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SPOUSES ELISEO F. ESTARES and ROSENDA P. ESTARES, petitioners,


vs. COURT OF APPEALS, HON. DAMASO HERRERA as Presiding Judge of the
RTC, Branch 24, Bian, Laguna PROMINENT LENDING & CREDIT CORPORATION,
PROVINCIAL
SHERIFF
OF
LAGUNA
and
Sheriff
IV
ARNEL
G.
MAGAT, respondents.
DECISION

AUSTRIA-MARTINEZ, J.:
Before us is a petition for certiorari and prohibition under Rule 65 of the Rules of Court
which assails the Decision[1] and Resolution of the Court of Appeals dated April 17, 2000 and July
7, 2000, respectively, in CA-G.R. SP No. 56123.
The factual background of the case is as follows:
On May 21, 1999, petitioner Spouses Eliseo F. Estares and Rosenda P. Estares (Estares
spouses for brevity) filed a complaint for Damages and Preliminary Prohibitory Injunction against
private respondent Prominent Lending & Credit Corporation (PLCC) before the Regional Trial
Court, Branch 24, Bian, Laguna, docketed as Civil Case No. B-5476.[2]
They alleged that: on January 12, 1998, they obtained a loan from PLCC for P800,000.00
secured by a real estate mortgage over a 363-square meter parcel of land with improvements
situated in the Municipality of Santa Rosa, Laguna, covered by Transfer Certificate of Title (TCT)
No. 99261; the promissory note and the real estate mortgage were falsified because they affixed
their signatures on two blank documents; the monthly interest of 3.5% and 3% penalty on each
delayed monthly interest are different from the 18% interest per annum to which they agreed to;
for failure to pay their obligation despite repeated demands, PLCC filed a petition for
extrajudicial foreclosure with the Office of the Provincial Sheriff of Laguna; and on June 8, 1999,
the Sheriff sent a Notice of Extrajudicial Sale to the Estares spouses.
Accordingly, the Estares spouses sought to declare as null and void the promissory note
and the real estate mortgage for not reflecting their true agreement. In the interim, they prayed
for a temporary restraining order (TRO) and/or writ of preliminary injunction to enjoin PLCC from
taking possession of the mortgaged property and proceeding with the extrajudicial sale
scheduled on July 13, 1999 at 10:00 a.m.
On June 30, 1999, the Estares spouses amended their complaint to include the Register of
Deeds of Laguna-Calamba Branch, the Provincial Sheriff of Laguna and Sheriff IV Arnel G. Magat
as party-defendants.[3]
On July 12, 1999, the trial court issued a TRO in favor of the Estares spouses. [4] The parties
subsequently agreed to maintain the status quo until August 20, 1999.[5]
On August 6, 1999, PLCC filed its Answer with Counterclaim alleging that the Estares
spouses were duly apprised of the terms and conditions of the loan, including the rate of
interest, penalties and other charges, in accordance with the Truth in Lending Act or Republic Act
No. 3765. It opposed the prayer for restraining order on the ground that there is no factual and
legal basis for its issuance since the Estares spouses fear of eviction is false. [6]

At the hearing on the Estares spouses application for a writ of preliminary injunction,
Rosenda P. Estares (Rosenda for brevity) testified that: the loan proceeds of P637,000.00,
received on January 12, 1998, was used in the improvement and renovation of their boarding
house; they did not question PLCC in writing why they only received P637,000.00; when they
received the Statement of Account, they did not question the figures appearing therein; when
they received PLCCs demand letter, they went to the formers office not to question the loans
terms and conditions but merely to request for extension of three months to pay their obligation.
They adduced in evidence the promissory note, real estate mortgage, statement of account,
petition for extrajudicial foreclosure and the notice of extrajudicial sale. The Estares spouses
then rested their case.
In opposition to the application for a writ of preliminary injunction, PLCC presented its
manager, Rey Arambulo, who testified that the Estares spouses were duly apprised of the terms
and conditions of the loan, including the rate of interest, penalties and other charges, in
accordance with the Truth in Lending Act or Republic Act No. 3765. It submitted the same
evidence offered by the Estares spouses, along with the latters credit application, the credit
investigation report, the receipts PLCC issued, and the disclosure statement on the loan.
On August 18, 1999, the trial court denied the Estares spouses application for a writ of
preliminary injunction, holding that the latter failed to establish the facts necessary for an
injunction to issue.[7]
On August 31, 1999, the Estares spouses filed a motion for reconsideration. [8] During the
hearing on the motion for reconsideration on September 17, 1999, Eliseo P. Estares (Eliseo for
brevity) moved that he be allowed to testify on the circumstances of the loan but the trial court
denied it. The trial court deemed it best that he be presented during the trial on the merits. [9] On
October 1, 1999, the trial court denied the motion for reconsideration. [10]
On December 7, 1999, the Estares spouses filed a petition for certiorari and prohibition in
the Court of Appeals ascribing grave abuse of discretion upon the trial court in issuing the Orders
dated August 18, 1999 and October 1, 1999 which denied their prayer for a writ of preliminary
injunction and motion for reconsideration, respectively.[11]
On December 14, 1999, without giving due course to the petition, the Court of Appeals
issued a Resolution requiring the PLCC to file its comment to the petition. The action on the
Estares spouses application for a TRO and writ of preliminary injunction was deferred and held in
abeyance until after receipt of the comment.[12]
With no restraining order enjoining him, Sheriff Magat conducted an auction sale on
January 5, 2000, with PLCC as highest bidder for P1,500,000.00.[13]
In its Comment dated January 15, 2000, PLCC claimed that the trial court did not commit
grave abuse of discretion in denying the Estares spouses application for a writ of preliminary
injunction since the latter failed to prove their right to injunctive relief and the action sought to
be enjoined has been rendered moot by the auction sale conducted on January 5, 2000.[14]
On April 17, 2000, the Court of Appeals dismissed the petition for lack of merit, holding
that the trial court did not abuse its discretion in denying the Estares spouses application for a
writ of preliminary injunction since the latter failed to prove the requisites for the issuance
thereof. [15]

The Estares spouses then moved for reconsideration of the April 17, 2000 decision. In
addition, they prayed that the auction sale on January 5, 2000, as well as the minutes of auction
sale and certificate of sale, be declared null and void not only because there was no publication
of the notice of auction sale but the auction sale preempted the Court of Appeals in the
disposition of the case and was conducted in defiance of the Resolution dated December 14,
1999.[16]
On July 7, 2000, the Court of Appeals denied the Estares spouses motion for
reconsideration.[17]
On September 16, 2000, the Estares spouses filed the present petition for certiorari and
prohibition anchored on the following grounds:
I
THE COURT OF APPEALS ERRED IN NOT GRANTING A WRIT OF PRELIMINARY INJUNCTION TO
PREVENT RESPONDENTS PLCC AND PROVINCIAL SHERIFF OF LAGUNA/ SHERIFF ARNEL MAGAT
FROM FORECLOSING THE MORTGAGE AND CONDUCTING THE AUCTION SALE OF PETITIONERS
PROPERTY AND/OR IN UPHOLDING THE ORDER DATED AUGUST 18, 1999 OF JUDGE DAMASO A.
HERRERA, RTC-BRANCH 24, LAGUNA.
II
THE COURT OF APPEALS ERRED IN NOT DECLARING AS NULL AND VOID AND/OR SETTING ASIDE
THE AUCTION SALE OF THE PETITIONERS HOUSE AND LOT CONDUCTED BY SHERIFF ARNEL
MAGAT ON JANUARY 5, 2000 FOR LACK OF RE-PUBLICATION OF NOTICE OF EXTRA-JUDICIAL SALE,
FOR PRE-EMPTING THE COURT OF APPEALS IN DECIDING THE CASE, AND FOR RENDERING THE
PETITION IN CA-G.R. SP NO. 56123 MOOT AND ACADEMIC.
III
THE COURT OF APPEALS ERRED IN NOT DECLARING DENIAL OF DUE PROCESS TO OVERSEAS
CONTRACT WORKER ELISEO ESTARES WHEN JUDGE DAMASO A. HERRERA REFUSED TO ALLOW
HIM TO TESTIFY ON THE CIRCUMSTANCES OF THEIR LOAN WITH PLCC. [18]
Anent the first ground, the Estares spouses insist that they firmly established their right to
injunctive relief. They claim that the promissory note, credit application, disbursement voucher,
disclosure statement and real estate mortgage are falsified; the promissory note is not reflective
of the true amount of the loan, as well as the term, interest and charges thereon;
the P126,362.28 represent additional charges, not as part of the loan, that were not agreed upon
prior to or before the consummation of the loan; and the amount of the loan and rate of interest
stated in the falsified promissory note are fictitious or simulated.

contend that Eliseo, an overseas contract worker, purposely took leave from work in the Middle
East to testify on the circumstances of the loan and his testimony was material to clarify the
matter of notarization of the real estate mortgage and show that said document was falsified.
On October 2, 2000, the Court granted the TRO prayed for in the petition and required the
respondents to comment thereon.[19]
In its Comment dated October 25, 2000, PLCC asserts that the petition should be
dismissed for being deficient on both procedural and substantive aspects.
As to the procedural aspect, PLCC posits that the petition is filed beyond the sixty-day
period required by the rules and therefore filed out of time. PLCC further claims that the
verification and certification of non-forum shopping are both insufficient. The verification speaks
of a Pre-Trial Brief while the certification of non-forum shopping was executed only by Rosenda.
As to the substance of the petition, PLCC argues that the Estares spouses failed to
establish their right to injunctive relief; the validity of the January 5, 2000 auction sale was
brought only in the motion for reconsideration which is improper because it is a factual issue
best addressed to the trial court; Sheriff Magat did not preempt the Court of Appeals in deciding
CA-G.R. SP No. 56123 when he conducted the auction sale on January 5, 2000 because the
Resolution dated December 14, 1999 of the said court did not suspend or restrain the sheriff
from conducting the foreclosure sale; Eliseo was not denied due process because he sought to
testify on factual matters in the hearing on their motion for reconsideration which is improper as
factual matters are best brought and proved during the trial on the merits of the case.
The Court gave due course to the petition and required the parties to submit their
respective memoranda[20] which they complied with.[21]
Before ruling on the issues raised in the petition, it is necessary to dwell on the procedural
aspects of the case.
From a reading of the grounds on which the instant petition for certiorari and prohibition
are based, it is readily apparent that the Estares spouses are appealing a decision of the Court of
Appeals by resorting to Rule 65, when their remedy should be based on Rule 45 of the Rules of
Court. A petition for review under Rule 45 is not similar to a petition for certiorari under Rule 65.
Under Rule 45, decisions, final orders or resolutions of the Court of Appeals in any
case, i.e., regardless of the nature of the action or proceedings involved, may be appealed to us
by filing a petition for review on certiorari, which would be but a continuation of the appellate
process over the original case.[22] In contrast, a special civil action under Rule 65 is an
independent action based on the specific grounds therein provided and proper only if there is no
appeal or any plain, speedy and adequate remedy in the ordinary course of law.
[23]
Thus, certiorari cannot be availed of as a substitute for the lost remedy of an ordinary appeal.
[24]

With respect to the second ground, they maintain that the auction sale conducted on
January 5, 2000 should be nullified because it lacked republication of the notice of auction sale
and it was conducted in violation of the Court of Appeals Resolution dated December 14, 1999
which enjoined the parties to maintain the status quo pending the filing by the respondents of
their Comment to the petition. They argue that PLCC and Sheriff Magat preempted the Court of
Appeals from resolving their petition by conducting the auction sale on January 5, 2000.
As to the third ground, they aver that Eliseo was denied due process when the trial court
refused to allow him to testify during the hearing on the motion for reconsideration. They

By their own account, the Estares spouses received the Order dated July 7, 2000 denying
their motion for reconsideration from the Court of Appeals on July 18, 2000. Instead of filing a
petition for review with this Court within 15 days thereof or until August 2, 2000, they filed this
special civil action by registered mail on September 16, 2000 or 60 days from receipt of the
Order dated July 7, 2000. By then, they had already lost the remedy of appeal. By availing of
a wrong remedy, the instant petition should have merited outright dismissal.

