Republic of the Philippines

SUPREME COURT

Manila

THIRD DIVISION

REPUBLIC OF THE G.R. No. 164800

PHILIPPINES,

Petitioner,

- versus -
Present:

ESTATE OF ALFONSO LIM, SR.,

ALFONSO LIM, JR., TEODORO YNARES-SANTIAGO,
Q. PENA, FERDINAND E.
MARCOS (now deceased and Chairperson,
Represented by his Estate/Heirs),
IMELDA R. MARCOS, TAGGAT CARPIO,*
INDUSTRIES, INC., PAMPLONA
VELASCO, JR.,
REDWOOD VENEER, INC.,
SOUTHERN PLYWOOD, NACHURA, and
WESTERN CAGAYAN LUMBER,
ACME PLYWOOD, VETERAN PERALTA, JJ.
WOODWORK, INC., SIERRA
MADRE WOOD INDUSTRIES,
INC., and TROPICAL
PHILIPPINES WOOD
INDUSTRIES, INC.,

Respondent.

* Additional member as per July 13, 2009 raffle.

 Promulgated:

July 22, 2009

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

DECISION

VELASCO, JR., J.:

In this Petition for Certiorari under Rule 65, the Republic of the Philippines
assails and seeks to nullify the Resolution1[1] dated March 28, 2003 of the
Sandiganbayan, as effectively reiterated in another resolution of June 18, 2004,
which denied petitioners motion for the issuance of a writ of preliminary
attachment in Civil Case No. 0030, entitled Republic v. Alfonso Lim, et al.,2[2] a
suit to recover ill-gotten or unexplained wealth.

The Facts

On October 2, 1991, in Civil Case No. 0030, the Republic, represented by

the Presidential Commission on Good Government (PCGG), filed before the
Sandiganbayan, Second Division, an Amended Complaint for reconveyance,
reversion, accounting, restitution, and damages. In it, the Republic averred that
Alfonso Lim, Sr. (now deceased) and Alfonso Lim, Jr., acting by themselves and/or

1[1] Penned by Associate Justice Godofredo L. Legaspi and concurred in by Associate

Justices Sandoval and Victorino.

2[2] Specifically, the amended complaint named as defendants, apart from Lim, Sr., the
following: Lim, Jr., Teodoro Q. Pena, Ferdinand E. Marcos (now deceased and represented by
his Estate/Heirs), Imelda R. Marcos, Taggat Industries, Inc., Pamplona Redwood Veneer, Inc.,
Southern Plywood, Western Cagayan Lumber, Acme Plywood, Veteran Woodwork, Inc., Sierra
Madre Wood Industries, Inc., and Tropical Philippines Wood Industries, Inc.
in unlawful collusion with Ferdinand E. Marcos and Imelda R. Marcos, and taking
undue advantage of their relationship, influence, and connection with the latter,
embarked upon devices and stratagems to unjustly enrich themselves at the
expense of the Republic and the Filipino people. Among other acts, the Lims were
alleged to have:

(a) actively solicited and obtained, upon the personal behest of [the
Marcoses], with the active collaboration of Teodoro Q. Pea, who was then
Minister of Natural Resources, additional timber concession in favor of
Taggat Industries, Inc. (TAGGAT) and Pamplona Redwood Veneer, Inc.
(PAMPLONA), corporations beneficially held and controlled by Alfonso
Lim and Alfonso Lim, Jr., which, in addition to other areas already
awarded to TAGGAT and PAMPLONA, resulted in their concession
holdings in excess of the allowable limits prescribed under Section 11,
Article XIV of the 1973 Constitution;

(b) actively solicited and obtained, upon the personal behest of [the
Marcoses], a management contract in favor of TAGGAT to operate and
manage the logging concessions of Veterans Woodwork, Inc.
(VETERANS), Sierra Madre Wood Industries, Inc. (SIERRA MADRE),
and Tropical Philippines Wood Industries, Inc. (TROPICAL) over and
above the objections of VETERANS;

(c) obtained a permit to cut down a certain number of Narra and Amaciga
trees, and, on the very same day, was likewise given an authorization by
Ferdinand E. Marcos to export the same, in violation of existing ban
against cutting and export of the aforesaid trees;
(d) obtained, in favor of PAMPLONA, a syndicated loan in the amount of
millions of US dollars from a consortium of international banks, secured
by the guarantee of the National Investment and Development Corporation
(NIDC), a subsidiary of the Philippine National Bank; and in view of the
default by PAMPLONA in the payment of its principal and/or interest
amortizations, the loan was converted, under the debt rescheduling
arrangement between Republic and its foreign creditor banks, into a public
sector obligation of Republic, to the grave and irreparable damage of the
Republic and the Filipino people.
 The Republic also alleged that the foregoing acts, singly or collectively,
constituted grave and gross abuse of official position and authority, flagrant breach
of public trust and fiduciary obligations, brazen abuse of right and power, unjust
enrichment, and violation of the Constitution and laws of the Republic to the grave
and irreparable damage to it and its citizens.

As its main prayer, the Republic asked for the reconveyance of all funds and
property impressed with constructive trust in favor of the Republic and the Filipino
people, as well as funds and other property acquired with [respondents] abuse of
right and power and through unjust enrichment, including but not limited to the
properties listed in Annex A of the Complaint together with the accruing income or
increment from date of acquisition until final judgment.

The properties listed in the said Annex A3[3] consistbesides the Lims assets
sequestered in accordance wth Executive Order Nos. 1 and 2, Series of 1986of the
assets and other properties of Lim, Sr., as follows:

1. a parcel of land with TCT No. 2981 (Lot A), located at Barrio Birinayan,
Talisay, Batangas;
2. a parcel of raw land with TCT No. 11750 (Lot 8-C-53) located at Muzon,
San Isidro, Angono, Rizal;
3. a parcel of raw land with TCT No. 11749 (Lot 8-C-51) located at Muzon,
San Isidro, Angono. Rizal;
4. a parcel of land with TCT No. 11728 (Lot 8-C-9) located at Muzon, San
Isidro, Angono, Rizal;
5. a parcel of land with TCT No. 11732 (Lot 8-C-17) located at Muzon, San
Isidro, Angono, Rizal;
6. a parcel of agricultural land with TCT No. 11728 (Lot 8-C-9) located at
Muzon, San Isidro, Angono, Rizal;
7. a parcel of agricultural land with TCT No. 11727 (Lot 8-C-7) located at
Muzon, San Isidro, Angono, Rizal;

3[3] Rollo, pp. 71-74.

8. a parcel of residential land with TCT No. 315 located at Maharlika,
Tagaytay City;
9. a parcel of agricultural/residential land with TCT No. 157570 located at
Berinayan, Laurel, Batangas;
10. a parcel of land and building in the name of SIERRA MADRE as
reported by Task Force SEAFRONT, Nov. 20, 1986;
11. a parcel of land and building in the name of PAMPLONA as reported by
Task Force SEAFRONT, November 20, 1986;
12. Contigous [13] parcels of land located at Claveria, Cagayan in the name
of TAGGAT Industries, Inc. as reported by Task Force SEAFRONT,
November 7, 1987:

xxxx

13. a parcel of agricultural land in the name of TAGGAT with OCT No. O-
1108 (S) Lot No. 1195;
14. a parcel of commercial land in the name of TAGGAT with TCT No.
78732 located at Romualdez Street, Paco, Manila;
15. buildings and improvements in the name of TAGGAT erected on OCT
No. 0-1104, 0-11017, 0-1109;
16. buildings in the name of TAGGAT erected on TCT No. 78732; Paco,
Manila.

[OTHER PROPERTIES]

A. Shares of Stocks in:

1. Taggat Industries, Inc. 1350, Romualdez Street, Paco, Manila

(TAGGAT)
2. Pamplona Redwood Veneer, 1350, Romualdez Street, Paco, Manila
Inc. (PAMPLONA)
3. Sierra Madre Wood 79 Doa Hemady corner 13th St., New
Industries, Inc. (SIERRA Manila, Quezon City
MADRE)
79 Doa Hemady corner 13th St., New
4. Veterans Woodworks, Inc.
(VETERANS) Manila, Quezon City
5. Southern 5th Floor Jardine Davies Bldg., 222
Plywood
Corporation (SPC) Sen. J. Puyat Avenue, Makati, Metro
Manila
6. Western Cagayan Lumber Jardine Davies Building, 222 Sen. J.
(WCL) Puyat Avenue, Makati, Metro Manila

B. Property, Plant and Equipment

xxxx
 C. Aircraft [2 units]

xxxx

D. Current Assets [as reported]

xxxx
E. Investments and Other Assets

1. Due from affiliated companies, TAGGAT, as reported

2. Investment in Stocks, TAGGAT, as reported
3. Deferred Charges and Other Assets, TAGGAT, as reported

F. Bank Accounts

1. PAMPLONA Accounts

a. The Consolidated Bank and Trust Co.

b. Equitable Banking Corporation

2. TAGGAT Acccounts

a. The Consolidated Bank and Trust Co,

b. Philippine National Bank

c. Equitable Banking Corporation

d. Philippine Banking Corporation

e. Allied Banking Corporation

G. Other

1. Frozen Bank Accounts and Other Assets of Alfonso Lim, Sr., Alfonso
Lim, Jr. and Lawrence Lim

Meanwhile, Lim, Sr. passed away. On June 22, 1998, his estate filed a
motion to lift the sequestration4[4] over certain real properties5[5] contending that

4[4] Id. at 75-77.

the PCGG impleaded him owing to his alleged association with former Pres.
Marcos. The estate would add, however, that Lim, Sr. secured title over almost all
of his real properties thus sequestered way back in 1948, long before the Marcoses
came to power.

To the motion to lift, the Republic interposed an opposition, alleging that the sequestered lots
and titles stand as security for the satisfaction of any judgment the Republic may obtain against
the estate of Lim, Sr., his family, or his group of companies.

By Resolution6[6] dated March 17, 2001, the Sandiganbayan lifted the

sequestration order in question on the strength of the following pertinent premises,
to wit:

The sequestration of some of the real properties of movant-defendant

[estate of Lim, Sr.] is a remedial measure resorted to in order to preserve these
properties along with others alleged to have taken illegally x x x, and in order to
prevent the same from disappearance, destruction, loss or dissipation and /or to
foil acts that may render moot and academic the efforts to recover the aforesaid
alleged ill-gotten wealth. However, the pertinent provisions of Executive Order
Nos. 1, 2 and 14 are explicit in saying that the properties that are supposed to be
sequestered are those x x x amassed during the regime of the deposed President
Ferdinand E. Marcos and not before or later thereto. x x x

In time, the Republic sought but was later denied reconsideration of the
sequestration-lifting resolution of the Sandiganbayan.7[7]

Meanwhile, after presenting its evidence in the main case, the Republic filed
its Formal Offer of Evidence dated October 8, 2001.8[8] On December 5, 2001, the

5[5] The Estate of Alfonso Sr. moved for the lifting of sequestration over lands covered
by TCT Nos. 11727, 11728, 11732, 11748, 11749, and 11750 issued on December 15, 1948 by
the Register of Deeds of Rizal, and TCT No. 315 issued on November 25, 1948 issued by
Register of Deeds of Tagaytay City in the name of Lim, Sr.

6[6] Rollo, pp. 98-103.

7[7] Id. at 104-108.

Sandiganbayan issued a terse order admitting all the documentary exhibits of the
Republic consisting of Exhibits A to G, inclusive of their submarkings.9[9]

The following incidents/events then transpired:

(1) Sometime in January 2002, the estate of Lim, Sr., Ruthie Lim, and two
others, as defendants a quo, filed a Demurrer to Evidence10[10] dated January 14,
2002, on the ground of either irrelevancy or immateriality of the Republics
evidence. As argued, the same evidence did not prove or disprove that the
demurring defendants, on their own or in concert with the Marcoses, amassed ill-
gotten wealth. Lim, Jr. later filed a Manifestation11[11] adopting the demurrer to
evidence of the estate of Lim, Sr., et al.

(2) On July 4, 2002, the Sandiganbayan denied the Republics motion for

reconsideration of the graft courts resolution lifting the sequestration order.12[12]

(3) In an obvious bid to counter the effects of the lifting of the sequestration,
the Republic, on September 9, 2002, filed a Motion for the Issuance of a Writ of
Preliminary Attachment13[13] against respondents in the amount of its claim. The
Republic alleged that respondent Lims were guilty of fraud in incurring various
legal obligations which the present action has been brought, by taking undue

8[8] Id. at 109-113.

9[9] Id. at 188.

10[10] Id. at 189-195.

11[11] Id. at 196-198.

12[12] Id. at 206-208.

13[13] Id. at 209-214.

advantage of their relationship, influence and connection with the [Marcoses] to
unjustly enriched themselves to the prejudice of the Republic.

Except for one, all the other respondents belonging to the Lim group filed
their respective comment or opposition to the Republics motion for a writ of
attachment.

(4) On March 28, 2003, the Sandiganbayan, stating that bare allegations of
the commission of fraud by respondents in incurring the aforesaid obligations are
not sufficient for the granting of the writ of preliminary attachment, denied, via a
Resolution,14[14] the corresponding motion.

In due time, the Republic interposed a motion seeking reconsideration of the

Sandiganbayans March 28, 2003 denial action.15[15]

(5) By Resolution dated July 17, 2003, the Sandiganbayan denied

respondents demurrer to evidence.16[16]

Forthwith, the estate of Lim, Sr., Taggat Industries, Inc. (TAGGAT), and
Pamplona Redwood Veneer, Inc. (PAMPLONA), followed later by Lim, Jr.,
respectfully moved for reconsideration of the July 17, 2003 Resolution.

(6) On June 18, 2004, the Sandiganbayan resolved to affirm the denial of the
respondents demurrer to evidence. It also denied in its March 28, 2003 resolution
the Republics motion for the issuance of a writ of preliminary attachment.17[17]

14[14] Id. at 35-41.

15[15] Id. at 42-43.

16[16] Id. at 230-233.

 Hence, this recourse is before us.

The Issues

The two interrelated issues petitioner Republic tenders boils down to:
whether the Sandiganbayan, in the light of the denial of respondents demurrer to
evidence, acted with grave abuse of discretion amounting to lack or excess of
jurisdiction in not considering that the evidence already on record support the
issuance of a writ or preliminary attachment.

The Republic contends that the pieces of evidence offered before and
admitted by the Sandiganbayan provide sufficient basis for the issuance of a writ of
preliminary attachment. Thus, the graft court, as the Republic argues, committed
grave abuse of discretion amounting to excess of jurisdiction in denying the writ of
preliminary injunction by not considering the evidence already on record and in
ruling contrary to its findings and conclusions when it denied respondents
demurrer to evidence.

