ANITA MANGILA, petitioner, vs. COURT OF APPEALS and LORETA GUINA, respondents.
Petitioner Anita Mangila, an exporter of sea foods under the name and style of Seafoods Products contracted the freight forwarding services of respondent Loreta Guina is the President and GM of Air Swift International for shipment products, such as crabs, prawns and assorted fishes, to Guam (USA) where petitioner maintains an outlet. Petitioner agreed to pay private respondent cash on delivery. Private respondent’s invoice stipulates a charge of 18% interest per annum on all overdue accounts. In case of suit, the same invoice stipulates attorney’s fees equivalent to 25 %of the amount due plus costs of suit.i On the first shipment, petitioner requested for 7 days within which to pay,however, for the next three shipments, March 17, 24 and 31, 1988, petitioner failed to pay private respondent shipping charges amounting to P109, 376.95.ii Despite several demands, petitioner never paid private respondent. Thus, respondent filed before the RTC of Pasay City for collection of sum of money. The sheriff filed his Sheriff’s Return showing that summons was not served on petitioner. A woman found at petitioner’s house informed the sheriff that petitioner transferred her residence to Sto. Niño, Guagua, Pampanga. The sheriff found out further that petitioner had left the Philippines for Guam.iii Thus, construing petitioner’s departure from the Philippines as done with intent to defraud her creditors, private respondent filed a Motion for Preliminary Attachment. The trial court issued an Order of Preliminary Attachment iv against petitioner. The following day, the trial court issued a Writ of Preliminary Attachment. The trial court granted the request of its sheriff for assistance from their counterparts in RTC, Pampanga. Thus, Sheriff Alfredo San Miguel of RTC Pampanga served on petitioner’s household help in San Fernando, Pampanga, the Notice of Levy with the Order, Affidavit and Bond. vPetitioner filed an Urgent Motion to Discharge Attachment vi without submitting herself to the jurisdiction of the trial court. She pointed out that up to then, she had not been served a copy of the Complaint and the summons. Hence, petitioner claimed the court had not acquired jurisdiction over her person.vii In the hearing of the Urgent Motion to Discharge Attachment, private respondent sought and was granted a resetting. On that date, private respondent’s counsel did not appear, so the Urgent Motion to Discharge Attachment was deemed submitted for resolution.viiiThe trial court granted the Motion to Discharge Attachment upon filing of petitioner’s counter-bond. The trial court, however, did not rule on the question of jurisdiction and on the validity of the writ of preliminary attachment.Private respondent applied for an alias summons, which the trial court issued on January 19, 1989.ix It was only on January 26, 1989 that summons was finally served on petitioner.x The trial court issued an Order setting the pre-trial for July 18, 1989 at 8:30 a.m. and requiring the parties to submit their pre-trial briefs. Meanwhile, private respondent filed a Motion to Sell Attached Properties but the trial court denied the motion.On motion of petitioner, the trial court issued an Order resetting the pre-trial from July 18, 1989 to August 24, 1989 at 8:30 a.m. On August 24, 1989, the day of the pre-trial, the trial court issued an Order xi terminating the pre-trial and allowing the private respondent to present evidence ex-parte on September 12, 1989 at 8:30 a.m.. The Order stated that when the case was called for pre-trial at 8:31 a.m., only the counsel for private respondent appeared. Upon the trial court’s second call 20 minutes later, petitioner’s counsel was still nowhere to be found. Thus, upon motion of private respondent, the pre-trial was considered terminated. On September 12, 1989, petitioner filed her Motion for Reconsideration of the Order terminating the pre-trial. Petitioner explained that her counsel arrived 5 minutes after the second call, as shown by the transcript of stenographic notes, and was late because of heavy traffic. Petitioner claims that the lower court erred in allowing private respondent to present evidence ex-parte since there was no Order considering the petitioner as in default. Petitioner contends that the Order of August 24, 1989 did not state that petitioner was declared as in default but still the court allowed private respondent to present evidence ex-parte.xii On October 6, 1989, the trial court denied the Motion for Reconsideration and scheduled the presentation of private respondent’s evidence ex-parte on October 10, 1989.On October 10, 1989, petitioner filed an Omnibus Motion stating that the presentation of evidence ex-parte should be suspended because there was no declaration of petitioner as in default and petitioner’s counsel was not absent, but merely late.On October 18, 1989, the trial court denied the Omnibus Motion.xiiiOn November 20, 1989, the petitioner received a copy of the Decision of November 10, 1989 , ordering petitioner to pay respondent P109,376.95 plus 18 percent interest per annum, 25 percent attorney’s fees and costs of suit. Private respondent filed a Motion for Execution Pending Appeal but the trial court denied the same. Court of Appeals rendered a decision affirming the decision of the trial court.
The Issues WHETHER RESPONDENT COURT ERRED IN NOT HOLDING THAT THE WRIT OF ATTACHMENT WAS
IMPROPERLY ISSUED AND SERVED;
The Ruling of the Court Improper Issuance and Service of Writ of Attachment Petitioner ascribes several errors to the issuance and implementation of the writ of attachment. Among petitioner’s arguments are: first, there was no ground for the issuance of the writ since the intent to defraud her creditors had not been established; second, the value of the properties levied exceeded the value of private respondent’s claim. However, the crux of petitioner’s arguments rests on the question of the validity of the writ of attachment. Because of failure to serve summons on her before or simultaneously with the writ’s implementation, petitioner claims that the trial court had not acquired jurisdiction over her person and thus the service of the writ is void. As a preliminary note, a distinction should be made between issuance and implementation of the writ of attachment. It is necessary to distinguish between the two to determine when jurisdiction over the person of the defendant should be acquired to validly implement the writ. This distinction is crucial in resolving whether there is merit in petitioner’s argument. This Court has long settled the issue of when jurisdiction over the person of the defendant should be acquired in cases where a party resorts to provisional remedies. A party to a suit may, at any time after filing the complaint, avail of the provisional remedies under the Rules of Court. Specifically, Rule 57 on preliminary attachment speaks of the grant of the remedy “at the commencement of the action or at any time thereafter.”xiv This phrase refers to the date of filing of the complaint which is the moment that marks “the commencement of the action.” The reference plainly is to a time before summons is served on the defendant, or even before summons issues. In Davao Light & Power Co., Inc. v. Court of Appeals,xv this Court clarified the actual time when jurisdiction should be had: “It goes without saying that whatever be the acts done by the Court prior to the acquisition of jurisdiction over the person of defendant - issuance of summons, order of attachment and writ of attachment - these do not and cannot bind and affect the defendant until and unless jurisdiction over his person is eventually obtained by the court, either by service on him of summons or other coercive process or his voluntary submission to the court’s authority. Hence, when the sheriff or other proper officer commences implementation of the writ of attachment, it is essential that he serve on the defendant not only a copy of the applicant’s affidavit and attachment bond, and of the order of attachment, as explicitly required by Section 5 of Rule 57, but also the summons addressed to said defendant as well as a copy of the complaint xxx.” (Emphasis supplied.) Furthermore, we have held that the grant of the provisional remedy of attachment involves three stages: first, the court issues the order granting the application; second, the writ of attachment issues pursuant to the order granting the writ; and third, the writ is implemented. For the initial two stages, it is not necessary that jurisdiction over the person of the defendant be first obtained. However, once the implementation of the writ commences, the court must have acquired jurisdiction over the defendant for without such jurisdiction, the court has no power and authority to act in any manner against the defendant. Any order issuing from the Court will not bind the defendant.xvi In the instant case, the Writ of Preliminary Attachment was issued on September 27, 1988 and implemented on October 28, 1988. However, the alias summons was served only on January 26, 1989 or almost three months after the implementation of the writ of attachment. The trial court had the authority to issue the Writ of Attachment on September 27 since a motion for its issuance can be filed “at the commencement of the action.” However, on the day the writ was implemented, the trial court should have, previously or simultaneously with the implementation of the writ, acquired jurisdiction over the petitioner. Yet, as was shown in the records of the case, the summons was actually served on petitioner several months after the writ had been implemented. Private respondent, nevertheless, claims that the prior or contemporaneous service of summons contemplated in Section 5 of Rule 57 provides for exceptions. Among such exceptions are “where the summons could not be served personally or by substituted service despite diligent efforts or where the defendant is a resident temporarily absent therefrom x x x.” Private respondent asserts that when she commenced this action, she tried to serve summons on petitioner but the latter could not be located at her customary address in Kamuning, Quezon City or at her new address in Guagua, Pampanga.xvii Furthermore, respondent claims that petitioner was not even in Pampanga; rather, she was in Guam purportedly on a business trip.
Private respondent never showed that she effected substituted service on petitioner after her personal service failed. Likewise, if it were true that private respondent could not ascertain the whereabouts of petitioner after a diligent inquiry, still she had some other recourse under the Rules of Civil Procedure. The rules provide for certain remedies in cases where personal service could not be effected on a party. Section 14, Rule 14 of the Rules of Court provides that whenever the defendant’s “whereabouts are unknown and cannot be ascertained by diligent inquiry, service may, by leave of court, be effected upon him by publication in a newspaper of general circulation x x x.” Thus, if petitioner’s whereabouts could not be ascertained after the sheriff had served the summons at her given address, then respondent could have immediately asked the court for service of summons by publication on petitioner.xviii Moreover, as private respondent also claims that petitioner was abroad at the time of the service of summons, this made petitioner a resident who is temporarily out of the country. This is the exact situation contemplated in Section 16,xix Rule 14 of the Rules of Civil Procedure, providing for service of summons by publication. In conclusion, we hold that the alias summons belatedly served on petitioner cannot be deemed to have cured the fatal defect in the enforcement of the writ. The trial court cannot enforce such a coercive process on petitioner without first obtaining jurisdiction over her person. The preliminary writ of attachment must be served after or simultaneous with the service of summons on the defendant whether by personal service, substituted service or by publication as warranted by the circumstances of the case. xx The subsequent service of summons does not confer a retroactive acquisition of jurisdiction over her person because the law does not allow for retroactivity of a belated service. RIMEO S. GUSTILO vs. HON. RICARDO S. REAL, SR. QUISUMBING, J.: In a verified complaint, Rimeo S. Gustilo charged respondent Judge Ricardo S. Real, Sr., of the MTC of VictoriasManapla, Negros Occidental with gross misconduct, gross incompetence, gross ignorance of the law, and violation of the Anti-Graft and Corrupt Practices Act relative to Civil Case No. 703-M entitled “Weddy C. Libo-on v. Rimeo S. Gustilo, et al.” for recounting of ballots of Precinct Nos. 27 and 27-A, Barangay Punta Mesa, Manapla, Negros Occidental. Complainant avers that he was a candidate for punong barangay of Barangay Punta Mesa, Manapla, Negros Occidental in the May 12, 1997 elections. His lone opponent was Weddy C. Libo-on, then the incumbent punong barangay. Both complainant and Libo-on garnered (819) votes during the elections, resulting in a tie. The breaking of the tie by the Board of Canvassers was in complainant’s favor and he was proclaimed duly elected punong barangay of Punta Mesa, Manapla.xxi His opponent filed an election protest case,Libo-on sought the recounting of ballots in two precincts, preliminary prohibitory injunction, and damages. Respondent ordered the issuance of summons to the parties and set the hearing, however, Libo-on filed a motion to advance the hearing which was granted. Complainant avers that he was not furnished a copy of this Order On May 29, 1997, respondent judge issued a (TRO) and annulled the proclamation of complainant as the duly elected punong barangay of Punta Mesa, Manapla.xxii Complainant declares that no copy of this Order was served on him. That same day, however, he was able to secure copies of the orders of respondent from the COMELEC Registrar of Manapla, Negros Occidental and (DILG). Moreover, it was only in the afternoon of May 29, 1997 that complainant received a copy of Libo-on’s petition in Civil Case No. 703-M and respondent’s Order dated May 21, 1997. On May 30, 1997, complainant took his oath of office as punong barangay.xxiii That same day, he also filed a petition for certiorari before the Regional Trial Court of Silay City, Negros Occidental. On June 5, 1997, the RTC lifted the TRO issued by respondent and declared as null and void the order nullifying complainant’s proclamation as duly elected punong barangay. Believing that respondent could not decide the case impartially, complainant moved for his inhibition. On June 11, 1997, respondent denied complainant’s motion for inhibition and after hearing Libo-on’s motion for permanent injunction, issued a second TRO “to maintain the status quo between the contending parties. Complainant argues that by issuing the second TRO, respondent reversed the order of the RTC of Silay City dated June 5, 1997. He also claims that by preventing him from assuming office, he was excluded by the DILG from participating in the election of the Liga ng Mga Barangay on June 14, 1997. In his Comment, respondent denied the allegations. He claimed that when Libo-on filed his motion to advance the hearing of the prayer for injunction on May 27, 1997, complainant was served a copy by registered mail as shown by the registry receipts attached to said motion. Considering the urgency of the matter and since there was substantial compliance with due process, he issued the Order. Respondent claims that on May 29, 1997, Libo-on and his counsel appeared but complainant did not, despite due notice. The hearing then proceeded, with Libo-on presenting his evidence. As a result, he issued the TRO prayed for
he compounded the infraction by annulling complainant’s proclamation as the duly elected punong barangay of Punta Mesa. since the second TRO he issued satisfied the notice and hearing requirements of Circular No. 1999.HON. In other words. He submits that absent fraud. Note that the RTC of Silay City corrected respondent’s errors by declaring null and void his Order dated May 29. which from the very beginning was illegal. he was constrained to annul complainant’s proclamation. which held that a faulty tabulation cannot be the basis of a valid proclamation.xxv Moreover. 1997 after receiving the applicant’s evidence ex parte.” The OCA recommends that respondent be fined P20. complainant had been duly proclaimed as the winning candidate for punong barangay. or fear of criticism. was outside the jurisdiction of his court.000. his acts.” We see no reason to disagree with the finding of the OCA that the evident purpose of the second TRO was to prevent complainant from participating in the election of the Liga ng mga Barangay. But since the COMELEC ignored Libo-on’s petition for correction of erroneous tabulation and Libo-on had no other remedy under the law.02 of the Code of Judicial Conduct which provides that. 316 (1995) and Tatlonghari v. Nonetheless. Unless his election was annulled. but seeks to justify his action on the ground that the proclamation was void ab initio. Respondent admits that the Order particularly the annulment of complainant’s proclamation. 20-95. entered into a Billboard Advertisement Contract whereby petitioner was to construct one billboard advertisement for Digital’s product for a period of one year. 20-95 in issuing the first TRO is grave abuse of authority. his actions showed a bias in favor of Libo-on and “evinced a pattern to prevent the complainant from assuming office as the duly elected punong barangay despite his having been proclaimed as such by the Board of Canvassers. 703-M were present during the hearing after due notice. Inc. a domestic corporation duly organized and existing under Philippine laws.xxiv In the instant case. After receiving their evidence. (Digital) and herein petitioner Limitless Potentials. Worse. it is essential that the following requisites be present: (1) there must be a right in esse or the existence of a right to be protected. 1997. he compounded his previous errors of judgment by proceeding to hear Libo-on’s motion for permanent injunction and issuing a second TRO on June 11. respondent wantonly usurped a power exclusively vested by law in the COMELEC. the Office of the Court Administrator (OCA) found that respondent’s errors were not honest mistakes in the performance of his duties.” LIMITLESS POTENTIALS. He justified his action by our rulings in Bince. He had taken his oath of office. even if erroneous. that Digital will make
.and annulled complainant’s proclamation. He points out that both parties in Civil Case No. Respondent admits that his court was not vested with the power or jurisdiction to annul the proclamation. Respondent contends that complainant should first have exhausted all remedies in his court before resorting to the special civil action for certiorari with the RTC. he was entitled to all the rights of said office. Respondent also faults the RTC of Silay City for issuing the Order dated June 5. which lifted the TRO he issued and declared void his nullification of complainant’s proclamation. respondent explains that it was never meant to reverse the Order of the RTC of Silay City dated June 5. Inc. 1936-69. Jr. he found that unless a TRO was issued. misconduct. The foregoing clearly show that whenever an application for a TRO is filed. Rather. In this case.000. In so doing. In its evaluation and recommendation report dated November 29. Before an injunctive writ can be issued. or corruption. a summary hearing may not be dispensed with. Libo-on would suffer a grave injustice and irreparable injury. COURT OF APPEALS Digital Networks Communications and Computers. “In every case. 1997. Respondent must be held liable for violating Rule 3. His failure to abide by Administrative Circular No.00/ month plus VAT. With respect to his Order of June 11. in willfully nullifying complainant’s proclamation despite his court’s want of authority. 199 SCRA 849 (1991). the court may act on the application only after all parties have been notified and heard in a summary hearing. among other things. public opinion. and conduct prejudicial to the proper administration of justice. COMELEC. INC vs. 1997 on the ground that “extreme urgency” and “grave injustice and irreparable injury will arise” if no injunctive remedy were granted. and (2) the act against which injunction to be directed is a violation of such right. 312 Phil. The latter court. respondent knowingly issued an unjust order. v. Manapla and prohibiting him from assuming office. in turn. 1997. are not the subject of disciplinary action. (LPI). It was agreed. should have dismissed the action for certiorari for failure to exhaust judicial remedies.00 and warned that a repetition of similar acts in the future will be dealt with more severely. We do not see how the complainant’s exercise of such rights would cause an irreparable injury or violate the right of the losing candidate so as to justify the issuance of a temporary restraining order “to maintain the status quo. a judge shall endeavor diligently to ascertain the facts and the applicable law unswayed by partisan interests. with an agreed rental of P60. dishonesty. COMELEC. respondent admits that he issued the injunctive writ sought on May 29. Respondent insists that his act did not reverse the Order of the RTC in Special Civil Action No. 1997.
