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PROVISIONAL REMEDIES

Rule 57 Preliminary Attachment


Section 1. Grounds upon which attachment may issue. At the commencement of the action
or at any time before entry of judgment, a plaintiff or any proper party may have the property of
the adverse party attached as security for the satisfaction of any judgment that may be
recovered in the following cases:
(a) In an action for the recovery of a specified amount of money or damages, other than
moral and exemplary, on a cause of action arising from law, contract, quasi-contract,
delict or quasi-delict against a party who is about to depart from the Philippines with
intent to defraud his creditors;
(b) In an action for money or property embezzled or fraudulently misapplied or converted
to his own use by a public officer, or an officer of a corporation, or an attorney, factor,
broker, agent, or clerk, in the course of his employment as such, or by any other person
in a fiduciary capacity, or for a willful violation of duty;
(c) In an action to recover the possession of property unjustly or fraudulently taken,
detained or converted, when the property, or any part thereof, has been concealed,
removed, or disposed of to prevent its being found or taken by the applicant or an
authorized person;
(d) In an action against a party who has been guilty of a fraud in contracting the debt or
incurring the obligation upon which the action is brought, or in the performance thereof;
(e) In an action against a party who has removed or disposed of his property, or is about
to do so, with intent to defraud his creditors; or
(f) In an action against a party who does not reside and is not found in the Philippines, or
on whom summons may be served by publication.
A. Section 13, Rule 39. Property exempt from execution. Except as otherwise expressly
provided by law, the following property, and no other, shall be exempt from execution:
(a) The judgment obligor's family home as provided by law, or the homestead in which
he resides, and land necessarily used in connection therewith;

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(b) Ordinary tools and implements personally used by him in his trade, employment, or
livelihood;
(c) Three horses, or three cows, or three carabaos, or other beasts of burden, such as
the judgment obligor may select necessarily used by him in his ordinary occupation;
(d) His necessary clothing and articles for ordinary personal use, excluding jewelry;
(e) Household furniture and utensils necessary for housekeeping, and used for that
purpose by the judgment obligor and his family, such as the judgment obligor may
select, of a value not exceeding one hundred thousand pesos;
(f) Provisions for individual or family use sufficient for four months;
(g) The professional libraries and equipment of judges, lawyers, physicians,
pharmacists, dentists, engineers, surveyors, clergymen, teachers, and other
professionals, not exceeding three hundred thousand pesos in value;
(h) One fishing boat and accessories not exceeding the total value of one hundred
thousand pesos owned by a fisherman and by the lawful use of which he earns his
livelihood;
(i) So much of the salaries, wages, or earnings of the judgment obligor for his personal
services within the four months preceding the levy as are necessary for the support of
his family;
(j) Lettered gravestones;
(k) Monies, benefits, privileges, or annuities accruing or in any manner growing out of
any life insurance;
(l) The right to receive legal support, or money or property obtained as such support, or
any pension or gratuity from the Government;
(m) Properties specially exempted by law.
But no article or species of property mentioned in this section shall be exempt from execution
issued upon a judgment recovered for its price or upon a judgment of foreclosure of a mortgage
thereon.
B. Article 153, Family Code - The following are conjugal partnership property:

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(1) That which is acquired by onerous title during the marriage at the expense of the
common fund, whether the acquisition be for the partnership, or for only one of the spouses;
(2) That which is obtained by the industry, or work, or as salary of the spouses, or of either of
them;
(3) The fruits, rents or interests received or due during the marriage, coming from the
common property or from the exclusive property of each spouse.

Article 157, Family Code - The right to an annuity, whether perpetual or of life, and the right of
usufruct, belonging to one of the spouses shall form a part of his or her separate property, but
the fruits, pensions and interests due during the marriage shall belong to the partnership.
The usufruct which the spouses have over the property of their children, though of another
marriage, shall be included in this provision.
C. RULE 127 - Provisional Remedies in Criminal Cases
Section 1. Availability of provisional remedies. The provisional remedies in civil actions,
insofar as they are applicable, may be availed of in connection with the civil action deemed
instituted with the criminal action. (1a)
Section 2. Attachment. When the civil action is properly instituted in the criminal action as
provided in Rule 111, the offended party may have the property of the accused attached as
security for the satisfaction of any judgment that may be recovered from the accused in the
following cases:
(a) When the accused is about to abscond from the Philippines;
(b) When the criminal action is based on a claim for money or property embezzled or
fraudulently misapplied or converted to the use of the accused who is a public officer,
officer of a corporation, attorney, factor, broker, agent, or clerk, in the course of his
employment as such, or by any other person in a fiduciary capacity, or for a willful
violation of duty;
(c) When the accused has concealed, removed, or disposed of his property, or is about
to do so; and
a) When the accused resides outside the Philippines.
D. CASES:
1. Paregrina v Panis G.R. No. 56011 (Oct. 31,1984)
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Respondent Court's assumption of jurisdiction, without prior conciliation proceedings between


the parties in the Lupon Tagapayapa, is questioned in this Petition for certiorari and Prohibition
with Preliminary Injunction. We issued a Temporary Restraining Order enjoining respondent
Judge from taking further action in the case pending resolution of the controversy.
The Complaint filed below by the SPOUSES Procopio and Carmelita Sanchez against
PETITIONERS Elmer, Adelaida and Cecilia, all surnamed Peregrina, is a civil action for
damages for alleged disrespect for the dignity, privacy and peace of mind of the SPOUSES
under Article 26 of the Civil Code, and for alleged defamation under Article 33 of the same
Code.
Admittedly, the parties are actual residents of the same barangay in Olongapo City. In fact, they
are neighbors. Unquestionably, too, no conciliation proceedings were filed before the Lupon. It
is not surprising then that the Complaint is silent regarding compliance with the mandatory
requirement, nor does it allege that the dispute falls within the excepted cases.
PETITIONERS, as defendants below, moved for the dismissal of the Complaint. Before firing an
Opposition, the SPOUSES applied for a Writ of Preliminary Attachment. Thereafter, the
SPOUSES presented their Opposition claiming that, under Section 6(3) of P.D. No. 1508, the
parties may go directly to the Courts if the action is coupled with a provisional remedy such as
preliminary attachment.
In resolving the Motion to Dismiss, respondent Judge at first, dismissed the Complaint for failure
of the SPOUSES to comply with the pre-condition for amicable settlement under P.D. No. 1508,
stating that the application for a provisional remedy was merely an afterthought. On motion for
reconsideration by the SPOUSES, however, respondent Judge denied PETITIONERS' Motion
to Dismiss on the ground that under Rule 57, Section 1 of the Rules of Court, the application for
attachment can be made at the commencement of the action or any time thereafter.
PETITIONERS now assail that Order of denial before us.
We uphold PETITIONERS. Section 3 of P.D. No. 1508 specifically provides: t.hqw
Disputes between or among persons actually respectively in the same barangay
shall be brought for amicable settlement before the Lupon of said barangay. ...
It is also mandated by Section 6 of the same law:
SECTION 6. Conciliation, pre-condition to filing of complaint. No complaint,
petition, action or proceeding involving any matter within the authority of the
Lupon as provided. in Section 2 hereof shall be filed or instituted in court or any
other government office for adjudication unless there has been a confrontation of
the parties before the Lupon Chairman or the Pangkat and no conciliation or
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settlement has been reached as certified by the Lupon Secretary or the Pangkat
Secretary, attested by the Lupon or Pangkat Chairman, or unless the settlement
has been repudiated. ...
Thus, Morata vs. Go, 125 SCRA 444 (1,,983), and Vda. de Borromeo vs. Pogoy, 126 SCRA 217
(1983) have held that P.D. No. 1508 makes the conciliation process at the Barangay level a
condition precedent for the filing of a complaint in Court. Non-compliance with that condition
precedent could affect the sufficiency of the plaintiff's cause of action and make his complaint
vulnerable to dismissal on the ground of lack of cause of action or prematurity. 2The condition is
analogous to exhaustion of administrative remedies, 3 or the lack of earnest efforts to
compromise suits between family members, 4 lacking which the case can be dismissed. 5
The parties herein fall squarely within the ambit of P.D. No. 1508. They are actual residents in
the same barangay and their dispute does not fall under any of the excepted cases. 6
It will have to be held, therefore, that respondent Judge erred in reconsidering his previous
Order of dismissal on the ground that the provisional remedy of attachment was seasonably
filed. Not only was the application for that remedy merely an afterthought to circumvent the law,
but also, fundamentally, a Writ of Attachment is not available in a suit for damages where the
amount, including moral damages, is contingent or unliquidated. 7 Prior referral to the Lupon for
conciliation proceedings, therefore, was indubitably called for.
WHEREFORE, respondent Judge's Order, dated November 17, 1980, is SET ASIDE, and the
Complaint in Civil Case No. 2946-0 for damages is DISMISSED, without prejudice. The
Temporary Restraining Order heretofore issued is hereby made permanent. No costs.

2. Carpio v Macadaeg 9 SCRA 552 (1963)


Isabelo Carpio filed this petition for certiorari and prohibition to annul and stop implementation of
respondent Judge's orders of October 24 and November 25, 1960, directing the sale of five race
horses and goods previously attached upon motion of respondent Oscar Abaya. We issued a
writ of preliminary injunction to restrain the sale, with instructions to respondent Sheriff of Rizal
to allow the daily training of the said horses and their participation in races whenever they were
included in the racing programs.

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On January 17, 1960 respondent Oscar Abaya filed a complaint against petitioner for the
recovery of various sums aggregating P25,000 (Civil Case No. 42450, C.F.I. Manila). Before
summons was served, and upon ex parte motion of respondent Abaya (Annex B), respondent
Judge issued two orders of attachment dated February 8 (Annex C-1) and February 10, 1960
(Annex C), pursuant to which the Sheriff of Manila garnished goods consisting of hardware
imported by petitioner, and the Sheriff of Rizal seized petitioner's five racing horses named
Mohamad, Mohamad's Pride, Magic Spell, Nashua and Sirius. On February 12, 1960 petitioner
filed an urgent petition to discharge the orders of attachment (Annex 1). Acting thereon,
respondent Judge, on March 11, 1960, set aside the two orders of February 8 and 10, 1960
(Annex F).

Upon two motions of respondent Abaya (Annexes H and 1), respondent Judge, on March 29,
1960, set aside his order of March 11, 1960 (Annex K). Though no new petition was filed for
issuance of a writ of attachment and no new order or alias writ of attachment was issued,
respondent Sheriff of Manila garnished the aforementioned goods and respondent Sheriff of
Rizal attached the five racing horses.

Upon petition of respondent Abaya (Annex L), respondent Judge issued an order directing the
sale at public auction of the five racing horses (Annex M). However, the sale was halted by
petitioner's putting up a bond of P4,000 and the horses were released to him by respondent
Sheriff of Rizal.

Upon motion of respondent Abaya (Annex R), respondent Judge, on October 24, 1960, ordered
the increase of the bond to P10,000, and ordered respondent Sheriff of Rizal to proceed with
the sale of the horses should petitioner failed to file the additional bond of P6,000 (Annex S).
Motions filed by petitioner seeking reconsideration of the said order of October 24 were denied
by respondent Judge on November 25, 1960 (Annex X). So, respondent Sheriff of Rizal
advertised the sale at public auction of the five racing horses. Upon motion of respondent Abaya
(Annex T), and despite the opposition of petitioner(Annex U), respondent Judge, on the same
day November 25 issued an order authorizing the sale of the garnished goods (Annex Z).
Petitioner seeks annulment of the order of October 24, 1960 ordering him to file an additional
bond of P6,000; the order of November 25, 1960 denying his motion for reconsideration of the
order of October 24; and the order of the same date authorizing the sale of the garnished
goods, on the ground that in issuing them respondent Judge acted without jurisdiction and/or
with grave abuse of discretion.
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Respondent Judge should not have issued the two writs of preliminary attachment (Annexes C
and C-1) on Abaya's simple allegation that the petitioner was about to dispose of his property,
thereby leaving no security for the satisfaction of any judgment.[[1]] Mere removal or disposal of
property, by itself, is not ground for issuance of preliminary attachment, notwithstanding
absence of any security for the satisfaction of any judgment against the defendant. The removal
or disposal, to justify preliminary attachment, must have been made with intent to defraud
defendant's creditors.[[2]]

Respondent Judge in fact corrected himself. Acting on petitioner's motion to discharge


attachment and apparently believing the correctness of the grounds alleged therein, [[3]]he set
aside the orders of attachment (Order of March 11, 1960, Annex F).
But reversing himself again, he set aside his order of March 11, 1960 (Annex K, dated March
29, 1960.[[4]] This he did apparently on Abaya's contention that petitioner was about to remove
or dispose of his property in order to defraud his creditors, as examples of which disposals he
pointed to the alleged sale of the horses and of petitioner's office furniture (Abaya's motion for
reconsideration dated March 15, 1960, Annex H). These averments of fraudulent disposals were
controverted by petitioner who, in his opposition to Abaya's motions for reconsideration (Annex
J), reiterated the defenses against preliminary attachment which he had previously enumerated
in his petition to discharge the two orders of attachment. Thus the question of fraudulent
disposal was put in issue; and respondent Judge, before issuing the preliminary attachment
anew, should have given the parties opportunity to prove their respective claims or, at the very
least, should have provided petitioner with the chance to show that he had not been disposing
of his property in fraud of creditors.[[5]]

But for much more than the above reason, respondent Judge should not have again ordered the
issuance of the writ of preliminary attachment since Abaya never made any affidavit as required
by Rule 59, Rules of Court, which states that:

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

For the purposes of issuance of preliminary attachment, the affidavit (Annex B-1) attached to
Abaya's motion therefor (Annex B), as we have said, is not sufficient, and it does not appear
that he ever executed another affidavit that complies with the above section. None appears
attached either to his motion for reconsideration dated March 15, 1960 (Annex H) or to his
motion for reconsideration dated March 16, 1960 (Annex I), upon which the order of attachment
(Annex K) was based.

Having construed that the preliminary attachment should not have been ordered, we believe it is
no longer necessary to discuss the subsequent actuations of respondent Judge which were all
based on the erroneous assumption that his order of March 29, 1960 was valid (Annex K).

WHEREFORE, the order of March 29, 1960 and all succeeding orders of respondent Judge with
respect to said preliminary attachment, are hereby declared null and void; the attached
properties are ordered released; and the preliminary injunction issued by this Court is made
permanent. Costs against respondent Abaya.

3. Adlawan v Torres (July 5, 1994)


Facts: Petitioner Adlawan was indebted to Respondent company Aboitiz for construction
projects the former was awarded with. However, due to inability to pay, Aboitiz filed for collection
of sum of money against petitioner in the CFI of Cebu. It also moved for preliminary attachment
on some of Adlawans properties after filing a bond.
Aboitiz filed a notice of dismissal for the above mention case. When Adlawan moved for the
enforcement of the dismissal, it was denied by the court on account of the filing by respondent
Aboitiz an action or delivery of personal property before the CFI of Lapu-Lapu and petitioner
Adlawans filing for damages in the same court for the seizure of his property by virtue of the
preliminary attachment.

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Respondent Aboitiz alleged that the voluntary dismissal of the previous case was without
prejudice to the institution of another action based on the same subject matter and that the
issuance of the writ was justified because the petitioners were intending to defraud Aboitiz by
mortgaging 11 parcels of land to PCIB thereby making PCIB a preferred creditor to the prejudice
of Aboitiz.
Issue: Was the writ of attachment legal or valid?
Held: Negative. The affidavit submitted by Aboitiz in support of its prayer for the writ of
attachment does NOT meet the requirements of Rule 57 of the Rules of Court regarding
allegations on impending fraudulent removal, concealment and disposition of defendants
property. To justify a preliminary attachment, the removal or disposal must have been made with
intent to defraud defendants creditors.
The factual basis must be alleged in the affidavit in support of the prayer for the writ of
attachment if not so specifically alleged in the verified complaint. (See full text for the copy of the
affidavit)
The Supreme Court have found that there is no factual allegation which may constitute as a
valid basis for the contention that the mortgage was in fraud of Aboitiz.
The affidavit is the foundation of the writ and if none be filed or one be filed which wholly fails to
set out some facts required by law to be stated therein, there is no jurisdiction and the
proceedings are null and void.
Bare allegation that an encumbrance of a property is in fraud of the creditor does NOT suffice.
Factual bases for such conclusion must be clearly averred.
By mortgaging a piece of property, a debtor merely subjects it to a lien but ownership thereof is
not parted with.
The Inability to pay ones creditors is no necessarily synonymous with fraudulent intent not to
honor an obligation.
When petitioners filed for reconsideration of the order directing the issuance of the writ, the
respondent Judge Torres should have conducted a hearing or required a submission of counteraffidavit from the petitioners, if only to gather the facts in support of the alleged fraud.
4. Aboitiz & Co. v Provincial Sheriff L-35990 (June 17, 1981)
The instant petition stemmed from Civil Case No. 7329 of the Court of First Instance of Davao
(Branch 1) in which a writ of preliminary attachment was issued ex-parte by the Court on the
strength of an affidavit of merit attached to the verified complaint filed by petitioner herein,
Aboitiz & Co., Inc., on November 2, 1971, as plaintiff in said case, for the collection of money in
the sum of P 155,739.41, which defendant therein, the respondent in the instant case, Cotabato
Bus Co., owed the said petitioner.
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By virtue of the writ of preliminary attachment, the provincial sheriff attached personal properties
of the defendant bus company consisting of some buses, machinery and equipment. The
ground for the issuance of the writ is, as alleged in the complaint and the affidavit of merit
executed by the Assistant Manager of petitioner, that the defendant "has removed or disposed
of its properties or assets, or is about to do so, with intent to defraud its creditors."
Respondent company filed in the lower court an "Urgent Motion to Dissolve or Quash Writ of
Attachment" to which was attached an affidavit executed by its Assistant Manager, Baldovino
Lagbao, alleging among other things that "the Cotabato Bus Company has not been selling or
disposing of its properties, neither does it intend to do so, much less to defraud its creditors; that
also the Cotabato Bus Company, Inc. has been acquiring and buying more assets". An
opposition and a supplemental opposition were filed to the urgent motion. The lower court
denied the motion stating in its Order that "the testimony of Baldovino Lagbao, witness for the
defendant, corroborates the facts in the plaintiff's affidavit instead of disproving or showing them
to be untrue."
A motion for reconsideration was filed by the defendant bus company but the lower court denied
it. Hence, the defendant went to the Court of Appeals on a petition for certiorari alleging grave
abuse of discretion on the part of herein respondent Judge, Hon. Vicente R. Cusi Jr. On giving
due course to the petition, the Court of Appeals issued a restraining order restraining the trial
court from enforcing further the writ of attachment and from proceeding with the hearing of Civil
Case No. 7329. In its decision promulgated on October 3, 1971, the Court of Appeals declared
"null and void the order/writ of attachment dated November 3, 1971 and the orders of December
2, 1971, as well as that of December 11, 1971, ordered the release of the attached properties,
and made the restraining order originally issued permanent.
The present recourse is an appeal by certiorari from the decision of the Court of Appeals
reversing the assailed orders of the Court of First Instance of Davao, (Branch I), petitioner
assigning against the lower court the following errors:
ERROR I
THE COURT OF APPEALS ERRED IN HASTILY AND PERFUNCTORILY
RENDERING, ON OCTOBER 3, 1971, A DECISION WITHOUT CONSIDERING
MOST OF THE EVIDENCE SUCH THAT
l) EVEN AN IMPORTANT FACT, ESTABLISHED BY DOCUMENTARY
EVIDENCE AND NOT DENIED BY RESPONDENT, IS MENTIONED ONLY AS A
"CLAIM" OF PETITIONER COMPANY;
2) THE DECISION CONTAINS NO DISCUSSION AND APPRECIATION OF THE
FACTS AS PROVED, ASSEMBLED AND PRESENTED BY PETITIONER
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COMPANY SHOWING IN THEIR TOTALITY THAT RESPONDENT HAS