Concerning the verification, we note that Rosenda stated therein that she caused the
preparation of the foregoing Pre-Trial Brief but we consider the same as a slight error and honest
mistake in the preparation of the petition. In any event, the purpose of requiring a verification is
simply to secure an assurance that the allegations of the petition have been made in good faith;
or are true and correct, not merely speculative. [25] This requirement is simply a condition
affecting the form of pleadings, and noncompliance therewith does not necessarily render it
fatally defective.[26] Indeed, verification is only a formal, not a jurisdictional, requirement. [27]
With regard to the certification of non-forum shopping signed only by Rosenda, the rule is
that the certificate of non-forum shopping must be signed by all the petitioners or plaintiffs in a
case and the signing by only one of them is insufficient because a lone signatory cannot be
presumed to have personal knowledge of the matters required to be stated in the attestation. [28]
However, the Court has also stressed that the rules on forum shopping, which were
designed to promote and facilitate the orderly administration of justice, should not be
interpreted with such absolute literalness as to subvert its own ultimate and legitimate objective
which is simply to prohibit and penalize the evils of forumshopping. [29] The fact that the rules on
forumshopping require strict compliance merely underscores its mandatory nature that it cannot
be dispensed with or its requirements altogether disregarded, but it does not thereby interdict
substantial compliance with its provisions under justifiable circumstances.[30]
We find that the execution by Rosenda of the certificate of non-forum shopping in behalf of
her co-petitioner and husband, Eliseo, constitutes substantial compliance with the Rules. After all
they share a common interest in the property involved since it is conjugal property, and the
petition questioning the propriety of the decision of the Court of Appeals originated from an
action brought by the spouses, and is clearly intended for the benefit of the conjugal
partnership. Considering that the husband was at that time an overseas contract worker working
in Algeria, whereas the petition was prepared in Sta. Rosa, Laguna, a rigid application of the
rules on forumshopping that would disauthorize the wifes signing the certification in her behalf
and that of her husband is too harsh and clearly uncalled for.[31]
In any event, we find that this petition must still be dismissed as the Court of Appeals did
not commit any grave abuse of discretion amounting to want or excess of jurisdiction in
dismissing the petition.
Generally, injunction is a preservative remedy for the protection of substantive rights or
interests. It is not a cause of action in itself but merely a provisional remedy, an adjunct to a
main suit. The controlling reason for the existence of the judicial power to issue the writ is that
the court may thereby prevent a threatened or continuous irremediable injury to some of the
parties before their claims can be thoroughly investigated and advisedly adjudicated. It is to be
resorted to only when there is a pressing necessity to avoid injurious consequences which
cannot be remedied under any standard of compensation. The application of the writ rests upon
an alleged existence of an emergency or of a special reason for such an order before the case
can be regularly heard, and the essential conditions for granting such temporary injunctive relief
are that the complaint alleges facts which appear to be sufficient to constitute a cause of action
for injunction and that on the entire showing from both sides, it appears, in view of all the
circumstances, that the injunction is reasonably necessary to protect the legal rights of plaintiff
pending the litigation.[32]
The Estares spouses had the burden in the trial court to establish the following
requirements for them to be entitled to injunctive relief: (a) the existence of their right to be
protected; and (b) that the acts against which the injunction is to be directed are violative of
such right.[33] To be entitled to an injunctive writ, the petitioner must show, inter alia, the
existence of a clear and unmistakable right and an urgent and paramount necessity for the writ

to prevent serious damage.[34] Thus, an injunctive remedy may only be resorted to when there is
a pressing necessity to avoid injurious consequences which cannot be remedied under any
standard compensation.[35]
In the present case, the Estares spouses failed to establish their right to injunctive relief.
They do not deny that they are indebted to PLCC but only question the amount thereof. Their
property is by their own choice encumbered by a real estate mortgage. Upon the nonpayment of
the loan, which was secured by the mortgage, the mortgaged property is properly subject to a
foreclosure sale.
Rosendas testimony sealed the fate of the necessity of the writ of preliminary injunction.
She admitted that: they did not question PLCC in writing why they only received P637,000.00;
they did not question the figures appearing in the Statement of Account when they received it;
and, when they received PLCCs demand letter, they went to the formers office not to question
the loans terms and conditions but merely to request for extension of three months to pay their
obligation.[36] She acknowledged that they only raised the alleged discrepancy of the amount
loaned and the amount received, as well as the blank documents which they allegedly signed,
after PLCC initiated the foreclosure proceedings.[37]
It must be stressed that the assessment and evaluation of evidence in the issuance of the
writ of preliminary injunction involve findings of facts ordinarily left to the trial court for its
conclusive determination.[38] As such, a trial courts decision to grant or to deny injunctive relief
will not be set aside on appeal unless the court abused its discretion. In granting or denying
injunctive relief, a court abuses its discretion when it lacks jurisdiction, fails to consider and
make a record of the factors relevant to its determination, relies on clearly erroneous factual
findings, considers clearly irrelevant or improper factors, clearly gives too much weight to one
factor, relies on erroneous conclusions of law or equity, or misapplies its factual or legal
conclusions.[39]
In the present case, the Estares spouses clearly failed to prove that they have a right
protected and that the acts against which the writ is to be directed are violative of said right.
Hence, the Court of Appeals did not commit a grave abuse of its discretion amounting to excess
or lack of jurisdiction in dismissing petitioners petition for certiorari.
There is likewise no merit to the claim that the Court of Appeals gravely abused its
discretion when it denied the prayer to nullify the auction sale held on January 5, 2000 for lack of
republication of the notice of auction sale and for preempting the Court of Appeals in deciding
the case and rendering the petition in CA-G.R. SP No. 56123 moot and academic.
The absence of republication of the notice of auction sale is a factual matter which by the
weight of judicial precedents cannot be inquired into by this Court in a petition for certiorari. It is
best addressed to the attention of the trial court and taken up in the trial of the case,
necessitating presentation of evidence by both parties. The propriety of the auction sale is a
matter which the trial court is in the best position to determine. For it is basic
that certiorari under Rule 65 is a remedy narrow in scope and inflexible in character. It is not a
general utility tool in the legal workshop. [40] It offers only a limited form of review. Its principal
function is to keep an inferior tribunal within its jurisdiction. [41] It can be invoked only for an error
of jurisdiction, that is, one where the act complained of was issued by the court, officer or a
quasi-judicial body without or in excess of jurisdiction, or with grave abuse of discretion which is
tantamount to lack or in excess of jurisdiction, [42] not to be used for any other purpose, [43] such as
to cure errors in proceedings or to correct erroneous conclusions of law or fact. [44] Again suffice it
to say that the only issue settled here is the propriety of the non-issuance of a writ of preliminary
injunction pending the final outcome of the case.

As to petitioners assertion that the Court of Appeals in its Resolution dated December 14,
1999 impliedly directed the parties to maintain the status quo, we deemed it worthy to quote in
full the said Resolution, thus:
Without necessarily giving due course to the petition, the Court requires the respondents to file
their comment (not motion to dismiss) within ten (10) days from notice, which may be treated as
their Answer should the petition be given due course.
Respondents are likewise ordered to show cause in the same Comment why a temporary
restraining order and writ of preliminary injunction should not be issued.
The action of the petitioners application for a temporary restraining order and writ of preliminary
injunction is deferred and held in abeyance until after receipt of respondents Comment. [45]
Clearly, the Court of Appeals did not give due course to the petition but merely required PLCC to
comment thereon. The Court of Appeals did not enjoin the conduct of the auction sale. In any
case, the necessity for the issuance of the writ of injunction has been found wanting.
Lastly, the Estares spouses claim that Eliseo was denied due process when the trial court
refused to allow him to testify during hearing on the motion for reconsideration deserves scant
consideration.
It must be remembered that a writ of preliminary injunction is generally based solely on
initial and incomplete evidence. The evidence submitted during the hearing on an application for
a writ of preliminary injunction is not conclusive or complete for only a sampling is needed to
give the trial court an idea of the justification for the preliminary injunction pending the decision
of the case on the merits.[46]
We note that it was the Estares spouses choice to present only Rosenda to testify on the
circumstances of the loan at the hearing on their application for a writ of preliminary injunction
and they cannot assert that Eliseo should have been accorded that opportunity during the
hearing on the motion for reconsideration. The essence of due process is found in the
reasonable opportunity to be heard and submit any evidence one may have in support of one's
defense. What the law proscribes is the lack ofopportunity to be heard.[47] As long as a party is
given the opportunity to defend his interests in due course, he would have no reason to
complain, for it is this opportunity to be heard that makes up the essence of due process.
[48]
Eliseo cannot complain that he was deprived of due process since he is given the full
opportunity to testify on the circumstances of the loan during the trial of the main case. [49]
All told, no grave abuse of discretion could therefore be imputed to the Court of Appeals in
dismissing petitioners petition for certiorari with prohibition, for lack of merit.
WHEREFORE, the instant petition for certiorari and prohibition is DISMISSED. The assailed
Decision and Resolution of the Court of Appeals dated April 17, 2000 and July 7, 2000,
respectively, in CA-G.R. SP No. 56123 are AFFIRMED in all respects. The temporary restraining
order issued by this Court is lifted. Costs against petitioners.
SO ORDERED.

2. BF HOMES, INC. and THEPHILIPPINE WATERWORKS AND CONSTRUCTION CORP., vs


MANILA ELECTRIC COMPANY,
LEONARDO-DE CASTRO, J.:
This Petition for Review on Certiorari under Rule 45 of the Rules of Court assails the
Decision[1] dated October 27, 2005 of the Court of Appeals in CA-G.R. SP No. 82826, nullifying
and setting aside (1) the Order [2] dated November 21, 2003 of the Regional Trial Court (RTC),
Branch 202 of Las Pias City, in Civil Case No. 03-0151, thereby dissolving the writ of injunction
against respondent Manila Electric Company (MERALCO); and (2) the Resolution [3] dated
February 7, 2006 of the Court of Appeals denying the Motion for Reconsideration of petitioners
BF Homes, Inc. (BF Homes) and Philippine Waterworks and Construction Corporation (PWCC).
MERALCO is a corporation duly organized and existing under Philippine laws engaged
in the distribution and sale of electric power in Metro Manila. On the other hand, BF Homes and
PWCC are owners and operators of waterworks systems delivering water to over 12,000
households and commercial buildings in BF Homes subdivisions in Paraaque City, Las Pias City,
Caloocan City, and Quezon City. The water distributed in the waterworks systems owned and
operated by BF Homes and PWCC is drawn from deep wells using pumps run by electricity
supplied by MERALCO.
On June 23, 2003, BF Homes and PWCC filed a Petition [With Prayer for the Issuance of
Writ of Preliminary Injunction and for the Immediate Issuance of Restraining Order] against
MERALCO before the RTC, docketed as Civil Case No. 03-0151.