Respondents, on the other hand, reiterate their position on the absence of

evidence of fraud, as required under Section 1(d), Rule 57 of the Rules of Court,
which would justify the issuance of the desired writ. In this regard, they
reproduced what the Sandiganbayan said in its March 28, 2003 resolution on the
matter of fraud, thus: These are general averments devoid of the particulars of
time, persons, etc., in support of the serious allegation that [respondents] are guilty
of fraud in incurring these alleged legal obligation. Bare allegations that

17[17] Id. at 44-51.

[respondents] have been guilty of fraud in incurring the aforesaid obligations are
not sufficient for the granting of the writ of attachment.18[18]

The Courts Ruling

An assiduous review of the antecedent facts and factual findings and

conclusions of the Sandiganbayan relative to the denial of demurrer to evidence
and the writ of preliminary injunction compels this Court to grant the instant
petition.

Nature of Preliminary Attachment

Attachment is an ancillary remedy applied for not for its own sake but to
enable the attaching party to realize upon relief sought and expected to be granted
in the main or principal action;19[19] it is a measure auxiliary or incidental to the
main action. As such, it is available during the pendency of the action which may
be resorted to by a litigant to preserve and protect certain rights and interests
therein pending rendition, and for purposes of the ultimate effects, of a final
judgment in the case. As a corollary proposition, an order granting an application
for a writ of preliminary attachment cannot, owing to the incidental or auxiliary
nature of such order, be the subject of an appeal independently of the main
action.20[20]

18[18] Id. at 39.

19[19] BAC Manufacturing and Sales Corporation v. Court of Appeals, G.R. No. 96784,
August 2, 1991, 200 SCRA 130, 139; citing Sievert v. CA, No. L-84034, December 22, 1988,
168 SCRA 692.

20[20] 1 Regalado, REMEDIAL LAW COMPENDIUM 606 (7th ed.).

 The instant case is one of those mentioned in Sec. 1, Rule 57 of the Rules,
specifically the sections paragraph d, wherein a writ of preliminary attachment
may be issued. It provides:

SECTION 1. Grounds upon which attachment may issue.A plaintiff or any

proper party may, at the commencement of the action or at any time thereafter,
have the property of the adverse party attached as security for the satisfaction of
any judgment that may be recovered in the following cases:

xxxx

(d) In an action against a party who has been guilty of fraud in contracting
the debt or incurring the obligation upon which the action is brought, or in
concealing or disposing of the property for the taking, detention or conversion of
which the action is brought;

For a writ of attachment to issue under the above-quoted rule, the applicant
must sufficiently show the factual circumstances of the alleged fraud.

Fraud may be defined as the voluntary execution of a wrongful act, or a

willful omission, knowing and intending the effects which naturally and
necessarily arise from such act or omission.21[21] In its general sense, fraud is
deemed to comprise anything calculated to deceive, including all acts and
omissions and concealment involving a breach of legal or equitable duty, trust, or
confidence justly reposed, resulting in damage to another, or by which an undue
and unconscientious advantage is taken of another.22[22] Fraud is also described
as embracing all multifarious means which human ingenuity can device, and which
are resorted to by one individual to secure an advantage over another by false

21[21] Legaspi Oil Co., Inc. v. Court of Appeals, G.R. No. 96505, July 1, 1993, 224
SCRA 213, 216.

22[22] Garcia v. People, G. R. No. 144785, September 11, 2003, 410 SCRA 582, 589;
Commissioner of Internal Revenue v. CA, G.R. No. 119322, June 4, 1996, 257 SCRA 200.
suggestions or by suppression of truth and includes all surprise, trick, cunning,
dissembling, and any unfair way by which another is cheated.23[23] Fraudulent,
on the other hand, connotes intentionally wrongful, dishonest, or unfair.24[24]

In the case at bar, the Republic has, to us, sufficiently discharged the burden
of demonstrating the commission of fraud committed by respondents Lims as a
condition sine qua non for the issuance of a writ of preliminary attachment. The
main supporting proving document is the Republics Exhibit B which the
Sandiganbayan unqualifiedly admitted in evidence. And the fraud or fraudulent
scheme principally came in the form of Lim, Sr. holding and/or operating logging
concessions which far exceeded the allowable area prescribed under the 1973
Constitution.

A cursory evaluation of the Republics Exhibit Bthe Decision dated

November 20, 1986 of then Minister Ernesto M. Maceda of the Ministry Natural
Resources (MNR)25[25] in an unnumbered MNR case entitled IN RE:
VIOLATIONS OF VETERANS WOODWORKS, INC. AND ALFONSO LIM, SR.
AND TAGGAT INDUSTRIES, INC., canceling the logging concessions26[26]
enjoyed by the Lim Groupyields the following undisputed relevant data:

23[23] People v. Balasa, G.R. No. 106357, September 3, 1998, 295 SCRA 49, 71-72; citing Alleje v. CA, G.R.
No. 107152, January 25, 1995, 240 SCRA 495.

24[24] Clapp, DICTIONARY OF THE LAW 194.

25[25] Now the Department of Environment and Natural Resources.

26[26] In part the cancellation decision reads: All the timber concessions of Alfonso Lim, Sr., namely: TLA
No. 071 (Taggat Industries, Inc.), TLA No. 074 (Pamplona Redwood Veneer Co., Inc.); TLA No. 321 (Southern
Plywood Corp.); and TLA No. 073 (Western Cagayan Lumber, Inc.) and TLA No. 075 (Acme Plywood & Veneer Co.,
Inc.) are hereby ordered REVOKED/CANCELLED, and the areas respectively covered thereby be reverted to the
mass of public forest. The District Foresters or the WIDA area Managers concerned, as the case may be, are hereby
 (1) Lim, Sr., through the seven (7) respondent corporations, had been
holding/operating/managing several timber concessions with a total area of
533,880 hectares, more or less, which was far in excess of the 100,000 hectares
allowed in the 1973 Constitution;27[27]

(2) Since a wide expanse of forest lands were in between the different Lim
concessions, the Lims had effectively access to a total of 633,880 hectares of
forests; and

(3) Other violation of the constitutional prohibition applies also to three (3)
corporations (Acme Plywood Co., Inc., Western Cagayan Lumber Co., Inc., and
Southern Plywood Corporation).

As is made abundantly clear in the aforesaid Maceda decision, the MNR

revoked or canceled the concessions or timber license agreements (TLAs) of Lim,
Sr. on the principal ground that the timber award was made in utter violation of the
Constitutional limitations on the granting of logging concessions.28[28] The same
decision also indicated that Lim, Sr.s influence, power and strong connection with
the past [i.e., Marcos] dispensation29[29] explained his receipt of special

directed to conduct inventories of the logs cut prior to these cancellation orders and to cause the removal of
logging equipments from the production areas of the licensee within thirty (30) days from date hereof.

27[27] Art. XIV, Sec. 11 of the 1973 Constitution provides that [N]o private corporation
or association may hold by lease, concession, license or permit, timber or forest lands and other
timber or forest resources in excess of one hundred hectares.

28[28] The canceled TLAs were those pertaining to TAGGAT, PAMPLONA, Southern
Plywood Corp., Western Cagayan Lumber, Inc., and Acme Plywood & Veneer Co., Inc.

29[29] Rollo, p. 163.

privileges and concessions unfettered by constitutional constraints. So influential
was Lim, Sr. that he and TAGGAT and sister companies received certain timber-
related benefits without the knowledge, let alone approval, of MNR.30[30] Lim,
Sr. doubtless utilized to the hilt his closeness to the Marcoses to amass what may
prima facie be considered as illegal wealth.

Scheme to Circumvent Constitutional Prohibition

Sec. 11 of Article XIV of the governing 1973 Constitution states that no private
corporation or association may hold by lease, concession, license, or permit,
timber or forest lands and other timber or forest resources in excess of one
hundred thousand hectares. Complementing this provision was Chapter I, No.
3(e) of Forestry Administrative Order (FAO) No. 11 prohibiting any individual,
corporation, partnership, or association from acquiring a timber license or license
agreement covering an area in excess of 100,000 hectares. Likewise, Chapter I, No.
3(d) of FAO No. 11 states that no individual corporation, partnership, or
association who is already a holder of an ordinary timber license or license
agreement nor any member of the family, incorporator, director, stockholder, or
member of such individual, corporation, partnership, or association shall be
allowed to acquire a new timber license or license agreement or any interest or
participation in it.

The constitutional and statutory limitations on allowable area leases and

concessions were obviously meant to prevent the concentration of large tracts of
public land in the hands of a single individual. But as the Office of the Solicitor
General aptly observed, citing the Maceda decision: For one Filipino out of 55
million to own, operate or in one form [or] another be financially interested in
more than 600,000 hectares out of a total forest land of 14 million hectares is
certainly unfair, unacceptable and unconstitutional by any standard.31[31]

Lim, Sr., as earlier stated, had been holding/operating/managing several timber

concessions through the seven (7) logging companies for an aggregate area of 533,880 hectares,
as follows:

30[30] Id. at 153.

31[31] Id. at 18-19.

 Name of Corporation TLA No. Concession Area
(1) Taggat Industries, Inc. 071 107,845 has.
(2) Pamplona Redwood Veneer Co., Inc. 074 118,315 has
(3) Southern Plywood Corp. (one share) 321 71,300 has.
(4) Western Cagayan Lumber Co., Inc. (one share) 073 69,675 has.
(5) Acme Plywood & Veneer Co,, Inc. (one share) 075 84,525 has.
(6) Veterans Woodworks, Inc. 63,179 has.
(7) Sierra Madre Wood Ind., Inc. 345 19,050 has.
TOTAL 533,880 has.

The Maceda decision stressed that Lim, Sr. had one share each in the three
corporations, namely: (1) Acme Plywood and Veneer Co., Inc. (ACME); (2)
Western Cagayan Lumber Co., Inc. (WESTERN); and (3) Southern Plywood
Corporation (SPC). These corporations, the decision added, likewise violated the
Constitution considering that Lim, Sr. had control over them as owner-founder. To
cover the constitutional violation, Lim, Jr. was used as a front and made to appear
as President of the mentioned three corporations.32[32]

There can be no quibbling that MNR correctly revoked/canceled all the

timber concessions of Lim, Sr., namely: TLA No. 071 (TAGGAT), TLA No. 074
(PAMPLONA), TLA No. 321 (SPC), TLA No. 073 (WESTERN), and TLA No.
075 (ACME). As it were, the TLAs of TAGGAT and PAMPLONA each exceeded
the 100,000-hectare threshold prescribed by the 1973 Constitution. Initially, the
execution and granting of those timber license agreements were already tainted
with fraud. The Lims resorted to their close connection with the Marcoses for the
approval of the timber license agreements and the Lims were given access
effectively to a total 633,880 hectares in violation of the 1973 Constitution and
FAO No. 11.

32[32] Id. at 161.

 Indeed, the Lims availment and enjoyment of logging concessions grossly in
excess of constitutional limits amount to a voluntary execution of a wrongful act, if
not a serious breach of legal duty. By their acts, the Lims veritably defrauded and
cheated the Filipino peoplethe ultimate beneficiaries of the countrys natural
resources.

Denial of Demurrer to Evidence Indicative

of the Commission of Fraudulent Acts

The evidence that clearly supports the issuance of a writ of preliminary

attachment sought by Republic is already on record before the Sandiganbayan. As
a matter of fact, the anti-graft court already ruled and considered that the evidence
so far presented by the Republic had been sufficient to support a finding that
respondents had committed illegal and fraudulent acts against the Republic and the
Filipino people. This was the tenor of the Sandiganbayans resolution denying the
respondents demurrer to evidence.

A demurrer to evidence is defined as an objection by one of the parties in an

action, to the effect that the evidence which his adversary produced is insufficient
in point of law, whether true or not, to make out a case or sustain the issue.33[33]
The party demurring challenges the sufficiency of the whole evidence to sustain a
verdict.34[34] In passing upon the sufficiency of the evidence raised in a
demurrer, the court is merely required to ascertain whether there is competent or

33[33] Rivera v. People, G.R. No. 163996, June 9, 2005, 460 SCRA 85, 91; citing Gutib
v. Court of Appeals, G.R. No. 131209, August 13, 1999, 312 SCRA 365, 371.

34[34] Id.; citing Ong v. People, G.R. No. 140904, October 9, 2000, 342 SCRA 372, 383.
sufficient proof to sustain the indictment or to support a verdict of guilt.35[35] And
when the court denies the demurrer, the defendant has to present countervailing
evidence against the evidence adduced by the plaintiff.36[36]

In the case at bar, when the Sandiganbayan denied respondents demurrer to

evidence, it in effect ruled that the evidence presented by the prosecution is, absent
a countervailing evidence, prima facie sufficient to support an adverse verdict
against them for amassing illegal wealth. The Sandiganbayan, in its underlying
resolution of July 17, 2003 denying the demurrer, wrote:

The Demurrer is denied.

To support the charges, plaintiff introduced, among others, Exhibit B, a

decision dated November 20, 1986 by then DENR Secretary Ernesto Maceda
which, after hearing, revoked or cancelled the respective Timber License
Agreements (TLAs) of defendants Alfonso Lim, Sr., Taggat Industries, Inc.,
Pamplona Redwood Veneer, [etc.] after an investigation found that the same
entities held timber concessions in excess of what was allowed by the
Constitution. The same decision likewise made certain findings of facts that x x x
Lim, Sr. enjoyed close association with former President Ferdinand E. Marcos as
a consequence of which the latter granted x x x Lim, Sr. special privileges and
concessions in gross violation of the Constitution. In addition, Exhibit E indicates
that x x x Taggat Industries, chiefly owned by defendant Lim Sr., using his close
association with then President Marcos, acquired and controlled three (3) other
logging firms, namely Veteran Woodworks, Inc., Tropical Philippine Wood
Industries, Inc., and Sierra Madre Wood Industries, Inc. x x x. This resulted to the
acquisition of defendant Lim Sr. of excessive number of timber concessions.

Given the circumstances, this Court cannot simply brush aside the foregoing considering that
what the defendants-movants proffer are mere blanket denial of the charges. In demurrer to
evidence, the party demurring challenges the sufficiency of the whole evidence to sustain a
verdict. The court, in passing upon the sufficiency of the evidence raised in a demurrer, is merely
required to ascertain whether there is competent or sufficient evidence to sustain the indictment.