REMOVED, DIVERTED OR DISPOSED OF ITS BANK DEPOSITS, INCOME
AND OTHER LIQUID ASSETS WITH INTENT TO DEFRAUD ITS CREDITORS,
ESPECIALLY ITS UNSECURED SUPPLIERS;
3) THE DECISION IGNORES THE SIGNIFICANCE OF THE REFUSAL OF
RESPONDENT TO PERMIT, UNDER REP. ACT NO. 1405, THE
METROPOLITAN BANK & TRUST CO. TO BRING, IN COMPLIANCE WITH A
subpoena DUCES TECUM TO THE TRIAL COURT ALL THE RECORDS OF
RESPONDENT'S DEPOSITS AND WITHDRAWALS UNDER ITS CURRENT
AND SAVINGS ACCOUNTS (NOW NIL) FOR EXAMINATION BY PETITIONER
COMPANY FOR THE PURPOSE OF SHOWING DIRECTLY THE REMOVAL,
DIVERSION OR DISPOSAL OF RESPONDENT'S DEPOSITS AND INCOME
WITH INTENT TO DEFRAUD ITS CREDITORS.
ERROR II
THE COURT OF APPEALS ERRED IN NOT APPRECIATING THE FACTS THAT
RESPONDENT'S BANK DEPOSITS ARE NIL AS PROOF WHICH - TOGETHER
WITH RESPONDENT'S ADMISSION OF AN INCOME OF FROM P10,000.00 to
P 14,000.00 A DAY AND THE EVIDENCE THAT IT CANNOT PRODUCE P
634.00 WITHOUT USING A PERSONAL CHECK OF ITS PRESIDENT AND
MAJORITY STOCKHOLDER, AND OTHER EVIDENCE SHOWS THE
REMOVAL OR CHANNELING OF ITS INCOME TO THE LATTER.
ERROR III
THE COURT OF APPEALS ERRED IN NOT APPRECIATING THE RESCUE
AND REMOVAL BY RESPONDENT OF FIVE ATTACHED BUSES, DURING
THE DEPENDENCY OF ITS MOTION TO DISSOLVE THE ATTACHMENT IN
THE, TRIAL COURT, AS A FURTHER ACT OF REMOVAL OF PROPERTIES BY
RESPONDENT WITH INTENT TO DEFRAUD PETITIONER COMPANY, FOR
WHOSE BENEFIT SAID BUSES HAD BEEN ATTACHED.
The questions raised are mainly, if not solely, factual revolving on whether respondent bus
company has in fact removed its properties, or is about to do so, in fraud of its creditors. This
being so, the findings of the Court of Appeals on said issues of facts are generally considered
conclusive and final, and should no longer be disturbed. However, We gave due course to the
petition because it raises also a legal question of whether the writ of attachment was properly
issued upon a showing that defendant is on the verge of insolvency and may no longer satisfy
its just debts without issuing the writ. This may be inferred from the emphasis laid by petitioner
on the fact that even for the measly amount of P 634.00 payment thereof was made with a
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personal check of the respondent company's president and majority stockholder, and its debts
to several creditors, including secured ones like the DBP, have remained unpaid, despite its
supposed daily income of an average of P 12,000.00, as declared by its assistant manager,
Baldovino Lagbao.
Going forthwith to this question of whether insolvency, which petitioners in effect claims to have
been proven by the evidence, particularly by company's bank account which has been reduced
to nil, may be a ground for the issuance of a writ of attachment, the respondent Court of Appeals
correctly took its position in the negative on the strength of the explicit ruling of this Court in Max
Chamorro & Co. vs. Philippine Ready Mix Concrete Company, Inc. and Hon. Manuel P.
Barcelona.
Petitioner, however, disclaims any intention of advancing the theory that insolvency is a ground
for the issuance of a writ of attachment , 3 and insists that its evidence -is intended to prove his
assertion that respondent company has disposed, or is about to dispose, of its properties, in
fraud of its creditors. Aside from the reference petitioner had made to respondent company's
"nil" bank account, as if to show removal of company's funds, petitioner also cited the alleged
non-payment of its other creditors, including secured creditors like the DBP to which all its
buses have been mortgaged, despite its daily income averaging P12,000.00, and the rescue
and removal of five attached buses.
It is an undisputed fact that, as averred by petitioner itself, the several buses attached are nearly
junks. However, upon permission by the sheriff, five of them were repaired, but they were
substituted with five buses which were also in the same condition as the five repaired ones
before the repair. This cannot be the removal intended as ground for the issuance of a writ of
attachment under section 1 (e), Rule 57, of the Rules of Court. The repair of the five buses was
evidently motivated by a desire to serve the interest of the riding public, clearly not to defraud its
creditors, as there is no showing that they were not put on the run after their repairs, as was the
obvious purpose of their substitution to be placed in running condition.
Moreover, as the buses were mortgaged to the DBP, their removal or disposal as alleged by
petitioner to provide the basis for its prayer for the issuance of a writ of attachment should be
very remote, if not nil. If removal of the buses had in fact been committed, which seems to exist
only in petitioner's apprehensive imagination, the DBP should not have failed to take proper
court action, both civil and criminal, which apparently has not been done.
The dwindling of respondent's bank account despite its daily income of from P10,000.00 to
P14,000.00 is easily explained by its having to meet heavy operating expenses, which include
salaries and wages of employees and workers. If, indeed the income of the company were
sufficiently profitable, it should not allow its buses to fall into disuse by lack of repairs. It should
also maintain a good credit standing with its suppliers of equipment, and other needs of the
company to keep its business a going concern. Petitioner is only one of the suppliers.
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It is, indeed, extremely hard to remove the buses, machinery and other equipments which
respondent company have to own and keep to be able to engage and continue in the operation
of its transportation business. The sale or other form of disposition of any of this kind of property
is not difficult of detection or discovery, and strangely, petitioner, has adduced no proof of any
sale or transfer of any of them, which should have been easily obtainable.
In the main, therefore, We find that the respondent Court of Appeals has not committed any
reversible error, much less grave abuse of discretion, except that the restraining order issued by
it should not have included restraining the trial court from hearing the case, altogether.
Accordingly, the instant petition is hereby denied, but the trial court is hereby ordered to
immediately proceed with the hearing of Civil Case No. 7329 and decide it in accordance with
the law and the evidence. No special pronouncement as to costs.
5. Filinvest Credit Corp. v Relova G.R. No. 50378 (Sept. 30, 1982)
This is a special civil action for certiorari, with prayer for restraining order or preliminary
injunction, filed by petitioner Filinvest Credit Corporation seeking to annul the Orders issued by
respondent Judge dated February 2, 1979 and April 4, 1979 in Civil Case No. 109900.
As shown by the records, the antecedents of the instant Petition are as follows:
On August 2, 1977, Filinvest Credit Corporation (hereinafter referred to as FILINVEST) filed a
complaint in the lower court against defendants Rallye Motor Co., Inc. (hereinafter referred to as
RALLYE) and Emesto Salazar for the collection of a sum of money with damages and
preliminary writ of attachment. From the allegations of the complaint, 1 it appears that in
payment of a motor vehicle described as: "One (1) Unit MAZDA DIESEL SCHOOL BUS, Model:
E4100, Serial No.: EXC43P-02356, Motor No.: Y-13676," Salazar executed a promissory note
dated May 5, 1977 in favor of RALLYE for the amount of P99,828.00. To secure the note,
Salazar also executed in favor of RALLYE a deed of chattel mortgage over the above described
motor vehicle. On May 7, 1977, RALLYE, for valuable consideration, assigned all its rights, title
and interest to the aforementioned note and mortgage to FILINVEST. Thereafter, FILINVEST
came to know that RALLYE had not delivered the motor vehicle subject of the chattel mortgage
to Salazar, "as the said vehicle (had) been the subject of a sales agreement between the
codefendants." Salazar defaulted in complying with the terms and conditions of the aforesaid
promissory note and chattel mortgage. RALLYE, as assignor who guaranteed the validity of the
obligation, also failed and refused to pay FILINVEST despite demand. According to FILINVEST,
the defendants intentionally, fraudulently and with malice concealed from it the fact that there
was no vehicle delivered under the documents negotiated and assigned to it, otherwise, it would
not have accepted the negotiation and assignment of the rights and interest covered by the
promissory note and chattel mortgage. Praying for a writ of preliminary attachment, FILINVEST
submitted with its complaint the affidavit of one Gil Mananghaya, pertinent portions of which
read thus:
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That he is the Collection Manager, Automotive Division of Filinvest Credit


Corporation;
That in the performance of his duties, he came to know of the account of Ernesto
Salazar, which is covered by a Promissory Note and secured by a Chattel
Mortgage, which documents together with all the rights and interest thereto were
assigned by Rallye Motor Co., Inc.;
That for failure to pay a stipulated installment, and the fact that the principal
debtor, Ernesto Salazar, and the assignor, Rallye Motor Co., Inc. concealed the
fact that there was really no motor vehicle mortgaged under the terms of the
Promissory Note and the Chattel Mortgage, the entire amount of the obligation
stated in the Promissory Note becomes due and demandable, which Ernesto
Salazar and Rallye Motor Co., Inc. failed and refused to pay, so much so that a
sufficient cause of action really exists for Filinvest Credit Corporation to institute
the corresponding complaint against said person and entity;
That the case is one of those mentioned in Section 1, Rule 57 of his Rules of
Court, particularly an action against parties who have been guilty of a fraud in
contracting the debt or incurring the obligation upon which the action is brought;
That there is no other sufficient security for the claim sought to be enforced by
the action, and that the amount due to the applicant Filinvest Credit Corporation
is as much as the sum for which the order is granted above all legal
counterclaims;
That this affidavit is executed for the purpose of securing a writ of attachment
from the court. 2
The specific provision adverted to in the above Affidavit is Section 1(d) of Rule 57 which
includes "an action against a party who has been guilty of fraud in contracting the debt or
incurring the obligation upon which the action is brought, or in concealing or disposing of the
property for the taking, detention or conversion of which the action is brought" as one of the
cases in which a "plaintiff or any proper party may, at the commencement of the action or at any
time thereafter, have the property of the adverse party attached as security for the satisfaction of
any judgment that may be recovered."
Judge Jorge R. Coquia (now Justice of the Court of Appeals), then presiding Judge of the lower
court, granted the prayer for a writ of attachment in an Order dated August 17, 1977 stating that:
Finding the complaint sufficient in form and substance, and in view of the sworn
statement of Gil Mananghaya, Collection Manager of the plaintiff that defendants
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have committed fraud in securing the obligation and are now avoiding payment of
the same, let a writ of attachment issue upon the plaintiff's filing of a bond in the
sum of P97,000.00.
In the meantime, let summons issue on the defendants. 3
More than a year later, in an Urgent Motion dated December 11, 1978, 4 defendant Salazar
prayed that the writ of preliminary attachment issued ex parte and implemented solely against
his property be recalled and/or quashed. He argued that when he signed the promissory note
and chattel mortgage on May 5, 1977 in favor of RALLYE, FILINVEST was hot vet his creditor or
obligee, therefore, he could not be said to have committed fraud when he contracted the
obligation on May 5, 1977. Salazar added that as the motor vehicle which was the object of the
chattel mortgage and the consideration for the promissory note had admittedly not been
delivered to him by RALLYE, his repudiation of the loan and mortgage is more justifiable.
FILINVEST filed an Opposition, but on February 2, 1979, the court a quo, this time presided
over by herein respondent Judge, ordered the dissolution and setting aside of the writ of
preliminary attachment issued on August 17, 1977 and the return to defendant Salazar of all his
properties attached by the Sheriff by virtue of the said writ. In this Order, respondent Judge
explained that:
When the incident was called for hearing, the Court announced that, as a matter
of procedure, when a motion to quash a writ of preliminary attachment is filed, it
is incumbent upon the plaintiff to prove the truth of the allegations which were the
basis for the issuance of said writ. In this hearing, counsel for the plaintiff
manifested that he was not going to present evidence in support of the allegation
of fraud. He maintained that it should be the defendant who should prove the
truth of his allegation in the motion to dissolve the said writ. The Court
disagrees. 5
FILINVEST filed a Motion for Reconsideration of the above Order, and was subsequently
allowed to adduce evidence to prove that Salazar committed fraud as alleged in the affidavit of
Gil Mananghaya earlier quoted. This notwithstanding, respondent Judge denied the Motion in
an Order dated April 4, 1979 reasoning thus:
The plaintiff's evidence show that the defendant Rallye Motor assigned to the
former defendant Salazar's promissory note and chattel mortgage by virtue of
which plaintiff discounted the note. Defendant Salazar refused to pay the plaintiff
for the reason that Rallye Motor has not delivered to Salazar the motor vehicle
which he bought from Rallye. It is the position of plaintiff that defendant Salazar
was in conspiracy with Rallye Motor in defrauding plaintiff.

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Ernesto Salazar, on his part complained that he was himself defrauded, because
while he signed a promissory note and chattel mortgage over the motor vehicle
which he bought from Rallye Motor, Rallye Motor did not deliver to him the
personal property he bought; that the address and existence of Rallye Motor can
no longer be found.
While it is true that the plaintiff may have been defrauded in this transaction, it
having paid Rallye Motor the amount of the promissory note, there is no evidence
that Ernesto Salazar had connived or in any way conspired with Rallye Motor in
the assignment of the promissory note to the plaintiff, because of which the
plaintiff paid Rallye Motor the amount of the promissory note. Defendant Ernesto
Salazar was himself a victim of fraud. Rallye Motor was the only party which
committed it. 6
From the above order denying reconsideration and ordering the sheriff to return to Salazar the
personal property attached by virtue of the writ of preliminary attachment issued on August 17,
1977, FILINVEST filed the instant Petition on April 19, 1979. On July 16, 1979, petitioner
FILINVEST also filed an Urgent Petition for Restraining Order 7 alleging, among others, that
pending this certiorari proceeding in this court, private respondent Salazar filed a Motion for
Contempt of Court in the court below directed against FILINVEST and four other persons
allegedly for their failure to obey the Order of respondent Judge dated April 4, 1979, which
Order is the subject of this Petition. On July 23, 1979, this Court issued a temporary restraining
order "enjoining respondent Judge or any person or persons acting in his behalf from hearing
private respondent's motion for contempt in Civil Case No. 109900, entitled, 'Filinvest Credit
Corporation, Plaintiff, versus The Rallye Motor Co., Inc., et al., Defendants' of the Court of First
Instance of Manila, Branch XI. " 8
Petitioner FILINVEST in its MEMORANDUM contends that respondent Judge erred:
(1) In dissolving the writ of preliminary attachment already enforced by the Sheriff
of Manila without Salazar's posting a counter-replevin bond as required by Rule
57, Section 12; and
(2) In finding that there was no fraud on the part of Salazar, despite evidence in
abundance to show the fraud perpetrated by Salazar at the very inception of the
contract.
It is urged in petitioner's first assignment of error that the writ of preliminary attachment having
been validly and properly issued by the lower court on August 17, 1977, the same may only be
dissolved, quashed or recalled by the posting of a counter-replevin bond under Section 12, Rule
57 of the Revised Rules of Court which provides that:

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Section 12. Discharge of Attachment upon, gluing counterbond.At any time


after an order of attachment has been granted, the party whose property has
been attached, or the person appearing on his behalf, may, upon reasonable
notice to the applicant, apply to the judge who granted the order, or to the judge
of the court, in which the action is pending, for an order discharging the
attachment wholly or in part on the security given. The judge shall, after hearing,
order the discharge of the attachment if a cash deposit is made, or a counterbond executed to the attaching creditor is filed, on behalf of the adverse party,
with the clerk or judge of the court where the application is made, in an amount
equal to the value of the property attached as determined by the judge, to secure
the payment of any judgment that the attaching creditor may recover in the
action. ...
Citing the above provision, petitioner contends that the court below should not have issued the
Orders dated February 2, 1979 and April 4, 1979 for failure of private respondent Salazar to
make a cash deposit or to file a counter-bond.
On the other hand, private respondent counters that the subject writ of preliminary attachment
was improperly or irregularly issued in the first place, in that it was issued ex parte without
notice to him and without hearing.
We do not agree with the contention of private respondent. Nothing in the Rules of Court makes
notice and hearing indispensable and mandatory requisites for the issuance of a writ of
attachment. The statement in the case of Blue Green Waters, Inc. vs. Hon. Sundiam and
Tan 9 cited by private respondent, to the effect that the order of attachment issued without notice
to therein petitioner Blue Green Waters, Inc. and without giving it a chance to prove that it was
not fraudulently disposing of its properties is irregular, gives the wrong implication. As clarified in
the separate opinion of Mr. Justice Claudio Teehankee in the same cited case, 10 a writ of
attachment may be issued ex parte. Sections 3 and 4, Rule 57, merely require that an applicant
for an order of attachment file an affidavit and a bond: the affidavit to be executed by the
applicant himself or some other person who personally knows the facts and to show that (1)
there is a sufficient cause of action, (2) the case is one of those mentioned in Section 1 of Rule
57, (3) there is no other sufficient security for the claim sought to be enforced, and (4) the
amount claimed in the action is as much as the sum for which the order is granted above all
legal counterclaims; and the bond to be "executed to the adverse party in an amount fixed by
the judge, not exceeding the applicant's claim, conditioned that the latter will pay all the costs
which may be adjudged to the adverse party and all damages which he may sustain by reason
of the attachment, if the court shall finally adjudge that the applicant was not entitled thereto."
We agree, however, with private respondents contention that a writ of attachment may be
discharged without the necessity of filing the cash deposit or counter-bond required by Section
12, Rule 57, cited by petitioner. The following provision of the same Rule allows it:
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Sec. 13. Discharge of attachment for improper or irregular issuance.The party


whose property has been attached may also, at any time either before or after
the release of the attached property, or before any attachment shall have been
actually levied, upon reasonable notice to the attaching creditor, apply to the
judge who granted the order, or to the judge of the court in which the action is
pending, for an order to discharge the attachment on the ground that the same
was improperly or irregularly issued. If the motion be made on affidavits on the
part of the party whose property has been attached, but not otherwise, the
attaching creditor may oppose the same by counter-affidavits or other evidence
in addition to that on which the attachment was made. After hearing, the judge
shall order the discharge of the attachment if it appears that it was improperly or
irregularly issued and the defect is not cured forthwith."(Emphasis supplied)
The foregoing provision grants an aggrieved party relief from baseless and unjustifiable
attachments procured, among others, upon false allegations, without having to file any cash
deposit or counter-bond. In the instant case the order of attachment was granted upon the
allegation of petitioner, as plaintiff in the court below, that private respondent RALLYE, the
defendants, had committed "fraud in contracting the debt or incurring the obligation upon which
the action is brought," covered by Section i(d), Rule 57, earlier quoted. Subsequent to the
issuance of the attachment order on August 17, 1977, private respondent filed in the lower court
an "Urgent Motion for the Recall and Quashal of the Writ of Preliminary Attachment on (his
property)" dated December 11, 1978 11 precisely upon the assertion that there was
"absolutely no fraud on (his) part" in contracting the obligation sued upon by petitioner. Private
respondent was in effect claiming that petitioner's allegation of fraud was false, that hence there
was no ground for attachment, and that therefore the attachment order was "improperly or
irregularly issued." This Court was held that "(i)f the grounds upon which the attachment was
issued were not true ..., the defendant has his remedy by immediately presenting a motion for
the dissolution of the same. 12 We find that private respondent's abovementioned Urgent Motion
was filed under option 13, Rule 57.
The last sentence of the said provision, however, indicates that a hearing must be conducted by
the judge for the purpose of determining whether or not there reality was a defect in the
issuance of the attachment. The question is: At this hearing, on whom does the burden of proof
lie? Under the circumstances of the present case, We sustain the ruling of the court a quo in its
questioned Order dated February 2, 1979 that it should be the plaintiff (attaching creditor), who
should prove his allegation of fraud. This pronouncement finds support in the first sentence of
Section 1, Rule 131, which states that: "Each party must prove his own affirmative allegations."
The last part of the same provision also provides that: "The burden of proof lies on the party
who would be defeated if no evidence were given on either side." It must be brne in mind that in
this jurisdiction, fraud is never presumed. FRAUS EST IdIOS ET NON
PRAESUMENDA. 13 Indeed, private transactions are presumed to have been fair and
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regular.14 Likewise, written contracts such as the documents executed by the parties in the
instant case, are presumed to have been entered into for a sufficient consideration. 15
In a similar case of Villongco, et al., vs. Hon. Panlilio, et al., 16 a writ of preliminary attachment
was issued ex parte in a case for damages on the strength of the affidavit of therein petitioners
to the effect that therein respondents had concealed, removed or disposed of their properties,
credits or accounts collectible to defraud their creditors. Subsequently, the lower court dissolved
the writ of attachment. This was questioned in a certiorari proceeding wherein this Court held,
inter alia, that:
The affidavit supporting the petition for the issuance of the preliminary
attachment may have been sufficient to justify the issuance of the preliminary
writ, but it cannot be considered as proof of the allegations contained in the
affidavit. The reason is obvious. The allegations are mere conclusions of law, not
statement of facts. No acts of the defendants are ever mentioned in the affidavit
to show or prove the supposed concealment to defraud creditors. Said
allegations are affirmative allegations, which plaintiffs had the obligation to
prove ... 17
It appears from the records that both herein private parties did in fact adduce evidence to
support their respective claims. 18 Attached to the instant Petition as its Annex "H" 19 is a
Memorandum filed by herein petitioner FILINVEST in the court below on March 20, 1979. After
private respondent filed his Comment to the Petition, 20 petitioner filed a Reply 21,attaching
another copy of the aforesaid Memorandum as Annex "A" 22 In this case on February 28, 1979
and March 1, 1979, the plaintiff (FILINVEST) presented in evidence documentary exhibits
"marked Exhibit A, A- I, B, B-1, B-2, B-3, B-4, C, C-1, D, E, F, G and G-1. The Memorandum
goes on to state that FILINVEST presented as its witness defendant Salazar himself who
testified that he signed Exhibits A, B, C, D, E and G; that he is a holder of a master's degree in
Business Administration and is himself a very careful and prudent person; that he does not sign
post-dated documents; that he does not sign contracts which do not reflect the truth or which
are irregular on their face, that he intended to purchase a school bus from Rallye Motors Co.,
Inc. from whom he had already acquired one unit; that he had been dealing with Abel Sahagun,
manager of RALLYE, whom he had known for a long time that he intended to purchase the
school bus on installment basis so he applied for financing with the FILINVEST; that he knew his
application was approved; that with his experience as a business executive, he knew that under
a financing arrangement, upon approval of his application, when he signed Exhibits A, B, C, D,
E and G, the financing company (FILINVEST) would release the proceeds of the loan to
RALLYE and that he would be obligated to pay the installments to FILINVEST; that he signed
Exhibits A, B and C simultaneously; that it was his wife who was always transacting business
with RALLYE and Abel Sahagun. 23

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Without disputing the above summary of evidence, private respondent Salazar states in his
Comment that "the same evidence proferred by (petitioner's) counsel was adopted by (private
respondent) Ernesto Salazar during the proceedings. 24
According to the court a quo in its assailed order of April 4, 1979, Emesto Salazar "was himself
defrauded because while he signed the promissory note and the chattel mortgage over the
vehicle which he bought from Rallye Motors, RALLYE did not deliver to him the personal
property he bought." And since no fraud was committed by Salazar, the court accordingly
ordered the sheriff to return to Salazar the properties attached by virtue of the writ of preliminary
attachment issued on August 17, 1977.
We do not agree. Considering the claim of respondent Salazar that Rallye Motors did not deliver
the motor vehicle to him, it follows that the Invoice, Exhibit "C", for the motor vehicle and the
Receipt, Exhibit "G", for its delivery and both signed by Salazar, Exhibits "C-1 " and "G-1", were
fictitious. It also follows that the Promissory Note, Exhibit "A", to pay the price of the undelivered
vehicle was without consideration and therefore fake; the Chattel Mortgage, Exhibit "B", over the
non-existent vehicle was likewise a fraud; the registration of the vehicle in the name of Salazar
was a falsity and the assignment of the promissory note by RALLYE with the conforme of
respondent Salazar in favor of petitioner over the undelivered motor vehicle was fraudulent and
a falsification.
Respondent Salazar, knowing that no motor vehicle was delivered to him by RALLYE, executed
and committed all the above acts as shown the exhibits enumerated above. He agreed and
consented to the assignment by RALLYE of the fictitious promissory note and the fraudulent
chattel mortgage, affixing his signature thereto, in favor of petitioner FILINVEST who, in the
ordinary course of business, relied on the regularity and validity of the transaction. Respondent
had previously applied for financing assistance from petitioner FILINVEST as shown in Exhibits
"E " and "E-1 " and his application was approved, thus he negotiated for the acquisition of the
motor vehicle in question from Rallye Motors. Since he claimed that the motor vehicle was not
delivered to him, then he was duty-bound to reveal that to FILINVEST, it being material in
inducing the latter to accept the assignment of the promissory note and the chattel mortgage.
More than that, good faith as well as commercial usages or customs require the disclosure of
facts and circumstances which go into the very object and consideration of the contractual
obligation. We rule that the failure of respondent Salazar to disclose the material fact of nondelivery of the motor vehicle, there being a duty on his part to reveal them, constitutes fraud.
(Article 1339, New Civil Code).
We hold that the court a quo committed grave abuse of discretion in dissolving and setting aside
the writ of preliminary attachment issued on August 17, 1977.

