested under him claim that the
execution sale of the judgment in question was void and that as a
consequence said judgment remains wholly unsatisfied. Proceeding
upon this conception of the case, Messrs. Crossfield and O'Brien, as
attorneys for the plaintiff in that action, procured an execution to be
issued on August 30, 1918, upon said judgment for the entire amount
of the recovery, including accrued interest and costs, less the sum of
P13.21, which had been secured in a garnishment proceeding against
one of the local banks.
Being thus menaced with the levy of an execution upon its property,
the Tayabas Land Company instituted the present action in the CFI of

Manila, against Salomon M. Sharruf and others, including the
sheriff of the Province of Tayabas, to obtain an order restraining
the threatened levy of execution and perpetually enjoining all
proceedings for the enforcement of the judgment against it.
ISSUE: WON the proceedings whereby the judgment against the
Tayabas Land Company and A.M. Ginainati in favor of Salomon M.
Sharruf was exposed to sale by the sheriff under the execution issued
in the action of Salvador Farre against the two Sharrufs is valid
No, sale of the judgment in question under process of execution was
void. A judgment for a sum of money entered in favor of the plaintiff
in one case can be reached and applied to the payment of a judgment
in another case against the party who occupies the position of creditor
in the former.
A judgment for a sum of money, that is, the interest of the plaintiff
in such a judgment, is liable to execution. A judgment for a sum of
money is, as to the party entitled to payment, a credit; and as to the
party who ought to pay the money, a debt. Furthermore, the interest
of the creditor in such a judgment is clearly property, though not
capable of manual delivery. All of these elements of value "debts."
"credits," and "all other property not capable of manual delivery" are
expressly declared.
Debts, credits, and other property not capable of manual delivery
are to be dealt with in a different manner from that prescribed in case
of the execution of tangible property; for while tangible property is
proceeded with by seizure and sale under execution, debts and credits
are to be attached by the citation of the debtor.
The proceeding thus indicated as proper, in order to subject a debt
or credit is known in American civil procedure as the process of
garnishment; and it may be truly said that garnishment is one of the
simplest processes, and the least involved in technicalities, of any
proceeding known to the law. It consists in the citation of some
stranger to the litigation, who is debtor to one of the parties to the
action. By this means such debtor stranger becomes a forced
intervenor; and the court, having acquired jurisdiction over his person
by means of the citation, requires him to pay his debt, not to his former
creditor, but to the new creditor, who is creditor in the main litigation.
It is merely a case of involuntary novation by the substitution of one
creditor for another. Upon principle the remedy is a species of
attachment or execution for reaching any property pertaining to a
judgment debtor which may be found owing to such debtor by a third
person.
The situation involved supposes the existence of at least three
persons, to wit, a judgment creditor, a judgment debtor, and the
garnishee, or person cited, who in turn is supposed to be indebted to
the first debtor.
To proceed a little further with the barest details of the process of
garnishment, we note that a citation issues from the court having
jurisdiction of the principal litigations, notifying the garnishee that the
property and credits of the judgment debtor have been levied upon or
attached in the hands of such garnishee, and enjoining him not to
deliver, transfer, or otherwise dispose of any effects or credits
belonging to that person, and requiring him furthermore to make a
statement to the court of the property of the judgment debtor in his
hands and of the debts owing by the garnishee to such debtor.
In cases where indebtedness is admitted, as not infrequently occurs,
the payment of the money by the garnishee to the judgment creditor
or into court, brings the proceeding to a close, so far as the garnishee
is concerned; but if the garnishee fails to answer, or does not admit
the indebtedness, he may be required to attend before the court in
which the action is pending to be examined on oath respecting the
same. Finally, if the liability of the garnishee is made manifest, the
officer of the court may collect the money and pay it to the person
entitled.
Enough has now been said to show clearly that the action of the
sheriff in exposing to public sale the judgment which had been
procured by Salomon M. Sharruf in the action against the Tayabas
Land Company, et al., was wholly unauthorized, and said sale must be
considered void. The proper step would have been for the court to
require the Tayabas Land Company, after the judgment against it had
become final, to pay into court, in the cause wherein Salvador Farre
was plaintiff, a sufficient amount of money to satisfy Farre's claim
against Sharruf; and if the judgment against the Tayabas Land
37
Company had been permitted to go to the stage of execution,
the proceeds in the hands of the sheriff would have been
applied, under the direction of the court, to the payment of Farre's
claim before any part would have been payable to Sharruf.
In dealing with the problems which have from time to time arisen in
connection with garnishment proceedings, courts have sometimes
been perplexed over the matter of protecting the garnishee from the
danger of having to pay his debt twice; and it goes without saying that
the procedure must be so adjusted as not to subject the garnishee to
this risk. Otherwise it is a fatal obstacle to the garnishment. No such
difficulty would arise in a case like this, where the two judgments are
both of record in the same court, and where consequently that court
has control over the process in both cases.
Debts and credits and property not capable of manual delivery must
be attached by leaving with the person owing the debt or having in
possession or under his control such credits and other personal
property" or with his agent, a copy of the writ, and a notice that the
debts owing by him to the defendant, or the credits and other personal
property' in his possession or under his control, belonging to the
defendant are attached in pursuance of such writ.
In order to avoid misunderstanding, we wish to say that we make no
question as to the propriety of the proceedings up to the time when
the judgment in question was advertised and exposed to sale by the
sheriff. The issuance of the execution and the service of the
garnishment were appropriate; and the garnishment was effective for
the purpose of preventing the garnishee, the Tayabas Land Company,
from paying the judgment to Salomon M. Sharruf.
Moreover, the garnishment was effective for the purpose of
conferring upon the Tayabas Land Company the right to pay off the
judgment which Farre had obtained against Sharruf. This right is not
only recognized in section 481 of the Code of Civil Procedure but also
in subsection 3 of article 1210 of the Civil Code; and by satisfying
Farre's claim, regardless of the manner in which it was accomplished,
the Tayabas Land Company absolved itself pro tanto from its
indebtedness to Sharruf. It results that, although the judgment against
the Tayabas Land Company has not yet been satisfied in full, said
company is entitled to be credited with the sum of P1,588.24, said by
it, through Francisco Alvarez, to Farre on October 6, 1917, with interest.
Reflection upon this feature of the case, however, confirms the
opinion that our lawmakers acted wisely in requiring that debts and
credits should be executed by means of the process of garnishment
rather than by exposing them to public sale. In the case before us a
judgment for a large amount was sold for a merely nominal sum, and
such would generally be the case at a sale under similar conditions.
This cannot fail to be highly prejudicial to the debtor who is under
immediate execution. The proceeding by garnishment, on the contrary,
enables all parties to realize their rights without unduly disturbing the
position of any.
Gotauco vs. ROD (1934)
supra.
Rural Bank of Sta. Barbara vs. Manila Mission (2009)
Sps. Tomas and Maria Soliven were the registered owners of a parcel
of land in Sta. Barbara, Pangasinan.
18 May 92: Sps. Soliven sold the property to Manila Mission of the
Church of Jesus Christ of Latter Day Saints. It was only on 28 Apr 94
when the TCT in the name of the Sps. Soliven was cancelled and a new
TCT was issued in the name of Manila Mission.
In the meantime, 15 Apr 93: Rural Bank of Sta. Barbara
(Pangasinan), Inc. filed with the RTC a Complaint against the Sps.
Soliven for a sum of money. The Complaint included a prayer for the
issuance of a Writ of Preliminary Attachment.
7 May 93: RTC ordered the issuance of the writ upon the filing of
the bond.
21 May: RTC issued the writ. Acting on the authority of said Writ,
Sheriff Reynaldo C. Daray attached the subject property, which was
then still covered by TCT in the name of the Sps. Soliven. The Writ of
Attachment was annotated on TCT in the name of the Sps. Soliven on
24 May 1993.

Thus, when TCT of the Sps. Soliven was cancelled and new TCT
of Manila Mission was issued on 28 April 1994, the annotation on
the Writ of Attachment was carried from the former to the latter.
When the case of Rural Bank was still pending, Manila Mission
executed an Affidavit claiming title and ownership over the subject
property and requested the Sheriff to release the property from
attachment. Sheriff, however, advised Manila Mission to filed a motion
directly with the RTC.
16 Mar 95: Manila Mission filed a Motion to Release Property from
Attachment. RTC issued an order discharging the subject property
from attachment.
Rural Bank filed MR, arguing it had better right over the subject
property. Denied. Filed Petition for Certiorari, alleging that the RTC
committed grave abuse of discretion, amounting to lack or excess of
jurisdiction, in canceling the Writ of Attachment and ordering the
release of the subject property.
Rural Banks contention: The Motion to Release Property from
Attachment filed by respondent before the RTC is not the proper
remedy under Section 14, Rule 57 of the Rules of Court. Pursuant to
said section, the remedy of a third person claiming to be the owner of
an attached property are limited to the following: (1) filing with the
Sheriff a third-party claim, in the form of an affidavit, per the first
paragraph of Section 14; (2) intervening in the main action, with prior
leave of court, per the second paragraph of Section 14, which allows a
third person to vindicate his/her claim to the attached property in the
"same x x x action"; and (3) filing a separate and independent action,
per the second paragraph of Section 14, which allows a third person
to vindicate his/her claim to the attached property in a "separate
action.
Manila Missions contention: It tried to pursue the first remedy, i.e.,
filing a third-party claim with the Sheriff. It filed an Affidavit of Title and
Ownership with the Sheriff, but said officer advised them to file a
motion directly with the RTC in the main case. It heeded the Sheriffs
advice by filing with the RTC.
ISSUE: WON the action of Manila Mission was proper
Yes. The filing by Manila Mission of the Motion to Release Property
from Attachment was made on the advice of the Sheriff upon whom
Manila Mission served its Affidavit of Title and Ownership. Manila
Mission should not be faulted for merely heeding the Sheriffs advice.
Apparently, the Sheriff, instead of acting upon the third-party claim of
Manila Mission on his own, would rather have some direction from the
RTC. Indeed, the Sheriff is an officer of the RTC and may be directed
by the said court to allow the third-party claim of respondent.
Therefore, the filing of the Motion in question can be deemed as a
mere continuation of the third-party claim of Manila Mission, in the
form of its Affidavit of Title and Ownership, served upon the Sheriff, in
accord with the first paragraph of Section 14, Rule 57 of the Rules of
Court.
Alternatively, we may also consider the Motion to Release Property
from Attachment, filed by Manila Mission before the RTC, as a Motion
for Intervention in the case, pursuant to the second paragraph of
Section 14, Rule 56, in relation to Rule 19 of the Rules of Court.
ISSUE: Which between the two transactions should be given priority:
the previous yet unregistered sale of the subject property by the Sps.
Soliven to Manila Mission, or the subsequent but duly annotated
attachment of the same property by Rural Bank?
The sole issue in this case is whether or not a registered writ of
attachment on the land is a superior lien over that of an earlier
unregistered deed of sale.
The settled rule is that levy on attachment, duly registered, takes
preference over a prior unregistered sale. This result is a necessary
consequence of the fact that the property involved was duly covered
by the Torrens system which works under the fundamental principle
that registration is the operative act which gives validity to the transfer
or creates a lien upon the land.
The preference created by the levy on attachment is not diminished
even by the subsequent registration of the prior sale. This is so because
an attachment is a proceeding in rem. It is against the particular
property, enforceable against the whole world. The attaching creditor
acquires a specific lien on the attached property which nothing can
38
subsequently destroy except the very dissolution of the
attachment or levy itself. Such a proceeding, in effect, means
that the property attached is an indebted thing and a virtual
condemnation of it to pay the owners debt. The lien continues until
the debt is paid, or sale is had under execution issued on the judgment,
or until the judgment is satisfied, or the attachment discharged or
vacated in some manner provided by law.
Thus, in the registry, the attachment in favor of respondents
appeared in the nature of a real lien when petitioner had his purchase
recorded. The effect of the notation of said lien was to subject and
subordinate the right of petitioner, as purchaser, to the lien. Petitioner
acquired ownership of the land only from the date of the recording of
his title in the register, and the right of ownership which he inscribed
was not absolute but a limited right, subject to a prior registered lien
of respondents, a right which is preferred and superior to that of
petitioner.
It is settled, therefore, that a duly registered levy on attachment
takes preference over a prior unregistered sale.
Manila Missions contention: There is a special circumstance in the
case at bar, which should be deemed a constructive registration of the
sale of the subject property in its favor, preceding the attachment of
the same property by Rural Bank. Averred in its Motion to Release
Property from Attachment that the construction of a church edifice on
the subject property was about to be finished at the time the Writ of
Preliminary Attachment was implemented on 24 May 1993, and that
the construction of the church was actually completed by mid-1993.
Asserts that since Rural Bank did not deny these allegations, much less
adduce evidence to the contrary, then the latter tacitly recognized the
construction of the church.
In Ruiz case, we made a qualification of the general rule that a duly
annotated attachment is superior to an unregistered prior sale. In fact,
we resolved Ruiz in favor of the vendee in the unregistered prior sale,
because knowledge of the unregistered sale by the attaching creditor
is deemed equivalent to registration. We explained: but where a party
has knowledge of a prior existing interest which is unregistered at that
time he acquired a right to the same land, his knowledge of that prior
unregistered interest has the effect of registration as to him.
Knowledge of an unregistered sale is equivalent to registration.
Section 50 of Act No. 496 (now Sec. 51 of PD 1529), provides that
the registration of the deed is the operative act to bind or affect the
land insofar as third persons are concerned. But where the party has
knowledge of a prior existing interest which is unregistered at the time
he acquired a right to the same land, his knowledge of that prior
unregistered interest has the effect of registration as to him. The
torrens system cannot be used as a shield for the commission of fraud.
No merit. In the case at bar, Manila Mission presented no evidence
of the building of the chapel other than its bare allegation thereof. More
importantly, even assuming for the sake of argument that the chapel
was indeed being built at the time of the attachment of the property,
we cannot simply apply Ruiz and conclude that this confirms
knowledge of a previous conveyance of the property at that time. In
Ruiz, the attaching party was the wife of the vendor of the subject
property, whom she sued for support. It was thus very probable that
she knew of the sale of the property to the vendee therein, considering
that the vendee had already introduced improvements thereon. In the
case at bar, there is no special relationship between Rural Bank and
the Sps. Soliven sufficient to charge the former with an implied
knowledge of the state of the latters properties. Unlike in the sale of
real property, an attaching creditor is not expected to inspect the
property being attached, as it is the sheriff who does the actual act of
attaching the property.
Neither did Manila Mission present any evidence of knowledge on
the part of Rural Bank of the prior existing interest of the former at the
time of the attachment. Manila Mission merely argues that there was
a tacit recognition on the part of Rural Bank of the construction of the
chapel when the latter did not deny this allegation in its Opposition to
the Motion to Discharge Property from Attachment.
The Motion, however, merely mentions the construction of the
chapel and does not charge Rural Bank with knowledge of the
construction. There was, therefore, nothing to deny on the part of Rural
Bank, as the mere existence of such construction at that time would
not affect the right of Rural Bank to its lien over the subject property.
Also, the mention in the Motion of the construction of the chapel would
have the effect of being a notice of an adverse third-party claim only

at the time of such Motion. Since such notice, which was deemed
in Ruiz as constructive registration of the sale, was effected only
after the attachment of the subject property, it could not affect the
validity of the attachment lien.
There was likewise no evidence of knowledge on the part of Rural
Bank of any third-party interest in the subject property at the time of
the attachment. We are, therefore, constrained to grant the instant
Petition for Review and nullify the Orders of the RTC discharging the
subject property from attachment.
Nevertheless, Manila Mission would not be left without remedy. It
could file a counter-bond pursuant to Section 12, Rule 57 of the Rules
of Court in order to discharge the attachment. If Manila Mission fails
to do the same and the property ends up being subjected to execution,
it can redeem the property and seek reimbursement from the Sps.
Soliven.
Section 8. Effect of attachment of debts, credits and all other similar
personal property. All persons having in their possession or under
their control any credits or other similar personal property belonging
to the party against whom attachment is issued, or owing any debts to
him, at the time of service upon them of the copy of the writ of
attachment and notice as provided in the last preceding section, shall
be liable to the applicant for the amount of such credits, debts or other
similar personal property, until the attachment is discharged, or any
judgment recovered by him is satisfied, unless such property is
delivered or transferred, or such debts are paid, to the clerk, sheriff, or
other proper officer of the court issuing the attachment. (8a)
Engineering Construction vs. NPC (1988)
29 Aug 68: Engineering Construction Inc. filed a complaint for
damages against NPC, alleging that it suffered damages to its facilities
and equipment due to the inundation of its campsite in Ipo,
Norzagaray, Bulacan, as a direct result of the improper and careless
opening by NPC of the spillway gates of Angat Dam at the height of
typhoon "Welming".
TC found NPC guilty of gross negligence. NPC filed a notice of appeal
from that decision but before it could perfect its appeal, ECI moved for
and was granted execution pending appeal upon posting a covering
bond of P200k which it later increased to P1.109M to fully answer for
whatever damages NPC might incur by reason of the premature
execution of the lower court's decision. Court granted said motion for
the exceptional writ.
Subsequently, Deputy Sheriff Restituto R. Quemada who was
assigned to enforce the writ of execution, garnished in favor of ECI all
amounts due and payable to NPC which were then in possession of
MERALCO and sufficient to cover the judgment sum of P1,108,985.31.
NPC filed a petition for certiorari with CA. CA granted the petition
and nullified the execution pending appeal of the judgment rendered
by the trial court, as well as all issued writs and processes in
connection with the execution.
MERALCO sought from the CA a clarification and reconsideration of
the aforesaid decision on the ground, among others, that the decision
was being used by NPC to compel MERALCO to return the amount of
P1,114,545.23 (inclusive of sheriff's fees) in two checks which it had
already entrusted to the deputy sheriff on February 23, 1971, who then
indorsed and delivered the same to ECI. CA held the sheriff, MERALCO
and ECI liable to restore to NPC the amount due to NPC which
MERALCO had earlier turned over to the sheriff for payment to ECI.
ISSUE: WON the garnishee (MERALCO) is liable when the notice of
garnishment was lifted for having been proved futile
No. We are sanctioning in this particular instance the execution
pending appeal of actual but not consequential and exemplary
damages and attorney's fees which must necessarily depend on the
final resolution of the main cases, the direct consequence would be to
authorize NPC to proceed against the covering bond filed by ECI but
only to the extent of the difference between the amount finally
adjudicated by this Court in the main cases [P724,985.31] and the
amount originally decreed by the trial court relating to the
consequential and exemplary damages and attorney's fees
39
[P1,108.985.31]. In other words, ECIs bond is held answerable
to NPC for P384,000.
But while partial restitution is warranted in favor of NPC, we find that
the CA erred in not absolving MERALCO, the garnishee, from its
obligations to NPC with respect to the payment to ECI of
P1,114,543.23, thus in effect subjecting MERALCO to double liability.
MERALCO should not have been faulted for its prompt obedience to a
writ of garnishment. Unless there are compelling reasons such as: a
defect on the face of the writ or actual knowledge on the part of the
garnishee of lack of entitlement on the part of the garnisher, it is not
incumbent upon the garnishee to inquire or to judge for itself whether
or not the order for the advance execution of a judgment is valid.
Garnishment is considered as a specie of attachment for reaching
credits belonging to the judgment debtor and owing to him from a
stranger to the litigation. Under the above-cited rule, the garnishee [the
third person] is obliged to deliver the credits, etc. to the proper officer
issuing the writ and "the law exempts from liability the person having
in his possession or under his control any credits or other personal
property be, longing to the defendant, ..., if such property be delivered
or transferred, ..., to the clerk, sheriff, or other officer of the court in
which the action is pending."
Applying the foregoing to the case at bar, MERALCO, as garnishee,
after having been judicially compelled to pay the amount of the
judgment represented by funds in its possession belonging to the
judgment debtor or NPC, should be released from all responsibilities
over such amount after delivery thereof to the sheriff. The reason for
the rule is self-evident. To expose garnishees to risks for obeying court
orders and processes would only undermine the administration of
justice.
RCBC vs. Judge Castro (1988)
15 Jan '70: In an action for recovery of unpaid tobacco deliveries,
an Order was issued, ordering Phil. Virginia Tobacco Administration
(PVTA) to pay jointly and severally Badoc Planters Inc within 48 hrs
the aggregate amount of P206,916.76 with legal interests.
26 Jan: Badoc filed an Urgent Ex-Parte Motion for a writ of execution
of said partial judgment which was granted. Branch Clerk of Court
issued a Writ of Execution addressed to Special Sheriff Faustino Rigor,
who then issued a Notice of Garnishment addressed to the General
Manager and/or Cashier of RCBC, requesting a reply within 5 days to
said garnishment as to any property which the PVTA might have in the
possession or control of RCBC or of any debts owing by RCBC to PVTA.
Upon receipt of such Notice, RCBC notified PVTA thereof to enable the
PVTA to take the necessary steps for the protection of its own interest.
27 Jan: Judge issued an Order granting the Ex-Parte Motion field by
Badoc and directing RCBC "to deliver in check the amount garnished
to Sheriff Rigor and Sheriff Rigor in turn is ordered to cash the check
and deliver the amount to the Badocs representative and/or counsel.
RCBC delivered to Sheriff Rigor a certified check of P206,916.76.
PVTA filed MR. Granted. Set aside the Orders of Execution and of
Payment and the Writ of Execution and ordering RCBC and Badoc "to
restore, jointly and severally, the account of PVTA with the said bank
in the same condition and state it was before the issuance of the
aforesaid Orders by reimbursing the PVTA with interests at the legal
rate from January 27, 1970 until fully paid to the account of the PVTA
This is without prejudice to the right of plaintiff to move for the
execution of the partial judgment pending appeal in case the motion
for reconsideration is denied and appeal is taken from the said partial
judgment. This became final.
PVTAs contention: Manner in which the bank complied with the
Sheriffs Notice of Garnishment indicated breach of trust and
dereliction of duty on the part of the bank as custodian of government
funds. Urged that the premature delivery of the garnished amount by
RCBC to the special sheriff even in the absence of a demand to deliver
made by the latter, before the expiration of the 5-day period given to
reply to the Notice of Garnishment, without any reply having been
given thereto nor any prior authorization from its depositor, PVTA and
even if the court's order of January 27, 1970 did not require the bank
to immediately deliver the garnished amount constitutes such lack of
prudence as to make it answerable jointly and severally with the
plaintiff for the wrongful release of the money from the deposit of the
PVTA.

ISSUE: WON the bank should be held liable with the judgment
creditor for reimbursement of the garnished funds, when it merely
complied with the court ordered and delivered the garnished amount
to the sheriff, who in turn delivered it to the judgment creditor, but
subsequently the order of the court directing payment was set aside
No. RCBC did not deliver the amount on the strength solely of a
Notice of Garnishment; rather, the release of the funds was made
pursuant to the Order of January 27, 1970. While the Notice of
Garnishment dated January 26, 1970 contained no demand of
payment as it was a mere request for RCBC to withhold any funds of
the PVTA then in its possession, the Order of January 27, 1970
categorically required the delivery in check of the amount garnished
to the special sheriff, Faustino Rigor.
In the second place, RCBC had already filed a reply to the Notice of
Garnishment stating that it had in its custody funds belonging to the
PVTA, which, in fact was the basis of Badoc in filing a motion to secure
delivery of the garnished amount to the sheriff.
Lastly, RCBC, upon the receipt of the Notice of Garnishment, duly
informed PVTA thereof to enable the latter to take the necessary steps
for the protection of its own interest.
There was nothing irregular in the delivery of the funds of PVTA by
check to the sheriff, whose custody is equivalent to the custody of the
court, he being a court officer. The order of the court dated January
27, 1970 was composed of two parts, requiring: 1) RCBC to deliver in
check the amount garnished to the designated sheriff and 2) the sheriff
in turn to cash the check and deliver the amount to Badocs
representative and/or counsel on record. It must be noted that in
delivering the garnished amount in check to the sheriff, the RCBC did
not thereby make any payment, for the law mandates that delivery of
a check does not produce the effect of payment until it has been
cashed.
Moreover, by virtue of the order of garnishment, the same was
placed in custodia legis and therefore, from that time on, RCBC was
holding the funds subject to the orders of the court a quo. That the
sheriff, upon delivery of the check to him by RCBC encashed it and
turned over the proceeds thereof to Badoc was no longer the concern
of RCBC as the responsibility over the garnished funds passed to the
court. Thus, no breach of trust or dereliction of duty can be attributed
to RCBC in delivering its depositor's funds pursuant to a court order
which was merely in the exercise of its power of control over such
funds.
As stated earlier, the order directing the bank to deliver the amount
to the sheriff was distinct and separate from the order directing the
sheriff to encash the said check. The bank had no choice but to comply
with the order demanding delivery of the garnished amount in check.
The very tenor of the order called for immediate compliance therewith.
On the other hand, the bank cannot be held liable for the subsequent
encashment of the check as this was upon order of the court in the
exercise of its power of control over the funds placed in custodia legis
by virtue of the garnishment.
RCBC's immediate compliance with the lower court's order should
not have been met with the harsh penalty of joint and several liability.
Nor can its liability to reimburse PVTA of the amount delivered in check
be premised upon the subsequent declaration of nullity of the order of
delivery.
It may be concluded that the charge of breach of trust and/or
dereliction of duty as well as lack of prudence in effecting the
immediate payment of the garnished amount is totally unfounded.
Upon receipt of the Notice of Garnishment, RCBC duly informed PVTA
thereof to enable the latter to take the necessary steps for its
protection. However, right on the very next day after its receipt of such
notice, RCBC was already served with the Order requiring delivery of
the garnished amount. Confronted as it was with a mandatory
directive, disobedience to which exposed it to a contempt order, it had
no choice but to comply.
ISSUE: WON PVTA funds are public funds exempt from garnishment
No. Republic Act No. 2265 created the PVTA as an ordinary
corporation with all the attributes of a corporate entity subject to the
provisions of the Corporation Law. Hence, it possesses the power "to
sue and be sued" and "to acquire and hold such assets and incur such
liabilities resulting directly from operations authorized by the
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provisions of this Act or as essential to the proper conduct of
such operations. It is clear that PVTA has been endowed with a
personality distinct and separate from the government which owns
and controls it. Accordingly, this Court has heretofore declared that the
funds of the PVTA can be garnished since "funds of public corporation
which can sue and be sued were not exempt from garnishment"
ISSUE: WON RCBC was bound to inquire into the legality and propriety
of the Writ of Execution and Notice of Garnishment issued against the
funds of PVTA
No. It had neither the personality nor the interest to assail or
controvert the orders of respondent Judge. It had no choice but to obey
the same inasmuch as it had no standing at all to impugn the validity
of the partial judgment rendered in favor of Badoc or of the processes
issued in execution of such judgment.
RCBC cannot therefore be compelled to make restitution solidarily
with Badoc. Badoc alone was responsible for the issuance of the Writ
of Execution and Order of Payment and so, Badoc alone should bear
the consequences of a subsequent annulment of such court orders;
hence, only Badoc can be ordered to restore the account of the PVTA.
Manila Remnant vs. CA (1994)
Case involved parcels of land in QC which were owned by Manila
Remnant Co. Inc. and became the subject of its agreement with A.U.
Valencia and Co., Inc., (AUVCI) by virtue of which the latter was to act
as the MRCI's agent in the development and sale of the property. For
a stipulated fee, AUVCI was to convert the lands into a subdivision,
manage the sale of the lots, execute contracts and issue official
receipts to the lot buyers.
Pursuant to the above agreement, AUVCI executed two contracts to
sell dated March 3, 1970, covering Lots 1 and 2, Block 17, in favor of
Sps. Oscar C. Ventanilla and Carmen Gloria Diaz for the combined
contract price of P66,571. After 10 days and without the knowledge of
the Ventanilla couple, Valencia, as president of MRCI, resold the same
parcels to Carlos Crisostomo, one of his sales agents, without any
consideration. Upon orders of Valencia, the monthly payments of the
Ventanillas were remitted to the MRCI as payments of Crisostomo, for
which receipts were issued in his name. The receipts were kept by
Valencia without the knowledge of the Ventanillas and Crisostomo. The
Ventanillas continued paying their monthly installments.
On May 30, 1973, MRCI informed AUVCI that it was terminating their
agreement because of discrepancies discovered in the latter's
collections and remittances. On June 6, 1973, Valencia was removed
by the board of directors of MRCI as its president.
On November 21, 1978, Sps. Ventanilla, having learned of the
supposed sale of their lots to Crisostomo, filed an action for specific
performance, annulment of deeds, and damages against MRCI, AUVCI
and Carlos Crisostomo.
TC declared the contracts to sell in favor of Sps. Ventanilla valid, and
annulled the contract to sell in favor of Crisostomo. Ordered MRCI to
executed an absolute DOS in favor of Ventanillas.
25 Jan 91: Sps. Ventanilla filed a motion for issuance of writ of
execution. Writ was issued on 3 May 91 and served upon MRCI on 9
May 91.
MRCI alleged that the subject properties could not be delivered to
the Ventanillas because they had already been sold to Samuel
Marquez on February 7, 1990, while their petition was pending in this
Court. Nevertheless, MRCI offered to reimburse the amount paid by
the respondents, including legal interest plus the aforestated damages.
MRCI also prayed that its tender of payment be accepted and all
garnishments on their accounts lifted.
Ventanillas contention: Opposed the reimbursement offered by
MRCI in lieu of the execution of the absolute deed of sale. Contended
that the alleged sale to Samuel Marquez was void, fraudulent, and in
contempt of court and that no claim of ownership over the properties
in question had ever been made by Marquez.
MRCI filed manifestation and MR, praying it be ordered to reimburse
Sps. Ventanilla the amount of P263,074.10 and the garnishment of its
bank deposit be lifted. Denied. Filed second manifestation and MR but
denied again.
MRCIs contention: TC may not enforce it garnishment order after
the monetary judgment for damages had already been satisfied and

the amount for reimbursement had already been deposited with
the sheriff. Garnishment as a remedy is intended to secure the
payment of a judgment debt when a well-founded belief exists that the
erring party will abscond or deliberately render the execution of the
judgment nugatory. As there is no such situation in this case, there is
no need for a garnishment order. Also that TC gravely abused its
discretion when it arbitrarily fixed the amount of the cash bond for the
lifting of the garnishment order at P500k. Questions the propriety of
this order on the ground that it has already partially complied with the
judgment and that it has always expressed its willingness to reimburse
the amount paid by the respondents. It says that there is no need for
a garnishment order because it is willing to reimburse the Ventanillas
in lieu of execution of the absolute deed of sale.
Ventanillas contention: Validity of the sale to them had already
been established even while the previous petition was still pending
resolution. That petition only questioned the solidary liability of MRCI
to the Ventanillas. The portion of the decision ordering the MRCI to
execute an absolute deed of sale in favor of the Ventanillas became
final and executory when the petitioner failed to appeal it to the
Supreme Court. There was no need then for an order enjoining the
petitioner from re-selling the property in litigation.
ISSUE: WON partial execution by MRCI is a ground for the discharge
of the writ of attachment
No. While MRCI have readily complied with the order of the TC for
the payment of damages to the Ventanillas, they have, however,
refused to execute the absolute deed of sale. It was for the purpose of
ensuring their compliance with this portion of the judgment that the
trial court issued the garnishment order which by its term could be
lifted only upon the filling of a cash bond of P500k.
The alternative judgment of reimbursement is applicable only if the
conveyance of the lots is not possible, but it has not been shown that
there is an obstacle to such conveyance. As the main obligation of
MRCI is to execute the absolute deed of sale in favor of the Ventanillas,
its unjustified refusal to do so warranted the issuance of the
garnishment order.
Garnishment is a species of attachment for reaching credits
belonging to the judgment debtor and owing to him from a stranger
to the litigation. It is an attachment by means of which the plaintiff
seeks to subject to his claim property of the defendant in the hands of
a third person or money owed by such third person or garnishee to
the defendant. The rules on attachment also apply to garnishment
proceedings.
A garnishment order shall be lifted if it established that: (a) the party
whose accounts have been garnished has posted a counterbond or has
made the requisite cash deposit; (b) the order was improperly or
irregularly issued as where there is no ground for garnishment or the
affidavit and/or bond filed therefor are defective or insufficient; (c) the
property attached is exempt from execution, hence exempt from
preliminary attachment, or (d) the judgment is rendered against the
attaching or garnishing creditor.
Partial execution of the judgment is not included in the above
enumeration of the legal grounds for the discharge of a garnishment
order. Neither does MRCI's willingness to reimburse render the
garnishment order unnecessary. As for the counterbond, the lower
court did not err when it fixed the same at P500k. As correctly pointed
out by the respondent court, that amount corresponds to the current
fair market value of the property in litigation and was a reasonable
basis for determining the amount of the counterbond.
Chemphil Export vs. CA (1995)
(supra)
Abinujar vs. CA (1995)
10 Oct 87: Sps. Abinujar and Milagros Lana executed a DOS with
Right to Repurchase in favor of Sps Ramiro, involving a residential
house. Due to serious financial and business reverses, Sps. Abinjuar
were not able to redeem the property within 4 months as agreed upon.
24 Oct 89: Sps. Ramiro filed a complaint for ejectment.
27 Dec: Parties entered into a compromise agreement. MTC
approved the same. The agreement stated that failure on the part of
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Sps. Abinujar to pay 3 consecutive payments, Sps. Ramiro will
be entitled to a writ of execution.
15 Apr 90: Sps. Ramiro filed motion for execution.
Sps. Abinujar filed motion asking that the check payments
previously deposited by them with the court, be accepted and be given
to Sps. Ramiro in compliance with their compromise agreement. Sps.
Ramiro opposed the same.
MTC denied Sps. Ramiros motion for execution. So, filed petition for
mandamus. Sps. Abinujar moved to dismiss the petition. RTC denied
MTD and issued resolution, commanding the MTC to issue a writ of
execution of the decision approving the compromise agreement.
MTC issued an order, directing the issuance of a writ of execution to
enforce the compromise agreement entered into by the parties.
11 Apr 91: A "Sheriffs' Notice to Voluntarily Vacate the Premises"
was served on Sps. Abinujar.
Sps. Abinujars contention: Assailed the validity of the issuance by
the Deputy Sheriff of the notice to voluntarily vacate the premises by
way of enforcing the decision approving the compromise agreement.
Maintained that their obligation is monetary in nature and the
applicable rule should have been Section 15, Rule 39 and not Section
13, Rule 39 of the Revised Rules of Court.
ISSUE: WON a Compromise Agreement may discharge a writ of
execution
No. A compromise agreement is a contract between the parties,
which if not contrary to law, morals or public policy, is valid and
enforceable between them. There are two kinds of compromise
agreements, the judicial, which puts an end to a pending litigation, and
the extrajudicial, which is to avoid a litigation. As a contract, a
compromise agreement is perfected by mutual consent. A judicial
compromise, however, while binding between the parties upon its
execution, is not executory until it is approved by the court and
reduced to a judgment.
The non-fulfillment of the terms and conditions of a compromise
agreement approved by the court justifies execution thereof and the
issuance of the writ for said purpose is the court's ministerial duty
enforceable by mandamus.
When the parties entered into a compromise agreement, the original
action for ejectment was set aside and the action was changed to a
monetary obligation.
A perusal of the compromise agreement signed by the parties and
approved by the inferior court merely provided that in case Sps.
Abinujar failed to pay 3 monthly installments, Sps. Ramiro would be
entitled to a writ of execution, without specifying what the subject of
execution would be. Said agreement did not state that Sps. Abinujar
would be evicted from the premises subject of the suit in case of any
default in complying with their obligation thereunder. This was the
result of the careless drafting thereof for which only Sps. Ramiro were
to be blamed.
A judgment is the foundation of a writ of execution which draws its
vitality therefrom. An officer issuing a writ of execution is required to
look to the judgment for his immediate authority.
An execution must conform to and be warranted by the judgment
on which it was issued. There should not be a substantial variance
between the judgment and the writ of execution. Thus, an execution is
fatally defective if the judgment was for a sum of money and the writ
of execution was for the sale of mortgaged property.
As Abinujars' obligation under the compromise agreement as
approved by the court was monetary in nature, Sps. Ramiro can avail
only of the writ of execution provided in Section 15, Rule 39 of the
Revised Rules of Court, and not that provided in Section 13.
PNB vs. Olutanga (1930)
In a civil case, BPI was ordered by the court to pay to Olutanga
Lumber Co. and PNB a sum of P31,242.11. Writ of execution was
issued, which was complied with by the sheriff of Zamboanga by
presenting it to the manager of the branch of BPI Zamboanga, on
January 10, 1928, but without levying execution on any property
belonging to the execution debtor. On the same date, the sheriff
addressed to the central office of said bank at Manila the following
telegram: Execution Bank Philippine Islands versus Olutanga Lumber
Company served today manager Zamboanga branch. Please authorize