which was also denied by the RTC Dissatisfied. Petitioner filed its Motion for Judgment Against the Bond. and (b) Digital’s cause of action. as represented by the private respondents. however. should be directed against the private respondents and Macgraphics. Hence. The preliminary injunction issued by the Court was thereby dissolved. the contract between Digital and the petitioner was considered terminated. the petitioner filed a Petition for Certiorari under Rule 65 of the Revised Rules of Civil Procedure before the Court of Appeals assailing the Orders of the RTC for having been issued with grave abuse of discretion amounting to lack and/or excess of jurisdiction. Makati City. as follows: When the application for temporary restraining order and/or preliminary injunction was heard this afternoon. [herein petitioner] who did not file comment on the petition appeared thru counsel Emmanuel Magnaye. Thus. to wit: (a) P60. Subsequently.00 plus VAT upon completion of the billboard. and (b) P120. the claim for damages on the bond is untenable. by way of affirmative defenses. In view thereof. where petitioner erected the subject billboard.7 granting private respondents’ prayer for a writ of preliminary injunction. Thus. to destroy the subject billboard to enable Macgraphics to erect its own billboard and advertising signs. Petitioner pointed out two basic legal issues wherein the appellate court committed serious and reversible errors. Digital complied with the aforesaid agreement. Private respondents filed a Petition for Certiorari with Prayer for Preliminary Restraining Order and/or Writ of Preliminary Injunction before the Regional Trial Court (RTC) of Makati City. petitioner filed a Third–Party Complaint4 against Macgraphics Carranz International Corporation (Macgraphics) etc alleging that it had entered into a contract of lease with Roman Catholic Archbishop of Manila (RCAM). 55170. Upon consideration of the allegations in the petition and the oral manifestations and admissions of both parties. this Court hereby resolves to issue the writ of preliminary injunction in order to preserve the status quo as well as not to render the issue herein raised moot and academic.000. over a space inside San Carlos Manor Seminary in Guadalupe Viejo. denied petitioner’s Motion for Judgment Against the Bond declaring that the preliminary injunction was not wrongfully obtained. to wit:
. Digital commenced a suit against herein petitioner before the (MeTC) of Makati City. petitioner learned that Macgraphics had "cajoled and induced" RCAM. the RTC rendered a Decision9 dismissing the Petition for Certiorari filed by private respondents. assailing the Orders of the MeTC of Makati City denying their Motion to Dismiss Third-Party Complaint and Motion to Dismiss Amended Third-Party Complaint The RTC issued an Order on 6 February 1998.00 plus VAT upon the signing of the contract. however. It was brought out to the attention of this Court that respondent judge is poised on pursuing the hearing of the case before her despite the pendency of this petition. Thereafter. this Petition. the Court of Appeals rendered a Decision dismissing the Petition filed by the petitioner for utter lack of merit. private respondents filed an Urgent Motion for Reconsideration.a three-month deposit in the following manner. Petitioner further averred that despite its full compliance with the terms and conditions of the lease contract. Thus. through the private respondents. The billboard.Aggrieved. petitioner claimed that: (a) the destruction of the subject billboard was not of its own making and beyond its control. Digital demanded for the return of their rental deposit for two months. It appeared that the case was set by respondent judge for hearing ex-parte for the reception of [herein petitioner’s] evidence on 23 February 1998. The RTC. The pertinent portion of the aforesaid Order reads. It also appeared that [herein private respondents] were declared in default despite the fact that they have filed their answer and the motion to lift such order of default and for admission of the answer was denied by respondent judge. for the return of Digital’s deposit. which was denied by the RTC. but the petitioner refused to do so claiming that the loss of the billboard was due to force majeure and that any cause of action should be directed against the responsible persons. if any. consistent with its defense against Digital’s Complaint. herein private respondents. was destroyed by unknown persons. the MeTC was enjoined from hearing the Third-Party Complaint in Civil Case No. together with their cohorts. which was equivalent to two months rental inclusive of VAT and attorney’s fees.000. the petitioner moved for the reconsideration of the aforesaid Order. maliciously dismantled and destroyed the subject billboard and prevented its men from reconstructing it.000.00. therefore. conditioned upon the posting of an injunction bond in the amount of P10.
which is similarly applicable to preliminary injunction. The dissolution of the injunction. which is the last actual. but merely maintain or re-establish the pre-existing relationship between them. Its principal purpose is to protect the enjoined party against loss or damage by reason of the injunction. to be entitled to an injunctive writ. court. if no preliminary injunction is issued.28 has outlined the procedure for the filing of a claim for damages against an injunction bond. petitioner repeatedly argues that malice or lack of good faith is not an element of recovery on the injunction bond. and uncontested status that preceded the actual controversy. setting forth the facts showing his right to damages and the amount thereof. subject to the final disposition of the principal action. petitioner asserts that it can properly collect such damages on the said bond. peaceful. 20. the purpose of the injunction bond. as the term itself suggests. amounts to a determination that the injunction was wrongfully obtained and a right of action on the injunction immediately accrues to the defendant.An application for damages on account of improper. A preliminary injunction. (2) a violation of that right. the defendant may.25 Thus. The petitioner maintains that the attorney’s fees. or at the time of the filing of the case. not explicitly exempted. Thus. of the 1997 Revised Rules of Civil Procedure. . this Court must initially establish the nature of the preliminary injunction. A preliminary injunction is a provisional remedy that a party may resort to in order to preserve and protect certain rights and interests during the pendency of an action. a bond executed to the party or person enjoined. Otherwise. among other things. and since malice or lack of good faith is not an element of recovery on the injunction bond. where the action or proceeding is pending.26 and the bond is usually conditioned accordingly.
.20 It is issued to preserve the status quo ante.22 The status quo should be existing ante litem motam. In the case at bar. The injunction bond is intended as a security for damages in case it is finally decided that the injunction ought not to have been granted. requiring a party. a preliminary injunction should not establish new relations between the parties. Hence. files with the court. irregular or excessive attachment must be filed before the trial or before appeal is perfected or before the judgment becomes executory.27 Rule 57.19 It is an order granted at any stage of an action. In answering this issue raised by petitioner. even if the injunction was obtained in good faith. litigation costs. irregular or excessive attachment. (3) that there is an urgent and permanent act and urgent necessity for the writ to prevent serious damage.23 The purpose of a preliminary injunction is to prevent threatened or continuous irremediable injury to some of the parties before their claims can be thoroughly studied and adjudicated. before final judgment. do the act which the plaintiff is seeking the court to restrain. The aforesaid provision of law pertinently provides: SEC. having proven through testimonial and documentary evidence that it suffered damages because of the issuance of the writ of injunction. and cost of delay by reason of the injunction are proper and valid items of damages which can be claimed against the injunction bond. Upon approval of the requisite bond. is merely temporary. the posting of a bond is a condition sine qua non for a writ of preliminary injunction to be issued. For this reason. Such damages may be awarded only after proper hearing and shall be included in the judgment on the main case. the applicant. the petitioner has the burden to establish the following requisites: (1) a right in esse or a clear and unmistakable right to be protected. with due notice to the attaching party and his surety or sureties. Section 20. This will make ineffectual the final judgment that the court may afterwards render in granting relief to the plaintiff.21 in order to protect the rights of the plaintiff during the pendency of the suit. a writ of preliminary injunction shall be issued. prior to the judgment or final order.24 A preliminary injunction or temporary restraining order may be granted only when. in an amount to be fixed by the court. The damages sustained as a result of a wrongfully obtained injunction may be recovered upon the injunction bond which is required to be deposited with court. as well as the manner of recovering damages on the said bond. Is malice or bad faith a condition sine qua non for liability to attach on the injunction bond? Petitioner argues that malice or lack of good faith is not an element of recovery on the bond. agency or person to perform or to refrain from performing a particular act or acts. to the effect that the applicant will pay such party or person all damages which he may sustain by reason of the injunction or temporary restraining order if the court should finally decide that the applicant was not entitled thereto.I. Claim for damages on account of improper.
ROMULO M. 9 The matter was subsequently rectified and at 3:30 p. 1999. for the purpose of recovery upon the injunction bond.30 citing the case of Pacis v. WAVA ANN BAYLON. vs. because to require malice as a prerequisite would make the filing of a bond a useless formality. Nothing herein contained shall prevent the party against whom the attachment was issued from recovering in the same action the damages awarded to him from any property of the attaching party not exempt from execution should the bond or deposit given by the latter be insufficient or fail to fully satisfy the award. Echano (Echano) and Librado Guerra (Guerra) are not registered stockholders of Mabini. respondent Romulo Adeva (Adeva) intentionally failed to call a stockholders meeting for the election of Mabini’s Board of Trustees on the pretext that its stock and transfer books are missing. ALICE ADEVA. (Mabini). 1999. 1999 which was extended until September 22. issued a (TRO) on September 2. Commission on Elections. he must claim damages sustained during the pendency of the appeal by filing an application in the appellate court. 6 Then SEC Chairman Perfecto Yasay. after the expiration of the TRO. ADEVA. ECHANO and LIBRADO GUERRA The petition stemmed from a dispute between two groups of shareholders within the Mabini College. The dissolution of the injunction. to prove malice or lack of good faith in the issuance thereof before he can recover damages against the injunction bond. 1999 at 1:00 to 3:00 p. there is no official list of stockholders of Mabini. 1999 granting the issuance of a writ of preliminary injunction.m. Hearing on the application for the issuance of a preliminary injunction was set on September 20 and 21. JUSTO LUKBAN. agree with the petitioner that indeed.00) Pesos per share. petitioners filed on August 31. and. MARCEL LUKBAN. SEC Case No. subject to the posting of an injunction bond in the amount of P50. that the scheme to bid out the shares is violative of the stockholders’ preemptive right to purchase treasury shares. 2 The Board agreed during its Special Meeting to direct the PBAC to send out to all known stockholders invitations to bid for the entire 106 treasury shares for a minimum bulk bid ofP1. and respondents.200. CEZAR E.000. the incumbent Board of Trustees passed a resolution authorizing the sale through bidding of 106 treasury shares of stock of Mabini by its Pre-qualification. and enjoining the sale of the treasury shares.200.00. the dissolution of the injunction because of petitioner’s main cause of action provides the actionable wrong for the purpose of recovery upon the bond. a petition for Annual Elections of Stockholders and SEC Supervision in the Procedural Matter of Corporate Inspection with Mandatory Injunction. 1999. wherein a committee was composed for the reconstitution of Mabini’s stock and transfer books.. 5 that the stock and transfer book of Mabini has yet to be reconstituted. the Adeva group. but it was refused by respondents’ counsel for the reason that the order was not signed by the majority of the Hearing Panel. 3 The bidding. Petitioners prayed that the impending sale be enjoined on the grounds that the authority given by the Board of Trustees to the PBAC contravenes Section 9 of the Corporation Code which gives the Board of Directors or Trustees the right to dispose said shares for a reasonable price fixed by the Board. ALBERTO GARCIA. the PBAC re-scheduled the sale of the shares on September 28. 1999. 1999. amounts to a determination that the injunction was wrongfully obtained and a right of action on the injunction bond immediately accrues. was deferred to September 4. that as of the date of filing of the petition. namely: Cesar F. malice or lack of good faith is not a condition sine qua non for liability to attach on the injunction bond. Thus. with notice to the party in whose favor the attachment was issued or his surety or sureties.m. LUZ GARCIA. petitioners filed SEC LEO Case No. AIDA FERRER and JANET VENIDA. This must be so. JR. 8 Attempt was made to serve a copy of the SEC Order in the morning of September 28.If the judgment of the appellate court be favorable to the party against whom the attachment was issued. On September 23. This Court was very succinct in the case of Aquino v. Socorro. 7 But before said date came. We. ensuring his indefinite tenure as President of the corporation. Jr. however. 1999. PAMELA ROSANNA APUYA. with petitioners comprising the Garcia-Lukban group. 95-0005 (EB 496). therefore. The appellate court may allow the application to be heard and decided by the trial court. 4 Thus. Inc. who suffered damages by reason of the issuance of a writ of injunction.00) Pesos or (P10. 08-99-6398 seeking to enjoin the scheduled sale. that two members of the PBAC.081. alleging that since 1983. the Hearing Panel telefaxed a copy of the signed order but respondents’ counsel still refused to receive the same on the ground that petitioners did not post an injunction
. before the judgment of the appellate court becomes executory. even if the injunction was obtained in good faith. the Hearing Panel issued an Order dated September 27. of the same day.29 Now. Bids and Award Committee (PBAC).31 thus: Malice or lack of good faith is not an element of recovery on the bond. it can be clearly gleaned that there is nothing from the aforequoted provision of law which requires an enjoined party.