In their Petition before the RTC, BF Homes and PWCC invoked their right to refund
based on the ruling of this Court inRepublic v. Manila Electric Company[4]:

7. It is of judicial notice that on November 15, 2002, in G.R. No.


141314, entitled Republic of the Philippines vs. Manila Electric Company,
and G.R. No. 141369, entitled Lawyers Against Monopoly and Poverty
(LAMP) et al. vs. Manila Electric Compnay (MERALCO), (both cases shall
hereafter be referred to as MERALCO Refund cases, for brevity), the
Supreme Court ordered MERALCO to refund its customers, which shall be
credited against the customers future consumption, the excess average
amount of P0.167 per kilowatt hour starting with the customers billing
cycles beginning February 1998. The dispositive portion of the Supreme
Court Decision in the MERALCO Refund cases reads:
WHEREFORE, in view of the foregoing, the
instant petitions are GRANTED and the decision of the
Court of Appeals in C.A. G.R. SP No. 46888 is
REVERSED. Respondent MERALCO is authorized to
adopt a rate adjustment in the amount of P0.017
kilowatthour, effective with respect to MERALCOs billing
cycles beginning February 1994. Further, in accordance
with the decision of the ERB dated February 16, 1998,
the excess average amount of P0.167 per kilowatt hour
starting with the applicants billing cycles beginning
February 1998 is ordered to be refunded to MERALCOs
customers or correspondingly credited in their favor for
future consumption.
x x x x.
8. The Motion for Reconsideration filed by MERALCO in the
MERALCO Refund cases was DENIED WITH FINALITY (the uppercase letters
were used by the Supreme Court) in the Resolution of the Supreme Court
dated April 9, 2003.
9. The amount that MERALCO was mandated to refund to [BF
Homes and PWCC] pursuant to the MERALCO Refund cases is in the amount
of P11,834,570.91.[5]

BF Homes and PWCC then alleged in their RTC Petition that:

10. On May 20, 2003, without giving any notice whatsoever,


MERALCO disconnected electric supply to [BF Homes and PWCCs] sixteen
(16) water pumps located in BF Homes in Paraaque, Caloocan, and Quezon
City, which thus disrupted water supply in those areas.
11. On June 4, 2003, [BF Homes and PWCC] received by facsimile
transmission a letter from MERALCO, x x x, in which MERALCO demanded to
[BF Homes and PWCC] the payment of electric bills amounting
to P4,717,768.15.
12. [MERALCO] replied in a letter dated June 11, 2003, x x x,
requesting MERALCO to apply the P4,717,768.15 electric bill against
theP11,834,570.91 that MERALCO was ordered to refund to [BF Homes and
PWCC] pursuant to the MERALCO Refund cases. x x x
13. Displaying the arrogance that has become its distinction,
MERALCO, in its letter dated June 16, 2003, x x x, denied [BF Homes and
PWCCs] request alleging that it has not yet come up with the schedule for
the refund of large amounts, such as those of [BF Homes and PWCC].

14. Even while MERALCO was serving its reply-letter to [BF Homes
and PWCC], MERALCO, again, without giving any notice, cut off power
supply to [BF Homes and PWCCs] five (5) water pumps located in BF Homes
Paraaque and BF Resort Village, in Pamplona, Las Pias City.
15. In its letter dated June 4, 2003 (Annex A), MERALCO
threatened to cut off electric power connections to all of [BF Homes and
PWCCs] water pumps if [BF Homes and PWCC] failed to pay their bills
demanded by MERALCO by June 20, 2003.[6]

BF Homes and PWCC thus cited the following causes of action for their RTC Petition:

16. In refusing to apply [MERALCOs] electric bills against the


amounts that it was ordered to refund to [BF Homes and PWCC] pursuant to
the MERALCO Refund cases and in making the implementation of the refund
ordered by the Supreme Court dependent upon its own will and caprice,
MERALCO acted with utmost bad faith.
17. [BF Homes and PWCC] are clearly entitled to the remedies
under the law to compel MERALCO to consider [BF Homes and PWCCs]
electric bills fully paid by the amounts which MERALCO was ordered to
refund to [BF Homes and PWCC] pursuant to the MERALCO Refund cases, to
enjoin MERALCO to reconnect electric power to all of [BF Homes and PWCCs]
water pumps, and to order MERALCO to desist from further cutting off power
connection to [BF Homes and PWCCs] water pumps.
18. MERALCOs unjust and oppressive acts have cast dishonor
upon [BF Homes and PWCCs] good name and besmirched their reputation
for which [BF Homes and PWCC] should be indemnified by way of moral
damages in the amount of not less than P1,000,000.00.
19. As an example for the public good, to dissuade others from
emulating MERALCOs unjust, oppressive and mercenary conduct, MERALCO
should be directed to pay [BF Homes and PWCC] exemplary damages of at
least P1,000,000.00.
20. MERALCOs oppressive and inequitable conduct forced [BF
Homes and PWCC] to engage the services of counsel to defend their rights
and thereby incur litigation expenses in the amount of at least P500,000.00
for which [BF Homes and PWCC] should be indemnified.[7]

BF Homes and PWCC additionally prayed that the RTC issue a writ of preliminary injunction and
restraining order considering that:

21. As indicated in its letter dated June 4, 2003 (Annex A), unless
seasonably restrained, MERALCO will cut off electric power connections to
all of [BF Homes and PWCCs] water pumps on June 20, 2003.
22. Part of the reliefs herein prayed for is to restrain MERALCO
from cutting off electric power connections to [BF Homes and PWCCs] water
pumps.
23. Unless MERALCOS announced intention to cut off electric
power connections to [BF Homes and PWCCs] water pumps is restrained,

[BF Homes and PWCC] will suffer great and irreparable injury because they
would not [be] able to supply water to their customers.
24. [BF Homes and PWCC] therefore pray that a writ for
preliminary injunction be issued upon posting of a bond in an amount as will
be determined by this Honorable Court.
25. [BF Homes and PWCC] further pray that, in the meantime and
immediately upon the filing of the above captioned Petition, a restraining
order be issued before the matter of preliminary injunction can be heard.[8]

xxxx
2.14. Instead of paying their unpaid electric bills and before
[MERALCO] could effect its legal and contractual right to disconnect [BF
Homes and PWCCs] electric services, [BF Homes and PWCC] filed the instant
petition to avoid payment of [MERALCOs] valid and legal claim for regular
monthly electric bills.
2.15. [BF Homes and PWCCs] unpaid regular bills
P6,551,969.55 covering the May and June 2003 electric bills. x x x

totaled

xxxx
On August 15, 2003, MERALCO filed before the RTC its Answer with Counterclaims and
Opposition to the Application for Writ of Preliminary Injunction

[9]

of BF Homes and PWCC.

2.17. [BF Homes and PWCC] knew that [MERALCO] is already in


the process of implementing the decision of the Supreme Court as to the
refund case. But this refund has to be implemented in accordance with the
guidelines and schedule to be approved by the ERC. Thus [BF Homes and
PWCCs] filing of the instant petition is merely to evade payment of their
unpaid electric bills to [MERALCO].[10]

According to MERALCO:
Hence, MERALCO sought the dismissal of the RTC Petition of BF Homes and PWCC on
2.2. Both petitioners BF Homes, Incorporated and Philippine
Waterworks Corporation are admittedly the registered customers of
[MERALCO] by virtue of the service contracts executed between them under
which the latter undertook to supply electric energy to the former for a
fee. The following twenty-three (23) Service Identification Nos. (SINs) are
registered under the name of BF Homes, Incorporated: x x x. While the
following twenty-one (21) Service Identification Nos. (SINs) are registered
under the name of Philippine Waterworks Construction Corporation: x x x

the following grounds:

3.1 The Honorable Court has no jurisdiction to award the relief


prayed for by [BF Homes and PWCC] because:
a)

The petition is in effect preempting or defeating the power


of the ERC to implement the decision of the Supreme Court.

b)

[MERALCO] is a utility company whose business activity is


wholly regulated by the ERC. The latter, being the regulatory
agency of the government having the authority over the
respondent, is the one tasked to approve the guidelines,
schedules and details of the refund.

c)

The decision of the Supreme Court, dated November 15,


2002, clearly states that respondent is directed to make the
refund to its customers in accordance with the decision of
the ERC (formerly ERB) dated February 16, 1998. Hence,
[MERALCO] has to wait for the schedule and details of the
refund to be approved by the ERC before it can comply with
the Supreme Court decision.

xxxx
2.4. The service contracts as well as the terms and conditions of
[MERALCOs] service as approved by BOE [Board of Energy], now ERC
[Energy Regulatory Commission], provide in relevant parts, that [BF Homes
and PWCC] agree as follows:
DISCONTINUANCE OF SERVICE:
The Company reserves the right to discontinue
service in case the customer is in arrears in the
payment of bills or for failure to pay the adjusted bills
in those cases where the meter stopped or failed to
register the correct amount of energy consumed, or for
failure to comply with any of these terms and
conditions, or in case of or to prevent fraud upon the
Company. Before disconnection is made in the case of,
or to prevent fraud, the Company may adjust the bill of
said customer accordingly and if the adjusted bill is not
paid, the Company may disconnect the same.
(Emphasis supplied)
2.5. This contractual right of [MERALCO] to discontinue electric
service for default in the payment of its regular bills is sanctioned and
approved by the rules and regulations of ERB (now the ERC). This right is
necessary and reasonable means to properly protect and enable [MERALCO]
to perform and discharge its legal and contractual obligation under its
legislative franchise and the law. Cutting off service for non-payment by the
customers of the regular monthly electric bills is the only practical way a
public utility, such as [MERALCO], can ensure and maintain efficient service
in accordance with the terms and conditions of its legislative franchise and
the law.

3.2.
[MERALCO] has the right to disconnect the electric
service to [BF Homes and PWCC] in that:
a)

The service contracts between [MERALCO] and [BF Homes


and PWCC] expressly authorize the former to discontinue
and disconnect electric services of the latter for their failure
to pay the regular electric bills rendered.

b)

It is [MERALCOs] legal duty as a public utility to furnish its


service to the general public without arbitrary discrimination
and, consequently, [MERALCO] is obligated to discontinue
and disconnect electric services to [BF Homes and PWCC] for
their refusal or failure to pay the electric energy actually
used by them.[11]

For its compulsory counterclaims, MERALCO prayed that the RTC orders BF Homes and

connection to [BF Homes and PWCCs] water pumps unless otherwise


ordered by this Court. Further, [BF Homes and PWCC] are hereby ordered to
post a bond in the amount of P500,000 to answer for whatever injury or
damage that may be caused by reason of the preliminary injunction. [14]

PWCC to pay MERALCOP6,551,969.55 as actual damages (representing the unpaid electric bills
of

BF

Homes

and

PWCC

for

May

and

June

2003),P1,500,000.00

as

exemplary

damages, P1,500,000.00 as moral damages, and P1,000,000.00 as attorneys fees.