him pay amount due defendant Olutanga Lumber plus sheriff fees
otherwise levy will be made on your Zamboaga office.
On same date, before receiving the foregoing telegram, the central
office of BPI Manila was notified by the sheriff of Manila that all the
credits and debts contracted by it with the Olutanga Lumber Company,
amounting to P16,656.30 plus interest, were levied upon in the name
of PNB by virtue of a writ of attachment issued in civil case.
11 Jan: BPI, in reply to said notice, addressed a letter to the sheriff
of Manila, notifying the latter that, pursuant to his notice of attachment,
it retained at the disposal of said sheriff the aforesaid sum of
P16,656.30, plus interest at the rate of 12% per annum from April 19,
1922 until such date as may be designated.
On same date, sheriff of Manila sent a letter to BPI at Manila,
requiring the latter to deliver to him the sum of P32,109,45,
theretofore attached, belonging to the Olutanga Lumber Company.
BPI notified the provincial sheriff of Zamboanga by telegram, on
January 12, 1928, that the amount of the judgment in favor of the
Olutanga Lumber Company against said bank had been delivered to
the sheriff of the City of Manila, and that any question on that subject
should be taken up with him.
Provincial sheriff of Zamboanga sent a communication to the
manager of BPI in said city, notifying him that all the money he had in
his possession or control, belonging to the BPI, was levied upon by
virtue of an order of execution.
14 Jan: Sheriff of Manila sent a telegram to the sheriff of
Zamboanga, telling him that the amount of the judgment against BPI
and in favor of the Olutanga Lumber Company, which had been
attached by virtue of two writs of attachment issued by PNB and the
Standard Oil company of New York against the Olutanga Lumber
Company, had been deposited with him by said BPI.
Notwithstanding the fact that the provincial sheriff of Zamboanga
had been duly informed of the levy made by the sheriff of Manila upon
the funds of the Olutanga Lumber Company in possession of BPI, and
of the delivery of said funds to said judicial officer of the City of Manila,
he attempted to collect from the branch of BPI Zamboanga the amount
of the judgment in favor of the Olutanga Lumber Company, threatening
to levy, and in fact did levy, an attachment against said branch.
BPI filed a petition for prohibition. Denied. Manager of BPI
Zamboanga had no other remedy than to deliver to the sheriff of
Zamboanga the sum of P31,596.83.
ISSUE: WON the garnishment can still be enforced against the
garnishee bank when a writ of garnishment had already been satisfied
by another branch office other than the one stated in the writ
No. We have seen that after the central office of BPI Manila had
deposited with the sheriff of the City of Manila the sum of P32,109.45,
by virtue of a demand made upon it by the latter in compliance with
an order of attachment, wherein PNB was and still is the plaintiff and
the Olutanga Lumber Company was and still is the defendant, which
sum of P32,109.45 was the amount of the judgment rendered in civil
case in favor of the Olutanga Lumber Company and against BPI, said
central office of BPI notified the provincial sheriff of Zamboanga of said
consignation. But the latter, notwithstanding the attachment of said
amount by the sheriff of Manila, tried to collect from the branch office
in Zamboanga of BPI the amount of said judgment.
Under the circumstances, the Zamboanga branch had to resort to
this court for a remedy to prevent execution of said judgment. This
court denied the remedy prayed for, and upon receipt of notice of said
denial the provincial sheriff of Zamboanga insisted in collecting from
the Zamboanga branch of BPI the amount of said judgment, which
said bank had to pay.
The general rule is that, where attached properties belonging to the
principal debtor are taken out of the hands of a person by legal
process, after he had been notified of the order of attachment, said
person cannot be made to answer for the properties in a proceeding
to carry out said attachment.
In the present case, the fact that the funds attached in the
possession of BPI, belonging to the Olutanga Lumber Company, had
been deposited with the sheriff of Manila by order of said officer, does
not change the juridical situation of said funds as attached in the
possession of BPI, and, according to the above-quoted rule, the
aforesaid BPI, having been judicially compelled to pay the amount of
the judgment represented by said funds to the Olutanga Lumber
42
Company, after having employed all the legal means to avoid it,
is released from all responsibility to the PNB in whose favor the
writ of attachment was issued.
When a person has funds in his possession belonging to a debtor,
and said funds are attached by a creditor of the latter, said person is
relieved from all responsibility to said creditor if he is judicially
compelled to deliver said funds to the aforesaid debtor.
Sheriff of the City of Manila is hereby ordered to return to said bank
the amount deposited by virtue of the writ of attachment, after
deducting his legal fees, with costs against the appellant.
Perla Compania vs. Ramolete (1991)
1 Jun 76: A Cimarron PUJ owned and registered in the name of
Nelia Enriquez, and driven by Cosme Casas, was travelling from Cebu
City to Danao City. The Cimarron PUJ collided with a private jeep
owned by the late Calixto Palmes, who was then driving the private
jeep. The impact of the collision was such that the private jeep was
flung away to a distance of about 30 feet and then fell on its right side
pinning down Calixto Palmes. He died.
25 Jun: Primitiva Palmes & Honorato Borbon, Sr. filed a complaint
against Casas and Enriquez, claiming actual, moral, nominal and
exemplary damages as a result of the accident.
CFI rendered a Decision in favor of Palmes, ordering Enriquez to pay
her P10k as moral damages, P12k as compensatory damages for the
death of Calixto Palmes, P3k as exemplary damages, P5k as actual
damages, and P1k as attorney's fees. Became final and executory.
Writ of execution was issued. However, returned unsatisfied.
Consequently, Enriquez was summoned. She declared under oath that
the Cimarron PUJ registered in her name was covered by a third-party
liability insurance policy issued by Perla Compania.
31 Jul 79: Palmes filed a motion for garnishment, praying that an
order of garnishment be issued against the insurance policy issued by
Perla Compania in favor of the judgment debtor.
6 Aug: Judge Ramolete issued an Order, directing the Provincial
Sheriff or deputy to garnish the third-party liability insurance policy.
Perla Companias contention: Quash the writ of garnishment. Writ
was void on the ground that Perla was not a party to the case and that
jurisdiction over its person had never been acquired by the trial court
by service of summons or by any process. Writ of garnishment had
been issued solely on the basis of the testimony of the judgment
debtor to the effect that the Cimarron PUJ was covered by a third-party
liability insurance issued by Perla, without granting it the opportunity
to set up any defenses which it may have under the insurance contract.
ISSUE: WON the writ of garnishment should be quashed
No. Garnishment has been defined as a species of attachment for
reaching any property or credits pertaining or payable to a judgment
debtor. In legal contemplation, it is a forced novation by the
substitution of creditors: the judgment debtor, who is the original
creditor of the garnishee is, through service of the writ of garnishment,
substituted by the judgment creditor who thereby becomes creditor of
the garnishee. Garnishment has also been described as a warning to a
person having in his possession property or credits of the judgment
debtor, not to pay the money or deliver the property to the latter, but
rather to appear and answer the plaintiff's suit.
In order that the trial court may validly acquire jurisdiction to bind
the person of the garnishee, it is not necessary that summons be
served upon him. The garnishee need not be impleaded as a party to
the case. All that is necessary for the trial court lawfully to bind the
person of the garnishee or any person who has in his possession
credits belonging to the judgment debtor is service upon him of the
writ of garnishment.
The Rules of Court themselves do not require that the garnishee be
served with summons or impleaded in the case in order to make him
liable.
Through service of the writ of garnishment, the garnishee becomes
a "virtual party" to, or a "forced intervenor" in, the case and the trial
court thereby acquires jurisdiction to bind him to compliance with all
orders and processes of the trial court with a view to the complete
satisfaction of the judgment of the court.
In the present case, there can be no doubt, therefore, that the trial
court actually acquired jurisdiction over Perla when it was served with

the writ of garnishment of the third-party liability insurance policy
it had issued in favor of judgment debtor Nelia Enriquez. Perla
cannot successfully evade liability thereon by such a contention.
Every interest which the judgment debtor may have in property may
be subjected to execution. In the instant case, the judgment debtor
Nelia Enriquez clearly had an interest in the proceeds of the third-party
liability insurance contract. In a third-party liability insurance contract,
the insurer assumes the obligation of paying the injured third party to
whom the insured is liable. The insurer becomes liable as soon as the
liability of the insured to the injured third person attaches. Prior
payment by the insured to the injured third person is not necessary in
order that the obligation of the insurer may arise. From the moment
that the insured became liable to the third person, the insured
acquired an interest in the insurance contract, which interest may be
garnished like any other credit.
Perlas contention: In order that it may be held liable under the
third-party liability insurance, a separate action should have been
commenced by Palmes to establish its liability.
No merit. It is clear from Section 45, Rule 39 that if a persons
alleged to have property of the judgment debtor or to be indebted to
him claims an interest in the property adverse to him or denies the
debt, the court may only authorize the judgment creditor to institute
an action against such person for the recovery of such interest or debt.
Said section does not authorize the court to make a finding that the
third person has in his possession property belonging to the judgment
debtor or is indebted to him and to order said third person to pay the
amount to the judgment creditor.
It has been held that the only power of the court in proceedings
supplemental to execution is to make an order authorizing the creditor
to sue in the proper court to recover an indebtedness due to the
judgment debtor. The court has no jurisdiction to try summarily the
question whether the third party served with notice of execution and
levy is indebted to defendant when such indebtedness is denied.
Accordingly, Rule 39, Section 45 of the Rules of Court is not
applicable in the instant case, and we see no need to require a separate
action against Perla: a writ of garnishment suffices to hold petitioner
answerable to the judgment creditor. If Perla had any substantive
defenses against the judgment debtor, it is properly deemed to have
waived them by laches.
Tec Bi vs. IAC (1917)
This is an action to recover from Chartered Bank of India, Australia
and China, the sum of P11,572.96, the amount of a judgment
recovered by Tec Bi against La Urania Cigar Factory, and for which Tec
Bi seeks to hold the bank liable by virtue of an attempted levy of
attachment upon certain leaf tobacco in the possession of the bank
under a pledge executed by the said La Urania Cigar Factory.
The Tobacco being pledged for an amount largely in excess of its
value, the bank refused to deliver it to the sheriff, and the pledge having
become due, sold the tobacco and applied the proceeds on account of
the indebtedness, previous to the time when Tec Bi finally secured
judgment against La Urania Cigar Factory and issued execution
thereon.
It appears that Tec Bi sold to La Urania a quantity of leaf tobacco.
La Urania pledged to the bank as security for the payment of an
indebtedness of P25k the bales of tobacco. The bales of tobacco were
stored in the bodega of Sprungli & Co.
1 Feb 13: The bank demanded from Sprungli the keys to the said
bodega, and discovered that there were less than 436 bales of tobacco,
which was what was stated in the description.
Bank did not know whether La Urania misrepresented the quantity
of tobacco. However, found that La Urania, in collusion with Sprungli,
disposed said tobacco and such was made without banks consent.
That the bank had been in absolute and exclusive possession of the
tobacco until when it was sold under and by virtue of the document of
pledge by the bank for the sum of P12,722.36 which was applied on
account of said loan, the entire amount of which was then past due
and unpaid, leaving a large balance thereof still due and unpaid.
22 Apr: Tec Bi filed a complaint against La Urania, claiming the
payment of the sum of P11,572.96 as the balance of the unpaid
purchase price of the tobacco. It asked for and obtained from CFI an
attachment against the said bales of tobacco, but inasmuch as the
bodega was locked and the sheriff was informed that the keys were in
43
the possession of the bank, he demanded the delivery thereof
from the latter, which demand was refused by the bank.
Sheriff notified it that the bales of tobacco identified in the complaint
were attached subject to the results of the complaint filed by Tec Bi
against La Urania.
8 Mar: The bank confirmed the fact that it had in its possession the
tobacco as security for the payment of a loan and that it intended to
sell the same.
CFI rendered judgment against La Urania. And so, sheriff attempted
to execute the judgment upon the bales of tobacco attached and in
the possession of the bank, but was unable to do so due to the
statement of the agent of said bank, that the tobacco had been sold
and that the proceeds of the sale had been applied upon the payment
of the amount due to from La Urania.
Tec Bis contention: His right as a preferred creditor for the amount
of the purchase price of the tobacco was not prejudiced and could not
be prejudiced by the pledge of the tobacco to the bank, since the date
of the contract of pledge is not evidenced by a public document; and,
further, that he had a perfect right to attach the tobacco in the course
of judicial proceedings for the recovery of his claim against the pledgor,
for the purchase price of the tobacco pledged to the bank.
Banks contention: The right of preference in favor of the bank, to
which the tobacco had been pledged by the common debtor, excluded
the preference in favor of Tec Bi; and that Tec Bi could not rely on the
provisions of Article 1865 of CC, because he was not a "third person"
in the sense in which these words are used in that article.
ISSUE: What is the remedy of the judgment creditor against the
garnishee if the judgment debt remains unsatisfied?
The remedy of the judgment creditor is to satisfy his claim against
the garnishee in the same case or in a separate case.
After execution unsatisfied against the judgment debtor, the
judgment creditor may bring an action at law against a garnishee upon
whom notice was served under an attachment issued in the action
before judgment; and it is not necessary before bringing such action
that the garnishee should be required to appear and answer, or that
an order should be obtained authorizing the action against the
garnishee; and no equitable circumstance need be shown to justify the
suit, which is upon direct liability of the garnishee to the plaintiff in that
suit provided for in section 544 of the Code of Civil Procedure.
As to the contention that Tec Bi should have been required to have
execution issued and returned unsatisfied, in whole or in part, before
the court below could entertain this action, it is to be observed, not
only that this contention wholly fails to take into account the ruling in
our former opinion, just referred to, holding that the pledge of the
tobacco to the defendant bank was wholly ineffective in so far as the
rights of third persons were concerned; and that such an objection,
even if well founded, should have been advanced in the trial court, and
cannot be raised for the first time on appeal, and still less upon a
motion for a rehearing after decision has been rendered in the CA.
Under Art. 1865 of CC, there can be no doubt that had the date of
the contract of pledge been evidenced by a public document, the
preferential right of the pledgee would have been superior to and
excluded all and any preferential rights of the vendor. However, the
pledge contract does contain a date and not evidenced by a public
instrument.
It cannot be doubted that with relation to the pledgor and the
pledgee the original vendor of the goods was a third person. The words
are not susceptible of any possible explanation which would exclude
him. He had no privity with either of the parties to the pledge contract.
He had no knowledge of the execution of that contract. He did not
participate in it in any way whatever. His rights so far as they affected
the pledged property, were adverse to both pledgor and pledgee. In a
word he was as to them a third person.
It necessarily follows that since the execution of the pledge in favor
of the defendant bank without the date of execution being evidenced
by a public instrument could have no effect as again the plaintiff, he
was strictly within his rights in asserting his claims as a preferred
creditor and in levying an attachment against the tobacco; and the
defendant bank could not lawfully assert any right as a pledgee or
preferred creditor which adversely affected the rights of the plaintiff in
the premises.

Even though the date of the bank's pledge is not evidenced in
a public document, still the delivery of the tobacco into the
possession of the bank defeated the right of Tec Bi to a preference.
First. While the contract of pledge and the delivery of the tobacco
undoubtedly created a valid pledge as between the pledgor and the
pledgee, so that the pledgor himself could not disturb the possession
of the pledgee; still, with relation to third person, the possession of the
bank must be deemed to be that of the purchaser of the tobacco, since
under the provisions of Art. 1865, the execution of the pledge could
not affect the right of third person. As to third persons, the pledge and
the pledged property must be treated as if the pledge never had been
executed.
Second. Even if it were true that Tec Bi had lost his statutory right of
preference as a result of the execution of the pledge and the delivery
of possession to the bank, still he had a perfect right to levy an
attachment on the tobacco pending his action to recover the amount
of the pledgor's indebtedness, unless the execution of the pledge had
the effect of depriving him of that right. But it is very clear that under
the express provisions of Art. 1865, no such effect could be given the
pledge.
The possession of the bank was not absolute and exclusive in the
sense that it could in any wise affect the right of another credit of the
common debtor, a "third person" with relation to the pledge contract,
to levy an attachment upon the tobacco. We must conclude therefore
that the stipulation as to the truth of the allegation of the answer that
the possession of the tobacco by the bank was "absolute and exclusive"
was intended only to mean that it was "absolute and exclusive" so far
as the pledgor himself was concerned; or else that the stipulation as
to the truth of the allegations of the answer did not include this
averment as to the "absolute and exclusive" possession of the tobacco
by the bank it being merely a conclusion of law, based upon the other
allegations of facts alleged by the pleader.
Consolidated Bank and Trust Corp. vs. IAC (1987)
Consolidated Bank (Solidbank) loaned NICOS sums of money in the
total amount of P4,076,518.64. Subsequently, NICOS failed to pay
back the loan, prompting Solidbank to filed a collection case.
The court issued an order of attachment upon the rights, interests,
and participation of which NICOS may have in TCT T-210581 and TCT
T-10580.
1 Sep 82: Pursuant to the writ of attachment issued by the Court
and upon posting of bond, Sheriff of Manila levied and attached the 2
real properties, including the buildings and other improvements
thereon. Afterwards, the Sheriff sent separate Notices of Levy Upon
Realty to the Registrar of Deeds of Malolos, Bulacan, dated September
1, 1982 requesting him "to make the proper annotation in the books
of your office" by virtue of the order of attachment.
7 Sep: ROD Malolos, Bulacan, pursuant to the request of the Manila
Sheriff, inscribed and annotated the Notices of Levy Upon Real
Property at the back of the TCTs.
Guards were deputized by the Manila Sheriff to secure the premises
of the 2 attached realties.
11 Jul 83: The attached properties which had been mortgaged by
NICOS to UCPB on March 11, 1982, were extrajudicially foreclosed by
the latter. As the highest bidder therein, a certificate of sale was issued
to it by the Sheriff of Bulacan over the subject realties including the
buildings and improvements thereon.
Subsequently, UCPB sold all of its rights, interests, and participation
over the properties in question to a certain Manuel Go. And Manuel Go
sold all the rights he acquired from UCPB over the same lots on that
very same day to Golden Star.
5 Oct: NICOS, though fully aware that it still had the right to redeem
the auctioned properties within the 1-year period of redemption from
July 11, 1983, suddenly executed a document entitled "Waiver of Right
of Redemption" in favor of Golden Star.
15 Sep: Golden Star filed a petition for the issuance of a writ of
possession. Granted. In accordance with the grant, armed men of
Golden Star forcibly took over the possession of the properties in
dispute from the guards deputized by the Sheriff of Manila to secure
the premises.
21 Nov: Solidbank, on the strength of its prior attachment over the
lands in question, filed with the Malolos court an omnibus motion to
annul the writ of possession. Denied.
44
ISSUE: WON the subject properties were under custodia legis
by virtue of the prior annotation of a writ of attachment in
Solidbanks favor at the time the properties were extrajudicially
foreclosed
Yes. Based on the evidence on record, the conclusion is clear that
the disputed real properties were under custodia legis by virtue of a
valid attachment at the time the same were extrajudicially foreclosed
by a third party mortgagee.
The rule is well settled that when a writ of attachment has been
levied on real property or any interest therein belonging to the
judgment debtor, the levy thus effected creates a lien which nothing
can destroy but its dissolution.
The foregoing conclusion has two necessary consequences. Firstly, it
follows that the writ of possession issued by the Malolos court in favor
of Golden Star is null and void ab initio because it interfered with the
jurisdiction of a co-ordinate and co-equal court. While property or
money is in custodia legis, the officer holding it is the mere hand of
the court, his possession is the possession of the court, and to interfere
with it is to invade the jurisdiction of the court itself.
Of equal importance is the fact that the transactions on which
respondent Golden Star's right to a writ of possession are based are
highly irregular and questionable, to say the least, considering the
following circumstances: On July 11, 1983, the Sheriff of Bulacan
executed a certificate of sale over the two lots in question in favor of
UCPB. On August 29, 1983, or about a month and a half later, UCPB
sold its rights, interests and participation over the lands to Manuel Go.
On that very same day, August 29, 1983, Manuel Go sold the same
properties to respondent Golden Star. On October 5, 1983, NICOS
which had a one year right of redemption over the lands in question
executed a Waiver of Right of Redemption in favor of Golden Star.
Based on the foregoing facts, we find that NICOS and Golden Star
conspired to defeat Solidbank's lien on the attached properties and to
deny the latter its right of redemption.
Secondly, it likewise follows that the petitioner has acquired by
operation of law the right of redemption over the foreclosed properties
pursuant to Sec. 6 of Act No. 3135: In all such cases in which an
extrajudicial sale is made ... any person having a lien on the property
subsequent to the mortgage ... may redeem the same at any time within
the term of one year from and after the date of sale.
An attaching creditor may succeed to the incidental rights to which
the debtor was entitled by reason of his ownership of the property, as
for example, a right to redeem from a prior mortgage. The fact that
NICOS executed a waiver of right of redemption in favor of Golden StaR
on October 5, 1983 is of no moment as by that time it had no more
right which it may waive in favor of another.
Golden Stars contention: Even if the attachment in issue was duly
registered and Solidbank has a right of redemption, the certificate of
sale of the lands in question was registered on September 6, 1983.
Claimed that the period to redeem therefore lapsed on September 6,
1984 without Solidbank ever exercising any right of redemption.
No merit. Well settled is the rule that the pendency of an action tolls
the term of the right of redemption. It has been held that "under a
statute limiting the time for redemption ... the right of redemption
continues after perfection of an appeal ... until the decision of the
appeal. In the case at bar, Solidbank commenced the instant action
by way of an omnibus motion before the Bulacan Court on November
21, 1983 or barely 2 months after the certificate of sale was registered
on September 6, 1983, well within the one year period of redemption.
BF Homes, Inc. vs. CA (1990)
19 Jul 84: BF Homes contracted a loan from Rosalinda Roa and
Vicente Mendoza in the amount of P250k. The obligation was
embodied in a P/N and secured by 2 post-dated checks issued by BF
in favor of the lenders.
25 Sep: BF filed a Petition for Rehabilitation and for a Declaration
in a State of Suspension of Payments under Sec. 5(d) of PD 902-A with
a prayer that upon the filing of the petition and in the meantime, all
claims against it for any and all accounts or indebtedness be
suspended, but allowing BF Homes to continue with its normal
operations. It also asked for the approval of the proposed rehabilitation
plan.

17 Oct: Roa and Mendoza filed a complaint against BF Homes
for the recovery of the loan of P250k. Also prayed for the issuance
of a writ of preliminary attachment against properties of BF.
22 Oct: TC issued the writ against BF Homes. BF moved for
dismissal, which was denied. BF filed for certiorari.
18 Mar 85: SEC, finding an urgent need to rehabilitate BF, issued
an order creating a management committee and suspending all
actions for claims against BF pending before any court, tribunal or
board.
6 Jun 86: CA rendered decision dismissing the complaint and
declaring the writ of preliminary attachment null and void. Roa and
Mendoza filed MR. Writ still dissolved. At the same time, however, it
suspended the proceedings therein until after the management
committee shall have been impleaded as party defendant.
BF Homes contention: Action should be resumed only until after
SEC Case No. 002693 shall have been adjudicated on the merits but
now agrees with Roa and Mendoza, in line with the "assessment" of the
Solicitor General, that the action should be suspended pending the
outcome of the rehabilitation proceedings.
ISSUE: WON the appointment of a rehabilitation receiver defeat a prior
attachment which was made on record
No. Coming now to the writ of preliminary attachment, we find that
it must stand despite the suspension of the proceedings in the RTC of
Quezon City. The writ was issued prior to the creation of the
management committee and so should not be regarded as an undue
advantage of Mendoza and Roa over the other creditors of BF.
The respondent court did not rule on whether the issuance of the
writ was improper or irregular. It simply said that the writ was no longer
proper or necessary at that time because the properties of BF were in
the hands of the receiver. We do not think so.
The appointment of a rehabilitation receiver who took control and
custody of BF has not necessarily secured the claims of Roa and
Mendoza. In the event that the receivership is terminated with such
claims not having been satisfied, the creditors may also find
themselves without security therefor in the civil action because of the
dissolution of the attachment. This should not be permitted. Having
previously obtained the issuance of the writ in good faith, they should
not be deprived of its protection if the rehabilitation plan does not
succeed and the civil action is resumed.
If there is an attachment or sequestration of the goods or estate of
the defendant in an action which is removed to a bankruptcy court,
such an attachment or sequestration will continue in existence and
hold the goods or estate to answer the final judgment or decree in the
same manner as they would have been held to answer the final
judgment or decree rendered by the Court from which the action was
removed, unless the attachment or sequestration is invalidated under
applicable law.
Under the Rules of Court, a writ of attachment may be dissolved only
upon the filing of a counter-bond or upon proof of its improper or
irregular issuance. Neither ground has been established in the case at
bar to warrant the discharge of the writ. No counter-bond has been
given.
In sum, the Court holds that the substitution of the management
committee/rehabilitation receiver in Civil Case No. Q-43104 in the RTC
of Quezon City is not necessary because the proceedings therein shall
be suspended anyway pending implementation of the revised
rehabilitation plan, during which the writ of preliminary attachment
shall remain in force.
Republic vs. Saludares (2000)
2 Apr 86: PCGG issued a writ of sequestration, based on the ground
that the shares of stocks in LBLC owned by Peter A. Sabido formed
part of "illegally acquired wealth."
27 July 87: The Republic of the Philippines through the PCGG and
the Office of the Solicitor General filed before the Sandiganbayan a
complaint for reconveyance, reversion, accounting, restitution and
damages against, among others, Peter A. Sabido.
12 Aug: Sabido filed a motion to lift the writs of sequestration.
Granted. PCGG filed MR.
11 Feb 93: Hung Ming Kuk filed a complaint for sum of money
against LBLC, with a prayer for a writ of preliminary attachment. The
45
PCGG was not impleaded by Hung Ming Kuk as party-defendant
nor was the sequestration case referred to the RTC's
proceedings. Thus, the Republic of the Philippines filed a special civil
action for certiorari.
Sandiganbayan denied the MR of PCGG.
17 Feb 93: TC granted the writ of preliminary attachment in favor
of Hung Ming Kuk.
Thereafter, Hung Ming Kuk filed a motion to declare LBLC in default
for failure to file responsive pleadings. RTC of Lianga issued an order,
declaring LBLC in default.
Republics contention: RTC of Lianga has no jurisdiction over the
subject matter of the case inasmuch as the same are under
sequestration by the PCGG. The sequestered assets have been placed
under custodia legis of the PCGG pending the final determination by
the Sandiganbayan that said assets are in fact ill-gotten. Hence, the
RTC has no jurisdiction to order the attachment of said sequestered
properties.
Hung Ming Kuks contention: His original complaint was for a sum
of money. It was a demand for payment of a valid obligation owed to
him by LBLC. He adds that it would be unfair and unjust to declare the
entire RTC proceedings regarding his claim for sum of money null and
void. Further claimed that the attachment order of the trial court was
issued after the Sandiganbayan had lifted the writ of sequestration
against LBLC.
ISSUE: WON the provisional remedy of attachment issued by the TC
in favor of Hung Ming Kuk was valid
No. It bears recalling that when the Sandiganbayan ordered that the
writ of sequestration be lifted, PCGG filed a special civil action for
certiorari to contest that order. The Supreme Court ruled in favor of
PCGG when it granted the latter'spetition to declare the lifting of the
writ of sequestration by the Sandiganbayan null and void.
Sequestration is defined as the process, which may be employed as
a conservatory writ whenever the right of the property is involved, to
preserve, pending litigation, specific property subject to conflicting
claims of ownership or liens and privileges.
The Court also noted the relationship between attachment and
receivership, on one hand, and sequestration, freeze order and
provisional takeover on the other. The latter there are ancillary
remedies in prosecuting the ill-gotten wealth of the previous Marcos
regime. The Court observed that sequestration, freezing and
provisional takeover are akin to the provisional remedy of preliminary
attachment or receivership.
By an order of attachment, a sheriff seizes property of a defendant
in a civil suit so that it may stand as security for the satisfaction of any
judgment that may be obtained, and not disposed of, or dissipated, or
lost intentionally, or otherwise, pending the action. When a writ of
attachment has been levied on real property or any interest therein
belonging to the judgment debtor, the levy creates a lien which nothing
can destroy but its dissolution. This well-settled rule is likewise
applicable to a writ of sequestration.
In our view, the disputed properties of LBLC were already under
custodia legis by virtue of a valid writ of sequestration issued by the
PCGG on April 2, 1986, when Judge Saludares issued the assailed writ
of attachment in favor of Hung Ming Kuk. At that time the writ of
sequestration issued by PCGG against LBLC was subsisting. Said writ
of the PCGG could not be interfered with by the RTC of Lianga, because
the PCGG is a coordinate and co-equal body. The PCGG had acquired
by operation of law the right of redemption over the property until after
the final determination of the case or until its dissolution.
Section 12. Discharge of attachment upon giving counter-bond. After
a writ of attachment has been enforced, the party whose property has
been attached, or the person appearing on his behalf, may move for
the discharge of the attachment wholly or in part on the security given.
The court shall, after due notice and hearing, order the discharge of
the attachment if the movant makes a cash deposit, or files a counter-
bond executed to the attaching party with the clerk of the court where
the application is made, in an amount equal to that fixed by the court
in the order of attachment, exclusive of costs. But if the attachment is
sought to be discharged with respect to a particular property, the
counter-bond shall be equal to the value of that property as
determined by the court. In either case, the cash deposit or the

counter-bond shall secure the payment of any judgment that the
attaching party may recover in the action. A notice of the deposit
shall forthwith be served on the attaching party. Upon the discharge of
an attachment in accordance with the provisions of this section, the
property attached, or the proceeds of any sale thereof, shall be
delivered to the party making the deposit or giving the counter-bond,
or to the person appearing on his behalf, the deposit or counter-bond
aforesaid standing in place of the property so released. Should such
counter-bond for any reason be found to be or become insufficient,
and the party furnishing the same fail to file an additional counter-
bond, the attaching party may apply for a new order of attachment.
Manila Remnant vs. CA
Insular vs. CA
KO Glass vs. Valenzuela (supra.)
Security Pacific vs. Tria-Infante (2005)
26 Aug 88: Reynaldo Anzures instituted a complaint against
Teresita Villaluz for violation of BP 22. An ex-parte motion for
preliminary attachment dated 6 Mar 89 was filed by Anzures.
3 Jul 89: TC issued order for the issuance of a writ of preliminary
attachment upon Anzures posting of a bond fixed at P2,123,400.
An attachment bond was thereafter posted by Anzures and
approved by the court. Thereafter, the sheriff attached certain
properties of Villaluz, which were duly annotated on the corresponding
certificates of title.
25 May 90: TC rendered a Decision on the case acquitting Villaluz
of the crime charged, but held her civilly liable. Villaluz appealed but
CA affirmed the TC.
During pendency of the case with the SC, Villaluz posted a
counterbond of P2.5M issued by Security Pacific Assurance Corp.
Villaluz filed an Urgent Motion to Discharge Attachment.
SC affirmed in toto the decision of the CA. The decision became
final. Anzures moved for execution of judgment before the TC.
7 May 99: TC issued a Writ of Execution.
Sheriff Buazon tried to serve the writ of execution upon Villaluz, but
the latter no longer resided in her given address. So the sheriff sent a
Notice of Garnishment upon Security Pacific at its office in Makati City,
by virtue of the counter-bond posted by Villaluz with said insurance
corporation in the amount of P2.5M. As reported by the sheriff,
Security Pacific refused to assume its obligation on the counter-bond
it posted for the discharge of the attachment made by Villaluz.
Anzures filed a Motion to Proceed with Garnishment, which was
opposed by Security Pacific, contending that it should not be held
liable on the counter-attachment bond.
31 Mar 2000: TC granted the Motion to Proceed with Garnishment.
The sheriff issued a Follow-Up of Garnishment addressed to the
President/General Manager of Security Pacific dated 3 Apr 2000.
7 Apr: Security Assurance filed a Petition for Certiorari with
Preliminary Injunction and/or Temporary Restraining Order with CA,
seeking the nullification of the TCs order granting the garnishment.
Security Pacifics contention: Writ of attachment which was earlier
issued against the real properties of Villaluz was not discharged. Since
the writ was not discharged, then its liability did not accrue. The alleged
failure of this Court to approve the counter-bond and to cause the
discharge of the attachment against Villaluz prevented the happening
of a condition upon which the counter-bonds issuance was premised,
such that petitioner should not be held liable thereon. The mere filing
of a counter-bond cannot automatically discharge the attachment
without first an order of discharge and approval of the bond.
Anzures contention: The filing of the counter-bond by Villaluz had
already ipso facto discharged the attachment on the properties and
made Security Pacific liable on the bond. Upon acceptance of the
premium, there was already an express contract for surety between
Villaluz and Security Pacific in the amount of P2.5M to answer for any
adverse judgment/decision against Villaluz.
ISSUE: WON the attachment on the property of Villaluz was discharged
by the mere act of posting the counter-bond
Yes. Under the Rules, there are two (2) ways to secure the discharge
of an attachment. First, the party whose property has been attached or
a person appearing on his behalf may post a security. Second, said
46
party may show that the order of attachment was improperly or
irregularly issued. The first applies in the instant case.
It should be noted that we permitted Villaluz to file a counter-
attachment bond. On 17 February 1997, we required the Anzures to
comment on the sufficiency of the counter-bond posted by Villaluz.
It is quite palpable that the necessary steps in the discharge of an
attachment upon giving counter-bond have been taken. To require a
specific order for the discharge of the attachment when this Court, in
our decision, had already declared that Security Pacific is solidarily
bound with Villaluz would be mere surplusage.
During the pendency of this petition, a counter-attachment bond
was filed by Villaluz before this Court to discharge the attachment
earlier issued by the trial court. Said bond amounting to P2.5M was
furnished by Security Pacific Assurance, Corp. which agreed to bind
itself "jointly and severally" with Villaluz for "any judgment" that may
be recovered by Anzures against the former.
The filing of the counter-attachment bond by Villaluz has discharged
the attachment on the properties and made Security Pacific liable on
the counter-attachment bond. This can be gleaned from the
"Defendants Bond for The Dissolution Of Attachment", which states
that Security Pacific, as surety, in consideration of the dissolution of
the said attachment jointly and severally, binds itself with Villaluz for
any judgment that may be recovered by Anzures against Villaluz.
The contract of surety is only between Villaluz and Security Pacific.
Security Pacific cannot escape liability by stating that a court approval
is needed before it can be made liable. This defense can only be availed
by Security Pacific against Villaluz but not against third persons who
are not parties to the contract of surety. The petitioners hold
themselves out as jointly and severally liable without any conditions in
the counter-attachment bond. Security Pacific cannot impose
requisites before it can be made liable when the law clearly does not
require such requisites to be fulfilled.
Calderon vs. IAC (supra.)
Metro, Inc. vs. Laras Gifts (2009)
Laras Gifts and Decors Inc. and Metro, Inc. are corporations
engaged in the business of manufacturing, producing, selling and
exporting handicrafts. Luis Villafuerte, Jr. and Lara Maria R. Villafuerte
are the president and vice-president of Laras Gifts respectively.
2001: Metro and Laras Gifts agreed that Laras Gifts would endorse
to Metro purchase orders received by Laras Gifts from their buyers in
the USA in exchange for a 15% commission, to be shared equally by
Laras Gifts and James R. Paddon (JRP), LGDs agent.
May 2003: Laras Gifts filed a complaint against Metro for sum of
money and damages with prayer for issuance of writ of preliminary
attachment. Subsequently filed an amended complaint, alleging that
as of July 2002, Metro defrauded them in the amount of $521,841.62.
Also prayed for P1M as moral damages, P1M as exemplary damages
and 10% of the judgment award as attorneys fees.
23 Jun: TC granted and issued the writ of attachment against the
properties and assets of Metro Inc. The writ provided that properties
are to attached as may be sufficient to satisfy the demand of Laras
Gifts in the amount equivalent to about P27M, unless Metro make a
deposit or give a bond in the same amount. The plaintiffs bond was in
the amount of P25M.
26 Jun: Metro filed a motion to discharge the writ of attachment. TC
granted the motion and lifted the writ of attachment.
Laras Gifts contention: TC gravely abused its discretion when it
ordered the discharge of the writ of attachment without requiring
petitioners to post a counter-bond.
Metros contention: The writ of attachment was improperly issued
because Laras Gifts amended complaint failed to allege specific acts
or circumstances constitutive of fraud. The improperly issued writ of
attachment may be discharged without the necessity of filing a
counter-bond. Also argued that Laras Gifts failed to show that the writ
of attachment was issued upon a ground which is at the same time
also Laras Gifts cause of action. Maintained that Laras Gifts
amended complaint was not an action based on fraud but was a
simple case for collection of sum of money plus damages.
ISSUE: WON the writ of attachment was improperly issued such that
it may be discharged without the filing of a counter-bond