35[35] Id.; citing Choa v. Choa, G.R. No. 143376, November 26, 2002, 392 SCRA 641,
648.

36[36] RULES OF COURT, Rule 33, Section 1.

Applying the said ruling in the instant case, there exists prima facie evidence on record x x x to
support or sustain the charges against the defendants-movants. There is therefore a further need
on the part of the defendants-movants to submit the proof to the contrary other than their mere
simple disclaimer.37[37]

Sandiganbayan Did Not Consider

Evidence in Denying Attachment

Given the foregoing pronouncement from the Sandiganbayan, the Court is

completely at a loss to understand the graft courts denial of the Republics plea for
the ancillary remedy of preliminary attachment. The wrongful actthe fraud
perpetuated by Lim Sr. and/or his corporations on the Republicis written over or
easily deducible from the adverted Maceda decision and Exhibit E. While fraud
cannot be presumed, it need not be proved by direct evidence and it can well be
inferred from attendant circumstances.38[38] Withal, we cannot but agree with the
Republics contention that the Sandiganbayans denial of its motion for a writ of
preliminary attachment constitutes grave and patent abuse of discretion amounting
to lack or excess of jurisdiction.

A scrutiny of the above-quoted July 17, 2003 Resolution readily shows that
the Sandiganbayan indeed considered the evidence presented and offered by the
Republic, specifically Exhibits B and E which convincingly show the finding that
respondents acts were tainted with fraud in the acquisition of the logging
concessions due to their close association with the Marcoses.

It is incongruous, therefore, for the Sandiganbayan to deny the writ of

preliminary attachment when the pieces of evidence on record which it used and

37[37] Rollo, pp. 232-233.

38[38] Godinez v. Alano, A.M. No. RTJ-98-1409, February 18, 1999, 303 SCRA 259,
271.
based its findings and conclusions in denying the demurrer to evidence were the
same ones which demonstrate the propriety of the writ of preliminary attachment.
Clearly, the Republic has complied with and satisfied the legal obligation to show
the specific acts constitutive of the alleged fraud committed by respondents. The
denial of the prayed writ, thus, evidently constitutes grave abuse of discretion on
the part of Sandiganbayan. After all, attachment is a mere provisional remedy to
ensure the safety and preservation of the thing attached until the plaintiff can, by
appropriate proceedings, obtain a judgment and have such property applied to its
satisfaction.39[39] Indeed, the properties of respondents sought to be subjected to
the ancillary writ of preliminary attachment are not only in danger of being lost but
should be placed under custodia legis to answer for any liabilities that may be
adjudged against them in the instant case.

WHEREFORE, the Sandiganbayan Resolutions dated March 28, 2003 and

June 18, 2004 are hereby REVERSED and SET ASIDE. Accordingly, the 2nd
Division of Sandiganbayan is hereby DIRECTED to ISSUE the Writ of
Preliminary Attachment prayed for by the Republic. No costs.

SO ORDERED.
 FIRST DIVISION

FOUNDATION SPECIALISTS, G.R. No. 170674

INC., Petitioner,

Present:PUNO, C.J., Chairperson, CARPIO,

-versus- CORONA, LEONARDO-DE CASTRO and BERSAMIN, JJ.

BETONVAL READY CONCRETE,

INC. and STRONGHOLD

INSURANCE CO., INC.,

Respondents.

Promulgated: August 24, 2009

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

DECISION

CORONA, J.:

On separate dates, petitioner Foundation Specialists, Inc. (FSI) and respondent Betonval Ready

Concrete, Inc. (Betonval) executed three contracts40[1] for the delivery of ready mixed concrete by

Betonval to FSI. The basic stipulations were: (a) for FSI to supply the cement to be made into ready

40[1] Individually denominated as "Contract Proposals and Agreements" dated July 23, 1991,
September 18, 1991 and March 26, 1992, respectively. Rollo, pp. 86-91.
mixed concrete; (b) for FSI to pay Betonval within seven days after presentation of the invoices plus 30%

interest p.a. in case of overdue payments and (c) a credit limit of P600,000 for FSI.

Betonval delivered the ready mixed concrete pursuant to the contracts but FSI failed to pay its

outstanding balances starting January 1992. As an accommodation to FSI, Betonval extended the seven

day credit period to 45 days.41[2]

On September 1, 1992, Betonval demanded from FSI its balance of P2,349,460.42[3] Betonval informed

FSI that further defaults would leave it no other choice but to impose the stipulated interest for late

payments and take appropriate legal action to protect its interest.43[4] While maintaining that it was

still verifying the correctness of Betonvals claims, FSI sent Betonval a proposed schedule of payments

devised with a liability for late payments fixed at 24% p.a.44[5]

41[2] Records, Vol. I, pp. 143-145. The extension of the credit term from seven days to 45 days
was made in a letter dated March 6, 1992. Attached to this letter was a detailed summary
of payments based on invoices not paid or covered by postdated checks issued by FSI for
various deliveries made or to be made by Betonval between January 14, 1992 to August
18, 1992. The 45-day credit extension was likewise reflected in the various invoices
dated between March 31, 1992 to September 3, 1992, all duly received by FSI. Id., pp.
16-66.

42[3] Records, Vol. I, pp. 68-69. This amount included the previously unpaid amount and new
billings.

43[4] Rollo, p. 203.

44[5] Id., pp. 72-73. FSIs proposed schedule of payments had reference to the statement of
account of Betonval. Of particular note in this statement of account is Betonvals
computation of interest at 24% computed from due date of the invoices, to which FSI
acceded per its September 3, 1992 letter.
Thereafter, FSI paid Betonval according to the terms of its proposed schedule of payments. It was able

to reduce its debt to P1,114,203.34 as of July 1993, inclusive of the 24% annual interest computed from

the due date of the invoices.45[6] Nevertheless, it failed to fully settle its obligation.

Betonval thereafter filed an action for sum of money and damages in the Regional Trial Court

(RTC).46[7] It also applied for the issuance of a writ of preliminary attachment alleging that FSI

employed fraud when it contracted with Betonval and that it was disposing of its assets in fraud of its

creditors.

FSI denied Betonvals allegations and moved for the dismissal of the complaint. The amount

claimed was allegedly not due and demandable because they were still reconciling their respective

records. FSI also filed a counterclaim and prayed for actual damages, alleging that its other projects

were delayed when Betonval attached its properties and garnished its bank accounts. It likewise prayed

for moral and exemplary damages and attorneys fees.

The RTC issued a writ of preliminary attachment and approved the P500,000 bond of respondent

Stronghold Insurance Co., Inc. (Stronghold). FSI filed a counterbond of P500,000 thereby discharging the

writ of preliminary attachment, except with respect to FSIs excavator, crawler crane and Isuzu pick-up

truck, which remained in custodia legis.47[8] An additional counterbond of P350,000 lifted the

garnishment of FSIs receivables from the Department of Public Works and Highways.

45[6] Id., p. 15.

46[7] Makati City, Branch 125. The action was docketed as Civil Case No. 93-2430. Id., p. 59.

47[8] Id., p. 63.

 On January 29, 1999, the RTC ruled for Betonval.48[9] However, it awarded P200,000

compensatory damages to FSI on the ground that the attachment of its properties was improper.49[10]

FSI and Stronghold separately filed motions for reconsideration while Betonval filed a motion for

clarification and reconsideration. In an order dated May 19, 1999, the RTC denied the motions for

48[9] Penned by then Acting Presiding Judge Oscar B. Pimentel. Id., pp. 214-221.

49[10] Id., pp. 214-221. The dispositive portion of the January 29, 1999 decision stated:

WHEREFORE, premises considered, judgment is hereby rendered, ordering the defendant to pay

plaintiff the sum of P1,114,203.34, plus legal interest at the rate of 12% per annum from date of

judicial demand or filing of this complaint until the full amount is paid; and, the sum of

P50,000.00 as and by way of reasonable attorneys fees, and the costs.

On defendants counterclaim, the award of moral and exemplary damages as prayed for is denied

for lack of merit.

However, plaintiff and surety are held jointly and severally liable on their attachment bond for

actual damages to defendant and are hereby ordered to pay defendant P200,000.00 as

reasonable compensatory damages arising from the improper attachment caused by the

negligence of plaintiff.

The writ of attachment having been improperly issued, is hereby ordered dissolved and the

counterbond of defendant discharged.

SO ORDERED.
reconsideration of Betonval and Stronghold. However, the January 29, 1999 decision was modified in

that the award of actual or compensatory damages to FSI was increased to P1.5 million.50[11]

50[11] Id., 235. The modification read:

WHEREFORE, premises considered, finding merit on the motion of defendant the same is hereby

given DUE COURSE. Consequently, the dispositive portion of the decision of this Court dated 29

January 1999, is hereby amended to read as:

WHEREFORE, premises considered, judgment is hereby rendered, ordering the

defendant to pay plaintiff the sum of P1,114,203.34, plus legal interest at the rate of

12% per annum from date of judicial demand or filing of this complaint until the full

amount is paid; and, the sum of P50,000.00 as and by way of reasonable attorneys fees,

and costs.

On defendants counterclaim, the award of moral and exemplary damages as prayed for

is denied for lack of merit.

However, plaintiff is hereby held liable on its attachment bond for actual damages to

defendant and is hereby ordered to pay said defendant a reasonable amount of

P1,500,000.00 as actual and compensatory damages arising from the improper

attachment caused by the negligence of plaintiff. As to the surety, Stronghold Insurance

Company, Inc. the same is hereby held jointly and severally liable with the plaintiff for

the aforesaid liability and is ordered to pay the defendant in the amount of P500,000.00

as covered by the attachment bond.

All parties appealed to the Court of Appeals (CA). However, only the respective appeals of Betonval and

Stronghold were given due course because FSIs appeal was dismissed for nonpayment of the appellate

docket fees.51[12]

In its appeal, Betonval assailed the award of actual damages as well as the imposition of legal interest at

only 12%, instead of 24% as agreed on. Stronghold, on the other hand, averred that the attachment was

proper.

In its decision52[13] dated January 20, 2005, the CA upheld the May 19, 1999 RTC order with

modification. The CA held that FSI should pay Betonval the value of unpaid ready mixed concrete at 24%

p.a. interest plus legal interest at 12%. The CA, however, reduced the award to FSI of actual and

compensatory damages, thus:

WHEREFORE, premises considered, the appealed Order dated May 19, 1999 is

MODIFIED as follows: (a) to increase the rate of interest imposable on the

P1,114,203.34 awarded to appellant Betonval from 12% to 24% per annum, with the

The writ of attachment having been improperly issued, is hereby ordered dissolved and

the counterbond of defendant discharged.

The motion for reconsideration filed by the plaintiff as well as that of Stronghold

Insurance Company, Inc. is hereby DENIED for lack of merit.

SO ORDERED. (emphasis in the original)

51[12] Id., p. 67.

52[13] Penned by Associate Justice Rebecca de Guia-Salvador and concurred in by Associate

Justices Portia Alio-Hormachuelos and Aurora Santiago-Lagman (now retired) of the
Seventh Division of the Court of Appeals. Id., pp. 59-78.
 aggregate sum to further earn an annual interest rate of 12% from the finality of this

decision, until full payment; (b) to reduce the award of actual damages in favor of

appellee from P1,500,000.00 to P200,000.00; (c) to hold both appellants jointly and

severally liable to pay said amount; and (d) to hold appellant Betonval liable for

whatever appellant surety may be held liable under the attachment bond. The rest is

AFFIRMED in toto.

FSIs motion for reconsideration was denied.53[14]

In this petition for review on certiorari,54[15] FSI prays for the following:

(a) decrease the rate of imposable interest on the P1,114,203.34 award to Betonval, from

12% to 6% p.a. from date of judicial demand or filing of the complaint until the full

amount is paid;

(b) deduct [from the award to Betonval] the cost or value of unused cement based on [its]

invoice stating 1,307.45 bags computed at the prevailing price;

(c) award actual and compensatory damages at P3,242,771.29;

(d) hold Betonval and Stronghold jointly and severally liable to pay such actual and

compensatory damages;

(e) hold Betonval liable for whatever Stronghold may be held liable under the attachment

bond and

(f) affirm in toto the rest of the order.55[16]

53[14] Id., pp. 80-84.

54[15] Under Rule 45 of the Rules of Court.

The petition has no merit.

BETONVALS COMPLAINT

WAS NOT PREMATURE

FSI argues that Betonvals complaint was prematurely filed. There was allegedly a need to

reconcile accounts, particularly with respect to the value of the unused cement supplied by FSI, totaling

2,801.2 bags56[17] which supposedly should have been deducted from FSIs outstanding obligation.

FSIs repeated requests for reconciliation of accounts were allegedly not heeded by Betonvals

representatives.

FSIs contention is untenable. It neither alleged any discrepancies in nor objected to the

accounts within a reasonable time.57[18] As held by the RTC, FSI was deemed to have admitted the

truth and correctness of the entries in the invoices since:

[N]o attempts were made to reconcile [FSIs] own record with [Betonval] until after the

filing of the complaint, inspite of claims in [FSIs] Answer about its significance, and

despite having had plenty of opportunity to do so from the time of receipt of the

invoices or demand letters from [Betonval]. [FSIs] excuse that it was impractical to

reconcile accounts during the middle of transactions is defeated by the absence of any

showing on record that a formal request to reconcile was issued to [Betonval] despite

55[16] Rollo, p. 53.

56[17] As reflected in FSIs record of Bulk Cement Status as opposed to Betonvals last invoice
which only reflected 1,307.45 bags. Id., p. 20.

57[18] Id., p. 217.

 the completion of deliveries or [FSIs] discovery of the alleged discrepancies, as well as

its failure to initiate any meeting with [Betonval], including one which the parties

were directed to hold for that purpose by the Court. Since [FSI] failed to prove the

correctness of its entries against those in [Betonvals] invoices, its record is self-serving.

xxx (emphasis supplied)

In view of FSIs failure to dispute this finding of the RTC because of its failure to perfect its appeal, FSI is

now estopped from raising this issue. There is no cogent reason to depart from the RTCs finding.

Undaunted, FSI retracts. Instead of claiming the balance of the unused cement as reflected in its

records, it now bases its claim on the invoices of Betonval. FSI relies on the RTCs statement in the May

19, 1999 order:

Still it can claim the cost of the balance of unused cement based on [Betonvals] invoices,

notwithstanding its admission of the obligation in the letter, as it neither expressed nor

implied any intent to waive that claim by said admission.