wherein the main issues involved. petitioners filed an Omnibus Motion praying that the sale of the treasury shares be nullified and that respondents be cited in indirect contempt. 08-99-6398 was filed by petitioners. 15 However. It is for the Hearing Panel in SEC Case No. the CA found that the SEC En Banc went beyond the issue of the propriety of granting the writ of preliminary injunction when it annulled the Mabini’s board resolution authorizing the sale of the treasury shares. 1999. 1999 at 12:00 noon. 21 the Court is convinced that SEC Case No. petitioners had yet to post an injunction bond which was done only on October 8. the SEC En Banc delved on matters that were not before it when it ruled that the board of trustees lacked the authority to dispose of the shares. 95-0005 (EB 496). 08-99-6398 is one which seeks only an ancillary remedy or one for Injunction. At first glance. Jr. Cacawa. that day and was already finished. 2000. (2) whether there was a quorum when the Board of Trustees authorized the sale of the treasury shares. the power to dispose treasury shares is given to the Board of Directors or Trustees and not to any other Committee created by the Board. and that the right of respondents Echano and Guerra to act as Members of the Board of the PBAC is "very dubious" because their names. respectively of the PBAC of Mabini. 08-99-6398 is a principal action for Injunction. and (3) whether respondents Echano and Guerra are bona fide shareholders. The Court has distinguished the main action for injunction from the provisional or ancillary remedy of preliminary injunction.bond and that the bidding had already commenced at 1:00 p. as it was the board itself which authorized the sale through the PBAC. are not recorded in the Stock and Transfer Book of Mabini which has been declared missing and has yet to be reconstituted. As a matter of course. the CA sustained the Hearing Panel’s denial of petitioners’ Omnibus Motion due to their failure to timely post an injunction bond. and Guerra.m. whether prohibitory or mandatory. and the reconstitution is still being undertaken at the time that SEC Case No. 08-99-6398 to determine whether a final injunction may be issued under the facts and the law of the case. among others. The Hearing Panel denied petitioners’ Omnibus Motion finding that there is no ground to nullify the sale or hold respondents in indirect contempt since at the time the sale was held. the sole object of which is to preserve the status quo until the merits can be heard.
is instructive. Lydia E. instead of just ruling on whether the Hearing Panel abused its discretion in denying petitioners’ Omnibus Motion. the main action for injunction seeks a judgment embodying a final injunction which is distinct from. it must first be made clear whether the petition filed by petitioners docketed as SEC Case No. "from offering for sale the treasury shares of Mabini College in a bidding to be held for the purpose. as Chairmen and Members. and considering the allegations in the petition that under Section 9 of the Corporation Code. Lastly. or 10 days after the scheduled sale. Echano. A preliminary injunction is granted at any stage of an action or proceeding prior to the judgment or final order. It may be the main action or merely a provisional remedy for and as an incident in the main action. 13 This prompted respondents to file a petition for review with the CA.
As a result. thus: The main action for injunction is distinct from the provisional or ancillary remedy of preliminary injunction which cannot exist except only as part or an incident of an independent action or proceeding.
. SEC Case No. The CA further stated that it does not concur with the SEC En Banc’s ruling that the sale lacked authority from Mabini’s board. 95-0005 (EB 496). to wit:
Injunction is a judicial writ." but it nullified the sale of the treasury shares based on the Hearing Panel’s "prima facie" finding that it lacked authority from Mabini’s Board of Trustees. It nullified the SEC En Banc’s Resolution. It persists until it is dissolved or until the termination of the action without the court issuing a final injunction. The latter case is a separate action which involves the annual elections of stockholders and SEC supervision in the procedural matter of corporate injunction as well as the reconstitution of Mabini’s stock and transfer books. and should not be confused with. in an action for injunction. on September 4. These issues are not involved in SEC LEO Case No. process or proceeding whereby a party is ordered to do or refrain from doing a certain act. Under the law. may issue. 14 In sustaining the sale of the treasury shares. Petitioners appealed to the SEC En Banc. 08-99-6398 cannot even be referred to or consolidated with SEC LEO Case No. Thus. not merely for an ancillary remedy of writ of preliminary injunction. are: (1) whether the creation of the PBAC by the Board of Trustees is valid under the Corporation Code. the auxiliary remedy of preliminary injunction. that the bidding of treasury shares is a plot by the incumbent President Adeva to corner treasury shares in order to secure majority shareholdings for purposes of corporate control. and in its Resolution dated July 11." Garayblas v. in his capacity as member of the Board of Trustees and President of Mabini. the provisional remedy of preliminary injunction. as subsequent buyers of shares. as a principal action. which granted the petition. 20 Considering the fact that in this case petitioners also prayed that the injunction be made permanent. Atienza. Guerra as the winning bidder. According to the CA. it affirmed the Hearing Panel’s finding that respondents may not be held in indirect contempt as the injunction order was released "with some defects. it seems obvious that petitioners’ action is only to enjoin respondents Adeva.
SANDIGANBAYAN (Fifth Division) and the REPUBLIC OF THE PHILIPPINES.: The instant petition arises from transactions that were entered into by the government in the penultimate days of the Marcos administration. Petitioner Vicente B. petitioner.i
VICENTE B. J. DECISION YNARES-SANTIAGO. respondents. CHUIDIAN. vs. Chuidian was alleged to be a dummy or
The remaining balance of Four Million Six Hundred Thousand Dollars (US$4. Philguarantee sued Chuidian before the Santa Clara County Superior Court. the said court concluded that Philguarantee “had not carried its burden of showing that the settlement between the parties should be set aside. PNB countered that it cannot be held liable for a breach of contract under principles of illegality. Chuidian not only defaulted in payment. On November 27.00) was to be paid through an irrevocable Letter of Credit (L/C) from which Chuidian would draw One Hundred Thousand Dollars (US$100. for and in behalf of the PCGG.00) monthly.000. Chuidian reneged on the approved business plan and instead invested the proceeds of the loan in corporations operating in the United States. their relatives and cronies.nominee of Ferdinand and Imelda Marcos in several companies said to have been illegally acquired by the Marcos spouses. Central District of California. on December 12. ARCI. Incorporated (ARCI) sometime in September 1980. 575867 and 577697 seeking to vacate the stipulated judgment containing the settlement between Philguarantee and Chuidian on the grounds that: (a) Philguarantee was compelled by the Marcos administration to agree to the terms of the settlement which was highly unfavorable to Philguarantee and grossly disadvantageous to the government.600. Incorporated and Interlek. As a favored business associate of the Marcoses. more particularly Dynetics. Philguarantee filed a motion before the Superior Court of Santa Clara County of California in Civil Case Nos. Incorporated. Petitioner Chuidian was among those whose assets were sequestered by the PCGG. the Board of Investments (BOI) and the Central Bank. Clara County denying Philguarantee’s motion to vacate the stipulated judgment based on the settlement agreement. the former defaulted in the payments thereof.300. Chuidian claimed that he himself was a victim of the systematic plunder perpetrated by the Marcoses as he was the true owner of these companies. an action against PNB seeking. Philguarantee intervened in said action.  Accordingly. or three (3) months before the successful people’s revolt that toppled the Marcos dictatorship. Chuidian was able to make two (2) monthly drawings from said L/C at the Los Angeles branch of the PNB. to compel PNB to pay the proceeds of the L/C. compelling Philguarantee to undertake payments for the same. the Sixth Appellate District of the Court of Appeal of the State of California affirmed the judgment of the Superior Court of Sta.000. Dollars (US$25. Philguarantee entered into a compromise agreement with Chuidian whereby petitioner Chuidian shall assign and surrender title to all his companies in favor of the Philippine government.00). Consequently. SSD-005-85 was issued for the said amount by the Philippine National Bank (PNB). Chuidian allegedly used false pretenses to induce the officers of the Philippine Export and Foreign Loan Guarantee Corporation (PHILGUARANTEE). as well as succeeding payment of Two Hundred Thousand Dollars (US$200. In return. his name was placed in the Department of Foreign Affairs’ Hold Order list. stocks and other assets suspected as having been illegally acquired by the Marcoses. 1986. SSD-005-85). Although Chuidian was then residing in the United States. Chuidian filed before the United States District Court. 1985. the PCGG issued a Sequestration Order directing the PNB to place under its custody. desist from pursuing any suit against Chuidian concerning the payments Philguarantee had made on Chuidian’s defaulted loans. and (c) the Aquino administration had ordered Philguarantee not to make further payments on the L/C to Chuidian. and thus it is excused from payment of the L/C. properties. With the advent of the Aquino administration.000. raising the same issues and arguments it had earlier raised in the action before the
.00). L/C No. After payment on the L/C was frozen by the PCGG. After considering the factual matters before it. and that he had in fact instituted an action before the Federal Courts of the United States to recover the companies which the Marcoses had illegally wrested from him.000. in June 1985. the irrevocable L/C (No.000. and in so doing.000. the newly-established Presidential Commission on Good Government (PCGG) exerted earnest efforts to search and recover money. Philguarantee shall absolve Chuidian from all civil and criminal liability. 98% of which was allegedly owned by Chuidian.00). For his part. gold. to facilitate the procurement and issuance of a loan guarantee in favor of the Asian Reliability Company. but also misused the funds by investing them in Silicon Valley corporations and using them for his personal benefit. 1985.” On appeal. Initial payment of Five Hundred Thousand Dollars (US$500. While ARCI represented to Philguarantee that the loan proceeds would be used to establish five interrelated projects in the Philippines. On May 30.000. (b) Chuidian blackmailed Marcos into pursuing and concluding the settlement agreement by threatening to expose the fact that the Marcoses made investments in Chuidian’s American enterprises.S. was granted a loan guarantee of Twenty-Five Million U. international comity and act of state. It was further stipulated that instead of Chuidian reimbursing the payments made by Philguarantee arising from Chuidian’s default. the Philippine government shall pay Chuidian the amount of Five Million Three Hundred Thousand Dollars (US$5.00) was actually received by Chuidian. among others. In the meantime. Subsequently. Although ARCI had received the proceeds of the loan guaranteed by Philguarantee. charging that in violation of the terms of the loan.
Espiritu. 1987. by himself and/or in conspiracy with the Marcos spouses. schemes and stratagems” by: (1) forming corporations for the purpose of hiding and avoiding discovery of illegally obtained assets. 1987. there was an urgent need for the writ of attachment to place the L/C under the custody of the Sandiganbayan so the same may be preserved as security for the satisfaction of judgment in the case before said court. Ongpin and then PNB President Edgardo B. (2) pillaging the coffers of government financial institutions such as the Philguarantee. several government officials who served under the Marcos administration. Philguarantee will be made to shoulder the expense resulting in further damage to the government. and (4) Chuidian is residing out of the country or one on whom summons may be served by publication. Among those liabilities which the government assumed were unused commercial L/C’s and Deferred L/C’s.00). The said Deed of Transfer provided for the transfer to the government of certain assets of PNB in exchange for which the government would assume certain liabilities of PNB.400. duress and fraud. if ever there was breach of contract. the PCGG averred that the above-stated acts of Chuidian committed in unlawful concert with the other defendants constituted “gross abuse of official position of authority. The Republic also averred that should the action brought by Chuidian before the U. and (2) in Chuidian’s favor by denying intervenor Philguarantee’s action to set aside the settlement agreement.Santa Clara Superior Court. Chuidian can ask the said foreign court to compel the PNB Los Angeles branch to pay the proceeds of the L/C. (5) Chuidian’s absence from the country does not necessarily make him a non-resident. as part of the government’s economic recovery program.000. the government filed before the Sandiganbayan Civil Case No. Rule 57 of the Rules of Court. which justifies the writ of attachment prayed for under Section 1(e) of the same rule. such fraud must be present at the time the contract is entered into. on March 17. (3) While Chuidian does not admit fraud on his part. contending that: (1) The plaintiff’s affidavit appended to the motion was in form and substance fatally defective. (3) Chuidian has removed or disposed of his property with the intent of defrauding the plaintiff as justified under Section 1(c) of Rule 57. and
. Chuidian opposed the motion for issuance of the writ of attachment. Meanwhile. citing as grounds therefor the following: (1) Chuidian embezzled or fraudulently misapplied the funds of ARCI acting in a fiduciary capacity.S. Incorporated in favor of Chuidian in the amount of Four Million Four Hundred Thousand Dollars (US$4. 1993. The Federal Court rendered judgment ruling: (1) in favor of PNB excusing the said bank from making payment on the L/C. flagrant breach of public trust and fiduciary obligations. (4) Chuidian has not removed or disposed of his property in the absence of any intent to defraud plaintiff. Thus. alleging that PNB was excused from making payments on the L/C since the settlement was void due to illegality. unjust enrichment. on February 27. While the case was pending. (2) The writ is justified under Section 1(d) of the same rule as Chuidian is guilty of fraud in contracting the debt or incurring the obligation upon which the action was brought. including Chuidian. 0027 against the Marcos spouses. including SSD-005-85 listed under Dynetics. (2) Section 1(b) of Rule 57 does not apply since there was no fiduciary relationship between the plaintiff and Chuidian. or that he concealed or disposed of the property that is the subject of the action. violation of the Constitution and laws” of the land. In particular. engaged in “devices. The complaint sought the reconveyance. and (3) executing the court settlement between Philguarantee and Chuidian which was grossly disadvantageous to the government and the Filipino people. the Republic of the Philippines filed a motion for issuance of a writ of attachment over the L/C. the complaint charged that Chuidian. among others. brazen abuse of right and power. justifying issuance of the writ under Section 1(b). District Court of California to compel payment of the L/C prosper. In fine. reversion. inspite of the sequestration of the said L/C. Eventually. a Deed of Transfer was executed between then Secretary of Finance Jaime V. to facilitate the rehabilitation of PNB. and a number of individuals known to be cronies of the Marcoses. accounting and restitution of all forms of wealth allegedly procured illegally and stashed away by the defendants. On July 30.