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WHEREFORE, IN VIEW OF THE FOREGOING, the appealed Orders of the lower court dated
February 2, 1979 and April 4, 1979 are hereby REVERSED and SET ASIDE. The temporary
restraining order issued by Us on July 23, 1979 is hereby made permanent. No costs.
6. Davao Light and Power v Court of Appeals (Nov. 29, 1991)
Facts:
Davao Light and Power Inc, Co. filed a complaint for recovery of sum of money and damages
against Queensland Hotel and Teodorico Adarna. The complaint contained an ex parte
application for a writ of preliminary attachment.
Judge Nartatez granted the writ and fixed the attachment bond at around P4Million. The
summons, copy of complaint, writ of attachment, copy of attachment bond were served upon
Queensland and Adarna. Pursuant to the writ, the Sheriff seized the properties of the latter.
Queensland and Adarna filed a motion to discharge the attachment for lack of jurisdiction to
issue the same because at the time the order of attachment was promulgated (May 3, 1989)
and the attachment writ issued (May 11,1989), the Trial Court had not yet acquired jurisdiction
over cause and person of defendants.
Trial Court denied the motion to discharge.
CA annulled the Trial Courts Order. Davao seeks to reverse CAs order.
Issue:
Whether or not preliminary attachment may issue ex parte against a defendant before acquiring
jurisdiction over his person.
Held:
Yes. Rule 57 speaks of the grant of the remedy at the commencement of the action or at any
time thereafter What the rule is saying is that after an action is properly commenced (by filing of
the complaint and payment of all requisite docket and other fees), the plaintiff may apply for and
obtain a writ of preliminary attachment. This he may do so, before or after, the summons to the
defendant.
The CA decision is reversed and the writ of attachment issued by Judge Nartatez is reinstated.
**
Preliminary Attachment provisional remedy in virtue of which a plaintiff or other party may, at
the commencement of the action or at any time thereafter, have the property of the adverse
party taken into custody of court as security for satisfaction of judgment to be recovered.
Nature of Attachment: a remedy which is purely statutory in respect of which the law requires a
strict of construction of the provisions granting it. No principle, whether statutory or through
jurisprudence, prohibits its issuance by any court before the acquisition of jurisdiction over the
person.

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7. Onate v Abrogar G.R. NO. 107491 (Feb. 23, 1995)


These are motions separately filed by petitioners, seeking reconsideration of the decision of the
Second Division holding that although the levy on attachment of petitioners' properties had been
made before the trial court acquired jurisdiction over them, the subsequent service of summons
on them cured the invalidity of the attachment.
The motions were referred to the Court en banc in view of the fact that in another decision
rendered by the Third Division on the same question, it was held that the subsequent acquisition
of jurisdiction over the person of a defendant does not render valid the previous attachment of
his property. 1 The Court en banc accepted the referral and now issues this resolution.
Petitioners maintain that, in accordance with prior decisions of this Court, the attachment of their
properties was void because the trial court had not at that time acquired jurisdiction over them
and that the subsequent service of summons on them did not cure the invalidity of the levy.
They further contend that the examination of the books and ledgers of the Bank of the Philippine
Islands (BPI), the Philippine National Bank (PNB) and the Urban Bank was a "fishing
expedition" which the trial court should not have authorized because petitioner Emmanuel C.
Oate, whose accounts were examined, was not a signatory to any of the documents
evidencing the transaction between Sun Life Assurance of Canada (Sun Life) and Brunner
Development Corporation (Brunner).
On the other hand private respondent Sun Life stresses the fact that the trial
court eventuallyacquired jurisdiction over petitioners and contends that this cured the invalidity
of the attachment of petitioners' properties. With respect to the second contention of petitioners,
private respondent argues that the examination of petitioner Oate's bank account was justified
because it was he who signed checks transferring huge amounts from Brunner's account in the
Urban Bank to the PNB and the BPI.
I
At the outset, it should be stated that the Court does not in the least doubt the validity of the writ
of attachment issued in these cases. The fact that a criminal complaint for estafa which Sun Life
had filed against petitioner Oate and Noel L. Dio, president of Brunner, was dismissed by the
Office of the Provincial Prosecutor is immaterial to the resolution of the motions for
reconsideration. In the first place, the dismissal, although later affirmed by the Department of
Justice, is pending reconsideration. In the second place, since the issue in the case below is
precisely whether petitioners were guilty of fraud in contracting their obligation, resolution of the
question must await the trial of the main case.
However, we find petitioners' contention respecting the validity of the attachment of their
properties to be well taken. We hold that the attachment of petitioners' properties prior to the
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acquisition of jurisdiction by the respondent court is void and that the subsequent service of
summons on petitioners did not cure the invalidity of such attachment. The records show that
before the summons and the complaint were served on petitioners Oate and Econ Holdings
Corporation (Econ) on January 9, 1992, Deputy Sheriff Arturo C. Flores had already served on
January 3, 1992 notices of garnishment on the PNB Head office 2 and on all its Metro Manila
branches and an A.B capital. 3 In addition he made other levies before the service of summons
on petitioners, to wit:
On January 6, 1992, he served notices of garnishment on the Urban Bank Head Office and
all its Metro Manila branches, 4 and on the BPI. 5
On the same day, he levied on attachment Oate's condominium unit at the Amorsolo
Apartments Condominium Project, covered by Condominium Certificate of Title No. S-1758. 6
On January 7, 1992, he served notice of garnishment on the Union Bank of the Philippines. 7
On January 8, 1992, he attached Oate's lot, consisting of 1,256 square meters, at the AyalaAlabang Subdivision, Alabang, Muntinlupa, covered by TCT No. 112673. 8
First. The Deputy Sheriff claims that he had tried to serve the summons with a copy of the
complaint on petitioners on January 3, 1992 but that there was no one in the offices of
petitioners on whom he could make a service. This is denied by petitioners who claim that their
office was always open and that Adeliza M. Jaranilla, Econ's Chief Accountant who eventually
received summons on behalf of Oate and Econ, was present that day. Whatever the truth is,
the fact is that no other attempt was made by the sheriff to serve the summons except
on January 9, 1992, in the case of Oate and Econ, and on January 16, 1992, in the case of
Dio. Meantime, he made several levies, which indicates a predisposition to serve the writ of
attachment in anticipation of the eventual acquisition by the court of jurisdiction over petitioners.
Second. Private respondent invokes the ruling in Davao Light & Power Co. v. Court of
Appeals 9 in support of its contention that the subsequent acquisition of jurisdiction by the court
cured the defect in the proceedings for attachment. It cites the following portion of the decision
in Davao Light and Power, written by Justice, now Chief Justice, Narvasa:
It goes without saying that whatever be the acts done by the Court prior to the
acquisition of jurisdiction over the person of the defendant, as above indicated
issuance of summons, order of attachment and writ of attachment (and/or
appointment of guardian ad litem, or grant of authority to the plaintiff to prosecute
the suit as a pauper litigant, or amendment of the complaint by the plaintiff as a
matter of right without leave of court and however valid and proper they might
otherwise be, these do not and cannot bind and affect the defendant until and
unless jurisdiction over his person is eventually obtained by the court, either by
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service on him of summons or other coercive process or his voluntary


submission to the court's authority. Hence, when the sheriff or other proper
officer commences implementation of the writ of attachment, it is essential that
he serve on the defendant not only a copy of the applicant's affidavit and
attachment bond, and of the order of attachment, as explicitly required by Section
5 of Rule 57, but also the summons addressed to said defendant as well as a
copy of the complaint and order for appointment of guardian ad litem, if any, as
also explicitly directed by Section 3, Rule 14 of the Rules of
Court. 10
It is clear from the above excerpt, however, that while the petition for a writ of preliminary
attachment may be granted and the writ itself issued before the defendant is summoned, the
writ of attachment cannot be implemented until jurisdiction over the person of the defendant is
obtained. As this Court explained, "levy on property pursuant to the writ thus issued may not be
validly effected unless preceded, or contemporaneously accompanied, by service on the
defendant of summons, a copy of the complaint (and of the appointment of guardian ad litem, if
any), the application for attachment (if not incorporated in but submitted separately from the
complaint), the order of attachment, and the plaintiff's attachment bond." 11
Further clarification on this point was made in Cuartero v. Court of Appeals, 12 in which it was
held:
It must be emphasized that the grant of the provisional remedy of attachment
practically involves three stages; first, the court issues the order granting the
application; second, the writ of attachment issues pursuant to the order granting
the writ; and third, the writ is implemented. For the initial two stages, it is not
necessary that jurisdiction over the person of the defendant should first be
obtained. However, once the implementation commences, it is required that the
court must have acquired jurisdiction over the defendant for without such
jurisdiction, the court has no power and authority to act in any manner against
the defendant. Any order issuing from the Court will not bind the defendant.
Private respondent argues that the case of Cuartero itself provides for an exception as shown in
the statement that "the court [in issuing the writ of preliminary attachment] cannot bind and
affect the defendant until jurisdiction is eventually obtained" and that since petitioners were
subsequently served with summons, no question can be raised against the validity of the
attachment of petitioners' properties before such service.
The statement in question has been taken out of context. The full statement reads:
It is clear from our pronouncements that a writ of preliminary attachment may
issue even before summons is served upon the defendant. However, we have
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likewise ruled that the writ cannot bind and affect the defendant until jurisdiction
over his person is eventually obtained. Therefore, it is required that when proper
officer commences implementation of the writ of attachment service of summons
should be simultaneously made. 13
Indeed, as this Court through its First Division has ruled on facts similar to those in these cases,
the attachment of properties before the service of summons on the defendant is invalid, even
though the court later acquires jurisdiction over the defendant. 14 At the very least, then, the writ
of attachment must be served simultaneously with the service of summons before the writ may
be enforced. As the properties of the petitioners were attached by the sheriff before he had
served the summons on them, the levies made must be considered void.
Third. Nor can the attachment of petitioners' properties before the service of summons on them
was made be justified an the ground that unless the writ was then enforced, petitioners would
be alerted and might dispose of their properties before summons could be served on them.
The Rules of Court do not require that issuance of the writ be kept a secret until it can be
enforced. Otherwise in no case may the service of summons on the defendant precede the levy
on attachment. To the contrary, Rule 57, 13 allows the defendant to move to discharge the
attachment even before any attachment is actually levied upon, thus negating any inference that
before its enforcement, the issuance of the writ must be kept secret. Rule 57,
13 provides:
Sec. 13. Discharge of attachment for improper or irregular issuance. The party
whose property has been attached may also, at any time either before or after
the release of the attached property, or before any attachment shall have been
actually levied, upon reasonable notice to the attaching creditor, apply to the
judge who granted the order, or to the judge of the court in which the action is
pending, for an order to discharge the attachment on the ground that the same
was improperly or irregularly issued. . . . (Emphasis added).
As this Court pointed out in Davao Light and Power, 15 the lifting of an attachment "may be
resorted to even before any property has been levied on."
It is indeed true that proceedings for the issuance of a writ of attachment are generally ex parte.
InMindanao Savings and Loans Ass'n v. Court of Appeals 16 it was held that no hearing is
required for the issuance of a writ of attachment because this "would defeat the objective of the
remedy [because] the time which such hearing would take could be enough to enable the
defendant to abscond or dispose of his property before a writ of attachment issues." It is not,
however, notice to defendant that is sought to be avoided but the "time which such hearing
would take" because of the possibility that defendant may delay the hearing to be able to
dispose of his properties. On the contrary there may in fact be a need for a hearing before the
Page 25

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writ is issued as where the issue of fraudulent disposal of property is raised. 17 It is not true that
there should be no hearing lest a defendant learns of the application for attachment and he
remove's his properties before the writ can be enforced.
On the other hand, to authorize the attachment of property even before jurisdiction over the
person of the defendant is acquired through the service of summons or his voluntary
appearance could lead to abuse. It is entirely possible that the defendant may not know of the
filing of a case against him and consequently may not be able to take steps to protect his
interests.
Nor may sheriff's failure to abide by the law be excused on the pretext that after all the court
later acquired jurisdiction over petitioners. More important than the need for insuring success in
the enforcement of the writ is the need for affirming a principle by insisting on that "most
fundamental of all requisites the jurisdiction of the court issuing attachment over the person
of the defendant." 18It may be that the same result would follow from requiring that a new writ be
served all over again. The symbolic significance of such an act, however, is that it would affirm
our commitment to the rule of law. 19
II
We likewise find petitioners' second contention to be meritorious. The records show that, on
January 21, 1992, respondent judge ordered the examination of the books of accounts and
ledgers of Brunner at the Urban Bank, Legaspi Village branch, and on January 30, 199 the
records of account of petitioner Oate at the BPI, even as he ordered the PNB to produce the
records regarding certain checks deposited in it.
First. Sun Life defends these court orders on the ground that the money paid by it to Brunner
was subsequently withdrawn from the Urban Bank after it had been deposited by Brunner and
then transferred to BPI and to the unnamed account in the petitioner Oate's account in the BPI
and to the unnamed account in the PNB.
The issue before the trial court, however, concerns the nature of the transaction between
petitioner Brunner and Sun Life. In its complaint, Sun Life alleges that Oate, in his personal
capacity and as president of Econ, offered to sell to Sun Life P46,990,000.00 worth of treasury
bills owned by Econ and Brunner at the discounted price of P39,526,500.82; that on November
27, 1991, Sun Life paid the price by means of a check payable to Brunner; that Brunner, through
its president Noel L. Dio, issued to it a receipt with undertaking to deliver the treasury bills to
Sun Life; and that on December 4, 1991, Brunner and Dio delivered instead a promissory note,
dated November 27, 1991, in which it was made to appear that the transaction was a money
placement instead of sale of treasury bills.

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Thus the issue is whether the money paid to Brunner was the consideration for the sale of
treasury bills, as Sun Life claims, or whether it was money intended for placement, as
petitioners allege. Petitioners do not deny receipt of P39,526,500.82 from Sun Life. Hence,
whether the transaction is considered a sale or money placement does not make the money the
"subject matter of litigation" within the meaning of 2 of Republic Act No. 1405 which prohibits
the disclosure or inquiry into bank deposits except "in cases where the money deposited or
invested is the subject matter of litigation." Nor will it matter whether the money was "swindled"
as Sun Life contends.
Second. The examination of bank books and records cannot be justified under Rule 57, 10.
This provision states:
Sec. 10. Examination of party whose property is attached and persons indebted
to him or controlling his property; delivery of property to officer. Any person
owing debts to the party whose property is attached or having in his possession
or under his control any credit or other personal property belonging to such party,
may be required to attend before the court in which the action is pending, or
before a commissioner appointed by the court, and be examined on oath
respecting the same. The party whose property is attached may also be required
to attend for the purpose of giving information respecting his property, and may
be examined on oath. The court may, after such examination, order personal
property capable of manual delivery belonging to him, in the possession of the
person so required to attend before the court, to be delivered to the clerk of the
court, sheriff, or other proper officer on such terms as may be just, having
reference to any lien thereon or claims against the same, to await the judgment
in the action.
Since, as already stated, the attachment of petitioners' properties was invalid, the examination
ordered in connection with such attachment must likewise be considered invalid. Under Rule 57,
10, as quoted above, such examination is only proper where the property of the person
examined has been validly attached.
WHEREFORE, the decision dated February 21, 1994 is RECONSIDERED and SET ASIDE and
another one is rendered GRANTING the petitions for certiorari and SETTING ASIDE the orders
dated February 26, 1992 and September 9, 1992, insofar as they authorize the attachment of
petitioners' properties and the examination of bank books and records pertaining to their
accounts, and ORDERING respondent Judge Zeus C. Abrogar
(1) forthwith to issue an alias writ of attachment upon the same bond furnished by respondent
Sun Life Assurance Company of Canada;

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(2) direct the sheriff to lift the levy under the original writ of attachment and simultaneously levy
on the same properties pursuant to the alias writ so issued; and
(3) take such steps as may be necessary to insure that there will be no intervening period
between the lifting of the original attachment and the subsequent levy under the alias writ.
Petitioners may file the necessary counterbond to prevent subsequent levy or to dissolve the
attachment after such levy.
8. Mangila v CA G.R. NO. 50378 (Aug. 12, 2002)
FACTS: Petitioner Anita Mangila ("petitioner" for brevity) is an exporter of sea foods and doing
business under the name and style of Seafoods Products. Private respondent Loreta Guina
("private respondent" for brevity) is the President and General Manager of Air Swift
International, a single registered proprietorship engaged in the freight forwarding business.
On the first shipment, petitioner requested for seven days within which to pay private
respondent. However, for the next three shipments, March 17, 24 and 31, 1988, petitioner failed
to pay private respondent shipping charges amounting to P109, 376.95.4
Despite several demands, petitioner never paid private respondent. Thus, on June 10, 1988,
private respondent filed Civil Case No. 5875 before the Regional Trial Court of Pasay City for
collection of sum of money.
On August 1, 1988, the sheriff filed his Sheriffs Return showing that summons was not served
on petitioner. A woman found at petitioners house informed the sheriff that petitioner transferred
her residence to Sto. Nio, Guagua, Pampanga. The sheriff found out further that petitioner had
left the Philippines for Guam.5
Thus, on September 13, 1988, construing petitioners departure from the Philippines as done
with intent to defraud her creditors, private respondent filed a Motion for Preliminary Attachment.
On September 26, 1988, the trial court issued an Order of Preliminary Attachment 6 against
petitioner. The following day, the trial court issued a Writ of Preliminary Attachment.
On October 28, 1988, Sheriff Alfredo San Miguel of RTC Pampanga served on petitioners
household help in San Fernando, Pampanga, the Notice of Levy with the Order, Affidavit and
Bond.7
On November 7, 1988, petitioner filed an Urgent Motion to Discharge Attachment 8 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.9
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The trial court granted the Motion to Discharge Attachment on January 13, 1989 upon filing of
petitioners counter-bond. The trial court, however, did not rule on the question of jurisdiction
and on the validity of the writ of preliminary attachment.
On December 26, 1988, private respondent applied for an alias summons, which the trial court
issued on January 19, 1989.11 It was only on January 26, 1989 that summons was finally served
on petitioner.12
RTC ruling
On 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 attorneys fees and costs of suit. Private respondent filed a Motion for Execution
Pending Appeal but the trial court denied the same.
CA Ruling
On December 15, 1995, the Court of Appeals rendered a decision affirming the decision of the
trial court. The Court of Appeals upheld the validity of the issuance of the writ of attachment and
sustained the filing of the action in the RTC of Pasay.
Hence this petition,
ISSUE
HELD: Improper Issuance and Service of Writ of Attachment
Petitioner ascribes several errors to the issuance and implementation of the writ of attachment.
Among petitioners arguments are:
1. first, there was no ground for the issuance of the writ since the intent to defraud
her creditors had not been established;
2. second, the value of the properties levied exceeded the value of private respondents
claim. However, the crux of petitioners 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 writs 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 petitioners argument.
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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." 21 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, 22 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 courts authority. Hence, when the sheriff or other proper
officer commencesimplementation of the writ of attachment, it is essential that he serve
on the defendant not only a copy of the applicants 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.23
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
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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. 24 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 defendants
"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 petitioners 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.25
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 16,26 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. 27 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.
10. Calderon v IAC (Nov. 11, 1987)

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For review on certiorari is respondent appellate Court's decision 1 in AC-G.R. No. 01420, which
affirmed the Regional Trial Court's decision 2 appealed from holding the plaintiff Jose D.
Calderon (petitioner herein) and his bondsman the Integrated Bonding and Insurance Company,
Inc., jointly and severally liable to pay defendants (private respondents herein), damages
caused by the filing by Calderon of the allegedly unwarranted suit and the wrongful and
malicious attachment of private respondents' properties.
The facts of the case are briefly as follows:
On November 2, 1976, petitioner Calderon purchased from the private respondents the
following: the Luzon Brokerage Corporation (LBC for brevity) and its five (5) affiliate companies,
namely, Luzon Air Freight, Inc., Luzon Port Terminals Services, Inc., Luzon (GS) Warehousing
Corporation, GS Industrial Management Corporation, and GS Luzon Trucking Corporation.
Twenty one (21) days thereafter or on November 23, 1976, the Bureau of Customs suspended
the operations of LBC for failure to pay the amount of P1,475,840.00 representing customs
taxes and duties incurred prior to the execution of the sale. In order to lift the suspension
Calderon paid the sum of P606,430.00 to the Bureau of Customs.
On October 27, 1977, Calderon filed a complaint against private respondents to recover said
amount of P1,475,840.00, with damages by reason of breach of warranty. In the same
complaint, the petitioner prayed for a preliminary attachment, alleging: that private respondents
had deliberately and willfully concealed from his knowledge such staggering liability of the LBC
for the purpose of misleading him into buying the six aforesaid companies; and that private
respondent Schulze is about to depart from the Philippines in order to defraud his creditors.
To support the petition for preliminary attachment, the petitioner posted a surety bond of
P1,475,840.00. On October 28, 1977, the trial court issued a writ of preliminary attachment,
whereupon properties of the private respondents were attached and their bank deposits were
garnished.
On November 10, 1977, petitioner Calderon filed an amended complaint, alleging that while the
liabilities of LBC are reflected in its books, the aforesaid amount was fraudulently withdrawn and
misappropriated by private respondent Schulze. (pp. 7-18, Rollo)
On the other hand, private respondents claimed: that the amount of P1,475,840.00 due to the
Bureau of Customs represents the duties and taxes payable out of the advanced payments
made by LBC's client, Philippine Refining Company (PRC, for brevity) in August, September
and October, 1976, and in the first and second weeks of November 1976, after Calderon himself
had taken control of the management of LBC (Exhibit A); that these deposit payments were
properly recorded in the books of the corporation and existing as part of the corporate funds;
that from the first week of June, 1976 up to October 30, 1976, private respondent Schulze fully
disclose and explained to Calderon that these customer's advanced deposit payments
(including those of the PRC) are to be paid to the Bureau of Customs when their corresponding
customs taxes and duties become due; that during this phase of the negotiation, Calderon and
his representatives inspected and studied the corporate books and records at will and learned
the daily operations and management of LBC; that the petitioner did not pay out of his own
pocket but out of the LBC funds the said amount of P606,430,30 demanded by the Bureau of
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FRATERNAL ORDER OF LEVIATHAN | LEVIATHAN SORORITAS

Customs, as evidenced by a manager's check No. FEBTC 25092 (Exhibits 9, 10, 11 & 38) and
another facility negotiated with the Insular Bank of Asia and America (Exhibit K-2); and that
private respondents are setting up a counterclaim for actual, moral and exemplary damages as
well as attorney's fees, as a consequence of the filing of the baseless suit and the wrongful and
malicious attachment of their properties, (pp. 217-221, Rollo)
On November 17, 1977, private respondents filed a counterbond, whereupon the trial court
issued an order directing the sheriff to return all real and personal properties already levied
upon and to lift the notices of garnishment issued in connection with the said attachment (Annex
B, p. 42, Rollo).
After trial, the trial court dismissed the complaint, holding Calderon and his surety First
integrated Bonding and Insurance Co., Inc., jointly and severally liable to pay the damages
prayed for by the private respondents.
Said decision was affirmed on appeal, although slightly modified in the sense that the award of
moral and exemplary damages in favor of private respondents Schulze and Amor was reduced.
The dispositive portion of the judgment of affirmance and modification reads:
WHEREFORE, the judgment of the lower court is modified as follows:
To
defendant-appellee
P650,000.00
as
moral
P200,000.00 as exemplary damages.
To
defendant-appellee
P150,000.00
as
P30,000.00 as exemplary damages,

George
damages

Antonio
moral

Schulze:
and

C.
damages

Amor:
and

An other dispositions in the judgment appealed from, including the dismissal of


the amended complainant are hereby affirmed in toto.
SO ORDERED.
In his petition, petitioner Calderon asserts, among other things, that the court below erred:
I
IN HOLDING THAT THE PETITIONER FAILED TO ESTABLISH HIS CLAIMS.
II
IN HOLDING THAT THE PRELIMINARY ATTACHMENT
WRONGFULLY AND MALICIOUSLY SUED OUT.