The Motion for Reconsideration of MERALCO of the aforementioned Order was denied by the RTC
in another Order issued on January 9, 2004. [15] The RTC reiterated its earlier finding that all the
requisites for the proper issuance of an injunction had been fully complied with by BF Homes and

Lastly, MERALCO opposed the application for writ of preliminary injunction of BF

PWCC, thus:

Homes and PWCC because:

I
[MERALCO] HAS THE LEGAL AND CONTRACTUAL RIGHT TO DEMAND
PAYMENT OF THE ELECTRIC BILLS AND, IN CASE OF NON-PAYMENT, TO
DISCONTINUE THE ELECTRIC SERVICES OF [BF HOMES and PWCC]
II
[BF HOMES and PWCC] HAVE NO CLEAR RIGHT WHICH WARRANTS
PROTECTION BY INJUNCTIVE PROCESS

Records indubitably show that all the requisites for the proper
issuance of an injunction have been fully complied with in the instant case.
It should be noted that a disconnection of power supply would
obviously cause irreparable injury because the pumps that supply water to
the BF community will be without electricity, thereby rendering said
community without water. Water is a basic and endemic necessity of
life. This is why its enjoyment and use has been constitutionally
safeguarded and protected. Likewise, a community without water might
create social unrest, which situation this Court has the mandate to
prevent. There is an urgent and paramount necessity for the issuance of the
injunctive writ to prevent serious damage to the guaranteed rights of [BF
Homes and PWCC] and the residents of the community to use and enjoy
water.[16]

After hearing,[12] the RTC issued an Order on November 21, 2003 granting the application of BF
Homes and PWCC for the issuance of a writ of preliminary injunction. The RTC found that the
records showed that all requisites for the issuance of said writ were sufficiently satisfied by BF
Homes and PWCC. The RTC stated in its Order:

Albeit, this Court respects the right of a public utility company like
MERALCO, being a grantee of a legislative franchise under Republic Act No.
9029, to collect overdue payments from its subscribers or customers for
their respective consumption of electric energy, such right must, however,
succumb to the paramount substantial and constitutional rights of the public
to the usage and enjoyment of waters in their community. Thus, there is an
urgent need for the issuance of a writ of preliminary injunction in order to
prevent social unrest in the community for having been deprived of the use
and enjoyment of waters flowing through [BF Homes and PWCCs] water
pumps.[13]

The RTC resolved the issue on jurisdiction raised by MERALCO, as follows:

As to the jurisdictional issue raised by respondent MERALCO, it


can be gleaned from a re-evaluation and re-assessment of the records that
this Court has jurisdiction to delve into the case. This Court gave both
parties the opportunity to be heard as they introduced evidence on the
propriety of the issuance of the injunctive writ. It is well-settled that no
grave abuse of discretion could be attributed to its issuance where a party
was not deprived of its day in court as it was heard and had exhaustively
presented all its arguments and defenses. (National Mines and Allied
Workers Union vs. Valero, 132 SCRA 578, 1984.)[17]

Aggrieved, MERALCO filed with the Court of Appeals a Petition for Certiorari under Rule 65 of the
Rules of Court, docketed as CA-G.R. SP No. 82826. MERALCO sought the reversal of the RTC
Orders dated November 21, 2003 and January 9, 2004 granting a writ of preliminary injunction in

The RTC decreed in the end:


favor of BF Homes and PWCC. MERALCO asserted that the RTC had no jurisdiction over the
WHEREFORE, in the light of the foregoing, [BF Homes and PWCCs] prayer for
the issuance of a writ of preliminary injunction is hereby
GRANTED. Respondent Manila Electric Company is permanently restrained
from proceeding with its announced intention to cut-off electric power

application of BF Homes and PWCC for issuance of such a writ.

In its Decision dated October 27, 2005, the Court of Appeals agreed with MERALCO that the RTC
had no jurisdiction to issue a writ of preliminary injunction in Civil Case No. 03-0151, as said trial

Moreover, it bears to stress that the Meralco Refund Decision was brought
into fore by the Decision dated 16 February 1998 of the ERC (then Energy
Regulatory Board) granting refund to [MERALCOs] consumers. Being the
agency of origin, the ERC has the jurisdiction to execute the same. Besides,
as stated, it is empowered to promulgate rules that are essential in the
discharge of its functions as an independent quasi-judicial body. [18]

court had no jurisdiction over the subject matter of the case to begin with. It ratiocinated in this
The dispositive portion of the judgment of the appellate court reads:
wise:

For one, it cannot be gainsaid that the ERC has original and exclusive
jurisdiction over the case. Explicitly, Section 43(u) of Republic Act No. 9136,
otherwise known as the Electric Power Industry Reform Act, (RA 9136),
states that the ERC shall have the original and exclusive jurisdiction over all
cases contesting rates, fees, fines and penalties imposed by the ERC in the
exercise of its powers, functions and responsibilities and over all cases
involving disputes between and among participants or players in the energy
sector. Section 4(o) of Rule 3 of the Implementing Rules and Regulations of
RA 9136 likewise provides that the ERC shall also be empowered to issue
such other rules that are essential in the discharge of its functions as an
independent quasi-judicial body.
For another, the respondent judge, instead of presiding over the case,
should have dismissed the same and yielded jurisdiction to the ERC
pursuant to the doctrine of primary jurisdiction. It is plain error on the part
of the respondent judge to determine, preliminary or otherwise, a
controversy involving a question which is within the jurisdiction of an
administrative tribunal, especially so where the question demands the
exercise of sound administrative discretion.
Needless to state, the doctrine of primary jurisdiction applies where the
administrative agency, as in the case of ERC, exercises its quasi-judicial and
adjudicatory function. Thus, in cases involving specialized disputes, the
practice has been to refer the same to an administrative agency of special
competence pursuant to the doctrine of primary jurisdiction. The courts will
not determine a controversy involving a question which is within the
jurisdiction of the administrative tribunal prior to the resolution of that
question by the administrative tribunal, where the question demands the
exercise of sound administrative discretion requiring the special knowledge,
experience and services of the administrative tribunal to determine
technical and intricate matters of fact, and a uniformity of ruling is essential
to comply with the premises of the regulatory statute administered.
Verily, the cause of action of [BF Homes and PWCC] against [MERALCO]
originates from the Meralco Refund Decision as it involves the perceived
right of the former to compel the latter to set-off or apply their refund to
their present electric bill. The issue delves into the right of the private
respondents to collect their refund without submitting to the approved
schedule of the ERC, and in effect give unto themselves preferential right
over other equally situated consumers of [MERALCO]. Perforce, the ERC, as
can be gleaned from the afore-stated legal provisions, has primary, original
and exclusive jurisdiction over the said controversy.
Indeed, the respondent judge glaringly erred in enjoining the right of
[MERALCO] to disconnect its services to [BF Homes and PWCC] on the
premise that the court has jurisdiction to apply the provisions on
compensation or set-off in this case. Although [MERALCO] recognizes the
right of [BF Homes and PWCC] to the refund as provided in the Meralco
Refund Decision, it is the ERC which has the authority to implement the
same according to its approved schedule, it being a dispute arising from the
exercise of its jurisdiction.

WHEREFORE, the foregoing considered, the instant petition is


hereby GRANTED and
the
assailed
OrdersREVERSED and SET
ASIDE. Accordingly, the writ of injunction against [MERALCO] is
[19]
hereby DISSOLVED. No costs.

In a Resolution dated February 7, 2006, the Court of Appeals denied the Motion for
Reconsideration of BF Homes and PWCC for failing to raise new and persuasive and meritorious
arguments.

Now, BF Homes and PWCC come before this Court via the instant Petition, raising the
following assignment of errors:

1.

The Court of Appeals ERRED in saying that the respondent judge


committed grave abuse of discretion by issuing the disputed writ of
injunction pending the merits of the case including the issue of subject
matter jurisdiction.

2.

The Court of Appeals ERRED in saying that the ERC under the doctrine
of primary jurisdiction has the original and EXCLUSIVE jurisdiction to
take cognizance of a petition for injunction to prevent electrical
disconnection to a customer entitled to a refund.

3.

The Court of Appeals ERRED in NOT SAYING that the ERC as a quasijudicial body under RA 9136 has no power to issue any injunctive relief
or remedy to prevent disconnection.

4. The Court of Appeals ERRED in not resolving the issue as to the violation
of MERALCO of a standing injunction order while the case remains
undecided.[20]
At the core of the Petition is the issue of whether jurisdiction over
the subject matter of Civil Case No. 03-0151 lies with the RTC or the
Energy Regulatory Commission (ERC). If it is with the RTC, then the
said trial court also has jurisdiction to issue the writ of preliminary
injunction against MERALCO. If it is with the ERC, then the RTC also
has no jurisdiction to act on any incidents in Civil Case No. 03-0151,
including the application for issuance of a writ of preliminary
injunction of BF Homes and PWCC therein.
BF Homes and PWCC argued that due to the threat of MERALCO to
disconnect electric services, BF Homes and PWCC had no other
recourse but to seek an injunctive remedy from the RTC under its
general jurisdiction. The merits of Civil Case No. 03-0151 was not

yet in issue, only the propriety of issuing a writ of preliminary


injunction to prevent an irreparable injury. Even granting that the
RTC has no jurisdiction over the subject matter of Civil Case No. 030151, the ERC by enabling law has no injunctive power to prevent
the disconnection by MERALCO of electric services to BF Homes and
PWCC.
The Petition has no merit.
Settled is the rule that jurisdiction is conferred only by the
Constitution or the law.[21] Republic v. Court of Appeals[22] also
enunciated that only a statute can confer jurisdiction on courts and
administrative agencies.
Related to the foregoing and equally well-settled is the rule that the
nature of an action and the subject matter thereof, as well as which
court or agency of the government has jurisdiction over the same,
are determined by the material allegations of the complaint in
relation to the law involved and the character of the reliefs prayed
for, whether or not the complainant/plaintiff is entitled to any or all
of such reliefs. A prayer or demand for relief is not part of the
petition of the cause of action; nor does it enlarge the cause of
action stated or change the legal effect of what is alleged. In
determining which body has jurisdiction over a case, the better
policy is to consider not only the status or relationship of the parties
but also the nature of the action that is the subject of their
controversy.[23]

it shall have the necessary powers and the aid of the


public force x x x.
Section 14 of C.A. No. 146 defines the term public
service or public utility as including every individual, copartnership,
association, corporation or joint-stock company, . . . that now or hereafter
may own, operate, manage or control within the Philippines, for hire or
compensation, any common carrier, x x x, electric light, heat, power, x x
x, when owned, operated and managed for public use or service within
the Philippines x x x. Under the succeeding Section 17(a), the PSC has the
power even without prior hearing
(a) To investigate, upon its own initiative, or
upon complaint in writing, any matter concerning any
public service as regards matters under its jurisdiction;
to require any public service to furnish safe, adequate
and proper service as the public interest may require
and warrant, to enforce compliance with any standard,
rule, regulation, order or other requirement of this Act
or of the Commission, x x x.
4. Then came Presidential Decree (P.D.) No. 1, reorganizing the
national government and implementing the Integrated Reorganization Plan.
Under the reorganization plan, jurisdiction, supervision and control over
public services related to electric light, and power heretofore vested in the
PSC were transferred to the Board of Power and Waterworks (BOPW).
Later, P.D. No. 1206 abolished the BOPW. Its powers and function
relative to power utilities, including its authority to grant provisional relief,
were transferred to the newly-created Board of Energy (BOE).

In Manila Electric Company v. Energy Regulatory Board,[24] the Court traced the
legislative history of the regulatory agencies which preceded the ERC, presenting a summary of
these agencies, the statutes or issuances that created them, and the extent of the jurisdiction
conferred upon them, viz:

1. The first regulatory body, the Board of Rate Regulation (BRR),


was created by virtue of Act No. 1779. Its regulatory mandate under Section
5 of the law was limited to fixing or regulating rates of every public service
corporation.

5. On May 8, 1987, then President Corazon C. Aquino issued E.O.


No. 172 reconstituting the BOE into the ERB, transferring the formers
functions and powers under P.D. No. 1206 to the latter and consolidating in
and entrusting on the ERB all the regulatory and adjudicatory functions
covering the energy sector. Section 14 of E.O. No. 172 states that (T)he
applicable provisions of [C.A.] No. 146, as amended, otherwise known as the
Public Service Act; x x x and [P.D.] No. 1206, as amended, creating the
Department of Energy, shall continue to have full force and effect, except
insofar as inconsistent with this Order.[25]

Thereafter, on June 8, 2001, Republic Act No. 9136, known as the Electric Power

2. In 1913, Act No. 2307 created the Board of Public Utility


Commissioners (BPUC) to take over the functions of the BRR. By express
provision of Act No. 2307, the BPUC was vested with jurisdiction, supervision
and control over all public utilities and their properties and franchises.