he cites as a sixth ground the fact that all these allegations of fraud and wrongdoing had already been dealt with in actions before the State and Federal Courts of California.” Moreover. this statement is hearsay since the PCGG Chairman was not a witness to the litigated incidents. the bank loans taken out by Chuidian. ordering the Sandiganbayan Sheriff to attach PNB L/C No. It may be added. And in relation thereto. On August 11. it is nevertheless a “form of suit multiplicity over the same issues. hence. Chuidian belied the allegation that he was also a defendant in “other related criminal action. the Rules provide for sufficient security should the owner of the property attached suffer damage or prejudice caused by the attachment. but is temporarily living outside. parties and
. or as to his homecoming plans in the future. the California Supreme Court ruled otherwise.” Thus. he is still subject to the provisional remedy of attachment.” Taking judicial notice of the admitted fact that Chuidian was residing outside of the country. 1993. the Sandiganbayan found that although no separate affidavit was attached to the motion. Third. the preliminary attachment was.  The Sandiganbayan’s ruling was based on its disquisition of the five points of contention raised by the parties. the Sandiganbayan ruled that even if Chuidian is one who ordinarily resides in the Philippines. 1997. Chuidian denies that he ever disposed of his assets to defraud the Republic. or in concealing or disposing of the subject property. the motion itself contained all the requisites of an affidavit. the Sandiganbayan observed that: “x x x no explanation whatsoever was given by him as to his absence from the country. but was the result of a US Court-approved settlement. he had “never been a defendant in any prosecution of any sort in the Philippines. Besides. and there is nothing in the records that support the Sandiganbayan’s erroneous conclusion on the matter. Section 3 of the Rules of Court. Anent the second contention. the Sandiganbayan held that there was a prima facie case of fraud committed by Chuidian. The Sandiganbayan also adopted the Republic’s position that since it was compelled to pay. On the first issue. SSD-005-85 as security for the satisfaction of judgment. the L/C was not a product of fraudulent transactions. Fifth. he had returned to the Philippines. Second. Chuidian filed a motion to lift the attachment based on the following grounds: First. an order of attachment was issued by the Sandiganbayan on July 19. Assuming that there is truth to the government’s allegation that Chuidian has removed or disposed of his property with the intent to defraud. While it cannot technically be considered as forum shopping. but only between Chuidian and ARCI. the Sandiganbayan issued a Resolution ordering the issuance of a writ of attachment against L/C No. SSD-005-85 for safekeeping pursuant to the Rules of Court as security for the satisfaction of judgment in Sandiganbayan Civil Case No. Since his absence in the past was the very foundation of the Sandiganbayan’s writ of preliminary attachment. the Sandiganbayan’s “most potent ground” for the issuance of the writ of preliminary attachment no longer existed. the proceeds of which were fraudulently diverted. applying Section 1(e) of Rule 57. in the first place. that he has no definite or clearcut plan to return to the country at this juncture – given the manner by which he has submitted himself to the jurisdiction of the court. 1993. Accordingly. there was no evidence at all of initial fraud or subsequent concealment except for the affidavit submitted by the PCGG Chairman citing mere “belief and information” and “not on knowledge of the facts. On July 14.” Moreover. Fourth.(6) Service of summons by publication cannot be used to justify the issuance of the writ since Chuidian had already submitted to the jurisdiction of the Court by way of a motion to lift the freeze order filed through his counsel. In fact. his presence in the country warrants the immediate lifting thereof. the Sandiganbayan held that the writ of attachment is warranted. Chuidian’s absence from the country was considered by the Sandiganbayan to be “the most potent insofar as the relief being sought is concerned. and the verification thereof is deemed a substantial compliance of Rule 57. the Sandiganbayan ruled that there was no fiduciary relationship existing between Chuidian and the Republic. moreover. through Philguarantee. Since the Republic is not privy to the fiduciary relationship between Chuidian and ARCI.” for in fact. On the third issue of fraud on the part of Chuidian in contracting the loan. it is entitled to the issuance of the writ of attachment to protect its rights as creditor. 0027. unwarranted because he was not “guilty of fraud in contracting the debt or incurring the obligation”. or almost four (4) years after the issuance of the order of attachment. justifying the issuance of the writ of attachment. Although he was accused of employing blackmail tactics to procure the settlement. it cannot invoke Section 1(b) of Rule 57. he could not have personally appeared in any other action because he had been deprived of his right to a travel document by the government. was never presented as a witness by the Republic and thus was not subject to cross-examination.
Chuidian filed a motion to require the Republic to deposit the L/C in an interest bearing account. Section 3. He argued that contrary to the Sandiganbayan’s pronouncement. his belated appearance before the Sandiganbayan is not a sufficient reason to lift the attachment. Accordingly. the Sandiganbayan gave due course to Chuidian’s plea for the attached L/C to be deposited in an interest-bearing account. The foreign judgment was not an issue then because at that time. had already been sold by the Republic and cannot be returned to Chuidian should the government succeed in depriving him of the proceeds of the L/C. the case itself should be dismissed for laches owing to the Republic’s failure to prosecute its action for an unreasonable length of time. Moreover. become fully demandable and payable. the Sandiganbayan’s position that Chuidian was not the owner but a mere payee-beneficiary of the L/C issued in his favor negates overwhelming jurisprudence on the Negotiable Instruments Law. Chuidian also moved for a reconsideration of the Sandiganbayan resolution denying the motion to require deposit of the L/C into an interest bearing account. Chuidian stressed that throughout the four (4) years that the preliminary attachment had been in effect. Neither was it revealed that the Republic had already disposed of Chuidian’s assets ceded to the Republic in exchange for the L/C. he proposed that it would be to the benefit of all if the Sandiganbayan requires PNB to deposit the full amount to a Sandiganbayan trust account at any bank in order to earn interest while awaiting judgment of the action. however. 1998. the authority of the PCGG Commissioner to subscribe as a knowledgeable witness relative to the issuance of the writ of preliminary attachment was raised for the first time in the motion to lift the attachment. allowing the deposit would not amount to a virtual recognition of his right over the L/C. Lastly. Chuidian further contends that should the attachment be allowed to continue. being only a temporary or ancillary remedy. it is the Republic who is fraudulently disposing of assets. In a Resolution promulgated on November 13. Finally. on August 20. he claimed that the Sandiganbayan’s refusal to exercise its fiduciary duty over attached assets will cause him irreparable injury. the preliminary attachment. the Sandiganbayan could not have known then that his absence was due to the nonrenewal of his passport at the instance of the PCGG. since its attachment. Under Rule 17. Furthermore. alleging that Chuidian’s absence was not the only ground for the attachment and. while at the same time obliterating his rights of ownership under the Civil Code. since the amount is just lying dormant in the PNB. he will be deprived of his property without due process. Finally. The Sandiganbayan. Said assets. Subsequently. allowing the foreign judgment as a basis for the lifting of the attachment would essentially amount to an abdication of the jurisdiction of the Sandiganbayan to hear and decide the ill gotten wealth cases lodged before it in deference to the judgment of foreign courts.” Considering that his assets had already been sold by the Republic. 1993 granting the application for the writ of preliminary attachment based on the following grounds: First. On the same day. but is now presently residing in the country. denied Chuidian’s motion for reconsideration of the denial of his motion to
. The Sandiganbayan declared the national government as the principal obligor of the L/C even though the liability remained in the books of the PNB for accounting and monitoring purposes. the government had not set the case for hearing. must be lifted and the PNB ordered to immediately pay the proceeds of the L/C to Chuidian. He further stressed that the Sandiganbayan abdicated its bounden duty to rule on an issue when it found “that his motion will render nugatory the purpose of sequestration and freeze orders over the L/C. Chuidian was out of the country in 1993. for he is not asking for payment but simply requesting that it be deposited in an account under the control of the Sandiganbayan. On July 13.” These foreign judgments constitute res judicata which warrant the dismissal of the case itself. 575867. In a motion seeking a reconsideration of the first resolution. However. 1997. said judgment had not yet been issued and much less final. Second. therefore. the issue of laches could not have been raised then because it was the Republic’s subsequent neglect or failure to prosecute despite the passing of the years that gave rise to laches. however. Chuidian assailed the Sandiganbayan’s finding that the issues raised in his motion to lift attachment had already been dealt with in the earlier resolution dated July 14. He pointed out to the Sandiganbayan that the face amount of the L/C had. on the ground that it will redound to the benefit of both parties. the Sandiganbayan denied Chuidian’s motion to lift attachment. The Republic opposed Chuidian’s motion to lift attachment. The L/C was payment to Chuidian in exchange for the assets he turned over to the Republic pursuant to the terms of the settlement in Case No. 1999. the Sandiganbayan issued another Resolution denying Chuidian’s motion to require deposit of the attached L/C in an interest bearing account. without earning any interest.subject matter. Since said assets were disposed of without his or the Sandiganbayan’s consent.
however. while the rest were of no imperative relevance as to affect the Sandiganbayan’s disposition. has been met fairly and squarely in the Resolution of July 14. or to the judge of the court in which the action is pending. or before any attachment shall have been actually levied. copy thereof shall forthwith be served on the attaching creditor or his lawyer. Chuidian’s stay in the country is uncertain and he may leave at will because he holds a foreign passport. Should such counterbond for any reason be found to be. the determination of the existence of grounds to discharge a writ of attachment rests in the sound discretion of the lower courts. as provided for in Section 13 of the same Rule: SEC. at any time either before or after the release of the attached property. 1998. which provides: SEC. he had returned to
. in an amount equal to the value of the property attached as determined by the judge. and that defendant has recovered or disposed of his property with the intent of defrauding plaintiff. By his own admission. 13. Discharge of attachment upon giving counterbond. The judge shall. If the motion be made on affidavits on the part of the party whose property has been attached. Upon the filing of such counter-bond. . the attaching creditor may oppose the same by counter-affidavits or other evidence in addition to that on which the attachment was made. or Second. (2) Chuidian’s belated presence in the Philippines cannot be invoked to secure the lifting of attachment. to secure the payment of any judgment that the attaching creditor may recover in the action. It would appear that petitioner chose the latter because the grounds he raised assail the propriety of the issuance of the writ of attachment. or the proceeds of any sale thereof. To quash the attachment on the ground that it was irregularly or improvidently issued. order the discharge of the attachment if a cash deposit is made. As has been consistently ruled by this Court. the party whose property has been attached. apply to the judge who granted the order. and 2) PNB was relieved of the obligation to pay on its own L/C by virtue of Presidential Proclamation No. 1993. – At anytime after an order of attachment has been granted. and (3) Chuidian’s other ground. shall be delivered to the party making the deposit or giving the counter-bond. Discharge of attachment for improper or irregular issuance. sufficiency of former PCGG Chairman Gunigundo’s verification of the complaint. or a counterbond executed to the attaching creditor is filed. and the party furnishing the same fail to file an additional counter-bond. the instant petition for certiorari contending that the respondent Sandiganbayan committed grave abuse of discretion amounting to lack or excess of jurisdiction when it ruled that: 1) Most of the issues raised in the motion to lift attachment had been substantially addressed in the previous resolutions dated July 14. insufficient. he repeatedly acknowledged that his justifications to warrant the lifting of the attachment are facts or events that came to light or took place after the writ of attachment had already been implemented. after hearing. petitioner emphasized that four (4) years after the writ was issued. The rule is specific that it applies to a party who is about to depart from the Philippines with intent to defraud his creditors.lift attachment. Hence. agreeing in full with the government’s apriorisms that: x x x (1) it is a matter of record that the Court granted the application for writ of attachment upon grounds other than defendant’s absence in the Philippine territory. The question in this case is: What can the herein petitioner do to quash the attachment of the L/C? There are two courses of action available to the petitioner: First. the judge shall order the discharge of the attachment if it appears that it was improperly or irregularly issued and the defect is not cured forthwith. or become. The Rules of Court specifically provide for the remedies of a defendant whose property or asset has been attached. More particularly. 50. for an order discharging the attachment wholly or in part on the security given. In its Resolution dated July 14. with the clerk or judge of the court where the application is made. the deposit or counter-bond aforesaid standing in place of the property so released. apply to the judge who granted the order. 12. or to the judge of the court in which the action is pending. or the person appearing on his behalf. or the person appearing on his behalf. After hearing. for an order to discharge the attachment on the ground that the same was improperly or irregularly issued. but not otherwise. on behalf of the adverse party. Upon the discharge of an attachment in accordance with the provisions of this section the property attached. Section 12. the Court found a prima facie case of fraud committed by defendant Chuidian. upon reasonable notice to the applicant. 1993 and August 26. To file a counterbond in accordance with Rule 57.The party whose property has been attached may also. upon reasonable notice to the attaching creditor. may. the attaching creditor may apply for a new order of attachment. 1993.
the L/C agreement provided that the L/C was to be construed according to laws of the Philippines. the Court finds that the PCGG orders are acts of state that must be respected by this Court. the Court of Appeal of the State of California affirmed the Superior Court’s judgment. but after the attachment had already been executed. to wit: Under Executive Order No. The freeze and sequestration orders are presently in effect. all significant events relating to the issuance and implementation of the L/C occurred in the Philippines. However. The said judgment became the subject of a petition for review by the California Supreme Court.S. 2. Next. 1. The L/C was issued in Manila. he was not barred from returning to the Philippines. however. the PCGG is vested by the Philippine President with the power to enforce its directives and orders by contempt proceedings. the PCGG is empowered to freeze any. funds and property illegally acquired by former President Marcos or his close friends and business associates. Under Executive Order No. including petitioner’s pleadings. The said Court’s judgment. Courts. res judicata finds no application in this instance because it is a requisite that the former judgment or order must be final. and that two of the payments were made at PNB/LA. The first judgment. Chuidian’s Philippine counsel filed a series of challenges to the freeze and sequestration orders. that the negotiations for which occurred in California.  Supervening events which may or may not justify the discharge of the writ are not within the purview of this particular rule. Second. It is rather too late in the day for petitioner to question the propriety of the issuance of the writ. 575867 and 577697 brought by Philguarantee before the Santa Clara Country Superior Court. such was done at the request of a Philippine government instrumentality for the benefit of a Philippine citizen. And yet. petitioner cites the judgment of the United States District Court in Civil Case 86-2255 RSWL brought by petitioner Chuidian against PNB to compel the latter to pay the L/C. For instance. The freeze order has remained in effect and was followed by a sequestration order issued by the PCGG. and thus PNB is excused from making payment on the L/C as long as the freeze and sequestration orders remain in effect. and the Philippine government certainly has an interest in preventing the L/C from being remitted in that it would be the release of funds that are potentially illgotten gains.the Philippines. which challenges were unsuccessful as the orders were found valid by the Philippine Supreme Court. Petitioner also makes capital of the two foreign judgments which he claims warrant the application of the principle of res judicata. petitioner no longer questioned the writ itself. performance by PNB would be illegal under Philippine Law. Then he informed the Sandiganbayan that while the case against him was pending. Much less do they attack the issuance of the writ at that time as improper or irregular. in Civil Case Nos. while it ruled in favor of petitioner on the matter of Philguarantee’s action-in-intervention to set aside the settlement agreement. the L/C was to be performed in the Philippines. the rule contemplates that the defect must be in the very issuance of the attachment writ. the government lost two (2) cases for fraud lodged against him before the U. the majority of the evidence and Tchacosh and Sabbatino compel the opposite conclusion. Subsequently. 1986. or when the complaint fails to state a cause of action. On March 11. Therefore PNB is excused from performance of the L/C agreement as long as the freeze and sequestration orders remain in effect. also ruled in favor of PNB. of any final judgment by the California Supreme Court. Hence. Accordingly. and all assets. are bereft of any evidence to show that there is a final foreign judgment which the Philippine courts must defer to. Yet while he noted that he would have returned earlier but for the cancellation of his passport by the PCGG. PNB/Manila received an order from the PCGG ordering PNB to freeze any further drawings on the L/C. In the instant case. compels the conclusion that the act of prohibiting payment of the L/C occurred in Los Angeles. under the PCGG order and Executive Orders Nos. On March 14. For four (4) long years he kept silent and did not exercise any of the remedies available to a defendant whose property or asset has been attached. the attachment may be discharged under Section 13 of Rule 57 when it is proven that the allegations of the complaint were deceptively framed. thus invoking res judicata. he also pointed out that the government is estopped from pursuing the case against him for failing to prosecute for the number of years that it had been pending litigation. Apart from seeking a reconsideration of the resolution granting the application for the writ. 1990. (Underscoring ours) Petitioner’s own evidence strengthens the government’s position that the L/C is under the jurisdiction of
. denied Philguarantee’s prayer to set aside the stipulated judgment wherein Philguarantee and Chuidian agreed on the subject attached L/C. The records. There is no showing. It is clear that these grounds have nothing to do with the issuance of the writ of attachment. there is no showing that the issuance of the writ of attachment was attended by impropriety or irregularity. 1 and 2. Thus. (Underscoring ours) xxx xxx xxx
Chuidian argues that the fact that the L/C was issued pursuant to a settlement in California.