No. In this case, the basis of Laras Gifts application for the
issuance of a writ of preliminary attachment is Section 1(d), Rule
57 of the Rules of Court.
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.
The applicant for a writ of preliminary attachment must sufficiently
show the factual circumstances of the alleged fraud because
fraudulent intent cannot be inferred from the debtors mere non-
payment of the debt or failure to comply with his obligation.
In their amended complaint, respondents alleged the following in
support of their prayer for a writ of preliminary attachment: that
defendants will sell exclusively and only thru plaintiffs for their US
buyer. Also provided that: Defendants are likewise guilty of fraud by
violating the trust and confidence reposed upon them by plaintiffs.
Defendants received the proceeds of plaintiffs LCs with the clear
obligation of remitting 15% thereof to the plaintiffs. Their refusal and
failure to remit the said amount despite demand constitutes a breach of
trust amounting to malice and fraud.
Laras Gifts allegation that Metro undertook to sell exclusively and
only through JRP/LGD for Target Stores Corporation but that Metros
transacted directly with Laras Gifts foreign buyer is sufficient
allegation of fraud to support their application for a writ of preliminary
attachment. Since the writ of preliminary attachment was properly
issued, the only way it can be dissolved is by filing a counter-bond.
The rule that "when the writ of attachment is issued upon a ground
which is at the same time the applicants cause of action, the only
other way the writ can be lifted or dissolved is by a counter-bond" is
applicable in this case.
It is clear that in Laras Gifts amended complaint of fraud is not only
alleged as a ground for the issuance of the writ of preliminary
attachment, but it is also the core of its complaint. The fear of the CA
that Metro could force a trial on the merits of the case on the strength
of a mere motion to dissolve the attachment has a basis.
Section 13. Discharge of attachment on other grounds. The party
whose property has been ordered attached may file a motion with the
court in which he action is pending, before or after levy or even after
the release of the attached property, for an order to set aside or
discharge the attachment on the ground that the same was improperly
or irregularly issued or enforced, or that the bond is insufficient. If the
attachment is excessive, the discharge shall be limited to the excess. If
the motion be made on affidavits on the part of the movant but not
otherwise, the attaching party may oppose the motion by counter-
affidavits or other evidence in addition to that on which the attachment
was made. After due notice and hearing, the court shall order the
setting aside or the corresponding discharge of the attachment if it
appears that it was improperly or irregularly issued or enforced, or that
the bond is insufficient, or that the attachment is excessive, and the
defect is not cured forthwith.
Jopillo, Jr. vs. CA (1988)
18 Oct 85: Raymond Lim filed a complaint for the collection of sum
of money in the amount of P100k with prayer of preliminary
attachment, alleging that Porfirio Jopillo, Jr. was, among others, guilty
of fraud in contracting the obligation in that from the very beginning
he had no intention to pay the same and that he is disposing of the
scrap materials subject of their agreement to defraud Lim.
21 Oct: TC granted ex-parte the prayer for the writ. It required Lim
to file a bond in the amount of P100k. Pursuant to said order, Sheriff
De Guzman attached a Chevrolet truck owned by Jopillo.
25 Oct: Jopillo filed an urgent motion to discharge the writ of
attachment, alleging therein that the issuance of the writ was irregular
and improper. At the hearing of the motion, Jopillo testified that their
agreement was for simple loans which have been fully paid by way of
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off-set when he delivered scrap materials to Lim on various
occasions. In support thereof, Jopillo presented receipts
purportedly signed by the secretary of Lim accepting deliveries of the
scrap materials.
6 Nov: TC denied Jopillos motion. It held that the writ of attachment
is within the context of the law and instead required Jopillo to put up
a counterbond in the amount equal to the value of the property
attached to discharge the writ of attachment pursuant to Section 12
of Rule 57 of the Rules of Court.
Jopillo filed MR. TC denied. Jopillo filed petition for certiorari. CA
denied.
Jopillos contention: Judge committed a GAD amounting to lack of
jurisdiction when he refused to order the discharge of the Writ of
attachment. Contended that having established by evidence that he
had paid in full the obligation sued upon, Lim has no cause of action
much less a ground to obtain a writ of attachment against him. Alleged
that the attachment may be considered as improperly or irregularly
issued when the facts alleged in Lims affidavit have been shown to be
untrue by Jopillo. Contended that it is incumbent upon Lim to prove
the facts in issue either by affidavit or deposition or some form of
evidence.
ISSUE: WON a motion to discharge a writ of attachment should be
granted upon presentation of evidence by the party whose property
has been attached to show that the attachment is improper or irregular
No. A motion to discharge a writ of attachment on the ground that
the same was improperly or irregularly issued may be established by
the affidavits submitted by the party whose property has been
attached or such other evidence presented at the hearing of the
motion. The attaching creditor may oppose the same by counter-
affidavits or other evidence in addition to that with which the
attachment was made.
If the movant establishes that the facts stated in the plaintiffs
affidavit or some of them, are shown to be false or untrue, the writ of
attachment may be considered as improperly or irregularly issued. The
determination of the existence of said grounds to discharge a writ of
attachment rests in the sound discretion of the lower court.
In the present case, although the evidence submitted by Jopillo
tended to show payment of the obligation subject of the complaint, it
appears that the genuineness of the alleged receipt of the scrap
materials which Jopillo claims to have delivered to Lim to offset his
obligation is in issue. Besides, the nature of the agreement and the
actual deliveries made of the scrap materials, among others, are
factual issues that must be resolved at the trial on the merits and not
at the hearing of the motion to discharge the writ of attachment. If Lim
did not present any counter-affidavit or evidence to counteract what
has been adduced by Jopillo at the hearing of the motion, it must be
because Lim believed that it was not necessary. As it is, the trial court
was apparently not persuaded by the evidence presented by Jopillo so
it ordered that the writ of attachment be maintained and directed that
if petitioner wants a discharge of the writ, he must put up a bond in
accordance with Section 12, Rule 57 of the Rules.
Jopillos contention: The attachment should be discharged in
accordance with Section 13 of Rule 57 and refuses to put up a counter-
bond as suggested by the court a quo.
No merit. Even assuming that the trial court committed an error in
denying the motion to discharge the writ of attachment, the error (if it
is an error at all) is an error in judgment which cannot be corrected
through the extraordinary remedy of certiorari but by an ordinary
appeal at the proper time.

Mindanao Savings vs. CA (1989)
10 Sep 86: Poly Mercado and Juan Mercado filed a complaint
against D.S. Homes, Inc. and its directors for rescission of contract and
damages with prayer for issuance of a writ of preliminary attachment.
The writ was granted ex parte.
22 Sep: Mercado amended their complaint, impleading as
additional defendants Davao Savings & Loan Assoc. and its president
Villamor. Judge Dinopol issued ex parte an amended order of
attachment.
D.S. Homes and Davao Savings (later renamed Mindanao Savings)
and Villamot filed motions to quash the writ, which were denied. D.S.
Homes offered a counterbond in the amount of P1,752,861.41 per
certificate issued by Land Bank. Lower court accepted the bank
certificate of deposit and lifted the writ.
29 Jul 87: Mindanao Savings and Villamor filed a petition for
certiorari to annul the order of attachment and the denial of their
motion to quash the same, alleging that the trial court acted in excess
of its jurisdiction in issuing the ex parte orders of preliminary
attachment and in denying their motion to quash the writ.
CA dismissed the petition, ruling that objections against the writ may
no longer be invoked once a counterbond is filed for its lifting or
dissolution.
ISSUE: WON one can still file a motion to quash the writ even after the
filing of the counterbond
No. The only requisites for the issuance of a writ of preliminary
attachment under Section 3, Rule 57 of the Rules of Court are the
affidavit and bond of the applicant. No notice to the adverse party or
hearing of the application is required. As a matter of fact, a hearing
would defeat the purpose of this provisional remedy. The time which
such a hearing would take, could be enough to enable the defendant
to abscond or dispose of his property before a writ of attachment
issues. Nevertheless, while no hearing is required by the Rules of Court
for the issuance of an attachment, a motion to quash the writ may not
be granted without "reasonable notice to the applicant" and only "after
hearing.
CA did not err in holding that objections to the impropriety or
irregularity of the writ of attachment "may no longer be invoked once
a counterbond is filed," when the ground for the issuance of the writ
forms the core of the complaint.
Indeed, after the defendant has obtained the discharge of the writ
of attachment by filing a counterbond under Section 12, Rule 57 of
the Rules of Court, he may not file another motion under Section 13,
Rule 57 to quash the writ for impropriety or irregularity in issuing it.
The reason is simple. The writ had already been quashed by filing a
counterbond, hence, another motion to quash it would be pointless.
Moreover, when the ground for the issuance of the writ is also the core
of the complaint, the question of whether the plaintiff was entitled to
the writ can only be determined after, not before, a full-blown trial on
the merits of the case.
May the defendant, after procuring the dissolution of the attachment
by filing a counterbond, ask for the cancellation of the counterbond on
the ground that the order of attachment was improperly issued? The
obligors in the bond are absolutely liable for the amount of any
judgment that the plaintiff may recover in the action without reference
to the question of whether the attachment was rightfully or wrongfully
issued."
The liability of the surety on the counterbond subsists until the Court
shall have finally absolved the defendant from the plaintiffs claims.
Only then may the counterbond be released. The same rule applies to
the plaintiffs attachment bond. The liability of the surety on the bond
subsists because the final reckoning is when the Court shall finally
adjudge that the attaching creditor was not entitled to the issuance of
the attachment writ.
Benitez vs. IAC (1987)
6 Dec 84: Casa Filipina Devt Corp. filed a complaint against Helena
Benitez for rescission of contract, plus damages, with prayer for
preliminary attachment. Complaint alleged:
Sometime 16 Apr 83, Casa Filipina, a real estate corporation,
represented by Renato P. Dragon, and Benitez entered into a verbal
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contract whereby Benitez allegedly agreed to undertake to
purchase/convey land for Casa Filipina in the total value of P1M
within the period of 4 months from receipt of the total amount.
On the same date, Casa Filipina tendered a check payment in the
amount of P500k in the name of Benitez.
26 Aug 83: To complete the amount of P1M as allegedly agreed
upon, Casa Filipina issued again another check in the amount of
P500k. Both checks were deposited and credited in Benitez's bank
account. The 4-month period allegedly elapsed without Benitez having
purchased nor conveyed any real estate in the total value of P1M in
favor of Casa Filipina, but instead Benitez converted the entrusted
money for her own personal use in violation of her fiduciary
relationship with Casa Filipina and that despite repeated demands for
the refund or return of the aforementioned amount, Benitez chose to
ignore the same.
11 Dec 85: Writ of attachment was granted by the court ex parte.
27 Dec: Clerk of Court issued a writ of preliminary attachment, by
virtue of which the Sheriff served notices of garnishment to the
Philippine Women's University, Taft Avenue, Manila, the Unlad
Development Resources Corporation and Bank of the Philippine
Islands, Unlad Condominium, Taft Avenue, Manila, thereby garnishing
the deposits, shares of stocks, salaries and other personal property of
Benitez.
30 Jan 84: Benitez was advised by the Acting ROD of Quezon City
that a notice of levy was filed with the Registrar's Office affecting two
parcels of prime land at Mariposa Street.
21 Jan 85: Benitez filed an answer with counterclaim and
opposition to the petition for issuance of a writ of preliminary
attachment. Benitez also filed an Urgent Motion to Discharge Writ of
Preliminary Attachment under Section 13, Rule 57, on the ground that
the same was improperly or irregularly issued.
Benitezs contention: Sometime in March 1983, Mr. Dragon, acting
for himself and Casa Filipina agreed to buy 10 hectares of Benitezs
land in Dasmarinas, Cavite, for a price of P15/sqm or for a total
consideration of P1.5M; that it was agreed upon by the parties that it
is only upon full payment of the amount that delivery of the property
will be made; that Casa Filipina was not able to comply with the
obligation to pay the balance of P500k despite repeated demands and
instead filed the present action for rescission.
Benitez attached thereto the affidavit of her technical assistant and
attorney-in-fact Virginia Real, who alleged, among other things, that
she knows for a fact that the transaction between Benitez and Dragon
for Casa Filipina, was one of purchase and sale; that a copy of TCT No.
9833 covering the land to be purchased was furnished the office of
Mr. Dragon on February 28, 1984; that Benitez is willing and able to
execute a DOAS in favor of Casa Filipina upon full payment of the
balance of P5k.
Motion was set for hearing on 25 Jan 85. However, Casa Filipina
and its counsel failed to appear despite notice. Motion was deemed
submitted for resolution.
31 Jan 85: Court denied Benitezs motion to discharge the writ. The
court ruled: the issue cannot be determined without adducing evidence
at the same time going into the merits of the case which in the opinion
of the Court could not be done at this stage of the proceedings.
Considering that the writ of preliminary attachment was issued after
having satisfied the requirements of the rules, the same may not be lifted
or discharged without the defendant filing a counterbond.
ISSUE: WON a counterbond is necessary and indispensable under the
circumstances before the subject writ may be recalled, quashed
and/or discharged
No. The attachment was granted by the lower court ex-parte under
Section 1(b), Rule 57, upon the allegation of Casa Filipina, that Benitez,
the defendant, had violated their alleged fiduciary relationship and had
unlawfully converted the amount of P1M for her own use. Benitez
promptly filed an urgent motion to discharge writ of preliminary
attachment for improper or irregular issuance, supported by the
affidavit of Virginia Real, who alleged that there was no fiduciary
relationship between Benitez and Casa Filipina inasmuch as the
transaction between them was one of sale of real property.
As held in Villongco, the affidavit supporting the petition for the
issuance of the preliminary attachment may have been sufficient to
justify the issuance of the preliminary writ, but it cannot be considered

as proof of the allegations contained in the affidavit, which are
mere conclusions of law, not statement of facts.
Benitezs Urgent Motion to Discharge Writ of Preliminary
Attachment was filed under Section 13, Rule 57. The last sentence of
said provision indicates that a hearing must be conducted by the judge
for the purpose of determining whether or not there really was a defect
in the issuance of the attachment.
It appears from the records that no hearing was conducted by the
lower court. Indeed, when the case was called for hearing, Casa Filipina
failed to appear and Benitezs motion was considered submitted for
resolution.
Casa Filipinas contention: Benitez did not file an affidavit in
support of her Urgent Motion to Discharge Attachment, as required
under Section 13 of Rule 57, hence, it was not necessary or imperative
that a hearing be held.
No merit. Attached to Benitezs motion was the supporting affidavit
of Virginia L. Real, the technical assistant of Benitez. In her affidavit,
she stated that she had personal knowledge of the transaction between
Casa Filipina and Benitez; that Mr. Renato Dragon, for himself and/or
Casa Filipina, agreed to buy a portion consisting of 10 hectares of a
parcel of land belonging to Benitez in Dasmarinas, Cavite, for the total
price of P1.5M of which Casa Filipina made a downpayment of P500k
on April 16, 1983; and a second payment of P500k on August 27,
1983; that Casa Filipina having failed to pay the balance of P500k, the
deed of sale could not be executed.
The record amply supports Benitezs version, as against Casa
Filipinas allegation that Benitez had acted as agent in receiving the
money and converted the same for her own use in violation of the
fiduciary relationship existing between her and Casa Filipina. Casa
Filipina acknowledged the receipt of a xerox copy of TCT No. 9833
covering Benitezs land in Dasmarinas, Cavite, and the check voucher
issued by Casa Filipina on April 16, 1983 showed that the check for
P500k was for "Payment for downpayment of lot to be purchased" and
the check voucher dated August 27, 1983 for P500k was for "Second
payment for lot to be purchased."
It was GAD on the part of Judge Rosario Veloso to deny Benitezs
Urgent Motion to Discharge Writ of Preliminary Attachment, without
conducting a hearing and requiring Benitez to substantiate its
allegation of fraud. Neither can Judge avoid deciding the issue raised
in Benitezs urgent motion by ruling that "the issue cannot be
determined without adducing evidence at the same time going into the
merits of the case." Having issued the writ of preliminary attachment
ex parte, it was incumbent on the respondent court, upon proper
challenge of its order, to determine whether or not the same was
improvidently issued. A preliminary attachment is a rigorous remedy
which exposes the debtor to humiliation and annoyance, such that it
should not be abused to cause unnecessary prejudice and, if
wrongfully issued on the basis of false allegation, should at once be
corrected.
A writ of attachment may be discharged pursuant to Section 13,
Rule 57, without the necessity of filing a cash deposit or counterbond.
The provisions of the aforesaid section grants an aggrieved party relief
from baseless and unjustifiable attachments procured, among others,
upon false allegations, without having to file any cash deposit or
counterbond.
Davao Light vs. CA (supra., p. 13)
Cuartero vs. CA (supra., p. 14)
Uy Kimpang vs. Javier (1937)
8 Aug 33: A writ of execution was issued by CFI Antique to enforce
payment to Uy Kimpang of the sum of P6,678.84 plus interests and
costs, which Vicente Javier, et.al. were sentenced to pay.
The sheriff levied upon the seven parcels of land belonging to the
Ramona Majandog and enumerated in the return of said sheriff of
September 9, 1933 for the purpose of selling, as he in fact later sold,
them at public auction to the highest bidder who was found in the
person of Uy Cay Ju, manager of the Uy Kimpang & Co., for the sum
of only P1,730.
In view of the fact that this sum was not sufficient to cover the full
value of the judgment and that the defendants failed to deliver to the
sheriff the properties which were released from the attachment by the
virtue of the obligation which, on December 29, 1925 and the approval
49
of the court, they executed jointly with their sureties Severino
Magbanua and Juan Autajay. Uy Kimpang in its motion of
January 23, 1934 moved the court to again order the execution of the
aforesaid judgment, but this time against the properties of two
sureties.
Surety Autajays contentions: (1) That the attachment of the
properties of the defendants was null and void because it does not
appear that they were served with a copy of the writ ordering the same;
(2) that said attachment was not inscribed in the registry of properties;
(3) that Autajay was released from his obligation as surety because his
undertaking had been cancelled when the court, in its order of
February 15, 1930, permitted him to withdraw therefrom; (4) that the
undertaking should in any event be enforced exclusively against the
other surety Magbanua inasmuch as he did not withdraw therefrom.
18 Jul 34: Lower court denied Uy Kimpangs motion, ruling that the
justice of the peace of Antique had no power to issue the writ, that the
issuance of the writ by the clerk was illegal because only justices and
judges of the CFI may issue such writs, no valid attachment because
the writ was not signed by any judge and the obligation executed by
Uy Kimpang was not approved by the court, etc.
ISSUE: WON the defects of the writ is sufficient to release the
attachment
No. It should be noted that the sheriff, upon receipt of the writ,
attached the properties belonging to defendants and enumerated in
the sheriff's return, the assessed value of which was noted at the
bottom of said return. On the same day, December 29, 1925, the
defendants executed a counter-obligation in the sum of P9,500 with a
view to dissolving the attachment levied upon their properties. Said
counterbond, which was approved on the same date by the justice of
the peace who issued the order of attachment, was signed by all the
defendant and their sureties Autajay and Magbanua who bound
themselves jointly and severally thereunder.
There is no doubt that, under the provisions of sections 425, 426
and 427 of Act No. 190, only the justice, judges of First Instance, and
justices of the peace or municipal judges may issue an order of
attachment when prayed for, provided the legal requisites are present.
In the case at bar, all the requirements of the law were complied
with. Inasmuch as the order of December 24, 1925 under which the
questioned writ of attachment was issued, was entered by a competent
judge, it cannot be alleged that said writ was a mere capricious act of
the clerk. On the contrary, it may and should be inferred that the writ
was issued in strict compliance with a perfectly valid order given to
him. The law does not provide or state that the writs of attachment
must be issued by the very justice or judge who is to authorize it; it
simply determines the judicial authority who shall have the power to
grant an attachment.
Even supposing that the writ in dispute is defective because it was
not signed by the judge who authorized its issuance, it is now too late
to raise the question after the same was accepted and believed to be
valid not only by the defendants but by their sureties. It is noteworthy
that in their counter-obligation, they made it understood that they were
aware of the issuance of a writ of attachment against the defendants;
that the properties of the latter had been attached by the sheriff; that
all wanted or at least prayed that said attachment be discharged; and
that they offered to execute, as in fact they immediately did execute,
the counter-obligation required.
The general rule is that "irregularities and defects in attachment or
garnishment proceedings which render the attachment merely
voidable and not void, are deemed to be waived unless promptly taken
advantage of by appropriate mode of raising objection thereto."
Irregularities in affidavit and undertaking or in proceedings to procure
attachment, if waived in attachment suit, cannot be taken advantage
of by sureties in collateral proceedings on undertaking given to secure
release of attachment.
It must be remembered that the defendants and the sureties not
only failed to object to the procedure followed by the clerk but, as
already stated, executed the counterobligation required by law for
discharge of the attachment levied upon the properties of the
defendant, and that Autajay and Magbanua were the ones who signed
the counterobligation as sureties and submitted the same to the justice
of the peace of the capital for approval. It must also be remembered
that in all the motions which they subsequently filed in these

proceedings, the said sureties confined themselves to the request
that they be permitted to withdraw from their obligation for the
reason that it was against their interest to continue being sureties of
the defendants.
Inasmuch as both the defendants and the sureties, by executing the
counterobligation required by law for the discharge of the attachment,
had accepted the obligation filed by the plaintiff with the justice of the
peace of the capital for the issuance of the writ of attachment against
the defendants, it is now too late and futile to allege that the said
obligation is invalid for lack of approval by the judge. They are
estopped from doing so by their own acts, inasmuch as their failure to
question the said obligation at the proper time constitutes a waiver of
their right. One who has any objection to the sufficiency or validity of
an obligation in attachment proceedings, should record the same
before executing the counterobligation required for the discharge of
the attachment; otherwise, it will be understood that he does not
question, or that he renounces his right to question, the sufficiency or
validity of the said obligation.
There is no importance in the fact that it does not appear in the
record that the court had dissolved, after the approval of the aforesaid
counterobligation, the attachment levied upon the properties of the
defendants. It must be assumed that the court discharged it by virtue
of the said counterobligation; otherwise, the reason for approving it
cannot be explained, and said approval would have no finality.
Filinvest Credit Corp. vs. Relova (1982)
2 Aug 77: Filinvest Credit Corp. filed a complaint against Rallye
Motor Co. and Ernesto Salazar for collection of sum of money with
damages and preliminary writ of attachment.
It appears that in payment of a motor vehicle, Mazda Diesel School
Bus, Salazar executed a P/N dated May 5, 1977 in favor of Rallye for
the amount of P99,828. To secure the note, Salazar also executed in
favor of Rallye a deed of chattel mortgage over the above described
motor vehicle.
7 May 77: Rallye, for valuable consideration, assigned all its rights,
title and interest to the aforementioned note and mortgage to Filinvest.
Thereafter, Filinvest came to know that Rallye had not delivered the
motor vehicle subject of the chattel mortgage to Salazar, "as the said
vehicle had been the subject of a sales agreement between the
codefendants." Salazar defaulted in complying with the terms and
conditions of the aforesaid P/N and chattel mortgage. Rallye, as
assignor who guaranteed the validity of the obligation, also failed and
refused to pay Filinvest despite demand.
According to Filinvest, the defendants intentionally, fraudulently and
with malice concealed from it the fact that there was no vehicle
delivered under the documents negotiated and assigned to it,
otherwise, it would not have accepted the negotiation and assignment
of the rights and interest covered by the promissory note and chattel
mortgage.
Praying for a writ of preliminary attachment, Filinvest submitted with
its complaint the affidavit of one Gil Mananghaya, which states: That
for failure to pay a stipulated installment, and the fact that the principal
debtor, Ernesto Salazar, and the assignor, Rallye Motor Co., Inc. concealed
the fact that there was really no motor vehicle mortgaged under the terms
of the Promissory Note and the Chattel Mortgage, the entire amount of
the obligation stated in the Promissory Note becomes due and
demandable, which Ernesto Salazar and Rallye Motor Co., Inc. failed and
refused to pay, so much so that a sufficient cause of action really exists
for Filinvest Credit Corporation to institute the corresponding complaint
against said person and entity (under Sec. 1(d), Rule 57, ROC)
17 Aug 77: Judge Coquia granted the prayer for a writ and allowing
issuance upon Filinvests filing of a bond in the sum of P97k. In the
meantime, summons were issued to the defendants.
11 Dec 78: Salazar prayed that the writ of preliminary attachment
issued ex parte and implemented solely against his property be
recalled and/or quashed.
Salazars contention: When he signed the promissory note and
chattel mortgage on May 5, 1977 in favor of Rallye, Filinvest was not
yet his creditor or obligee, therefore, he could not be said to have
committed fraud when he contracted the obligation on May 5, 1977.
Added that as the motor vehicle which was the object of the chattel
mortgage and the consideration for the P/N had admittedly not been
50
delivered to him by Rallye, his repudiation of the loan and
mortgage is more justifiable.
2 Feb 79: Judge Relova ordered the dissolution and setting aside of
the writ and the return to Salazar of all his properties attached by the
Sheriff, ruling that: When the incident was called for hearing, the Court
announced that, as a matter of procedure, when a motion to quash a writ
of preliminary attachment is filed, it is incumbent upon the plaintiff to
prove the truth of the allegations which were the basis for the issuance of
said writ. In this hearing, counsel for the plaintiff manifested that he was
not going to present evidence in support of the allegation of fraud. He
maintained that it should be the defendant who should prove the truth of
his allegation in the motion to dissolve the said writ. The Court disagrees.
Filinvest filed MR and was allowed to adduce evidence to prove that
Salazar committed fraud as alleged in the affidavit of Mananghaya.
However, Judge Relova denied the motion, ruling that: While it is true
that the plaintiff may have been defrauded in this transaction, it having
paid Rallye Motor the amount of the promissory note, there is no evidence
that Ernesto Salazar had connived or in any way conspired with Rallye
Motor in the assignment of the promissory note to the plaintiff, because
of which the plaintiff paid Rallye Motor the amount of the promissory note.
Defendant Ernesto Salazar was himself a victim of fraud. Rallye Motor was
the only party which committed it.
Filinvests contention: Court should not have dissolved the writ for
failure of Salazar to make a cash deposit or to file a counterbond.
Salazars contention: the subject writ of preliminary attachment was
improperly or irregularly issued in the first place, in that it was issued
ex parte without notice to him and without hearing.
ISSUE: WON the issuance of the writ was improper for being issued ex
parte without notice to Salazar and without hearing
No. Nothing in the Rules of Court makes notice and hearing
indispensable and mandatory requisites for the issuance of a writ of
attachment. A writ of attachment may be issued ex parte. Sections 3
and 4, Rule 57, merely require that an applicant for an order of
attachment file an affidavit and a bond: the affidavit to be executed by
the applicant himself or some other person who personally knows the
facts and to show that (1) there is a sufficient cause of action, (2) the
case is one of those mentioned in Section 1 of Rule 57, (3) there is no
other sufficient security for the claim sought to be enforced, and (4)
the amount claimed in the action is as much as the sum for which the
order is granted above all legal counterclaims; and the bond to be
"executed to the adverse party in an amount fixed by the judge, not
exceeding the applicant's claim, conditioned that the latter will pay all
the costs which may be adjudged to the adverse party and all damages
which he may sustain by reason of the attachment, if the court shall
finally adjudge that the applicant was not entitled thereto.
We agree, however, with Salazars contention that a writ of
attachment may be discharged without the necessity of filing the cash
deposit or counter-bond required by Section 12, Rule 57, cited by
Filinvest. Sec. 13 grants an aggrieved party relief from baseless and
unjustifiable attachments procured, among others, upon false
allegations, without having to file any cash deposit or counter-bond.
In the instant case, the order of attachment was granted upon the
allegation of Filinvest that Rallye, the defendants, had committed
"fraud in contracting the debt or incurring the obligation upon which
the action is brought," covered by Section 1(d), Rule 57. Subsequent
to the issuance of the attachment order on August 17, 1977, Salazar
filed in the lower court an "Urgent Motion for the Recall and Quashal
of the Writ of Preliminary Attachment on (his property)" dated
December 11, 1978 precisely upon the assertion that there was
"absolutely no fraud on his part" in contracting the obligation sued
upon by petitioner. Salazar was in effect claiming that Filinvests
allegation of fraud was false, that hence there was no ground for
attachment, and that therefore the attachment order was "improperly
or irregularly issued."
This Court was held that "if the grounds upon which the attachment
was issued were not true, the defendant has his remedy by
immediately presenting a motion for the dissolution of the same. We
find that Salazars abovementioned Urgent Motion was filed under
Section 13, Rule 57.
The last sentence of the said provision, however, indicates that a
hearing must be conducted by the judge for the purpose of
determining whether or not there reality was a defect in the issuance

of the attachment. The question is: At this hearing, on whom does
the burden of proof lie?
Under the circumstances of the present case, it should be Filinvest
(attaching creditor), who should prove his allegation of fraud. This
pronouncement finds support in the first sentence of Section 1, Rule
131, which states that: "Each party must prove his own affirmative
allegations." The last part of the same provision also provides that: "The
burden of proof lies on the party who would be defeated if no evidence
were given on either side."
It must be borne in mind that in this jurisdiction, fraud is never
presumed. Fraus est idios et non praesumenda. Indeed, private
transactions are presumed to have been fair and regular. Likewise,
written contracts such as the documents executed by the parties in the
instant case, are presumed to have been entered into for a sufficient
consideration.
It appears from the records that both parties did in fact adduce
evidence to support their respective claims. Filinvest attached a
Memorandum in its Petition. After Salazar filed his Comment to the
Petition, Filinvest filed a Reply, attaching another copy of the
Memorandum. The Memorandum goes on to state that Filinvest presented
as its witness defendant Salazar himself who testified that he signed
Exhibits A, B, C, D, E and G; that he is a holder of a master's degree in
Business Administration and is himself a very careful and prudent person;
that he does not sign post-dated documents; that he does not sign
contracts which do not reflect the truth or which are irregular on their face,
that he intended to purchase a school bus from Rallye Motors Co., Inc. from
whom he had already acquired one unit; that he had been dealing with
Abel Sahagun, manager of Rallye, whom he had known for a long time that
he intended to purchase the school bus on installment basis so he applied
for financing with the Filinvest; that he knew his application was approved;
that with his experience as a business executive, he knew that under a
financing arrangement, upon approval of his application, when he signed
Exhibits A, B, C, D, E and G, the financing company (Filinvest) would release
the proceeds of the loan to Rallye and that he would be obligated to pay
the installments to Filinvest; that he signed Exhibits A, B and C
simultaneously; that it was his wife who was always transacting business
with Rallye and Abel Sahagun.
Considering the claim of Salazar that Rallye Motors did not deliver
the motor vehicle to him, it follows that the Invoice for the motor
vehicle and the Receipt for its delivery and both signed by Salazar were
fictitious. It also follows that the P/N to pay the price of the undelivered
vehicle was without consideration and therefore fake; the Chattel
Mortgage over the non-existent vehicle was likewise a fraud; the
registration of the vehicle in the name of Salazar was a falsity and the
assignment of the promissory note by Rallye with the conforme of
Salazar in favor of Filinvest over the undelivered motor vehicle was
fraudulent and a falsification.
Salazar, knowing that no motor vehicle was delivered to him by
Rallye, executed and committed all the above acts as shown the
exhibits enumerated above. He agreed and consented to the
assignment by Rallye of the fictitious promissory note and the
fraudulent chattel mortgage, affixing his signature thereto, in favor of
Filinvest who, in the ordinary course of business, relied on the
regularity and validity of the transaction. Salazar had previously
applied for financing assistance from Filinvest and his application was
approved, thus he negotiated for the acquisition of the motor vehicle
in question from Rallye Motors. Since he claimed that the motor
vehicle was not delivered to him, then he was duty-bound to reveal that
to Filinvest, it being material in inducing the latter to accept the
assignment of the promissory note and the chattel mortgage.
The failure of Salazar to disclose the material fact of non-delivery of
the motor vehicle, there being a duty on his part to reveal them,
constitutes fraud. Therefore, the lower court committed GAD in
dissolving and setting aside the writ.
Miranda vs. CA (1989)
26 Dec 85: Sps. Rayos sold to Rogelio Miranda a parcel of land for
P250k under a DOS with Assumption of Mortgage prepared by
Orlando Rayos, who is a lawyer.
Miranda directly paid Rayos the sum of P150k and thereafter, paid
the first 3 quarterly amortizations in the total amount of P87,864.94
to Philippine Savings Bank as the mortgagee on the loan contracted
by Rayos. Miranda claims that the bank at first refused to accept his
third quarterly payment but relented when he showed it the contract
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he had entered into with Rayos. However, when he offered to
make the fourth and last payment on December 24,1986, the
bank refused to accept it, informing him that Rayos had already made
the payment and had asked it not to deliver the Torrens certificate of
the mortgaged land to Miranda. This certificate was subsequently
recovered by Rayos, who had since then refused to surrender it to him
or to refund him the total amount of P267,088.61 which he said he
had paid on their contract.
Rogelio Miranda filed a complaint for damages against Sps. Rayos.
2 Jan 87: A writ was issued in favor of Miranda.
Rayos filed a motion to discharge the attachment, claiming there
was no proof that he had committed fraud in contracting the debt or
incurring the obligation on which the complaint was based.
Judge granted the motion and discharged the writ, ruling that Rayos
could not be faulted with fraud.
Mirandas contention: There was a valid ground for the issuance of
the writ of attachment because the DOS with Assumption of Mortgage
prepared by Rayos was attended at the inception with fraud that
brought it under the provision of Rule 57, Section 1(d). That fraud
consisted of the deception employed by Rayos in inveigling him to
enter into the contract of sale without cautioning him that his
assumption of mortgage might be disapproved by the Philippine
Savings Bank.
ISSUE: WON the writ should be discharged
Yes. The Court cannot accept Mirandas contention. The fraud might
have been committed by Rayos after the conclusion of the contract.
However, such fraud is not covered by the aforesaid rule, let alone the
fact that it has yet to be established.
What is clear at this time is that Rayos cannot be said to have
deluded Miranda into entering into the contract by taking advantage
of his position as a lawyer and withholding necessary information from
Miranda. Miranda insists he did not know any better as a layman. He
complains that Rayos did not warn him that the assumption of
mortgage would have to be approved by the Philippine Savings Bank
and that their transaction would be nullified without such approval. He
stresses that had he been properly warned, he would not have invested
an initial payment of P150k and later made the three amortization
payments of P87,864.94, not to mention the last quarterly payment
he also remitted to the Bank.
Rayos contention: He had informed Miranda that the assumption
of mortgage was subject to the approval of the mortgagee bank and
that he had sent Miranda the appropriate forms to accomplish.
Mirandas contention: Such form was merely an application for
individual loans and did not constitute the sufficient advise or warning
that Rayos should have given him. The "Application for Loan" form sent
by Rayos to Miranda has no relevance and materiality to the
assumption of Rayos' loan account with defendant Philippine Savings
Bank. That application form of PSB accomplished by Miranda is strictly
for individual loan application filed by Miranda for P100k for himself.
It does not constitute in any manner a "warning" or an "instruction" to
him that it was incumbent upon him to get an express approval by the
bank (PSB) for his assumption of Rayos' mortgage.
The Loan Application Form sent by Rayos was actually filled up and
signed by Miranda and his wife dated March 4, 1986. In said loan
application, the amount of the loan appears as P100k, the same
amount as the mortgage to be assumed, the security offered also
appears as TCT No. 100156 the same property bought by Miranda
from Rayos with assumption of the mortgage in favor of the Philippine
Savings Bank. How can Miranda now say that the Application for Loan
form sent by Rayos "has no relevance and materiality to the
assumption of the Rayos' loan account with Philippine Savings Bank."
Being a layman did not excuse him from knowledge of the basic
principles involved in this case of which he feigns total ignorance.
Moreover, the evidence shows that he was in fact informed of the need
for the approval of the assumption of mortgage and actually sought to
secure such approval although unsuccessfully. This shows that no
fraud was imposed on him by Rayos when they entered into the Deed
of Sale with Assumption of Mortgage, which also means that there was
really no ground for the issuance of the writ of attachment.
As the writ of attachment was improperly granted, it was only fitting
that it be discharged by the trial court in rectification of its initial error.
Hence, there was no need at all for Rayos to post a counterbond.