HAD

III
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FRATERNAL ORDER OF LEVIATHAN | LEVIATHAN SORORITAS

BEEN

IN HOLDING THAT THE PETITIONER IS LIABLE NOT ONLY FOR ACTUAL


DAMAGES BUT MORAL AND EX-EXEMPLARY DAMAGES AS WELL.
On the other hand, petitioner Insurance Company raises the following issues:
I
WHETHER OR NOT THE PETITIONER SURETY IS LIABLE FOR DAMAGES
ON
ITS
CONTRACTED
SURETYSHIP
NOTWITHSTANDING
THE
DISSOLUTION OF THE WRIT OF PRELIMINARY ATTACHMENT, AS A CON.
SEQUENCE OF THE FILING OF THE DEFENDANT'S COUNTER- BOND,
WHEREBY LEVIED PROPERTIES WERE ORDERED BY THE COURT
RETURNED TO PRIVATE RESPONDENTS AND THE NOTICES OF
GARNISHMENT ISSUED IN CONNECTION THEREWITH ORDERED LIFTED.
II
WHETHER OR NOT THE SUBSEQUENT FILING BY PRIVATE RESPONDENTS
OF A COUNTER-BOND TO DISCHARGE THE WRIT OF PRELIMINARY
ATTACHMENT CONSTITUTE A WAIVER ON ANY DEFECT IN THE ISSUANCE
OF THE ATTACHMENT WRIT.
III
WHETHER OR NOT A SURETY IS A GUARANTOR OF THE EXISTENCE OF A
GOOD CAUSE OF ACTION IN THE COMPLAINT.
The petition is devoid of merit.
Whether or not the amount of P1,475,840.00 was duly disclosed as an outstanding liability of
LBC or was misappropriated by private respondent Schulze is purely a factual issue. That
Calderon was clearly in bad faith when he asked for the attachment is indicated by the fact that
he failed to appear in court to support his charge of misappropriation by Schulze, and in effect,
preventing his being cross-examined, no document on the charges was presented by him.
What the Appellate Court found in this regard need not be further elaborated upon. The
Appellate Court ruled:
... The record shows that appellant Calderon failed to produce any evidence in
support of his sworn charge that appellee Schulze had deliberately and willfully
concealed the liabilities of Luzon Brokerage Corporation. Neither did appellant
Calderon prove his sworn charges that appellee Schulze had maliciously and
fraudulently withdrawn and misappropriated the amount of Pl,475,840.00 and
that an the defendants had maliciously and fraudulently concealed and withheld
from him this alleged liability of Luzon Brokerage Corporation in breach of the
contract-warranty that said corporation had no obligations or liabilities except
those appearing in the books and records of the said corporation. Indeed,
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FRATERNAL ORDER OF LEVIATHAN | LEVIATHAN SORORITAS

appellant Calderon never appeared in the trial court to substantiate the charges
in his verified complaints and in his affidavit to support his petition for the
issuance of a writ of attachment. He distanced himself from the appellees and
avoided cross-examination regarding his sworn allegations. ...
... But even though appellant Calderon failed to prove his serious charges of
fraud, malice and bad faith, the appellees took it upon themselves to show that
they did not conceal or withhold from appellant's knowledge the deposits made
by Philippine Refining Co., Inc. with Luzon Brokerage Corporation and that they
did not withdraw and misappropriate the deposits made by Philippine Refining
Co., Inc. with Luzon Brokerage Corporation.
The books and records of Luzon Brokerage Corporation on which the Financial
Statement of Luzon Brokerage Corporation, as of October 31, 1976 was
prepared by the auditing firm retained by appellant Calderon himself (Exhibit 1),
disclose that the liabilities of Luzon Brokerage Corporation in the total amount of
P4,574,498.32 appear under the heading 'Customers Deposit' (Exhibit 1-A) this
amount includes the deposit of Philippine Refining Co., Inc. in the sum of
Pl,475,840.00.
But appellant Calderon contends that this financial statement was dated
February 4, 1977 (see Exhibit 1-C). There is nothing commendable in this
argument because the bases of the financial statement were the books, records
and documents of Luzon Brokerage Corporation for the period ending October
31, 1976, which were all turned over to and examined by appellant Calderon and
his executive, legal and financial staffs. There is also no merit in the contention of
appellant Calderon that the appellees have tampered the books of Luzon
Brokerage Corporation because there is no proof to back this charge, let alone
the fact that appellant Calderon did not even present the said books to support
his charge.
As stated above, the amount of customers' deposits in the sum of P4,574,498.32
includes the deposits of Philippine Refining Co., Inc. (Exhibits 46-A, 46-B, 46-C,
46-D, 46-E, 46-F, 46-G, 46-H, 46-1, 46-J, t.s.n. July 23, 1980, pp. 12-13, 14-15).
The amounts deposited by Philippine Refining Co., Inc. on various dates with
Luzon Brokerage Corporation made before the execution of the sale were all
entered in three other corporate books of Luzon Brokerage Corporation namely,
the Cash Receipts Register (Exhibits 39-A-1 to 39-K-1 and 39-A-1-B to 39-K-1B), the Journal Vouchers (Exhibits 42 to 46 and 42-A to 43- A), and the
Customer's Deposit Ledger (Exhibit 46-A to 46-J) ... .
Thus, the claim of appellant Calderon that the deposits made by Philippine
Refining Co., Inc. with Luzon Brokerage Corporation of P406,430.00 on August
24, 1976 (Exhibit N P53,640.00 on October 13, 1976 (Exhibit 0), P406,430.00 on
September 8, 1976 (Exhibit P P199,508.00 on September 24, 1976 (Exhibit Q
P52,738.00 on October 22, 1976 (Exhibit R and P264,436.00 on October 7, 1976

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FRATERNAL ORDER OF LEVIATHAN | LEVIATHAN SORORITAS

(Exhibit S) were not entered in the books of Luzon Brokerage Corporation, is


completely without merit. ... (pp. 85-87, Rollo)
It is evident from the foregoing that the attachment was maliciously sued out and that as already
pointed out Schulze was not in bad faith.
While as a general rule, the liability on the attachment bond is limited to actual damages, moral
and exemplary damages may be recovered where the attachment was alleged to be maliciously
sued
out
and
established
to
be
so. (Lazatin
vs.
Twano
et
al,
L-12736, July 31, 1961).
In the instant case, the issues of wrongful and malicious suing out of the writ of preliminary
attachment were joined not only in private respondents' motion to discharge the attachment but
also in their answer to the amended complaint (p. 38, Rollo). The trial court observed that the
books and records of Luzon Brokerage Corporation disclose that the liabilities of the said
corporation in the total amount of P4,574,498.32 appear under the heading "Customs Deposit"
(Exhibit 1-A) and this amount includes the deposit of Philippine Refining Co., Inc. in the sum of
P1,475,840.00 (p. 26, Rollo). On the other hand, plaintiff never appeared in court, and failed to
produce any evidence to substantiate his charges (p. 26, Rollo).
Well settled is the rule that the factual findings of the trial court are entitled to great weight and
respect on appeal, especially when established by unrebutted testimonial and documentary
evidence, as in this case.
Anent the petition of the surety, We say the following:
Specifically, petitioner surety contends that the dissolution of the attachment extinguishes its
obligation under the bond, for the basis of its liability, which is wrongful attachment, no longer
exists, the attachment bond having been rendered void and ineffective, by virtue of Section 12,
Rule 57 of the Rules of Court. (p. 5, Petition)
While Section 12, Rule 57 of the Rules of Court provides that upon the filing of a counterbond,
the attachment is discharged or dissolved, nowhere is it provided that the attachment bond is
rendered void and ineffective upon the filing of counterbond.
The liability of the attachment bond is defined in Section 4, Rule 57 of the Rules of Court, as
follows:
Sec. 4. Condition of applicant's bond. The party applying for the order must give
a bond executed to the adverse party in an amount to be fixed by the judge, not
exceeding the applicant's claim, conditioned that the latter will pay all the costs
which may be adjudged to the adverse party and all damages which he may
sustain by reason of the attachment, if the court shall finally adjudge that the
applicant was not entitled thereto.
It is clear from the above provision that the responsibility of the surety arises "if the court shall
finally adjudge that the plaintiff was not entitled thereto." In Rocco vs. Meads, 96 Phil. Reports
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884, we held that the liability attaches if the plaintiff is not entitled to the attachment because the
requirements entitling him to the writ are wanting, or if the plaintiff has no right to the attachment
because the facts stated in his affidavit, or some of them, are untrue. It is, therefore, evident that
upon the dismissal of an attachment wrongfully issued, the surety is liable for damages as a
direct result of said attachment.
Equally untenable is the Surety's contention that by filing a counterbond, private respondents
waived any defect or flaw in the issuance of the attachment writ, for they could have sought,
without need of filing any counterbond, the discharge of the attachment if the same was
improperly or irregularly issued, as provided in Section 13, Rule 57 of the Rules of Court.
Whether the attachment was discharged by either of the two (2) ways indicated in the law, i.e.,
by filing a counterbond or by showing that the order of attachment was improperly or irregularly
issued, the liability of the surety on the attachment bond subsists because the final reckoning is
when "the Court shall finally adjudge that the attaching creditor was not entitled" to the issuance
of the attachment writ in the first place.
The attachment debtor cannot be deemed to have waived any defect in the issuance of the
attachment writ by simply availing himself of one way of discharging the attachment writ, instead
of the other. Moreover, the filing of a counterbond is a speedier way of discharging the
attachment writ maliciously sought out by the attaching creditor instead of the other way, which,
in most instances like in the present case, would require presentation of evidence in a full-blown
trial on the merits and cannot easily be settled in a pending incident of the case.
We believe, however, that in the light of the factual situation in this case, the damages awarded
by the Intermediate Appellate Court are rather excessive. They must be reduced.
WHEREFORE, the judgment of said Appellate Court is hereby modified as follows: Both
petitioner Calderon and petitioner First Integrated Bonding and Insurance Company, Inc. are
hereby ordered to give jointly and severally:
1. Respondent George Schulze, P250,000.00 as moral damages and
P50,000.00 as exemplary damages; and
2. Respondent Antonio C. Amor, P50,000.00 as moral damages and P10,000.00
as exemplary damages.
The rest of the judgment of the Intermediate Appellate Court is hereby AFFIRMED.
11. National Bureau of Investigation v Tuliao A.M. P-96-1184(March 24, 1997)
Sheriffs play an important role in the administration of justice. They form an integral part
thereof because they are called upon to serve court writs, execute all processes, and carry into
effect the orders of the court with due care and utmost diligence. [1] As agents of the law, high
standards are expected of them. In the present case, respondent sheriff failed to live up to these
standards.
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A complaint against Respondent Deputy Provincial Sheriff Rodolfo G. Tuliao of the Regional
Trial Court of Cauayan, Isabela , Branch 20 was filed by Santiago N. Salvador before the
Tuguegarao Sub-Office (TUGSO) of the National Bureau of Investigation (NBI). [2] An
investigation was conducted by Agent-in-Charge Franklin Javier and Agent Raul A. Ancheta. On
November 24, 1994, complainant gave his statement [3] to Agent Paul Gino Rivera. Invoking his
right to remain silent, respondent sheriff refused to submit himself to custodial investigation
before Agent Javier. Instead, he submitted a Compliance[4] dated July 22, 1995 and an
Answer[5] dated August 4, 1995.
After the investigation, Agents Javier and Ancheta recommended, inter alia, the filing of an
administrative case with the Office of the Court Administrator.[6] Atty. Gerarda G. Galang, Chief
of the NBI Legal and Evaluation Division, concurred with said recommendation. [7] On November
13, 1995, Director Mariano M. Mison of the NBI transmitted to this Court a copy of the
evaluation with the recommendation that appropriate action be taken against respondent.[8]
Hence, this administrative complaint now before us.

The Facts
Complainant Salvador bought a passenger jeep from Lito G. Ignacio to be paid in monthly
installments of P7,000.00 with a down payment of P50,000.00. After remitting the down
payment, complainant diligently paid all monthly amortizations until March 1994 when, in the
absence of Ignacio, the complainant was forced to pay to an unnamed brother of the seller the
amounts due for the months of April and May 1994. However, the brother failed to remit said
amount to the seller; thus, the latter filed with the Regional Trial Court of Cauayan, Isabela,
Branch 20[9] a suit for collection, docketed as Civil Case No. 20-757, entitled Pisces Motor
Works, Represented by Lito D. Ignacio vs. Santiago Salvador.
Subsequently, an order was issued by the RTC directing respondent sheriff to attach the
passenger jeep. Complainant, through counsel, filed a motion to discharge attachment upon
filing of a counterbond for the release of the vehicle in his favor. Due to some defects in the
aforementioned motion, a second motion with counterbond was filed. On July 13, 1994, the trial
court issued an order, the decretal portion of which reads, to wit:[10]
WHEREFORE, and in view of the foregoing, the counterbond of the defendant, is hereby
approved. The Sheriff is hereby ordered to release to the defendant the attached vehicle
bearing Motor No. 6D-57-51813 with Plate No. UV BBR-127.
Respondent refused to comply with the said order. Instead, he released the passenger jeep
to Ignacio after the latter had executed a receipt therefor together with an undertaking that he
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would produce the jeep whenever required by the court. Respondent justified such release by
saying that the court had no storage building that would protect the jeep from damage or loss.[11]
Despite the pendency of a motion for contempt[12] filed by complainant against respondent,
the case was dismissed[13] on August 31, 1994 because jurisdiction over the case had been
transferred to the municipal trial court as mandated by Republic Act No. 7691 which expanded
said courts jurisdiction.
After receipt of respondents Comment dated April 20, 1996, the Court referred the case to
the Office of the Court Administrator for evaluation, report and recommendation. In a
memorandum to the Chief Justice dated August 29, 1996, Acting Court Administrator Reynaldo
L. Suarez recommended a finding of guilt and suspension of respondent for six (6) months
without pay.[14]
Issue
The main issue in this case is whether respondent sheriff is administratively liable for failing
to release the property under custodia legis to the complainant in accordance with the order of
the regional trial court.
Respondent sheriff contends that his act of not taking into his official custody the attached
property was not unlawful but was in fact reasonable because the court had no facility for its
storage.That it could no longer be returned to complainants possession in accordance with the
courts order was not his fault but that of the attaching creditor who had violated his obligation to
produce the same whenever required by the court. He offers to pay a fine in the discretion of the
Honorable Court as he has not benefited any pecuniary interest (sic).[15]
The Courts Ruling
Respondents contentions are without merit. We agree with the Court Administrator that
respondent should be held administratively liable.
First Issue: Manner of Attachment
This Court finds respondent sheriffs manner of attachment irregular and his reason therefor
totally unacceptable.
Rule 57 of the Rules of Court provides:
Sec. 5. Manner of attaching property.-- The officer executing the order shall without delay
attach, to await judgment and execution in the action, all the properties of the party against
whom the order is issued in the province, x x x.
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xxx xxx xxx


Sec. 7. Attachment of real and personal property; recording thereof.--Properties shall be
attached by the officer executing the order in the following manner:
xxx xxx xxx
(c) Personal property capable of manual delivery, by taking and safely keeping it in his capacity,
after issuing the corresponding receipt therefor;
xxx xxx xxx
Clearly, respondents act of leaving the passenger jeep in the possession and control of the
creditor did not satisfy the foregoing requirements of the Rules; neither did it conform to the
plainly worded RTC order. The note in the receipt that imposed on Ignacio the obligation to
produce the same whenever required by the court was no compliance either, because it did not
establish that the property was in respondent sheriffs substantial presence and
possession. Respondent fell short of his obligation to take and safely keep the attached property
in his capacity. He cannot feign ignorance of this duty as he himself correctly cited an early
decision of this Court explaining a sheriffs duty in attachment, as follows:[16]
x x x A verbal declaration of seizure or service of a writ of attachment is not sufficient. There
must be an actual taking of possession and placing of the attached property under the control of
the officer or someone representing him. (Hollister vs. Goodale, 8 Conn., 332, 21 Am. Dec.,
674; Jones vs. Howard, 99 Ga., 451, 59 Am. St. Rep., 231.)
We believe that x x x to constitute a valid levy of an attachment, the officer levying it must take
actual possession of the property attached as far as x x x practicable (under the
circumstances). He must put himself in (a) position to, and must assert and, in fact, enforce a
dominion over the property adverse to and exclusive of the attachment debtor, and such
property must be in his substantial presence and possession. (Corniff vs. Cook, 95 Ga., 61, 51
Am. St. Rep., 55, 61.) Of course, this does not mean that the attaching officer may not, under an
arrangement satisfactory to himself, put anyone in possession of the property for the purpose of
guarding it, but he can not in this way relieve himself from liability to the parties interested in
said attachment.
That Ignacio was able to move the passenger jeep to an unknown location is further proof
that respondent sheriff had not taken and safely kept it in his substantial presence, possession
and control.
His claim that the regional trial court did not have any storage facility to house said property
is no justification. He could have deposited it in a bonded warehouse.[17]
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FRATERNAL ORDER OF LEVIATHAN | LEVIATHAN SORORITAS

Contrary to respondent sheriffs contention, compelling the attaching creditor to release the
property in question was not in order, because the proper remedy provided by the Rules of
Court was for the party whose property had been attached to apply for the discharge of the
attachment by filing a counterbond.[18] The effect of this remedy is the delivery of possession of
the attached property to the party giving the counterbond. The attaching creditor was not
authorized to have possession of the attached property, contrary to the insistence of respondent
sheriff.
Second Issue: Liability of a Sheriff
A court employee should keep in mind that he is an integral part of that organ of the
government that is involved in the sacred task of administering justice. His conduct and
behavior should perforce be circumscribed with the heavy burden of responsibility and must at
all times be characterized by propriety and decorum.[19]
Section 4(c) of Republic Act No. 6713 requires of every public official and employee
justness and sincerity in the discharge and execution of official duties. It exacts from him at all
times respect for the rights of others and proscribes him from dispensing or extending undue
favors on account of his office.
The Court in Chan vs. Castillo held:[20]
Every officer or employee in the judiciary is duty bound to obey the orders and processes of
the court without the least delay (Pascual vs. Duncan, 216 SCRA 786 [1992]), x x x.
Leaving the attached property in the possession of the attaching creditor makes a farce of
the attachment. This is not compliance with the issuing courts order. When a writ is placed in the
hands of a sheriff, it is his duty, in the absence of any instructions to the contrary, to proceed
with reasonable celerity and promptness to execute it according to its mandate. [21] He is
supposed to execute the order of the court strictly to the letter.[22] If he fails to comply, he is liable
to the person in whose favor the process or writ runs.[23]
Respondents pretense of having acted in utmost good faith for the preservation of the
attached property is hardly credible because there was no reason for his having acted thus. In
sum, he is unable to satisfactorily explain why he failed to take such movable in his control.
By acceding to the request of Ignacio, respondent sheriff actually extended an undue favor
which prejudiced the complainant as well as the orderly administration of justice. He exceeded
his powers which were limited to the faithful execution of the courts orders and service of its
processes.[24] His prerogatives did not give him any discretion to determine who among the
parties was entitled to possession of the attached property.

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That he exerted efforts in going to the creditors residence in Tuguegarao, Cagayan to


obtain possession of the attached property was an act of compliance with the writ of
attachment. This action, belated as it was, did not mitigate his liability. Much less did it exculpate
him from penalty.
IN VIEW OF THE FOREGOING, respondent sheriff is hereby found administratively liable
as charged and is SUSPENDED for six (6) months without pay with a warning that the
commission of the same or similar acts in the future shall be dealt with more severely by this
Court.