FSI contends that this declaration has become final and executory and must be implemented in the

name of substantial justice. Betonval, however, avers that that the issue on the alleged unused cement

was never raised as an affirmative defense in its answer or in its motion for reconsideration to the

January 29, 1999 decision. Neither was this issue raised in the CA. Hence, FSI must not be allowed to

broach it for the first time in this Court. Betonval is correct.

It is well-settled that issues not raised in the trial court may not be raised for the first time on appeal.

Furthermore, defenses and objections not pleaded either in a motion to dismiss or in the answer are

deemed waived.58[19]

More importantly, the portion of a decision that becomes the subject of an execution is that ordained or

decreed in the dispositive portion.59[20] In this case, there was no award in favor of FSI of the value of

the balance of the unused cement as reflected in the invoices.

THE APPLICABLE INTEREST RATE IS 24% P.A.

There is no dispute that FSI and Betonval stipulated the payment of a 30% p.a. interest in case of

overdue payments. There is likewise no doubt that FSI failed to pay Betonval on time.

FSI acknowledged its indebtedness to Betonval in the principal amount of P1,114,203.34. However, FSI

opposed the CAs imposition of a 24% p.a. interest on the award to Betonval allegedly because: (a) the

grant to FSI of a 45-day credit extension novated the contracts insofar as FSIs obligation to pay any

interest was concerned; (b) Betonval waived its right to enforce the payment of the 30% p.a. interest

when it granted FSI a new credit term and (c) Betonvals prayer for a 24% p.a. interest instead of 30%,

resulted in a situation where, in effect, no interest rate was supposedly stipulated, thus necessitating

the imposition only of the legal interest rate of 6% p.a. from judicial demand.

FSIs contentions have no merit.

Novation is one of the modes of extinguishing an obligation.60[21] It is done by the substitution or

change of the obligation by a subsequent one which extinguishes the first, either by changing the object

58[19] RULES OF COURT, Rule 9, Sec. 1.

59[20] Davao Light and Power Company, Inc. v. Diaz, G.R. No. 150253, 30 November 2006,
509 SCRA 152, 169.
or principal conditions, or by substituting the person of the debtor, or by subrogating a third person in

the rights of the creditor.61[22] Novation may:

[E]ither be extinctive or modificatory, much being dependent on the nature of the

change and the intention of the parties. Extinctive novation is never presumed; there

must be an express intention to novate; in cases where it is implied, the acts of the

parties must clearly demonstrate their intent to dissolve the old obligation as the

moving consideration for the emergence of the new one. Implied novation necessitates

that the incompatibility between the old and new obligation be total on every point

such that the old obligation is completely superceded by the new one. The test of

incompatibility is whether they can stand together, each one having an independent

existence; if they cannot and are irreconcilable, the subsequent obligation would also

extinguish the first.

An extinctive novation would thus have the twin effects of, first, extinguishing an

existing obligation and, second, creating a new one in its stead. This kind of novation

presupposes a confluence of four essential requisites: (1) a previous valid obligation, (2)

an agreement of all parties concerned to a new contract, (3) the extinguishment of the

old obligation, and (4) the birth of a valid new obligation. Novation is merely

modificatory where the change brought about by any subsequent agreement is merely

incidental to the main obligation (e.g., a change in interest rates or an extension of time

to pay; in this instance, the new agreement will not have the effect of extinguishing the

60[21] CIVIL CODE, Art. 1231.

61[22] Tolentino, Arturo M., COMMENTARIES AND JURISPRUDENCE ON THE CIVIL

CODE OF THE PHILIPPINES (VOLUME FOUR), Central Book Supply, Inc., p. 381.
 first but would merely supplement it or supplant some but not all of its

provisions.)62[23]

The obligation to pay a sum of money is not novated by an instrument that expressly recognizes

the old, changes only the terms of payment, adds other obligations not incompatible with the old ones

or the new contract merely supplements the old one.63[24]

The grant by Betonval to FSI of a 45-day credit extension did not novate the contracts so as to extinguish

the latter. There was no incompatibility between them. There was no intention by the parties to

supersede the obligations under the contracts. In fact, the intention of the 45-day credit extension was

precisely to revive the old obligation after the original period expired with the obligation unfulfilled. The

grant of a 45-day credit period merely modified the contracts by extending the period within which FSI

was allowed to settle its obligation. Since the contracts remained the source of FSIs obligation to

Betonval, the stipulation to pay 30% p.a. interest likewise remained.

Obviously, the extension given to FSI was triggered by its own request, to help it through its financial

difficulties. FSI would now want to take advantage of that generous accommodation by claiming that its

liability for interest was extinguished by its creditors benevolence.

Neither did Betonval waive the stipulated interest rate of 30% p.a., as FSI erroneously claims. A waiver is

a voluntary and intentional relinquishment or abandonment of a known legal right or privilege.64[25] A

waiver must be couched in clear and unequivocal terms which leave no doubt as to the intention of a

62[23] Iloilo Traders Finance, Inc. v. Heirs of Oscar Soriano, Jr., 452 Phil. 82, 89-90 (2003).

63[24] Spouses Reyes v. BPI Family Savings Bank, G.R. Nos. 149840-41, 31 March 2006, 486
SCRA 276, 282.

64[25] R.B. Michael Press and Escobia v. Galit, G.R. No. 153510, 13 February 2008, 545
SCRA 23, 31.
party to give up a right or benefit which legally pertains to him.65[26] FSI did not adduce proof that a

valid waiver was made by Betonval. FSIs claim is therefore baseless.

Parties are bound by the express stipulations of their contract as well as by what is required by the

nature of the obligation in keeping with good faith, usage and law.66[27] Corollarily, if parties to a

contract expressly provide for a particular rate of interest, then that interest shall be applied.67[28]

It is clear that Betonval and FSI agreed on the payment of interest. It is beyond comprehension how

Betonvals prayer for a 24% interest on FSIs balance could have resulted in a situation as if no interest

rate had been agreed upon. Besides, FSIs proposed schedule of payments (September 3, 1992),68[29]

referring to Betonvals statement of account,69[30] contained computations of FSIs arrears and billings

with 24% p.a. interest.

There can be no other conclusion but that Betonval had reduced the imposable interest rate from 30%

to 24% p.a. and this reduced interest rate was accepted, albeit impliedly, by FSI when it proposed a new

schedule of payments and, in fact, actually made payments to Betonval with 24% p.a. interest. By its

own actions, therefore, FSI is estopped from questioning the imposable rate of interest.

65[26] Id.

66[27] Spouses Quiamco v. Capital Insurance & Surety Co., Inc., G.R. No. 170852, 12
September 2008.

67[28] Casa Filipino Development Corporation v. Deputy Executive Secretary, G.R. No. 96494,
28 May 1992, 209 SCRA 399, 405.

68[29] Records, Vol. I, p. 72.

69[30] Id., p. 73.

We likewise hold that the imposition of a 12% p.a. interest on the award to Betonval (in addition to the

24% p.a. interest) in the assailed judgment is proper. When the judgment of the court awarding a sum of

money becomes final and executory, the rate of legal interest shall be 12% p.a. from such finality until

its satisfaction, this interim period being deemed to be by then an equivalent to a forbearance of

credit.70[31]

THERE WAS IMPROPER ATTACHMENT OF FSIS PROPERTIES

Betonvals application for the issuance of the writ of preliminary attachment

was based on Section 1(d) and (e), Rule 57 of the Rules of Court.71[32] However,

the CA affirmed the RTCs factual findings that there was improper attachment of

FSIs properties. In debunking FSIs claim for actual damages, respondents insist

that the attachment was proper and that Betonval was able to sufficiently prove

the existence of the grounds for attachment. However, these are factual matters

70[31] Eastern Shipping Lines, Inc. v. CA, G.R. No. 97412, 12 July 1994, 234 SCRA 78, 97.

71[32] 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) xxx

(d) In an action against a party who has been guilty of a fraud in contracting the debt or
incurring the obligation upon which the action is brought, or in 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; xxx
that have been duly passed upon by the RTC and the CA and which are

inappropriate in a petition for review.

Moreover, we agree with the RTC and the CA that FSIs properties were

improperly attached. Betonval was not able to sufficiently show the factual

circumstances of the alleged fraud because fraudulent intent cannot be inferred

from FSIs mere nonpayment of the debt or failure to comply with its obligation. In

Ng Wee v. Tankiansee,72[33] we held that the applicant must be able to

demonstrate that the debtor intended to defraud the creditor. Furthermore:

The fraud must relate to the execution of the agreement and must have been
the reason which induced the other party into giving consent which he would not have
otherwise given. To constitute a ground for attachment in Section 1 (d), Rule 57 of the
Rules of Court, fraud should be committed upon contracting the obligation sued upon. A
debt is fraudulently contracted if at the time of contracting it the debtor has a
preconceived plan or intention not to pay, as it is in this case. Fraud is a state of mind
and need not be proved by direct evidence but may be inferred from the circumstances
attendant in each case.73[34]

In other words, mere failure to pay its debt is, of and by itself, not enough
to justify an attachment of the debtors properties. A fraudulent intention not to
pay (or not to comply with the obligation) must be present.

72[33] G.R. No. 171124, 13 February 2008, 545 SCRA 263, 272-273.

73[34] Id., citing Liberty Insurance Corporation v. Court of Appeals, G.R. No. 104405, 13 May 1993, 222 SCRA 37.
PETITIONER IS NOT ENTITLED TO THE AMOUNT OF ACTUAL DAMAGES PRAYED FOR

In its bid for a bigger award for actual damages it allegedly suffered from

the wrongful attachment of its properties, FSI enumerates the standby costs of

equipment74[35] and manpower standby costs75[36] it allegedly lost. We cannot

grant FSIs prayer. FSI did not pursue its appeal to the CA as shown by its failure to

pay the appellate docket fees. It is well-settled that a party who does not appeal

from the decision may not obtain any affirmative relief from the appellate court

other than what he has obtained from the lower court whose decision is brought

up on appeal.76[37]

WHEREFORE, the petition is hereby DENIED.

Costs against petitioner.

SO ORDERED.

74[35] Standby cost of equipment for its EDSA/Boni/Pioneer Interchange project amounted to
P2,353,952.29. For its Bulacan Bridge project, the standby equipment cost was pegged at
P98,154.

75[36] Manpower standby costs for its EDSA/Boni/Pioneer Interchange project was P312,312
and P478,344 for its Perla Mansion project.

76[37] Bank of the Philippine Islands v. Lifetime Marketing Corp., G.R. No. 176434, 25 June 2008, 555 SCRA 373,
382.
 FOUNDATION SPECIALISTS, INC., vs. BETONVAL READY CONCRETE INC. and
STRONGHOLD INSURANCE CO., INC.,
G.R. No. 170674
August 24, 2009

FACTS: On separate dates, petitioner FSI and respondent Betonval executed three contracts for
the delivery of ready mixed concrete by Betonval to FSI. Betonval delivered the ready mixed
concrete pursuant to the contracts but FSI failed to pay its outstanding balance. As an
accommodation to FSI, Betonval extended the seven day credit period to 45 days.

Betonval demanded from FSI its balance. Betonval informed FSI that further defaults would
leave it no other choice but to impose the stipulated interest for late payments and take
appropriate legal action to protect its interest. While maintaining that it was still verifying the
correctness of Betonvals claims, FSI sent Betonval a proposed schedule of payments devised
with a liability for late payments fixed at 24% p.a.

Thereafter, FSI paid Betonval according to the terms of its proposed schedule of payments. It
was able to reduce its debt, inclusive of the annual interest. Nevertheless, it failed to fully settle
its obligation.

Betonval thereafter filed an action for sum of money and damages in the RTC. It also applied for
the issuance of a writ of preliminary attachment alleging that FSI employed fraud when it
contracted with Betonval and that it was disposing of its assets in fraud of its creditors.

FSI denied Betonvals allegations and moved for the dismissal of the complaint. FSI also filed a
counterclaim and prayed for AD, MD, ED and AF.

The RTC issued a writ of preliminary attachment and approved the P500,000 bond of
Stronghold.

The RTC ruled for Betonval. However, it awarded compensatory damages to FSI on the ground
that the attachment of its properties was improper.

FSI and Stronghold separately filed MRs while Betonval filed a motion for clarification and
reconsideration. The RTC denied both MRs.. All parties appealed to the CA. However, only the
respective appeals of Betonval and Stronghold were given due course because FSIs appeal was
dismissed for nonpayment of the appellate docket fees.

the CA upheld the RTC order with modification. FSIs MR was denied, hence this petition for
review on certiorari

ISSUE:

WON THERE WAS IMPROPER ATTACHMENT OF FSIS PROPERTIES

WON PETITIONER IS ENTITLED TO THE AMOUNT OF ACTUAL DAMAGES PRAYED
FOR

HELD: WHEREFORE, the petition is hereby DENIED.

YES; Betonvals application for the issuance of the writ of preliminary attachment was based on
Section 1(d) and (e), Rule 57 of the ROC. However, the CA affirmed the RTCs factual findings
that there was improper attachment of FSIs properties.. However, these are factual matters that
have been duly passed upon by the RTC and the CA and which are inappropriate in a petition for
review.

Moreover, we agree with the RTC and the CA that FSIs properties were improperly attached.
Betonval was not able to sufficiently show the factual circumstances of the alleged fraud because
fraudulent intent cannot be inferred from FSIs mere nonpayment of the debt or failure to comply
with its obligation. In Ng Wee v. Tankiansee, we held that the applicant must be able to
demonstrate that the debtor intended to defraud the creditor. Furthermore:

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 ROC, fraud should be
committed upon contracting the obligation sued upon. A debt is fraudulently contracted if at the
time of contracting it the debtor has a preconceived plan or intention not to pay, as it is in this
case. Fraud is a state of mind and need not be proved by direct evidence but may be inferred
from the circumstances attendant in each case.

In other words, mere failure to pay its debt is, of and by itself, not enough to justify an
attachment of the debtors properties. A fraudulent intention not to pay (or not to comply with
the obligation) must be present.

NO; In its bid for a bigger award for actual damages it allegedly suffered from the wrongful
attachment of its properties, FSI enumerates the standby costs of equipment and manpower
standby costs it allegedly lost. We cannot grant FSIs prayer. FSI did not pursue its appeal to the
CA as shown by its failure to pay the appellate docket fees. It is well-settled that a party who
does not appeal from the decision may not obtain any affirmative relief from the appellate court
other than what he has obtained from the lower court whose decision is brought up on appeal.
 Republic of the Philippines
SUPREME COURT
Manila

SECOND DIVISION

G.R. No. L-35990 June 17, 1981

ABOITIZ & COMPANY, INC., HONORABLE VICENTE N. CUSI JR., Judge

of the Court of First Instance of Davao, and the PROVINCIAL SHERIFF
OF DAVAO DEL SUR, petitioners,
vs.
COTABATO BUS COMPANY, INC., respondent.