Finally, we also agree with the respondent court that the order
lifting the attachment being merely interlocutory, it should not
have been questioned on certiorari. This extraordinary remedy is
available only when there is a clear showing of a grave abuse of
discretion amounting to lack of jurisdiction, and there is no such
showing here.
Adlawan vs. Torres (supra., p. 7)
Peroxide Phils. Corp. vs. CA (1991)
6 Dec 82: BPI sued Peroxide Phils. Corp., Eastman Chemical
Industries, Inc., and the Sps. Mapuas for the collection of an
indebtedness of Peroxide wherein Eastman and the Mapuas bound
themselves to be solidarily liable.
Judge Pineda ordered the issuance of a writ of preliminary
attachment which was done on 7 Jan 83, after BPI filed an attachment
bond in the amount of P32.7M. Peroxides proeprties were then
attached by the sheriff.
11 Jan 83: Eastman and the Mapuas moved to lift the attachment.
Motion was set for hearing on 14 Jan 83. BPI was also granted up to
Jan 17 to file a written opposition and filed motion to set for hearing.
17 Jan: Judge Pineda issued 2 orders. The first, denying BPIs
motion for hearing. The second, lifting the writ of attachment as prayed
by Eastman and the Mapuas. BPI filed MR.
28 Nov: Judge Reyes issued an order with an explicit finding that
the attachment against the properties of Eastman and the Mapuas was
proper on the ground that they had disposed of their properties in
fraud of BPI. It also directed the sheriff to implement the writ of
attachment upon the finality of said order.
17 Dec 84: TC issued an order granting BPI's motion for partial
reconsideration by finding, inter alia, that "considering the lapse of more
than a year since the Order of November 28, 1983 and the nature and
purpose of attachment, the writ of attachment revived in the Order of
November 28, 1983 and hereby re-affirmed may be executed and
implemented immediately," and directing the sheriff to execute said writ
which "is hereby declared immediately executory."
Peroxide sought the annulment of the above order.
29 May 86: Judge Acosta issued an order suspending the writ of
attachment pursuant to an ex parte motion filed by Peroxide.
Thereafter, the SC ruled that the writ of preliminary attachment issued
was in accordance with law and jurisprudence.
30 Jul 87: BPI filed a motion to order Bataan Pulp and Paper Mills,
Inc., jointly and severally with Peroxide, to deliver to the sheriff the cash
dividends declared on the garnished shares of stock of Peroxide with
said paper company, and to cite for contempt the officers of Bataan
for releasing and/or paying the dividends to Peroxide in disregard of
the notice of garnishment. This was granted.
23 Aug 88: By virtue of the MR of Peroxide, the TC ruled that the
properties of Eastman and the Mapuas should not, pending proper
determination, be attached.
BPIs contention: The discharge is illegal and void because the
order lifting the same is violative of Section 13, Rule 57 of the Rules of
Court which requires, among others, a prior hearing before the judge
may order the discharge of the attachment upon proof adduced
therein of the impropriety or irregularity in the issuance of the writ and
the defect is not cured forthwith
ISSUE: WON the discharge of the writ was proper
No. It is true that Peroxide's motion to discharge was set for hearing
with notice to BPI but it is likewise true that counsel for the latter asked
for an opportunity to file a written opposition and for a hearing to
which he asked that Edmund O. Mapua be subpoenaed. Said counsel
was allowed to file a written opposition which he seasonably did, but
Judge Pineda denied both the requested subpoena and hearing and,
instead, granted the discharge of the attachment. These are the bases
for BPI's complaint that it was denied due process.
Now, it is undeniable that when the attachment is challenged for
having been illegally or improperly issued, there must be a hearing
with the burden of proof to sustain the writ being on the attaching
creditor. That hearing embraces not only the right to present evidence
but also a reasonable opportunity to know the claims of the opposing
parties and meet them. The right to submit arguments implies that
52
opportunity, otherwise the right would be a barren one. It means
a fair and open hearing. And, as provided by Section 13 of Rule
57, the attaching creditor should be allowed to oppose the application
for the discharge of the attachment by counter-affidavit or other
evidence, in addition to that on which the attachment was made.
Respondent court was, therefore, correct in holding that the
attachment of the properties of Eastman and the Mapuas remained
valid from its issuance since the judgment had not been satisfied, nor
has the writ been validly discharged either by the filing of a
counterbond or for improper or irregular issuance.
We likewise affirm the findings and conclusion of respondent court
that the order of Judge Acosta, dated May 29, 1986, suspending the
writ of attachment was in essence a lifting of said writ which order,
having likewise been issued ex parte and without notice and hearing
in disregard of Section 13 of Rule 57, could not have resulted in the
discharge of the attachment. Said attachment continued unaffected by
the so-called order or suspension and could not have been deemed
inefficacious until and only by reason of its supposed restoration in the
order of December 16, 1987 of Judge Gerona. Under the facts of this
case, the ex parte discharge or suspension of the attachment is a
disservice to the orderly administration of justice and nullifies the
underlying role and purpose of preliminary attachment in preserving
the rights of the parties pendente lite as an ancillary remedy.
We, therefore, sustain the position of BPI that the CA, in its judgment
presently under challenge, did not err in upholding the continuing and
uninterrupted validity and enforceability of the writ of preliminary
attachment issued since the order of discharge and, later, the order of
suspension of the trial court were void and could not have created the
operational lacuna in its effectivity as claimed by Peroxide. Further, the
cancellation of the annotations regarding the levy on attachment of
Peroxide's properties, procured by the sheriff pursuant to the aforesaid
invalid orders, is likewise a nullity and another levy thereon is not
required. We observe, however, that the records do not disclose the
lifting of the levy on the Bataan shares of Eastman and the Mapuas
and on their real properties in Caloocan City.
We reject Peroxide's theory that the preliminary attachment is not
applicable to Eastman and the Mapuas. The writ was issued in Civil
Case No. 48849 against the properties of all the petitioners herein.
Eastman and the Mapuas moved for the discharge of the attachment
on the ground that they were not disposing of their properties in fraud
of creditors, but they did not raise the issue of their liabilities as being
allegedly those of mere guarantors. They did so only when this Court
resolved on October 27, 1986 that the writ of preliminary attachment
was issued in accordance with law and applicable jurisprudence.
Also, what was considered in AC-G.R. SP No. 05043 and thereafter
in G.R. No. 74558 was the matter of the validity of the attachment
against Eastman and the Mapuas, considering that, even before the
proceedings had reached the IAC in AC-G.R. SP No. 05043, BPI no
longer had any attachment against Peroxide whose only remaining
asset in Bulacan had been levied upon and acquired by its other
creditors when Judge Pineda lifted the attachment obtained by BPI.
Thus, as correctly posited by BPI, before the determination of the
liability of Eastman and the Mapuas after trial on the merits, the writ
of preliminary attachment may properly issue. Even assuming that
when Eastman and the Mapuas asked for the lifting of the attachment
they presented evidence that they were guarantors and not sureties of
Peroxide, the trial court could not have admitted such evidence or
ruled upon that issue since the same could be entertained only after a
full-blown trial and not before then. Otherwise, we would have the
procedural absurdity wherein the trial court would be forced to decide
in advance and preempt in an auxiliary proceeding an issue which can
and should be determined only in a trial on the merits.
The proceeding in the issuance of a writ of preliminary attachment,
as a mere provisional remedy, is ancillary to an action commenced at
or before the time when the attachment is sued out. Accordingly, the
attachment does not affect the decision of the case on the merits, the
right to recover judgment on the alleged indebtedness and the right to
attach the property of the debtor being entirely separate and distinct.
As a rule, the judgment in the main action neither changes the nature
nor determines the validity of the attachment. At any rate, whether said
petitioners are guarantors or sureties, there exists a valid cause of
action against them and their properties were properly attached on the
basis of that indubitable circumstance.

Section 14. Proceedings where property claimed by third person.
If the property attached is claimed by any person other than the
party against whom attachment had been issued or his agent, and
such person makes an affidavit of his title thereto, or right to the
possession thereof, stating the grounds of such right or title, and serves
such affidavit upon the sheriff while the latter has possession of the
attached property, and a copy thereof upon the attaching party, the
sheriff shall not be bound to keep the property under attachment,
unless the attaching party or his agent, on demand of the sheriff, shall
file a bond approved by the court to indemnify the third-party claimant
in a sum not less than the value of the property levied upon. In case of
disagreement as to such value, the same shall be decided by the court
issuing the writ of attachment. No claim for damages for the taking or
keeping of the property may be enforced against the bond unless the
action therefor is filed within one hundred twenty (120) days from the
date of the filing of the bond.
The sheriff shall not be liable for damages for the taking or keeping
of such property to any such third-party claimant, if such bond shall
be filed. Nothing herein contained shall prevent such claimant or any
third person from vindicating his claim to the property, or prevent the
attaching party from claiming damages against a third-party claimant
who filed a frivolous or plainly spurious claim, in the same or a
separate action.
When the writ of attachment is issued in favor of the Republic of the
Philippines, or any officer duly representing it, the filing of such bond
shall not be required, and in case the sheriff is sued for damages as a
result of the attachment, he shall be represented by the Solicitor
General, and if held liable therefor, the actual damages adjudged by
the court shall be paid by the National Treasurer out of the funds to
be appropriated for the purpose.
Uy vs. CA (1990)
24 Mar 82: Esteban Uy filed a complaint against Sy Yuk Tat for sum
of money, damages, with preliminary attachment. Upon his filing a
bond of P232,780, court issued a writ of preliminary attachment and
appointed Cabang as Special Sheriff to implement the writ.
6 Apr: Same court issued a break-open order upon motion of Uy.
7 Apr: Sheriff Cabang began to implement the writ.
19 Apr: Cabang filed a Partial Sheriffs Return, stating that it effected
a physical and actual count of items, which are as follows: 329 boxes
of GE Flat Iron, each box containing 6 pcs, 229 boxes of Magnetic Blank
Tapes with 48 pcs each, 239 boxes of Sanyo floor polishers, and 54
boxes of Ronson floor polishers.
12 Apr: A third party claim was filed by Wilson Ting and Yu Hon,
addressed to Cabang asserting ownership over the properties attached
at No. 65, Speaker Perez St., QC. The third party claim specifically
enumerated the properties, as reflected in the Partial Sheriffs Return.
19 Apr: Cabang filed his Partial Sheriffs Return.
The third party claimants and Yu filed a motion to dissolve the
aforementioned writ of preliminary attachment, alleging among others,
that being the absolute owners of the personal properties listed in their
third party claim which were illegally seized from them they were
willing to file a counterbond for the return thereof; which motion was
opposed by Uy.
29 Apr: Judge Castro rendered a judgment by default, in favor of Uy.
5 May: Ting and Yu Hon filed a complaint for damages with
application for preliminary injunction against Uy and Cabang, alleging
that they are the owners of the personal properties reflected in the
Partial Sheriffs Return dated April 13, 1983 which have been attached
and seized by Cabang.
In the above case, Judge Buencamino issued an order, stating that
the parties are ordered to maintain the status quo in this case with
respect to the properties attached and subject of this action alleged to
belong to the plaintiffs."
Meanwhile, in the first case, the court issued an order striking off
from the records all pleadings filed by the third party claimants. Uy
filed an ex parte motion for writ of execution which was granted.
7 Jun: Uy filed a motion to quash or dissolve the status quo order
on the ground that the court "has no jurisdiction to interfere with
properties under custodia legis on orders of a court of co-equal and
co-ordinate jurisdiction" and that Ting and Yu Hons complaint is not
for recovery of properties in question.
53
24 Jun: Uy, in the first case, filed his ex parte motion to
authorize Sheriff to sell the attached properties enumerated in
Sheriff Cabang's partial return filed on April 19, 1982, on the ground
that the properties under custodia legis were perishable especially
those taken from No. 65 Speaker Perez, Quezon City.
The motion to quash or dissolve the status quo order was denied.
12 Jul: Cabang filed another partial sheriffs return this time stating
among others that the judgment in that case had been partially
satisfied, and that in the public auction sale held on July 6, 1982,
certain personal properties had been sold to Uy, the winning bidder
for P15k while the other properties were sold in the amount of P200k
in cash with Bernabe Ortiz.
In the case of Ting, Ting and Yu Hon filed a motion for preliminary
attachment alleging this ground: "In the case at bar, which, is one 'to
recover possession of personal properties unjustly detained, ... the
property... has been ... removed ... (and) disposed of to prevent its being
found or taken by the applicant or an officer" and/or said defendants are
guilty of fraud in disposing of the property for the taking, (or) detention
... of which the action is brought.
The court issued an order granting the writ of preliminary
attachment in favor of Ting and Yu Hon.
Uy filed an urgent motion to quash and/or dissolve the preliminary
attachment. He then filed a motion for preliminary hearing on
affirmative defenses as motion to dismiss. The motion to dismiss was
denied, as well as the motion to quash.
ISSUE: WON properties levied and seized by virtue of a writ of
attachment and later by a writ of execution, were under custodia legis
and therefore not subject to the jurisdiction of another co-equal court
where a third party claimant claimed ownership of the same properties
No. While it is true that property in custody of the law may not be
interfered with, without the permission of the proper court, this rule is
confined to cases where the property belongs to the defendant or one
in which the defendant has proprietary interests. But when the Sheriff,
acting beyond the bounds of his office seizes a stranger's property, the
rule does not apply and interference with his custody is not
interference with another court's order of attachment.
A separate action by the third party who claims to be the owner of
the property attached is appropriate. If this is so, it must be admitted
that the judge trying such action may render judgment ordering the
sheriff or whoever has in possession of the attached property to deliver
it to the plaintiff claimant or desist from seizing it. It follows further
that the court may make an interlocutory order, upon the filing of such
bond as may be necessary, to release the property pending final
adjudication of the title. Jurisdiction over an action includes jurisdiction
on interlocutory matter incidental to the cause and deemed necessary
to preserve the subject matter of the suit or protect the parties'
interests.
The power of the court in the execution of judgments extends only
over properties unquestionably belonging to the judgment debtor. The
levy by the sheriff of a property by virtue of a writ of attachment may
be considered as made under the authority of the court only when the
property levied upon belongs to the defendant. If he attaches
properties other than those of the defendant, he acts beyond the limits
of this authority. The court issuing a writ of execution is supposed to
enforce its authority only over properties of the judgment debtor.
Should a third party appear to claim the property levied upon by the
sheriff, the procedure laid down by the Rules is that such claim should
be the subject of a separate and independent action.
Neither can Uy complain that they were denied their day in court
when the RTC issued a writ of preliminary attachment without hearing
as it is well settled that its issuance may be made by the court ex parte.
No grave abuse of discretion can be ascribed to respondent Judge in
the issuance of a writ of attachment without notice to petitioners as
there is nothing in the Rules of Court which makes notice and hearing
indispensable and mandatory requisites in its issuance.
In addition, Uys motion to quash or discharge the questioned
attachment in the court a quo is in effect a motion for reconsideration
which cured any defect of absence of notice.
Estoppel is likewise unavailing in the case at bar by the mere fact
that Ting pointed the items and merchandise taken from the Mansion
House and nearby Bodega which were levied and hauled by Special
Sheriff Cabang, where in the report of said Sheriff made earlier on April

6, 1982, he stated that on the same occasion referred to in his
Partial Return, Ting and Yu Hon denied Sy Yuk Tat's ownership
over the goods in question.
In like manner, the sale of the disputed properties at the public
auction, in satisfaction of a judgment of a co-equal court does not
render the case moot and academic. The undeviating ruling of this
Court in such cases is that attachment and sale of properties belonging
to a third person is void because such properties cannot be attached
and sold at public auction for the purpose of enforcing a judgment
against the judgment debtor.
Manila Herald Publishing vs. Ramos (1951)
Antonio Quirino filed a libel suit against against Aproniano G. Borres,
Pedro Padilla and Loreto Pastor, editor, managing editor and reporter,
respectively, of the Daily Record, a daily newspaper published in
Manila, asking damages aggregating P90k. With the filing of this suit,
Quirino secured a writ of preliminary attachment upon putting up a
P50k bond, and the Sheriff of Manila levied an attachment upon
certain office and printing equipment found in the premises of the
Daily Record.
Thereafter the Manila Herald Publishing Co. Inc. and Printers, Inc.,
filed with the sheriff separate third-party claims, alleging that they were
the owners of the property attached. Whereupon, the sheriff required
of Quirino a counter bound of P41,500 to meet the claim of the Manila
Herald and another bond of P59,500 to meet the claim of Printers.
These amounts, upon Quirino's motion filed under Section 13, Rule 59,
were reduced by the court to P11k and P10k respectively.
Unsuccessful in their attempt to quash the attachment, on October
7, 1950, the Manila Herald and Printers commenced a joint suit
against the sheriff, Quirino and Alto Surety and Insurance Co. Inc., in
which the former sought (1) to enjoin them from proceeding with the
attachment of the properties above mentioned and (2) P45k damages.
By virtue of an ex parte motion by Manila Herald and Printers, Judge
Pecson issued a writ of preliminary injunction to the sheriff directing
him to desist from proceeding with the attachment of said properties.
Quirino filed an ex parte petition for its dissolution. Judge Ramos
granted the petition on a bond of P21k. However, Judge Ramos soon
set aside said order on a MR filed by Manila Herald and Printer, and
set the matter for hearing.
ISSUE: WON Manila Herald and Printers should come as intervenors
into the case for libel instead of bringing an independent action
Section 14 of Rule 59, which treats of the steps to betaken when
property attached is claimed by the other person than that defendant
or his agent, contains the proviso that "Nothing herein contained shall
prevent such third person from vindicating his claim to the property by
any proper action."
What is "proper action"? Section 1 of Rule 2 defines action as "an
ordinary suit in court of justice, by which one party prosecutes another for
the enforcement or protection of a right, or the prevention or redress of a
wrong," while section 2, entitled "Commencement of Action," says that
"civil action may be commenced by filing a complaint with the court."
"Action" has acquired a well-define, technical meaning, and it is in
this restricted sense that the word "action" is used in the above rule.
In employing the word "commencement" the rule clearly indicates an
action which originates an entire proceeding and puts in motion the
instruments of the court calling for summons, answer, etc, and not any
intermediary step taken in the course of the proceeding whether by
the parties themselves or by a stranger. It would be strange indeed if
the framers of the Rules of Court or the Legislature should have
employed the term "proper action" instead of "intervention" or
equivalent expression if the intention had been just that. It was all the
easier, simplier and the more natural to say intervention if that had
been the purpose, since the asserted right of the third-party claimant
necessarily grows out of the pending suit, the suit in which the order
of attachment was issued.
The most liberal view that can be taken in favor of the respondents'
position is that intervention as a means of protecting the third-party
claimants' right is not exclusive but cumulative and suppletory to the
right to bring a new, independent suit. It is significant that there are
courts which go so far as to take the view that even where the statute
expressly grants the right of intervention is such cases as this, the
54
statute does not extend to owners of property attached, for,
under this view, "it is considered that the ownership is not one
of the essential questions to be determined in the litigation between
plaintiff and defendant;" that "whether the property belongs to
defendant or claimant, if determined, is considered as shedding no
light upon the question in controversy, namely, that defendant is
indebted to plaintiff."
Under the old procedure, the third person could not intervene, he
having no interest in the debt (or damages) sued upon by the plaintiff."
However, under the present Rules, "a third person claiming to be the
owner of such property may, not only file a third-party claim with the
sheriff, but also intervene in the action to ask that the writ of
attachment be quashed.
Yet, the right to intervene, unlike the right to bring a new action, is
not absolute but left to the sound discretion of the court to allow. This
qualification makes intervention less preferable to an independent
action from the standpoint of the claimants, at least. Because
availability of intervention depends upon the court in which Case No.
11531 is pending, there would be assurance for Manila Herald and
Printers that they would be permitted to come into that case.
Little reflection should disabuse the mind from the assumption that
an independent action creates a multiplicity of suits. There can be no
multiplicity of suits when the parties in the suit where the attachment
was levied are different from the parties in the new action, and so are
the issues in the two cases entirely different. In the circumstances,
separate action might, indeed, be the more convenient of the two
competing modes of redress, in that intervention is more likely to inject
confusion into the issues between the parties in the case for debt or
damages with which the third-party claimant has nothing to do and
thereby retard instead of facilitate the prompt dispatch of the
controversy which is underlying objective of the rules of pleading and
practice. That is why intervention is subject to the court's discretion.
A separate action by the third party who claims to be the owner of
the property attached is appropriate. If this is so, it must be admitted
that the judge trying such action may render judgment ordering the
sheriff of whoever has in possession the attached property to deliver it
to the plaintiff-claimant or desist from seizing it. It follows further that
the court may make an interlocutory order, upon the filing of such
bond as may be necessary, to release the property pending final
adjudication of the title. Jurisdiction over an action includes jurisdiction
over a interlocutory matter incidental to the cause and deemed
necessary to preserve the subject matter of the suit or protect the
parties' interests. This is self-evident.
The fault with Quirinos argument is that it assumes that the Sheriff
is holding the property in question by order of the court handling the
case for libel. In reality this is true only to limited extent. That court did
not direct the sheriff to attach the particular property in dispute. The
order was for the sheriff to attach Borres', Padilla's and Pastor's
property. He was not supposed to touch any property other than that
of these defendants', and if he did, he acted beyond the limits of his
authority and upon his personal responsibility.
It is true of course that property in custody of the law can not be
interferred with without the permission of the proper court, and
property legally attached is property in custodia legis. But for the
reason just stated, this rule is confined to cases where the property
belongs to the defendant or one in which the defendant has
proprietary interest. When the sheriff acting beyond the bounds of his
office seizes a stranger's property, the rule does not apply and
interference with his custody is not interference with another court's
order of attachment.
Traders Royal Bank vs. IAC (1984)
18 Mar 82: Traders Royal Bank instituted a suit against Remco
Alcohol Distillery for the recovery of P2,382,258.71, obtaining therein
a writ of preliminary attachment directed against the assets and
properties of Remco. Pursuant to said writ, Sheriff Santiago levied
among others about 4,600 barrels of aged or rectified alcohol found
within the premises of Remco.
1 Apr: A third party claim was filed with the Deputy Sheriff by La
Tondea, Inc. claiming ownership over said attached property.
12 May: La Tondea filed a complaint-in-intervention in Traders
case against Remco, alleging among others, that 'it had made advances
to Remco Distillery Inc. which totalled P3M and which remains

outstanding as of date' and that the 'attached properties are
owned by La Tondea, Inc.
Subsequently, La Tondea, without the foregoing complaint-in-
intervention having been passed upon filed a "Motion to Withdraw"
dated October 8, 1983, praying that it be allowed to withdraw alcohol
and molasses from the Remco, and which motion was granted,
authorizing La Tondea to withdraw alcohol and molasses from the
Remco Distillery Plant at Calumpit, Bulacan.
However, the foregoing order was reconsidered, declaring that the
alcohol "which has not been withdrawn remains in the ownership of
Remco Alcohol Distillery Corporation" and which order likewise denied
La Tondea's motion to intervene.
La Tondea filed MR, reiterating its request for leave to withdraw
alcohol from the Remco, and praying further that the "portion of the
order dated February 18, 1983" declaring Remco to be the owner of
subject alcohol, "be reconsidered and striken off said order. However,
La Tondea withdrew its MR.
19 Jul 83: La Tondea Inc. instituted a case, in which it asserted its
claim of ownership over the properties attached, and likewise prayed
for the issuance of a writ of Preliminary Mandatory and Prohibitory
Injunction.
TRB filed a motion to dismiss the application for writ of preliminary
injunction of La Tondea. La Tondea, on the one hand, filed an
opposition to such motion. Hearings were held.
28 Sep 83: TC declared La Tondea to be the owner of the disputed
alcohol, and granted the latters application for injunctive relief.
6 Oct: Sheriff Evangelista issued on Santiago the corresponding writ
of preliminary injunction.
11 Oct: TC issued an order in the case of TRB, requiring Deputy
Sheriff Santiago to enforce the writ of preliminary attachment
previously issued by said court, by preventing respondent sheriff and
La Tondea, Inc. from withdrawing or removing the disputed alcohol
from the Remco ageing warehouse at Calumpit, Bulacan, and requiring
the aforenamed respondents to explain and show cause why they
should not be cited for contempt for withdrawing or removing said
attached alcohol belonging to Remco.
Thereafter, TRB filed a petition for certiorari and prohibition, with
application for a writ of preliminary injunction, to annul and set aside
the Order dated September 28, 1983; to dissolve the writ of
preliminary injunction dated October 6, 1983 issued pursuant to said
order; to prohibit respondent Judge from taking cognizance of and
assuming jurisdiction over Civil Case No. 7003-M, and to compel La
Tondea, Inc., and Ex-Officio Provincial Sheriff of Bulacan to return the
disputed alcohol to their original location at Remco's ageing
warehouse at Calumpit, Bulacan.
TRBs contention: Respondent Judge of RTC Bulacan acted without
jurisdiction in entertaining Civil Case No. 7003-M, in authorizing the
issuance of a writ of preliminary mandatory and prohibitory injunction,
which enjoined the sheriff of Pasay City from interferring with La
Tondea's right to enter and withdraw the barrels of alcohol and
molasses from Remco's ageing warehouse and from conducting the
sale thereof, said merchandise having been previously levied upon
pursuant to the attachment writ issued by RTC Pasay. It is submitted
that such order of the Bulacan Court constitutes undue and illegal
interference with the exercise by the Pasay Court of its coordinate and
co-equal authority on matters properly brought before it.
ISSUE:
No question that the action filed by La Tondea, Inc., as third-party
claimant, before RTC Bulacan wherein it claimed ownership over the
property levied upon by Sheriff Santiago is sanctioned by Section 14,
Rule 57. The provision explicitly sets forth the remedy that may be
availed of by a person who claims to be the owner of property levied
upon by attachment, viz: to lodge a third-party claim with the sheriff,
and if the attaching creditor posts an indemnity bond in favor of the
sheriff, to file a separate and independent action to vindicate his claim.
And this precisely was the remedy resorted to by La Tondea when it
filed the vindicatory action before the Bulacan Court.
Generally, the rule that no court has the power to interfere by
injunction with the judgments or decrees of a concurrent or coordinate
jurisdiction having equal power to grant the injunctive relief sought by
injunction, is applied in cases where no third-party claimant is involved,
in order to prevent one court from nullifying the judgment or process
55
of another court of the same rank or category, a power which
devolves upon the proper appellate court. The purpose of the
rule is to avoid conflict of power between different courts of coordinate
jurisdiction and to bring about a harmonious and smooth functioning
of their proceedings.
TRBs contention: Since La Tondea, Inc., had voluntarily submitted
itself to the jurisdiction of the Pasay Court by filing a motion to
intervene in Civil Case No. 9894-P, the denial or dismissal thereof
constitutes a bar to the present action filed before the Bulacan Court.
No merit. Suffice it to state that intervention as a means of
protecting the third-party claimant's right in an attachment proceeding
is not exclusive but cumulative and suppletory to the right to bring an
independent suit. The denial or dismissal of a third-party claim to
property levied upon cannot operate to bar a subsequent independent
action by the claimant to establish his right to the property even if he
failed to appeal from the order denying his original third-party claim.
Ching vs. CA (2004)
26 Sep 78: Phil. Blooming Mills obtained a loan of P9M from Allied
Banking Corp. By virtue of this loan, PBM, through its Executive VP
Alferedo Ching, executed a P/N for said amount promising to pay on
December 22, 1978 at an interest rate of 14% per annum. As added
security for the said loan, on 28 Sep 78, Ching, together with Emilio
Taedo and Chung Kiat Hua, executed a continuing guaranty with the
ABC binding themselves to jointly and severally guarantee the
payment of all PBM obligations owing the ABC to the extent of P38M.
28 Dec 79: ABC extended another loan to the PBM in the amount
of P13M payable in eighteen months at 16% interest per annum. As
in the previous loan, the PBM, through Alfredo Ching, executed a P/N
to evidence the loan maturing on June 29, 1981. This was renewed
once for a period of one month.
PBM defaulted in the payment of all its loans.
21 Aug 81: ABC filed a complaint for sum of money with prayer for
a writ of preliminary attachment against the PBM to collect the
P12,612,972.88 exclusive of interests, penalties and other bank
charges. Impleaded as co-defendants in the complaint were Alfredo
Ching, Emilio Taedo and Chung Kiat Hua in their capacity as sureties
of the PBMCI.
In its application for a writ of preliminary attachment, ABC averred
that the "defendants are guilty of fraud in incurring the obligations
upon which the present action is brought in that they falsely
represented themselves to be in a financial position to pay their
obligation upon maturity thereof." Its supporting affidavit stated, inter
alia, that the "defendants have removed or disposed of their properties,
or are about to do so, with intent to defraud their creditors.
26 Aug 81: After an ex-parte hearing, TC issued an Order denying
the ABCs application for a writ of preliminary attachment, ruling that
the grounds alleged in the application and that of its supporting
affidavit "are all conclusions of fact and of law" which do not warrant
the issuance of the writ prayed for.
On MR, however, the trial court, in an Order dated 14 Sep 81,
reconsidered its previous order and granted the ABCs application for
a writ of preliminary attachment on a bond of P12.7M.
Upon the ABCs posting of the requisite bond, TC issued a writ of
preliminary attachment. Subsequently, summonses were served on
the defendants, save Chung Kiat Hua who could not be found.
1 Apr 82: PBM and Ching jointly filed a petition for suspension of
payments with the SEC at the same time seeking the PBMs
rehabilitation.
9 Jul 82: SEC issued an Order placing the PBMs business,
including its assets and liabilities, under rehabilitation receivership,
and ordered that "all actions for claims listed in Schedule "A" of the
petition pending before any court or tribunal are hereby suspended in
whatever stage the same may be until further orders from the
Commission." ABC was among the creditors.
31 Jan 83: PBM and Ching jointly filed a Motion to Dismiss and/or
motion to suspend the proceedings in the case filed by ABC, invoking
the PBMs pending application for suspension of payments and over
which the SEC had already assumed jurisdiction.
Meanwhile, 26 Jul: Deputy Sheriff levied on attachment the 100,000
common shares of Citycorp stocks in the name of Alfredo Ching.
16 Sep: TC partially granted the aforementioned motion by
suspending the proceedings only with respect to the PBMCI. It denied
 56