there are only two ways of quashing a writ of attachment: (a) by filing a counterbond immediately. the litigation would take longer than most cases. in accordance with Section 12 of the same rule. was not availed of by petitioner. To reiterate. In fine. broker. the foreign judgments relied upon by petitioner do not constitute a bar to the Republic’s action to recover whatever alleged ill-gotten wealth petitioner may have acquired. fraud was not only one of the grounds for the issuance of the preliminary attachment. it was at the same time the government’s cause of action in the main case. or (b) by moving to quash on the ground of improper and irregular issuance. instead of at the regular trial. neither did
. this alleged fraud was one of the grounds for the application of the writ. however.  These grounds for the dissolution of an attachment are fixed in Rule 57 of the Rules of Court and the power of the Court to dissolve an attachment is circumscribed by the grounds specified therein. otherwise an applicant for the lifting of the writ could force a trial of the merits of the case on a mere motion.g. This recourse. It is not the Republic’s fault that the litigation has been protracted. petitioner has failed to convince this Court that the Sandiganbayan gravely abused its discretion in a whimsical. (Underscoring ours) Thus. In other words. or by any other person in a fiduciary capacity. in the course of his employment as such. which are interlocutory in nature. In sum. that he also raised the issue that there was no evidence of fraud on record other than the affidavit of PCGG Chairman Gunigundo. this Court has time and again ruled that the merits of the action in which a writ of preliminary attachment has been issued are not triable on a motion for dissolution of the attachment.” the defendant is not allowed to file a motion to dissolve the attachment under Section 13 of Rule 57 by offering to show the falsity of the factual averments in the plaintiff’s application and affidavits on which the writ was based – and consequently that the writ based thereon had been improperly or irregularly issued – the reason being that the hearing on such a motion for dissolution of the writ would be tantamount to a trial of the merits of the action. obtain a judgment and have such property applied to its satisfaction. agent. It would have the effect of prejudging the main case. as noted by the Solicitor General in his comment. Courts recognize the authority of the Republic to sequester and freeze said L/C. There is as yet no evidence of fraud on the part of petitioner. Petitioner may argue. by appropriate proceedings. As long as the Sandiganbayan acted within its jurisdiction. touches on the very merits of the main case which accuses petitioner of committing fraudulent acts in his dealings with the government. or an attorney. Moreover. e. we have held that when the writ of attachment is issued upon a ground which is at the same time the applicant’s cause of action.the Philippine government and that the U. the only other way the writ can be lifted or dissolved is by a counterbond. factor. not the government. Petitioner cannot invoke this delay in the proceedings as an excuse for not seeking the proper recourse in having the writ of attachment lifted in due time. If ever laches set in. Moreover. As such. it was petitioner. however. committed no grave abuse of discretion amounting to lack or excess of jurisdiction.. any alleged errors committed in the exercise of its jurisdiction will amount to nothing more than errors of judgment which are reviewable by timely appeal and not by special civil action of certiorari.S. allowing the discharge of the attachment at this stage of the proceedings would put in jeopardy the right of the attaching party to realize upon the relief sought and expected to be granted in the main or principal action. This issue of fraud. Petitioner’s motion to lift attachment failed to demonstrate any infirmity or defect in the issuance of the writ of attachment. On the other hand. or for a willful violation of duty. Thus. Petitioner is only one of the twenty-three (23) defendants in the main action. “an action for money or property embezzled or fraudulently misapplied or converted to his own use by a public officer. Challenging the issuance of the writ of attachment four (4) years after its implementation showed petitioner’s apparent indifference towards the proceedings before the Sandiganbayan. The attachment is a mere provisional remedy to ensure the safety and preservation of the thing attached until the plaintiff can. and the Sandiganbayan granted said application after it found a prima facie case of fraud committed by petitioner. To discharge the attachment at this stage of the proceedings would render inutile any favorable judgment should the government prevail in the principal action against petitioner. who failed to take action within a reasonable time period. in issuing the questioned resolutions. the Sandiganbayan. or an officer of a corporation. capricious and arbitrary manner. or clerk. albeit belatedly. Hence.” or “an action against a party who has been guilty of fraud in contracting the debt or incurring the obligation upon which the action is brought. We have uniformly held that: x x x when the preliminary attachment is issued upon a ground which is at the same time the applicant’s cause of action. There are no compelling reasons to warrant the immediate lifting of the attachment even as the main case is still pending. the merits of the action would be ventilated at a mere hearing of a motion.
Accordingly. such that the substitution of debtor can be validly made even without the consent of the creditor. No costs. LUZ DU. were not “meant to deprive the owner or possessor of his title or any right to the property sequestered. Payment by the new debtor gives him the rights mentioned in Articles 1236 and 1237.. PNB is estopped from denying its liability thereunder considering that neither the PNB nor the government bothered to secure petitioner’s consent to the substitution of debtors. Finally. we affirm the Sandiganbayan’s ruling that the proceeds of the L/C should be deposited in an interest bearing account with the Land Bank of the Philippines for the account of the Sandiganbayan in escrow until ordered released by the said Court.” Thus. in effect. STRONGHOLD INSURANCE CO. DECISION PANGANIBAN. WHEREFORE. We are not unmindful that any effort to secure petitioner’s consent at that time would. any substitution of debtor must be with the consent of the creditor. for the account of Sandiganbayan in escrow for the person or persons. 1998 and July 2.4 million within fifteen (15) days from notice hereof. for which any substitution of debtor requires his consent. the petition is DISMISSED.. may be made without the knowledge or against the will of the latter. SFD-005-85 in the amount of U. Article 1293 of the New Civil Code provides: Novation which consists in substituting a new debtor in the place of the original one.he file a counterbond. In fact. Sandiganbayan. In Republic v. Even though Presidential Proclamation No. however.S. who shall eventually be adjudged lawfully entitled thereto. the same to be placed under special time deposit with the Land Bank of the Philippines. 50 can be considered an “insuperable cause”. whose consent thereto cannot just be presumed. INC. Thus. the same to earn interest at the current legal bank rates. such as freeze orders and sequestration. petitioner. The Resolutions of the Sandiganbayan dated November 6. Presidential Proclamation No. SO ORDERED. The PNB is DIRECTED to remit to the Sandiganbayan the proceeds of Letter of Credit No. the Philippine government included. We find no legal reason. the Government or other person. but not without the consent of the creditor. vs. 1999 are AFFIRMED. natural or juridical. we come to the matter of depositing the Letter of Credit in an interest-bearing account. the Deed of Transfer that was executed between PNB and the government pursuant to the said Presidential Proclamation specifically stated that it shall be deemed effective only upon compliance with several conditions. he is deemed to be the lawful payee-beneficiary of said L/C. one of which requires that: (b) the BANK shall have secured such governmental and creditors’ approvals as may be necessary to establish the consummation. frozen or taken over and vest it in the sequestering agency. Even the Sandiganbayan found that: x x x Movant has basis in pointing out that inasmuch as the L/C was issued in his favor. 50 was not intended to set aside laws that govern the very lifeblood of the nation’s commerce and economy. in view of all the foregoing. respondent. to release the PNB from any liability thereunder. be deemed an admission that the L/C is valid and binding.  we held that the provisional remedies. $4. Thus. it does not necessarily make the contracts and obligations affected thereby exceptions to the abovequoted law.” The validity of this Deed of Transfer is not disputed. J. he is presumed to be the lawful payee-beneficiary of the L/C until such time that the plaintiff successfully proves that said L/C is ill-gotten and he has no right over the same. legality and enforceability of the transactions contemplated hereby. The Sandiganbayan thus erred in relieving PNB of its liability as the original debtor. The principal and its interest shall remain in said account until ordered released by the Court in accordance with law. We agree with the Sandiganbayan that any interest that the proceeds of the L/C may earn while the case is being litigated would redound to the benefit of whichever party will prevail.:
. The Deed of Transfer. until such time that the government is able to successfully prove that petitioner has no right to claim the proceeds of the L/C. whereby certain liabilities of PNB were transferred to the national government. cannot affect the said L/C since there was no valid substitution of debtor.
.00. Luz Du initiated Civil Case No. the auction sale of an attached realty retroacts to the date the levy was registered. 2200.
The Facts The CA narrated the facts as follows: “x x x Aurora Olarte de Leon was the registered owner of Lot No. “IN VIEW OF ALL THE FOREGOING. “Then again. Suy. 90-1848 became final and executory. B 2002 Decision and the December 5. We find no reversible error in the appealed decision.60.”
The questioned Resolution. 2200 was issued in favor of the Caliwag spouses. “On her part. 101 Phil. it was held that where a preliminary attachment in favor of ‘A’ was recorded on November 11. which means that the purchaser took the property subject to such attachment lien and to all of its consequences. The CA disposed as follows:
“Parenthetically. the decision was handed down in Civil Case No. denied petitioner’s Motion for Reconsideration. the instant appeal is ordered DISMISSED. “On January 3.Preference is given to a duly registered attachment over a subsequent notice of lis pendens. anchored on the earlier mentioned Deed of Conditional Sale. the auction sale retroacts to the date of the levy. it enjoys the same preference as the attachment lien enjoys over the private sale. 1990. levy on execution issued and the attached property sold at public auction. seeking to nullify the March 19. pronouncement as to cost. Under the torrens system.
The Case Before us is a Petition for Review under Rule 45 of the Rules of Court. [Were] the rule be otherwise. Inc. even if the beneficiary of the notice acquired the subject property before the registration of the attachment. Phil. the attachment lien has priority over the private sale. The auction sale being a necessary sequel to the levy. Stronghold Insurance Corp. Luz Du caused the annotation of a Notice Of Lis Pendens at the back of Transfer Certificate of Title No. 237).681.. 1991. The action was accompanied by a prayer for a writ of preliminary attachment duly annotated at the back of Transfer Certificate of Title No. 10-A (LRC Psd 336366) per Transfer Certificate of Title No. one of which is the subsequent sale on execution (Tambao v.691. the latter retroacts to the date of the levy. In other words. on December 21. 90-1848 in favor of Stronghold. Sometime in January 1989. 1117). Bank.00 leaving a balance of P95. Aurora de Leon sold [the] same property to spouses Enrique and Rosita Caliwag without prior notice to Luz Du. and the private sale of the attached property in favor of ‘B’ was executed on May 29. 2200 on August 7.000.. 1989. 1933. 2002 Resolution of the Court of Appeals (CA) in CA-GR CV No. x x x commenced Civil Case No. on the other hand. “On February 11. 582/T-3 was cancelled and Transfer Certificate of Title No. Transfer Certificate of Title No. for allegedly defrauding Stronghold and misappropriating the company’s fund by falsifying and simulating purchases of documentary stamps. 52 Phil. 90-1848 against spouses Rosita and Enrique Caliwag et al. Said the High Court: ‘In line with the same principle. As a result. 1990. 1932. the preference enjoyed by the levy of execution would be meaningless and illusory (Capistrano v. 1991. when the decision in Civil Case No. 582/T-3. Nat. 50884. De Leon sold the property to Luz Du under a ‘Conditional Deed of Sale’ wherein said vendee paid a down payment of P75. “Meanwhile. 60319 against Aurora de Leon and the spouses Caliwag for the annulment of the sale by De Leon in favor of the Caliwags. ordering the spouses Caliwag jointly and severally to pay the plaintiff P8.000.’ (Underscoring supplied) “By and large. on April 28.
respondent enjoyed priority in time. 6444 in its (Stronghold’s) name. constituted constructive notice to petitioner and all third persons from the time of Stronghold’s entry. “Whether a Notice of Levy on Attachment on the property is a superior lien over that of the unregistered right of a buyer of a property in possession pursuant to a Deed of Conditional Sale. 2200 and in lieu thereof. 64645) to cancel Transfer Certificate of Title No. According to Luz Du. 2200 that would show any defect in the title or any adverse claim over the property. Luz Du too was able to secure a favorable judgment in Civil Case No. the CA held that Stronghold’s notice of levy on attachment had been registered almost five (5) months before petitioner’s notice of lis pendens.
. When the decision became final and executory. Stronghold still proceeded with the execution of the decision in Civil Case No. Hence. the appellate court added. Such registration. 2200. On [August] 5. Transfer Certificate of Title No. this Petition. Hence. and the final and executory decision in Civil Case No. 6444. despite her said notice of lis pendens annotated. 1991. For this reason. The necessary sequels of execution and sale retroacted to the time when Stronghold registered its notice of levy on attachment. on March 12.” f
The Court’s Ruling The Petition has no merit. 60319 she filed against spouses Enrique and Rosita Caliwag. 1992. 2200 and the attached property was sold in a public auction. as provided under the Land Registration Act -. “It came to pass that on August 5. 60319 and which became final and executory sometime in 1993.
Issues Petitioner submits the following issues for our consideration: “I. “II. 90-1848 against the subject lot and ultimately the issuance of Transfer Certificate of Title No. at a time when there was nothing on TCT No. 6444 in the name of Stronghold with damages claiming priority rights over the property by virtue of her Notice Of Lis Pendens under Entry No. Luz Du commenced the present case (docketed as Civil Case No.  the certificate of sale and the final Deed of Sale in s favor of Stronghold were inscribed and annotated leading to the cancellation of Transfer Certificate of Title No. “Whether the acquisition of the subject property by Respondent Stronghold was tainted with bad faith. it found no basis to nullify TCT No. 1991. 13305 and inscribed on January 3. 6444 was issued in the name of Stronghold.among others.
Ruling of the Court of Appeals Sustaining the trial court in toto.now the Property Registration Decree. “Under the above historical backdrop. The CA also held that respondent was a purchaser in good faith. which was issued in the name of respondent after the latter had purchased the property in a public auction. 1991. a notice of levy on execution was annotated on Transfer Certificate of Title No. as well.” ) The trial court ruled that Stronghold had superior rights over the property because of the prior registration of the latter’s notice of levy on attachment on Transfer Certificate of Title (TCT) No.
Brillo: : “x x x. Green. 646). 1529:
“SEC. 51. In the registry.Main Issue: Superiority of Rights Petitioner submits that her unregistered right over the property by way of a prior conditional sale in 1989 enjoys preference over the lien of Stronghold -. 1949. 51 of Act No. which had been noted ahead in the records of the Register of Deeds. to the lien. 1182 on August 3. 1932 (sec. 102. was entitled to the execution of the judgment credit over the lands in question. but shall operate only as a contract between the parties and as evidence of authority to the Registry of Deeds to make registration. We do not agree. which took place on November 21. 496.