12. Escovilla v Court of Appeals G.R. NO. 84497 (Nov. 6, 1989)

FACTS:
In Civil Case No. 13699, entitled Cuison Engineering and Machinery Co., Inc. v. del Rosario and
Sons Logging Enterprises, Inc.", a decision dated March 24, 1981 was rendered by the then
Court of First Instance, Branch II (now Regional Trial Court, Branch IX), Davao City awarding to
Cuison Engineering and Machinery Co., Inc. a certain sum of money and damages. The Court
of Appeals eventually affirmed the decision which became final and executory on June 29,
1984. Thereafter, Cuison Engineering and Machinery Co. sought the execution of the subject
decision and a corresponding writ of execution was issued on December 27, 1984 by the RTC,
Branch IX, Davao City.
On January 26, 1985, petitioner Deputy Sheriff Alfonso Escovilla, Jr. levied and seized one (1)
unit electric welding machine. A third party claim over said item was filed by Mariano Rana office
manager of Sibagat Timber Corporation, one of the private respondents.
Because of such levy, Special Civil Case No. 454 which was an action for prohibition with
preliminary injunction and damages was filed on February 5, 1985 before the RTC, Branch IV of
Butuan City entitled, "Sibagat Timber Corp., Petitioner v. Alfonso Escovilla, Jr. and Cuison
Engineering and Machinery Corp., Inc., Respondents."
February 7, 1985 - Petitioner Deputy Sheriff Cecilio M. Meris seized and levied one (1) unit
motor launch named "Pixie Boy No. 5" by virtue of the writ of execution issued in Civil Case No.
13699.
On February 8, 1985, private respondent Conchita del Rosario, claiming ownership over the
motor launch filed a third party claim over the subject property. APPROVED.
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Petitioner Cecilio M. Meris prepared the notice of sale setting the auction sale of the motor
launch on February 14, 1985.
February 11, 1985 - Special Civil Case No. 454 was amended to include as additional petitioner,
Conchita del Rosario and as additional respondent, Cecilio M. Meris. As prayed for in the
petition, a temporary restraining order was issued directing the respondents to refrain from
proceeding with the public auction sale scheduled on February 14, 1985.
RTC of Davao City issued an order in Civil Case No. 13699 directing Deputy Sheriff Escovilla to
proceed with the auction sale of the subject motor launch "Pixie Boy No. 5" with authority to
lawfully retrieve the same wherever it may be stored or berthed.
Pursuant to such order, Escovilla took custody of the motor launch and set the auction sale on
March 27, 1985.
Despite the orders of the court in Special Civil Case No. 454 directing the Sheriff to return the
motor launch and to desist from proceeding with the auction sale, the auction sale was
conducted upon motion of Cuison Engineering and Machinery Co., Inc. and upon order of Judge
Saludares in Civil Case No. 13699.
On March 27, 1985, the subject motor launch was sold at public auction by Deputy Sheriff
Joseymour R. Robiza in lieu of Escovilla who was then in Gen. Santos City, South Cotabato.
Trial on the merits was held in Special Civil Case No. 454, and on June 5, 1986, the court
rendered a decision, commanding respondent Sheriff Alfonso Escovilla, Jr. to return the motor
launch Pixie Boy No. 5 at his own expense to its rightful owner Conchita C. del Rosario in
Butuan City; Ordering the forfeiture of the indemnity bond put up by First Integrated Bonding &
Insurance Co., Inc. of Davao City;Declaring the sale of public auction of the motor launch Pixie
Boy No. 5 conducted by Deputy Sheriff Joseymour Ecobiza to be illegal and void from the
beginning; 4. Ordering respondent sheriff Alfonso Escovilla, Jr. to return to Sibagat 'Ember
Corporation at Butuan City, at his own expense, the electric welding machine he improvidently
and illegally seized.
CA Affirmed with some modifications.
ISSUE: WHETHER OR NOT AN ACTION FOR PROHIBITION WILL STILL PROSPER AS A
REMEDY FOR ACTS ALREADY ACCOMPLISHED.
HELD:
In the instant case, the private respondents properly instituted Special Civil Case No. 454 which
is a separate and independent action to vindicate their claims over the subject properties. If at
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all the petitioners had any doubts as to the veracity of the third-party claims, then the separate
action instituted was the proper forum to ventilate such protestations. The action for prohibition
was filed on February 5, 1985. On February 18, 1985 the respondent Sheriffs admitted having
seized the disputed properties but assured the court that they will not remove them from its
jurisdiction nor sell or dispose of the same.
The rule is clear. If a third party claim is filed, the sheriff is not bound to proceed with the levy of
the property unless he is given by the judgment creditor an indemnity bond against the claim.
The judgment creditor, by giving an indemnity bond, assumes the direction and control of the
sheriffs action; so far as it might constitute a trespass and thus he becomes, to that extent, the
principal and the sheriff, his agent. This makes him responsible for the continuance of the
wrongful possession and for the sale and conversion of the goods and for all real damages
which the owner might sustain.
Thus, in this case, even if the auction sale has been conducted and the sheriffs certificate of
sale was issued in favor of the winning bidder, the liability of the judgment creditor and
consequently, the purchaser to the real owners of the properties levied and executed is not
extinguished. We also take note of the trial court's finding that Sheriffs Escovilla and Meris
misled the Davao court as to the ownership of the properties they had seized knowing quite well
that the petitioners in Special Civil Case No. 454, the prohibition case, were the actual owners
of the property. This brings us to the other point raised in this petition.
Petition DISMISSED.
13. Fort Bonifacio Devt Corp v Yllas Lending Corp G.R. NO. 158997 (Oct. 6, 2008)
FACTS: FORT BONIFACIO DEVELOPMENT CORP. ( FBDC) executed a lease contract in
favor of Tirreno, Inc. over a unit at the Bonifacio Global City in Taguig, Metro Manila. The parties
had the lease contract notarized on the day of its execution. Tirreno used the leased premises
for Savoia Ristorante and La Strega Bar.
Due to Tirrenos alleged failure to settle its outstanding obligations, FBDC entered and occupied
the leased premises. FBDC also appropriated the equipment and properties left by Tirreno
pursuant to Section 22 of their Contract of Lease as partial payment for Tirrenos outstanding
obligations.
In 2002, Yllas Lending Corporation caused the sheriff of the trial court to serve an alias writ of
seizure against FBDC. FBDC found out that in 2001, respondents filed a complaint for
Foreclosure of Chattel Mortgage with Replevin, against Tirreno, et al. In their complaint, Yllas
alleged that they lent a sum of money to Tirreno et al and in 2000 executed a Deed of Chattel
Mortgage in favor of Yllas as security for the loan. The Chattel Mortgage covered properties of
the Tirrenos restaurant and bar.
On the same day, FBDC served on the sheriff an affidavit of title and third party claim.
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FRATERNAL ORDER OF LEVIATHAN | LEVIATHAN SORORITAS

Despite FBDCs service upon him of an affidavit of title and third party claim, the sheriff
proceeded with the seizure of certain items from FBDCs premises. The sheriff delivered the
seized properties to Yllas.
FBDC questioned the propriety of the seizure and delivery of the properties to respondents
without an indemnity bond before the trial court, which decided against FBDC. It stated that:
1. Section 22 of the lease contract between FBDC and Tirreno is void under Article 2088 of the
Civil Code.
2. FBDC should have filed a separate complaint against respondents instead of filing a motion
to intervene. (The trial court quoted Bayer Phils. v. Agana )
FBDC filed a MR, which was denied. Hence this petition to review pure questions of law.
ISSUE:
WON the trial court is should have required respondents to file an indemnity bond for FBDCs
protection
HELD: YES. Pursuant to Section 14 of Rule 57, the sheriff is not obligated to turn over to
respondents the properties subject of this case in view of respondents failure to file a bond.
The bond in Section 14 of Rule 57 (proceedings where property is claimed by third person) is
different from the bond in Section 3 of the same rule (affidavit and bond).
Under Section 14 of Rule 57, the purpose of the bond is to indemnify the sheriff against any
claim by the intervenor to the property seized or for damages arising from such seizure, which
the sheriff was making and for which the sheriff was directly responsible to the third party.
Section 3, Rule 57, on the other hand, refers to the attachment bond to assure the return of
defendants personal property or the payment of damages to the defendant if the plaintiffs
action to recover possession of the same property fails, in order to protect the plaintiffs right of
possession of said property, or prevent the defendant from destroying the same during the
pendency of the suit.
Because of the absence of the indemnity bond in the present case, FBDC may also hold the
sheriff for damages for the taking or keeping of the properties seized from FBDC.
14. Pioneer Insurance & Surety v Hontanosas L-35951(Aug. 31, 1977)
We reverse the decision of the Court of Appeals 1 promulgated, on October 30, 1972 in CA-G.R.
No. 00951-R entitled "Pioneer Insurance & Surety Corp., et al., petitioners, vs. Hon Judge
Agapito Hontanosas, et al., respondents," which decision had denied for lack of merit the
petition filed therein for certiorari. prohibition and/or mandamus with preliminary injunction
seeking to nullify the order of default of February 29, 1972 and the decision of March 9, 1972 in
Civil Case No. R-12069, entitled "Ben Rodriguez, et al. vs. Allied Overseas Commercial Co., et
al." issued by the respondent Presiding Judge of the Court of First Instance of Cebu.
The case commenced on October 12, 1970 when Allied Overseas Commercial Co., Ltd., a
foreign corporation domiciled in Hongkong, filed in the Court of First Instance of Manila a
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FRATERNAL ORDER OF LEVIATHAN | LEVIATHAN SORORITAS

complaint against the respondent-appellee Ben Uy Rodriguez for the collection of a sum of
money arising out of a transaction between them in the amount of P450,533.00, the agreed
peso equivalent of the HK$418,279.60 balance unpaid. Plaintiff therein having prayed for the
issuance of a writ of preliminary attachment, the game was granted by the Court against
Rodriguez upon the filing by said plaintiff of a bond in the amount of P450,000.00, which
petitioner-appellant Pioneer Insurance & Surety Corp. duly posted. The corresponding levy in
attachment was made by annotation on the properties of Rodriguez which consisted of 4 pieces
of lots; notices of garnishment on different Cebu banks turned out negative, while personal
properties found at the Rodriguez residence, although attached, were, however, not removed
therefrom.
A motion to dismiss the complaint was thereupon filed by Rodriguez, followed by an application
for damages against the bond, praying that he be permitted to present evidence of damages he
sustained by reason of the wrongful attachment, and to enforce said claim against the surety on
its bond, alleging further that otherwise his claim against the bond will forever be barred as said
claim cannot be the subject of an independent civil action under Sec. 20, Rule 57 of the Rules of
Court. The court iii its order of December 22, 1970 dismissed the complaint on the ground of
improper venue since defendant Rodriguez was a resident of Cebu, and lifted the writ of
preliminary attachment setting. the hearing on the claim for damages against the bond on
January 14, 1971.
With the intention of filing a separate civil action in the Court t T of Firs instance of Cebu,
respondent-appellee Rodriguez withdrew his claim for damages against Pioneer Insurance and
Surety Corp., which motion for withdrawal was granted by the Court Thereafter, the
respondents-appellees Rodriguez spouses filed a complaint for damages on February 15, 1971
against Pioneer Insurance & Surety Corp. and Allied Overseas (the Hongkong-based
corporation), docketed as Civil Case No. R-12069, Court of First Instance of Cebu presided by
respondent judge lion Agapito Hontanosas, the complaint praying that Rodriguez be declared as
not in any manner indebted to the defendant Allied Overseas Commercial Co. and that Pioneer
Insurance & Surety Corp. be held liable for damages, attorneys foes and expenses of litigation
by reason of the and malicious attachment issued by the Manila Court.
Defendant Pioneer Insurance and Surety Corp. filed its manner to the complaint (Civil Case No.
R-12069) alleging affirmative and special defenses. With respect to the other defendant Allied
Overseas Commercial Co., summons was (coursed thru the Philippine Consulate General in
Honkong which turned it down as it had no authority to serve the process under the Rules of
Court.
On April 27, 1971, defendant Pioneer Insurance & Surety Corp. filed a motion for a preliminary
hearing of its affirmative defenses of lack of cause of action and bar by prior judgment and/or
abandonment, which are grounds for a motion to dismiss. This was denied by the respondent
Judge in his Order dated May 15, 1971, so also was the motion for reconsideration per its Order
of June 2, 1971.
On May 5, 1971, the case was called for pre-trial. Plaintiffs with counsel attended; defendant
Pioneer Insurance & Surety Corp. thru counsel was present The other defendant, Allied
Overseas Commercial Co was not yet summoned, hence absent. The parties manifested failure
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FRATERNAL ORDER OF LEVIATHAN | LEVIATHAN SORORITAS

to settle the case amicably, thus the Court set the trial of the case on the merits for June 11,
1971.
A petition for certiorari and prohibition was then filed by Pioneer Insurance and Surety Corp. on
August 3, 1971 in the Court of Appeals, CA-G.R. No. 00369-R (Record on Appeal, p. 133) with
prayer to enjoin a hearing scheduled on August 7, 1971, alleging that respondent Judge
committed grave abuse of discretion amounting to lack and/or excess of jurisdiction in lending
the motion for preliminary hearing. The Court of Appeals In its Resolution dated August 7, 1971
distributed this petition for certiorari. Record on Appeal, pp. 133-137)
An amended complaint was now submitted to ad admitted by the Court on August 14, 1971 by
impleading left petitioner-appellant Hadji Esmayaten Lucman as additional, defendant., making
allegations tending show confabulation between the new defendant, and the foreign-based
corporation to collect a non-existing debt. To the amended complaint, Pioneer Insurance &
Surety Corp filed its answer.
Lucman having been impleaded as assignee defendant Allied Overseas Commercial filed a
motion to dismiss on the ground of auter action pendant, that is an action pending in the Court
of First Instance of Rizal, Civil Case No. 14351 between the same parties with the same
allegation and defences of counterclaims. On November 25, 1971, respondent Judge denied
the motion to dismiss, whereupon Lucman filed his answer to the amended complaint.
Upon an ex parte motion of Rodriguez, the Court declared Lucman in default in its Order of
January 10, 1972 and thereafter promulgated a decision dated January 28, 1972 against
Lucman only, ordering him to pay damage,- in the amount of P150,000.00; declaring that
Rodriguez was no in any manner indebted to Lucman or to Allied Overseas Commercial Co and
that the Metropolitan Bank & Trust Co. (Cebu Branch) Check No. CB2169 (xerox copy marked
Exhibit M issued iv Rodriguez to pay the indebtedness was a forgery.
Lucman moved on February 11, 1972 to set aside the order of default and to admit the answer
earlier filed by him to the amended complaint. On February 21. 1972, respondent Judge set
aside the order of default against Lucman including the decision against him, the dispositive
portion of which order reads as follows:
WHEREFORE, the Order of Default dated January 10, 1972 as well as the
decision (Re: Hadji Esmayaten Lucman) dated January 28, 1972, are hereby
reconsidered and set aside. Let the hearing of this case on the merits be
scheduled as previously set for February 28, 1972 at 8:30 o'clock in the morning.
The parties thru their respective counsels are to be immediately notified of this
order. The Clerk of Court is directed to notify defendant Hadji Esmayaten
Lucman thru counsel Atty. Eriberto D. Ignacio At Rm. 414, Madrigal Bldg.,
Escolta, Manila by telegram.
SO ORDERED.
Cebu City, Philippines, February 21, 1972.
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FRATERNAL ORDER OF LEVIATHAN | LEVIATHAN SORORITAS

(SGD.)
AGAPITO
HONTANOSAS
JUDG
E
(Record on Appeal,
pp. 297-298)
Forthwith, the clerk of court sent the telegram notices in the following wise:
YOUR MOTION SET ASIDE ORDER, DEFAULT AND DECLARE
PROCEEDINGS NULL AND VOID RE CIVIL CASE BEN RODGIGUEZ ET AL
VERSUS HADJI ESMAYATEN LUCMAN GRANTED STOP PRETRIAL SHALL
PROCEED AS PREVIOUSLY SCHEDULED FEBRARY 28 1972 MORNING
(Record on Appeal, p.
298)
Counsel for the petitioners received the telegram notices on February 21, 1972; and on
February 23, 1972 counsel filed an urgent motion for postponement of the pre-trial, claiming that
he was not aware of any such pre-trial having been previously set for February 28, 1972 in the
morning, as indeed no such pre-trial can as yet be set as the issues with respect to the
amended complaint are not yet fully joined since plaintiffs have not answered the compulsory
conterclaims separately set up by the defendants in said summons to theforeign corporations
Allied Overseas Commercial Co. Ltd. of Hongkong, nor have plaintiffs asked that said foreign
corporation be dropped from the amended complaint; that counsel has a hearing in Manila of a
criminal case which is of intransferable character, and prayed that the pre-trial be set at some
other date in March preferably either March 22 or 23, 1972 at 9:00 a.m. which were the only free
dates for the month of March 1972 in the calendar of the counsel. (Record on Appeal, pp. 301303)
Apparently, the above urgent motion for postponement although sent through registered airmail
special delivery and received by the Dispatching Section of the Post Office of Cebu on February
28, 1972 (Resolution, Court of Appeals, Recrod on Appeal, pp. 365-366) was not received by
the Court for on February 28, 1972 when the case was called, an order was issued by the Court
postponing the pre-trial of the case to March 20, 1972 in ivew of the absence of the defendants
and counsel notwithstanding notices of hearing and telegrams sent to them, on the condition
that should defendants be found that as to plaintiffs will be allowed to present their evidence and
the defendants will be declared in default for failure to appear at the pre-trial. (Record on
Appeal, pp. 304-305)
Upon verification from the radio Communications of the Philippines that the telegrams
mentioned above were delivered and received by the addresses on February 21, 1972, the
Court on February 29, 1972 declared the defendants in default and allowed the plaintiffs to
present their evidence in support of their complaint before the Clerk of Court. (Record on
Appeal, pp. 306-307). The evidence was thereupon presented and on March 9, 1977 the
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FRATERNAL ORDER OF LEVIATHAN | LEVIATHAN SORORITAS

respondent Judge promulgated his Decision declaring that the plaintiff Rodriguez is not in any
manner indebted to defendant Lucman or to Allied Overseas Commercial Co., declaring the
personal check of the plaintiff to be a forgery; that the attachment of the properties of plaintiff in
the Manila case was wrongfu; amd malicious, and ordering defendant Pioneer Insurance and
Surety Co. to pay P350,000.00 as moral damages, P50,000.00 as exemplary damages and
P50,000.00 for expenses of litigation in Manila. Defendant Lucman was also ordered to pay
plaintiffs the sum of P50,000,00 as exemplary damages and P30,000.00 as attorney's fees.
Within 30 days reglementary period to perfect the appeal, defendants Pioneer Insurance &
Surety Corp. and Hadji Esmayaten Lucman filed the Notice of Appeal and the Original record on
Appeal, the latter ordered corrected and amended but finally approved by the Court on July 31,
1972.
Meanwhile, petitioner's filed on April 4, 1972 before the Court of Appeals a petition for certiorari,
prohibition and/or mandamus with preliminary injunction CA-G.R. No. 00951-R) seeking to
nullify the order of default of February 29, 1972 and the Decision of March 9, 1972 of
respondent Judge, to command said Judge to elevate the records of the case for review and to
prohibit him from enforcing his decision and from taking further action in the case, No. 12069.
On April 13, 1972, the Court of Appeals promulgated its resolution dismissing the petition
aforestated and ruled among others as follows:
Furthermore, petitioners instant remedy is not proper because of their own
admission that appeal is available from the decision of respondent Judge
(Discussion, pp. 12-13 of their Petition). This is shown by the handwriting at the
upper right hand corner of Annex R (Decision) when they received the decision
on March 25, 1972 and the period to appeal will expire on April 24, 1972.
We are not, therefore, convinced that the remedy of appeal is inadequate,
considering that whatever errors respondent Judge might have committed can be
assigned as specific errors on appeal. It has been consistently held that certiorari
is not available where the remedy of appeal is present .
(Recor
d
on
Appeal
,
p.
373)
On a motion for reconsideration, the Court of Appeals reconsidered the resolution cited above,
and issued another resolution dated July 25, 1972 giving due course to the petition and required
the respondents to answer the petition (not a motion to dismiss), and among others, stated, to
wit:
Upon this fact alone, we believe as petitioners contend that although appeal is
available, such remedy is not sufficiently speedy and adequate to cure the
defects in the proceedings therein or to remedy the disadvantageous position of
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FRATERNAL ORDER OF LEVIATHAN | LEVIATHAN SORORITAS

Petitioners because, since they were deprived of raising any issue or defense
that they have in the respondent court by reason of the order of default, they
cannot raise said issues or defenses for the first time on appeal.
(Rollo,
P. 98)
The petition having been given due course, the respondents herein answered the same, and on
October 30, 1972, the Court of Appeals rendered its Decision denying the petition for lack of
merit, and held among others, thus
Finally we are not also convinced that the remedy of appeal is inadequate under
the circumstances obtaining in the principal cue Whatever errors respondent
Judge might have committed in his order or judgment may be assigned as
specific errors in their appeal. This Court can review any all such errors of fact
and law in the appeal.
(Rollo,
p. 138)
Petitioners filed a motion for reconsideration which was denied, hence this appeal by certiorari
from the decision of the Court of Appeals and is now before Us being assailed and faulted on
three principal issues: 1. the illegality of th order of the default and the decision arising
therefrom; 2. the inadequacy of the remedy of appeal; and 3. the lack of jurisdiction of the Court
in the principal case.
The petitioner's main thrust in this legal attack is directed to the other dated February 29, 1972
declaring defendants (now the petitioners) in default at the second pre-trial hearing and allowing
the plaintiffs (the present private respondents) to present evidence ex parte before the Clerk of
Court, which evidence uncotradicted and unrebutted was lifted almost en toto as the basis of the
decision granting damages so enormous and so huge in amount as to exceed the bounds of
reason and fairness.
The procedure for the pre-trial of a case is laid down by Rule 20, Revised Rules of court, which
provides, to wit:
Sec. 1. Pre-trial mandatory. In any action, after the last pleading has been
filed, the ourt shall direct the parties and their attorneys to appear before it for a
conference to consider':
(a) The possibility of an amicable settlement or of a submission to arbitration;
(b) The simplification of the issues;
(c) The necessity or desirability of amendments to the pleadings;