Chings motion to dismiss the complaint/or suspend the guaranty and suretyship agreement with the PBM. Encarnacion
proceedings and pointed out that PD 1758 only concerns the had the right to file the motion for said relief.
activities of corporations, partnerships and associations and was never
intended to regulate and/or control activities of individuals. Section 15. Satisfaction of judgment out of property attached, return of
25 Oct 84: Ching filed an Omnibus Motion, again praying for the sheriff. If judgment be recovered by the attaching party and
dismissal of the complaint or suspension of the proceedings on the execution issue thereon, the sheriff may cause the judgment to be
ground of the July 9, 1982 Injunctive Order issued in SEC Case No. satisfied out of the property attached, if it be sufficient for that purpose
2250. He averred that as a surety of the PBMCI, he must also in the following manner:
necessarily benefit from the defenses of his principal. (a) By paying to the judgment obligee the proceeds of all sales of
Emilio Y. Taedo, thereafter, filed his own Omnibus Motion, praying perishable or other property sold in pursuance of the order of the
for the dismissal of the complaint, arguing that the ABC had court, or so much as shall be necessary to satisfy the judgment;
"abandoned and waived" its right to proceed against the continuing (b) If any balance remains due, by selling so much of the property,
guaranty by its act of resorting to preliminary attachment. real or personal, as may be necessary to satisfy the balance, if enough
17 Dec 86: ABC filed a Motion to Reduce the amount of his for that purpose remain in the sheriff's hands, or in those the clerk of
preliminary attachment bond from P12.7M to P6.350M. Alfredo Ching the court;
opposed the motion, but on 2 Apr 87, the court issued an Order (c) By collecting from all persons having in their possession credits
setting the incident for further hearing on 28 May 87 for the parties belonging to the judgment obligor, or owing debts to the latter at the
to adduce evidence on the actual value of the properties of Alfredo time of the attachment of such credits or debts, the amount of such
Ching levied on by the sheriff. credits and debts as determined by the court in the action, and stated
2 Mar 88: TC issued an Order granting the motion of the ABC and in the judgment, and paying the proceeds of such collection over to
rendered the attachment bond of P6.350M. the judgment obligee.
16 Nov 93: Encarnacion Ching filed a Motion to Set Aside the levy The sheriff shall forthwith make a return in writing to the court of
on attachment. his proceedings under this section and furnish the parties with copies
Encarnacions contention: The 100,000 shares of stocks levied on thereof.
by the sheriff were acquired by her and her husband during their
marriage out of conjugal funds after the Citycorp Investment Tayabas Land vs. Sharruf (supra., p. 36)
Philippines was established in 1974. Furthermore, the indebtedness
covered by the continuing guaranty/comprehensive suretyship Bilag-Rivera vs. Flora (1995)
contract executed by Alfredo Ching for the account of PBM did not
redound to the benefit of the conjugal partnership. Likewise alleged
Florentina Bilag-Rivera charged Crisanto Flora, deputy sheriff of RTC
that being the wife of Alfredo Ching, she was a third-party claimant
Baguio, with grave misconduct and dishonesty, when he released a
entitled to file a motion for the release of the properties.
motor vehicle subject of a writ of attachment to a representative of
ABCs contention: Encarnacion is not a party to the present case
Panda Motors in a civil case, without authority from the court which
and thus, has no personality to file any motion before the Court. She
issued the writ, thereby enabling Panda to sell the motor vehicle to a
also did not file any Motion for Intervention. Said motion filed by
third person, to the damage and prejudice of Bilag-Rivera who claims
Encarnacion cannot be construed to be in the nature of a third-party
ownership over said motor vehicle.
claim. Also, the motion was barred by prescription or by laches
5 Aug 90: Elsie Tacay bought an Isuzu Jitney on installment basis
because the shares of stocks were in custodia legis.
from Panda Automotive Corp., Dagupan City, represented by Charlie
Q. Carlos, for P256k.
ISSUE: WON Encarnacion has the right to file the motion to quash the
17 Mar 92: When the installment payments reached P145k, Tacay
levy on attachment on the 100k shares of stocks
demanded for the execution of a DOAS which she obtained from
Panda on the same date.
Yes. The sheriff may attach only those properties of the defendant
23 Mar 92: Tacay registered the vehicle in her name with the LTO
against whom a writ of attachment has been issued by the court. When
in Lingayen.
the sheriff erroneously levies on attachment and seizes the property of
10 May 92: Tacay tendered a check for P100k to cover part of the
a third person in which the said defendant holds no right or interest,
P120k balance still due. Upon presentment by Panda with the drawee
the superior authority of the court which has authorized the execution
bank, the check for P100k was dishonored as the same was allegedly
may be invoked by the aggrieved third person in the same case. Upon
forged. When confronted by Panda about the check's dishonor, Tacay
application of the third person, the court shall order a summary
promised to pay the balance of P120k on or before 23 June 1992.
hearing for the purpose of determining whether the sheriff has acted
8 Jul 92: However, Tacay sold the Isuzu jitney to Florentina Bilag-
rightly or wrongly in the performance of his duties in the execution of
Rivera for the amount of P250k, covered by an Absolute DOS. Hence,
the writ of attachment, more specifically if he has indeed levied on
possession of the vehicle and its LTO registration papers were turned
attachment and taken hold of property not belonging to the plaintiff. If
over to Bilag-Rivera.
so, the court may then order the sheriff to release the property from
It appears that Tacay failed to fulfill her promise to pay the P120k
the erroneous levy and to return the same to the third person. In
balance on the vehicle due Panda Corp., prompting the latter to verify
resolving the motion of the third party, the court does not and cannot
the whereabouts of the said vehicle. Panda later learned of the DOS
pass upon the question of the title to the property with any character
between Tacay and Bilag-Rivera and obtained information that the
of finality. It can treat the matter only insofar as may be necessary to
alleged DOS was not registered or even annotated on the Certificate of
decide if the sheriff has acted correctly or not. If the claimants proof
Registration of the motor vehicle.
does not persuade the court of the validity of the title, or right of
Sep 92: Panda filed a complaint for specific performance, replevin,
possession thereto, the claim will be denied by the court. The aggrieved
and damages with prayer for the issuance of a writ of preliminary
third party may also avail himself of the remedy of "terceria" by
attachment against Elsie Tacay with Rivera impleaded as co-defendant.
executing an affidavit of his title or right of possession over the
18 Sep 92: RTC issued a writ of preliminary attachment against
property levied on attachment and serving the same to the office
Tacay and Rivera. Since the subject motor vehicle was believed to be
making the levy and the adverse party. Such party may also file an
in the City of Baguio, the writ was addressed to the RTC, City Sheriff,
action to nullify the levy with damages resulting from the unlawful levy
Baguio City.
and seizure, which should be a totally separate and distinct action from
Instead of proceeding against the principal defendant Tacay, the
the former case. The above-mentioned remedies are cumulative and
Deputy Sheriff proceeded to attach the subject motor vehicle in
any one of them may be resorted to by one third-party claimant
Rivera's possession. At that time, Sheriff was accompanied by Charlie
without availing of the other remedies.
Carlos, Panda's Manager. Flora issued to Rivera a handwritten receipt
In the case at bar, Encarnacion filed her motion to set aside the levy
which indicated that he took possession of the vehicle pursuant to the
on attachment of the 100,000 shares of stocks in the name of Alfredo
writ of attachment.
claiming that the said shares of stocks were conjugal in nature; hence,
not liable for the account of her husband under his continuing

Rivera requested the City Sheriff of RTC Baguio to hold the
vehicle for a few days as she would prepare the amount of P20k
as counterbond to discharge the attachment. Since there was no
bonded warehouse in the City of Baguio, the office of the City Sheriff
requested complainant to pay P1k to justify their holding on to said
vehicle until she could post the counterbond. She paid the same.
23 Dec 92: RTC Dagupan issued an order for the issuance of an
alias writ of attachment prayed for by Panda. The writ was addressed
to Sheriff Flora with an order to attach the same motor vehicle in
possession of Rivera. Flora received the alias writ on 23 Feb 93. The
alias writ was not served immediately by Flora because the
whereabouts of said vehicle could not be ascertained.
15 Mar: Panda Motors was informed that the vehicle to be attached
was in the possession of Carlos Camiwet, a cousin of Rivera.
Flora went to the residence of Camiwet and served the alis writ with
an attachment bond of P120k. It was alleged that Flora did not issue
any receipt to cover for his repossession of the vehicle and that various
tools worth P50k, which were not integral to the motor vehicle, were
also taken by Flora.
The following day, Rivera accompanied by her lawyer, went to the
office of Flora to inquire about the motor vehicle and to request for a
receipt. Flora told her not to worry and that the issuance of a receipt
was no longer necessary because the vehicle and its tools were being
kept in a safe place. She then informed Flora that she would be posting
a counterbond as soon as she had the money. On several occasions,
she came to the office of Flora to inspect the vehicle but Flora did not
allow her to see the vehicle nor was she informed of its whereabouts.
Flora, however, gave her repeated assurances that the vehicle was
being kept in a safe place.
17 May 93: Rivera attended the hearing in Civil Case No. D-10285
to argue her Motion to Dismiss and Motion to Quash the Writ of
Preliminary Attachment. To her surprise, she was informed by the
lawyer of Panda that a certain Elsie Tacay had voluntarily surrendered
the vehicle together with its documents to Panda and that Panda's
manager, Charlie Carlos, had already sold the vehicle to a person
named Leonardo Sarmiento for P175k.
7 Jun 93: Flora submitted the return of the alias writ of attachment.
Rivera manifested before the court that the subject motor vehicle
was in custodia legis and that the above-mentioned transactions were
anomalous and contrary to law. Thereafter, the court directed
complainant's lawyer to investigate the matter and to report his
findings to the court.
Riveras lawyer then sent a letter of inquiry to the Clerk of Court of
Baguio, asking why Flora did not issue a receipt when he executed the
alias writ of attachment; why there was no sheriff's return on the writ
of attachment filed in court; why the vehicle was no longer seen again
after 15 Mar 93; and whether it was true that Tacay took the vehicle
together with the tools from Rivera and returned it to Panda.
Meanwhile, the Clerk of Court and the Ex-Officio Sheriff of RTC,
Baguio issued a memo to Flora requiring him to explain the
proceedings he conducted in enforcing the alias writ of attachment.
Floras contention: He served and took the subject vehicle into
custodia legis, and a receipt was duly issued. The receipt not however
received nor signed by the defendants as they refused to do so,
thereafter, said motor vehicle was surrendered to Panda for
safekeeping and custody for the reason that this office has no bonded
warehouse to keep the said motor vehicle. An acknowledgment receipt
was duly signed by the manager of said Panda Motors in the person
of Mr. Charlie Marcos. Also denied the existence of the tools.
ISSUE: WON Flora should be held administratively liable
Yes. While the evidence may be insufficient to prove that Flora
conspired with Charlie Carlos and Elsie Tacay in eventually alienating
the vehicle to a third person, his particular zeal and precipitate
decision to give possession of the vehicle to a party litigant (Panda)
and treat the same as "in custodia legis" effectively destroys the
presumption of regularity in the performance of his official duties.
As deputy sheriff, respondent could not be unaware of Rule 57,
section 6 of the rules of Court which provides that: Immediately after
executing the order of the officer must make a return thereon to the clerk
or judge of the court from which the order issued, with a full statement of
his proceeding under the order and a complete inventory of the property
attached, together with any counter-bond given by the party against whom
57
attachment is issued, and serve a copy of any such counter-bond
on the applicant or his lawyer.
Chapter VIII (e) (4) of the Manual for Clerks of Court similarly states
that: All sheriffs and deputy sheriffs shall submit a report to the judge
concerned on the action taken on all writs and processes assigned to them
within (10) days from receipt of said process or writ. Said report shall form
part of the records.
Flora could not evade the positive duty of serving the attaching
creditor's affidavit, bond, and the order of attachment on Camiwet by
now alleging that it was the fault of Rivera and her representative in
refusing to sign the receipt that he allegedly issued on 15 March 1993.
The records of the investigation reveal otherwise; that Rivera could
not have signed the acknowledgment receipt because she was not
present when the vehicle was attached. In the same vein, her cousin
Camiwet refused to sign the receipt because, as he testified, the same
was misleading as he was being forced to sign a receipt which
indicated that Rivera and Elsie Tacay surrendered the vehicle to Flora
by virtue of the said alias writ of attachment.
Flora himself virtually admitted his nonfeasance when he testified
that it had been their practice to give possession of properties subject
of writs of attachment to party litigants because they have no bonded
warehouse in their jurisdiction. However, he could not explain why, in
this particular case, in the first writ of attachment, he even demanded
P1k from Rivera for alleged storage fees while she bought time to find
the amount for her counterbond, and yet, in the execution of the alias
writ, he usurped the court's function and released the vehicle to the
custody of Mr. Carlos. Equally reprehensible is his attempt to cover up
his misdeed by concealing it from Rivera when the latter confronted
him thereafter in his office.
Thus, the return he executed more than 2 months after the
enforcement of the alias writ was more of an afterthought rather than
the fulfillment of a positive duty, because by then he had been ordered
by the clerk of court to explain his proceedings under the alias writ of
attachment.
PNB vs. Vasquez (1941)
27 May 25: Esteban Vasquez succeeded in negotiating with the
PNB a loan for P24k, on the 1925-26 sugarcane harvest of his
hacienda "Mandalagan"; that the money advanced him by PNB
totalled P19,521.09, at an agreed 9% interest/annum and a mortgage
executed on his sugarcane harvest; that additional guaranty was put
up by one Cristeta Ibaez.
Subsequently, in an action filed by PNB for the recovery of the total
amount due and owing, Vazquez was ordered by the court to settle his
obligation in full. No appeal was interposed by any of the parties to the
decision of 31 Oct 31, and the same became final and executory.
But the said judgment not having enforced by writ of execution and
the period of five years having elapsed, the PNB, on 22 Jul 37, filed a
complaint.
PNB obtained a writ of preliminary attachment, by virtue of which
500 piculs of sugar belonging to Vazquez was levied upon by the
sheriff and sold at public auction at the rate of P10.75 per picul, the
proceeds therefrom amounting to P5,250.13. This amount was
deposited with PNB, upon its own petition, in the name of Andres
Covacha personally, then a deputy of the Provincial Sheriff of
Occidental Negros.
14 Aug 28: A deposit of P5,250.13, was made in the name of the
Provincial Sheriff of Occidental Negros with the bank, by virtue of
another petition of PNB approved by the court to transfer the deposit
in the name of the provincial sheriff proper. It appears, however, that
the Provincial Sheriff made other deposits on this current account, and
that he has been making withdrawals therefrom until it was closed on
6 Jan 32.
PNBs contention: The amount of P5,250.13 should not have been
deducted from the judgment awarded to it, for the reason that
Vasquez, despite the attachment, is still the owner of the 500 piculs of
sugar and of its proceeds after the public auction sale, and loss or
misappropriation thereof should be for his account.
ISSUE:
The reason invoked is not applicable here. As correctly observed by
the trial judge, "once the decision in the aforesaid civil case had

become final, the proceed of the sugar attached in connection
therewith should be considered as partial satisfaction of the
amount of the judgment." "Personal property may have levied upon
under attachment and left in the possession of the sheriff or other
officer levying the writ to secure the payment of such judgment as may
be recovered in the action. Where execution issues, it is the duty of
such officer to apply towards its satisfaction the property so attached
and left in his hands; but he may have embezzled or otherwise
misappropriated it, or allowed it to be lost by his negligence. When
such is the case, we think the better opinion is, that it must, as between
the plaintiff and defendant, and persons claiming under defendant, be
treated as though it had been levied upon under execution as well as
under attachment, and therefore as satisfying the judgment to the
extent of its value."
And whether or not the Provincial Sheriff was negligent in the
performance of his official duties by not turning the money over the
plaintiff, is a question which could only be determined in a separate
case and hence, immaterial in the present controversy.
The affirmative acts of PNB have resulted in the attachment and
subsequent sale of the property of Vasquez. It seems fair that PNB
having put Vasquez's property into the hands of the sheriff, the loss
should fall on him and not on Vasquez. When a sheriff takes property
or goods in execution or by attachment, he becomes the bailee for the
benefit of all parties interested, and certainly for the party who set him
in motion. After obtaining the judgment, PNB at once was entitled to
have the proceeds of the sale applied to the satisfaction of his
judgment and it was the duty of the sheriff to pay the proceeds over.
The money collected or paid the sheriff on the sale of the goods or
property may be regarded just like money in the hands of a sheriff
collected on execution. If the sheriff collects money from a judgment
debtor, and then fails to pay it over, the debtor cannot be compelled
to pay it again.
We find Vazquez liable to PNB for the principal sum of P19,869.47,
with interest on the sum of P11,884.50 at 9% per annum from April
1, 1927, but deducting the sum of P5,250.13, the deduction to be
computed as of the date the judgment in civil case No. 4031 had
become final and executory.
PAL vs. CA (1990)
8 Nov 67: Amelia Tan filed a complaint for damages against PAL.
Judge Morfe rendered judgment on 1972 in favor of Tan and against
PAL. PAL filed its appeal but CA ruled against it, condemning it to pay
Tan the sum of P25k as damages and P5k as attorneys fee.
31 May 77: Judgment became final and executory.
2 Sep: re Tan filed a motion praying for the issuance of a writ of
execution of the judgment rendered by CA.
11 Oct: TC issued its order of execution with the corresponding writ
in favor of Tan. The writ was duly referred to Deputy Sheriff Emilio Z.
Reyes of Branch 13 of CFI Manila for enforcement.
11 Feb 78: Tan moved for issuance of an alias writ of execution.
1 Mar: PAL filed an opposition to the motion for the issuance of an
alias writ of execution, stating that it had already fully paid its
obligation to Tan through the deputy sheriff of the respondent court,
Emilio Z. Reyes, as evidenced by cash vouchers properly signed and
receipted by said Emilio Z. Reyes.
3 Mar: CA denied the issuance of the alias writ for being premature,
ordering the executing sheriff Reyes to appear with his return and
explain the reason for his failure to surrender the amounts paid to him
by PAL. However, the order could not be served upon Deputy Sheriff
Reyes who had absconded or disappeared.
28 Mar: A motion for the issuance of a partial alias writ of execution
was filed by Tan.
19 Apr: Tan filed a motion to withdraw "Motion for Partial Alias Writ
of Execution" with Substitute Motion for Alias Writ of Execution.
18 May: PAL received a copy of the first alias writ of execution issued
on the same day directing Special Sheriff del Rosario to levy on
execution in the sum of P25k with legal interest thereon from July 20,
1967 when Tan made an extra-judicial demand through a letter. Levy
was also ordered for the further sum of P5k awarded as attorney's fees.
23 May: PAL filed an urgent motion to quash the alias writ of
execution, stating that no return of the writ had as yet been made by
Deputy Sheriff Reyes and that the judgment debt had already been
fully satisfied by PAL.
58
26 May: Del Rosario served a notice of garnishment on the
depository bank of PAL, Far East Bank and Trust Company,
Rosario Branch, Binondo, Manila, through its manager and garnished
the PALs deposit in the said bank in the total amount of P64,408.00
as of May 16, 1978.
ISSUE: Can an alias writ of execution be issued without prior return of
the original writ by the implementing officer?
Yes. A judgment cannot be rendered nugatory by the unreasonable
application of a strict rule of procedure. Vested rights were never
intended to rest on the requirement of a return, the office of which is
merely to inform the court and the parties, of any and all actions taken
under the writ of execution. Where such information can be
established in some other manner, the absence of an executing
officer's return will not preclude a judgment from being treated as
discharged or being executed through an alias writ of execution as the
case may be. More so, as in the case at bar. Where the return cannot
be expected to be forthcoming, to require the same would be to
compel the enforcement of rights under a judgment to rest on an
impossibility, thereby allowing the total avoidance of judgment debts.
So long as a judgment is not satisfied, a plaintiff is entitled to other
writs of execution.
ISSUE: WON the judgment has been fully satisfied / Did the payment
made to the absconding sheriff by check in his name operate to satisfy
the judgment debt?
No. Tan who has won her case should not be adjudged as having
sued in vain. To decide otherwise would not only give her an empty
but a pyrrhic victory. It should be emphasized that under the initial
judgment, Amelia Tan was found to have been wronged by PAL. She
filed her complaint in 1967. After 10 years of protracted litigation in
the CFI and the CA, Ms. Tan won her case. It is now 1990.
Almost 22 years later, Ms. Tan has not seen a centavo of what the
courts have solemnly declared as rightfully hers. Through absolutely
no fault of her own, Ms. Tan has been deprived of what, technically,
she should have been paid from the start, before 1967, without need
of her going to court to enforce her rights. And all because PAL did not
issue the checks intended for her, in her name.
Under the peculiar circumstances of this case, the payment to the
absconding sheriff by check in his name did not operate as a
satisfaction of the judgment debt. In general, a payment, in order to be
effective to discharge an obligation, must be made to the proper
person. Article 1240 states: Payment shall be made to the person in
whose favor the obligation has been constituted, or his successor in
interest, or any person authorized to receive it.
Thus, payment must be made to the obligee himself or to an agent
having authority, express or implied, to receive the particular payment
Payment made to one having apparent authority to receive the money
will, as a rule, be treated as though actual authority had been given for
its receipt. Likewise, if payment is made to one who by law is
authorized to act for the creditor, it will work a discharge. The receipt
of money due on a judgment by an officer authorized by law to accept
it will, therefore, satisfy the debt.
The theory is where payment is made to a person authorized and
recognized by the creditor, the payment to such a person so
authorized is deemed payment to the creditor. Under ordinary
circumstances, payment by the judgment debtor in the case at bar, to
the sheriff should be valid payment to extinguish the judgment debt.
There are circumstances in this case, however, which compel a
different conclusion. The payment made by PAL to the absconding
sheriff was not in cash or legal tender but in checks. The checks were
not payable to Amelia Tan or Able Printing Press but to the absconding
sheriff.
In the absence of an agreement, either express or implied, payment
means the discharge of a debt or obligation in money and unless the
parties so agree, a debtor has no rights, except at his own peril, to
substitute something in lieu of cash as medium of payment of his debt.
Consequently, unless authorized to do so by law or by consent of the
obligee a public officer has no authority to accept anything other than
money in payment of an obligation under a judgment being executed.
Strictly speaking, the acceptance by the sheriff of PALs checks, in the
 59

case at bar, does not, per se, operate as a discharge of the case of the absconding sheriff. The correct and prudent thing
judgment debt. for the petitioner was to have issued the checks in the intended
Since a negotiable instrument is only a substitute for money and not payee's name.
money, the delivery of such an instrument does not, by itself, operate The pernicious effects of issuing checks in the name of a person
as payment. A check, whether a manager's check or ordinary cheek, is other than the intended payee, without the latter's agreement or
not legal tender, and an offer of a check in payment of a debt is not a consent, are as many as the ways that an artful mind could concoct to
valid tender of payment and may be refused receipt by the obligee or get around the safeguards provided by the law on negotiable
creditor. Mere delivery of checks does not discharge the obligation instruments. An angry litigant who loses a case, as a rule, would not
under a judgment. The obligation is not extinguished and remains want the winning party to get what he won in the judgment. He would
suspended until the payment by commercial document is actually think of ways to delay the winning party's getting what has been
realized. adjudged in his favor. We cannot condone that practice especially in
If bouncing checks had been issued in the name of Amelia Tan and cases where the courts and their officers are involved.
not the Sheriff's, there would have been no payment. After dishonor of
the checks, Ms. Tan could have run after other properties of PAL. The Section 17. Recovery upon the counter-bond. When the judgment
theory is that she has received no value for what had been awarded has become executory, the surety or sureties on any counter-bond
her. Because the checks were drawn in the name of Emilio Z. Reyes, given pursuant to the provisions of this Rule to secure the payment of
neither has she received anything. The same rule should apply. the judgment shall become charged on such counter-bond and bound
PALs contention: If it had paid cash to Sheriff Reyes, there would to pay the judgment obligee upon demand the amount due under the
have been payment in full legal contemplation. judgment, which amount may be recovered from such surety or
In the first place, PAL did not pay in cash. It paid in cheeks. And sureties after notice and summary hearing in the same action.
second, payment in cash always carries with it certain cautions.
Nobody hands over big amounts of cash in a careless and inane Luzon Steel vs. Sia (1969)
manner. Mature thought is given to the possibility of the cash being
lost, of the bearer being waylaid or running off with what he is carrying
Luzon Steel Corp. sued Metal Manufacturing and Jose Sia, manager,
for another. Payment in checks is precisely intended to avoid the
for breach of contract and damages. It obtained a writ of preliminary
possibility of the money going to the wrong party. The situation is
attachment of the properties of the defendants, but the attachment
entirely different where a Sheriff seizes a car, a tractor, or a piece of
was lifted upon a P25k counterbond executed by Sia, as principal, and
land. Logic often has to give way to experience and to reality. Having
the Times Surety & Insurance Co., Inc. as solidary guarantor.
paid with checks, PAL should have done so properly.
Luzon Steel and Sia entered into a compromise agreement whereby
Payment in money or cash to the implementing officer may be
Sia agreed to settle Luzon Steels claim by paying P500 monthly for 6
deemed absolute payment of the judgment debt but the Court has
mos and within 1 mo after paying the last installment of P500, the
never, in the least bit, suggested that judgment debtors should settle
balance of P22k shall be paid in lump sum. It was also agreed that the
their obligations by turning over huge amounts of cash or legal tender
failure of Sia to pay one or any installment will make the whole
to sheriffs and other executing officers. Payment in cash would result
obligation immediately due and demandable and that a writ of
in damage or interminable litigations each time a sheriff with huge
execution will be issued immediately against Sias bond. The
amounts of cash in his hands decides to abscond.
compromise was submitted to court and approved.
As a protective measure, therefore, the courts encourage the
Sia failed to comply. Luzon Steel obtained a writ of execution against
practice of payments by cheek provided adequate controls are
Sia and the joint and several counterbond. Surety moved to quash.
instituted to prevent wrongful payment and illegal withdrawal or
Suretys contention: It was not a party to the compromise, and that
disbursement of funds. If particularly big amounts are involved, escrow
the writ was issued without giving the surety notice and hearing.
arrangements with a bank and carefully supervised by the court would
be the safer procedure. Actual transfer of funds takes place within the
ISSUE: WON the judgment upon the compromise discharged the
safety of bank premises. These practices are perfectly legal. The object
surety from its obligation under its attachment counterbond
is always the safe and incorrupt execution of the judgment.
It is, indeed, out of the ordinary that checks intended for a particular
No. We are dealing with a counterbond filed to discharge a levy on
payee are made out in the name of another. Making the checks
attachment. Rule 57, section 12, specifies that an attachment may be
payable to the judgment creditor would have prevented the
discharged upon the making of a cash deposit or filing a counterbond
encashment or the taking of undue advantage by the sheriff, or any
"in an amount equal to the value of the property attached as determined
person into whose hands the checks may have fallen, whether
by the judge"; that upon the filing of the counterbond "the property
wrongfully or in behalf of the creditor. The issuance of the checks in
attached ... shall be delivered to the party making the deposit or giving
the name of the sheriff clearly made possible the misappropriation of
the counterbond, or the person appearing on his behalf, the deposit or
the funds that were withdrawn.
counterbond aforesaid standing in place of the property so released".
Having failed to employ the proper safeguards to protect itself, the
Whether the judgment be rendered after trial on the merits or upon
judgment debtor whose act made possible the loss had but itself to
compromise, such judgment undoubtedly may be made effective upon
blame.
the property released; and since the counterbond merely stands in the
The attention of this Court has been called to the bad practice of a
place of such property, there is no reason why the judgment should
number of executing officers, of requiring checks in satisfaction of
not be made effective against the counterbond regardless of the
judgment debts to be made out in their own names. If a sheriff directs
manner how the judgment was obtained.
a judgment debtor to issue the checks in the sheriff's name, claiming
The diverse rule in section 17 of Rule 59 for counterbonds posted
he must get his commission or fees, the debtor must report the sheriff
to obtain the lifting of a writ of attachment is due to these bonds being
immediately to the court which ordered the execution or to the
security for the payment of any judgment that the attaching party may
Supreme Court for appropriate disciplinary action. Fees, commissions,
obtain; they are thus mere replacements of the property formerly
and salaries are paid through regular channels. This improper
attached, and just as the latter may be levied upon after final judgment
procedure also allows such officers, who have 60 days within which to
in the case in order to realize the amount adjudged, so is the liability
make a return, to treat the moneys as their personal finds and to
of the counter-sureties ascertainable after the judgment has become
deposit the same in their private accounts to earn 60 days interest,
final. This situation does not obtain in the case of injunction
before said finds are turned over to the court or judgment creditor.
counterbonds, since the sureties in the latter case merely undertake
Quite as easily, such officers could put up the defense that said checks
"to pay all damages that the plaintiff may suffer by reason of the
had been issued to them in their private or personal capacity. Without
continuance ... of the acts complained of" (Rule 60, section 6) and not
a receipt evidencing payment of the judgment debt, the
to secure payment of the judgment recovered.
misappropriation of finds by such officers becomes clean and
It was error on the part of the court below to have ordered the surety
complete. The practice is ingenious but evil as it unjustly enriches court
bond cancelled, on the theory that the parties' compromise discharged
personnel at the expense of litigants and the proper administration of
the obligation of the surety.
justice. The temptation could be far greater, as proved to be in this

Suretys contention: The execution issued against it was invalid
because the writ issued against its principal, Jose O. Sia had not
been returned unsatisfied; and the surety invoked in its favor Section
17 of Rule 57.
No merit. The counterbond contemplated in the rule is evidently an
ordinary guaranty where the sureties assume a subsidiary liability. This
is not the case here, because the surety in the present case bound
itself "jointly and severally" with the Sia; and it is prescribed in Article
2059, paragraph 2, of the Civil Code that excusion (previous
exhaustion of the property of the debtor) shall not take place "if he (the
guarantor) has bound himself solidarily with the debtor". The rule
heretofore quoted cannot be construed as requiring that an execution
against the debtor be first returned unsatisfied even if the bond were
a solidary one; for a procedural rule may not amend the substantive
law expressed in the Civil Code, and further would nullify the express
stipulation of the parties that the surety's obligation should be solidary
with that of Sia.
A second reason against the stand of the surety and of the court
below is that even if the surety's undertaking were not solidary with
that of the principal debtor, still he may not demand exhaustion of the
property of the latter, unless he can point out sufficient leviable
property of the debtor within Philippine territory. There is no record
that the surety has done so.
A third reason against the thesis of appellee is that, under the rule
and its own terms, the counter-bond is only conditioned upon the
rendition of the judgment. Payment under the bond is not made to
depend upon the delivery or availability of the property previously
attached, as it was under Section 440 of the old Code of Civil
Procedure. Where under the rule and the bond the undertaking is to
pay the judgment, the liability of the surety or sureties attaches upon
the rendition of the judgment, and the issue of an execution and its
return nulla bona is not, and should not be, a condition to the right to
resort to the bond.
It is true that under Section 17 recovery from the surety or sureties
should be "after notice and summary hearing in the same action". But
this requirement has been substantially complied with from the time
the surety was allowed to move for the quashal of the writ of execution
and for the cancellation of their obligation.
Phil. British Assurance vs. IAC (1987)
Sycwin Coating & Wires filed a complaint for collection of sum of
money against Varian Industrial Corp. Sycwin attached some of the
properties of Varian upon the posting of a supersedeas bond. Varian
in turn posted a counterbond in the sum of P1.4M thru Philippine
British Assurance Co., Inc., so the attached properties were released.
Judgment was rendered in favor of Sycwin, against Varian.
Varian appealed. Sycwin filed a petition for execution pending
appeal against the properties of Varian. Court ordered the execution
pending appeal. However, the writ of execution was returned
unsatisfied as Varian failed to deliver the previously attached personal
properties upon demand. Sycwin prayed that the surety ordered to
pay the value of its bond.
ISSUE: WON Sycwin is entitled to an execution against the surety
Under Sections 5 and 12, Rule 57, it is provided that the
counterbond is intended to secure the payment of "any judgment" that
the attaching creditor may recover in the action. Under Section 17, it
provides that when "the execution be returned unsatisfied in whole or in
part" it is only then that "payment of the judgment shall become charged
on such counterbond."
The counterbond was issued in accordance with the provisions of
Section 5, Rule 57 as provided in the second paragraph which is
deemed reproduced as part of the counterbond. In the third
paragraph, it is also stipulated that the counterbond is to be "applied
for the payment of the judgment." Neither the rules nor the provisions
of the counterbond limited its application to a final and executory
judgment. Indeed, it is specified that it applies to the payment of any
judgment that maybe recovered by plaintiff. Thus, the only logical
conclusion is that an execution of any judgment including one pending
appeal if returned unsatisfied maybe charged against such a
counterbond.
60
It is well recognized rule that where the law does not
distinguish, courts should not distinguish. Ubi lex non distinguish
nec nos distinguere debemos.
All that is required is that the conditions provided for by law are
complied with. Under Section 17, in order that the judgment creditor
might recover from the surety on the counterbond, it is necessary (1)
that the execution be first issued against the principal debtor and that
such execution was returned unsatisfied in whole or in part; (2) that
the creditor make a demand upon the surety for the satisfaction of the
judgment, and (3) that the surety be given notice and a summary
hearing on the same action as to his liability for the judgment under
his counterbond.
The rule therefore, is that the counterbond to lift attachment that is
issued in accordance with the provisions of Section 5, Rule 57, of the
Rules of Court, shall be charged with the payment of any judgment
that is returned unsatisfied. It covers not only a final and executory
judgment but also the execution of a judgment pending appeal.
Imperial Insurance vs. De Los Angeles (1982)
Rosa Reyes obtained a writ of preliminary attachment and,
accordingly, levied upon all the properties of Felicisimo V. Reyes in Civil
Case Q-8213. Pedro V. Reyes and Consolacion V. Reyes are the
plaintiffs in Civil Case No. Q-5214 likewise obtained a writ of
preliminary attachment and, accordingly, levied upon all the properties
of Felicisimo V. Reyes.
For the dissolution of the attachments referred to above, The
Imperial Insurance, Inc., as surety, and Felicisimo Reyes, as principal,
posted a 'defendant's bond for dissolution of attachment' in the
amount of P60k in Civil Case No. Q-5213 and another bond of the
same nature in the amount of P40k in the other civil case.
The civil cases were jointly tried and decision was rendered in favor
of the plaintiffs therein. The decision became final.
24 Jun 66: Judge de los Angeles issued the writs of execution of
judgment in said cases. However, Provincial Sheriff of Bulacan
returned the writs of execution' unsatisfied in whole or in part'.
9 Sep: private respondents filed a 'motion for recovery on the surety
bonds'. Thereafter, said private respondents, thru counsel, sent a letter
of demand upon Imperial Insurance asking the latter to pay them the
accounts on the counter-bonds.
24 Sep: Imperial Insurance filed its 'opposition' to the private
respondents "Motion for recovery on the surety bonds'. Judge, in his
order, rendered judgment against the counter-bonds.
15 Nov: private respondents filed an ex parte motion for writ of
execution' without serving copy thereof on Imperial.
23 Nov: Imperial filed MR of the order, dated November 10, 1966.
This motion was, however, denied.
19 Jan 67: Judge issued an order granting the issuance of the writ
of execution against the bonds filed by Imperial.
Imperials contention: CA erred in holding that the judge could
legally issue the writ of execution against Imperial as surety in a
counterbond (bond to dissolve attachment) on the basis of an ex parte
motion for execution which was allegedly never served upon the surety
nor set for hearing.
ISSUE: WON the writ of execution was proper
Yes. The counterbonds filed to lift the writs of attachment executed
by Imperial for and in behalf of the deceased Felicisimo Reyes are
clearly the bonds contemplated under Sec. 17, Rule 57 of ROC. This
section allows the counterbond filed to lift an attachment to be
charged only after notice and summary hearing in the same action.
The records show that the notice and hearing requirement was
substantially complied with in the instant case.
Prior to the filing of the ex parte motion for a writ of execution, the
respondents filed a motion for recovery on the surety bonds where
Imperial was duly notified and the said motion was heard on
September 24, 1966. Moreover, on November 23, 1966, Imperial filed
MR of the order dated November 10, 1966 rendering judgment against
Imperial on its counter-bonds in the amount of P60k in Civil Case No.
Q-5213 and P40k in Civil Case No. Q-5214. The respondent judge set
the hearing of the ex parte motion for writ of execution together with
the MR of the order dated November 10, 1966 on December 17, 1966
at 8:30 o'clock in the morning. Imperial received the notice of the said

hearing on December 9, 1966 as evidenced by Registry Return
Receipt No. 40122. 10 On January 9, 1967, the respondent Judge
issued an order denying the MR dated November 23, 1966 for lack of
merit. In an order dated January 19, 1967, the motion for writ of
execution was granted by the respondent judge.
It is thus clear from indubitable documents on record that the
requirements of notice and hearing had been satisfactorily complied
with by the respondents.
Imperials contention: CA gravely erred in holding that the plaintiff
who obtained judgment against the defendant may legally choose "to
go directly" after the surety in a counterbond without prior exhaustion
of the defendant's properties.
No merit. Although the counterbond contemplated in Sec. 17, Rule
57 is an ordinary guaranty, where the sureties assume a subsidiary
liability, the rule cannot apply to a counterbond where the surety
bound itself "jointly and severally with the defendant as in the present
case. The counterbond executed by the deceased Felicisimo V. Reyes,
as principal, and Imperial, as solidary quarantor to lift the attachment
in Civil Case No. Q-5213 is in the following terms: jointly and severally
bind ourselves in the sum of P60k The counterbond executed by the
same parties in Civil Case No. Q-5214, likewise states: jointly and
severally bind ourselves in the sum of P40k
Clearly, Imperial had bound itself solidarily with the principal, the
deceased Felicisimo Reyes. In accordance with Article 2059, par. 2 of
the Civil Code of the Philippines, excussion (previous exhaustion of the
property of the debtor) shall not take place "if he (the guarantor) has
bound himself solidarily with the debtor." Section 17, Rule 57 of the
Rules of Court cannot be construed that an "execution against the
debtor be first returned unsatisfied even if the bond were a solidary one,
for a procedural rule may not amend the substantive law expressed in the
Civil Code, and further would nullify the express stipulation of the parties
that the surety's obligation should be solidary with that of the defendant."
Hence, it cannot escape liability on its counterbonds.
Imperials contention: CA erred in not holding that the order dated
November 10, 1966 rendering judgment against the counter-bonds,
as well as the order dated January 9, 1967, denying the motion for
reconsideration thereof, and the order of the writ of execution dated
January 19, 1967 are final and appealable in accordance with Sec. 2,
Rule 41 of the Rec. Rules of Court.
No merit. To recover against Imperial on its counter-bonds, it is not
necessary to file a separate action. Recovery and execution may be
had in the same civil cases as sanctioned by Sec. 17, Rule 57.
The decision in Civil Cases Nos. Q-5213 and Q-5214, having become
final, the respondent judge issued the writs of execution in said cases.
On August 20, 1966, the Provincial Sheriff of Bulacan returned the
writs of execution "unsatisfied in whole or in part."
Sec. 12, Rule 57 specifies that an attachment may be discharged
upon the making of a cash deposit or filing a counterbond "in an
amount equal to the value of the property attached as determined by
the judge"; and that upon filing the counterbond "the property
attached shall be delivered to the party making the deposit or giving
the counterbond or the person appearing in his behalf, the deposit or
counterbond standing in place of the property so released."
The counter-bonds merely stand in place of the properties so
released. They are mere replacements of the properties formerly
attached, and just as the latter may be levied upon after final judgment
in the case in order to realize the amount adjudged so is the liability
of the counter sureties ascertainable after the judgment has become
final.
The judgment having been rendered against Felicisimo Reyes, the
counter-bonds given by him and Imperial under Sec. 12, Rule 57 are
made liable after execution was returned unsatisfied. Under the said
rule, a demand shall be made upon the surety to pay the plaintiff the
amount due on the judgment, and if no payment is so made, the
amount may be recovered from such surety after notice and hearing
in the same action. A separate action against the sureties is not
necessary.
In the present case, the demand upon Imperial was made with due
notice and hearing thereon when the private respondents filed the
motion for recovery on the surety bonds dated September 9, 1966 and
to which Imperial filed their opposition dated September 24, 1966.
Therefore, all the requisites under Sec. 17, Rule 57, being present,
namely: (1) the writ of execution must be returned unsatisfied, in
whole or in part; (2) the plaintiff must demand the amount due under
61
the judgment from the surety or sureties, and (3) notice and
hearing of such demand although in a summary manner,
complied with, the liability of the petitioner automatically attaches.
In effect, the order dated November 10, 1966 rendering judgment
against the counter-bonds was a superfluity. The respondent judge
could have issued immediately a writ of execution against the
petitioner surety upon demand.
Vadil vs. De Venecia (1963)
13 Apr 53: Pablo Espaola Estate filed an action against Raymundo
Guinsatao for the recovery of the sum of P9,360. Applied for a writ of
preliminary attachment on the ground that Guinsatao had removed or
was about to remove his properties with intent to defraud his creditors.
Guinsatao denied the allegations of the complaint and expressed
willingness to file a counterbond to discharge the writ of preliminary
attachment. The court ordered him "to file a counterbond within 5 days
from the receipt of this order, in the amount of P9,360 to secure the
payment to the plaintiff of any judgment he may recover in the present
case."
Guinsatao filed a bond entitled "Defendant's Bond", which reads:
That Raymundo Guinsatao of Mabasa, Dupax, Nueva Vizcaya as principal
and Esteban Vadil, Eugenio Vadil, Juan Galiboso, Joaquin Vadil, Victor
Vadil and Vicente Vadil all of Mabasa, Dupax, Nueva Vizcaya as sureties,
are hereby held and in the sum of P9,360bind ourselvesjointly and
severally
Judgment was rendered against Guinsatao. The decision became
final. Execution followed but Guinsatao had no sufficient property. On
motion of Espaola Estate, the lower court ordered the execution of
the bond.
Vadils contention: They are not liable to Espaola because their
undertaking under the bond was to pay "all the costs which may be
awarded to the defendant, and all damages that the defendant may
suffer by reason of the Writ of Preliminary Attachment should it be
finally adjudicated that the same was done without legitimate cause"
rather than to pay the judgment that Espaola might recover.
ISSUE: WON the Vadils are liable
No. This is a case where, instead of a bond conditioned the payment
to the plaintiff of any judgment which may recover in an action, as the
trial court directed, the bond filed provides that the sureties will pay
all the costs which may be awarded to the defendant, and all damages
that the defendant may suffer by reason the Writ of Preliminary
Attachment should it be finally a judged that the same was done without
legitimate cause thus raising doubt as to whether the petitioners, as
sureties, understood the import of the order of the court.
This doubt, as to whether Vadil understood the court order, is further
shown by the fact that under Section 2 of Rule 59 of the Rules of Court,
the issuance an order of attachment may be prevented if the defend
"makes deposit or gives bond ... in an amount sufficient to satisfy such
demand, besides costs, or in an amount equal to the value of the property
which is to be attached.
Now, if, as alleged in the motion of Espaola Estate, only P150 was
realized from the sale of Guinsatao's property, it is not likely that Vadils
would agree to stand surety for P9,360 for Guinsatao, whose properties
(worth only P150) stood in imminent danger of attachment.
We are inclined to resolve the doubt in favor of the Vadils. Sureties
are favorites of the law. Assuming an obligation without any thought of
material gain, except in some instances, all presumptions are indulged
in their favor. The rationale of this doctrine is reasonable; an
accommodation surety acts without motive of pecuniary gain and,
hence, should be protected against unjust pecuniary impoverishment
by imposing on the principal duties akin to those of a fiduciary. This
cannot be said of compensated corporate surety which is a business
association organized for the purpose of assuming classified risks in
large numbers, for profit and on an impersonal basis, through the
medium of standardized written contractual forms drawn by its own
representatives with the primary aim of protecting its own interests.
Another reason in support of the conclusion reached herein is that
actually there was no writ of attachment issued by the Court. It is to be
noted that the obligation to be assumed by the bondsmen is premised
upon the issuance of such a writ.