. 1949. 496. their title arose already subject to the levy in favor of the appellee. 354.a lien that was created by the registration of respondent’s levy on attachment in 1990. Tabigue vs. otherwise. 1949 operated to convey the lands to them even without the corresponding entry in the owner’s duplicate titles. 91. Lucauco. As early as Gomez v. because it retroacts to the date of the levy. Sunico and Peterson. She acquired the ownership of the said parcels only from the date of the recording of her title in the register. charge or otherwise deal with the same in accordance with existing laws. lease. But no deed. Levy Hermanos. or other voluntary instrument. Act No. “Even assuming. of necessity. therefore. Buzon vs. mortgage. and Worcester vs. lease. and that even if the prior sale is subsequently registered before the sale in execution but after the levy was duly made. Liong-Wong-Shih vs. the subsequent sale of the property to the attaching creditor must. the levy on execution on the same lots in Civil Case No. Inc. The legal effect of the notation of said lien was to subject and subordinate the right of Apolonia Gomez. by virtue of which Levy Hermanos. Ocampo and Ocampo. It is true that she bought the lots with pacto de retro but the fact of her purchase was not noted on the certificates of title until long after the attachment and its inscription on the certificates. Otherwise. if appellants became owners of the properties in question by virtue of the recording of the conveyances in their favor. Hence. petitioner avers that unlike the circumstances in that case. PNB was improperly applied by the Court of Appeals. mortgages. and their subsequent sale to appellee Brillo (which retroacts to the date of the levy) still takes precedence over and must be preferred to appellants’ deeds of sale which were registered only on November 5. 34 Phil. x x x” x Indeed.” (Citations omitted. . the validity of the execution sale should be maintained. except a will purporting to convey or affect registered land shall take effect as a conveyance or bind the land. this Court has held that an G attachment that is duly annotated on a certificate of title is superior to the right of a prior but unregistered buyer. as reiterated in Defensor v. and of the fundamental principle that registration is the operative act that conveys and binds lands covered by Torrens titles (sections 50. “This result is a necessary consequence of the fact that the properties herein involved were duly registered under Act No.An owner of registered land may convey. 11 Phil. the property herein had been sold to her before the levy. and the right of ownership which she inscribed was not an absolute but a limited right. subject to a prior registered lien. 13 Phil. the preference created by the levy would be meaningless and illusory. the preference created by the levy would be meaningless and illusory. 496 and decisions cited above). a right which is preferred and superior to that of the plaintiff (sec. the Court explained as follows: “x x x. that the entry of appellants’ sales in the books of the Register of Deeds on November 5. as purchaser. 51. therefore. leases or other voluntary instruments as are sufficient in law. Maintaining that the ruling in Capistrano v. retroact to the date of the levy. Act 496). the attachment appeared in the nature of a real lien when Apolonia Gomez had her purchase recorded. 51. italics w supplied) The Court has steadfastly adhered to the governing principle set forth in Sections 51 and 52 of Presidential Decree No. The doctrine is well-settled that a levy on execution duly registered takes preference over a prior unregistered sale. In that case. 8 Phil. mortgage. The preference given to a duly registered levy on attachment or execution over a prior unregistered sale is well-settled in our jurisdiction. He may use such forms of deeds. Conveyance and other dealings by registered owner.
it did not know that the land being attached had been sold to petitioner. In view of the foregoing. which held that precedence should be given C to a levy on attachment or execution. is registered before the sale is registered.“The act of registration shall be the operative act to convey or affect the land insofar as third persons are concerned. had not been registered. Such notice does not establish a lien or an encumbrance on the property affected. as ruled by the Court in Capistrano. order. instrument or entry affecting registered land shall. Thus.though made as far back as 1946 -. the purchase made by the bank at said auction should enjoy the same legal priority that the levy had over the sale in favor of plaintiff. the CA correctly applied Capistrano. be constructive notice to all persons from the time of such registering. whose registration was before that of the prior sale. If either the third-party claim or the subsequent registration of the prior sale was insufficient to defeat the previously registered attachment lien.” (Citations t omitted. absent any allegation or proof that Stronghold had actual knowledge of the sale to petitioner before the registration of its attachment. filing or entering. unlike the attachment. The auction sale being a necessary sequel to the levy. the sale of the land in question -. and in all cases under this Decree. Suffice it to say that when Stronghold registered its notice of attachment. the registration shall be made in the office of the Register of Deeds for the province or the city where the land lies.was registered only in 1953. In other words. a notice of lis pendens with respect to a e disputed property is intended merely to inform third persons that any of their transactions in connection therewith -. it follows that a notice of lis pendens is likewise insufficient for the same purpose. if registered. lease. mortgage.would be subject to the result of the suit. filed or entered in the office of the Register of Deeds for the province or city where the land to which it relates lies. as follows: “x x x the rule now followed is that if the attachment or levy of execution. Were the rule otherwise.Every conveyance. for this was effected precisely to carry out the sale. f
Capistrano Ruling Correctly Applied The preference created by the levy on attachment is not diminished even by the subsequent registration of the prior sale. As in Capistrano. the registration of Stronghold’s attachment was the operative act that gave validity to the transfer and created a lien upon the land in favor of respondent. the annotation of respondent’s notice of attachment was a registration in good faith.  This t principle applies with more force to this case. “The rule is not altered by the fact that at the time of the execution sale the Philippine National Bank had information that the land levied upon had already been deeded by the judgment debtor and his wife to Capistrano. The present case is not much different. It is settled that a person dealing with registered property may rely on the title and be charged with notice of only such burdens and claims as are annotated thereon. she invokes the alleged superior right of a prior unregistered buyer to overcome respondent’s lien.”(Italics supplied) As the property in this case was covered by the torrens system. attachment. As the name suggests. the preference enjoyed by the levy of execution in a case like the present would be meaningless and illusory. The stipulation of facts shows that Stronghold had already registered its levy on attachment before petitioner annotated her notice of lis pendens.if entered into subsequent to the notation -. judgment. lien. though posterior to the sale. Constructive notice upon registration. after the property had already been subjected to a levy on execution by the Philippine National Bank. the kind that
. It had no such knowledge precisely because the sale. italics supplied)
Second Issue: Taking in Bad Faith We now tackle the next question of petitioner: whether Stronghold was a purchaser in good faith. the auction sale retroacts to the date of the levy. PNB. it takes precedence over the latter. “SEC. . That was the import of Capistrano v. 52.
representing another unpaid account. 61159. Dominador Dayrit. ignored said demand. the RTC Sheriff attached certain assets of WENCESLAO.75. WENCESLAO entered into a contract with READYCON on April 16.not at the time of actual purchase but at the time of the attachment -. 2002 in CA-GR CV No.150. On September 5. deliver. 1991. 1991. it is only after the notice of lis pendens is inscribed in the Office of the Register of Deeds that purchasers of the property become bound by the judgment in the case. and if necessary. It was further stipulated by the parties that respondent was to furnish. as well as its resolution dated June 20.75 to READYCON.. To fulfill its obligations to the PEA. Its primary business is the manufacture and sale of asphalt materials. DAYRIT. As READYCON timely posted the required bond of P1.. WENCESLAO paid the downpayment of P235. 1991. for brevity) is a domestic corporation. Thereafter.178. primarily infrastructure. Petitioner D. the following heavy equipments: One (1) asphalt paver. the Petition is DENIED.M. is the vice-president of said company. READYCON performed its obligation to lay and roll the asphalt materials on the jobsite. 1991.000. particularly. vs. In view of this development. engaged in the construction business. WENCESLAO and ASSOCIATES. Wenceslao and Associates.it was an innocent purchaser for value and in good faith. Its co-petitioner. was to be paid within fifteen (15) days thereof. and/or DOMINADOR S.75.014.531.. READYCON TRADING AND CONSTRUCTION CORP. On May 30. dated January 30.110. DECISION QUISUMBING. Accordingly. one (1) dozer and one (1) grader.239. On April 22. Costs
.308.150. It did not even bother to reply to the demand letter. 61159. READYCON agreed to sell to WENCESLAO asphalt materials valued at P1. with prayer for writ of preliminary attachment against D. 1991. or P235. the counsel for READYCON wrote a demand letter to WENCESLAO asking that it make good on the balance it owed. amounting to P942. lay. 1991. foundation works. WENCESLAO.M.: This petition for review assails the decision  of the Court of Appeals. roll the asphalt. As Stronghold is deemed to have acquired the property -. respondent. READYCON demanded that WENCESLAO pay the balance of the contract price. ordering petitioners to pay the sum of P1.M. make the needed corrections on a prepared base at the jobsite. however. as signatory officer for WENCESLAO in this agreement.661. Branch 165. in Civil Case No. READYCON demanded payment of P1. WENCESLAO was bound to pay respondent a twenty percent (20%) downpayment. one (1) bulldozer. (WENCESLAO. upon delivery of the materials contracted for. and the assailed Decision and Resolution AFFIRMED. The facts of this case are not in dispute.661.
Moreover. The balance of the contract price. Respondent Readycon Trading and Construction Corporation (READYCON. the date of filing of the complaint.45 with interest rate of 12% per annum (compounded annually) from August 9. READYCON filed a complaint with the Regional Trial Court of Pasig City for collection of a sum of money and damages.75.75 as the balance of contract price. The contract bore the signature of co-petitioner Dominador Dayrit. until fully paid to Readycon Trading and Construction Corp. Inc. Again. The appellate court affirmed the decision of the Regional Trial Court of Pasig City. as well as payment of P99. 2002.647. Under the contract. on July 19. INC. D. petitioners. WENCESLAO failed to heed the demand. SO ORDERED.made its prior right enforceable. Fifteen (15) days after performance of said work. docketed as Civil Case No.70. against petitioner. 49101.45 from petitioners herein with P914.870. plus damages. WENCESLAO had a contract with the Public Estates Authority (PEA) for the improvement of the main expressway in the R-1 Toll Project along the Coastal Road in Parañaque City. for brevity) is likewise a corporate entity organized in accordance with Philippine laws. denying petitioners’ motion for reconsideration. WHEREFORE.014. and subdivision development. Wenceslao and/or Dominador Dayrit. organized under and existing pursuant to Philippine laws. J. READYCON delivered the assorted asphalt materials worth P1. its application for the writ of preliminary attachment was granted.110.
9 million. the balance was already due and demandable when demand was made on May 30.014. petitioners did not adduce evidence to show that the attachment caused damage to the cited pieces of heavy equipment. In the proceedings below. 2.000. Dissatisfied with the decision. petitioners rely mainly on Lazatin v. Also. the petitioners appealed to the Court of Appeals. The appellate court also found that the trial court correctly interpreted the period for payment of the balance. Granting that the sales contract was not merely for supply and delivery but also for service. to pay plaintiff as follows: 1. until fully paid.On September 16.110. WENCESLAO prayed for the payment of damages caused by the filing of READYCON’s complaint and the issuance of the writ of attachment despite lack of cause. 112 Phil. 3. the instant petition. the appellate court found that contrary to WENCESLAO’s assertion. On September 25. judgment is hereby rendered ordering the defendant D. malice and bad faith in obtaining a writ of attachment must be proved before a claim for damages on account of wrongful attachment will prosper. it had to spend P50. 1994. 1991? On the first issue. The CA stressed that the trial court found neither malice nor bad faith relative to the filing of the complaint and the obtaining of the writ of attachment. 196 SCRA 29 (1991). attachment. WENCESLAO also alleged that since the contract did not indicate this condition with respect to the period within which the balance must be paid. citing Philippine Commercial International Bank v. date of filing of the complaint. Intermediate Appellate Court.  It alleged READYCON agreed that the balance in the payments would be settled only after the government had accepted READYCON’s work as to its quality in laying the asphalt. Inc. 1991. Petitioners contend that Lazatin applies in the instant case because the wrongful attachment of WENCESLAO’s equipment resulted in a paralysis of its operations. however. Aside from that. However.00 as and for attorney’s fees and expenses of litigation. WENCESLAO moved for the release of the attached equipments and posted its counter-bond.WHETHER OR NOT QUESTIONS OF FACTS ARE RAISED IN THE APPEAL BY CERTIORARI. that respondent shall lay the asphalt in accordance with the specifications and standards imposed by and acceptable to the government. On December 26. Since the attachment lasted 19 days it suffered a total loss of P1.45 with interest at the rate of 12% per annum (compounded annually) from August 9. It held that the text of the stipulation that the balance shall be paid within fifteen days is clear and unmistakable. it alleged that their contract was not merely one of sale but also of service. the RTC rendered judgment in this wise: WHEREFORE.110. WENCESLAO admitted that it owed READYCON P1.000 on
. In denying the appeal. The appellate court. 2.000 per day in terms of accomplishment of work. By way of counterclaim. namely. 733 (1961).WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN NOT HOLDING THE OBLIGATION [AS] NOT YET DUE AND DEMANDABLE. The amount of P1. 1991. 1991. Costs of suit.
The counterclaim of the defendants is dismissed for lack of merit. Hence. reiterated in MC Engineering v. In Lazatin. We find proper for resolution two issues: (1) Is respondent READYCON liable to petitioner WENCESLAO for damages caused by the issuance and enforcement of the writ of preliminary attachment? (2) Was the obligation of WENCESLAO to pay READYCON already due and demandable as of May 30. 3. Twano and Castro. affirmed in toto the decision of the lower court. 1991. though not malicious. The trial court granted the motion and directed the RTC Sheriff to return the attached equipments. Wenceslao & Associates. the contract failed to reflect the true intention of the parties.WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN NOT HOLDING RESPONDENT LIABLE FOR COMPENSATORY DAMAGES FOR THE WRONGFUL ISSUANCE OF THE WRIT OF PRELIMINARY ATTACHMENT.M.45 indeed. The amount of P35. wherein petitioners raise the following issues: 1. 380 SCRA 116 (2002). Court of Appeals. according to the CA. causing it to sustain a loss of P100.014. the Sheriff released the attached heavy machineries to WENCESLAO. Lazatin also held that attorney’s fees may be recovered under Article 2208 of the Civil Code. which was a month after READYCON performed its obligation. we held that actual or compensatory damages may be recovered for wrongful.