Industry Reform Act of 2001 (EPIRA), was enacted, providing a framework for restructuring the

3. On November 7, 1936, Commonwealth Act (C.A.) No. 146, or


the Public Service Act (PSA), was passed creating the Public Service
Commission (PSC) to replace the BPUC. Like the BPUC, the PSC was
expressly granted jurisdiction, supervision and control over public services,
with the concomitant authority of calling on the public force to exercise its
power, to wit:

purely independent regulatory body. The Energy Regulatory Board (ERB) was abolished and its

SEC. 13. Except as otherwise provided herein,


the Commission shall have general supervision and
regulation of,jurisdiction and control over, all
public utilities, and also over their property, property
rights, equipment, facilities and franchises so far as
may be necessary for the purpose of carrying out the
provisions of this Act, and in the exercise of its authority

electric power industry. One of the avowed purposes of the EPIRA is to establish a strong and

powers and functions not inconsistent with the provision of the EPIRA were expressly transferred
to the ERC.[26]

The powers and functions of the ERB not inconsistent with the EPIRA were transferred
to the ERC by virtue of Sections 44 and 80 of the EPIRA, which read:

Sec. 44. Transfer of Powers and Functions. The powers and


functions of the Energy Regulatory Board not inconsistent with the
provisions of this Act are hereby transferred to the ERC. The foregoing
transfer of powers and functions shall include all applicable funds and
appropriations, records, equipment, property and personnel as may be
necessary.
Sec. 80. Applicability and Repealing Clause. The applicability
provisions of Commonwealth Act No. 146, as amended, otherwise known as
the Public Service Act. Republic Act 6395, as amended, revising the charter
of NPC; Presidential Decree 269, as amended, referred to as the National
Electrification Decree; Republic Act 7638, otherwise known as the
Department of Energy Act of 1992; Executive Order 172, as amended,
creating the ERB; Republic Act 7832 otherwise known as the Anti-Electricity
and Electric Transmission Lines/Materials Pilferage Act of 1994; shall
continue to have full force and effect except insofar as they are inconsistent
with this Act.
The provisions with respect to electric power of Section 11(c) of
Republic Act 7916, as amended, and Section 5(f) of Republic Act 7227, are
hereby repealed or modified accordingly.
Presidential Decree No. 40 and all laws, decrees, rules and
regulations, or portions thereof, inconsistent with this Act are hereby
repealed or modified accordingly.

(u) The ERC shall have the original and exclusive jurisdiction over
all cases contesting rates, fees, fines and penalties imposed by the ERC in
the exercise of the abovementioned powers, functions and responsibilities
and over all cases involving disputes between and among participants or
players in the energy sector.
All notices of hearings to be conducted by the ERC for the purpose
of fixing rates or fees shall be published at least twice for two successive
weeks in two (2) newspapers of nationwide circulation.

A careful review of the material allegations of BF Homes and PWCC in their Petition
before the RTC reveals that the very subject matter thereof is the off-setting of the amount of
refund they are supposed to receive from MERALCO against the electric bills they are to pay to
the same company. This is squarely within the primary jurisdiction of the ERC.

The right of BF Homes and PWCC to refund, on which their claim for off-setting
depends, originated from the MERALCO Refund cases. In said cases, the Court (1) authorized

In addition to the foregoing, the EPIRA also conferred new powers upon the ERC under
Section 43, among which are:

MERALCO to adopt a rate adjustment in the amount of P0.017 per kilowatthour, effective with
respect to its billing cycles beginning February 1994; and (2) ordered MERALCO to refund to its
customers or credit in said customers favor for future consumption P0.167 per kilowatthour,

SEC. 43. Functions of the ERC. The ERC shall promote


competition, encourage market development, ensure customer choice and
penalize abuse of market power in the restructured electricity industry. In
appropriate cases, the ERC is authorized to issue cease and desist order
after due notice and hearing. Towards this end, it shall be responsible for the
following key functions in the restructured industry:
xxxx
(f) In the public interest, establish and enforce a methodology for
setting transmission and distribution wheeling rates and retail rates for the
captive market of a distribution utility, taking into account all relevant
considerations, including the efficiency or inefficiency of the regulated
entities.The rates must be such as to allow the recovery of just and
reasonable costs and a reasonable return on rate base (RORB) to enable the
entity to operate viably. The ERC may adopt alternative forms of
internationally-accepted rate-setting methodology as it may deem
appropriate. The rate-setting methodology so adopted and applied must
ensure a reasonable price of electricity. The rates prescribed shall be nondiscriminatory. To achieve this objective and to ensure the complete removal
of cross subsidies, the cap on the recoverable rate of system losses
prescribed in Section 10 of Republic Act No. 7832, is hereby amended and
shall be replaced by caps which shall be determined by the ERC based on
load density, sales mix, cost of service, delivery voltage and other technical
considerations it may promulgate. The ERC shall determine such form of
rate-setting methodology, which shall promote efficiency. x x x.
xxxx

starting with the customers billing cycles that begin February 1998, in accordance with the ERB
Decision dated February 16, 1998.

It bears to stress that in the MERALCO Refund cases, this Court only affirmed the
February 16, 1998 Decision of the ERB (predecessor of the ERC) fixing the just and reasonable
rate for the electric services of MERALCO and granting refund to MERALCO consumers of the
amount they overpaid. Said Decision was rendered by the ERB in the exercise of its jurisdiction
to determine and fix the just and reasonable rate of power utilities such as MERALCO.

Presently, the ERC has original and exclusive jurisdiction under Rule 43(u) of the EPIRA
over all cases contesting rates, fees, fines, and penalties imposed by the ERC in the exercise of

its powers, functions and responsibilities, and over all cases involving disputes between and

ancillary and provisional remedy of preliminary injunction cannot exist except only as an incident

among participants or players in the energy sector. Section 4(o) of the EPIRA Implementing Rules

of an independent action or proceeding.[28]

and Regulation provides that the ERC shall also be empowered to issue such other rules that are
essential in the discharge of its functions as in independent quasi-judicial body.

Incidentally, BF Homes and PWCC seemed to have lost sight of Section 8 of Executive
Order No. 172 which explicitly vested on the ERB, as an incident of its principal function, the

Indubitably, the ERC is the regulatory agency of the government having the authority

authority to grant provisional relief, thus:

and supervision over MERALCO. Thus, the task to approve the guidelines, schedules, and details
of the refund by MERALCO to its consumers, to implement the judgment of this Court in the
MERALCO Refund cases, also falls upon the ERC. By filing their Petition before the RTC, BF Homes
and PWCC intend to collect their refund without submitting to the approved schedule of the ERC,
and in effect, enjoy preferential right over the other equally situated MERALCO consumers.

Section 8. Authority to Grant Provisional Relief. The Board may,


upon the filing of an application, petition or complaint or at any stage
thereafter and without prior hearing, on the basis of supporting papers duly
verified or authenticated, grant provisional relief on motion of a party in the
case or on its own initiative, without prejudice to a final decision after
hearing, should the Board find that the pleadings, together with such
affidavits, documents and other evidence which may be submitted in
support of the motion, substantially support the provisional order: Provided,
That the Board shall immediately schedule and conduct a hearing thereon
within thirty (30) days thereafter, upon publication and notice to all affected
parties.

Administrative agencies, like the ERC, are tribunals of limited jurisdiction and, as such,

The aforequoted provision is still applicable to the ERC as it succeeded the ERB, by

could wield only such as are specifically granted to them by the enabling statutes. In relation

virtue of Section 80 of the EPIRA. A writ of preliminary injunction is one such provisional relief

thereto is the doctrine of primary jurisdiction involving matters that demand the special

which a party in a case before the ERC may move for.

competence of administrative agencies even if the question involved is also judicial in


nature. Courts cannot and will not resolve a controversy involving a question within the

Lastly, the Court herein already declared that the RTC not only lacked the jurisdiction

jurisdiction of an administrative tribunal, especially when the question demands the sound

to issue the writ of preliminary injunction against MERALCO, but that the RTC actually had no

exercise of administrative discretion requiring special knowledge, experience and services of the

jurisdiction at all over the subject matter of the Petition of BF Homes and PWCC in Civil Case No.

administrative tribunal to determine technical and intricate matters of fact. The court cannot

03-0151. Therefore, in addition to the dissolution of the writ of preliminary injunction issued by

arrogate into itself the authority to resolve a controversy, the jurisdiction of which is initially

the RTC, the Court also deems it appropriate to already order the dismissal of the Petition of BF

lodged with the administrative body of special competence.

Homes and PWCC in Civil Case No. 03-0151 for lack of jurisdiction of the RTC over the subject

[27]

matter of the same. Although only the matter of the writ of preliminary injunction was brought
Since the RTC had no jurisdiction over the Petition of BF Homes and PWCC in Civil Case

before this Court in the instant Petition, the Court is already taking cognizance of the issue on

No. 03-0151, then it was also devoid of any authority to act on the application of BF Homes and

the jurisdiction of the RTC over the subject matter of the Petition. The Court may motu

PWCC for the issuance of a writ of preliminary injunction contained in the same Petition. The

proprio consider the issue of jurisdiction. The Court has discretion to determine whether the RTC

validly acquired jurisdiction over Civil Case No. 03-0151 since, to reiterate, jurisdiction over the
subject matter is conferred only by law. Jurisdiction over the subject matter cannot be acquired

Teodorico Adarna (docketed as Civil Case No. 19513-89). The complaint contained an ex
parte application for a writ of preliminary attachment.
2. On May 3, 1989 Judge Nartatez, to whose branch the case was assigned by raffle, issued an
Order granting the ex parte application and fixing the attachment bond at P4,600,513.37.

through, or waived by, any act or omission of the parties.Neither would the active participation
of the parties nor estoppel operate to confer jurisdiction on the RTC where the latter has none
over a cause of action.[29] Indeed, when a court has no jurisdiction over the subject matter, the
only power it has is to dismiss the action.

[30]

WHEREFORE, the instant Petition for Review is DENIED. The Decision dated October
27,

2005

of

the

Court

of

Appeals

in

CA-G.R.

SP

No.

82826

is AFFIRMED

with

the MODIFICATION that the Regional Trial Court, Branch 202 of Las Pias City, isORDERED to
dismiss the Petition [With Prayer for the Issuance of Writ of Preliminary Injunction and for the

3. On May 11, 1989 the attachment bond having been submitted by Davao Light, the writ of
attachment issued.
4. On May 12, 1989, the summons and a copy of the complaint, as well as the writ of attachment
and a copy of the attachment bond, were served on defendants Queensland and Adarna; and
pursuant to the writ, the sheriff seized properties belonging to the latter.
5. On September 6, 1989, defendants 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 the cause and over the persons of the defendants.
6. On September 14, 1989, Davao Light filed an opposition to the motion to discharge
attachment.

Immediate Issuance of Restraining Order] of BF Homes, Inc. and Philippine Waterworks and

7. On September 19, 1989, the Trial Court issued an Order denying the motion to discharge.

Construction Corporation in Civil Case No. 03-0151. Costs against BF Homes, Inc. and Philippine

This Order of September 19, 1989 was successfully challenged by Queensland and Adarna in a
special civil action of certiorari instituted by them in the Court of Appeals. The Order was, as
aforestated, annulled by the Court of Appeals in its Decision of May 4, 1990. The Appellate
Court's decision closed with the following disposition:

Waterworks and Construction Corporation.