Zaragoza vs. Fidelino (1988)
Antonio Zaragoza filed a suit for replevin against Angela Fidelino
and/or John Doe, alleging that the car had been sold to Fidelino but
the latter had failed to pay the price in the manner stipulated in their
agreement.
The car was taken from Fidelino's possession by the sheriff on the
strength of a writ of delivery but was promptly returned to her on
orders of the Court when a surety bond for the car's releases was
posted in her behalf by Mabini Insurance & Fidelity Co., Inc.
Judgment was rendered in favor of Zaragoza and ordered Fidelino
to pay Zaragoza the sum of P19,417.46.
Zaragoza moved for the amendment of the decision so as to include
the surety, Mabini Insurance, as a party solidarily liable with Fidelino
for the payment of the sums awarded in the judgment. Despite having
been duly furnished with copies of the motion and the notice of
hearing, neither Fidelino nor the surety company filed any opposition
to the motion, nor did either of them appear at the hearing thereof.
The motion was granted by the Court, ordering Fidelino and Mabini
Insurance to be jointly and severally liable to Zaragoza.
Mabini Insurances contention: The lower court never acquired
jurisdiction over it since no summons was ever served on it, its filing
of a counter-bond not being equivalent to voluntary submission to the
Court's jurisdiction; Zaragoza failed to make a proper application with
notice before finality of the decision as provided by Section 20, Rule
57; and when the order amending the judgment was promulgated, the
judgment had already become final, the running of the period of
appeal not having been suspended by Zaragoza's motion to amend
decision, and so, the Court no longer had authority to amend it on April
16, 1968.
ISSUE: WON the surety is liable
Yes. The surety deposits quite correctly, that the situation at bar is
governed by Section 10, Rule 60, in relation to Section 20, Rule 57, of
the Rules of Court. Section 10, Rule 60 reads: Judgment to include
recovery against sureties. The amount, if any, to be awarded to either
party upon any bond filed by the other in accordance with the provisions
of this rule, shag be claimed, ascertained, and granted under the same
procedure as prescribed in section 20 of Rule 57.
It would seem at first blush that Section 20, Rule 57 is not relevant.
Its title and first sentence speak [1] of an illegal attachment, and [2] of
a judgment "in favor of the party against whom (said illegal)
attachment was issued."
In the case at bar, the writ of delivery was not illegal; and the
judgment was for, not against, the party in whose favor the writ of
delivery was issued. In other words, it would appear that for Section
20, Rule 57 to apply to the instant action," the judgment should have
been "in favor of" Fidelino (the party "against whom" the writ of delivery
was issued). This however was not the case. The judgment was in fact
against, NOT in favor of Fidelino.
Thus, the first sentence of Section 20 precludes recovery of
damages by a party against whom an attachment is issued and
enforced if the judgment be adverse to him. This is not however
correct. Although a party be adjudged liable to another, if it be
established that the attachment issued at the latter's instance was
wrongful and the former had suffered injury thereby, recovery for
damages may be had by the party thus prejudiced by the wrongful
attachment, even if the judgment be adverse to him. Slight reflection
will show the validity of this proposition. For it is entirely possible for a
plaintiff to have a meritorious cause of action against a defendant but
have no proper ground for a preliminary attachment. In such a case, if
the plaintiff nevertheless applies for and somehow succeeds in
obtaining an attachment, but is subsequently declared by final
judgment as not entitled thereto, and the defendant shows that he has
suffered damages by reason of the attachment, there can be no
gainsaying that indemnification is justly due the latter.
The second and third sentences of Section 20, Rule 57, in relation
to Section 10, Rule 60, are unquestionably relevant to the matter of
the surety's liability upon a counter-bond for the discharge of a writ of
delivery in a replevin suit. Under Section 10, Rule 60 (which makes
reference "to either party upon any bond filed by the other in
accordance with the provisions of this rule"), the surety's liability for
damages upon its counter-bond should be claimed, ascertained, and
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granted under the same procedure as prescribed in section 20
of Rule 57; 13 and and section 20 pertinently decrees that 'such
damages may be awarded only upon application and after proper
hearing, and shall be included in the final judgment, which means that
the application must be filed before the trial or before appeal is
perfected or before the judgment becomes executory, with due notice
to the attaching creditor and his surety or sureties, setting forth the
facts showing his right to damages and the amount thereof.
Stated otherwise, to hold a surety on a counter-bond liable, what is
entailed is (1) the filing of an application therefor with the Court having
jurisdiction of the action; (2) the presentation thereof before the
judgment becomes executory (or before the trial or before appeal is
perfected); (3) the statement in said application of the facts showing
the applicant's right to damages and the amount thereof, (4) the giving
of due notice of the application to the attaching creditor and his surety
or sureties; and (5) the holding of a proper hearing at which the
attaching creditor and the sureties may be heard on the application.
These requisites apply not only in cases of seizure or delivery under
Rule 60, but also in cases of preliminary injunctions under Rule 58, 14
and receiverships under Rule 59.
It should be stressed, however, that enforcement of a surety's liability
on a counter-bond given for the release of property seized under a writ
of preliminary attachment is governed, not by said Section 20, but by
another specifically and specially dealing with the matter, Section 17.
The record shows that Mabini bound itself "jointly and severally"
with the Fidelino "in the sum of P48k which is double the value of the
property stated in the affidavit of Zaragoza, for the delivery thereof if
such delivery is adjudged, or for the payment of such sum to him as
may be recovered against the defendant and the costs of the action.
This being so, Mabinis liability attached upon the promulgation of
the verdict against Fidelino. All that was necessary to enforce the
judgment against it was an application therefor with the Court, with
due notice to the surety, and a proper hearing, i.e., that it be formally
notified that it was in truth being made responsible for its co-principal's
adjudicated prestation (in this case, the payment of the balance of the
purchase price of the automobile which could no longer be found and
therefore could not be ordered returned), and an opportunity, at a
hearing called for the purpose, to show to the Court why it should not
be adjudged so responsible. A separate action was not necessary; it
was in fact proscribed. And again, the record shows substantial
compliance with these basic requirements, obviously imposed in
deference to due process.
Mabini undoubtedly received copy of Zaragoza's Motion to Amend
Decision. That motion made clear its purpose. The motion contained,
at the foot thereof, a "notice that on Saturday, March 23, 1968, at 8:30
a.m., or as soon thereafter as the matter may be heard, the .. (plaintiffs
counsel would) submit the foregoing motion for the consideration of
the Court." And likewise indubitable is the fact that, as the Court a quo
has observed, "neither .. Fidelinos counsel nor the surety company
filed any opposition to said motion, nor did they appear in the hearing
of the motion on March 23, 1968 .. (for which reason) the motion was
deemed submitted for resolution." The surety's omission to appear at
the hearing despite notice of course constituted a waiver of the right
to be heard on the matter.
The terms of the counter-bond voluntarily filed by it in Fidelinos
behalf leave no doubt of its assent to be bound by the Court's
adjudgment of his liability, i.e., its acceptance of the Court's
jurisdiction. For in that counterbond, it implicitly prayed for affirmative
relief; the release of the seized car, in consideration of which it
explicitly bound itself solidarily with said Fidelino to answer for the
delivery of the car subject of the action "if such delivery is adjudged,"
i.e., commanded by the Court's judgment, or "for the payment of such
sum as may be recovered against the defendant and the costs of the
action," the reference to a possible future judgment against the
defendant, and necessarily against itself, being certain and
unmistakable. The filing of that bond was clearly an act of voluntary
submission to the Court's authority, which is one of the modes for the
acquisition of jurisdiction over a party.

Dizon vs. Valdes (1968)
Ramon Dizon filed a suit for collection of sum of money against
Lorenzo Valdes, Valleson Inc., and Augusto Valdes. Judgment was
rendered, directing Valleson and Augusto to pay jointly and severally
to Dizon the amount of P6,260 with interest and to pay attorney's fees
in the amount of P600.
11 Jan 61: Valleson filed its notice of appeal. Appeal was perfected
on Feb 11.
Meanwhile, one day before Vallesons notice of appeal, Dizon
petitioned for and the TC directed the issuance of a writ of preliminary
attachment against the properties, real and personal, of Augusto and
Valleson, Inc. upon an P11,730 bond. On Jan 11, said bond having
been filed, the corresponding writ was issued. Pursuant thereto,
garnishment notices were served by the Manila Sheriff on one
Restituto Sibal and the Philippine Guaranty Co.
9 Feb: Valdes and Valleson moved to dissolve the writ upon an
P11,730 counterbond subscribed by Capital Insurance. TC dissolved.
24 Feb: Dizon filed a motion to admits its Claim for Damages.
Dizons contention: The dissolution of the attachment put out of the
reach of Dizon the properties and assets which may be held to answer
for the adjudged claim; and that, by reason thereof, he suffered and
will suffer damages in the amount of P11,730 plus the corresponding
12% interest thereon and attorney's fees and costs. He then prayed
that Valdes, Valleson and Capital Insurance be ordered to pay him,
jointly and severally, the amount of P11,730 plus interests, expenses,
and attorney's fees.
Capitol Insurances contention: Pursuant to the Rules of Court
(Section 17, Rule 57), the surety on any counter-bond shall only
become charged and bound to pay plaintiff upon demand, the amount
due under the judgment; and that such amount may be recovered
from the surety after notice and summary hearing in the same action
only if execution be returned unsatisfied in whole or in part.
ISSUE: WON Dizon may claim for damages on the defendants
counterbond
No. By the terms of the counter-bond itself, liability thereunder
attaches only "in case the plaintiff recovers judgment in the action."
Indeed, by Section 12 of Rule 59 of the old Rules, the law in force at
the time the counterbond was executed, the statutory counter-bond
was made "to secure the payment to the plaintiff of any judgment he may
recover in the action." Complementary to this legal precept is Section
17 of the same Rule 59 of the old Rules which should be deemed
as read into the bond.
Since at the time the claim for damages was registered, the case
was still pending appeal, it is quite obvious that the motion for the
claim for damages was premature. And the lower court thus correctly
ruled out Dizons motion. For, Section 17 contemplates of proceedings
on execution after judgment. And, it is only thereafter that liability upon
the surety's bond may be determined. The key term in Section 17 is
the phrase "if the execution be returned unsatisfied in whole or in part."
Until such proceeding shall have taken place and unless unsatisfied
liability under the judgment still exists, no action upon the counter-
bond may be taken against the surety.
Dizons contention: Section 20, Rule 57 should control.
No merit. By its very terms, this obviously refers to the recovery of
damages by a party against whom attachment was issued. This is a
remedy available to the defendants here, not the plaintiff.
It is therefore not to be doubted that, upon the applicable rules, the
counter-bond does not answer for damages on account of the lifting
of the attachment, but for the payment of the amount due under the
judgment that may be recovered by an attaching creditor.
Also, the counter-bond, it should be emphasized, precisely stands
"in place of the properties so released. Thus, the release of such
property cannot really "prejudice the rights of the attaching party.
Pioneer Insurance vs. Camilon (1982)
In Steel Distributors Inc. vs. Co Ban Ling & Sons, et. al., judgment
was rendered ordering Co Ban Ling and Pioneer Insurance to pay
jointly and severally Steel Distrbutors the sum of P35,760 with interest
and P3k for attorneys fees. It was also ordered that in the event that
the properties of Co Ban Ling and Sons, Co Chin Leng and Pioneer
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Insurance are not sufficient to satisfy the judgment, Co Chin
Tong and Macario Co Ling are ordered to pay, jointly with the
other partners, the balance of the obligation to Steel Distributors.
Upon appeal, the CA modified the judgment and stated that the
liability of Co Chin Leng is only joint, or pro rate and subsidiary.
Judge ordered the issuance of a writ of execution. A motion to quash
was filed but which was denied, ruling that: There is no merit in the
Motion to Quash Writ of Execution filed by Pioneer Insurance and Surety
Corporation since under the decision affirmed by the Court of Appeals its
liability was adjudged to be jointly and severally with defendant Co Ban
Ling & Sons Co. On the other hand, non-inclusion of the other defendants
in the writ is of no consequence at this stage since their liability is not
primary but will accrue only in the event the judgment cannot be satisfied
by defendant partnership and Pioneer Insurance and Surety Corporation.
ISSUE: WON the rule on excussion applies
No. The rule of excussion claimed by Pioneer Insurance under
Section 17 of Rule 17, which it invokes considering it was only the
bondsman to secure the lifting of the writ of preliminary attachment,
is not applicable in the instant case where there is already a final and
executory judgment sentencing the bondsman as joint and solidarily
liable. The petition is dismissed without prejudice to Pioneer Insurance
recovering from its co-judgment debtor whatever it has to pay under
the writ of execution herein questioned.
UPPC vs. Acropolis (2012)
14 May 2002: United Pulp and Paper Co. field a civil case for
collection of the amount of P42,844,353.14 against Unibox Packaging
Corporation and Vicente Ortega. UPPC also prayed for a Writ of
Preliminary Attachment against the properties of Unibox and Ortega
for the reason that the latter were on the verge of insolvency and were
transferring assets in fraud of creditors.
29 Aug: RTC issued the Writ of Attachment after UPPC posted a
bond in the same amount of its claim. By virtue of the said writ, several
properties and assets of Unibox and Ortega were attached.
10 Oct: Unibox and Ortega filed their Motion for the Discharge of
Attachment, praying that they be allowed to file a counter-bond in the
amount of P42,844,353.14 and that the writ of preliminary attachment
be discharged after the filing of such bond. This was granted subject
to the condition that Unibox and Ortega file a counterbond.
21 Nov: Acropolis Central Guaranty Corporation issued the
Defendants Bond for Dissolution of Attachment in the amount of
P42,844,353.14 in favor of Unibox.
UPPC filed its Manifestation and Motion to Discharge the
Counterbond, claiming that Acropolis was among those insurance
companies whose licenses were set to be cancelled due to their failure
to put up the minimum amount of capitalization required by law. This
motion was denied. Court ordered the sheriff to cause the lifting of the
attachment on the properties of Unibox and Ortega.
29 Sep 2003: Unibox, Ortega and UPPC executed a compromise
agreement, wherein Unibox and Ortega acknowledged their obligation
to UPPC in the amount of P35,089,544 as of August 31, 2003,
inclusive of the principal and the accrued interest, and bound
themselves to pay the said amount in accordance with a schedule of
payments agreed upon by the parties. Consequently, the RTC
promulgated its Judgment, approving the compromise agreement.
For failure of Unibox and Ortega to pay the required amounts for
the months of May and June 2004 despite demand by UPPC, the latter
filed its Motion for Execution to satisfy the remaining unpaid balance.
A writ of execution was issued.
The sheriff then proceeded to enforce the Writ of Execution. It was
discovered, however, that Unibox had already ceased its business
operation and all of its assets had been foreclosed by its creditor bank.
Moreover, the responses of the selected banks which were served with
notices of garnishment indicated that Unibox and Ortega no longer
had funds available for garnishment. The sheriff also proceeded to the
residence of Ortega to serve the writ but he was denied entry to the
premises. Despite his efforts, the sheriff reported in his November 4,
2008 Partial Return that there was no satisfaction of the remaining
unpaid balance by Unibox and Ortega.
On the basis of the said return, UPPC filed its Motion to Order Surety
to Pay Amount of Counter-Bond directed at Acropolis. RTC granted.

Acropolis contention: It could not be made to pay the amount
of the counter-bond because it did not receive a demand for
payment from UPPC. Furthermore, it reasoned that its obligation had
been discharged by virtue of the novation of its obligation pursuant to
the compromise agreement executed by UPPC, Unibox and Ortega.
UPPCs contention: It complied with the requirement of demanding
payment from Acropolis by notifying it, in writing and by personal
service, of the hearing held on UPPCs Motion to Order Respondent-
Surety to Pay the Bond. Also, the terms of the counter-attachment
bond are clear in that Acropolis, as surety, shall jointly and solidarily
bind itself with Unibox and Ortega to secure the payment of any
judgment that UPPC may recover in the action.
ISSUE: WON UPPC failed to make the required demand and notice
upon Acropolis
No. Under Section 17, Rule 57, it is evidence that a surety on a
counter-bond given to secure the payment of a judgment becomes
liable for the payment of the amount due upon: (1) demand made
upon the surety; and (2) notice and summary hearing on the same
action. After a careful scrutiny of the records of the case, UPPC indeed
complied with these twin requirements.
The filing of a complaint constitutes a judicial demand. Accordingly,
the filing by UPPC of the Motion to Order Surety to Pay Amount of
Counter-Bond was already a demand upon Acropolis, as surety, for the
payment of the amount due, pursuant to the terms of the bond.
Furthermore, an examination of the records reveals that the motion
was filed by UPPC on November 11, 2004 and was set for hearing on
November 19, 2004. Acropolis was duly notified of the hearing and it
was personally served a copy of the motion on November 11, 2004,
contrary to its claim that it did not receive a copy of the motion.
On November 19, 2004, the case was reset for hearing on November
30, 2004. The minutes of the hearing on both dates show that only the
counsel for UPPC was present. Thus, Acropolis was given the
opportunity to defend itself. That it chose to ignore its day in court is
no longer the fault of the RTC and of UPPC. It cannot now invoke the
alleged lack of notice and hearing when, undeniably, both
requirements were met by UPPC.
As to the alleged novation. No merit. Acropolis voluntarily bound
itself with Unibox to be solidarily liable to answer for ANY judgment
which UPPC may recover from Unibox in its civil case for collection. Its
counter-bond was issued in consideration of the dissolution of the writ
of attachment on the properties of Unibox and Ortega. The counter-
bond then replaced the properties to ensure recovery by UPPC from
Unibox and Ortega. It would be the height of injustice to allow Acropolis
to evade its obligation to UPPC, especially after the latter has already
secured a favorable judgment.
The argument of Acropolis that its obligation under the counter-
bond was novated by the compromise agreement is, thus, untenable.
In order for novation to extinguish its obligation, Acropolis must be
able to show that there is an incompatibility between the compromise
agreement and the terms of the counter-bond, as required by Article
1292 of the Civil Code.
Nothing in the compromise agreement indicates, or even hints at,
releasing Acropolis from its obligation to pay UPPC after the latter has
obtained a favorable judgment. Clearly, there is no incompatibility
between the compromise agreement and the counter-bond. Neither
can novation be presumed in this case. Novation cannot be presumed.
All things considered, Acropolis, as surety under the terms of the
counter-bond it issued, should be held liable for the payment of the
unpaid balance due to UPPC.
Section 20. Claim for damages on account of improper, irregular or
excessive attachment. An application for damages on account of
improper, irregular or excessive attachment must be filed before the
trial or before appeal is perfected or before the judgment becomes
executory, with due notice to the attaching party and his surety or
sureties setting forth the facts showing his right to damages and the
amount thereof. Such damages may be awarded only after proper
hearing and shall be included in the judgment on the main case.
If the judgment of the appellate court be favorable to the party
against whom the attachment was issued he must claim damages
sustained during the pendency of the appeal by filing an application
in the appellate court, with notice to the party in whose favor the
64
attachment was issued or his surety or sureties, before the
judgment of the appellate court becomes executory. The
appellate court may allow the application to be heard and decided by
the trial court.
Nothing herein contained shall prevent the party against whom the
attachment was issued from recovering in the same action the
damages awarded to him from any property of the attaching party not
exempt from execution should the bond or deposit given by the latter
be insufficient or fail to fully satisfy the award.
Calderon vs. IAC (supra., p. 20)
Pioneer Insurance vs. Hontanosas (1977)
12 Oct 70: Allied Overseas Commercial filed a complaint against
Ben Uy Rodriguez for collection of sum of money arising out of a
transaction between them in the amount of P450,533. Also prayed for
preliminary attachment, which was granted upon the filing by Allied of
a bond in the amount of P450k, which Pioneer Insurance & Surety
Corp. duly posted.
The corresponding levy in attachment was made by annotation on
the properties of Rodriguez which consisted of 4 pieces of lots; notices
of garnishment on different Cebu banks turned out negative, while
personal properties found at the Rodriguez residence, although
attached, were, however, not removed therefrom.
A motion to dismiss the complaint was thereupon filed by
Rodriguez, followed by an application for damages against the bond,
praying that he be permitted to present evidence of damages he
sustained by reason of the wrongful attachment, and to enforce said
claim against the surety on its bond, alleging further that otherwise his
claim against the bond will forever be barred as said claim cannot be
the subject of an independent civil action under Sec. 20, Rule 57.
Complaint of Allied was dismissed for improper venue. Writ of
preliminary attachment was lifted. Hearing on the claim for damages
against the bond was set on 14 Jan 71.
Rodriguez withdrew his claim for damages against Pioneer, which
was granted. Thereafter, Rodriguez filed a separate civil action for
damages against Pioneer and Allied.
Judge of Cebu promulgated his decision, declaring the attachment
of the properties of Rodriguez was wrongful and malicious. Also
ordered Pioneer to pay P350k moral damages, P50k exemplary
damages, 50k expenses of litigation in Manila.
Pioneers contention: CFI Cebu has no jurisdiction over the case
filed by Sps. Rodriguez seeking damages for the alleged malicious and
unlawful issuance of the writ of preliminary attachment against
Rodriguezs properties. Also contends that under See. 20, Rule 57, the
claim for damages against a bond in an alleged wrongful attachment
can only be prosecuted in the same court where the bond was filed
and the attachment issued.
Rodriguezs contention: Alleged that the rule that a claim for
damages arising from the issuance of a wit of attachment, injunction,
receivership and replevin should be presented in the same action is
not applicable where the principal case has been dismissed for lack of
jurisdiction and no claim for damages could therefore have been
presented in said case.
ISSUE: WON Sec. 20, Rule 57 applies
Yes. It is true that the claim for damages against a bond in an alleged
wrongful attachment can only be prosecuted in the same court where
the bond was filed and the attachment issued.
Records show that Rodriguez filed an Application for Damages
Against Bond dated December 3, 1970. CFI Manila, after dismissing
the complaint and lifting the writ of preliminary attachment, ordered
that the hearing of the application for damages against the bond be
set aside on January 14, 1971.
In other words, Rodriguez sought that judgment be rendered against
the surety for such amount of damages as may be proved or
established by him, and was granted by the court the opportunity to
prove damages against the bond of the surety company. He even cited
the very provision of the Revised Rules of Court, Rule 57, Sec. 20 to
justify his application, and the cases supporting his application, for
otherwise his claim will forever be barred.

In effect, at this point in time, Rodriguez waived the lack of
jurisdiction on his person, be seeking an affirmative relief from the
court, which he cannot now complain before this Court.
It must be noted that objections to lack of jurisdiction of the person,
and other objections to jurisdiction not based on the contention that
there is an absolute want of jurisdiction of the subject matter, are
waived by invoking the court's jurisdiction, as by a counterclaim,
consent, or voluntary submission, to jurisdiction, or conduct
amounting to a general appearance.
Therefore, CA erred in not dismissing the complaint with respect to
Pioneer over which respondent Judge had not acquired jurisdiction
pursuant to Sec. 20, Rule 57 of the Revised Rules of the Court.
Stronghold Insurance vs. CA (1989)
FCP Credit Corp. filed a complaint against Jose Orosa, praying that
a writ of replevin be issued against Orosa. The Court ordered the
seizure of the motor vehicle covered by a chattel mortgage executed
in favor of FCP. A replevin bond put up by Stronghold Insurance in the
amount of P210k was filed. A writ of replevin was issued.
Complaint was dismissed for lack of merit. As to Orosas
counterclaim, Court ordered FCP to pay him P400k moral damages,
P100k exemplary damages, and P50k attorneys fees. Copy of the
decision was received by Orosa on April 11, 1988 while FCP received
a copy thereof on April 13, 1988.
14 Apr 88: Orosa filed a motion for execution of the judgment
pending appeal, alleging that the judgment in the case may be
rendered ineffective because FCP Credit Corporation was already
liquidating its business affairs. He expressed his willingness to file a
bond for such purpose. FCP opposed said motion through a "Motion
for Partial Reconsideration of the Decision and Opposition to the
Motion for Execution" filed on April 26, 1988
26 Apr 88: Orosa filed an application for judgment on the bond.
Opposition was filed by FCP, alleging that appeal had been perfected
hence the TC had already lost jurisdiction to hear Orosas motion; that
the application for damages does not set forth the facts showing his
right thereto and the amount thereof; and that the motion is fatally
defective for lack of the requisite 3 days notice.
Hearing on the application was scheduled on 29 Apr 1988 but Orosa
and counsel failed to appear.
In the meantime, action on FCPs notice of appeal and motion to
elevate the records to CA, which were earlier filed on April 14, 1988,
was held in abeyance by the court.
In a special order, the TC ordered the issuance of a writ of execution
pending appeal upon Orosa's filing of a bond in the amount of P500k,
reasoning "Orosa's willingness to file a required bond to answer for
damages in the case of reversal of the judgment" and (2) "FCP is in
imminent danger of insolvency or dissolution."
6 Jun 88: Court upheld Orosas right to recover damages on the
replevin bond and the liability of FCP for said damages and for all the
sums of money recovered in the case in the lower court. Following day,
Court designated a supplemental decision, ordering Stronghold to be
jointly and severally liable with FCP, and to pay Orosa the damages
specified in the decision which is P210k.
Deputy Sheriff Jaime Del Rosario, by virtue of the order of execution
pending appeal, levied upon the properties of Stronghold and
garnished its funds with Far East Bank and United Coconut Planters
Bank on June 17, 1988. A few days thereafter, on June 22, 1988,
Stronghold filed a petition for certiorari, with a prayer for preliminary
injunction and/or restraining order.
On the same day of the filing of said petition, an order was issued
by the trial court supplementing its order of execution pending appeal
dated June 3, 1988 by ordering Orosa to file an additional bond in the
amount of P200k.
An "Urgent Omnibus Motion for Reconsideration with Prayer for
Restraining Order," dated June 24, 1988, was filed by Stronghold with,
alleging that "there exists no good and valid reasons to justify execution
pending appeal against SICI considering that it is very solvent and any
final judgment against it would surely be satisfied." Denied.
11 Jul 88: Upon an ex parte motion, TC directed the enforcement
of the writ of execution pending appeal against FCP alone. Later, on 5
Aug 88, another order was issued this time directing its enforcement
against Stronghold. Stronghold moved for the reconsideration of said
order and in the hearing of said motion, its counsel adduced additional
65
arguments in support thereof. The court was informed that its
application for a writ of injunction was already submitted for
resolution by the Court of Appeals.
Eventually, the application for a writ of injunction referred to by
Stronghold was granted by the CA on August 26, 1988. Nevertheless,
the same writ was lifted and set aside when the petition for certiorari
was dismissed.
ISSUE: WON the decision should be set aside and annulled
The rule is clear that where the judgment in an action is in favor of
the party against whom the writ of replevin was issued, he may recover
damages resulting therefrom and the replevin bond required under
Section 2, Rule 60 may be held to answer for this purpose. The
procedure to hold the surety liable upon the replevin bond is provided
for under Section 10 of the same rule in relation to Section 20 of Rule
57. Compliance with the following requisites is essential: (1) the filing
of an application therefor with the Court having jurisdiction of the
action; (2) the presentation thereof before the judgment becomes
executory (or before the trial or before appeal is perfected); (3) the
statement in said application of the facts showing the applicant's right
to damages and the amount thereof; (4) the giving of due notice of the
application to the attaching creditor and his surety or sureties and (5)
the holding of a proper hearing at which the attaching creditor and
sureties may be heard on the application.
These requisites apply not only in cases of seizure or delivery under
Rule 60, but also in cases of preliminary injunctions under Rule 58,
and receiverships under Rule 59.
To avoid multiplicity of suits, all incidents arising from the same
controversy must be settled in the same court having jurisdiction of
the main action. Thus, the application for damages must be filed in the
court which took cognizance of the case, with due notice to the other
parties.
The timeliness of the application for judgment on the bond in this
case, as well as the motion for immediate execution, is apparent
because it was filed before the appeal was perfected. The fact that one
of the parties had filed a notice of appeal does not perfect such appeal.
An appeal is perfected upon the lapse of the last day for all parties to
appeal.
It should also be noted that the filing of the application for judgment
on the bond by Orosa was in the nature of a motion for reconsideration
under Section 1(c), Rule 37, which consequently had the effect of
interrupting the period to appeal. This being so, the order holding in
abeyance FCP's notice of appeal was not even necessary and was an
apparent superfluity.
Strongholds contention: There was a failure to hold a proper
hearing.
Such requirement, however, has been held to mean that the hearing
will be summary and will be limited to such new defenses, not
previously set up by the principal, as the surety may allege and offer
to prove. The oral proof of damages already adduced by the claimant
may be reproduced without the necessity of retaking the testimony,
but the surety should be given an opportunity to cross-examine the
witness or witnesses if he so desires.
In the present case, Stronghold did not allege and offer to prove any
new defense not previously set up by the principal. Furthermore, the
grounds relied upon in its opposition to the application requires no
hearing for their proper consideration by the court a quo, aside from
the fact that the trial court adequately and particularly resolved them
in its order of June 6, 1988.
If Stronghold really had additional defenses, if should have asked for
the opportunity to present the same when the motion to dismiss the
application for judgment on the bond was denied. This is also true with
respect to the cross-examination of the witnesses which Stronghold is
now belatedly asking for. While there was no one to cross-examine
during the hearing of the application for judgment on the bond
because of Orosas absence. Stronghold could have invoked and
insisted on such right. Further, even if Orosa had appeared during the
hearing, it could reasonably be expected that no witnesses would be
presented since the application for judgment on the bond relied
mainly on the same grounds that were already presented in court and
were subject of the trial on the merits, or were at least already of
record. To repeat, had Stronghold been sincere in the stance that it
now takes to create an issue, it should have demanded its right to