DE CASTRO, J.:

The instant petition stemmed from Civil Case No. 7329 of the Court of First
Instance of Davao (Branch 1) in which a writ of preliminary attachment was
issued ex-parte by the Court on the strength of an affidavit of merit attached to
the verified complaint filed by petitioner herein, Aboitiz & Co., Inc., on
November 2, 1971, as plaintiff in said case, for the collection of money in the
sum of P 155,739.41, which defendant therein, the respondent in the instant
case, Cotabato Bus Co., owed the said petitioner.

By virtue of the writ of preliminary attachment, the provincial sheriff attached

personal properties of the defendant bus company consisting of some buses,
machinery and equipment. The ground for the issuance of the writ is, as
alleged in the complaint and the affidavit of merit executed by the Assistant
Manager of petitioner, that the defendant "has removed or disposed of its
properties or assets, or is about to do so, with intent to defraud its creditors."

Respondent company filed in the lower court an "Urgent Motion to Dissolve or

Quash Writ of Attachment" to which was attached an affidavit executed by its
Assistant Manager, Baldovino Lagbao, alleging among other things that "the
Cotabato Bus Company has not been selling or disposing of its properties,
neither does it intend to do so, much less to defraud its creditors; that also the
Cotabato Bus Company, Inc. has been acquiring and buying more assets". An
opposition and a supplemental opposition were filed to the urgent motion. The
lower court denied the motion stating in its Order that "the testimony of
Baldovino Lagbao, witness for the defendant, corroborates the facts in the
plaintiff's affidavit instead of disproving or showing them to be untrue."
A motion for reconsideration was filed by the defendant bus company but the
lower court denied it. Hence, the defendant went to the Court of Appeals on a
petition for certiorari alleging grave abuse of discretion on the part of herein
respondent Judge, Hon. Vicente R. Cusi Jr. On giving due course to the
petition, the Court of Appeals issued a restraining order restraining the trial
court from enforcing further the writ of attachment and from proceeding with
the hearing of Civil Case No. 7329. In its decision promulgated on October 3,
1971, the Court of Appeals declared "null and void the order/writ of
attachment dated November 3, 1971 and the orders of December 2, 1971, as
well as that of December 11, 1971, ordered the release of the attached
properties, and made the restraining order originally issued permanent.

The present recourse is an appeal by certiorari from the decision of the Court
of Appeals reversing the assailed orders of the Court of First Instance of
Davao, (Branch I), petitioner assigning against the lower court the following
errors:

ERROR I

THE COURT OF APPEALS ERRED IN HASTILY AND

PERFUNCTORILY RENDERING, ON OCTOBER 3, 1971, A
DECISION WITHOUT CONSIDERING MOST OF THE
EVIDENCE SUCH THAT

l) EVEN AN IMPORTANT FACT, ESTABLISHED BY

DOCUMENTARY EVIDENCE AND NOT DENIED BY
RESPONDENT, IS MENTIONED ONLY AS A "CLAIM" OF
PETITIONER COMPANY;

2) THE DECISION CONTAINS NO DISCUSSION AND

APPRECIATION OF THE FACTS AS PROVED, ASSEMBLED
AND PRESENTED BY PETITIONER COMPANY SHOWING IN
THEIR TOTALITY THAT RESPONDENT HAS REMOVED,
DIVERTED OR DISPOSED OF ITS BANK DEPOSITS, INCOME
AND OTHER LIQUID ASSETS WITH INTENT TO DEFRAUD ITS
CREDITORS, ESPECIALLY ITS UNSECURED SUPPLIERS;

3) THE DECISION IGNORES THE SIGNIFICANCE OF THE

REFUSAL OF RESPONDENT TO PERMIT, UNDER REP. ACT
NO. 1405, THE METROPOLITAN BANK & TRUST CO. TO
BRING, IN COMPLIANCE WITH A subpoena DUCES TECUM
TO THE TRIAL COURT ALL THE RECORDS OF
 RESPONDENT'S DEPOSITS AND WITHDRAWALS UNDER ITS
CURRENT AND SAVINGS ACCOUNTS (NOW NIL) FOR
EXAMINATION BY PETITIONER COMPANY FOR THE
PURPOSE OF SHOWING DIRECTLY THE REMOVAL,
DIVERSION OR DISPOSAL OF RESPONDENT'S DEPOSITS
AND INCOME WITH INTENT TO DEFRAUD ITS CREDITORS.

ERROR II

THE COURT OF APPEALS ERRED IN NOT APPRECIATING

THE FACTS THAT RESPONDENT'S BANK DEPOSITS ARE NIL
AS PROOF WHICH - TOGETHER WITH RESPONDENT'S
ADMISSION OF AN INCOME OF FROM P10,000.00 to P
14,000.00 A DAY AND THE EVIDENCE THAT IT CANNOT
PRODUCE P 634.00 WITHOUT USING A PERSONAL CHECK
OF ITS PRESIDENT AND MAJORITY STOCKHOLDER, AND
OTHER EVIDENCE SHOWS THE REMOVAL OR
CHANNELING OF ITS INCOME TO THE LATTER.

ERROR III

THE COURT OF APPEALS ERRED IN NOT APPRECIATING

THE RESCUE AND REMOVAL BY RESPONDENT OF FIVE
ATTACHED BUSES, DURING THE DEPENDENCY OF ITS
MOTION TO DISSOLVE THE ATTACHMENT IN THE, TRIAL
COURT, AS A FURTHER ACT OF REMOVAL OF PROPERTIES
BY RESPONDENT WITH INTENT TO DEFRAUD PETITIONER
COMPANY, FOR WHOSE BENEFIT SAID BUSES HAD BEEN
ATTACHED.

The questions raised are mainly, if not solely, factual revolving on whether
respondent bus company has in fact removed its properties, or is about to do
so, in fraud of its creditors. This being so, the findings of the Court of Appeals
on said issues of facts are generally considered conclusive and final, and
should no longer be disturbed. However, We gave due course to the petition
because it raises also a legal question of whether the writ of attachment was
properly issued upon a showing that defendant is on the verge of insolvency
and may no longer satisfy its just debts without issuing the writ. This may be
inferred from the emphasis laid by petitioner on the fact that even for the
measly amount of P 634.00 payment thereof was made with a personal check
of the respondent company's president and majority stockholder, and its debts
to several creditors, including secured ones like the DBP, have remained
unpaid, despite its supposed daily income of an average of P 12,000.00, as
declared by its assistant manager, Baldovino Lagbao. 1
Going forthwith to this question of whether insolvency, which petitioners in effect claims to have been
proven by the evidence, particularly by company's bank account which has been reduced to nil, may be a
ground for the issuance of a writ of attachment, the respondent Court of Appeals correctly took its position
in the negative on the strength of the explicit ruling of this Court in Max Chamorro & Co. vs. Philippine
Ready Mix Concrete Company, Inc. and Hon. Manuel P. Barcelona. 2

Petitioner, however, disclaims any intention of advancing the theory that insolvency is a ground for the
issuance of a writ of attachment , 3 and insists that its evidence -is intended to prove his assertion that
respondent company has disposed, or is about to dispose, of its properties, in fraud of its creditors. Aside
from the reference petitioner had made to respondent company's "nil" bank account, as if to show
removal of company's funds, petitioner also cited the alleged non-payment of its other creditors, including
secured creditors like the DBP to which all its buses have been mortgaged, despite its daily income
averaging P12,000.00, and the rescue and removal of five attached buses.

It is an undisputed fact that, as averred by petitioner itself, the several buses attached are nearly junks.
However, upon permission by the sheriff, five of them were repaired, but they were substituted with five
buses which were also in the same condition as the five repaired ones before the repair. This cannot be
the removal intended as ground for the issuance of a writ of attachment under section 1 (e), Rule 57, of
the Rules of Court. The repair of the five buses was evidently motivated by a desire to serve the interest
of the riding public, clearly not to defraud its creditors, as there is no showing that they were not put on
the run after their repairs, as was the obvious purpose of their substitution to be placed in running
condition.

Moreover, as the buses were mortgaged to the DBP, their removal or disposal as alleged by petitioner to
provide the basis for its prayer for the issuance of a writ of attachment should be very remote, if not nil. If
removal of the buses had in fact been committed, which seems to exist only in petitioner's apprehensive
imagination, the DBP should not have failed to take proper court action, both civil and criminal, which
apparently has not been done.

The dwindling of respondent's bank account despite its daily income of from P10,000.00 to P14,000.00 is
easily explained by its having to meet heavy operating expenses, which include salaries and wages of
employees and workers. If, indeed the income of the company were sufficiently profitable, it should not
allow its buses to fall into disuse by lack of repairs. It should also maintain a good credit standing with its
suppliers of equipment, and other needs of the company to keep its business a going concern. Petitioner
is only one of the suppliers.

It is, indeed, extremely hard to remove the buses, machinery and other equipments which respondent
company have to own and keep to be able to engage and continue in the operation of its transportation
business. The sale or other form of disposition of any of this kind of property is not difficult of detection or
discovery, and strangely, petitioner, has adduced no proof of any sale or transfer of any of them, which
should have been easily obtainable.

In the main, therefore, We find that the respondent Court of Appeals has not committed any reversible
error, much less grave abuse of discretion, except that the restraining order issued by it should not have
included restraining the trial court from hearing the case, altogether. Accordingly, the instant petition is
hereby denied, but the trial court is hereby ordered to immediately proceed with the hearing of Civil Case
No. 7329 and decide it in accordance with the law and the evidence. No special pronouncement as to
costs.

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila

SECOND DIVISION

G.R. No. L-67715 July 11, 1986

WILLIAM ALAIN MIAILHE and THE HON. FELIX V. BARBERS, in his capacity as Presiding
Judge, RTC of Manila, Branch XXXIII, petitioners-appellants,
vs.
ELAINE M. DE LENCQUESAING and HERVE DE LENCQUESAING, respondents-appellees.

PARAS, J.:

This petition is an appeal by certiorari from the Decision of the Intermediate Appellate Court in
AC-G.R. SP. No. 01914 which declared null-and void, the Order of the Hon. Judge Felix V.
Barbers, issued in Civil Case No. 83-16829, dated April 14, 1983, granting petitioner's
application for the issuance of a writ of preliminary attachment and the Order dated September
13, 1983 denying respondent's motion to lift said attachment.

The pertinent facts that gave rise to the instant petition are as follows: Petitioner William Alain
Miailhe, his sisters Monique Miailhe Sichere, Elaine Miailhe de Lencquesaing and their mother,
Madame Victoria D. Miailhe are co-owners of several registered real properties located in Metro
Manila. By common consent of the said co-owners, petitioner William Alain has been
administering said properties since 1960. As Madame Victoria D. Miailhe, her daughter Monique
and son William Alain (herein petitioner) failed to secure an out-of court partition thereof due to
the unwillingness or opposition of respondent Elaine, they filed in the Court of First Instance of
Manila (now Regional Trial Court) an action for Partition, which was docketed as Civil Case No.
105774 and assigned to Branch . . . thereof, presided over by Judge Pedro Ramirez. Among the
issues presented in the partition case was the matter of petitioner's account as administrator of
the properties sought to be partitioned. But while the said administrator's account was still being
examined, respondent Elaine filed a motion praying that the sum of P203,167.36 which
allegedly appeared as a cash balance in her favor as of December 31, 1982, be ordered
delivered to her by petitioner William Alain. Against the opposition of petitioner and the other co-
owners, Judge Pedro Ramirez granted the motion in his Order dated December 19, 1983 which
order is now the subject of a certiorari proceeding in the Intermediate Appellate Court under AC-
G.R. No. SP-03070.

Meanwhile however, and more specifically on February 28, 1983, respondent Elaine filed a
criminal complaint for estafa against petitioner William Alain, with the office of the City Fiscal of
Manila, alleging in her supporting affidavit that on the face of the very account submitted by him
as Administrator, he had misappropriated considerable amounts, which should have been
turned over to her as her share in the net rentals of the common properties. Two days after filing
the complaint, respondent flew back to Paris, the City of her residence. Likewise, a few days
after the filing of the criminal complaint, an extensive news item about it appeared prominently
in the Bulletin Today, March 4, 1983 issue, stating substantially that Alain Miailhe, a consul of
the Philippines in the Republic of France, had been charged with Estafa of several million pesos
by his own sister with the office of the City Fiscal of Manila.
On April 12, 1983, petitioner Alain filed a verified complaint against respondent Elaine, for
Damages in the amount of P2,000,000.00 and attorney's fees of P250,000.00 allegedly
sustained by him by reason of the filing by respondent (then defendant) of a criminal complaint
for estafa, solely for the purpose of embarrassing petitioner (then plaintiff) and besmirching his
honor and reputation as a private person and as an Honorary Consul of the Republic of the
Philippine's in the City of Bordeaux, France. Petitioner further charged respondent with having
caused the publication in the March 4, 1983 issue of the Bulletin Today, of a libelous news item.
In his verified complaint, petitioner prayed for the issuance of a writ of preliminary attachment of
the properties of respondent consisting of 1/6 undivided interests in certain real properties in the
City of Manila on the ground that "respondent-defendant is a non-resident of the Philippines",
pursuant to paragraph (f), Section 1, Rule 57, in relation to Section 17, Rule 14 of the Revised
Rules of Court.

This case for Damages was docketed as Civil Case No. 83-16829 of the Regional Trial Court of
Manila, Branch XXXIII presided over by the Honorable Felix V. Barbers.

On April 14, 1983, Judge Barbers granted petitioner's application for preliminary attachment
upon a bond to be filed by petitioner in the amount of P2,000,000.00. Petitioner filed said bond
and upon its approval, the Writ of Preliminary Attachment was issued on April 18, 1983 which
was served on the Deputy Clerk of Court of Branch XXX before whom the action for Partition
was pending.

On May 17, 1983, respondent thru counsel filed a motion to lift or dissolve the writ of attachment
on the ground that the complaint did not comply with the provisions of Sec. 3 of Rule 57, Rules
of Court and that petitioner's claim was for unliquidated damages. The motion to lift attachment
having been denied, respondent filed with the Intermediate Appellate Court a special action for
certiorari under AC-G.R. SP No. 01914 alleging that Judge Barbers had acted with grave abuse
of discretion in the premises. On April 4, 1984, the IAC issued its now assailed Decision
declaring null and void the aforesaid Writ of preliminary attachment. Petitioner filed a motion for
the reconsideration of the Decision but it was denied hence, this present petition which was
given due course in the Resolution of this Court dated February 6, 1985.