SO ORDERED.

3. G.R. No. 93262 December 29, 1991


DAVAO LIGHT & POWER CO., INC., petitioner,
vs.
THE COURT OF APPEALS, QUEENSLAND HOTEL or MOTEL or QUEENSLAND TOURIST
INN, and TEODORICO ADARNA, respondents.
Subject of the appellate proceedings at bar is the decision of the Court of Appeals in CA-G.R. Sp.
No. 1967 entitled "Queensland Hotel, Inc., etc. and Adarna v. Davao Light & Power Co., Inc.,"
promulgated on May 4, 1990.1 That decision nullified and set aside the writ of preliminary
attachment issued by the Regional Trial Court of Davao City 2 in Civil Case No. 19513-89 on
application of the plaintiff (Davao Light & Power Co.), before the service of summons on the
defendants (herein respondents Queensland Co., Inc. and Adarna).
Following is the chronology of the undisputed material facts culled from the Appellate Tribunal's
judgment of May 4, 1990.
1. On May 2, 1989 Davao Light & Power Co., Inc. (hereafter, simply Davao Light) filed a verified
complaint for recovery of a sum of money and damages against Queensland Hotel, etc. and

. . . the Orders dated May 3, 1989 granting the issuance of a writ of


preliminary attachment, dated September 19, 1989 denying the motion to
discharge attachment; dated November 7, 1989 denying petitioner's motion
for reconsideration; as well as all other orders emanating therefrom,
specially the Writ of Attachment dated May 11, 1989 and Notice of Levy on
Preliminary Attachment dated May 11, 1989, are hereby declared null and
void and the attachment hereby ordered DISCHARGED.
The Appellate Tribunal declared that
. . . While it is true that a prayer for the issuance of a writ of preliminary
attachment may be included m the complaint, as is usually done, it is
likewise true that the Court does not acquire jurisdiction over the person of
the defendant until he is duly summoned or voluntarily appears, and adding
the phrase that it be issued "ex parte" does not confer said jurisdiction
before actual summons had been made, nor retroact jurisdiction upon
summons being made. . . .
It went on to say, citing Sievert v. Court of Appeals, 3 that "in a proceedings in
attachment," the "critical time which must be identified is . . . when the trial court
acquires authority under law to act coercively against the defendant or his
property . . .;" and that "the critical time is the of the vesting of jurisdiction in the court
over the person of the defendant in the main case."

Reversal of this Decision of the Court of Appeals of May 4, 1990 is what Davao Light seeks in the
present appellate proceedings.
The question is whether or not a writ of preliminary attachment may issue ex parte against a
defendant before acquisition of jurisdiction of the latter's person by service of summons or his
voluntary submission to the Court's authority.
The Court rules that the question must be answered in the affirmative and that consequently,
the petition for review will have to be granted.
It is incorrect to theorize that after an action or proceeding has been commenced and
jurisdiction over the person of the plaintiff has been vested in the court, but before the
acquisition of jurisdiction over the person of the defendant (either by service of summons or his
voluntary submission to the court's authority), nothing can be validly done by the plaintiff or the
court. It is wrong to assume that the validity of acts done during this period should be defendant
on, or held in suspension until, the actual obtention of jurisdiction over the defendant's person.
The obtention by the court of jurisdiction over the person of the defendant is one thing; quite
another is the acquisition of jurisdiction over the person of the plaintiff or over the subjectmatter or nature of the action, or the res or object hereof.
An action or proceeding is commenced by the filing of the complaint or other initiatory
pleading. 4 By that act, the jurisdiction of the court over the subject matter or nature of the
action or proceeding is invoked or called into activity; 5 and it is thus that the court acquires
jurisdiction over said subject matter or nature of the action. 6 And it is by that self-same act of
the plaintiff (or petitioner) of filing the complaint (or other appropriate pleading) by which he
signifies his submission to the court's power and authority that jurisdiction is acquired by the
court over his person. 7On the other hand, jurisdiction over the person of the defendant is
obtained, as above stated, by the service of summons or other coercive process upon him or by
his voluntary submission to the authority of the court. 8
The events that follow the filing of the complaint as a matter of routine are well known. After the
complaint is filed, summons issues to the defendant, the summons is then transmitted to the
sheriff, and finally, service of the summons is effected on the defendant in any of the ways
authorized by the Rules of Court. There is thus ordinarily some appreciable interval of time
between the day of the filing of the complaint and the day of service of summons of the
defendant. During this period, different acts may be done by the plaintiff or by the Court, which
are unquestionable validity and propriety. Among these, for example, are the appointment of a
guardian ad litem,9 the grant of authority to the plaintiff to prosecute the suit as a pauper
litigant, 10 the amendment of the complaint by the plaintiff as a matter of right without leave of
court, 11 authorization by the Court of service of summons by publication, 12 the dismissal of
the action by the plaintiff on mere notice. 13
This, too, is true with regard to the provisional remedies of preliminary attachment, preliminary
injunction, receivership or replevin. 14 They may be validly and properly applied for and granted
even before the defendant is summoned or is heard from.
A preliminary attachment may be defined, paraphrasing the Rules of Court, as the provisional
remedy in virtue of which a plaintiff or other party may, at the commencement of the action or
at any time thereafter, have the property of the adverse party taken into the custody of the
court as security for the satisfaction of any judgment that may be recovered. 15 It is a remedy
which is purely statutory in respect of which the law requires a strict construction of the
provisions granting it. 16 Withal no principle, statutory or jurisprudential, prohibits its issuance
by any court before acquisition of jurisdiction over the person of the defendant.

Rule 57 in fact speaks of the grant of the remedy "at the commencement of the action or at any
time thereafter."17 The phase, "at the commencement of the action," obviously refers to the
date of the filing of the complaint which, as above pointed out, is the date that marks "the
commencement of the action;" 18 and the reference plainly is to a time before summons is
served on the defendant, or even before summons issues. What the rule is saying quite clearly is
that after an action is properly commenced by the filing of the complaint and the payment of
all requisite docket and other fees the plaintiff may apply for and obtain a writ of preliminary
attachment upon fulfillment of the pertinent requisites laid down by law, and that he may do so
at any time, either before or after service of summons on the defendant. And this indeed, has
been the immemorial practice sanctioned by the courts: for the plaintiff or other proper party to
incorporate the application for attachment in the complaint or other appropriate pleading
(counter-claim, cross-claim, third-party claim) and for the Trial Court to issue the writ ex-parte at
the commencement of the action if it finds the application otherwise sufficient in form and
substance.
In Toledo v. Burgos, 19 this Court ruled that a hearing on a motion or application for preliminary
attachment is not generally necessary unless otherwise directed by the Trial Court in its
discretion. 20 And in Filinvest Credit Corporation v. Relova, 21 the Court declared that
"(n)othing in the Rules of Court makes notice and hearing indispensable and mandatory
requisites for the issuance of a writ of attachment." The only pre-requisite is that the Court be
satisfied, upon consideration of "the affidavit of the applicant or of some other person who
personally knows the facts, that a sufficient cause of action exists, that the case is one of those
mentioned in Section 1 . . . (Rule 57), that there is no other sufficient security for the claim
sought to be enforced by the action, and that the amount due to the applicant, or the value of
the property the possession of which he is entitled to recover, is as much as the sum for which
the order (of attachment) is granted above all legal counterclaims." 22 If the court be so
satisfied, the "order of attachment shall be granted," 23 and the writ shall issue upon the
applicant's posting of "a bond executed to the adverse party in an amount to be fixed by the
judge, not exceeding the plaintiffs 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." 24
In Mindanao Savings & Loan Association, Inc. v. Court of Appeals, decided on April 18,
1989, 25 this Court had occasion to emphasize the postulate that no hearing is required on an
application for preliminary attachment, with notice to the defendant, for the reason that this
"would defeat the objective of the remedy . . . (since the) time which such a hearing would take,
could be enough to enable the defendant to abscond or dispose of his property before a writ of
attachment issues." As observed by a former member of this Court, 26 such a procedure would
warn absconding debtors-defendants of the commencement of the suit against them and the
probable seizure of their properties, and thus give them the advantage of time to hide their
assets, leaving the creditor-plaintiff holding the proverbial empty bag; it would place the
creditor-applicant in danger of losing any security for a favorable judgment and thus give him
only an illusory victory.
Withal, ample modes of recourse against a preliminary attachment are secured by law to the
defendant. The relative ease with which a preliminary attachment may be obtained is matched
and paralleled by the relative facility with which the attachment may legitimately be prevented
or frustrated. These modes of recourse against preliminary attachments granted by Rule 57
were discussed at some length by the separate opinion in Mindanao Savings & Loans
Asso. Inc. v. CA., supra.
That separate opinion stressed that there are two (2) ways of discharging an
attachment: first, by the posting of a counterbond; and second, by a showing of its improper or
irregular issuance.

1.0. The submission of a counterbond is an efficacious mode of lifting an attachment already


enforced against property, or even of preventing its enforcement altogether.

instances . . . would require presentation of evidence in a fullblown trial on the merits, and
cannot easily be settled in a pending incident of the case." 27

1.1. When property has already been seized under attachment, the attachment may be
discharged upon counterbond in accordance with Section 12 of Rule 57.

It may not be amiss to here reiterate other related principles dealt with in Mindanao Savings &
Loans Asso. Inc. v.C.A., supra., 28 to wit:

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 in 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 . . .
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. . . .
1.2. But even before actual levy on property, seizure under attachment may be prevented also
upon counterbond. The defendant need not wait until his property is seized before seeking the
discharge of the attachment by a counterbond. This is made possible by Section 5 of Rule 57.
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, not
exempt from execution, or so much thereof as may be sufficient to satisfy
the applicant's demand, unless the former makes a deposit with the clerk or
judge of the court from which the order issued, or gives a counter-bond
executed to the applicant, in an amount sufficient to satisfy such demand
besides costs, or in an amount equal to the value of the property which is
about to be attached, to secure payment to the applicant of any judgment
which he may recover in the action. . . . (Emphasis supplied)
2.0. Aside from the filing of a counterbond, a preliminary attachment may also be lifted or
discharged on the ground that it has been irregularly or improperly issued, in accordance with
Section 13 of Rule 57. Like the first, this second mode of lifting an attachment may be resorted
to even before any property has been levied on. Indeed, it may be availed of after property has
been released from a levy on attachment, as is made clear by said Section 13, viz.:
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. . . . (Emphasis supplied)
This is so because "(a)s pointed out in Calderon v. I.A.C., 155 SCRA 531 (1987), 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

(a) When an attachment may not be dissolved by a showing of its irregular


or improper issuance:
. . . (W)hen the preliminary attachment is issued upon a ground which is at
the same time the applicant's cause of action; e.g., "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." (Sec. 1
[b], Rule 57), or "an action against a party who has been guilty of fraud m
contracting the debt or incurring the obligation upon which the action is
brought" (Sec. 1 [d], Rule 57), the defendant is not allowed to file a motion
to dissolve the attachment under Section 13 of Rule 57 by offering to show
the falsity of the factual averments in the plaintiff's application and
affidavits on which the writ was based and consequently that the writ
based thereon had been improperly or irregularly issued (SEE Benitez v.
I.A.C., 154 SCRA 41) the reason being that the hearing on such a motion
for dissolution of the writ would be tantamount to a trial of the merits of the
action. In other words, the merits of the action would be ventilated at a
mere hearing of a motion, instead of at the regular trial. Therefore, when
the writ of attachment is of this nature, the only way it can be dissolved is
by a counterbond (G.B. Inc. v. Sanchez, 98 Phil. 886).
(b) Effect of the dissolution of a preliminary attachment on the plaintiffs attachment bond:
. . . The dissolution of the preliminary attachment upon security given, or a
showing of its irregular or improper issuance, does not of course operate to
discharge the sureties on plaintiff's own attachment bond. The reason is
simple. That bond is "executed to the adverse party, . . . conditioned that
the . . . (applicant) will pay all the costs which may be adjudged to the
adverse party and all damages which he may sustain by reason of the
attachment, if the court shall finally adjudge that the applicant was not
entitled thereto" (SEC. 4, Rule 57). Hence, until that determination is made,
as to the applicant's entitlement to the attachment, his bond must stand
and cannot be with-drawn.
With respect to the other provisional remedies, i.e., preliminary injunction (Rule 58), receivership
(Rule 59), replevin or delivery of personal property (Rule 60), the rule is the same: they may also
issue ex parte. 29
It goes without saying that whatever be the acts done by the Court prior to the acquisition of
jurisdiction over the person of defendant, as above indicated issuance of summons, order of
attachment and writ of attachment (and/or appointments of guardian ad litem, or grant of
authority to the plaintiff to prosecute the suit as a pauper litigant, or amendment of the
complaint by the plaintiff as a matter of right without leave of court 30 and however valid and
proper they might otherwise be, these do not and cannot bind and affect the defendant until and
unless jurisdiction over his person is eventually obtained by the court, either by service on him
of summons or other coercive process or his voluntary submission to the court's authority.