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FRATERNAL ORDER OF LEVIATHAN | LEVIATHAN SORORITAS

(d) The possibility of obtaining stipulations or admissions of facts and of


documents to avoid unnecessary proofs;
(e) The limitation of the number of witnesses;
(f) The advisability of a preliminary reference of isues to a commissioner,
(g) Such other matters as may aid in the prompt disposition of the action.
Sec. 2. Failure to appear at pre-trial conference. A party who fails to appear at
a pre-trial conference may be non-suited or considered as in default.
Sec. 3. Allows the ocurt to render judgment on the pleading or summary
judgment as justice require. Sec. 4 directs that a reocrd of the pre-trial results be
made; and Sec. 5 requires the court to prepare a pre-trial calendar of cases for
consideration as above provided, and that upon the submission of the last
pleading in a particular case, it shall be the duty of the clerk of court to place
case in the pre-trial calendar.
Unquestionably, the present Rules make pre-trial mandatory. And the reason for making pre-trial
mandatory is that pre-trial conferences bring the parteis together, thus making possible an
amicable settlement or doing away with at least the non-essentials of a case from the beginning.
(Borja vs. Roxas, 73 Phil. 647).
Philippine jurisprudence has laid down the legal doctrine that while it is true that it is mandatory
for the parties and their attorneys to appear before the trial court for a pre-trial conference to to
consider inter alia the possibility of an amicable settlement, the rule wa sby no means intended
as an implacable bludgeon but as a tool to assist the trial court in the orderly and expeditious
conduct of trial. The rule is addressed to the sound discretion of the trial court (Rice and Corn
Administration vs. Ong Ante, et. al., G.R. No. L-30558, Oct. 4, 1971).
Both client and counsel must appear at the pre-trial. this is mandatory. Failure of the client to
appear is a ground for dismissal. (American Ins. Co. vs. Republic 1967D Phil. 63; Home Ins. Co.
vs. United States Lines Co., 1967D Phil. 401, cited in Saulog vs. Custombuilt Manufacturing
Corp. No. L-29612, Nov. 15, 1968; Taroma v. Sayo, L-37296, Oct. 30, 1975 (67 SCRA 508).
In the case of Insurance Co. of the North America vs. Republic, et. al., G.R. No.L-26794, Nov.
15, 1967, 21 SCRA 887, the Supreme Court, speaking thru Justice Bengzon, held that Sec. 1,
Rule 20 of the Rules requries the court to hold a pre-trial before the case is heard and since in
this case, a pre-trial has already been had, the fact that an amended complaint was later filed,
did not necessitate another pre-trial. it would have been impractical, useless and timeconsuming to call another pre-trial.
Under the rules of pleading and practice, the answer ordinarily is the last pleading, but when the
defendant's answer contrains a counterclaim, plaintiff's answer to it is the last pleading. When
the defendant's answer has a cross-claim, the answer or the cross-defendant to it sit he last
pleading. Where the plaintiff's answer to a counterclaim contains a counterclaim constains a
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FRATERNAL ORDER OF LEVIATHAN | LEVIATHAN SORORITAS

counter-claim agains the opposing party or a cross-claim against a co-defendant, the answer of
the opposing party to the counterclaim or the answer of the co-defendant to the cross-claim is
the last pleading. And where the plaintiff files a reply alleging facts in denial or avoidance of new
matter by way of defense in the answer, such reply constitutes the last pleading. (Francisco, the
Revised Rules of Court, Vo. II, pp. 2-3).
The above citations and authorites are the ground rules upon which the conflictings claims of
the opposing partie's may be resolved and decided.
First, the legality of the order of default dated February 29, 1971 and the decision dated March
9, 1972. there is spread out in the Record on Appeal, pp. 92-93 that on May 5, 1971, a pre-trial.
was conducted by the court between the plaintiff Ben Uy Rodriguez spouses and the defendant
Pioneer Insurance & Surety Corp. The record or results of said pre-trial is found in the ordr of
the court dated May 5, 1971, which states:
When this case was called for pre-trial today, the plaintiffs and their counsel, Atty.
Hilario Davide Jr. appeared. On the other hand, the defendant Pioneer Insurance
& Surety Corp. represented by its counsel, Atty. Amando Ignacio also appeared.
When asked by the court if there is any possibility of settling this case amicably,
the counsel for the defendant answered in the negative. Both counsels agreed
that the only issue to the resolved bu the Court is whether the bonding company
is laible or not, and if so, how much?
Atty. Hilario Davide, Jr. caused the markings of the following exhibit.
Exhibit "A-pre-trial", the finanacial report of Ben Rodriguez as of December 31,
1969; and
Exhibit "B-pre-trial", the affidavit of handwriting expert Perfecto Espina, and
thereafter he reserved his right to mark additinal exhibits during the trial on the
merits.
The counsel for the defendant also reserved his right to object to the Exhibits of
the plaintiffs and mark his exhibits during the trial on the merits of the case.
Both counsels are given ten (10) days from today within which to file their
simulatteneous memoranda or authorities in support of the motion for preliminary
hearing and its objection thereto. and thereafter his incident will be resolved by
the Court.
Following agreement of the partiesm, the trial on the the merits of this case is set
for June 11, 1971 at 8:30 o'clock in the moring.
The parties thru their respective counsels are notified in open court of this order.
SO ORDERED.
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FRATERNAL ORDER OF LEVIATHAN | LEVIATHAN SORORITAS

Cebu City, Philippines, May 5, 1971.


SGD.)
AGAPITO
HONTANOSAS
JUDG
E
(Record on Appeal, p.
93)
The defendant Pioneer Insurance & Surety Corp. having complied with the order of the Court to
appear and attend this pre-trial, and had manifested its opposition to settling the case amicably,
said party may no longer be compelled to attend a second pre-trial hearing, and neither may it
be punished by the court by its orde declaring said defendant as in default. The mandatory
character of a pre-trial nad the serious consequences confronting the parties in the event that
each party fails to attend the same must impose a strict application of the Rule such that where
we find no authority for the the Court to call another pre-trial hearing, as in fact there is none in
said Rule, the conclusion is inescapable that the respondent Judge committed a grave and
serious abuse of discretion and acted in excess of jurisdiction in declaring defedant Pioneer
Insurance & Surety Corp. "as in default" for failure to attend the second pre-trial called by the
Judge on February 29, 1972. In other words, there is nothing in the Rules that empowers or has
called a first pre-trial duly attended by tha prties, and lacking such authority, the court perforce
lack the autority to declare a failure to prosecute on the part of the plaintiff for failing to attend
such second pre-trial; it also lack the authority to declare the defendant "as in default" by reason
of the latter's failure to be present at the said second pre-trial.
It serves no purpose for the court to call again another pre-trial where the parties had previously
agreed to disagree, where the issues had been joined and where the court itself had been
satisfied that a hearing on the merits is the next step to conduct as int he instant case where the
court, after the pre-trial on May 5, 1971, set he trial of the case on its merits for June 11, 1971.
Indeed, a second pre-trial is impractical, useless and time-consuming.
We have not lost sight of the fact that when the first pre-trial was called and conducted, the
party litigants were the Ben Uy Rodriguez spouses as plaintiffs, while Pioneer Insurance &
Surety Corp. and Allied Overseas Commercial Co. (although not yet summoned) were the
defendants, whereas at the time the second pre-trial was called, the original complaint had been
amended to implead Hadji Esmayaten Lucman as additional defendant. The amendment of the
complaint to implead Lucman did not, however, alter the impracticability, the uselessness and
the absence of authority to call a second pretrial hearing since the amended complaint merely
impleaded Lucman as the assignee of the original defendant Allied Overseas Commercial Co.
and no additional cause of action was alleged; the prayer was the same and the amount of
damages sought was the same as that in the original complaint.
Second, the prematureness of the pre-trial called on February 28, 1972, assuming that there
was need to have another pre-trial. The records (Record on Appeal, p. 293) show that the notice
of the clerk of court setting the case for pre-trial on February 28, 1972 was issued and dated
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FRATERNAL ORDER OF LEVIATHAN | LEVIATHAN SORORITAS

February 7, 1972. As of this date, February 7,1972, the complaint had been amended on August
27, 1971 by impleading the defendant Hadji Esmayaten Lucman who filed his answer on
December 24, 1971, interposing therein a compulsory counterclaim. (Record on Appeal, pp.
239-240). Before this date of February 7, 1972, the court had already promulgated the Decision
dated January 28, 1972 as against Lucman only.
Likewise, as of February 7, 1972, defendant Pioneer Insurance & Surety Corp. had also filed its
answer to the amended complaint, interposing too a compulsory counterclaim. But as of
February 7, 1972, the plaintiffs have not yet filed their answer to the compulsory counterclaims
of the defendants (which is necessarily the last pleading to be filed in order that the case is
ready and ripe for the pre-trial). It was only on February 22, 1972 that plaintiffs made their reply
to the answer, and their answer to the compulsory, counterclaim of defendant Lucman 'Record
on Appeal, pp. 299- 301).
The records do not disclose any reply of the plaintiffs to the answer of Pioneer Insurance &
Surety Corp., nor any answer to the compulsory counterclaim of the Corp. The above state of
the case as far as the pleadings are concerned clearly and manifestly show that the case was
not yet ready for pre-trial, that it was as yet premature because the last pleading had not yet
been filed by the plaintiffs.
Even the state of the pleadings as of February 21, 1972 when the telegrams were sent notifying
the parties of the pre-trial for February 28, 1972 reveals the prematureness of calendaring the
case pre-trial. As of February 21, 1972, the complaint was already amended to implead Lucman
who submitted his answer with compulsory counterclaim. but plaintiffs had not yet filed their
reply and their answer to the counterclaim, because the records indicate that the plaintiffs'
answer to the counterclaim, because the records indicate that the plaintiffs' answer to the
counterclaim is dated February 22, 1972. (Record on Appeal, pp. 299-301). And to the
compulsory counterclaim of defendant Pioneer Insurance & Surety Corp., plaintiffs made no
answer whatsoever.
Third, the notices given by the clerk of court thru telegrams on February 21, 1972 notifying the
parties of the pre-trial on February 28, 1972 were insufficient, in law and jurisprudence.
We have careffully noted the telegraphic notices sent by the clerk of court and we find this
omission which is fatal to the respondents' cause: no telegram was sent to the defendant
Pioneer Insurance & Surety Corp. The telegram was sent to the counsel of this defendant, but
none to the defendant itself.
The Court had directed the clerk of court to send notice by telegram to the parties for the
February 28 pre-trial. The clerk did send the telegram to Atty. Eriberto Ignacio, counsel for
Pioneer Insurance & Surety Corp., but omitted and failed to send telegram to the party itself, the
corporation, as required strictly by law. Notice to the counsel is not enough. We reiterate that
this failure is a jurisdictional defect.
Reading the order of the court dated february 29, it appears in black and white (Record on
Appeal, pp. 306-307, Annex W, Rollo, p. 194) that only two telegraphic messages were sent by
the clerk of court, thus (1) the message addressed to Atty. Eriberto Ignacio delivered to the
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FRATERNAL ORDER OF LEVIATHAN | LEVIATHAN SORORITAS

given address at 3:45 P.M. the same day it was filed but the signature of he recipient was
unreadable; (2) the other message addressed to Hadji Esmayaten Lucman per RCPI San Juan
also delivered on the same day, February 21, 1972 and personally 4eceived by the addressee
himself. This was the offficial advice received by the Court from the Radio Communications of
the Philippines thru which the telegrams were wired.
This is also confirmed by the Order of the Court dated April 11, 1972 denying the defendant's
Urgent Motion for Reconsideration. The other states.
Per advice from the Radio Communications of the Philippines, Inc. these two
messages were received by the addressees, Atty. Eriberto Ignacio and Hadji
Esmayaten Lucman on the same day it was filed, that is on February 21, 1972.
(Recor
d
on
Appeal
,
p.
357)
Decidedly, there was no telegram sent to party defendant Pioneer Insurance & Surety Corp.,
informing it of the February 28 pre-trial hearng. The reason for requiring the presence of the
party who must be notified is explained in the case of Home Insurance Co. vs. United Lines
Co. (L-25593, November 15, 1967, 21 SCRA 863), where the Court, speaking thru Justice
Bengzon, said that:
A party who fails to appear at a pre-trial conference may be non-suited or
considered as in default. This shows the purpose of the Rules to compel the
parties to appear personally before the court to reach, if possible, a compromise.
Accordingly the court is given the discretion to dismiss the case should plaintiff
not appear at the pre-trial.
Fourth, the denial of the motion for postponement was a grave abuse of discretion. We grant the
court the discretion to postpone any hearing, pre-trial or on the merits of the case, but the
exercise of discretion must be based on reasonable grounds. The motion (Record on Appeal,
pp. 301-303) had alleged grounds which are meritorious and not frivolous nor intended for
delay, which are 1. no formal order of the court scheduling the February 28 pre-trial had been
received; 2. pre-trial cannot be had as yet be set as the issues are not yet fully joined; 3.
counsel has a hearing previously set in Manila in a criminal case which was of an intransferable
character. We are also concede that counsel may not presume nor take for granted that his
motion for postponement and the proposed setting to March 22 or 23, 1972 will be granted by
the court but where the court had actually postponed the hearing on February 28, 1972 due to
the absence of the defendants and their counsel, and scheduled the pre-trial to March 20, 1972
at 8:30 o'clock in the morning (Record on Appeal, pp. 304-306), we find no reason nor fairness
in the court's order of February 29, 1972 finding defendants as in default since the pre-trial was
moved to a later date in March as prayed in the motion.

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FRATERNAL ORDER OF LEVIATHAN | LEVIATHAN SORORITAS

The motion for postponement was received on February 28, 1972 at the Cebu Post Office, as
shown in the postmarks on the envelope (photographed on p. 322, record on Appeal) but was
not immediately delivered to the court although the envelope bore the words, "registered Air
Mail/Special Delivery with Return Card." If the letter containing the moton was not yet delivered
to the Court the next day, February 29, 1972 when the court made the order declaring
defendants in default, this was clearly a postal neglect and omission to perform its duty, not
attributable to defendants, The Court, in the exercise of wise discretion, could have restored
their standing in court and given them an even chance to face their opponents.
For refusing to set aside said order of default and the decision, we hold the Court of Appeals in
reversible error therefor. The respondent Court of Appeals has ignored established rulings of the
Supreme Court in Pineda vs. Court of Appeals, 67 SCRA 228, that a party may not be declared
in default for future to attend the pre-trial where only his counsel was notified of the pre-trial
schedule; in Sta. Maria, Jr. vs. Court of Appeals, 45 SCRA 596 that a pre-trial is unnecessary
where the case could not be settled and that the fact that an amended complaint was later filed
with leave of court did not, undue the circumstances, necessitate another pre-trial; and
in Pineda vs. Court of Appeals, 67 SCRA 288 that Courys should be liberal in setting asiode
default judgment.
At this juncture, it is necessary to emphasize once more the pronouncement of this Court
speaking through Justice Teehankee in Taroma vs. sayo, 67 SCRA 509, pp. 512-513, that:
For the guidelines of the bench and bar, therefore, the Court in reaffirminf the
ruling that notice of pre-trial must be served separately upon the party and his
counsel of record, retates that while service of such notice to party may be made
directly to the party, it is best that the trial courts uniformly serve such notice to
party through or care of his counsel of the obligation of notifying the party of the
date, time and palce of the pre-trial conference and assuring that the party either
appear thereat or deliver to counsel a written authority to represent the party with
power to compromise the case, with the warning that a party who fails to do so
may be non-suited or declared in default.
The second point at issue is whether the remedy of ordinary appeal in the case is palin, speedy
and adequate such that the writ of certiorari will not lie. We have adverted to previously that the
Court of Appeals in its extended Resolution dated July 25, 1972 ruled that although appeal was
available, such remedy is not sufficiently speedy and adequate to cure the defects in the
proceedings therein or to remedy the disadvantageous position of petitioners because, since
they were deprived of raising any issue or defense that they have in the respondent court by
reason of the order of default, they cannot raise said issue or defense for the first time on
appeal. Yet, on October 30, 1972, the Court in its decision held that the remedy of appeal is not
inadequate in that whatever errors respondent Judge might have committed in his order or
judgment may be assigned as specific errors in their appeal before said tribunal, and that it can
review any errors of fact and of law in the appeal.
This conflicting stand of the Court of Appeals issuing from the same case is as difficult to
resolve as it is to reconcile them. We have but to rule on them. hold one to be correct and
dislodge the other as an error.
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FRATERNAL ORDER OF LEVIATHAN | LEVIATHAN SORORITAS

On general principles, the writ of certiorari will lie where there is no appeal, nor any plain,
speedy and adequate remedy in the ordinary course of law. The existence of an appeal is a bar
to writ of certiorari where such appeal is in itself a sufficient and adequate remedy, in that it will
promptly relieve the petitioner from the injurious effects of the order or judgment complained of.
(Silvestre v. Torres, 57 Philippines 885, 890; Pachoco v. Tumangday L-14500, May 25, 1960;
Lopez et al. v. Alvendia, et al. L-20697, Dec. 24, 1964). Courts ordinarily do not deny the writ if
the result would be to deprive a party of his substantial rights and leave him without remedy,
and in those instances wherein the lower court has acted without jurisdiction over the subject
matter, or where the order or judgment complained of is a patent nullity, courts have gone even
as far as to disregard completely the question of petitioner's fault, the reason being,
undoubtedly, that acts performed with absolute want of jurisdiction over the subject matter are
void ab initio and cannot be validated by consent, express or implied, of the parties. (Moran,
Comments on the Rules of Court, Vol. 3, 1970 ed., pp. 169-170).
There are numerous cases where the Supreme Court has granted the writ notwithstanding the
existence of an appeal. Thus, the Supreme Court to avoid future litigations, passed upon a
petition for certiorari though the proper remedy was appeal. Writs have been granted despite
the existence of the remedy of appeal where public welfare and the advancement of public
policy so dictate, the broader interests of justice so require, or where the orders complained of
were found to be completely null and void, or that the appeal was not considered the
appropriate remedy. (Fernando v. Varquez, No. L-26417, Jan. 30, 1970)
As to what is an adequate remedy, it has been defined as "a remedy which is equally beneficial,
speedy and sufficient, not merely a remedy which at some time in the future will bring about a
revival of the judgment of the lower court complained of in the certiorari proceeding, but a
remedy which will promptly relieve the petitioner from the injurious effects of that judgment and
the acts of the inferior court or tribunal." (Silvestre v. Torres, 57 Phil. 885, 11 CJ., p. 113)
Now to the case at bar, We find here a number of special facts and circumstances which
addresses themselves to the wise discretion of this court with such force to induce Us to grant
the writ in order to prevent a total or partial failure of justice, to redress or prevent the wrong
done. We are satisfied that petitioners are cornered into a desperate position where they have
been ordered to pay damages over and above the amount of the bond posted for the
attachment of private respondents' properties as ordered by the decision of the court based on
evidence presented ex parte by reason of the order of default, and more than that, plaintiff
Rodriguez is relieved from civil liability on an inexplicable and unprecedented finding that the
plaintiffs' check was a forgery, (when the check exhibited was only a xerox copy of the original,
which original was in the records of the case filed in the court of First instance of Rizal, Civil
Case No. 14499 entitled "Hadji Esmayaten Lucman vs. Benjamin Rodriguez, et al.," (Record on
Appeal, pp. 49-55). Again, the conflicting notices as to the hearing ordered, pre-trial in one and
on the merits in the other, is not the doing of the petitioners of their standing in court was in
effect a failure of justice. Petitioners can no longer present their evidence to rebut the claim of
damages, or reduce the unconscionable and excessive damages or question the release of
plaintiff's debt, for the same may not be submitted nor raised for the first time on appeal. We,
therefore, hold that the Court of Appeals erred in holding that the appeal is adequate. The court
erred in ignoring the doctrine laid down in Omico v. Villegas, 63 SCRA 285, that appeal is not an
adequate remedy where party is illegally declared in default.
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FRATERNAL ORDER OF LEVIATHAN | LEVIATHAN SORORITAS

Petitioners assail the jurisdiction of the court of First Instance of Cebu in Civil Case No. 12069-R
filed by the Rodriguez spouses, seeking damages for the alleged malicious and unlawful
is2suance of the writ of preliminary attachment against the latter's properties granted by the
Court of First Instance of Manila upon the posting of a security bond in the amount of
P450,000.00 given by the petitioner Pioneer Insurance & Surety Corp. The petitioners contend
that under See. 20, Rule 57 of the Revised Rules of Court, the claim for damages against a
bond in an alleged wrongful attachment can only be prosecuted in the same court where the
bond was filed and the attachment issued.
Rule 57, Sec. 20 of the Revised Rules of Court provides, to wit:
Claim for damages on account of illegal attachment. If the judgment on the action
be in favor of the party against whom attachment was issued, he may recover,
upon the bond given or deposit made by the attaching creditor, any damages
resulting from the attachment. Such damages may be awarded only upon
application and after proper hearing, and shall be included in the final judgment.
The application must be filed before the trial or before appeal is perfected or
before the judgment becomes executory, with due notice to the attaching creditor
and his surety or sureties, setting forth the facts shaking his right if damages and
the amount thereof.
xxx xxx xxx
On the other hand, the private respondents argue that the above rule is not applicable to the
case at bar, citing Moran, Vol. Rules of Court, 1963 pp. 51-52, to wit:
... the rule that a claim for damages arising from the issuance of a wit of
attachment, injunction, receivership and replevin should be presented in the
same action is not applicable where the principal case has been dismissed for
lack of Jurisdiction and no claim for damages could therefore have beer
presented in said case.
The position of the petitioners is correct. The ruling in the case of Santos vs. Court of Appeals,
et al., 95 Phil. 360 advanced by respondents to support their stand, is not controlling here, or
We find that no claim for damages against the surety bond in support of a preliminary.
attachment was ever presented or filed. The latest decisions of this Court in Ty Tion et al., vs.
Marsman & Co., et al., L-17229, July 31, 1962, 5 SCRA 761 reiterating the rulings in Del
Rosario vs. Nava, 50 O.G. 4189; Estioco vs. Hamada, L- 11079, May 21, 1958; Neva Espa;a
vs. Montelibano, 58 Phil, 807; Tan Suyco vs. Javier, 21 Phil. 82; Raymundo vs. Carpio, 33 Phil.
894; Santos v. Moir,36 Phil. 350; lay down the proper and pertinent rule that the claim for
damages against a bond in an aleged wrongful attachment can only be prosecuted in the same
court where the bond was filed and the attachment issued.
Moreover, the records show that private respondent Rodriguez filed an Application for Damages
Against Bond dated December 3, 1970 (Record on Appeal, pp. 77-81) praying that

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FRATERNAL ORDER OF LEVIATHAN | LEVIATHAN SORORITAS

Wherefore, it is respectfully prayed that in the event the motion to dismiss and
the motion to discharge attachment were granted, the defendant be allowed to
present evidence to prove damages sustained by him by reason of the
attachment against the Pioneer Insurance & Surety Corp. in a hearing that may
be conducted for the purpose with due notice to the plaintiff and the surety, and
that after due notice and hearing judgment be rendered against the Pioneer
Insurance and Surety Corp. for such amount of damages as may be proved and
established for defendant.
The defendant further prays for such other reliefs and remedies consistent with
law, justice and equity.
Cebu City, December 3, 1970.
ESTANISLAO
FERNANDEZ
JOSE D. PALMA
Attorney
Defendant

for

The Court of First Instance of Manila in its order dated Dcember 22, 1970, after dismissing the
complaint and lifting the writ of preliminary attachment, ordered that the hearing of the
application for damages against the bond be set aside on January 14, 1971 at 8:30 a.m.
(Record on Appeal, pp. 82-86)
In other words, defendant Rodriguez sought that judgment be rendered against the surety for
such amount of damages as may be proved or established by him, and was granted by the
court the opportunity to prove damages against the bond of the surety company. He even cited
the very provision of the Revised Rules of Court, Rule 57, Sec. 20 to justify his application, and
the cases supporting his application, for otherwise his claim will forever be barred. In effect, at
this point in time, defendant Rodriguez waived the lack of jurisdiction on his person, be seeking
an affirmative relief from the court, which he cannot now complain before this Court.
Thus, Francisco, in his Revised Rules of Court, Vol. 1, p. 130 citing 21 C.J.S. writes that:
Objections to lack of jurisdiction of the person, and other objections to jurisdiction
not based on the contention that there is an absolute want of jurisdiction of the
subject matter, are waived by invoking the court's jurisdiction, as by a
counterclaim, consent, or voluntary submission, to jurisdiction, or conduct
amounting to a general appearance.
In Soriano v. Palacio, 12 SCRA 557, this Court held that even if jurisdiction was not originally
acquired by the Court over the defendant due to allegedly defective services of summons, still
when the latter filed a motion for reconsideration of the judgment by default, he is considered to
have submitted to said court's jurisdiction.
Page 59