cross-examine such witnesses as it was minded to. As it turned
out, the opportunity to so demand was present but Stronghold did
not care to do so. Instead, it preferred to stick to its stand that the
application should be denied for failure of Orosa to appear during the
hearing. Stronghold should, therefore, suffer the consequences of its
inexplicable inaction and conscious omission.
The application for judgment on the bond was in the nature of a
motion for reconsideration, hence the resolution thereof constitutes a
final and appealable order. Appeal being the proper and then available
remedy, the original action for certiorari does not lie and cannot
substitute for the remedy of appeal that was thereafter lost.
We cannot, however, sanction the execution pending appeal which
was authorized in this case. The order for advance execution must be
struck down for lack of the requisite good reasons therefor. It is already
settled that the mere filing of a bond does not warrant execution
pending appeal. To consider the mere filing of a bond a good reason
would precisely make immediate execution of a judgment pending
appeal routinary, the rule rather than the exception.
The alleged imminent danger of insolvency of FCP Credit Corp. does
not also constitute a good reason for immediate execution. The
obligation of FCP and Stronghold in the case at bar is in solidum. Their
agreement states that the principal and the surety therein jointly and
severally bound themselves "in the sum of P210k for the prosecution
of the action, for the return of the property to defendant, if the return
thereof be adjudged, and for the payment ... of such sum as may in
the cause be recovered against the plaintiff, and costs of the action."
Carlos vs. Sandoval (supra., 19)
Carlos likewise prayed for the issuance of the provisional relief of
preliminary attachment. RTC granted the prayer for preliminary
attachment, and on 15 September 1995, a writ of preliminary
attachment. Carlos posted a bond for P20k issued by SIDDCOR
Insurance Corp. Shortly thereafter, a Notice of Garnishment was served
upon PNB over the deposit accounts maintained by Sandoval.
Sandoval filed an Urgent Motion to Discharge the Writ of
Attachment, which was opposed by Carlos. RTC rendered an order
denying the motion. Sandoval filed a Petition for Certiorari with the CA,
seeking to set aside the RTC order granting the writ of preliminary
attachment denying the motion for the discharge of the writ.
27 Feb 96: CA Second Division promulgated its Decision, wherein
it granted the Petition for Certiorari and ordered the discharge and
dissolution of the Writ of Attachment and Notice of Garnishment.
Carlos elevated the petition with the SC, which was also denied. The
decision of the CA became final.
In the meantime, the hearing on Carloss Complaint ensued before
the RTC. Sandoval duly filed their Answer and thereafter filed a Motion
for Summary Judgment. Carlos opposed the motion and countered
with his own Motion for Summary Judgment. RTC rendered a
summary judgment in favor of Carlos.
Upon promulgation of the Summary Judgment, Carlos moved
before the RTC for execution pending appeal. The RTC granted the
motion for execution pending appeal upon the filing of a bond. On 27
May 1996, the RTC issued a Writ of Execution.
Carlos contention: There was no proper hearing on the application
for damages and that the CA had wrongfully acted on the application
in that it resolved it prior to the rendition of the main judgment.
ISSUE: WON the hearing requirement under Section 20, Rule 57 was
complied with before judgment was rendered
Yes. Section 20 essentially allows the application to be filed at any
time before the judgment becomes executory. It should be filed in the
same case that is the main action, and cannot be instituted separately.
It should be filed with the court having jurisdiction over the case at the
time of the application. The remedy provided by law is exclusive and
by failing to file a motion for the determination of the damages on time
and while the judgment is still under the control of the court, the
claimant loses his right to damages.
There is no question in this case that the Motion for Judgment on
the Attachment Bond filed by Sandoval on 10 December 1996 was
properly filed since it was filed with the CA during the pendency of the
appeal in the main case and also as an incident thereto. The core
66
questions though lie in the proper interpretation of the
condition under Section 20, Rule 57 that reads: "Such damages
may be awarded only after proper hearing and shall be included in the
judgment on the main case."
Such damages may be awarded only after proper hearing
Section 20 of Rule 57 requires that there be a "proper hearing" before
the application for damages on the attachment bond may be granted.
The hearing requirement ties with the indispensable demand of
procedural due process. Due notice to the adverse party and its surety
setting forth the facts supporting the applicant's right to damages and
the amount thereof under the bond is essential. No judgment for
damages may be entered and executed against the surety without
giving it an opportunity to be heard as to the reality or reasonableness
of the damages resulting from the wrongful issuance of the writ.
Under the rule, it was neither mandatory nor fatal that there should
be a separate hearing in order that damages upon the bond can be
claimed, ascertained and awarded. What is necessary only is for the
attaching party and his surety or sureties to be duly notified and given
the opportunity to be heard.
In this case, both Carlos and SIDDCOR were duly notified by the CA
of the Motion for Judgment on the Attachment Bond and were
required to file their respective comments thereto. Carlos and
SIDDCOR filed their respective comments in opposition to Sandovals
motion. Clearly, all the relevant parties had been afforded the bare
right to be heard on the matter.
However, in this case, there were no open court hearings conducted
by the CA, and it is precisely this absence that Carlos and SIDDCOR
assert as fatal.
Plainly, there is no express requirement under the rule that the
hearing be done in open court, or that the parties be allowed to
confront adverse witnesses to the claim of damages on the bond.
It is undeniable that when the attachment is challenged for having
been illegally or improperly issued, there must be a hearing with the
burden of proof to sustain the writ being on the attaching creditor. That
hearing embraces not only the right to present evidence but also a
reasonable opportunity to know the claims of the opposing parties and
meet them. The right to submit arguments implies that opportunity,
otherwise the right would be a barren one. It means a fair and open
hearing.
The "proper hearing" contemplated would not merely encompass
the right of the parties to submit their respective positions, but also to
present evidence in support of their claims, and to rebut the
submissions and evidence of the adverse party. This is especially
crucial considering that the necessary elements to be established in
an application for damages are essentially factual: namely, the fact of
damage or injury, and the quantifiable amount of damages sustained.
Such matters cannot be established on the mere say-so of the
applicant, but require evidentiary support. At the same time, there was
no equivocal statement from the Court that the hearing required under
the rule should be a full-blown hearing on the merits.
In this case, we rule that the demands of a "proper hearing" were
satisfied as of the time the CA rendered its assailed judgment on the
attachment bond. The circumstances in this case that we consider
particularly telling are the settled premises that the judicial finding on
the wrongfulness of the attachment was then already conclusive and
beyond review, and that the amount of actual damages sustained was
likewise indubitable as it indeed could be found in the official case
record in CA-G.R. CV No. 53229. As a result, Carlos would have been
precluded from either raising the defenses that the preliminary
attachment was valid or disputing the amount of actual damages
sustained by reason of the garnishment. The only matter of
controversy that could be litigable through the traditional hearing
would be the matter of moral and exemplary damages, but the Court
of Appeals appropriately chose not to award such damages.
Moreover, Carlos and SIDDCOR were afforded the opportunity to
counter the arguments extended by Sandoval. They fully availed of that
right by submitting their respective comments/oppositions. In fine, the
due process guarantee has been satisfied in this case.
It should be noted that this case poses a situation different from
what is normally contemplated under Section 20, Rule 57wherein
the very wrongfulness of the attachment remains one of the issues in
contention in the main case. In such a case, there would be a greater
demand for a more extensive hearing on the application of damages.
The modality of hearing should remain within the discretion of the

court having jurisdiction to hear the application for damages. The
only demand, concordant to due process, would be the satisfaction
of the right to be heard, to present evidence, and to rebut the evidence
and arguments of the opposing party.
However, a different situation applies if it is the Court of Appeals or
the Supreme Court before which the application for damages is filed.
Both these courts, which are capacitated to receive and act on such
actions, are generally not triers of facts, and do not, in the course of
daily routine, conduct hearings. It is partly for such reason that Section
20, Rule 57 authorizes these appellate courts to refer the application
for damages to the trial court for hearing and decision. The trial courts
are functionally attuned to ascertain and evaluate at the first instance
the necessary factual premises that would establish the right to
damages. Still, reference of the application for damages to the trial
court is discretionary on the part of the appellate courts. The latter,
despite their traditional appellate jurisdiction and review function, are
still empowered under Section 20 to rule on the application for
damages, notwithstanding the factual dimension such question
presents.
To impose as mandatory on the CA or the SC to hear the application
for damages through full-blown hearings in open court is supremely
unwise and beyond the demands of Section 20, Rule 57. The effect
would be unduly disruptive on the daily workflow of appellate courts
such as the CA and SC, which rarely conduct open court hearings.
Neither could the Court see what is so markedly special about an
application for damages, fact-oriented as it may be, that would require
it to be heard by the appellate courts in open court when no such
mandatory rule applies to other judicial matters for resolution that are
also factual in nature.
and shall be included in the judgment on the main case. court issued an order setting for hearing the issue of damages.
Section 20, Rule 57 does state that the award of damages shall be
included in the judgment on the main case, and seemingly indicates
that it should not be rendered prior to the adjudication of the main
case.
In this case, we are confronted with a situation wherein the
determination that the attachment was wrongful did not come from
the trial court, or any court having jurisdiction over the main action. It
was rendered by the CA in the exercise of its certiorari jurisdiction in
the original action reviewing the propriety of the issuance of the Writ
of Preliminary Attachment against Sandoval. Said ruling attained
finality when it was affirmed by this Court.
The courts are thus bound to respect the conclusiveness of this final
judgment, deeming as it does the allowance by the RTC of preliminary
attachment as improper. This conclusion is no longer subject to review,
even by the court called upon to resolve the application for damages
on the attachment bond. The only matter left for adjudication is the
proper amount of damages.
Nevertheless, Section 20, Rule 57 explicitly provides that the award
for damages be included in the judgment on the main case. This point
was apparently not lost on the CA when it rendered its Resolution
dated 23 March 1998, certifying that the case may now be referred to
the Raffle Committee for assignment to a ponente. The appellate court
stated therein: "The Resolution of defendants-appellants motion for
judgment on the attachment may be incorporated in the decision by the
ponente for study and report," and such observation is in conformity
with Section 20.
Since Section 20, Rule 57 provides that their application for
damages on the attachment bond "shall be included in the judgment
on the main case," it is clear that the award for damages need not be
resolved before the case is submitted for decision, but should instead
be resolved and included in the judgment on the main case, or the
decision on the Appeal by Certiorari filed by the respondents.
Thus, the action of the Court of Appeals in resolving the application
for damages even before the main judgment was issued does not
conform to Section 20, Rule 57. However, the special particular
circumstances of this case lead us to rule that such error is not mortal
to the award of damages.
As noted earlier, the award of damages was made after a proper
hearing had occurred wherein all the concerned parties had been
given the opportunity to present their arguments and evidence in
support and in rebuttal of the application for damages. The premature
award of damages does not negate the fact that the parties were
accorded due process, and indeed availed of their right to be heard.
67
The fact that Section 20, Rule 57 provides that the award of
damages on the attachment bond "shall be included in the
judgment on the main case" necessarily implies that it is to be made
only after the case has been re-raffled for study and report, and
concurrently decided with the judgment of the ponente in the main
case. Again, the Court of Appeals failed to consider Section 20, Rule
57 when it acted upon the application even before the second raffle
was made.
Maningo vs. IAC (1990)
Case 1. 16 Nov 79: Neville Lamis Enterprises filed complaint for
specific performance against Santiago Maningo to enforce a MOA
entered into by them.
During pendency, 8 Dec: Maningo filed a complaint against Lamis
for collection of a sum of money with preliminary attachment before
the RTC Tagum, (Civil Case No. 1395).
9 Dec: Court issued a writ of preliminary attachment upon a bond
of P100k issued by Paramount Insurance Corp. As a consequence, the
Deputy Provincial Sheriff levied upon certain personal properties of
Lamis. Lamis filed an ex-parte manifestation with the Provincial Sheriff
for the suspension of the levy on the ground that Civil Case No. 1395
was merely a duplicity of Civil Case No. 35199 which was pending in
the RTC Pasig. Lamis further moved for the dismissal of Civil Case No.
1395 based on lis pendens and for improper venue. Denied.
Lamis filed certiorari with the SC. SC rendered a decision, dismissing
Civil Case No. 1395. Decision became final on 8 Apr 1982.
2 Aug 82: Lamis filed an urgent ex-parte motion in Civil Case No.
1395 for the confiscation of Maningos attachment bond. The lower
At said hearing, Paramount and Maningo objected to the same.
22 Dec: Maningo filed petition for certiorari and prohibition, alleging
that Lamis failed to comply with Section 20, Rule 57, which provides
that the application for damages must be made before entry of
judgment in the subject case and that Lamis filed his application for
damages only after final judgment. Petition was dismissed. Final.
In view of dismissal, Lamis filed a motion for the execution of the
SCs decision and a motion in Civil Case No. 1395 to be allowed to
present evidence for the confiscation of Maningo's attachment bond
and for damages.
14 Aug 83: Santiago Maningo died intestate and his counsel moved
for the dismissal of Case No. 1395 on the ground that the heirs are no
longer interested in the prosecution of the case. Denied, set for hearing.
In the meantime, the court issued an order requiring the sheriffs to
take into custody in favor of Lamis all attached properties still
unreleased by Maningo.
24 May 84: Lower court issued two orders: 1) an order requiring
the surety to pay Lamis the sum of P100k as the total claim for
damages by reason of the unlawful attachment; and 2) another order
for the issuance of a writ of execution against the surety.
Case 2. 11 Dec 81: Maningo filed with RTC Tagum a complaint for
Foreclosure of Chattel Mortgage, interest, damages and attorney's fees
with prayer for attachment against Neville Lamis Enterprises, Neville
Lamis and others (Civil Case No. 147). The complaint was later
amended to Replevin, damages, and attorneys fees.
21 Dec: Court issued an order for seizure of a bulldozer, upon a
replevin bond of P340k by Paramount Insurance.
25 May 82: Lamis moved for dismissal of said case and to cite
Maningo for contempt on the ground of litis pendentia, alleging that
said case is barred by pendency of Civil Case No. 35199 and also by
prior judgment which dismissed Civil Case No. 1395.
Civil Case No. 147 was dismissed by the SC.
11 Jun 84: Lamis filed motion in Civil Case No. 147 for the
reception of evidence on the damages he sustained by reason of the
issuance of the writ of replevin.
20 Sep: RTC awarded Lamis the amount of P7,677,177 as
compensatory damages by reason of the issuance of the writ.
Maningos contention: Civil Case No. 147 was also ordered
dismissed on December 15, 1982 by the SC upon petition of Lamis in
G.R. No. 61419; and that the said dismissal became final on March 3,
1983 long before Lamis applied for damages sustained by reason of
unlawful replevin.
ISSUE: WON Lamis is entitled to damages

No. As may be gathered from Section 20, Rule 57, the claim for
damages resulting from wrongful seizure of personalty property
must be filed in the same action in which the writ attachment or the
writ of replevin was issued; otherwise, it is barred. It may be presented,
before trial in the answer by way of counterclaim. In the discretion of
the court, it may also be made at any other time even after the
rendition of final judgment if the court has still jurisdiction over the
case. Hence, if the application for damages is not made in compliance
with the procedure laid down in the rules, even the surety on the bond
is relieved from liability therefor. The remedy provided by law is
exclusive and by failing to file a motion for the determination of the
damages on time and while judgment is still under the control of the
court, the claimant loses his right to damages.
In the case at bar, there is no showing that Lamis had timely filed
his claim for damages arising from the wrongful issuance of the writ
of replevin in Civil Case No. 147, or prior to dismissal on December 15,
1982, of the replevin case, upon Lamis' petition for certiorari. It was
only years later, on June 11, 1984, that Lamis applied for damages on
the replevin bond, after the case had long been dismissed. The trial
court no longer had jurisdiction and control over the case when it
awarded damages after it was dismissed and thrown out of court in
the certiorari case filed by Lamis himself. Thus, the judgment of the
trial court awarding damages against the estate of Maningo in the
amount of P7,677,177 in the replevin case is null and void. Logically,
Maningos surety, Paramount Insurance, should be released from its
liability under the bond. Notwithstanding, our dismissal of the latter's
petition seeking review on certiorari of the same decision of the
respondent appellate court on July 2, 1986, upholding the award of
damages to Lamis, We release said surety from liability based on the
same principles We have pronounced in the foregoing discussion.
Santos vs. CA (1954)
20 May 50: Ofrecino Santos filed an action for the recovery of the
sum of P1,628 against Teodulo M. Cruz and Valentin C. Garcia (Civil
Case No. 241). Santos secured a writ of preliminary attachment which
was levied upon a tractor which, though believed by Santos to belong
to Cruz and Garcia in Civil Case No. 241, in fact was owned by the
Philippine Reconstruction Corporation Inc., which in due time filed a
third party claim. Santos filed an amended complaint including PRCI
as a defendant.
Upon motion filed by Cruz and Garcia, Civil Case No. 241 was
dismissed by CFI Cotabato for lack of jurisdiction, the amount involved
being less than P2,000.
Santos filed a similar action in the Justice of the Peace Court of
Buayan, Cotabato, against PRCI as sole defendant, wherein Santos was
awarded the sum of P1,638.10, with interest and costs, but this
decision is still the subject matter of a pending certiorari proceeding
in CFI Cotabato instituted by PRCI.
9 May 51: PRCI filed in CFI Manila (Civil Case No. 13778) against
Santos for damages resulting from the levy of its tractor under the writ
of attachment issued in Civil Case No. 241.
12 Feb 52: Case was set for hearing.
29 Feb: Decision was rendered in favor of PRCI and against Santos,
ordering the later to pay the sum of P4,500 with legal rate of interest
from the date of the filing of the complaint and to further pay the sum
of P1,000 as attorney's fees and costs of the suit.
Santos contention: CFI Manila acted without jurisdiction, the cause
of action in Civil Case No. 13778 having arisen from a supposed
wrongful attachment ordered by CFI Cotabato in Civil Case No. 241,
and for that reason, that the latter court has exclusive jurisdiction to
determine whether its legal processes are wrongful or not; and even
granting that the CFI Manila had proper jurisdiction, the particular
cause of action in said Civil Case No. 13778 is barred by the decision
of the Justice of the Peace Court of Buayan, Cotabato.
ISSUE: WON CFI Manila has jurisdiction
Yes. It is to be recalled that, when PRCIs tractor was levied upon, it
was not a party in Civil Case No. 241, and although an amended
complaint was filed, no new writ of attachment was issued so as to
cover PRCIs properties. It is also significant that Civil Case No. 241
was dismissed by the CFI Cotabato for lack of jurisdiction.
68
We have no hesitancy in declaring that CFI Manila correctly
took cognizance of Civil Case No. 13778, because the PRCI
sought damages, not on the allegation that the writ of attachment was
illegally or wrongfully issued by the CFI Cotabato in Civil Case No. 241,
but on theory that said writ was caused by Santos to be levied upon
the tractor of PRCI which was not a party defendant.
The filing of the amended complaint did not cure the defect, since
the seizure continued to be in virtue of the original writ, none having
been issued under the amended complaint.
Santos citation: The procedure for recovery of damages on account
of the issuance of a writ of attachment, injunction, receivership, and
replevin proceedings, as interpreted in the cases adverted to, requires
that the claim for damages should be presented in the same action
which gave rise to the special proceeding in order that it may be
included in the final judgment of the case, and it cannot be the subject
of a separate action. The philosophy of the ruling seems to be that the
court that had acted on the special proceeding which occasioned the
damages has the exclusive jurisdiction to assess them because of its
control of the case. This ruling is sound and tends to avoid multiplicity
of action. (Cruz vs. Manila Surety)
The citation is not controlling, for the reason that, apart from the
circumstance that, as already stated, PRCI has never claimed that the
writ of attachment was wrongfully issued in Civil Case No. 241, it
appears that the latter case was dismissed for lack of jurisdiction, and
no claim for damages could therefore properly have been presented
in said case, because the CFI Cotabato, thus lacking jurisdiction, was
in fact prevented from rendering any final judgment therein which
could include such damages. Avoidance of multiplicity of suite
presupposes the competence of the court in the first or earlier case.
Aquino vs. Socorro (1970)
14 Feb 64: CA issued a writ of preliminary injunction in favor of
Francisco Socorro upon his posting a P1,000 bond. The writ of
preliminary injunction, among others, restrained Zacarias Aquino
"from entering, cutting, hauling, selling and/or exporting logs or other
forest products from the forest area" subject of litigation.
Aquino, however, filed a counterbond in the amount of P2,000,
effecting the immediate dissolution of the writ.
29 Jun: CA dismissed Socorros petition in the main action for lack
of jurisdiction to entertain the same. Socorro appealed. SC affirmed.
15 Jul: Before CAs decision became final, Aquino filed with the CA
his claim for damages in the amount of P199,000 on account of the
wrongful issuance of the writ of preliminary injunction.
CA denied Aquinos claim for want of bad faith and malice on the
part of Socorro in filing his petition and securing the issuance of the
writ of preliminary injunction.
Aquinos contention: CA erred in denying his claim for damages on
the ground of want of bad faith and malice on the part of Socorro in
filing the petition for certiorari re the main case and securing the
issuance of the writ of preliminary injunction. He invokes the provisions
of Section 9, Rule 58 in relation to Section 20, Rule 57, of the Rules of
Court. Section 9, Rule 58. Said provisions do not require a claimant
who seeks to recover damages on account of the wrongful issuance of
a writ of preliminary injunction, to prove bad faith and malice on the
part of the party who obtained the issuance of the writ. Also, Sec. 4(b)
of Rule 58 makes the party applying for an injunction liable for all
damages sustained by the other party if the court finally decides the
party applicant as not entitled thereto. The dissolution of the writ of
preliminary injunction by the CA clearly demonstrates that the Socorro
was not entitled thereto.
ISSUE: WON Aquino's claim for damages on account of the
improvident issuance by the CA of the writ of preliminary injunction
should be dismissed on the ground that he has failed to show or prove
bad faith and malice on the part of Socorro in obtaining the issuance
of the writ of preliminary injunction
Yes. In the case at bar, the record reveals that Aquino, in the
proceedings before the CA filed a counterbond in the amount of
P2,000 and opposed the injunction bond filed by the respondent
Socorro on the ground of its insufficiency. In effect, those brought
about the immediate dissolution of the writ of preliminary injunction.
Thus Aquino pursues his claim for damages in the amount of P199k

no longer upon the injunction bond in the amount of P1,000 filed
by Socorro with the CA. This being the case, applicable here is the
holding in Molina vs. Somes, supra, that an application for damages
on account of the improvident issuance of a preliminary injunction writ
must be governed by the same principles applicable to an action for
the wrongful bringing of action.
Before the Socorros liability can attach, it must appear that he filed
his petition for certiorari re the main action and obtained the issuance
of the writ of preliminary injunction maliciously and without probable
cause. These two essential requisites, malicious prosecution and lack
of probable cause, are neither alleged nor proved in this case before
us. Nothing in the record tends to establish the liability of Socorro.
In Pacis vs. COMELEC, the court held that damages sustained as a
result of a wrongfully obtained injunction may be recovered upon the
injunction bond required to be filed with the court. The same
provisions permitting the issuance of the writ of preliminary injunction
require the filing of a bond before the grant of the writ. The statutory
undertaking of the bond is that it shall answer for all damages which
the party to be restrained may sustain by reason of the injunction if
the court should finally decide that the plaintiff was not entitled
thereto. Malice or lack of good faith is not an element of recovery on
the bond. This must be so, because to require malice as a prerequisite
would make the filing of the bond a useless formality.
The dissolution of the injunction, even if the injunction was obtained
in good faith, amounts to a determination that the injunction was
wrongfully obtained and a right of action on the injunction bond
immediately accrues. Thus, for the purpose of recovery upon the
injunction bond, "the dissolution of the injunction because of the
failure of petitioner's main cause of action" provides the "actionable
wrong" for the purpose of recovery upon the bond.
There is nothing in the Rules of Court which allows recovery of
damages other than upon the bond pledged by the party suing for an
injunction. Section 9, Rule 58, limits recovery only upon the bond, and
it specifically states that ... 'the amount of damages to be awarded to the
plaintiff, or to the defendant, as the case may be, upon the bond of the
other party, shall be claimed, ascertained, and awarded under the same
procedure as prescribed in Section 20 of Rule 57. Under this provision,
the party restrained, if he can recover anything, can recover only by
reason of and upon the bond the only security and protection
conceded to him by the rules. Consequently, the rule limits the amount
of recovery in a suit on an injunction bond to the sum thus fixed, the
amount measuring the extent of the assumed liability.
In Molina vs. Somes, the court held that an action for damages for
the improper suing out of an injunction must be maintained upon the
same principles which govern an action for the wrongful bringing of an
action. This rule, however, applies only when the party restrained
pursues his claim for damages not upon the injunction bond. In such
a case where the party restrained sues not on the injunction bond, the
rules accord him no relief by way of a claim for damages unless he
can establish that the party applicant secured the issuance of the writ
maliciously and without probable cause. This Court stated that when
the process has been sued out maliciously there may be a right of
action in favor of the defendant. But this right depends upon the law
governing malicious prosecutions, and has no relation to the claim for
damages urged by the defendant in this case.
Hanil Development vs. IAC (1986)
Escobar Explosives Engineers, Inc. filed a complaint for recovery of
sum of money with damages against Hanil Devt. Co. The complaint
docketed as Civil Case No. 35966 sought to compel Hanil to pay for
the blasting services rendered by Escobar in connection with the
former's contract with the Ministry of Public Highways to construct the
200 Km. Oro-Butuan Road Project in Mindanao.
16 Apr 82: TC rendered decision in favor of Escobar. Hanil was
ordered to pay the sum of P1,341,727.40.
6 May: Escobar filed petition for issuance of preliminary attachment.
Motion was set for hearing.
13 May: Hanil filed its notice of appeal and cash appeal bond with
the trial court.
24 May: TC granted petition for issuance of preliminary attachment.
Writ was enforced and the bank accounts of Hanil were garnished and
its equipment attached.
69
Hanil filed MR of the May 24 order. While MR was pending,
Escobar filed another motion, "Ex-Parte Motion to Deposit Cash"
praying that an order be issued directing the Finance Manager of the
NAPOCOR to withdraw available funds of Hanil from the NAPOCOR
and deposit them with the clerk of court of the CFI of Rizal. Granted.
Hanil filed with IAC a petition for certiorari with prayer of prohibition,
injunction and preliminary restraining order. IAC restrained the
enforcement of the orders and after hearing, issued a preliminary
injunction enjoining the implementation of said orders upon the filing
of a P50k cash bond by Hanil. Subsequently, the challenged orders
were declared null and void, having been issued with GAD.
23 Aug 82: TC disapproved Hanils amended record on appeal for
being filed beyond the reglementary period and extension granted.
Appeal was dismissed. Hanil filed MR of the dismissal while Escobar
filed a motion for execution. TC denied MR and granted the motion for
execution.
Hanil filed a petition for certiorari and mandamus with prayer of
prohibition with IAC assailing the mentioned orders of the TC. IAC
declared such null and void. Hanils appeal was reinstated and TC was
ordered to elevate the entire records to the appellate court.
11 Feb 85: After records were transmitted, IAC sent notice to Hanil
to filed appellants brief within 45 days. Received it on 25 Feb 85.
13 Mar: Hanil filed an "Application for Judgment against Attachment
Bond" and "Motion to Defer Filing of Appellant's Brief" praying for a
hearing before the IAC so it could prove the damages it sustained as a
result of the illegal writ of attachment issued by the TC. It wanted a
judgment against the attachment bond posted by Escobar and its
insurer Sanpiro Insurance to be included in the final decision in the
main case, now pending before the IAC. Escobar filed MTD.
30 Apr: IAC denied Hanils application, granted Escobars motion to
dismiss the appeal, and dismissed the appeal. Hanil filed a motion for
reconsideration but this was denied.
ISSUE: WON the application for judgment against attachment bond of
Hanil should be granted
Yes. The application for judgment against attachment bond was filed
to prove the damages sustained by Hanil as a result of the illegal writ
of attachment issued by the TC so that the judgment against the
attachment bond posted by Escobar and its insurer could be included
in the final judgment of the main case. The assessment and award of
such damages could not have been made in CA-G.R. No. 14512 as
alleged by Escobar because the question therein was WON the writ of
attachment in Civil Case No. 35966 should have been issued.
The object was to set aside the preliminary attachment immediately.
It was a preventive measure.
Escobar, in its petition for writ of attachment filed with the trial court,
posted an attachment bond issued by the Sanpiro Insurance in the
amount of P1,341,727.40.
Contrary to the claim of Escobar, this writ of attachment issued by
the TC was executed. Hanils equipment and bank accounts were
garnished pursuant to the writ. In fact, Escobars opposition to Hanils
MR of the TCs order which issued the writ of attachment stated that
the same should be denied for being moot and academic "because the
writ of attachment and/or garnishment have already been executed."
Considering that the writ of attachment was declared null and void,
Hanil had the right to ask for whatever damages it may have incurred
as a result of its issuance pursuant to Section 20, Rule 57 of the
Revised Rules of Court.
In the instant case, the application for judgment against the
attachment bond was filed under the following circumstances: (1) the
writ of attachment was issued by the trial court after it had rendered
its decision and after Hanil had already perfected its appeal; (2)
Escobar posted a surety bond to answer for any damages that may be
adjudged to Hanil if the writ is later found to be illegal; (3) the writ of
attachment was declared illegal; and (4) the application for judgment
against the attachment bond was made with notice to the insurer,
Sanpiro Insurance Corporation.
Therefore, the IAC committed GAD in denying the application for
judgment against attachment bond.

BA Finance vs. CA (1988)
1 Jul 75: Augusto Yulo secured a loan from BA Finance in the
amount of P591,003.59 as evidenced by a P/N he signed in his own
behalf and as representative of the A & L Industries. Yulo presented an
alleged SPA executed by his wife, Lily Yulo, who manages A & L
Industries and under whose name the said business is registered,
purportedly authorizing Augusto Yulo to procure the loan and sign the
P/N. About two months prior to the loan, however, Augusto Yulo had
already left Lily Yulo and their children and had abandoned their
conjugal home. When the obligation became due and demandable,
Augusto Yulo failed to pay the same.
7 Oct: BA Finance filed its amended complaint against Sps. Augusto
and Lily Yulo on the basis of the P/N. It also prayed for the issuance of
a writ of attachment, alleging that the said spouses were guilty of fraud
in contracting the debt upon which the action was brought and that
the fraud consisted of the spouses' inducing BA Finance to enter into
a contract with them by executing a Deed of Assignment in favor of BA
Finance, assigning all their rights, titles and interests over a
construction contract executed by and between the spouses and A.
Soriano Corporation on June 19, 1974 for a consideration of
P615,732.50 when, in truth, the spouses did not have any intention of
remitting the proceeds.
TC issued the writ of attachment, enabling BA Finance to attach the
properties of A & L Industries. BA Finance filed another motion for the
examination of attachment debtor, alleging that the properties
attached by the sheriff were not sufficient to secure the satisfaction of
any judgment that may be recovered by it in the case. Granted.
Lily Yulo filed her answer with counterclaim, alleging that although
Augusto Yulo and she are husband and wife, the former had
abandoned her and their children 5 months before the filing of the
complaint; that they were already separated when the P/N was
executed; that her signature in the SPA was forged; that she never got
a single centavo from the proceeds of the loan mentioned in the P/N;
and that as a result of the illegal attachment of her properties, which
constituted the assets of the A & L Industries, the latter closed its
business and was taken over by the new owner.
After hearing, TC dismissed BA Finances complaint against Lily Yulo
and A & L Industries. Also ordered BA Finance to pay Lily Yulo P660k
as actual damages; P500k as unrealized profits; P300k as exemplary
damages; P30k as and for attorney's fees. BA Finance appealed.
BA Finances contention: The properties referred to are still subject
to a levy on attachment. They are, therefore, still under custodia legis
and thus, the assailed decision should have included a declaration as
to who is entitled to the attached properties and that assuming
arguendo that the attachment was erroneous, the lower court should
have ordered the sheriff to return to Lily Yulo the attached properties
instead of condemning it to pay the value thereof by way of actual
damages.
ISSUE: WON the attachment of the properties of A & L Industries was
wrongful so as to entitle Lily Yulo to actual damages only / WON said
attachment was made in bad faith and with malice to warrant the
award of other kinds of damages
Only actual damages. There was no bad faith on the part of BA
Finance in securing the writ of attachment. An attachment may be said
to be wrongful when, for instance, the plaintiff has no cause of action,
or that there is no true ground therefore, or that the plaintiff has a
sufficient security other than the property attached, which is tantamout
to saying that the plaintiff is not entitled to attachment because the
requirements of entitling him to the writ are wanting.
Although BA Finance failed to prove the ground relied upon for the
issuance of the writ of attachment, this failure cannot be equated with
bad faith or malicious intent. The steps which were taken by BA
Finance to ensure the security of its claim were premised, on the firm
belief that the properties involved could be made answerable for the
unpaid obligation due it.
Thus, BA Finance is liable only for actual damages and not for
exemplary damages and attorney's fees. Lily Yulo has manifested
before this Court that she no longer desires the return of the attached
properties since the said attachment caused her to close down the
business. From that time, she has become a mere employee of the new
owner of the premises. Therefore, it is just and equitable to allow Lily
70
Yulo to recover actual damages based on the value of the
attached properties as proven in the trial court, in the amount
of P660k. In turn, if there are any remaining attached properties, they
should be permanently released to BA Finance.
We cannot, however, sustain the award of P500k representing
unrealized profits because this amount was not proved or justified
before the trial court. The basis of the alleged unearned profits is too
speculative and conjectural to show actual damages for a future
period. Lily Yulo failed to present reports on the average actual profits
earned by her business and other evidence of profitability which are
necessary to prove her claim for the said amount.
Malayan Insurance vs. Salas (1979)
This case is about Malayan Insurances liability on its replevin bond
which was not included in the final judgment against the principal in
the bond. It is undisputed that in 1970, Makati Motor Sales, as vendor
mortgagee, sued Rosendo Fernando for the recovery of four diesel
trucks and the connection of the balance of his obligation plus
damages.
Makati Motors Sales posted a replevin bond executed by the
Malayan Insurance. In that bond, the surety bound itself to pay
P362,775.92 "for the return of the property to the defendant, if the
return thereof be adjudged, and for the payment of such sum as may
in the cause be recovered against the plaintiff ". Pursuant to the order
of the court, the sheriff seized the four trucks. Later, two of the trucks
were returned to Fernando.
2 Mar 73: After trial, the lower court rendered judgment, ordering
Makati Motor to return to Fernando the other 2 trucks and to pay him
for the seizure of each of them in the sum of 300 daily from Sep 25
and 26, 1970 until return plus P26k as actual and moral damages. In
turn, Fernando was ordered to pay Makati Motor the sum of
P66,998.34 as the balance of the price of the 2 trucks.
Makati Motor appealed. Affirmed.
Meanwhile, 11 May 73: Before elevation of the record to the CA,
Fernando filed in the TC an application for damages against the
replevin bond. Malayan Insurance opposed on the ground that the TC
had lost jurisdiction over the case because of the perfection of the
appeal. Application was denied.
27 May: Fernando filed in the CA his claim for damages against the
replevin bond and prayed that the same be included in the judgment.
CA did not act immediately on that claim but in its 1977 decision, it
observed that Fernando's motion or claim "was correct" and it ordered
that his claim against Malayan Insurance "be heard before the trial
court". That decision affirming the lower court's judgment became final
and executory on March 18, 1977.
6 Apr 77: After remand of the record to the TC, Fernando filed
motion to set for hearing his application for damages against the
surety on its replevin bond. Malayan Insurance moved to quash the
proceeding regarding the claim for damages, contending that TC has
no jurisdiction to alter or modify the final judgment of the CA.
14 Jul 78: TC denied the motion to quash and directed Malayan
Insurance to pay Fernando the damages which it had adjudged.
Malayan Insurances contention: TCs judgment against it is not
warranted under section 20 of Rule 57. Assailed the TCs competence
to render judgment against the surety after the decision of the CA
against the surety's principal had become final and executory.
ISSUE: WON the TC has jurisdiction to hear the Fernandos application
Yes. The TC has jurisdiction to pass upon Fernando's application for
the recovery of damages on the surety's replevin bond. The reason is
that Fernando seasonably filed his application for damages in the CA.
It was not his fault that the damages claimed by him against the surety
were not included in the judgment of the CA affirming the trial court's
award of damages to Fernando payable by the principal in the replevin
bond. The peculiar factual situation of this case makes it an exception
to the settled rule that the surety's liability for damages should be
included in the final judgment to prevent duplicity of suits or
proceedings.
As may be gathered from section 20 of Rule 57, the application for
damages against the surety must be filed (with notice to the surety) in
the CFI before the trial or before appeal is perfected or before the
judgment becomes executory.