Hence, when the sheriff or other proper officer commences implementation of the writ of
attachment, it is essential that he serve on the defendant not only a copy of the applicant's
affidavit and attachment bond, and of the order of attachment, as explicity required by Section 5
of Rule 57, but also the summons addressed to said defendant as well as a copy of the complaint
and order for appointment of guardian ad litem, if any, as also explicity directed by Section 3,
Rule 14 of the Rules of Court. Service of all such documents is indispensable not only for the
acquisition of jurisdiction over the person of the defendant, but also upon considerations of
fairness, to apprise the defendant of the complaint against him, of the issuance of a writ of
preliminary attachment and the grounds therefor and thus accord him the opportunity to
prevent attachment of his property by the posting of a counterbond in an amount equal to the
plaintiff's claim in the complaint pursuant to Section 5 (or Section 12), Rule 57, or dissolving it by
causing dismissal of the complaint itself on any of the grounds set forth in Rule 16, or
demonstrating the insufficiency of the applicant's affidavit or bond in accordance with Section
13, Rule 57.
It was on account of the failure to comply with this fundamental requirement of service of
summons and the other documents above indicated that writs of attachment issued by the Trial
Court ex parte were struck down by this Court's Third Division in two (2) cases, namely: Sievert
v. Court of Appeals, 31 and BAC Manufacturing and Sales Corporation v. Court of Appeals, et
al. 32 In contrast to the case at bar where the summons and a copy of the complaint, as well
as the order and writ of attachment and the attachment bond were served on the defendant
in Sievert, levy on attachment was attempted notwithstanding that only the petition for issuance
of the writ of preliminary attachment was served on the defendant, without any prior or
accompanying summons and copy of the complaint; and in BAC Manufacturing and Sales
Corporation, neither the summons nor the order granting the preliminary attachment or the writ
of attachment itself was served on the defendant "before or at the time the levy was made."
For the guidance of all concerned, the Court reiterates and reaffirms the proposition that writs of
attachment may properly issue ex parte provided that the Court is satisfied that the relevant
requisites therefor have been fulfilled by the applicant, although it may, in its discretion, require
prior hearing on the application with notice to the defendant; but that levy on property pursuant
to the writ thus issued may not be validly effected unless preceded, or contemporaneously
accompanied, by service on the defendant of summons, a copy of the complaint (and of the
appointment of guardian ad litem, if any), the application for attachment (if not incorporated in
but submitted separately from the complaint), the order of attachment, and the plaintiff's
attachment bond.
WHEREFORE, the petition is GRANTED; the challenged decision of the Court of Appeals is hereby
REVERSED, and the order and writ of attachment issued by Hon. Milagros C. Nartatez, Presiding
Judge of Branch 8, Regional Trial Court of Davao City in Civil Case No. 19513-89 against
Queensland Hotel or Motel or Queensland Tourist Inn and Teodorico Adarna are hereby
REINSTATED. Costs against private respondents.

4. [G.R. No. 133303. February 17, 2005]BERNARDO VALDEVIESO, petitioner, vs.


CANDELARIO DAMALERIO AND AUREA C. DAMALERIO, respondents.
Before this Court is a Petition for Review under Rule 45 of the Rules of Court, seeking to set aside
the 25 September 1997 Decision and the 10 February 1998 Resolution of the Court of Appeals in
CA-G.R. SP No. 43082 entitled, Candelario Damalerio and Aurea Damalerio v. Honorable Antonio
S. Alano, et al.[1]
There is no dispute as to the following facts:
On 05 December 1995, Bernardo Valdevieso (petitioner) bought from spouses Lorenzo and
Elenita Uy a parcel of land consisting of 10,000 square meters, more or less, located at Bo.
Tambler, General Santos City, and covered by Transfer Certificate of Title (TCT) No. T-30586. [2]
The deed of sale was not registered, nor was the title of the land transferred to petitioner.
[3]

On 07 December 1995, the said property was immediately declared by petitioner for
taxation purposes as Tax Declaration No. l6205 with the City Assessors Office. [4]
It came to pass that on 19 April 1996, spouses Candelario and Aurea Damalerio
(respondents) filed with the Regional Trial Court (RTC) of General Santos City, a complaint for a
sum of money against spouses Lorenzo and Elenita Uy docketed as Civil Case No. 5748 with
application for the issuance of a Writ of Preliminary Attachment.[5]
On 23 April 1996, the trial court issued a Writ of Preliminary Attachment by virtue of which
the property, then still in the name of Lorenzo Uy but which had already been sold to petitioner,
was levied. The levy was duly recorded in the Register of Deeds of General Santos City and
annotated upon TCT No. T-30586.[6]

SO ORDERED.
On 06 June 1996, TCT No. T-30586 in the name of Lorenzo Uy was cancelled and, in lieu
thereof, TCT No. T-74439 was issued in the name of petitioner. [7] This new TCT carried with it the
attachment in favor of respondents.
On 14 August 1996, petitioner filed a third-party claim in Civil Case No. 5748 to discharge
or annul the attachment levied on the property covered by TCT No. T-74439 on the ground that
the said property belongs to him and no longer to Lorenzo and Elenita Uy.[8]

[9]

In a resolution dated 21 October 1996, the trial court ruled for the petitioner.
Citing Manliguez v. Court of Appeals[10] and Santos v. Bayhon,[11] it held that the levy of the

property by virtue of attachment is lawful only when the levied property indubitably belongs to
the defendant. Applying the rulings in the cited cases, it opined that although defendant Lorenzo
Uy remained the registered owner of the property attached, yet the fact was that he was no
longer the owner thereof as it was already sold earlier to petitioner, hence, the writ of
attachment was unlawful.

if the person who invokes it is not guilty of delay. Both conditions have not been met, however,
since there is a law on the subject matter, i.e., Section 51 of Presidential Decree No. 1529, and
that petitioner allegedly slept on his rights by not immediately registering an adverse claim
based on his deed of sale.
We agree with the respondents.

Respondents sought reconsideration thereof which was denied by the trial court in a
resolution dated 03 January 1997.[12]
From the unfavorable resolution of the trial court in the third-party claim, respondents
appealed to the Court of Appeals. The appellate court reversed the resolution and by judgment
promulgated on 25 September 1997, it declared that an attachment or levy of execution, though
posterior to the sale, but if registered before the sale is registered, takes precedence over the
sale.[13] The writ of attachment in favor of the respondents, being recorded ahead of the sale to
petitioner, will therefore take precedence.
Petitioner moved for reconsideration but this was denied by the Court of Appeals in its
Resolution of 10 February 1998.[14]
Hence, this Petition for Review on Certiorari.
The sole issue in this case is whether or not a registered writ of attachment on the land is
a superior lien over that of an earlier unregistered deed of sale.
Petitioner maintains that he has a superior right over the questioned property because
when the same was attached on 23 April 1996, this property was no longer owned by spouses
Uy against whom attachment was issued as it was already sold to petitioner on 05 December
1995. The ownership thereof was already transferred to petitioner pursuant to Article 1477 [15] in
relation to Article 1498[16] of the Civil Code.
Dismissing the allegation that he slept on his rights by not immediately registering at least
an adverse claim based on his deed of sale, petitioner avers that he promptly worked out for the
transfer of registration in his name. The slight delay in the registration, he claims was not due to
his fault but attributable to the process involved in the registration of property such as the
issuance of the Department of Agrarian Reform clearance which was effected only after
compliance with several requirements.
Considering the peculiar facts and circumstances obtaining in this case, petitioner submits
it would be in accord with justice and equity to declare him as having a superior right to the
disputed property than the respondents.
Respondents maintain the contrary view. They aver that registration of a deed of sale is
the operative act which binds the land and creates a lien thereon. Before the registration of the
deed, the property is not bound insofar as third persons are concerned. Since the writ of
attachment in favor of respondents was registered earlier than the deed of sale to petitioner,
respondents were of the belief that their registered writ of attachment on the subject property
enjoys preference and priority over petitioners earlier unregistered deed of sale over the same
property. They also contend that Articles 1477 and 1498 of the Civil Code as cited by petitioner
are not applicable to the case because said provisions apply only as between the parties to the
deed of sale. These provisions do not apply to, nor bind, third parties, like respondents, because
what affects or binds third parties is the registration of the instrument in the Register of Deeds.
Furthermore, respondents argue that petitioner cannot invoke equity in his favor unless the
following conditions are met: (a) the absence of specific provision of a law on the matter; and (b)

The law applicable to the facts of this case is Section 51 of P.D. No. 1529. Said Section
provides:
Sec. 51. Conveyance and other dealings by registered owner. - An owner of registered land may
convey, mortgage, lease, charge, or otherwise deal with the same in accordance with existing
laws. He may use such forms of deeds, mortgages, leases or other voluntary instruments as are
sufficient in law. But no deed, mortgage, lease, or other voluntary instrument, except a will
purporting to convey or affect registered land, shall take effect as a conveyance or bind the land,
but shall operate only as a contract between the parties and as evidence of authority to the
Register of Deeds to make registration.
The act of registration shall be the operative act to convey or affect the land insofar as third
persons are concerned, and in all cases under this Decree, the registration shall be made in the
office of the Register of Deeds for the province or city where the land lies.
It is to be noted that though the subject land was deeded to petitioner as early as 05
December 1995, it was not until 06 June 1996 that the conveyance was registered, and, during
that interregnum, the land was subjected to a levy on attachment. It should also be observed
that, at the time of the attachment of the property on 23 April 1996, the spouses Uy were still
the registered owners of said property. Under the cited law, the execution of the deed of sale in
favor of petitioner was not enough as a succeeding step had to be taken, which was the
registration of the sale from the spouses Uy to him. Insofar as third persons are concerned, what
validly transfers or conveys a persons interest in real property is the registration of the deed.
Thus, when petitioner bought the property on 05 December 1995, it was, at that point, no more
than a private transaction between him and the spouses Uy. It needed to be registered before it
could bind third parties, including respondents. When the registration finally took place on 06
June 1996, it was already too late because, by then, the levy in favor of respondents, pursuant to
the preliminary attachment ordered by the General Santos City RTC, had already been annotated
on the title.
The settled rule is that levy on attachment, duly registered, takes preference over a prior
unregistered sale.[17] This result is a necessary consequence of the fact that the property
involved was duly covered by the Torrens system which works under the fundamental principle
that registration is the operative act which gives validity to the transfer or creates a lien upon
the land.[18]
The preference created by the levy on attachment is not diminished even by the
subsequent registration of the prior sale. This is so because an attachment is a proceeding in
rem.[19] It is against the particular property, enforceable against the whole world. The attaching
creditor acquires a specific lien on the attached property which nothing can subsequently
destroy except the very dissolution of the attachment or levy itself. [20] Such a proceeding, in
effect, means that the property attached is an indebted thing and a virtual condemnation of it to
pay the owners debt.[21] The lien continues until the debt is paid, or sale is had under execution
issued on the judgment, or until the judgment is satisfied, or the attachment discharged or
vacated in some manner provided by law.