FRATERNAL ORDER OF LEVIATHAN | LEVIATHAN SORORITAS

We agree with the petitioners that the Court of Appeals erred in not dismissing the complaint
with respect to the petitioner Pioneer Insurance & Surety Corp., over which respondent-appellee
Judge had not acquired jurisdiction pursuant to Sec. 20, Rule 57 of the Revised Rules of the
Court.
IN VIEW OF THE FOREGOING, the judgment of the Court of Appeals is reversed and another
one is entered declaring the order of default dated February 29, 1972 and the decision rendered
by the respondent Judge on March 9, 1972 null and void, holding that the Court of First Instance
of Cebu lacks jurisdiction to hear and determine the claim for damages arising from the alleged
wrongful attachment issued by the Court of First Instance of Manila and ordering the dismissal
of that case (Civil Case No. 12069 of the Court of First Instance of Cebu), as well as the
pending of the judgment herein annuled in the Court of Appeals which has been rendered moot.
15. Consolidated Bank v IAC G.R. No. 73976 (May 29, 1987)
The basic issue for resolution in this petition for review of the December 13, 1985 decision of
the Intermediate Appellate Court, now the Court of Appeals, as well as the resolution of March
13, 1986 denying the motion for reconsideration, is whether or not an attaching creditor acquires
the right of redemption of a debtor over the attached properties of the latter which are
subsequently extrajudicially foreclosed by third parties.
Briefly, the facts are as follows: Originally, petitioner Consolidated Bank and Trust Corporation
(SOLIDBANK) loaned private respondent NICOS Industrial Corporation (NICOS) sums of
money in the total amount of FOUR MILLION SEVENTY SIX THOUSAND FIVE HUNDRED
EIGHTEEN AND 64/100 PESOS (P4,076,518.64).
Subsequently, NICOS failed to pay back the loan prompting SOLIDBANK to file a collection
case before the Court of First Instance of Manila, Branch XXIX. The case was docketed as Civil
Case No. 82-11611.
On August 30, 1982, the court in the aforecited case issued an order of attachment " ... upon the
rights, interests and participation of which defendants NICOS Industrial Corporation ... may
have in Transfer Certificate of Title No. T-210581 (T-32.505 M) and Transfer Certificate of Title
No. T-10580 (T-32.504 M) (Annexes "B", "B-1", "B-2" and "B-3" of petition).
On September 1, 1982, pursuant to the writ of attachment issued by the Court and upon
petitioner's posting of sufficient bond, the Sheriff of Manila levied and attached the two real
properties described by the foregoing order of attachment, including the buildings and other
improvements thereon. Afterwards, the Sheriff sent separate Notices of Levy Upon Realty to the
Registrar of Deeds of Malolos, Bulacan, dated September 1, 1982 requesting him "to make the
proper annotation in the books of your office" by virtue of the order of attachment dated August
30,1982 issued by the Manila Court in Civil Case No. 82-11611.
Accordingly, on September 7, 1982, the Registrar of Deeds of Malolos, Bulacan, pursuant to the
request of the Manila Sheriff, inscribed and annotated the Notices of Levy Upon Real Property
at the back of Transfer Certificates of Title Nos. T-210581 (T-32.505 M) and T-210580 (T-32.504
M).
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FRATERNAL ORDER OF LEVIATHAN | LEVIATHAN SORORITAS

Pursuant to the foregoing ng inscription and annotations, guards were deputized by the Manila
Sheriff to secure the premises of the two attached realties.
A year later, however, on July 11, 1983, the attached properties which had been mortgaged by
NICOS to the United Coconut Planters Bank (UCPB) on March 11, 1982, were extrajudicially
foreclosed by the latter. As the highest bidder therein, a certificate of sale was issued to it by the
Sheriff of Bulacan over the subject realties including the buildings and improvements thereon.
Surprisingly, two transactions occurred soon thereafter, both on August 29, 1983. First, UCPB
sold all of its rights, interests, and participation over the properties in question to a certain
Manuel Go; Second, Manuel Go sold all the rights he acquired from UCPB over the same lots
on that very same day to private respondent Golden Star Industrial Corporation (GOLDEN
STAR).
Barely a month later, on October 5, 1983, respondent NICOS, though fully aware that it still had
the right to redeem the auctioned properties within the one year period of redemption from July
11, 1983, suddenly executed a document entitled "Waiver of Right of Redemption" in favor of
respondent GOLDEN STAR.
On September 15, 1983, GOLDEN STAR filed a petition for the issuance of a writ of possession
over the subject realties before the Regional Trial Court, Branch VI of Malolos, Bulacan.
On November 4, 1983, the Malolos Court granted GOLDEN STAR's petition for a writ of
possession and issued the writ. In accordance with these orders, armed men of GOLDEN STAR
forcibly took over the possession of the properties in dispute from the guards deputized by the
Sheriff of Manila to secure the premises.
Thus on November 21, 1983, petitioner SOLIDBANK, on the strength of its prior attachment
over the lands in question filed with the Malolos court an omnibus motion to annul the writ of
possession issued to GOLDEN STAR and to punish for contempt of court the persons who
implemented the writ of possession with the use of force and intimidation.
The respondents NICOS and GOLDEN STAR, filed oppositions to the foregoing omnibus
motion, the former on the basis of the waiver of its right of redemption to GOLDEN STAR, and
the latter on its alleged ignorance that the lands in question were under custodia legis, having
been attached by the Sheriff of Manila.
On June 9, 1984, the Malolos Court issued an order denying the omnibus motion, the decretal
portion of which is as follows:
WHEREFORE, the Omnibus Motion of movant Consolidated Bank and Trust
Corporation to annul the writ of possession issued by this Court in favor of
Golden Star Industrial Corporation and to cite for contempt those who
fraudulently secured and unlawfully implemented the writ of possession is hereby
DENIED for lack of merit. (p. 8 of the Brief for the Complainant-OppositorAppellant in AC-G.R. CV No. 04398 [p.118, Rollo])
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FRATERNAL ORDER OF LEVIATHAN | LEVIATHAN SORORITAS

The petitioner SOLIDBANK forthwith interposed an appeal before the Intermediate Appellate
Court arguing inter alia that the properties were under custodia legis, hence the extrajudicial
foreclosure and the writ of possession were null and void, and that the right of NICOS to redeem
the auctioned properties had been acquired by SOLIDBANK.
On December 13, 1985, the Intermediate Appellate Court rendered its assailed decision "finding
no merit in this appeal and affirming in toto the appealed order of June 9, 1984, ruling that "the
properties in issue ... were not incustodia legis at the time of the extrajudicial foreclosure."
The petitioner moved for reconsideration, arguing that its writ of attachment over the properties
in question was duly registered in the Register of Deeds of Malolos, Bulacan, and that the right
to redeem said properties should be retained or given back to SOLIDBANK as attaching
creditor.
On March 13, 1986, the Intermediate Appellate Court promulgated its resolution denying the
motion for reconsideration for lack of merit.
Hence this petition for review, on the grounds that respondent appellate court decided the case
contrary to law and applicable decisions of the Supreme Court, and has departed from the
accepted and usual course of judicial proceedings as to call for an exercise of the power of
supervision of this Court.
The fundamental question herein, which is determinative of the other issues, is whether or not
the subject properties were under custodia legis by virtue of the prior annotation of a writ of
attachment in petitioner's favor at the time the properties were extrajudicially foreclosed.
We rule in the affirmative on the following grounds:
First of all, the records show (specifically Annexes "B," "B-1" to "B-3" of the petition) that on
September 1, 1982, the Sheriff of Branch XXIX of the Court of First Instance of Manila, sent
separate Notices of Levy Upon Realty to the Registrar of Deeds of Malolos Bulacan, requesting
him "to make the proper annotation in the books of your office," "by virtue of an order of
attachment issued in Civil Case No. 82-11611 dated August 30, 1982, ... upon the rights,
interests, and participation of which defendant NICOS Industrial Corporation in this case may
have in ... ."Transfer Certificate of Title No. T-210581 (T-32.505 M) and Transfer Certificate of
Title No. T-210580 (T-32,505 M).
Secondly, and more significant, the records clearly show (page 4, Annex "D" of petition) that the
Registrar of Deeds of Malolos, Bulacan, on September 7, 1982, inscribed and annotated the
foregoing Notices of Levy at the back of Transfer Certificate of Title Nos. 210580 and 210581, to
wit:
TRANSFER CERTIFICATE OF TITLE
No. T-210580 (T-32.504 M)

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Entry No. 79524 (M): Kind; NOTICE OF LEVY UPON REALTY, Executed in favor
of the CONSOLIDATED BANK AND TRUST CORPORATION (SOLIDBANK);Plaintiff; Conditions: Notice is hereby given that by virtue of an Order of
Attachment issued by the C.F.I. of Manila, Branch XXIX, in Civil Case No. 8211611, all the rights, interest and participation of NICOS INDUSTRIAL
CORPORATION-Defendant over the herein described lot is hereby levied upon
attached.; Date of Instrument: September 1, 1982; Date of Inscription:
September 7, 1982 at 2:35.
Meycauayan, Bulacan.
(SGD.) VIOLETA
GARCIA

R.

Branch
Deeds

LINCALLO
Register

of

TRANSFER CERTIFICATE OF TITLE


No. T-210581 (T-32.505 M)
Entry No. 79524 (M); Kind: NOTICE OF LEVY UPON REALTY, Executed in favor
of THE CONSOLIDATED BANK AND TRUST CORPORATION (SOLIDBANK)
Plaintiff; Conditions: Notice is hereby given that by virtue of an Order of
Attachment issued by the C.F.I. of Manila, Branch XXIX, in Civil Case No. 8211611, all the rights, interest and participation of NICOS INDUSTRIAL
CORPORATION Defendants over the herein described lot is hereby levied
upon attached.; Date of Instrument; September 1, 1982; Date of Inscription:
September 7, 1982 at 2:35.
Meycauayan, Bulacan.
(SGD.) VIOLETA R.
LINCALLO GARCIA
Branch
Regist
er
of
Deeds
(pp.
91-92,
Rollo)
Based on the foregoing evidence on record, the conclusion is clear that the disputed real
properties were undercustodia legis by virtue of a valid attachment at the time the same were
extrajudicially foreclosed by a third party mortgagee.
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FRATERNAL ORDER OF LEVIATHAN | LEVIATHAN SORORITAS

The rule is well settled that when a writ of attachment has been levied on real property or any
interest therein belonging to the judgment debtor, the levy thus effected creates a lien which
nothing can destroy but its dissolution (Chua Pua Hermanos v. Register of Deeds of Batangas,
50 Phil. 670; Government, et. al. v. Mercado, 67 Phil. 409).
The foregoing conclusion has two necessary consequences.
Firstly, it follows that the writ of possession issued by the Malolos court in favor of respondent
GOLDEN STAR is nun and void ab initio because it interfered with the jurisdiction of a coordinate and co-equal court (See De Leon v. Salvador, 36 SCRA 567):
While property or money is in custodia legis, the officer holding it is the mere
hand of the court, his possession is the possession of the court, and to interfere
with it is to invade the jurisdiction of the court itself (Gende v. Fleming, 371 N.E.
2d. 191; Bishop v. Atlantic Smokeless Coal Co., 88F. Supp. 27, 7 CJS 320).
Of equal importance is the fact that the transactions on which respondent GOLDEN STAR's
right to a writ of possession are based are highly irregular and questionable, to say the least,
considering the following circumstances:
On July 11, 1983, the Sheriff of Bulacan executed a certificate of sale over the two lots in
question in favor of UCPB.
On August 29, 1983, or about a month and a half later, UCPB sold its rights, interests and
participation over the lands to Manuel Go.
On that very same day, August 29, 1983, Manuel Go sold the same properties to respondent
GOLDEN STAR.
On October 5, 1983, respondent NICOS which had a one year right of redemption over the
lands in question executed a "Waiver of Right of Redemption in favor of respondent GOLDEN
STAR." The attempts to bring the disputed properties out of the petitioner's reach, inspite of the
attachment, are plain and apparent.
Based on the foregoing facts, we find that respondents NICOS and GOLDEN STAR conspired
to defeat petitioner's lien on the attached properties and to deny the latter its right of
redemption.
It appears that in issuing the writ of possession, the Malolos court relied on copies of documents
(which did not show the memorandum of encumbrance) submitted to it by GOLDEN STAR. It
was thus led into the error of ruling that the petitioner's attachment was not properly annotated.
Secondly, it likewise follows that the petitioner has acquired by operation of law the right of
redemption over the foreclosed properties pursuant to Sec. 6 of Act No. 3135, to wit:

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FRATERNAL ORDER OF LEVIATHAN | LEVIATHAN SORORITAS

In all such cases in which an extrajudicial sale is made ... any person having a
lien on the property subsequent to the mortgage ... may redeem the same at any
time within the term of one year from and after the date of sale.
It has been held that "an attaching creditor may succeed to the incidental rights to which the
debtor was entitled by reason of his ownership of the property, as for example, a right to redeem
from a prior mortgage" (Lyon v. Stanford, 5 Conn. 541, 7 SJS 505).
The fact that respondent NICOS executed a waiver of right of redemption in favor of respondent
GOLDEN STAR on October 5, 1983 is of no moment as by that time it had no more right which
it may waive in favor of another,
Finally, GOLDEN STAR argues that even if the attachment in issue was duly registered and the
petitioner has a right of redemption, the certificate of sale of the lands in question was registered
on September 6, 1983. It claims that the period to redeem therefore lapsed on September 6,
1984 without the petitioner bank ever exercising any right of redemption.
This argument is untenable. Well settled is the rule that the pendency of an action tolls the term
of the right of redemption. Specifically, tills Court in Ong Chua v. Carr, (53 Phil. 975, 983)
categorically ruled that:
xxx xxx xxx
... Neither was it error on the part of the court to hold that the pendency of the
action tolled the term for the right of redemption; that is an old and well
established rule.
This was reiterated in Fernandez v. Suplido (96 Phil. 541, 543), as follows:
xxx xxx xxx
... As pointed out in Ong Chua v. Carr, 53 Phil. 975, the pendency of an action
brought in good faith and relating to the validity of a sale with pacto de retro tolls
the term for the right of redemption. ...
Not only that. It has been held that "under a statute limiting the time for redemption ... the right
of redemption continues after perfection of an appeal ... until the decision of the appeal
(Philadelphia Mortgage Co. v. Gustus, 75 N.W. 1107).
In the case at bar, the petitioner commenced the instant action by way of an omnibus motion
before the Bulacan Court on November 21, 1983 or barely two months after the certificate of
sale was registered on September 6, 1983, well within the one year period of redemption.
WHEREFORE, IN VIEW OF THE FOREGOING, the petition is granted and judgment is hereby
rendered:

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FRATERNAL ORDER OF LEVIATHAN | LEVIATHAN SORORITAS

1) declaring as valid and binding the levy and attachment by the Manila Sheriff on the two
realties in question including the buildings and improvements thereon;
2) declaring that petitioner has acquired the right of redemption over the aforesaid properties
which it may exercise within one year from notice of entry of judgment in this case; and
3) declaring as null and void (a) the order of the Bulacan Court dated November 4, 1983
granting the writ of possession to respondent GOLDEN STAR, (b) its order of June 9, 1984
denying the petitioner's omnibus motion, and (c) the Waiver of Right of Redemption executed by
respondent NICOS in favor of respondent GOLDEN STAR.
16. Sps Yu v Ngo Yee Te G.R. No. 155868 (Feb. 6, 2007)
Before us is a Petition for Review on Certiorari under Rule 45 of the Rules of Court
assailing the March 21, 2001 Decision [1] of the Court of Appeals (CA) in CA-G.R. CV No.
52246[2] and its October 14, 2002 Resolution.[3]
The antecedent facts are not disputed.
Spouses Gregorio and Josefa Yu (Spouses Yu) purchased from Ngo Yet Te (Te) bars of
detergent soap worth P594,240.00, and issued to the latter three postdated checks[4] as
payment of the purchase price. When Te presented the checks at maturity for encashment, said
checks were returned dishonored and stamped ACCOUNT CLOSED.[5] Te demanded[6] payment
from Spouses Yu but the latter did not heed her demands. Acting through her son and attorneyin-fact, Charry Sy (Sy), Te filed with the Regional Trial Court (RTC), Branch 75, Valenzuela,
Metro Manila, a Complaint,[7] docketed as Civil Case No. 4061-V-93, for Collection of Sum of
Money and Damages with Prayer for Preliminary Attachment.
In support of her prayer for preliminary attachment, Te attached to her Complaint an
Affidavit executed by Sy that Spouses Yu were guilty of fraud in entering into the purchase
agreement for they never intended to pay the contract price, and that, based on reliable
information, they were about to move or dispose of their properties to defraud their creditors.[8]
Upon Tes posting of an attachment bond,[9] the RTC issued an Order of
Attachment/Levy[10] dated March 29, 1993 on the basis of which Sheriff Constancio Alimurung
(Sheriff Alimurung) of RTC, Branch 19, Cebu City levied and attached Spouses Yus properties
in Cebu City consisting of one parcel of land (known as Lot No. 11) [11] and four units of motor
vehicle, specifically, a Toyota Ford Fierra, a jeep, a Canter delivery van, and a passenger bus.[12]
On April 21, 1993, Spouses Yu filed an Answer [13] with counterclaim for damages arising
from the wrongful attachment of their properties, specifically, actual damages amounting
to P1,500.00 per day; moral damages, P1,000,000.00; and exemplary damages, P50,000.00.
They also sought payment of P120,000.00 as attorneys fees and P80,000.00 as litigation
expenses.[14] On the same date, Spouses Yu filed an Urgent Motion to Dissolve Writ of
Preliminary Attachment.[15] They also filed a Claim Against Surety Bond[16]in which they
demanded payment from Visayan Surety and Insurance Corporation (Visayan Surety), the
surety which issued the attachment bond, of the sum of P594,240.00, representing the
Page 66

FRATERNAL ORDER OF LEVIATHAN | LEVIATHAN SORORITAS

damages they allegedly sustained as a consequence of the wrongful attachment of their


properties.
While the RTC did not resolve the Claim Against Surety Bond, it issued an
Order[17] dated May 3, 1993, discharging from attachment the Toyota Ford Fierra, jeep, and
Canter delivery van on humanitarian grounds, but maintaining custody of Lot No. 11 and the
passenger bus. Spouses Yu filed a Motion for Reconsideration[18] which the RTC denied.[19]
Dissatisfied, they filed with the CA a Petition for Certiorari,[20] docketed as CA-G.R. SP
No. 31230, in which a Decision[21] was rendered on September 14, 1993, lifting the RTC Order
of Attachment on their remaining properties. It reads in part:
In the case before Us, the complaint and the accompanying affidavit in
support of the application for the writ only contains general averments. Neither
pleading states in particular how the fraud was committed or the badges of fraud
purportedly committed by the petitioners to establish that the latter never had an
intention to pay the obligation; neither is there a statement of the particular acts
committed to show that the petitioners are in fact disposing of their properties to
defraud creditors. x x x.
xxxx
Moreover, at the hearing on the motion to discharge the order of
attachment x x x petitioners presented evidence showing that private respondent
has been extending multi-million peso credit facilitiesto the petitioners for the past
seven years and that the latter have consistently settled their obligations. This
was not denied by private respondent. Neither does the private respondent
contest the petitioners allegations that they have been recently robbed of
properties of substantial value, hence their inability to pay on time. By the
respondent courts own pronouncements, it appears that the order of attachment
was upheld because of the admitted financial reverses the petitioner is
undergoing.
This is reversible error. Insolvency is not a ground for attachment especially
when defendant has not been shown to have committed any act intended to
defraud its creditors x x x.
For lack of factual basis to justify its issuance, the writ of preliminary attachment
issued by the respondent court was improvidently issued and should be
discharged.[22]
From said CA Decision, Te filed a Motion for Reconsideration but to no avail.[23]
Te filed with us a Petition for Review on Certiorari[24] but we denied the same in a
Resolution dated June 8, 1994 for having been filed late and for failure to show that a reversible
error was committed by the CA.[25] Entry of Judgment of our June 8, 1994 Resolution was made
on July 22, 1994.[26] Thus, the finding of the CA in its September 14, 1993 Decision in CA-G.R.
Page 67

FRATERNAL ORDER OF LEVIATHAN | LEVIATHAN SORORITAS

SP No. 31230 on the wrongfulness of the attachment/levy of the properties of Spouses Yu


became conclusive and binding.
However, on July 20, 1994, the RTC, apparently not informed of the SC Decision,
rendered a Decision, the dispositive portion of which reads:
WHEREFORE, premises considered, the Court finds that the plaintiff has
established a valid civil cause of action against the defendants, and therefore,
renders this judgment in favor of the plaintiff and against the defendants, and
hereby orders the following:
1) Defendants are hereby ordered or directed to pay the plaintiff the sum
of P549,404.00, with interest from the date of the filing of this case (March 3,
1993);
2) The Court, for reasons aforestated, hereby denies the grant of
damages to the plaintiff;
3) The Court hereby adjudicates a reasonable attorneys fees and
litigation expenses of P10,000.00 in favor of the plaintiff;
4) On the counterclaim, this Court declines to rule on this,
considering that the question of the attachment which allegedly gave rise
to the damages incurred by the defendants is being determined by the
Supreme Court.
SO ORDERED.[27] (Emphasis ours)
Spouses Yu filed with the RTC a Motion for Reconsideration [28] questioning the
disposition of their counterclaim. They also filed a Manifestation[29] informing the RTC ofour June
8, 1994 Resolution in G.R. No. 114700.
The RTC issued an Order dated August 9, 1994, which read:
xxxx
(2) With regard the counter claim filed by the defendants against the plaintiff for
the alleged improvident issuance of this Court thru its former Presiding Judge
(Honorable Emilio Leachon, Jr.), the same has been ruled with definiteness by
the Supreme Court that, indeed, the issuance by the Court of the writ of
preliminary attachment appears to have been improvidently done, but nowhere
in the decision of the Supreme Court and for that matter, the Court of
Appeals decision which was in effect sustained by the High Court, contains
any ruling or directive or imposition, of any damages to be paid by the
plaintiff to the defendants, in other words, both the High Court and the CA,
merely declared the previous issuance of the writ of attachment by this Court thru
its former presiding judge to be improvidently issued, but it did not award any
damages of any kind to the defendants, hence, unless the High Court or the CA
rules on this, this Court coud not grant any damages by virtue of the improvident
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FRATERNAL ORDER OF LEVIATHAN | LEVIATHAN SORORITAS

attachment made by this Court thru its former presiding judge, which was
claimed by the defendants in their counter claim.
(3) This Court hereby reiterates in toto its Decision in this case dated July 20,
1994. [30] (Emphasis ours)
The RTC also issued an Order dated December 2, 1994,[31] denying the Motion for
Reconsideration of Spouses Yu.[32]
In the same December 2, 1994 Order, the RTC granted two motions filed by Te, a Motion to
Correct and to Include Specific Amount for Interest and a Motion for Execution Pending Appeal.
[33]
The RTC also denied Spouses Yus Notice of Appeal[34] from the July 20, 1994 Decision
and August 9, 1994 Order of the RTC.
From said December 2, 1994 RTC Order, Spouses Yu filed another Notice of Appeal
the RTC also denied in an Order[36] dated January 5, 1995.