pertained to the propriety of questioning the writ of attachment by filing a motion to quash said writ. WENCESLAO failed to show concrete and credible proof of the damages it suffered.. Intermediate Appellate Court. in the present case. 172 SCRA 480 (1989). Nonetheless. the writs of attachment were found to be wrongfully issued. we laid no hard and fast rule that bad faith or malice must be proved to recover any form of damages. in the present case. Calderon v. for pertinently what this Court stated was as follows: The silence of the decision in GR No. after a counter-bond had been posted by the movant. e. the filing of a counterbond is a speedier way of discharging the attachment writ maliciously sought out by the attaching party creditor instead of the other way. a penalty cannot be meted out for the enforcement of a right. what is involved here is the issue of actual and compensatory damages.g. wherein the respective complaints were dismissed for being unmeritorious. Furthermore.. its reliance upon Mindanao Savings and Loan
It is to be stressed that the posting of a counter-bond is not tantamount to a waiver of the right to damages arising from a wrongful attachment. But nowhere in Mindanao Savings did we rule that filing a counter-bond is tantamount to a waiver of the right to seek damages on account of the impropriety or illegality of the writ. It cites Mindanao Savings and Loan Association v. i. 196 SCRA 29 (1991). the right to question the irregularity and propriety of the writ of attachment must be deemed waived since the ground for the issuance of the writ forms the core of the complaint. which in most instances like in the present case. Petitioners cite Lazatin and MC Engineering insofar as proof of bad faith and malice as prerequisite to the claim of actual damages is dispensed with. It stresses that the writ was legally issued by the RTC. But we denied the award of actual damages for want of evidence to show said damages. this Court ruled on that issue without a pronouncement that procurement of the writ was attended by bad faith. proof of malice and bad faith are unnecessary because. The issuance of a writ and its enforcement entail a rigorous process where the court found that it was not attended by malice or bad faith. The point in Mindanao Savings. Otherwise stated. citing Philippine Commercial & Industrial Bank. We find for the respondent on this issue. sufficient proof thereon is required. In Philippine Commercial & Industrial Bank. the liability of the surety on the attachment bond subsists because the final reckoning is when “the Court shall finally adjudge that the attaching creditor was not entitled” to the issuance of the attachment writ in the first place. upon a finding that READYCON sought the relief without malice or bad faith. we find that petitioner is not entitled to an award of actual or compensatory damages. Unlike Lazatin and MC Engineering. the two courts found READYCON entitled to a writ of preliminary attachment as a provisional remedy by which the property of the defendant is taken into custody of the law as a security for the satisfaction of any judgment
. We note that the appellate court. we found bad faith and malice to be present. just like in Lazatin and MC Engineering. Stated differently. Respondent counters that inasmuch as a preliminary attachment is an available ancillary remedy under the rules. stressed that bad faith or malice must first be proven as a condition sine qua non to the award of damages. would require presentation of evidence in a fullblown trial on the merits and cannot easily be settled in a pending incident of the case. instead of the other. both the trial and the appellate courts held that the complaint had merit. Proof of bad faith or malice in obtaining a writ of attachment need be proved only in the claim for damages on account of the issuance of the writ. For the mere existence of malice and bad faith would not per se warrant the award of actual or compensatory damages. Hence. by filing a counterbond or by showing that the order of attachment was improperly or irregularly issued. Only the legality of the issuance of the writ of attachment was brought in issue in that case.e. This we have made clear in previous cases. a
Plainly.the pullout of the equipment and another P100. 55381 on whether there was bad faith or malice on the part of the petitioner in securing the writ of attachment does not mean the absence thereof. However.000 to repair and restore them to their former working condition. Moreover. We affirm the finding of the respondent appellate court that malice and bad faith attended the application by PCIB of a writ of attachment. such as in this case when it sought such relief. The appellate court appears to have misread our ruling. The attachment debtor cannot be deemed to have waived any defect in the issuance of the attachment writ by simply availing himself of one way of discharging the attachment writ.  where we ruled that: Whether the attachment was discharged by either of the two (2) ways indicated in the law. Association is misplaced. thereby warranting the award of moral and exemplary damages. to the effect where a counter-bond is filed. alluded to by respondent. Court of Appeals. To grant such damages.
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. When the terms of a contract are clear and readily understandable. in Civil Case No. he could not be made personally liable for the corporation’s failure to comply with its obligation thereunder. the government accepted the work but WENCESLAO still failed to pay respondent. however. 61159. a few days after institution of the complaint. Neither do we find now that the writ is improper or illegal. The assailed decision and resolution of the Court of Appeals in CA-G.75 Balance – payable within fifteen (15) days – P942. For in a petition for certiorari under Rule 45 of the 1997 Rules of Civil Procedure. the buyer is obliged to pay the price of the thing sold at the time stipulated in the contract. The findings of the trial court as affirmed by the appellate court on this issue. SO ORDERED. WENCESLAO insists that the balance of the purchase price was payable only “upon acceptance of the work by the government. until fully paid.45 with interest rate of 12% per annum (compounded annually) from August 9. Petitioner WENCESLAO is properly held liable to pay respondent the sum of P1. are AFFIRMED.M. Even so. it contends that while the contract provided that the balance was payable within fifteen (15) days.110. Rule 57. If WENCESLAO suffered damages as a result. except when a party puts in issue in his pleading the failure of the written agreement to express the true intent of the parties. the date of filing of the complaint. both the RTC and the Court of Appeals found no reason to rule that READYCON was not entitled to issuance of the writ.661. This was what the petitioners wanted done. 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. WENCESLAO could have averted such damage if it immediately filed a counter-bond or a deposit in order to lift the writ at once. On the second issue. the petition is DENIED. to rule on whether the written agreement failed to express the true intent of the parties would entail having this Court reexamine the facts. Condition of applicant’s bond. Respondent argues that the stipulation in the sales contract is very clear that it should be paid within fifteen (15) days without any qualifications and conditions. that the findings by the RTC. However. vs. we find no reason to warrant a reversal of the decisions of the lower courts. ALEJANDRO NG WEE. It did not. if any. according to petitioner.R. Hence it cannot be used to qualify the reckoning of the period for payment. Besides.P235. 4. it is merely because it did not heed the demand letter of the respondent in the first place. no other evidence shall be admissible other than the original document itself. plus damages. WHEREFORE.. But since Dominador Dayrit merely acted as representative of D. despite the fact of the work’s acceptance by the government already. 49101. the real intent of the parties was that it shall be due and demandable only fifteen days after acceptance by the government of the work. then affirmed by the CA. and must bear its own loss. according to petitioner.178.
. there is no room for construction.” In other words. said agreement did not specify when the period begins to run. bind us now. if the court shall finally adjudge that the applicant was not entitled thereto (italics for emphasis). However. Under Article 1582 of the Civil Code. telling against petitioner WENCESLAO is its failure still to pay the unpaid account. that the extra condition being insisted upon by the petitioners is not found in the sales contract between the parties.014.647. Inc. Branch 165. This is common practice. Section 4 of the 1997 Rules of Civil Procedure states that: SEC. Both the RTC and the appellate court found that the parties’ contract stated that the buyer shall pay the manufacturer the amount of P1.75 in the following manner: 20% downpayment . . CV No. affirming the judgment of the Regional Trial Court of Pasig City.308. petitioner. the appellate court erred when it held the contract clear enough to be understood on its face. Suffice it to say. however.which the plaintiff may recover. Therefore. on that account. With submissions of the parties carefully considered. In this case.00 Following the rule on interpretation of contracts. 1991. WENCESLAO admits that it indeed owed READYCON the amount being claimed by the latter. in signing the contract. Wenceslao and Associates. the contention was mooted and rendered academic when. this Court may not review the findings of fact all over again. No pronouncement as to costs.
the RTC. The defendants. respondent. made several money placements totaling P210. moved for the discharge of the attachment.: Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court assailing the September 14.19 On September 30. ViceChairman and Director of Wincorp. Virata (Virata).10 Arguing that the writ was improperly issued and that the bond furnished was grossly insufficient. Petitioner Alejandro Ng Wee. The facts are undisputed.5 Finding that Virata purportedly used Power Merge as a conduit and connived with Wincorp's officers and directors to fraudulently obtain for his benefit without any intention of paying the said placements. a domestic entity engaged in the business of an investment house with the authority and license to extend credit. 90130 and its January 6. his co-defendants. The appellate court.MANUEL TANKIANSEE.21 and (2) that he could not have connived with Wincorp and the other defendants because he and Pearlbank Securities. 2000. assumed the obligation of the surety.18 We subsequently denied the petition with finality on August 23. a valued client of Westmont Bank (now United Overseas Bank). 2000. When the latter defaulted in its obligation. This credit facility originated from another loan of about P1.R.R. on December 22. He then discovered that the company extended a loan equal to his total money placement to a corporation [Power Merge] with a subscribed capital of only P37.991. among others. 2001. No. Allegedly.16 and the motion for reconsideration thereof on March 16. petitioner's money placements were transferred without his knowledge and consent to the loan account of Power Merge through an agreement that virtually freed the latter of any liability. SP No. 162928. 2004.13 denied all the motions for the discharge of the attachment. 2004 for Virata's and UEM-MARA's failure to sufficiently show that the appellate court committed any reversible error.12 On October 23. 2000. consequently.R. 74610]. on the basis of the allegations in the complaint and the October 12. petitioner instituted.595. J. in G.9 The writ was. 2004. however.3 Sometime in February 2000.17 In a petition for review on certiorari before this Court. filed their respective motions for reconsideration14 but the trial court denied the same on October 14. while respondent opted not to question anymore the said orders..7 On October 26. Luis Juan L. to petitioner's filing of a P50M-bond. SP No. respondent. 2005 Decision1 of the Court of Appeals (CA) in CA-G. denied the certiorari petition on August 21. filed cases against the company as they were also victimized by its fraudulent
. in an Omnibus Order. reached in which Hottick's president. petitioner was enticed to roll over his placements so that Wincorp could loan the same to Virata/Power Merge. DECISION NACHURA. Settlement was. Inc. including respondent herein. Virata and UEM-MARA Philippines Corporation (UEM-MARA).20 repleading the grounds he raised in his first motion but raising the following additional grounds: (1) that he was not present in Wincorp's board meetings approving the questionable transactions. 2002. issued on November 6. the trial court ordered the issuance of a writ of preliminary attachment against the properties not exempt from execution of all the defendants in the civil case subject. 2006 Resolution2 denying the motion for reconsideration thereof.6 One of the defendants impleaded in the complaint is herein respondent Manuel Tankiansee. respondent filed before the trial court another Motion to Discharge Attachment. assailed the same via certiorari under Rule 65 before the CA [docketed as CA-G.11 The other defendants likewise filed similar motions. petitioner received disturbing news on Wincorp's financial condition prompting him to inquire about and investigate the company's operations and transactions with its borrowers.15 Incidentally. however. 2000 Affidavit8 of petitioner.5B extended by Wincorp to another corporation [Hottick Holdings]. 00-99006 for damages with the Regional Trial Court (RTC) of Manila.62 with the bank's affiliate. Civil Case No. in which he is a major stockholder. 2000.4 Under the scheme agreed upon by Wincorp and Hottick's president. through the false representations of Wincorp and its officers and directors. on October 19. Wincorp instituted a case against it and its surety. 2004.5M. we denied the petition and affirmed the CA rulings on May 19. 2003. Westmont Investment Corporation (Wincorp).
Respondent further contends that the trial court. SP No. in resolving the Motion to Discharge Attachment. IT IS RESPECTFULLY SUBMITTED THAT THE COURT OF APPEALS ERRED IN SUSTAINING THE ERRORS IN JUDGMENT ALLEGED BY RESPONDENT. but the CA denied the same in its January 6. SINCE IT MERELY RAISED ERRORS IN JUDGMENT. B. WHICH. Grounds upon which attachment may issue.-At the commencement of the action or at any time before entry of judgment. ARE NOT THE PROPER SUBJECTS OF A WRIT OF CERTIORARI.R. BUT ALSO BECAUSE THESE HAD EARLIER BEEN RESOLVED WITH FINALITY BY THE LOWER COURT. and that the additional grounds were respondent's affirmative defenses that properly pertained to the merits of the case.27 Thus. petitioner filed the instant petition on the following grounds: A.28 For his part. that the general and sweeping allegation of fraud against respondent in petitioner's affidavit-respondent as an officer and director of Wincorp allegedly connived with the other defendants to defraud petitioner-is not sufficient basis for the trial court to order the attachment of respondent's properties. need not actually delve into the merits of the case. 90130.22 Ruling that the grounds raised were already passed upon by it in the previous orders affirmed by the CA and this Court. LIKEWISE. 2006 Resolution. the trial court denied the motion in its January 6. UNDER PREVAILING JURISPRUDENCE. 74610 and this Court in G. a plaintiff or any proper party may have the property of the adverse
. IT IS RESPECTFULLY SUBMITTED THAT THE COURT OF APPEALS SHOULD NOT HAVE GIVEN DUE COURSE TO THE PETITION FOR CERTIORARI FILED BY RESPONDENT. NOT ONLY BECAUSE THESE ARE BELIED BY THE VERY DOCUMENTS HE SUBMITTED AS PROOF OF SUCH ERRORS. 2000 Writ of Preliminary Attachment26 to the extent that it concerned respondent's properties.23 With the denial of its motion for reconsideration. SINCE THESE GROUNDS ALREADY RELATE TO THE MERITS OF CIVIL CASE NO. 24 respondent filed a certiorari petition before the CA docketed as CA-G.R.schemes. On September 14. IT IS RESPECTFULLY SUBMITTED THAT THE COURT OF APPEALS COMMITTED SERIOUS LEGAL ERROR IN RESOLVING FAVORABLY THE GROUNDS ALLEGED BY RESPONDENT IN HIS PETITION AND (SIC) LIFTING THE WRIT OF PRELIMINARY ATTACHMENT. Petitioner cannot also rely on the decisions of the appellate court in CA-G. Nowhere in the said affidavit does petitioner mention the name of respondent and any specific act committed by the latter to defraud the former.R. MOREOVER. SP No. C. CANNOT BE USED AS BASIS (SIC) FOR DISCHARGING A WRIT OF PRELIMINARY ATTACHMENT. Connivance cannot also be based on mere association but must be particularly alleged and established as a fact. 2005 Order. A writ of attachment can only be granted on concrete and specific grounds and not on general averments quoting perfunctorily the words of the Rules. UNDER PREVAILING JURISPRUDENCE. respondent counters. 162928 to support his claim because respondent is not a party to the said cases. the appellate court rendered the assailed Decision25 reversing and setting aside the aforementioned orders of the trial court and lifting the November 6. No. among others. In the case at bench. 2005. 00-99006 WHICH. the basis of petitioner's application for the issuance of the writ of preliminary attachment against the properties of respondent is Section 1(d) of Rule 57 of the Rules of Court which pertinently reads: Section 1.29 We agree with respondent's contentions and deny the petition. Petitioner moved for the reconsideration of the said ruling. All that the court has to examine are the allegations in the complaint and the supporting affidavit.
the applicant must sufficiently show the factual circumstances of the alleged fraud because fraudulent intent cannot be inferred from the debtor's mere nonpayment of the debt or failure to comply with his obligation.43 Likewise. the general averment in the affidavit that respondent is an officer and director of Wincorp who allegedly connived with the other defendants to commit a fraud. et al. Rule 57 of the Rules of Court. No. at the time of contracting the obligation.36 Absent any statement of other factual circumstances to show that respondent.. or without any showing of how respondent committed the alleged fraud. had a preconceived plan or intention not to pay. fraud should be committed upon contracting the obligation sued upon.45 that
. otherwise. the affidavit merely states that respondent. etc. therefore. The affidavit narrated only the alleged fraudulent transaction between Wincorp and Virata and/or Power Merge.. Court of Appeals. by the way. an officer and director of Wincorp. In other words. explains why this Court. the court shall refrain from issuing it. that. the mere fact that respondent is an officer and director of the company does not necessarily give rise to the inference that he committed a fraud or that he connived with the other defendants to commit a fraud.44 Considering.31 In Liberty Insurance Corporation v. As to the participation of respondent in the said transaction.40 Let it be stressed that the provisional remedy of preliminary attachment is harsh and rigorous for it exposes the debtor to humiliation and annoyance. connived with the other defendants in the civil case to defraud petitioner of his money placements. the trial court acted in excess of its jurisdiction when it issued the writ of preliminary attachment against the properties of respondent. If it is wrongfully issued on the basis of false or insufficient allegations. for. in this case.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 a fraud in contracting the debt or incurring the obligation upon which the action is brought. in G. strictly construed against the applicant. being the foundation of the writ. the writ should not be abused to cause unnecessary prejudice. therefore. compelling is the need to give a hint about what constituted the fraud and how it was perpetrated38 because established is the rule that fraud is never presumed. The affidavit. v. 162928. it should at once be corrected. 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. affirmed the writ of attachment issued against the latter.33 In the instant case. While under certain circumstances. 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. the court which issues it acts in excess of its jurisdiction.41 The rules governing its issuance are. is insufficient to support the issuance of a writ of preliminary attachment. To constitute a ground for attachment in Section 1 (d). as it is in this case. petitioner has not shown any specific act or deed to support the allegation that respondent is guilty of fraud. Sanchez.39 Verily.42 such that if the requisites for its grant are not shown to be all present. Inc. it must be shown that the debtor in contracting the debt or incurring the obligation intended to defraud the creditor. to whom liability will directly attach. this is only done when the wrongdoing has been clearly and convincingly established. which. No other factual averment or circumstance details how respondent committed a fraud or how he connived with the other defendants to commit a fraud in the transaction sued upon.30 The applicant must then be able to demonstrate that the debtor has intended to defraud the creditor.32 we explained as follows: To sustain an attachment on this ground. For a writ of attachment to issue under this rule. petitioner has not fully satisfied the legal obligation to show the specific acts constitutive of the alleged fraud committed by respondent.B. We are not unmindful of the rule enunciated in G. courts may treat a corporation as a mere aggroupment of persons. petitioner's October 12.35 must contain such particulars as to how the fraud imputed to respondent was committed for the court to decide whether or not to issue the writ. 2000 Affidavit34 is bereft of any factual statement that respondent committed a fraud.37 In the application for the writ under the said ground.R. A debt is fraudulently contracted if at the time of contracting it the debtor has a preconceived plan or intention not to pay. or in the performance thereof.