We find the petition meritless. The most important issue raised by petitioner is whether or not
the Intermediate Appellate Court erred in construing Section 1 par. (f) Rule 57 of the Rules of
Court to be applicable only in case the claim of the plaintiff is for liquidated damages (and
therefore not where he seeks to recover unliquidated damages arising from a crime or tort).

In its now assailed decision, the IAC stated

We find, therefore, and so hold that respondent court had exceeded its
jurisdiction in issuing the writ of attachment on a claim based on an action for
damages arising from delict and quasi delict the amount of which is uncertain
and had not been reduced to judgment just because the defendant is not a
resident of the Philippines. Because of the uncertainty of the amount of plaintiff's
claim it cannot be said that said claim is over and above all legal counterclaims
that defendant may have against plaintiff, one of the indispensable requirements
for the issuance of a writ of attachment which should be stated in the affidavit of
applicant as required in Sec. 3 of Rule 57 or alleged in the verified complaint of
plaintiff. The attachment issued in the case was therefore null and void.
We agree.

Section 1 of Rule 57 of the Rules of Court provides

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

(a) In an action for the recovery of money or damages on a cause of action

arising fromcontract, express or implied, against a party who is about to depart
from the Philippines with intent to defraud his creditors;

(b) In an action for money or property embezzled or fraudulently misapplied or

converted to his own use by a public officer, or an officer of a corporation or an
attorney, factor, broker, agent, or clerk, in the course of his employment as such,
or by any other person in a fiduciary capacity, or for a willful violation of duty;

(c) In an action to recover the possession of personal property unjustly detained,

when the property, or any part thereof, has been concealed. removed, or
disposed of to prevent its being found or taken by the applicant or an officer;

(d) In an action against a party who has been guilty of a fraud in contracting the
debt or incurring the obligation upon which the action is brought, or in concealing
or disposing of the property for the taking, detention or conversion of which the
action is brought;

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

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

While it is true that from the aforequoted provision attachment may issue "in an action against a
party who resides out of the Philippines, " irrespective of the nature of the action or suit, and
while it is also true that in the case of Cu Unjieng, et al vs. Albert, 58 Phil. 495, it was held that
"each of the six grounds treated ante is independent of the others," still it is imperative that the
amount sought be liquidated.

In view of the foregoing, the Decision appealed from is hereby AFFIRMED.

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 75466 December 19, 1988

ANTONIO TOLEDO, petitioner,

vs.
HON. JOSE P. BURGOS, Presiding Judge of Branch XXV of the Regional Trial
Court of Cebu, Region VII, and PERCY CASTRO, respondents.

PARAS, J.:

This is a petition for certiorari and mandamus with a prayer for the issuance of a writ of
preliminary prohibitory injunction, questioning the respondent judge's denial of
petitioner's "Application for Issuance of a Writ of Preliminary Attachment" and the latter's
subsequent "Motion for Reconsideration", in his orders dated 6 June 1986 and 23 June
1986, respectively.

As can be gleaned from the parties' memoranda, the following material facts have been
established:

A complaint for Delivery of Personal Property was commenced by petitioner on 14 June

1985 against respondent Castro but was subsequently denied. In connection therewith,
a writ of Replevin was applied for. Petitioner's subsequent reconsideration having been
likewise denied, he went to the then Intermediate Appellate Court on certiorari. The
latter Court denied the same on 30 April 1986. *

Subsequently, on 14 May 1986, petitioner applied for the issuance of a writ of

preliminary attachment with the Court below, and which was requested by the former's
counsel for it to be considered in the morning of 6 June 1986 "With or without the
attendance of counsel and without oral arguments" (p. 28, Rollo). In said application, it
was alleged that respondent Castro, among others, "has removed and has deposed
(sic) or is about to depose (sic) of her property with intent to defraud the herein plaintiff"
(p. 24, Rollo). To support such allegation, an affidavit of one Rudolfo Inot (p. 29, Rollo)
was attached to the application to prove that respondent Castro and her spouse
insistently offered to sell to him two (2) motor vehicles. Castro submitted her written
opposition thereto on 4 June 1986 (p. 57, Rollo). On the hearing of 6 June 1986, neither
petitioner nor his counsel appeared. Being present then, Castro assailed the allegations
in the affidavit of Mr. Inot. She likewise argued that petitioner had to prove by
overwhelming evidence his allegation that she was about to dispose of her properties in
fraud of creditors, and that mere affidavits would not suffice. On the same date,
respondent judge denied the application.

On 17 June 1986, petitioner moved to reconsider the above denial. Once more, counsel
for petitioner requested that the consideration of said motion be scheduled in the
morning session of 23 June 1986 "without need of argument or appearance of counsel"
(p. 35, Rollo). But like before, petitioner and his counsel failed to appear. On said date,
respondent Castro manifested that the two (2) vehicles, alleged to have been offered for
sale by her, were needed in her retail merchandising business, thus, had no intention of
disposing of them. The respondent judge then issued another order dated 23 June 1986
denying petitioner's motion. Hence, this present petition was filed on 12 August 1986.

In a minute resolution dated 25 August 1986 (p. 90, Rollo), this Court denied the instant
petition for being without merit. And after respondent Castro had filed her answer and
petitioner his motion for reconsideration, this Court reconsidered the aforesaid
resolution in a subsequent one dated 5 January 1987 (p. 94, Rollo) and ordered the
parties to submit their respective memoranda.

The sole issue in this case concerns the propriety of the respondent judge's denial of
petitioner's application for a writ of attachment. In branding the denial as improper,
petitioner accuses respondent judge of having made it "with undue haste and without
proper notice of hearing" and with disregard of the "(strong) evidence in support of the
application". (Petition, p. 8, Rollo)

We disagree With the petitioner's accusations. Contrary to his claims, the respondent
judge acted well within his powers and in the highest regard for justice. Respondent
judge acted correctly in denying petitioner's "Application for Issuance of a Writ of
Preliminary attachment". There was no need for him to, as against petitioner's claim, set
a hearing on the said application. This is because the issuance of a writ of preliminary
attachment may be made by the Court ex parte. As We held in the case of Filinvest
Credit Corporation vs. Relova, 117 SCRA 420, and reiterated in Belisle Investment and
Finance Co., Inc. vs. State Investment House, Inc., 151 SCRA 630:

Nothing in the Rules of Court makes notice and hearing indispensable and
mandatory requisites for the issuance of a writ of attachment. The
statement in the case Blue Green Waters, Inc. vs. Hon. Sundiam and Tan
cited by private respondent, to the effect that the order of attachment
issued without notice to therein petitioner Blue Green Waters, Inc. and
without giving it a chance to prove that it was not fraudulently disposing of
its properties is irregular, gives the wrong implication. As clarified in the
separate opinion of Mr. Justice Claudio Teehankee in the same cited
case, a writ of attachment may be issued ex parte.

And even if said notice is indeed necessary, petitioner can only blame himself for failing
to attend the scheduled hearing of 6 June 1986. This is because it was he, through his
counsel, who requested that the application be set for consideration and approval by the
Court on the said date. It was, therefore, his duty to be present in Court on that date.

Inasmuch as a writ of preliminary attachment may be issued without hearing, the judge
before whom the application is made has full discretion in considering the supporting
evidence proffered by the applicant. And in dealing with the affidavit of Mr. Inot, the
respondent judge was empowered to decide whether or not such should be given credit.
As We enunciated in the early case of La Grande vs. Samson (58 Phil. 578); "the
sufficiency or insufficiency of an affidavit depends upon the amount of credit given to it
by the judge, and its acceptance of rejection upon his sound discretion."

It is unfortunate that counsel for petitioner, in his motion for reconsideration dated 13
October 1986, has made a hasty accusation against the Honorable Judge Jose Burgos,
the public respondent, as having "shown manifest partiality towards private
respondents, making statements and actions which clearly intimate that the private
respondents would win the case handsdown This is indeed unfortunate, improper and
an affront to the dignity of the judiciary." (p. 79, Rollo). We do not find any cogent and
valid ground in the records of this case which justify such a grave imputation upon a
member of the Bench. Counsel for petitioner is hereby reminded of his duties to the
Court. And the attorney's duty of prime importance is to observe and maintain the
respect due the courts of justice and judicial officers (Rule 138, Sec. 20(b); Rheem of
the Phil. vs. Ferrer, 60 SCRA 234). His arguments, written or oral, should be gracious to
both the court and opposing counsel and be of such words as may be properly
addressed by one gentleman to another (National Surety Co. v. Jarvis, 278 US 610
(1928).

WHEREFORE, premises considered, this petition is hereby DENIED with costs against
petitioner.

SO ORDERED.
[G.R. No. 115678. February 23, 2001]

PHILIPPINE BANK OF COMMUNICATIONS, petitioner, vs. HON. COURT OF APPEALS

and BERNARDINO VILLANUEVA, respondents.

[G.R. No. 119723. February 23, 2001]

PHILIPPINE BANK OF COMMUNICATIONS, petitioner, vs. HON. COURT OF APPEALS

and FILIPINAS TEXTILE MILLS, INC., respondents.

DECISION

YNARES-SANTIAGO, J.:

Before us are consolidated petitions for review both filed by Philippine Bank of
Communications; one against the May 24, 1994 Decision of respondent Court of Appeals in CA-
G.R. SP No. 32863i[1] and the other against its March 31, 1995 Decision in CA-G.R. SP No.
32762.ii[2] Both Decisions set aside and nullified the August 11, 1993 Orderiii[3] of the
Regional Trial Court of Manila, Branch 7, granting the issuance of a writ of preliminary
attachment in Civil Case No. 91-56711.

The case commenced with the filing by petitioner, on April 8, 1991, of a Complaint against
private respondent Bernardino Villanueva, private respondent Filipinas Textile Mills and one
Sochi Villanueva (now deceased) before the Regional Trial Court of Manila. In the said
Complaint, petitioner sought the payment of P2,244,926.30 representing the proceeds or value of
various textile goods, the purchase of which was covered by irrevocable letters of credit and trust
receipts executed by petitioner with private respondent Filipinas Textile Mills as obligor; which,
in turn, were covered by surety agreements executed by private respondent Bernardino
Villanueva and Sochi Villanueva. In their Answer, private respondents admitted the existence of
the surety agreements and trust receipts but countered that they had already made payments on
the amount demanded and that the interest and other charges imposed by petitioner were
onerous.

On May 31, 1993, petitioner filed a Motion for Attachment,iv[4] contending that violation of the
trust receipts law constitutes estafa, thus providing ground for the issuance of a writ of
preliminary attachment; specifically under paragraphs b and d, Section 1, Rule 57 of the Revised
Rules of Court. Petitioner further claimed that attachment was necessary since private
respondents were disposing of their properties to its detriment as a creditor. Finally, petitioner
offered to post a bond for the issuance of such writ of attachment.

The Motion was duly opposed by private respondents and, after the filing of a Reply thereto by
petitioner, the lower court issued its August 11, 1993 Order for the issuance of a writ of
preliminary attachment, conditioned upon the filing of an attachment bond. Following the denial
of the Motion for Reconsideration filed by private respondent Filipinas Textile Mills, both
private respondents filed separate petitions for certiorari before respondent Court assailing the
order granting the writ of preliminary attachment.
Both petitions were granted, albeit on different grounds. In CA-G.R. SP No. 32762, respondent
Court of Appeals ruled that the lower court was guilty of grave abuse of discretion in not
conducting a hearing on the application for a writ of preliminary attachment and not requiring
petitioner to substantiate its allegations of fraud, embezzlement or misappropriation. On the other
hand, in CA-G.R. SP No. 32863, respondent Court of Appeals found that the grounds cited by
petitioner in its Motion do not provide sufficient basis for the issuance of a writ of preliminary
attachment, they being mere general averments. Respondent Court of Appeals held that neither
embezzlement, misappropriation nor incipient fraud may be presumed; they must be established
in order for a writ of preliminary attachment to issue.

Hence, the instant consolidatedv[5] petitions charging that respondent Court of Appeals erred in

1. Holding that there was no sufficient basis for the issuance of the writ of preliminary
attachment in spite of the allegations of fraud, embezzlement and misappropriation of the
proceeds or goods entrusted to the private respondents;

2. Disregarding the fact that that the failure of FTMI and Villanueva to remit the proceeds or
return the goods entrusted, in violation of private respondents fiduciary duty as entrustee,
constitute embezzlement or misappropriation which is a valid ground for the issuance of a writ of
preliminary attachment.vi[6]

We find no merit in the instant petitions.

To begin with, we are in accord with respondent Court of Appeals in CA-G.R. SP No. 32863 that
the Motion for Attachment filed by petitioner and its supporting affidavit did not sufficiently
establish the grounds relied upon in applying for the writ of preliminary attachment.

The Motion for Attachment of petitioner states that

1. The instant case is based on the failure of defendants as entrustee to pay or remit the
proceeds of the goods entrusted by plaintiff to defendant as evidenced by the trust receipts
(Annexes B, C and D of the complaint), nor to return the goods entrusted thereto, in violation of
their fiduciary duty as agent or entrustee;

2. Under Section 13 of P.D. 115, as amended, violation of the trust receipt law constitute(s)
estafa (fraud and/or deceit) punishable under Article 315 par. 1[b] of the Revised Penal Code;

3. On account of the foregoing, there exist(s) valid ground for the issuance of a writ of
preliminary attachment under Section 1 of Rule 57 of the Revised Rules of Court particularly
under sub-paragraphs b and d, i.e. for embezzlement or fraudulent misapplication or conversion
of money (proceeds) or property (goods entrusted) by an agent (entrustee) in violation of his
fiduciary duty as such, and against a party who has been guilty of fraud in contracting or
incurring the debt or obligation;

4. The issuance of a writ of preliminary attachment is likewise urgently necessary as there

exist(s) no sufficient security for the satisfaction of any judgment that may be rendered against
the defendants as the latter appears to have disposed of their properties to the detriment of the
creditors like the herein plaintiff;

5. Herein plaintiff is willing to post a bond in the amount fixed by this Honorable Court as a
condition to the issuance of a writ of preliminary attachment against the properties of the
defendants.