[35]

which

Spouses Yu filed with the CA a Petition [37] for Certiorari, Prohibition and Mandamus,
docketed as CA-G.R. SP No. 36205, questioning the denial of their Notices of Appeal; and
seeking the modification of the July 20, 1994 Decision and the issuance of a Writ of Execution.
The CA granted the Petition in a Decision[38] dated June 22, 1995.
Hence, Spouses Yu filed with the CA an appeal[39] docketed as CA-G.R. CV No. 52246,
questioning only that portion of the July 20, 1994 Decision where the RTC declined to rule on
their counterclaim for damages.[40] However, Spouses Yu did not dispute the specific monetary
awards granted to respondent Te; and therefore, the same have become final and executory.
Although in the herein assailed Decision[41] dated March 21, 2001, the CA affirmed in
toto the RTC Decision, it nonetheless made a ruling on the counterclaim of Spouses Yu by
declaring that the latter had failed to adduce sufficient evidence of their entitlement to damages.
Spouses Yu filed a Motion for Reconsideration[42] but the CA denied it in the herein
assailed Resolution[43] dated October 14, 2002.
Spouses Yu filed the present Petition raising the following issues:
I. Whether or not the appellate court erred in not holding that the writ of
attachment was procured in bad faith, after it was established by final judgment
that there was no true ground therefor.
II. Whether or not the appellate court erred in refusing to award actual, moral and
exemplary damages after it was established by final judgment that the writ of
attachment was procured with no true ground for its issuance.[44]
There is one preliminary matter to set straight before we resolve the foregoing issues.
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FRATERNAL ORDER OF LEVIATHAN | LEVIATHAN SORORITAS

According to respondent Te,[45] regardless of the evidence presented by Spouses Yu,


their counterclaim was correctly dismissed for failure to comply with the procedure laid down in
Section 20 of Rule 57. Te contends that as Visayan Surety was not notified of the counterclaim,
no judgment thereon could be validly rendered.
Such argument is not only flawed, it is also specious.
As stated earlier, Spouses Yu filed a Claim Against Surety Bond on the same day they
filed their Answer and Urgent Motion to Dissolve Writ of Preliminary Attachment. [46]Further, the
records reveal that on June 18, 1993, Spouses Yu filed with the RTC a Motion to Give Notice to
Surety.[47] The RTC granted the Motion in an Order [48] dated June 23, 1993. Accordingly, Visayan
Surety was notified of the pre-trial conference to apprise it of a pending claim against its
attachment bond. Visayan Surety received the notice onJuly 12, 1993 as shown by a registry
return receipt attached to the records.[49]
Moreover, even if it were true that Visayan Surety was left in the proceedings a quo,
such omission is not fatal to the cause of Spouses Yu. In Malayan Insurance Company, Inc. v.
Salas,[50] we held that x x x if the surety was not given notice when the claim for damages
against the principal in the replevin bond was heard, then as a matter of procedural due process
the surety is entitled to be heard when the judgment for damages against the principal is sought
to
be enforced against
the
suretys
replevin
bond.[51]This
remedy is applicable for the procedures governing claims for damages

on an attachment bond and on a replevin bond are the same.[52]


We now proceed to resolve the issues jointly.
Spouses Yu contend that they are entitled to their counterclaim for damages as a matter
of right in view of the finality of our June 8, 1994 Resolution in G.R. No. 114700 which affirmed
the finding of the CA in its September 14, 1993 Decision in CA-G.R. SP No. 31230 that
respondent Te had wrongfully caused the attachment of their properties. Citing Javellana v. D.O.
Plaza Enterprises, Inc.,[53] they argue that they should be awarded damages based solely on the
CA finding that the attachment was illegal for it already suggests that Te acted with malice when
she applied for attachment. And even if we were to assume that Te did not act with malice, still
she should be held liable for the aggravation she inflicted when she applied for attachment even
when she was clearly not entitled to it.[54]
That is a rather limited understanding of Javellana. The counterclaim disputed therein
was not for moral damages and therefore, there was no need to prove malice. As early as
in Lazatin v. Twao,[55] we laid down the rule that where there is wrongful attachment, the
attachment defendant may recover actual damages even without proof that the attachment
plaintiff acted in bad faith in obtaining the attachment. However, if it is alleged and established
that the attachment was not merely wrongful but also malicious, the attachment defendant may
recover moral damages and exemplary damages as well. [56] Either way, the wrongfulness of the
attachment does not warrant the automatic award of damages to the attachment defendant; the
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latter must first discharge the burden of proving the nature and extent of the loss or injury
incurred by reason of the wrongful attachment.[57]
In fine, the CA finding that the attachment of the properties of Spouses Yu was wrongful
did not relieve Spouses Yu of the burden of proving the factual basis of their counterclaim for
damages.
To merit an award of actual damages arising from a wrongful attachment, the attachment
defendant must prove, with the best evidence obtainable, the fact of loss or injury suffered and
the amount thereof.[58] Such loss or injury must be of the kind which is not only capable of proof
but must actually be proved with a reasonable degree of certainty. As to its amount, the same
must be measurable based on specific facts, and not on guesswork or speculation. [59] In
particular, if the claim for actual damages covers unrealized profits, the amount of unrealized
profits must be estalished and supported by independent evidence of the mean income of the
business undertaking interrupted by the illegal seizure. [60]
Spouses Yu insist that the evidence they presented met the foregoing standards. They
point to the lists of their daily net income from the operation of said passenger bus based on
used ticket stubs[61] issued to their passengers. They also cite unused ticket stubs as proof of
income foregone when the bus was wrongfully seized. [62] They further cite the unrebutted
testimony of Josefa Yu that, in the day-to-day operation of their passenger bus, they use up at
least three ticket stubs and earn a minimum daily income ofP1,500.00.[63]
In ruling that Spouses Yu failed to adduce sufficient evidence to support their
counterclaim for actual damages, the CA stated, thus:
In this case, the actual damages cannot be determined. Defendantappellant Josefa Yu testified on supposed lost profits without clear and
appreciable explanation. Despite her submission of the used and unused ticket
stubs, there was no evidence on the daily net income, the routes plied by the bus
and the average fares for each route. The submitted basis is too speculative and
conjectural. No reports regarding the average actual profits and other evidence of
profitability necessary to prove the amount of actual damages were presented.
Thus, the Court a quo did not err in not awarding damages in favor of
defendants-appellants.[64]
We usually defer to the expertise of the CA, especially when it concurs with the factual
findings of the RTC.[65] Indeed, findings of fact may be passed upon and reviewed by the
Supreme Court in the following instances: (1) when the conclusion is a finding grounded
entirely on speculations, surmises, or conjectures; (2) when the inference made is manifestly
mistaken, absurd, or impossible; (3) where there is a grave abuse of discretion in the
appreciation of facts; (4) when judgment is based on a misapprehension of facts; (5) when the
lower court, in making its findings, went beyond the issues of the case and such findings are
contrary to the admissions of both appellant and appellee; (6) when the factual findings of the
CA are contrary to those of the trial court; (7) when the findings of fact are themselves
conflicting; (8) when the findings of fact are conclusions made without a citation of specific
evidence on which they are based; (9) when the facts set forth in the petition as well as in the
petitioners main and reply briefs are not disputed by the respondents; (10) when the findings of
fact of the lower court are premised on the supposed absence of evidence and are contradicted
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by the evidence on record.[66] However, the present case does not fall under any of the
exceptions. We are in full accord with the CA that Spouses Yu failed to prove their counterclaim.
Spouses Yus claim for unrealized income of P1,500.00 per day was based on their computation
of their average daily income for the year 1992. Said computation in turn is based on the value
of three ticket stubs sold over only five separate days in 1992. [67] By no stretch of the
imagination can we consider ticket sales for five days sufficient evidence of the average daily
income of the passenger bus, much less its mean income. Not even the unrebutted testimony of
Josefa Yu can add credence to such evidence for the testimony itself lacks corroboration.[68]
Besides, based on the August 29, 1994 Manifestation[69] filed by Sheriff Alimurung, it would
appear that long before the passenger bus was placed under preliminary attachment in Civil
Case No. 4061-V-93, the same had been previously attached by the Sheriff of Mandaue City in
connection with another case and that it was placed in the Cebu Bonded Warehousing
Corporation, Cebu City. Thus, Spouses Yu cannot complain that they were unreasonably
deprived of the use of the passenger bus by reason of the subsequent wrongful attachment
issued in Civil Case No. 4061-V-93. Nor can they also attribute to the wrongful attachment their
failure to earn income or profit from the operation of the passenger bus.
Moreover, petitioners did not present evidence as to the damages they suffered by reason of the
wrongful attachment of Lot No. 11.
Nonetheless, we recognize that Spouses Yu suffered some form of pecuniary loss when
their properties were wrongfully seized, although the amount thereof cannot be definitively
ascertained. Hence, an award of temperate or moderate damages in the amount of P50,000.00
is in order.[70]
As to moral and exemplary damages, to merit an award thereof, it must be shown that
the wrongful attachment was obtained by the attachment plaintiff with malice or bad faith, such
as by appending a false affidavit to his application.[71]
Spouses Yu argue that malice attended the issuance of the attachment bond as shown
by the fact that Te deliberately appended to her application for preliminary attachment an
Affidavit where Sy perjured himself by stating that they had no intention to pay their obligations
even when he knew this to be untrue given that they had always paid their obligations; and by
accusing them of disposing of their properties to defraud their creditors even when he knew this
to be false, considering that the location of said properties was known to him.[72]
The testimony of petitioner Josefa Yu herself negates their claim for moral and exemplary
damages. On cross-examination she testified, thus:
Q: Did you ever deposit any amount at that time to fund the check?
A: We requested that it be replaced and staggered into smaller amounts.
COURT: Did you fund it or not?
Atty. Ferrer: The three checks involved?
Atty. Florido: Already answered. She said that they were not able to fund it.
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Atty. Ferrer: And as a matter of fact, you went to the bank to close your account?
A: We closed account with the bank because we transferred the account to
another bank.
Q: How much money did you transfer from that bank to which the three checks
were drawn to this new bank?
A: I dont know how much was there but we transferred already to the Solid
Bank.
Q: Who transferred?
A: My daughter, sir.[73] (Emphasis ours)

Based on the foregoing testimony, it is not difficult to understand why Te concluded that
Spouses Yu never intended to pay their obligation for they had available funds in their bank but
chose to transfer said funds instead of cover the checks they issued. Thus, we cannot attribute
malice nor bad faith to Te in applying for the attachment writ. We cannot hold her liable for moral
and exemplary damages.
As a rule, attorneys fees cannot be awarded when moral and exemplary damages are
not granted, the exception however is when a party incurred expenses to lift a wrongfully issued
writ of attachment.[74] Without a doubt, Spouses Yu waged a protracted legal battle to fight off
the illegal attachment of their properties and pursue their claims for damages. It is only just and
equitable that they be awarded reasonable attorneys fees in the amount of P30,000.00.
In sum, we affirm the dismissal of the counterclaim of petitioners Spouses Yu for actual,
moral, and exemplary damages. However, we grant them temperate damages and attorneys
fees.
WHEREFORE, the petition is partly GRANTED. The March 21, 2001 Decision of the
Court of Appeals is AFFIRMED with the MODIFICATION that petitioners counterclaim
is PARTLY GRANTED. Gregorio Yu and Josefa Yu are awarded P50,000.00 temperate
damages and P30,000.00 attorneys fees.
17. Leelin Marketing Corp v IES Agro Development Co. L-38971(April 28, 1983)
Is the counterbond put up by a surety company for the discharge of an attachment liable for the
money judgment in favor of the judgment creditor? That issue being purely legal, the then Court
of Appeals certified the appeal before it to this Tribunal.
This was an action originally for a sum of money filed by plaintiff Leelin Marketing Corp.
(LEELIN, for short) against defendants Mario Santos and Aurelio Cartano doing business under
the name and style of C & S Agro Development Company before the Court of First Instance of
Camarines Sur. LEELIN procured a writ of preliminary attachment upon its filing of a bond of
P12,962.17, the amount of its claim, by virtue of which the merchandise in the stores of
defendants in Tabaco and Legazpi, Albay, one panel car and one sedan car were attached.
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However, upon presentation by defendants of a counterbond executed by Belfast Surety and


Insurance Co., Inc., (the Surety, for brevity) in the amount of P20,000.00, and approved by the
Trial Court, the attachment was dissolved.
The counterbond provides as follows:
WHEREFORE, we Mario Santos, Aurelio Cartao and C & S Development Co.,
as principals and Belfast Surety & Insurance Co., Inc. of Manila, Philippines, as
surety in consideration of the lifting of said attachment hereby jointly and
severally bind ourselves in the sum of TWENTY THOUSAND (P20,000.00)
PESOS in favor of the plaintiff under the condition that we will pay all costs which
may be adjudged to plaintiff and all damages which it may sustain by reason of
the attachment, if the same shall finally be adjudged to have been wrongful and
without sufficient cause. 1 (Emphasis supplied )
Defendants having failed to appear for trial, a commissioner appointed by the Court received the
evidence. In due course, decision was rendered ordering defendants:
... to pay jointly and severally to the plaintiff, Leelin Marketing Corporation, the
amounts of P14,020.26 in full payment of their account together with their
corresponding interests as of January 15, 1969 with interest at the rate of 12%
per annum on the amount of P12,962.17 until fully paid; P3,505.07 as attorney's
fees, and Pl,312.25 to indemnify plaintiff of the expenses incurred by it in
connection with this case and the writ of preliminary attachment therein. Without
pronouncement as to costs.
The decision having become final and executory, a writ of execution was issued but the same
was returned unsatisfied. LEELIN moved to charge the Surety on its counterbond, setting the
motion for hearing. The Surety filed an opposition denying all liability for payment of the
monetary judgment.
Resolving the motion, the Trial Court "reluctantly" held that the Surety cannot be held liable for
the judgment under the terms and conditions set forth in the bond. Said the Court:
In the spirit prevailing in Section 20, Rule 57, Revised Rules of Court, we believe,
the plaintiff should have notified the surety (Belfast Surety & Insurance Co., Inc.)
when it presented its evidence during the trial in the spirit of fairness and to
comply with the strict requirements of due process. A day in Court must be
given the Surety before it should be adjudged or held liable under the
counterbond. This should have been done by the plaintiff either before trial or
before entry of the final judgment, i.e., not later than the date when the judgment
becomes final and executory. This is the rule and has been reiterated by our
Supreme Court in numerous cases. Plaintiff failed to observe or follow this
procedure; accordingly, we cannot hold the surety liable even if the terms and
conditions of the bond were differently words as quoted. ... 2
We reverse.
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There is an apparent confusion between a bond put up by an attaching creditor for


the issuance of writs of attachment covered by Section 4 of Rule 57 of the Rules of Court, and
the counterbond given by the adverse party for the discharge of writs of attachment already
issued covered by Section 12 of the same Rule 57. It is the bond posted by the attaching
creditor under Section 4, Rule 57, in an amount not exceeding its claim, that answers for costs
and all damages which may be sustained by the adverse party by reason of the attachment, if
the Court shall finally adjudge that the attaching creditor was not entitled thereto. Explicitly,
Section 4, Rule 57 provides:
Sec. 4. Condition of applicant's bond. The party applying for the order must
give a bond executed to the adverse party in an amount to be fixed by the judge,
not exceeding the applicant's claim, conditioned that the latter will pay all the
costs which may be adjudged to the adverse party and all damages which he
may sustain by reason of the attachment, if the court shall finally adjudge that the
applicant was nnot entitled thereto.
And, it is the claim for damages on account of illegal attachment that may be awarded only after
the proper hearing and which shall be included in the final judgment. That claim must be filed
before the trial or before appeal is perfected or before the judgment becomes executory, with
due notice to the attaching creditor and his surety, pursuant to Section 20 of Rule 57 of the
Rules of Court, reading:
Sec. 20. Claim for damages on account of illegal attachment. If the judgment
on the action be in favor of the party against whom attachment was issued, he
may recover, upon the bond given or deposit made by the attaching creditor, any
damages resulting from the attachment. Such damages may be awarded only
upon application and after proper hearing, and shall be included in the final
judgment. The application must be filed before the trial or before appeal is
perfected or before the judgment becomes executory, with due notice to the
attaching creditor and his surety or sureties, setting forth the facts showing his
right to damages and the amount thereof.
xxx xxx xxx
On the other hand, a counterbond under Section 12 of Rule 57 of the Rules of Court is filed by
the party whose property has been attached, equal to the value of the property attached, in
order to secure the payment of any judgment that the attaching creditor may recover in the
action. To discharge attachment upon said counterbond, said Rule explicitly provides:
Sec. 12. Discharge of attachment upon giving counterbond. At any time after
an order of attachment has been granted, the party whose property has been
attached, or the person appearing on his behalf, may, upon reasonable notice to
the applicant, apply to the judge who granted the order, or to the judge of the
court in which the action is pending, for an order discharging the attachment
wholly or in part on the security given. The judge shall, after hearing, order the
discharge of the attachment if a cash deposit is made, or a counterbond
executed to the attaching creditor is filed, on behalf of the adverse party, with the
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clerk-or judge of the court where the application is made, in an amount equal to
the value of the property attached as determined by the judge, to secure the
payment of any judgment that the attaching creditor may recover in the action.
Upon the firing of such counter-bond, copy thereof shall forthwith be served on
the attaching creditor or his lawyer. Upon the discharge of an attachment in
accordance with the provisions of this section the property attached, or the
proceeds of any sale thereof, shall be delivered to the party making the deposit
or giving the counter-bond, or the person appearing on his behalf, the deposit or
counter-bond aforesaid standing in place of the property so released. Should
such counter-bond for any reason be found to be, or become, insufficient, and
the party furnishing the same fail to file an additional counter-bond, the attaching
creditor may apply for a new order of attachment. (Emphasis supplied)
And, when execution against the principal debtor is returned unsatisfied, Section 17 of Rule 57
allows recovery upon the bond as follows:
Sec. 17. When execution returned unsatisfied, recovery had upon bond. If the
execution be returned unsatisfied in whole or in part, the surety or sureties on
any counterbond given pursuant to the provisions of this rule to secure the
payment of the judgment shall become charged on such counter- bond, and
bound to pay to the judgment creditor upon demand, the amount due under the
judgment which amount may be recovered from such surety or sureties after
notice and summary hearing in the same action. (Emphasis supplied)
It is thus clear that the cases cited by the Surety requiring notice of hearing before the finality of
the judgment in regards the claim of damages have no applicability in the case at bar. The
application by the Trial Court of Section 20, Rule 57, is likewise misplaced.
Under Section 17 of Rule 57, in order that the judgment creditor may recover from the Surety on
the counterbond, it is necessary (1) that execution be first issued against the principal debtor
and that such execution was returned unsatisfied in whole or in part; (2). that the creditor made
a demand upon the surety for the satisfaction of the judgment; and (3) the surety be given
notice and a summary hearing in the same action as to his hability for the judgment under his
counterbond. 3
In the case at bar, we find that LEELIN had substantially complied with the foregoing requisites.
A writ of execution had been issued and had been returned unsatisfied. It had filed a motion to
charge the Surety on its counterbond. A notice for the hearing of the motion had been served on
the Surety and summary hearing was held.
It must be conceded that there is nothing in the language or terms of the bond executed by the
Surety under which it could be held liable for the amount of the judgment. Admittedly, too,
LEELIN did not contest the words of the bond but remained silent with respect thereto at the
time it was presented. As good faith is presumed, we assume that the parties had committed a
mutual mistake believing that its terms correctly reflected the purpose for which it had been
filed, that is, to secure the discharge of the writ of attachment. Mutual mistake and good faith
having attended the execution of the bond, the reformation of the instrument is in order. 4
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The Surety should be held estopped from denying that the purpose and intent of the bond was
for the lifting of the attachment for that would be allowing it to enrich itself by its own bad
faith. 5 By the very wording of its bond, the same was issued "in consideration of the lifting of
(the) attachment".
A modification of the bond is declared and the provision of section 12 of Rule 57 of the Rules of
Court considered read into and embodied in the bond in question. It is not the terms of the bond
that control but the provisions of the law requiring the filing of such bond. In statutory or judicial
bonds, the rule is "that the statute under which the bond is given shall be read into and
considered as a part thereof, and that whatever conditions contrary to law that may be
embodied therein will be ruled out and treated as surplusage, the theory being that when a
contract of suretyship is entered into pursuant to a statute, the parties are deemed to have had
the law in contemplation when the contract was executed." 6
WHEREFORE, the Order appealed from is reversed, and the Court of origin is hereby ordered
to proceed with the execution against Belfast Surety and Insurance Co., Inc., to the extent of the
amount of the counterbond, with costs against said surety company.

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