25659. PRUDENCIO CASTILLO. Failure to settle the above account on or before December 21.R. We state. ang (mga) may sumbong at (mga) ipinagsusumbong sa usaping binabanggit sa itaas. Na ako si Teresita V. 162928. petitioner Teresita Idolor executed in favor of private respondent Gumersindo De Guzman a Deed of Real Estate Mortgage with right of extra-judicial foreclosure upon failure to redeem the mortgage on or before September 20. TERESITA V. that our ruling herein deals only with the writ of preliminary attachment issued against the properties of respondent-it does not concern the other parties in the civil case.46 However. nor affect the trial court's resolution on the merits of the aforesaid civil case. HON. filed a complaint against petitioner Idolor before the Office of the Barangay Captain of Barangay Ramon Magsaysay. as aforesaid. Total amount of P1. which resulted in a “Kasunduang Pag-aayos” which agreement is quoted in full: “Kami. At nangangako kami na tutupad na tunay at matapat sa mga katakdaan ng pag-aayos na inilahad sa itaas. 1996. ay nagkakasundo sa pamamagitan nito na ayusin ang aming alitan gaya ng sumusunod: Na ako si Teresita V. The September 14. SP No. National Capital Judicial Region. respondents. 1994. 2006 Resolution of the Court of Appeals in CA-G. Idolor ay humihingi ng 90 days palugit (grace period) to settle the said amount. only a general allegation of fraud was made against respondent.[t]he merits of the main action are not triable in a motion to discharge an attachment otherwise an applicant for the dissolution could force a trial of the merits of the case on his motion. 1994. wife of Gumersindo de Guzman. 1994. the petition is DENIED."48 Also.. 2005 Decision and the January 6. Na ang nasabing halaga ay may nakasanlang titulo ng lupa (TCT No. in closing. the principle finds no application here because petitioner has not yet fulfilled the requirements set by the Rules of Court for the issuance of the writ against the properties of respondent. On September 21. IDOLOR.00. WHEREFORE. J.00 noong September 20.000. to the effect that the writ of attachment is properly issued insofar as it concerns the properties of Virata and UEM-MARA. premises considered. The object of said mortgage is a 200-square meter property with improvements located at 66 Ilocos Sur Street. our ruling in G. he is not in the same situation as Virata and UEM-MARA since. Presiding Judge. DECISION GONZAGA-REYES. as correctly ruled by the CA. while petitioner's affidavit detailed the alleged fraudulent scheme perpetrated by Virata and/or Power Merge. COURT OF APPEALS. to secure a loan of P520.R. does not affect respondent herein. for. Furthermore. petitioner. 1996.23 inclusive of interest earned. 90130 are AFFIRMED.: This is a petition for review on certiorari filed by petitioner Teresita Idolor which seeks to set aside the decision of the respondent Court of Appeals which reversed the Orderof the Regional Trial Court of Quezon Citygranting Idolor’s prayer for the issuance of a writ of preliminary injunction and the resolution denying petitioner’s motion for reconsideration.47 The evil sought to be prevented by the said ruling will not arise. No. vs. JR. 25659) under Registry receipt 3420 dated July 15. Quezon City. SPS. Branch 220. private respondent Iluminada de Guzman.233.288. respondent is "never a party thereto.000. 1996. GUMERSINDO DE GUZMAN and ILUMINADA DE GUZMAN and HON. Idolor of legal age ay nakahiram ng halagang P520. I agree to execute a deed of sale with the agreement to repurchase without interest within one year. Barangay Ramon Magsaysay.”
. because the propriety or impropriety of the issuance of the writ in this case can be determined by simply reading the complaint and the affidavit in support of the application. Quezon City covered by TCT No. On March 21. Regional Trial Court. Quezon City.
Branch 220. that petitioner and the general public have not been validly notified of the auction sale conducted by respondent sheriffs.Petitioner failed to comply with her undertaking. Idolor. Teresita Idolor filed her motion for reconsideration which was denied in a resolution dated February 4. 1998 which granted the issuance of a preliminary injunction. that the newspaper utilized in the publication of the notice of sale was not a newspaper of general circulation. respondent Gumersindo De Guzman filed an extra judicial foreclosure of the real estate mortgage pursuant to the parties agreement set forth in the real estate mortgage dated March 21. The issues raised by petitioner are: whether or not the respondent Court of Appeals erred in ruling (I) that petitioner has no more proprietary right to the issuance of the writ of injunction. On March 21. is a sufficient ground for denying the injunction. we agree with the respondent Court that petitioner has no more proprietary right to speak of over the foreclosed property to entitle her to the issuance of a writ of injunction. the respondent court granted the petition and annulled the assailed writ of preliminary injunction. In the instant case. is a prerequisite to the granting of an injunction. We do not agree. 1997. Hence this petition for review on certiorari filed by petitioner Teresita V. the Sheriff’s Certificate of Sale was registered with the Registry of Deeds of Quezon City on June 23.  Before an injunction can be issued. Injunction is a preservative remedy aimed at protecting substantive rights and interests. 1997. On September 28. The trial court denied the motion for reconsideration filed by the de Guzman spouses. 1997 and the
. On May 23. 2000. In the meantime. Failure to establish either the existence of a clear and positive right which should be judicially protected through the writ of injunction or that the defendant has committed or has attempted to commit any act which has endangered or tends to endanger the existence of said right. The core issue in this petition is whether or not the respondent Court erred in finding that the trial court committed grave abuse of discretion in enjoining the private and public respondents from causing the issuance of a final deed of sale and consolidation of ownership of the subject parcel of land in favor of private respondents. it is essential that the following requisites be present: 1) there must be a right in esse or the existence of a right to be protected.  The controlling reason for the existence of the judicial power to issue the writ is that the court may thereby prevent a threatened or continuous irremediable injury to some of the parties before their claims can be thoroughly investigated and advisedly adjudicated. It is to be resorted to only when there is a pressing necessity to avoid injurious consequences which cannot be remedied under any standard of compensation. as the highest bidder and consequently. (2) that the ”Kasunduang Pag-aayos” did not ipso facto result in novation of the real estate mortgage. Hence the existence of a right violated. and (4) that the questioned writ of preliminary injunction was issued with grave abuse of discretion. 1998. the trial court issued a writ of preliminary injunction enjoining private respondents. the mortgaged property was sold in a public auction to respondent Gumersindo. petitioner filed with the Regional Trial Court of Quezon City. Deputy Sheriffs Marino Cachero and Rodolfo Lescano and the Registry of Deeds of Quezon City alleging among others alleged irregularity and lack of notice in the extra-judicial foreclosure proceedings subject of the real estate mortgage. Injunction is not designed to protect contingent or future rights. Petitioner claims that her proprietary right over the subject parcel of land was not yet lost since her right to redeem the subject land for a period of one year had neither lapsed nor run as the sheriff’s certificate of sale was null and void. thus private respondent Gumersindo filed a motion for execution before the Office of the Barangay captain who subsequently issued a certification to file action. On July 28. It appears that the mortgaged property was sold in a public auction to private respondent Gumersindo on May 23. On June 25. Spouses de Guzman filed with the respondent Court of Appeals a petition for certiorari seeking annulment of the trial court’s order dated July 28. 1999. the Deputy Sheriffs and the Registry of Deeds of Quezon City from causing the issuance of a final deed of sale and consolidation of ownership of the subject property in favor of the De Guzman spouses. 1998. (3) that the “Kasunduang Pag-aayos” is merely a promissory note of petitioner to private respondent spouses. 2) the act against which the injunction is to be directed is a violation of such right. 1994. a temporary restraining order was issued by the trial court. 1997. a complaint for annulment of Sheriff’s Certificate of Sale with prayer for the issuance of a temporary restraining order (TRO) and a writ of preliminary injunction against private respondents.
 Under the law. or by substituting a new debtor in place of the old one. 1994 which was secured by a real estate mortgage and asked for a ninety (90) days grace period to settle her obligation on or before December 21. in other words. 1996 agreement) is not incompatible and can stand together with the mortgage contract of March 21. Evidently. 1994 and the “Kasunduang Pag-aayos” dated September 21. It is always a ground for denying injunction that the party seeking it has insufficient title or interest to sustain it. private respondents have the right to extra-judicially foreclose the real estate mortgage while under the second agreement. it was executed to facilitate easy compliance by respondent mortgagor with her mortgage obligation. or by subrogating a third person to the rights of the creditor. 274 SCRA 461 ). 1994 mortgage contract which was then more than two years overdue.. that a comparison of the real estate mortgage dated March 21. We are not persuaded. Accordingly. where. Court of Appeals. i. 1996 revealed the irreconciliable incompatibility between them. p. either by changing its objects or principal conditions. o
A review of the “Kasunduang Pag-aayos” which is quoted earlier does not support petitioner’s contention that it novated the real estate mortgage since the will to novate did not appear by express agreement of the parties nor the old and the new contracts were incompatible in all points. Petitioner had one year from the registration of the sheriff’s sale to redeem the property but she failed to exercise her right on or before June 23. i. In fact. that she shows no equity. Petitioner insists that the “Kasunduang Pag-aayos” was not a mere promissory note contrary to respondent court’s conclusion since it was entered by the parties before the Lupon Tagapamayapa which has the effect of a final judgment. the amount due was one million two hundred thirty three thousand two hundred eighty eight and 23/100 (P1. 1998.e. novation is never presumed.
. 1998. It (the September 21. there can be no novation. that the second agreement “Kasunduang Pag-aayos” was a valid new contract as it was duly executed by the parties and it changed the principal conditions of petitioner’s original obligations.233. 1996 merely gave life to the March 21. 1996 between her and spouses de Guzman before the Office of the Lupon Tagapamayapa showed the express and unequivocal intention of the parties to novate or modify the real estate mortgage. petitioner should execute a deed of sale with right to repurchase within one year without interest.  The possibility of irreparable damage without proof of actual existing right is not a ground for an injunction.e. the amount due was five hundred twenty thousand (P520.in other words.23) inclusive of interest. and no claim to the ultimate relief sought .75 Rollo) executed by the parties on September 21. A compromise agreement clarifying the total sum owned by a buyer with the view that he would find it easier to comply with his obligations under the Contract to Sell does not novate said Contract to Sell (Rillo v. after which it shall earn interest at the legal rate per annum and non-payment of which within the stipulated period. 1997.288. Petitioner‘s allegation regarding the invalidity of the sheriff’s sale dwells on the merits of the case.sheriff’s certificate of sale was registered with the Registry of Deeds of Quezon City on June 23. 1996 and that upon failure to do so. The agreement adverted to (Annex 2 of Comment.000) pesos only payable by petitioner within six (6) months.233. We cannot rule on the same considering that the matter should be resolved during the trial on the merits. she will execute a deed of sale with a right to repurchase without interest within one year in favor of private respondents. 1998.288. thus spouses de Guzman are now entitled to a conveyance and possession of the foreclosed property. 1994. Where the parties to the new obligation expressly recognize the continuing existence and validity of the old one. there exists no such express abrogation of the original undertaking. it was held that no novation of a contract had occurred when the new agreement entered into between the parties was intended to give life to the old one. the parties expressly negated the lapsing of the old obligation. she failed to show sufficient interest or title in the property sought to be protected as her right of redemption had already expired on June 23. two (2) days before the filing of the complaint. Petitioner next contends that the execution of the “Kasunduang Pag-aayos” dated September 21. 1996. 1996. petitioner expressly recognized in the Kasunduan the existence and the validity of the old obligation where she acknowledged her long overdue account since September 20.  We find no cogent reason to disagree with the respondent court’s pronouncement as follows: “In the present case. failing which she also agreed to execute in favor of the mortgagee a deed of sale of the mortgaged property for the same amount without interest. Novation is the extinguishment of an obligation by the substitution or change of the obligation by a subsequent one which terminates it. that under the first agreement.23 including the interests due on the unpaid mortgage loan which amount she promised to liquidate within ninety (90) days or until December 21. Respondent acknowledged therein her total indebtedness in the sum of P1. When petitioner filed her complaint for annulment of sheriff’s sale against private respondents with prayer for the issuance of a writ of preliminary injunction on June 25. The parties to a contract must expressly agree that they are abrogating their old contract in favor of a new one. payable within 90 days and in case of non payment of the same on or before December 21.
failure to exercise the right of redemption would entitle the purchaser to possession of the property.” Notably. 1996. is misplaced. 1997. which requires the lapse of six (6) months before the amicable settlement may be enforced. after her failure to comply with her obligation which expired on December 21. SO ORDERED.Respondent correctly argues that the compromise agreement has the force and effect of a final judgment. the provision in the “Kasunduang Pag-aayos” regarding the execution of a deed of sale with right to repurchase within one year would have the same effect as the extra-judicial foreclosure of the real estate mortgage wherein petitioner was given one year from the registration of the sheriff’s sale in the Registry of property to redeem the property. It is not proper to consider an obligation novated by unimportant modifications which do not alter its essence. WHEREFORE.  It bears stress that the period to pay the total amount of petitioner’s indebtedness inclusive of interest amounted to P1. Thus. That precisely is the reason why petitioner resorted to the foreclosure of the mortgage on March 27. Reliance by private respondent upon Section 417 of the New Local Government Code of 1991. The decision of the respondent Court of Appeals dated September 28. petitioner has not shown that she is entitled to the equitable relief of injunction. The instant case deals with extra judicial foreclosure governed by ACT No.233.e. 1996 and petitioner failed to execute a deed of sale with right to repurchase on the said date up to the time private respondents filed their petition for extra-judicial foreclosure of real estate mortgage..23 expired on December 21. 3135 as amended. i.288. 1999 is hereby AFFIRMED.
. The failure of petitioner to comply with her undertaking in the “kasunduan“ to settle her obligation effectively delayed private respondents’ right to extra-judicially foreclose the real estate mortgage which right accrued as far back as 1994. the petition is DENIED.