Section 1(b) and (d), Rule 57 of the then controlling Revised Rules of Court, provides, to wit

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

xxx xxx xxx

(b) In an action for money or property embezzled or fraudulently misapplied or converted to

his use by a public officer, or an officer of a corporation, or an attorney, factor, broker, agent or
clerk, in the course of his employment as such, or by any other person in a fiduciary capacity, or
for a willful violation of duty;

xxx xxx xxx

(d) In an action against a party who has been guilty of fraud in contracting the debt or
incurring the obligation upon which the action is brought, or in concealing or disposing of the
property for the taking, detention or conversion of which the action is brought;

xxx xxx xxx

While the Motion refers to the transaction complained of as involving trust receipts, the violation
of the terms of which is qualified by law as constituting estafa, it does not follow that a writ of
attachment can and should automatically issue. Petitioner cannot merely cite Section 1(b) and
(d), Rule 57, of the Revised Rules of Court, as mere reproduction of the rules, without more,
cannot serve as good ground for issuing a writ of attachment. An order of attachment cannot be
issued on a general averment, such as one ceremoniously quoting from a pertinent rule.vii[7]

The supporting Affidavit is even less instructive. It merely states, as follows --

I, DOMINGO S. AURE, of legal age, married, with address at No. 214-216 Juan Luna Street,
Binondo, Manila, after having been sworn in accordance with law, do hereby depose and say,
THAT:

1. I am the Assistant Manager for Central Collection Units Acquired Assets Section of the
plaintiff, Philippine Bank of Communications, and as such I have caused the preparation of the
above motion for issuance of a writ of preliminary attachment;
2. I have read and understood its contents which are true and correct of my own knowledge;

3. There exist(s) sufficient cause of action against the defendants in the instant case;

4. The instant case is one of those mentioned in Section 1 of Rule 57 of the Revised Rules
of Court wherein a writ of preliminary attachment may be issued against the defendants,
particularly sub-paragraphs b and d of said section;

5. There is no other sufficient security for the claim sought to be enforced by the instant
case and the amount due to herein plaintiff or the value of the property sought to be recovered is
as much as the sum for which the order for attachment is granted, above all legal counterclaims.

Again, it lacks particulars upon which the court can discern whether or not a writ of attachment
should issue.

Petitioner cannot insist that its allegation that private respondents failed to remit the proceeds of
the sale of the entrusted goods nor to return the same is sufficient for attachment to issue. We
note that petitioner anchors its application upon Section 1(d), Rule 57. This particular provision
was adequately explained in Liberty Insurance Corporation v. Court of Appeals,viii[8] as
follows

To sustain an attachment on this ground, it must be shown that the debtor in contracting the debt
or incurring the obligation intended to defraud the creditor. The fraud must relate to the
execution of the agreement and must have been the reason which induced the other party into
giving consent which he would not have otherwise given. To constitute a ground for attachment
in Section 1 (d), Rule 57 of the Rules of Court, fraud should be committed upon contracting the
obligation sued upon. A debt is fraudulently contracted if at the time of contracting it the
debtor has a preconceived plan or intention not to pay, as it is in this case. Fraud is a state of
mind and need not be proved by direct evidence but may be inferred from the circumstances
attendant in each case (Republic v. Gonzales, 13 SCRA 633). (Emphasis ours)

We find an absence of factual allegations as to how the fraud alleged by petitioner was
committed. As correctly held by respondent Court of Appeals, such fraudulent intent not to
honor the admitted obligation cannot be inferred from the debtors inability to pay or to comply
with the obligations.ix[9] On the other hand, as stressed, above, fraud may be gleaned from a
preconceived plan or intention not to pay. This does not appear to be so in the case at bar. In fact,
it is alleged by private respondents that out of the total P419,613.96 covered by the subject trust
receipts, the amount of P400,000.00 had already been paid, leaving only P19,613.96 as balance.
Hence, regardless of the arguments regarding penalty and interest, it can hardly be said that
private respondents harbored a preconceived plan or intention not to pay petitioner.

The Court of Appeals was correct, therefore, in its finding in CA-G.R. SP No. 32863 that neither
petitioners Motion or its supporting Affidavit provides sufficient basis for the issuance of the
writ of attachment prayed for.
We also agree with respondent Court of Appeals in CA-G.R. SP No. 32762 that the lower court
should have conducted a hearing and required private petitioner to substantiate its allegations of
fraud, embezzlement and misappropriation.

To reiterate, petitioners Motion for Attachment fails to meet the standard set forth in D.P. Lub
Oil Marketing Center, Inc. v. Nicolas,x[10] in applications for attachment. In the said case, this
Court cautioned --

The petitioners prayer for a writ of preliminary attachment hinges on the allegations in paragraph
16 of the complaint and paragraph 4 of the affidavit of Daniel Pe which are couched in general
terms devoid of particulars of time, persons and places to support such a serious assertion that
defendants are disposing of their properties in fraud of creditors. There is thus the necessity of
giving to the private respondents an opportunity to ventilate their side in a hearing, in accordance
with due process, in order to determine the truthfulness of the allegations. But no hearing was
afforded to the private respondents the writ having been issued ex parte. A writ of attachment
can only be granted on concrete and specific grounds and not on general averments merely
quoting the words of the rules.

As was frowned upon in D.P. Lub Oil Marketing Center, Inc.,xi[11] not only was petitioners
application defective for having merely given general averments; what is worse, there was no
hearing to afford private respondents an opportunity to ventilate their side, in accordance with
due process, in order to determine the truthfulness of the allegations of petitioner. As already
mentioned, private respondents claimed that substantial payments were made on the proceeds of
the trust receipts sued upon. They also refuted the allegations of fraud, embezzlement and
misappropriation by averring that private respondent Filipinas Textile Mills could not have done
these as it had ceased its operations starting in June of 1984 due to workers strike. These are
matters which should have been addressed in a preliminary hearing to guide the lower court to a
judicious exercise of its discretion regarding the attachment prayed for. On this score, respondent
Court of Appeals was correct in setting aside the issued writ of preliminary attachment.

Time and again, we have held that the rules on the issuance of a writ of attachment must be
construed strictly against the applicants. This stringency is required because the remedy of
attachment is harsh, extraordinary and summary in nature. If all the requisites for the granting of
the writ are not present, then the court which issues it acts in excess of its jurisdiction.xii[12]

WHEREFORE, for the foregoing reasons, the instant petitions are DENIED. The decision of
the Court of Appeals in CA-G.R. SP No. 32863 and CA-G.R. SP No. 32762 are AFFIRMED. No
pronouncement as to costs.

SO ORDERED.
FIRST DIVISION

REPUBLIC OF THE PHILIPPINES, G.R. No. 167741

Petitioner,

Present:

PUNO, C.J., Chairperson,

SANDOVAL-GUTIERREZ,*

-versus- CORONA,

AZCUNA and

GARCIA, JJ.

MAJ. GEN. CARLOS FLORES

GARCIA, CLARITA DEPAKAKIBO

GARCIA, IAN CARL DEPAKAKIBO

GARCIA, JUAN PAULO

DEPAKAKIBO GARCIA, TIMOTHY

DEPAKAKIBO GARCIA and

THE SANDIGANBAYAN

(FOURTH DIVISION),

Respondents. Promulgated:

July 12, 2007

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

DECISION

CORONA, J.:

This petition for certiorariiv[1] assails the January 14, 2005

and March 2, 2005 resolutionsiv[2] of the Fourth Division of the

Sandiganbayan in Civil Case No. 0193 entitled Republic of the

Philippines v. Maj. Gen. Carlos Flores Garcia, Clarita Depakakibo

Garcia, Ian Carl Depakakibo Garcia, Juan Paulo Depakakibo Garcia

and Timothy Mark Depakakibo Garcia.

 Civil Case No. 0193 was a petition for forfeiture of unlawfully

acquired properties, with a verified urgent ex-parte application for

the issuance of a writ of preliminary attachment, filed by the

Republic of the Philippines against Maj. Gen. Carlos F. Garcia, his

wifeiv[3] and childreniv[4] in the Sandiganbayan on October 27,

2004. In praying for the issuance of a writ of preliminary

attachment, the Republic maintained that, as a sovereign political

entity, it was exempt from filing the required attachment bond.

On October 29, 2004, the Sandiganbayan issued a resolution

ordering the issuance of a writ of preliminary attachment against

the properties of the Garcias upon the filing by the Republic of a P1

million attachment bond.iv[5] On November 2, 2004, the Republic

posted the required attachment bond to avoid any delay in the

issuance of the writ as well as to promptly protect and secure its

claim.
 On December 7, 2004, the Republic filed a motion for partial

reconsideration of the October 29, 2004 resolution claiming that it

was exempt from filing an attachment bond and praying for the

release thereof.

In a resolution dated January 14, 2005, the Sandiganbayan

ruled that there was nothing in the Rules of Court that exempted

the Republic from filing an attachment bond. It reexamined

Tolentino v. Carlosiv[6] which was invoked by the Republic to justify

its claimed exemption. That case was decided under the old Code of

Civil Procedure enacted more than a century ago.

The Sandiganbayan denied the Republics motion.

Reconsideration was also denied in a resolution dated March 2,

2005.

As already stated, these two resolutions (January 14, 2005

and March 2, 2005) are the subject of the present petition.

 Did the Sandiganbayan commit grave abuse of discretion

when it rejected the Republics claim of exemption from the filing of

an attachment bond? Yes.

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

Sec. 3. Affidavit and bond required. An order of attachment shall be

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

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

a bond must first be filed to answer for all costs which may be

adjudged to the adverse party and for the damages he may sustain

by reason of the attachment. However, this rule does not cover the

State. In Tolentino,iv[7] this Court declared that the State as

represented by the government is exempt from filing an attachment

bond on the theory that it is always solvent.

2. Section 427 of the Code of Civil Procedure provides that before the
issuance of a writ of attachment, the applicant therefor or any person in his
name, should file a bond in favor of the defendant for an amount not less than
P400 nor more than the amount of the claim, answerable for damages in case it
is shown that the attachment was obtained illegally or without sufficient cause;
but in the case at bar the one who applied for and obtained the attachment
is the Commonwealth of the Philippines, as plaintiff, and under the theory
that the State is always solvent it was not bound to post the required bond
and the respondent judge did not exceed his jurisdiction in exempting it from
such requirement. x x xiv[8] (emphasis supplied)

In other words, the issuance of a writ of preliminary attachment is

conditioned on the filing of a bond unless the applicant is the State.

Where the State is the applicant, the filing of the attachment bond

is excused.iv[9]
 The attachment bond is contingent on and answerable for all

costs which may be adjudged to the adverse party and all damages

which he may sustain by reason of the attachment should the court

finally rule that the applicant is not entitled to the writ of

attachment. Thus, it is a security for the payment of the costs and

damages to which the adverse party may be entitled in case there is

a subsequent finding that the applicant is not entitled to the writ.

The Republic of the Philippines need not give this security as it is

presumed to be always solvent and able to meet its obligations.

The Sandiganbayan thus erred when it disregarded the

foregoing presumption and instead ruled that the Republic should

file an attachment bond. The error was not simply an error of

judgment but grave abuse of discretion.

There is grave abuse of discretion when an act is done

contrary to the Constitution, the law or jurisprudence.iv[10] Here,

the Sandiganbayans January 14, 2005 resolution was clearly

contrary to Tolentino.

Worse, the Sandiganbayan transgressed the Constitution and

arrogated upon itself a power that it did not by law possess. All

courts must take their bearings from the decisions and rulings of

this Court. Tolentino has not been superseded or reversed. Thus, it

is existing jurisprudence and continues to form an important part

of our legal system.iv[11] Surprisingly, the Sandiganbayan declared

that Tolentino need(ed) to be carefully reexamined in the light of the

changes that the rule on attachment ha(d) undergone through the

years.iv[12] According to the court a quo:

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

That was then, this is now. The provisions of the old Code of Civil
Procedure governing attachment have been substantially modified in the
subsequent Rules of Court. In fact, Rule 57 of the present 1997 Rules of Civil
Procedure is an expanded modification of the provisions of the old Code of Civil
Procedure governing attachment. Unlike the old Code of Civil Procedure, the
present 1997 Rules of Civil Procedure is noticeably explicit in its requirement
that the party applying for an order of attachment should file a bond.
 On this, Article VIII, Section 4(3) of the Constitution provides:

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

The Constitution mandates that only this Court sitting en

banc may modify or reverse a doctrine or principle of law laid down

by the Court in a decision rendered en banc or in division. Any

court, the Sandiganbayan included, which renders a decision in

violation of this constitutional precept exceeds its jurisdiction.

Therefore, the Sandiganbayan could not have validly

reexamined, much less reversed, Tolentino. By doing something it

could not validly do, the Sandiganbayan acted ultra vires and

committed grave abuse of discretion.

The fact was, the revisions of the Rules of Court on

attachment, particularly those pertaining to the filing of an

attachment bond, did not quash Tolentino.

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

Sec. 247. Obligation for damages in case of attachment. Before the

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

Contrary to the pronouncement of the Sandiganbayan, Section

247 of Act No. 190 explicitly required the execution of an

attachment bond before a writ of preliminary attachment could be

issued.

The relevant provisions of Act No. 190 on attachment were

later substantially adopted as Sections 3iv[13] and 4, Rule 59 of the

1940 Rules of Court.

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

Sec. 4. Bond required from plaintiff. The party applying for the order
must give a bond executed to the defendant in an amount to be fixed by the
judge, not exceeding the plaintiffs claim, that the plaintiff will pay all the costs
which may be adjudged to the defendant and all damages which he may sustain
by reason of the attachment, if the court shall finally adjudge that the plaintiff
was not entitled thereto.
 And with the promulgation of the 1964 Rules of Court, the

rules on attachment were renumbered as Rule 57, remaining

substantially the same:

Sec. 3. Affidavit and bond required. An order of attachment shall be

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

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

Clearly, the filing of an attachment bond before the issuance of

a writ of preliminary attachment was expressly required under the

relevant provisions of both the 1940 and 1964 Rules of Court.

Commentaries on Sections 3 and 4 of the 1964 Rules of Court

uniformly cited Tolentino. They stated that the government is

exempt from filing an attachment bondiv[14] and that the State

need not file an attachment bond.iv[15]

Where the Republic of the Philippines as a party to an action asks for a

writ of attachment against the properties of a defendant, it need not furnish a
bond. This is so because the State is presumed to be solvent.iv[16]

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

And then again, we note the significant fact that Sections 3

and 4, Rule 57 of the 1964 Rules of Court were substantially

incorporated as Sections 3 and 4, Rule 57 of the present (1997)

Rules of Court.iv[18] There is thus no reason why the Republic

should be made to file an attachment bond.