If an appeal is taken, the application must be filed in the
appellate court but always before the judgment of that court
becomes executory so that the award may be included in its judgment.
But it is not always mandatory that the appellate court should
include in its judgment the award of damages against the surety. Thus,
it was held that where the application for damages against the surety
is seasonably made in the appellate court, "the latter must either
proceed to hear and decide the application or refer "it" to the trial court
and allow it to hear and decide the same".
In the case at bar, Fernando in 1974 made a timely claim in the CA
for an award of damages against Malayan Insurance enforceable
against its replevin bond. The surety was notified of that application. It
registered an opposition to the claim. The CA did not resolve the claim
immediately but in its 1977 decision it directed TC to hear that claim.
Obviously, the lower court has no choice but to implement that
directive which is the law of the case.
ISSUE: WON Malayan Insurance was afforded the hearing requirement
No. However, the trial court's implementation of that directive was
incorrect. It set the claim for hearing but the surety assailed its
jurisdiction and did not consider itself bound by the mandate of the
appellate court. The merits of the claim for damages were not threshed
out at the hearing because the surety stood pat on its contention that
the TC has no jurisdiction to allow the claim in view of the finality of
the decision of the CA.
It was held that if the surety was not given notice when the claim for
damages against the principal in the replevin bond was heard, then as
a matter of procedural due process the surety is entitled to be heard
when the judgment for damages against the principal is sought to be
enforced against the surety's replevin bond. Again, hearing is summary
and is limited to such new defense, not previously set up by the
principal, as the surety may allege and offer to prove.
Inasmuch as in this case, Malayan Insurance was not given the
summary hearing during which it could contest the reality or
reasonableness of Fernando's claim for damages, we have to set aside
the trial court's order awarding damages against it and, in the interest
of justice, give it another opportunity to be heard on the merits of
Fernando's claim for damages.
Phil. Charter Insurance vs. CA (1989)
Dec 81: Learjet Phil. Inc. filed a suit against Gates Learjet Corp. and
Gates Learjet Export Corp. On Learjets application and upon posting
of an attachment bond by Phil. Charter Insurance Corp., Court issued
a writ or preliminary attachment directed against the defendants
properties. Sheriff seized a twin engine airplane belonging to the
defendants.
After due proceedings, the TC rendered judgment in favor of Learjet,
sentencing defendants to pay $2.250M actual damages, P200k moral
damages, P100k exemplary damages. However, this judgment was
reversed and set aside for lack of merit. The judgment also ordered
Learjet to pay the defendants by way of actual damages the amount
of $73,139.36 and P50k exemplary damages for the wrongful
attachment.
16 Dec 86: Four days after notice of the judgment was served on
the defendants, they filed with the CA an "Urgent Petition to have
Damages Awarded on Account of Illegal Attachment Executed Against
Attachment Bond Issued by the T.J. Philippine American Assurance
Co., Inc., Now Pan-Philippines General Insurance Corporation." The
petition adverted to the attachment bond posted by the surety firm in
the amount of P2.M. A copy of the petition was furnished the surety.
Learjet filed MR.
10 Mar 87: CA denied the MR for lack of merit and noted the
defendants application for damages and referred the same to the TC
to hear and decide the same.
On remand, the defendants filed a petition to have damages
awarded on account of the illegal attachment against the attachment
bond. Court ordered the execution. The writ was issued on 8 Apr 88.
The sheriff sought to enforce the writ also against PCIC. PCIC
contended that there was no judgment against it due to the wrongful
attachment, that since neither Section 20, Rule 57 nor the Resolution
of the CA of March 10, 1987 had been complied with, there existed no
award of damages against it under its attachment bond, and
71
enforcement of execution against said bond would be contrary
to due process.
TC restrained the enforcement of the writ of execution against the
surety and set the suretys motion for hearing. After receiving
arguments, the Court promulgated an Order on June 14, 1988
overruling the movant surety's argument that it had lost competence
to hear and determine the application or damages against the
attachment bond because the judgment of the CA had become final
and executory.
The Court also resolved to issue, upon a bond of P1M, a writ of
preliminary injunction restraining the sheriffs from enforcing the writ
of execution or otherwise executing the judgment against the surety
"until the application for damages on the attachment bond is heard
and decided;" and set the hearing on the matter on August 9, 1988.
PCICs contention: It had been denied its day in court when, without
its being present at the trial, the defendants had adduced evidence in
support of the damages eventually awarded by the CA; that said
defendants had fatally failed to file an application for damages on
account of the wrongful attachment, and consequently, the Court had
no more jurisdiction to set for hearing the urgent petition.
ISSUE:
By settled rule, a writ of preliminary attachment may issue once the
Court is satisfied, on consideration ex parte of the application and its
supporting affidavits and documents, or after healing, as the court may
in its discretion consider proper, that any of the grounds specified by
law exists, and an acceptable bond is given by the applicant.
The filing of the attachment bond by a surety undoubtedly connotes
and operates as a voluntary submission by it to the Court's jurisdiction,
and of course binds it to faithfully comply with its specific obligations
under its bond.
The surety does not, to be sure, become liable on its bond simply
because judgment is subsequently rendered against the party who
obtained the preliminary attachment. The surety becomes liable only
when and if "the court shall finally adjudge that the applicant was not
entitled to the attachment." This is so regardless of the nature and
character of the judgment on the merits of the principal claims,
counterclaims or cross-claims, etc. asserted by the parties against each
other. Indeed, since an applicant's cause of action may be entirely
different from the ground relied upon by him for a preliminary
attachment, it may well be that although the evidence warrants
judgment in favor of said applicant, the proofs may nevertheless also
establish that said applicant's proferred ground for attachment was
inexistent or specious and hence, the writ should not have issued at
all; i.e., he was not entitled thereto in the first place. In that event, the
final verdict should logically award to the applicant the relief sought in
his basic pleading, but at the same time sentence him usually on
the basis of a counterclaim to pay damages caused to his adversary
by the wrongful attachment.
When the final judgment declares that the party at whose instance
an attachment had issued was not entitled thereto, there is no question
about the eminent propriety of condemning that party to the payment
of all the damages that the wrongful attachment had caused to the
party whose property had been seized under the attachment writ.
But what of the surety's liability? The surety on an attachment bond,
as already pointed out, assures that the applicant "will pay all the costs
which may be adjudged to the adverse party and all damages which
he may sustain by reason of the attachment, if the court shall finally
adjudge that the applicant was not entitled thereto." In other words the
surety, by submitting its attachment bond, binds itself solidarily to
make the same payments which its principal the party at whose
instance the attachment issues may be condemned to make, to
compensate for the damages resulting from the wrongful attachment,
although unlike its principal, its liability is limited to the amount stated
in its bond.
The final adjudication "that the applicant was not entitled" to the
attachment, standing alone, does not suffice to make the surety liable.
It is necessary, in addition, that the surety be accorded due process,
i.e., that it be given an opportunity to be heard on the question of its
solidarily liability for damages arising from wrongful attachment.
Evidently, such a summary hearing is not rendered unnecessary or
superfluous by the fact that the matter of damages was among the
issues tried during the hearings on the merits, unless of course, the

surety had previously been duly impleaded as a party, or
otherwise earlier notified and given opportunity to be present and
ventilate its side on the matter during the trial.
A party against whom a writ of preliminary attachment issues may
impugn the writ by alleging and proving inter alia that the applicant
was not entitled thereto, i.e., that the asserted ground for attachment
was inexistent, or the amount for which the writ was sought was
excessive, etc., this, by appropriate motion. He may also claim
damages on account of the wrongful attachment through an
appropriate pleading, such as a counterclaim, or other form of
application. What is important is that the "application must be filed
before the trial or before appeal is perfected or before the judgment
becomes executory, with due notice to the attaching creditor and his
surety or sureties, setting forth the facts showing his right to damages
and the amount thereof."
In the case at bar, since the Trial Court's decision had gone against
the defendants, and no irregularity had been adjudged as regards the
preliminary attachment, the latter obviously had no occasion to apply
for damages from wrongful attachment although they could have
so applied therefor because, as already pointed out, it is entirely
possible under the law that an applicant for preliminary attachment
be adjudged entitled to relief on his basic claim and at the same time
pronounced as not entitled to the attachment.
As things turned out, the Trial Court's judgment was reversed by the
CA; the latter dismissed the complaint, declared Learjet not entitled to
the attachment and sentenced it to pay the defendants damages on
account thereof, and it was only at this time that the defendants could
have presented and did actually present their petition to enforce the
surety's liability on its bond. This petition, as aforestated, the CA noted
and referred to the Trial Court with instructions "to hear and decide ...
pursuant to Section 20, Rule 57 of the Rules of Court." Under the
circumstances, and in the light of the explicit provisions of said Section
20, Rule 57, there can be no debate about the seasonablenes of the
defendants' application for damages and the correctness of the referral
by the Court of Appeals of the application for damages to the Trial
Court for hearing and determination.
The surety's liability may be enforced whether the application for
damages for wrongful attachment be submitted in the original
proceedings before the Trial Court, or on appeal, so long as the
judgment has not become executory. The surety's liability is not and
cannot be limited to the damages caused by the improper attachment
only during the pendency of the appeal. That would be absurb. The
plain and patent intendment of the law is that the surety shall answer
for all damages that the party may suffer as a result of the illicit
attachment, for all the time that the attachment was in force; from levy
to dissolution. The fact that the attachment was initially (and
erroneously) deemed correct by the Trial Court, and it was only on
appeal that it was pronounced improper, cannot restrict recovery on
the bond only to such damages as might have been sustained during
the appeal.
The fact that the second paragraph of the rule speaks only of
"damages sustained during the pendency of the appeal" is of no
moment; it obviously proceeds from the assumption in the first
paragraph that the award for the damages suffered during the
pendency of the case in the trial court was in fact "included in the final
judgment" (or applied for therein before the appeal was perfected or
the judgment became executory); hence, it states that the damages
additionally suffered thereafter, i.e., during the pendency of the appeal,
should be claimed before the judgment of the appellate tribunal
becomes executory.
Zaragoza vs. Fidelino (supra., p. 62)
Zenith Insurance vs. CA (1990)
25 Jan 83: Lawrence Fernandez insured his car for own damage
under private car policy no. 50459 with Zenith Insurance.
6 Jul: The car figured in an accident and suffered actual damages
in the amount of P3,640. After allegedly being given a run around by
Zenith for 2 months, Fernandez filed a complaint with the RTC Cebu
for sum of money and damages resulting from the refusal of Zenith to
pay the amount claimed. Aside from actual damages and interests,
Fernandez also prayed for moral damages in the amount of P10k,
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exemplary damages of P5k, attorney's fees of P3k and litigation
expenses of P3k.
28 Sep: Zenith filed an answer, alleging that it offered to pay the
claim of Fernandez pursuant to the terms and conditions of the
contract, which Fernandez rejected.
After termination of the pre-rial, Fernandez presented his evidence.
Zenith, however, failed to present its evidence in view of its failure to
appear in court, without justifiable reason, on the day scheduled for
the purpose. The trial court issued an order on August 23, 1984
submitting the case for decision with Zeniths evidence. This order,
Zenith assailed before the CA.
4 Jun 86: A decision was rendered by the TC in favor of Fernandez,
ordering Zenith to pay P3,640 actual damages, P20k moral damages,
P20k exemplary damages, P5k attorneys fees, and P3k litigation costs.
Upon motion of Fernandez and before the expiration of the period
to appeal, the trial court, on June 20, 1986, ordered the execution of
the decision pending appeal.
10 Jun: Zenith filed a notice of appeal before the TC. The notice of
appeal was granted in the same order granting Fernandezs motion for
execution pending appeal. CA affirmed the decision of the TC.
Zeniths contention: While the complaint of Fernandez prayed for
P10k moral damages, the lower court awarded twice the amount, or
P20k without factual or legal basis; while he prayed for P5k exemplary
damages, the trial court awarded P20k; and while he prayed for P3k
attorney's fees, the trial court awarded P5k.
ISSUE: WON the award of damages was proper
No. It is clear that under the Insurance Code, in case of unreasonable
delay in the payment of the proceeds of an insurance policy, the
damages that may be awarded are: 1) attorney's fees; 2) other
expenses incurred by the insured person by reason of such
unreasonable denial or withholding of payment; 3) interest at twice the
ceiling prescribed by the Monetary Board of the amount of the claim
due the injured; and 4) the amount of the claim.
As regards the award of moral and exemplary damages, the rules
under the Civil Code of the Philippines shall govern.
The purpose of moral damages is essentially indemnity or
reparation, not punishment or correction. Moral damages are
emphatically not intended to enrich a complainant at the expense of a
defendant, they are awarded only to enable the injured party to obtain
means, diversions or amusements that will serve to alleviate the moral
suffering he has undergone by reason of the defendant's culpable
action. While it is true that no proof of pecuniary loss is necessary in
order that moral damages may be adjudicated, the assessment of
which is left to the discretion of the court according to the
circumstances of each case. In awarding moral damages in case of
breach of contract, there must be a showing that the breach was
wanton and deliberately injurious or the one responsible acted
fraudulently or in bad faith.
In the instant case, there was a finding that Fernandez was given a
"run-around" for two months, which is the basis for the award of the
damages granted under the Insurance Code for unreasonable delay in
the payment of the claim. However, the act of Zenith of delaying
payment for two months cannot be considered as so wanton or
malevolent to justify an award of P20k as moral damages, taking into
consideration also the fact that the actual damage on the car was only
P3,460. In the pre-trial of the case, it was shown that there was no total
disclaimer by Fernandez. The reason for Zenith's failure to indemnify
him within the two-month period was that the parties could not come
to an agreement as regards the amount of the actual damage on the
car. The amount of P10k prayed for by Fernandez as moral damages
is equitable.
On the other hand, exemplary or corrective damages are imposed
by way of example or correction for the public good. It cannot be
awarded as Zenith had not acted in wanton, oppressive or malevolent
manner.
The amount of P5k awarded as attomey's fees is justified under the
circumstances of this case considering that there were other petitions
filed and defended by Fernandez in connection with this case.
As regards the actual damages incurred by Fernandez, the amount
of P3,640 had been established before the TC and affirmed by the CA.
CA court correctly ruled that the deductions of P250 and P274 as

deductible franchise and 20% depreciation on parts, respectively
claimed by Zenith as agreed upon in the contract, had no basis.
Therefore, the Court awarded Fernandez P3,640 as actual claim,
P10k moral damages, P5k attorneys fees, P3k litigation expenses.
Lazatin vs. Twao (1961)
In a case for recovery of P35k, in connection with the purchase from
the US government and the susbsequent sale of some 225 trucks,
Angel Twao and Gregorio Castro sued Francisco Lazatin, et. al.
After trial, CFI Manila dismissed the complaint. The order of
dismissal was taken to the CA (CA-G.R. No. 4533-R), which, on Nov 3,
1950, rendered judgment reversing the said order and declaring that
plaintiffs and defendants were co-owners in the business of buying and
selling surplus auto-trucks, and ordered the defendants (one of them
Lazatin) to pay to the plaintiffs therein, the sum of P10k, with legal
interest from the filing of the complaint.
Said decision became final. It was executed, with the levy of the
properties of Lazatin and their subsequent sale at public auction,
wherein Twao and Castro were the purchasers.
2 Aug 52: Before the expiration of the redemption period, Lazatin
deposited with the Sheriff of Pampanga the sum of P13,849.88,
redemption price.
9 Aug 52: Lazatin filed the present action, to recover from the same
Twao and Castro the sum of P19,676.09, supposedly a balance of the
proceeds of auto-trucks, sold directly to purchasers by said
defendants. On the same date, Lazatin, alleging that "there is no
security whatsoever for the payment of the amount claimed in the
complaint and that the defendants are removing or are about to
remove or dispose of their property with intent to defraud their
creditors, particularly the plaintiff," secured a writ of attachment on the
amount he deposited. Pursuant thereto, Sheriff refused to deliver the
sum of P13,849.88 which should have been paid to Twao and Castro.
12 Aug: Twao and Castro filed an Urgent Motion to Dissolve the
Writ of Preliminary Attachment, alleging that Lazatin has no cause of
action and that the allegations in the petition and in the affidavit are
false.
10 Sep: Lower court, after hearing, dissolved the writ.
9 May 53: Lazatin died. Gil Gotiangco was appointed as
administrator.
On the date set for hearing, Twao and Castro were granted, a
preliminary hearing on their special defenses.
12 Nov 54: The lower court entered an order, dismissing the
complaint on the ground that it was barred by a prior judgment and
by the statute of limitations. At the same time, the Court set the case
for hearing on Twao and Castros counterclaim.
28 Oct 55: The trial court rendered judgment, ordering the estate
of Lazatin to pay Twao and Castro P3k attorneys fees, P2.5k moral
damages to each, P13,849.88 amount claimed with interest.
Twao and Castros contention: Invoked Sec. 4, Rule 59. Under said
section, malice and want of probable cause are not essential, and the
element of malice cannot be implied from the terms thereof. Argued
that as the attachment-plaintiff, according to the rule, should pay "all
the damages" which the attachment-defendant might sustain by
reason of the attachment, if the court shall finally adjudge that the
plaintiff was not entitled thereto, the ruling of the trial court that the
appellant should pay the appellees moral damages, is correct.
ISSUE: WON the award of moral damages was proper
No. Sec. 4 of Rule 59, does not prescribe the remedies available to
the attachment-defendant in case of a wrongful attachment, but
merely provides an action for recovery upon the bond, based on the
undertaking therein made and not upon the ability arising from a
tortious act, like the malicious suing of an attachment. Under the first,
where malice is not essential, the attachment-defendant, is entitled to
recover only the actual damages sustained by him by reason of the
attachment. Under the second, where the attachment is maliciously
sued out, the damages recoverable may include a compensation for
every injury to his credit, business or feelings.
It is quite true that said section 4 employs the expression "all
damages", but this should be understood to refer to the damages
resulting from the undertaking itself, the recovery of which is subject
to "the principles of the general law on damages", earlier discussed.
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The trial court did not make any express ruling that the writ
of attachment was maliciously sued out by Lazatin or any finding
of facts or circumstances from which it may be necessarily inferred
that the attachment was thus obtained. The decision does not make
any finding that Twao and Castro did in fact suffer mental anguish or
injury to their credit or reputation. The decision simply states: "Coming
now to the moral damages which defendants have suffered consisting of
mental anguish, serious anxiety and besmirched reputation, it is believed
that sing businessmen of good commercial standing and reputation, each
of them should be awarded at least P2,500.00."
Moreover, the dissolution of the writ was due to a technicality. No
moral damages can be inferred from the mere act that the redemption
price to which defendants were entitled, had been retained by the
provincial sheriff for a period of 38 days.
While the lower court declared that Twao and Castro had an
outstanding balance of P171,947.80 in the bank and that they were
not disposing their property in fraud of creditors or of Lazatin, as
alleged in the petition for issuance of the writ, still the said court did
not make any finding that the said petition was maliciously sued out.
As to attorneys fees and expenses of litigation, it cannot be
recovered in the absence of stipulation, subject to exceptions.
Attorneys fees of P3k is upheld.
MC Engineering vs. CA (2002)
29 Oct 84: MC Engineering and Surigao Coconut Devt Corp. signed
a contract for the restoration of the latters building, land improvement,
electrical, and mechanical equipment located at Lipata, Surigao City,
which was damaged by typhoon Nitang. The agreed consideration was
P5.150M of which P2.5M was for the restoration of the damaged
buildings and land improvement, while the P3M was for the restoration
of the electrical and mechanical works.
30 Oct: MC Engineering and Gerent Builders, Inc. entered into an
agreement wherein Gerent subcontracted to MC Engineering the
restoration of the buildings and land improvement phase of its
contract with Sucodeco but MC Engineering retained for itself the
restoration of the electrical and mechanical works. It covered P1.665M.
3 Dec: Sucodeco and MC Engineering entered into an agreement
their contract by increasing the price of the civil works from P2.250M
to P3,104,851.51.
The civil work aspect consisting of the building restoration and land
improvement from which Gerent would get P1.665M was completed
and the corresponding certificate of acceptance was executed but the
electrical works were cancelled.
2 Jan 85: Gerent received from MC Engineering the amount of
P1,339,720 as full payment of the sub-contract price, after deducting
earlier payments made by Gerent.
Nevertheless, Gerent is still claiming from MC Engineering the sum
of P632,590.13 as its share in the adjusted contract cost in the amount
of P854,851.51. MC Engineering refused to pay Gerent.
21 Mar 85: Gerent filed the complaint against MC Engineering.
28 Mar: Trial court issued the corresponding writ of preliminary
attachment upon the filing by Gerent of a P632,590.13 bond issued
by Stronghold.
24 Apr: MC Engineering moved to quash the writ on the ground that
it was improperly issued. Denied. On appeal, writ was granted.
13 Jul 87: Trial court ordered the return of MC Engineerings
properties that deputy sheriff Florendo attached and seized. Sheriff
reported to the court that he never seized a single property of MC
Engineering but merely conducted a "paper levy".
5 Jan 88: MC Engineering filed an application against the
attachment bond to recover damages it suffered due to the wrongful
issuance of the writ of attachment. Stronghold opposed. Court ruled
against Gerent and Stronghold and ordered them to pay P70k moral
damages, P30k exemplary damages, P50k attorneys fees.
ISSUE: WON MC Engineering is entitled to moral and exemplary
damages due to the wrongful issuance of the writ of preliminary
attachment
No. CA found that the trial court erred in awarding moral and
exemplary damages to MC Engineering. The mere fact that a complaint
is dismissed for lack of legal basis will not justify an award of moral
damages to the prevailing party. Even the dismissal of a "clearly

unfounded civil action or proceeding" will not entitle the winning
party to moral damages. For moral damages to be awarded, the
case must fall within the instances enumerated in Article 2219, or
under Article 2220, of the Civil Code. Moreover, in the absence of fraud,
malice, wanton recklessness or oppressiveness, exemplary damages
cannot be awarded.
CAs Decision: In the instant suit, MC Engineering failed to establish
bad faith and malice against Gerent when it sought to attach the
formers properties. The lower court itself in its decision did not make
any express pronouncement as to the existence of malice and bad faith
in the procurement of the writ of attachment. Instead, the trial court
concluded that as a result of such attachment, the defendants
business operation and credit standing have been prejudiced and
damaged and the defendant is entitled to recover moral and
exemplary damages by reason of the irregular issuance of the writ of
attachment. Such conclusions do not immediately warrant the award
of moral damages. It is true that the attachment was wrongful. But in
the absence of proof of bad faith or malice, Gerents application cannot
be said to be harassing or oppressing but merely an act done to assert
and protect a legal right.
The grant of exemplary damages is likewise improper. Since no
moral damages is due to appellee and it appearing that no actual
damages was awarded by the lower court, the grant of exemplary
damages has no leg on which to stand (Art. 2234, Civil Code).
If at all, the wrongful issuance of the writ of attachment merely
resulted in actual damages to MC Engineering. But such is not
automatically awarded for it is subject to proof. MC Engineerings claim
that it lost major contracts after a credit investigation revealed that its
accounts were garnished is a bare allegation not merely unsupported
by solid evidence but is also speculative. The alleged $35,000
remittance refused by the Hongkong and Shanghai Bank does not
inspire belief for failure of MC Engineering to produce documentary
proof to buttress its claim.
It is important to note that despite MC Engineerings posturing that
it incurred expenses prior to the cancellation of its contract, thus
entitling it to the whole adjustment price, the records are bereft of
proof showing substantial amounts expended by MC Engineering. To
justify its entitlement to the whole amount, it could have presented
receipts reflecting purchases of materials, drawing plans of
engineering designs, detailed estimates of electrical and mechanical
works and testimonies of engineers allegedly mobilized to start the
planning. As it is, the most that MC Engineering could produce were 3
purchase invoices totaling P110k.
Thus, Gerent was merely ordered to pay P21,250 as attorneys fees.
DM Wenceslao vs. Readycon (2004)
Wenceslao had a contract with the Public Estates Authority for the
improvement of the main expressway in the R-1 Toll Project along the
Coastal Road in Paraaque City.
16 Apr 91: To fulfill its obligations to the PEA, Wenceslao entered
into a contract with Readycon. The latter agreed to sell to Wenceslao
asphalt materials valued at P1,178,308.75. Under the contract,
Wenceslao was bound to pay Readycon a 20% downpayment or
P235,661.75 upon delivery of the materials contracted for. The
balance of the contract price, amounting to P942,647, was to be paid
within 15 days thereof. It was further stipulated by the parties that
Readycon was to furnish, deliver, lay, roll the asphalt, and if necessary,
make the needed corrections on a prepared base at the jobsite.
22 Apr: Readycon delivered the assorted asphalt materials worth
P1,150,531.75. Accordingly, Wenceslao paid the downpayment of
P235,661.75 to Readycon. Thereafter, Readycon performed its
obligation to lay and roll the asphalt materials on the jobsite.
15 days after performance of work, Readycon demanded that
Wenceslao pay the balance. Wenceslao ignored the demand.
19 Jul: Readycon filed a complaint for collection of sum of money
and damages with prayer for writ of preliminary attachment against
Wenceslao. It demanded payment of P1,014,110.45 with P914,870.75
as the balance of contract price, as well as payment of P99,239.70,
representing another unpaid account.
As Readycon timely posted the required bond of P1.150M, its
application for the writ of preliminary attachment was granted.
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5 Sep 91: RTC Sheriff attached certain assets of Wenceslao,
particularly, the following heavy equipment: One (1) asphalt
paver, one (1) bulldozer, one (1) dozer and one (1) grader.
16 Sep: Wenceslao moved for the release of the attached equipment
and posted its counter-bond. TC granted the motion and directed the
RTC Sheriff to return the attached equipment.
25 Sep: Sheriff released the attached heavy machineries to
Wenceslao.
Wenceslao, by way of counterclaim, prayed for the payment of
damages caused by the filing of Readycons complaint and the
issuance of the writ of attachment despite lack of cause.
26 Dec 94: RTC rendered judgment, ordering Wenceslao to pay
Readycon the amount of P1,014,110.45 with interest and P35k
attorneys fees and expenses of litigation. Wenceslaos counterclaim
was dismissed for lack of merit.
Wenceslao appealed. CA affirmed RTC. CA ruled that malice and bad
faith in obtaining a writ of attachment must be proved before a claim
for damages on account of wrongful attachment will prosper. However,
CA did not find malice or bad faith to the filing of the complaint and
the obtaining of the writ by Readycon.
Wenceslaos contention: Lazatin case applies because the wrongful
attachment of Wenceslaos equipment resulted in a paralysis of its
operations, causing it to sustain a loss of P100k per day in terms of
accomplishment of work. Since the attachment lasted 19 days it
suffered a total loss of P1.9M. Aside from that, it had to spend P50k
on the pullout of the equipment and another P100k to repair and
restore them to their former working condition.
Readycons contention: Inasmuch as a preliminary attachment is
an available ancillary remedy under the rules, a penalty cannot be
meted out for the enforcement of a right, such as in this case when it
sought such relief. It stresses that the writ was legally issued by the
RTC, upon a finding that Readycon sought the relief without malice or
bad faith. Furthermore, Wenceslao failed to show concrete and
credible proof of the damages it suffered. The issuance of a writ and
its enforcement entail a rigorous process where the court found that it
was not attended by malice or bad faith.
ISSUE: WON Readycon is liable to Wenceslao for damages caused by
the issuance and enforcement of the writ of preliminary attachment
No. It is to be stressed that the posting of a counter-bond is not
tantamount to a waiver of the right to damages arising from a wrongful
attachment.
It also stressed that bad faith or malice must first be proven as a
condition sine qua non to the award of damages. Plainly, we laid no
hard and fast rule that bad faith or malice must be proved to recover
any form of damages. However, the mere existence of malice and bad
faith would not per se warrant the award of actual or compensatory
damages. To grant such damages, sufficient proof thereon is required.
Wenceslao is not entitled to an award of actual or compensatory
damages. Both RTC and CA held that the complaint had merit. Stated
differently, the two courts found Readycon entitled to a writ of
preliminary attachment as a provisional remedy by which the property
of the defendant is taken into custody of the law as a security for the
satisfaction of any judgment which the plaintiff may recover.
In this case, both the RTC and CA found no reason to rule that
Readycon was not entitled to issuance of the writ. Neither do we find
now that the writ is improper or illegal. If Wenceslao suffered damages
as a result, it is merely because it did not heed the demand letter of
Readycon in the first place. Wenceslao could have averted such
damage if it immediately filed a counter-bond or a deposit in order to
lift the writ at once. It did not, and must bear its own loss, if any, on
that account.
Yu vs. Ngo Yet Te (2007)
Sps. Yu purchased from Ngo Yet Te bars of detergent soap worth
P594,240, and issued to the latter 3 postdated checks as payment of
the purchase price. When Te presented the checks at maturity for
encashment, said checks were returned dishonored and stamped
"Account Closed".
Te demanded payment from Sps. Yu but the latter did not heed her
demands. Te filed a complaint for Collection of Sum of Money and
Damages with Prayer for Preliminary Attachment.

In support of her prayer for preliminary attachment, Te
attached to her Complaint an Affidavit executed by Charry Sy, her
son, that Sps. Yu were guilty of fraud in entering into the purchase
agreement for they never intended to pay the contract price, and that,
based on reliable information, they were about to move or dispose of
their properties to defraud their creditors.
Upon Tes posting of an attachment bond, the RTC issued an Order
of Attachment/Levy dated March 29, 1993 on the basis of which
Sheriff Alimurung levied and attached Sps. Yus properties in Cebu City
consisting of one parcel of land, Lot 11, and four units of motor vehicle,
specifically, a Toyota Ford Fierra, a jeep, a Canter delivery van, and a
passenger bus.
21 Apr 93: Sps. Yu filed an answer with counterclaim for damages
from the wrongful attachment of their properties. On the same date,
they filed an Urgent Motion to Dissolve Writ of Preliminary Attachment.
They also filed a Claim Against Surety Bond in which they demanded
payment from Visayan Surety, the surety which issued the attachment
bond, of the sum of P594,240, representing the damages they
allegedly sustained as a consequence of the wrongful attachment of
their properties.
RTC issued an order, discharging from attachment the Toyota Ford
Fierra, jeep, and Canter delivery van on humanitarian grounds, but
maintaining custody of Lot No. 11 and the passenger bus. Sps. Yu filed
MR which the RTC denied. They filed for certiorari and CA lifted the
RTCs order of attachment on their remaining properties.
Te filed MR but denied. Te filed before the SC for review on certiorari
but was again denied.
However, the RTC, apparently not informed of the SC Decision,
rendered a decision in favor of Te and against Sps. Yu. The
counterclaim of Sps. Yu was not ruled upon.
When the case went to the CA, CA affirmed the RTC Decision but
made a ruling on the counterclaim, by declaring that Sps. Yu had failed
to adduce sufficient evidence of their entitlement to damages.
Sps. Yus contention: They are entitled to their counterclaim for
damages as a matter of right in view of the finality of the decision
finding Te to have wrongfully caused the attachment of their
properties. They argue that they should be awarded damages based
solely on the CA finding that the attachment was illegal for it already
suggests that Te acted with malice when she applied for attachment.
And even if we were to assume that Te did not act with malice, still she
should be held liable for the aggravation she inflicted when she applied
for attachment even when she was clearly not entitled to it.
ISSUE: WON the writ of attachment was procured in bad faith thus,
entitling the Sps. Yu to actual, moral, and exemplary damages
No. The rule is that where there is wrongful attachment, the
attachment-defendant may recover actual damages even without
proof that the attachment-plaintiff acted in bad faith in obtaining the
attachment. However, if it is alleged and established that the
attachment was not merely wrongful but also malicious, the
attachment-defendant may recover moral damages and exemplary
damages as well. Either way, the wrongfulness of the attachment does
not warrant the automatic award of damages to the attachment-
defendant; the latter must first discharge the burden of proving the
nature and extent of the loss or injury incurred by reason of the
wrongful attachment.
In fine, the CA finding that the attachment of the properties of
Spouses Yu was wrongful did not relieve Spouses Yu of the burden of
proving the factual basis of their counterclaim for damages.
To merit an award of actual damages arising from a wrongful
attachment, the attachment-defendant must prove, with the best
evidence obtainable, the fact of loss or injury suffered and the amount
thereof. Such loss or injury must be of the kind which is not only
capable of proof but must actually be proved with a reasonable degree
of certainty. As to its amount, the same must be measurable based on
specific facts, and not on guesswork or speculation. In particular, if the
claim for actual damages covers unrealized profits, the amount of
unrealized profits must be established and supported by independent
evidence of the mean income of the business undertaking interrupted
by the illegal seizure.
Sps. Yus contention: They met the foregoing standards. They point
to the lists of their daily net income from the operation of said
passenger bus based on used ticket stub issued to their passengers.
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They also cite unused ticket stubs as proof of income foregone
when the bus was wrongfully seized. They further cite the
unrebutted testimony of Josefa Yu that, in the day-to-day operation of
their passenger bus, they use up at least three ticket stubs and earn a
minimum daily income of P1.5k.
No merit. Sps. Yu failed to adduce sufficient evidence to support
their counterclaim for actual damages. In this case, the actual damages
cannot be determined. Josefa Yu testified on supposed lost profits
without clear and appreciable explanation. Despite her submission of
the used and unused ticket stubs, there was no evidence on the daily
net income, the routes plied by the bus and the average fares for each
route. The submitted basis is too speculative and conjectural. No
reports regarding the average actual profits and other evidence of
profitability necessary to prove the amount of actual damages were
presented.
Spouses Yus claim for unrealized income of P1,500 per day was
based on their computation of their average daily income for the year
1992. Said computation in turn is based on the value of three ticket
stubs sold over only five separate days in 1992. By no stretch of the
imagination can we consider ticket sales for five days sufficient
evidence of the average daily income of the passenger bus, much less
its mean income. Not even the unrebutted testimony of Josefa Yu can
add credence to such evidence for the testimony itself lacks
corroboration.
Besides, , it would appear that long before the passenger bus was
placed under preliminary attachment, the same had been previously
attached by the Sheriff of Mandaue City in connection with another
case and that it was placed in the Cebu Bonded Warehousing
Corporation, Cebu City. Thus, Sps. Yu cannot complain that they were
unreasonably deprived of the use of the passenger bus by reason of
the subsequent wrongful attachment issued. Nor can they also
attribute to the wrongful attachment their failure to earn income or
profit from the operation of the passenger bus.
Moreover, Sps. Yu. did not present evidence as to the damages they
suffered by reason of the wrongful attachment of Lot No. 11.
Nonetheless, Sps. Yu suffered some form of pecuniary loss when
their properties were wrongfully seized, although the amount thereof
cannot be definitively ascertained. Hence, an award of temperate or
moderate damages in the amount of P50k is in order.
Sps. Yus contention: Malice attended the issuance of the
attachment bond as shown by the fact that Te deliberately appended
to her application for preliminary attachment an Affidavit where Sy
perjured himself by stating that they had no intention to pay their
obligations even when he knew this to be untrue given that they had
always paid their obligations; and by accusing them of disposing of
their properties to defraud their creditors even when he knew this to
be false, considering that the location of said properties was known to
him.
No merit. As to moral and exemplary damages, to merit an award
thereof, it must be shown that the wrongful attachment was obtained
by the attachment plaintiff with malice or bad faith, such as by
appending a false affidavit to his application.
Based on the testimony of Josefa Yu, it is not difficult to understand
why Te concluded that Sps. Yu never intended to pay their obligation
for they had available funds in their bank but chose to transfer said
funds instead of cover the checks they issued. Josefa testified that they
were not able to fund the check. In fact, they closed their account with
the bank and transferred the account to another bank.
Thus, we cannot attribute malice nor bad faith to Te in applying for
the attachment writ. We cannot hold her liable for moral and
exemplary damages.
Moreover, as a rule, attorneys fees cannot be awarded when moral
and exemplary damages are not granted, the exception however is
when a party incurred expenses to lift a wrongfully issued writ of
attachment.
Without a doubt, Sps. Yu waged a protracted legal battle to fight off
the illegal attachment of their properties and pursue their claims for
damages. It is only just and equitable that they be awarded reasonable
attorneys fees in the amount of P30k.