In fact, in Spouses Badillo v. Hon. Tayag,iv[19] a fairly recent

case, this Court declared that, when the State litigates, it is not

required to put up a bond for damages or even an appeal bond

because it is presumed to be solvent. In other words, the State is

not required to file a bond because it is capable of paying its

obligations.iv[20]
 The pronouncement in Spouses Badillo applies in this case

even if Spouses Badillo involved the filing of a supersedeas bond.

The pronouncement that the State is not required to put up a bond

for damages or even an appeal bond is general enough to

encompass attachment bonds. Moreover, the purpose of an

attachment bond (to answer for all costs and damages which the

adverse party may sustain by reason of the attachment if the court

finally rules that the applicant is not entitled to the writ) and a

supersedeas bond (to answer for damages to the winning party in

case the appeal is found frivolous) is essentially the same.

In filing forfeiture cases against erring public officials and

employees, the Office of the Ombudsman performs the States

sovereign functions of enforcing laws, guarding and protecting the

integrity of the public service and addressing the problem of

corruption in the bureaucracy.

 The filing of an application for the issuance of a writ of

preliminary attachment is a necessary incident in forfeiture cases.

It is needed to protect the interest of the government and to prevent

the removal, concealment and disposition of properties in the hands

of unscrupulous public officers. Otherwise, even if the government

subsequently wins the case, it will be left holding an empty bag.

Accordingly, the petition is hereby GRANTED. The January

14, 2005 and March 2, 2005 resolutions of the Sandiganbayan are

REVERSED and SET ASIDE. The Republic of the Philippines is

declared exempt from the payment or filing of an attachment bond

for the issuance of a writ of preliminary attachment issued in Civil

Case No. 0193. The Sandiganbayan is hereby ordered to release the

P1,000,000 bond posted by the Republic of the Philippines to the

Office of the Ombudsman.

SO ORDERED.
Republic of the Philippines
Supreme Court
Manila

THIRD DIVISION
SPOUSES RAINER TIU A.M. No. P-11-2986

and JENNIFER TIU, [Formerly A.M. OCA IPI No. 10-3460-P]

Complainants,

Present:

PERALTA, J., Acting Chairperson,

- versus - ABAD,

VILLARAMA, JR.,

MENDOZA, and

PERLAS-BERNABE, JJ.

VIRGILIO F. VILLAR,

Sheriff IV, Regional Trial Court,

Office of the Clerk of Court,
Promulgated:
Pasay City,

Respondent.
June 13, 2012

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

DECISION
MENDOZA, J.:

This is an administrative matter for Grave Misconduct, Grave Abuse of

Authority and Conduct Prejudicial to the Best Interest of the Service filed against
respondent Virgilio F. Villar, Sheriff IV, Office of the Clerk of Court, Regional Trial
Court, Pasay City (Sheriff Villar), relating to the implementation of the Writ of
Preliminary Attachment in Civil Case No. R-PSY-10-02698-CV, a case for Sum of
Money and Damages, captioned as Henry Sia and Hankook Industrial Sales Co. v.
Spouses Rainer Tiu and Jennifer Calacday Tiu, et al.xii[1]

The factual antecedents are as follows:

On February 17, 2010, Henry Sia (Sia) and Hankook Industrial Sales Co. filed
a Complaint for Sum of Money and Damages with prayer for Preliminary
Attachment against Classique Concept International Corporation (Classique), First
Global Ventures, Inc. (First Global) and herein complainants, spouses Rainer and
Jennifer Tiu (Spouses Tiu), before the Regional Trial Court, Pasay City, Branch 115
(RTC). In its Orderxii[2] dated February 25, 2010, the RTC granted the prayer for
the issuance of a writ of preliminary attachment. Accordingly, on March 8, 2010,
the Writ of Preliminary Attachment addressed to Sheriff Carlos G. Tadeo and
Sheriff Virgilio Villar was issued. Preliminarily, on March 17, 2010, Sheriff Villar
served copies of the summons, complaint and the writ of preliminary attachment
to Spouses Tiu in the office of First Global at Unit 1905 Raffles Corporate Center,
Emerald Avenue, Ortigas Center, Pasig City. The copies were received by Grace
Tan Bauco (Bauco), who introduced herself as the companys General Manager
and Caretaker, after efforts to personally serve them to Spouses Tiu failed.
Thereafter, Sheriff Villar attached the personal properties found in said address.

Unperturbed, Spouses Tiu moved to have the case against them dismissed
on the ground of improper venue.xii[3]

In its Orderxii[4] dated July 8, 2010, the RTC granted the motion and
ordered the release of the attached properties in favor of Spouses Tiu. The
decretal portion of the order reads:

WHEREFORE, under Rule 4, Sec. 2, in relation to Rule 16, Sec. 1 (c),

because of improper venue, the defendants Motion to Dismiss and Supplemental
Motion to Dismiss are GRANTED, and this case is DISMISSED.
 The writ of preliminary attachment dated March 8, 2010 previously
issued by this Court is set aside, and everything seized thereby be immediately
returned by the sheriff responsible to the defendants. [Emphasis ours]

SO ORDERED.xii[5]

The motion for reconsideration filed by the group of Sia was denied by the
RTC in a subsequent orderxii[6] dated July 16, 2010. The RTC reiterated its
previous order to return the attached items to Spouses Tiu. The fallo reads:

WHEREFORE, finding no cogent or legal reason to reverse or modify the

Order dated July 8, 2010, the plaintiffs Motion for Reconsideration with Motion
to Conduct Ocular Inspection is DENIED.

Sheriff Virgilio Villar is directed to immediately return to defendants the

seized items.xii[7]

Acting on the RTCs directive, Sheriff Villar submitted his Sheriffs Report
with Urgent Prayer for Issuance of Clarificatory Order.xii[8] He wanted to be
clarified on whether or not he should wait for the trial courts order to attain
finality before returning the attached personal properties.
 In the meantime, Sia filed his Notice of Appeal and Very Urgent Motion to
Stay Enforcement of Order to Return Seized Properties while Spouses Tiu filed an
Urgent Ex-Parte Motion to Cite Sheriff Virgilio Villar in Contempt of Court.xii[9]

Not contented with the motion, Spouses Tiu also lodged the present
administrative complaintxii[10] against Sheriff Villar for his alleged questionable
actions regarding the implementation of the writ of attachment against them.

First, Spouses Tui alleged that there was no proper service of summons
upon them by Sheriff Villar before the writ of attachment was implemented. They
claimed that Sheriff Villar merely left a copy of the summons with one of their
employees in violation of the rule on personal service of summons to the parties
concerned as required by the Rules of Court. Second, they averred that Sheriff
Villar improperly implemented the writ against them without prior coordination
with the Sheriffs Office of Pasig City. Third, they insinuated that Sheriff Villar
asked for money for the release of their seized properties. Fourth, they charged
that Sheriff Villar maliciously refused to return their attached properties despite
the RTCs clear directive after the case against them was dismissed.
 In his Comment,xii[11] Sheriff Villar denied all the charges against him. He
denied the allegation of Spouses Tiu that there was no valid service of summons
for the writ of preliminary attachment. He explained that he effected a
substituted service after several unsuccessful attempts to personally serve the
summons on them. He also added that he made the proper coordination with the
Sheriffs office of Pasig City before implementing the writ of preliminary
attachment against them. He denied receiving P35,000.00 from their driver in
exchange for the release of the couples seized properties. He asserted that he had
no ill-motive against the return of the seized properties to them and even sought
clarification from the RTC.

Incidentally, the RTC, in its Orderxii[12] dated August 17, 2010, gave due
course to the Notice of Appeal and stated that by virtue of Sias timely appeal it
had no recourse but to elevate the entire records of the case, including the issue
of the return of Spouses Tius attached properties, to the Court of Appeals.

The Office of the Court Administrator (OCA), in its Reportxii[13] dated June
22, 2011, stated that the factual and conflicting allegations of the parties must be
threshed out in an appropriate investigation considering the seriousness of the
charge being imputed against Sheriff Villar. Accordingly, the OCA made the
following recommendations:
 RECOMMENDATION: We respectfully submit for the consideration of
the Honorable Court the recommendation that the instant administrative
complaint against Virgilio F. Villar, Sheriff IV, Office of the Clerk of Court,
Regional Trial Court, Pasay City, be RE-DOCKETED as a regular administrative
matter and REFERRED to the Executive Judge of the Regional Trial Court, Pasay
City for investigation. The report and recommendation relative to the
investigation shall be submitted within sixty (60) days from receipt of the records
of the administrative complaint.xii[14]

In its Resolutionxii[15] dated September 12, 2011, the Court resolved to re-
docket the administrative complaint into a regular administrative matter and
referred the same to the Executive Judge of the Regional Trial Court, Pasay City
for investigation, report and recommendation.

In his Report and Recommendationxii[16] dated February 8, 2012,

Executive Judge Edwin B. Ramizo (Judge Ramizo) recommended the dismissal of
the administrative complaint against Sheriff Villar.

Judge Ramizo found that Sheriff Villar complied with the instruction
embodied in Administrative Circular No. 12 requiring a sheriff to notify in writing
the sheriff of the place where the execution of a writ is to take place. He likewise
found nothing irregular in the substituted service of summons effected by Sheriff
Villar as the same complied with the requisites mandated by the Rules of Court.
Furthermore, the investigating judge saw no bad faith when Sheriff Villar failed to
return the attached properties after the dismissal of the case and the issuance of
the RTC order to release the seized properties. According to him, Sheriff Villar
merely retained the properties because he was uncertain whether or not he
should wait for the finality of the order dismissing the case. Judge Ramizo gave no
weight to Spouses Tius allegation that Sheriff Villar demanded money from them
to regain possession of their seized properties.

After a careful examination of the records, the Court agrees with the
recommendation of Judge Ramizo that the complaint against Sheriff Villar be
dismissed.

On the questioned substituted service of summons, the Court concurs with

the findings of the investigating judge that there was a valid substituted service of
summons. As a rule, personal service of summons is preferred as against
substituted service. Thus, substituted service can only be resorted to by the
process server only if personal service cannot be made promptly. Most
importantly, the proof of substituted service of summons must (a) indicate the
impossibility of service of summons within a reasonable time; (b) specify the
efforts exerted to locate the defendant; and (c) state that the summons was
served upon a person of sufficient age and discretion who is residing in the
address, or who is in charge of the office or regular place of business, of the
defendant. It is likewise required that the pertinent facts proving these
circumstances be stated in the proof of service or in the officers return.xii[17]

Based on the records, Sheriff Villar exhausted efforts to personally serve

the summons to Spouses Tiu as indicated in his Sheriffs Return of Summonsxii[18]
dated April 23, 2010. When it was apparent that the summons could not be
served personally on the spouses, Sheriff Villar served the summons through
Bauco, their employee, at the office address of the couples business, First Global
and Classique. It was evident that Bauco was competent and of sufficient age to
receive the summons on their behalf as she represented herself to be their
General Manager and Caretaker.

On the charge that Sheriff Villar did not comply with the requirement of
prior coordination as mandated in Administrative Circular No. 12, Judge Ramizo
found it baseless and stated that the sheriff properly complied with the circular.
Administrative Circular No. 12xii[19] lays down the guidelines and procedure in
the service and execution of court writs and processes in the reorganized courts.
In particular, paragraph 2 thereof states:

xxxx
 2. All Clerks of Court of the Metropolitan Trial Court and Municipal Trial
Courts in Cities, and/or their deputy sheriffs shall serve all court processes and
execute all writs of their respective courts within their territorial jurisdiction;
[Emphasis ours]

xxxx

Paragraph 5 of the same circular requires prior coordination with the

sheriff of the place where the execution of the writ will take place, to wit:

5. No sheriff or deputy sheriff shall execute a court writ outside his

territorial jurisdiction without first notifying in writing, and seeking the assistance
of, the sheriff of the place where the execution shall take place; [Emphasis ours]

In the case at bench, documentary evidence indeed discloses that Sheriff

Villar of Pasay City coordinated with the Sheriff of Pasig City, in compliance with
Administrative Circular No. 12, before he implemented the writ of preliminary
attachment. In the Certificationxii[20] dated November 17, 2011, the Clerk of
Court of Pasig City attested to the fact that Sheriff Villar formally coordinated with
their office in connection with the implementation of the writ of attachment.
Attached to said certification is a certified true copy of Sheriff Villars request for
coordinationxii[21] dated March 12, 2010, on which the word received was
stamped by the Office of the Clerk of Court and Ex-officio Sheriff, RTC-Pasig
City.
 As to Sheriff Villars failure to effect the immediate release of the attached
properties despite the RTCs order of release, the Court finds the explanation of the
respondent sheriff acceptable enough as not to earn a sanction from the Court.

By law, sheriffs are obligated to maintain possession of the seized properties

absent any instruction to the contrary. In this case, the writ of preliminary
attachment authorizing the trial court to legally hold the attached items was set
aside by the RTC Order dated July 8, 2010 specifically ordering Sheriff Villar to
immediately release the seized items to Spouses Tiu. Pertinently, Rule 57, Section
19 of the Rules of Civil Procedure provides:
SEC. 19. Disposition of attached property where judgment is for
party against whom attachment was issued.If judgment be rendered
against the attaching party, all the proceeds of sales and money collected
or received by the sheriff, under the order of attachment, and all property
attached remaining in any such officers hands, shall be delivered to the
party against whom attachment was issued, and the order of attachment
discharged.

The instruction of the trial court was clear and simple. Sheriff Villar was to
return the seized properties to Spouses Tiu. He should have followed the courts
order immediately. He had no discretion to wait for the finality of the courts order
of dismissal before discharging the order of attachment. Nevertheless, Sheriff
Villar showed no deliberate defiance of, or disobedience to, the courts order of
release. Records show that he took the proper step under the circumstances. He
filed with the trial court his Sheriffs Report with Urgent Prayer for the Issuance of
a Clarificatory Order. The Court perceives nothing amiss in consulting the judge
before taking action on a matter of which he is not an expert.
 As to the allegation of grave misconduct for supposedly asking P35,000.00
to facilitate the return of the attached items, the records bear out that it was a
baseless charge. In administrative proceedings, the complainant bears the onus of
establishing, by substantial evidence, the averments of his complaint.xii[22] Other
than the bare allegations of Spouses Tiu, no evidence showing that Sheriff Villar
surreptitiously demanded money from them for the release of their attached
properties was adduced. Mere suspicion without proof cannot be the basis of
conviction.xii[23]

WHEREFORE, the complaint against Virgilio F. Villar, Sheriff IV, Office

of the Clerk of Court, Regional Trial Court, Pasay City, is hereby DISMISSED.

SO ORDERED.