Thus, in the registry, the attachment in favor of respondents appeared in the nature of a
real lien when petitioner had his purchase recorded. The effect of the notation of said lien was to
subject and subordinate the right of petitioner, as purchaser, to the lien. Petitioner acquired
ownership of the land only from the date of the recording of his title in the register, and the right
of ownership which he inscribed was not absolute but a limited right, subject to a prior
registered lien of respondents, a right which is preferred and superior to that of petitioner. [22]
Anent petitioners reliance on the rulings laid down in Manliguez v. Court of
Appeals and Santos v. Bayhon, we find the same to be misplaced. These cases did not deal at all
with the dilemma at hand, i.e. the question of whether or not a registered writ of attachment on
land is superior to that of an earlier unregistered deed of sale. In Santos, what was involved were
machinery and pieces of equipment which were executed upon pursuant to the favorable ruling
of the National Labor Relations Commission. A third party claimed that the machinery were
already sold to her, but it does not appear in the facts of the case if such sale was ever
registered. Manliguez is similar to Santos, except that the former involved buildings and
improvements on a piece of land. To stress, in both cited cases, the registration of the sale, if
any, of the subject properties was never in issue.
As to petitioners invocation of equity, we cannot, at this instance, yield to such principle in
the presence of a law clearly applicable to the case. We reiterate that this Court, while aware of
its equity jurisdiction, is first and foremost, a court of law. [23] While equity might tilt on the side of
one party, the same cannot be enforced so as to overrule positive provisions of law in favor of
the other.[24] Equity cannot supplant or contravene the law. [25] The rule must stand no matter how
harsh it may seem. Dura lex sed lex.
WHEREFORE, the appealed Decision of the Court of Appeals in CA-G.R. SP No. 43082
dated 25 September 1997, and its Resolution dated 10 February 1998, are hereby AFFIRMED. No
costs.
SO ORDERED.
Puno, (Chairman), Austria-Martinez, Callejo, Sr., and Tinga, JJ., concur.

5. G.R. No. L-11390

March 26, 1918

EL BANCO ESPAOL-FILIPINO, plaintiff-appellant,


vs.
VICENTE PALANCA, administrator of the estate of Engracio Palanca
Tanquinyeng, defendant-appellant.
Aitken and DeSelms for appellant.
Hartigan and Welch for appellee.
STREET, J.:
This action was instituted upon March 31, 1908, by "El Banco Espanol-Filipino" to foreclose a
mortgage upon various parcels of real property situated in the city of Manila. The mortgage in
question is dated June 16, 1906, and was executed by the original defendant herein, Engracio
Palanca Tanquinyeng y Limquingco, as security for a debt owing by him to the bank. Upon March
31, 1906, the debt amounted to P218,294.10 and was drawing interest at the rate of 8 per
centum per annum, payable at the end of each quarter. It appears that the parties to this
mortgage at that time estimated the value of the property in question at P292,558, which was
about P75,000 in excess of the indebtedness. After the execution of this instrument by the
mortgagor, he returned to China which appears to have been his native country; and he there
died, upon January 29, 1810, without again returning to the Philippine Islands.
As the defendant was a nonresident at the time of the institution of the present action, it was
necessary for the plaintiff in the foreclosure proceeding to give notice to the defendant by
publication pursuant to section 399 of the Code of Civil Procedure. An order for publication was
accordingly obtained from the court, and publication was made in due form in a newspaper of
the city of Manila. At the same time that the order of the court should deposit in the post office
in a stamped envelope a copy of the summons and complaint directed to the defendant at his
last place of residence, to wit, the city of Amoy, in the Empire of China. This order was made
pursuant to the following provision contained in section 399 of the Code of Civil Procedure:
In case of publication, where the residence of a nonresident or absent defendant is
known, the judge must direct a copy of the summons and complaint to be forthwith
deposited by the clerk in the post-office, postage prepaid, directed to the person to be
served, at his place of residence
Whether the clerk complied with this order does not affirmatively appear. There is, however,
among the papers pertaining to this case, an affidavit, dated April 4, 1908, signed by Bernardo
Chan y Garcia, an employee of the attorneys of the bank, showing that upon that date he had
deposited in the Manila post-office a registered letter, addressed to Engracio Palanca
Tanquinyeng, at Manila, containing copies of the complaint, the plaintiff's affidavit, the
summons, and the order of the court directing publication as aforesaid. It appears from the
postmaster's receipt that Bernardo probably used an envelope obtained from the clerk's office,
as the receipt purports to show that the letter emanated from the office.
The cause proceeded in usual course in the Court of First Instance; and the defendant not having
appeared, judgment was, upon July 2, 1908, taken against him by default. Upon July 3, 1908, a

decision was rendered in favor of the plaintiff. In this decision it was recited that publication had
been properly made in a periodical, but nothing was said about this notice having been given
mail. The court, upon this occasion, found that the indebtedness of the defendant amounted to
P249,355. 32, with interest from March 31, 1908. Accordingly it was ordered that the defendant
should, on or before July 6, 1908, deliver said amount to the clerk of the court to be applied to
the satisfaction of the judgment, and it was declared that in case of the failure of the defendant
to satisfy the judgment within such period, the mortgage property located in the city of Manila
should be exposed to public sale. The payment contemplated in said order was never made; and
upon July 8, 1908, the court ordered the sale of the property. The sale took place upon July 30,
1908, and the property was bought in by the bank for the sum of P110,200. Upon August 7,
1908, this sale was confirmed by the court.
About seven years after the confirmation of this sale, or to the precise, upon June 25, 1915, a
motion was made in this cause by Vicente Palanca, as administrator of the estate of the original
defendant, Engracio Palanca Tanquinyeng y Limquingco, wherein the applicant requested the
court to set aside the order of default of July 2, 1908, and the judgment rendered upon July 3,
1908, and to vacate all the proceedings subsequent thereto. The basis of this application, as set
forth in the motion itself, was that the order of default and the judgment rendered thereon were
void because the court had never acquired jurisdiction over the defendant or over the subject of
the action.
At the hearing in the court below the application to vacate the judgment was denied, and from
this action of the court Vicente Planca, as administrator of the estate of the original defendant,
has appealed. No other feature of the case is here under consideration than such as related to
the action of the court upon said motion.
The case presents several questions of importance, which will be discussed in what appears to
be the sequence of most convenient development. In the first part of this opinion we shall, for
the purpose of argument, assume that the clerk of the Court of First Instance did not obey the
order of the court in the matter of mailing the papers which he was directed to send to the
defendant in Amoy; and in this connection we shall consider, first, whether the court acquired
the necessary jurisdiction to enable it to proceed with the foreclosure of the mortgage and,
secondly, whether those proceedings were conducted in such manner as to constitute due
process of law.
The word "jurisdiction," as applied to the faculty of exercising judicial power, is used in several
different, though related, senses since it may have reference (1) to the authority of the court to
entertain a particular kind of action or to administer a particular kind of relief, or it may refer to
the power of the court over the parties, or (2) over the property which is the subject to the
litigation.
The sovereign authority which organizes a court determines the nature and extent of its powers
in general and thus fixes its competency or jurisdiction with reference to the actions which it
may entertain and the relief it may grant.
Jurisdiction over the person is acquired by the voluntary appearance of a party in court and his
submission to its authority, or it is acquired by the coercive power of legal process exerted over
the person.
Jurisdiction over the property which is the subject of the litigation may result either from a
seizure of the property under legal process, whereby it is brought into the actual custody of the
law, or it may result from the institution of legal proceedings wherein, under special provisions of
law, the power of the court over the property is recognized and made effective. In the latter case
the property, though at all times within the potential power of the court, may never be taken

into actual custody at all. An illustration of the jurisdiction acquired by actual seizure is found in
attachment proceedings, where the property is seized at the beginning of the action, or some
subsequent stage of its progress, and held to abide the final event of the litigation. An
illustration of what we term potential jurisdiction over the res, is found in the proceeding to
register the title of land under our system for the registration of land. Here the court, without
taking actual physical control over the property assumes, at the instance of some person
claiming to be owner, to exercise a jurisdiction in rem over the property and to adjudicate the
title in favor of the petitioner against all the world.
In the terminology of American law the action to foreclose a mortgage is said to be a proceeding
quasi in rem, by which is expressed the idea that while it is not strictly speaking an action in
rem yet it partakes of that nature and is substantially such. The expression "action in rem" is, in
its narrow application, used only with reference to certain proceedings in courts of admiralty
wherein the property alone is treated as responsible for the claim or obligation upon which the
proceedings are based. The action quasi rem differs from the true action in rem in the
circumstance that in the former an individual is named as defendant, and the purpose of the
proceeding is to subject his interest therein to the obligation or lien burdening the property. All
proceedings having for their sole object the sale or other disposition of the property of the
defendant, whether by attachment, foreclosure, or other form of remedy, are in a general way
thus designated. The judgment entered in these proceedings is conclusive only between the
parties.
In speaking of the proceeding to foreclose a mortgage the author of a well known treaties, has
said:
Though nominally against person, such suits are to vindicate liens; they proceed upon
seizure; they treat property as primarily indebted; and, with the qualification abovementioned, they are substantially property actions. In the civil law, they are styled
hypothecary actions, and their sole object is the enforcement of the lien against
the res; in the common law, they would be different in chancery did not treat the
conditional conveyance as a mere hypothecation, and the creditor's right ass an
equitable lien; so, in both, the suit is real action so far as it is against property, and
seeks the judicial recognition of a property debt, and an order for the sale of
the res. (Waples, Proceedings In Rem. sec. 607.)
It is true that in proceedings of this character, if the defendant for whom publication is made
appears, the action becomes as to him a personal action and is conducted as such. This,
however, does not affect the proposition that where the defendant fails to appear the action
is quasi in rem; and it should therefore be considered with reference to the principles governing
actions in rem.
There is an instructive analogy between the foreclosure proceeding and an action of attachment,
concerning which the Supreme Court of the United States has used the following language:
If the defendant appears, the cause becomes mainly a suit in personam, with the
added incident, that the property attached remains liable, under the control of the
court, to answer to any demand which may be established against the defendant by
the final judgment of the court. But, if there is no appearance of the defendant, and no
service of process on him, the case becomes, in its essential nature, a proceeding in
rem, the only effect of which is to subject the property attached to the payment of the
defendant which the court may find to be due to the plaintiff. (Cooper vs. Reynolds, 10
Wall., 308.)

In an ordinary attachment proceeding, if the defendant is not personally served, the preliminary
seizure is to, be considered necessary in order to confer jurisdiction upon the court. In this case
the lien on the property is acquired by the seizure; and the purpose of the proceedings is to
subject the property to that lien. If a lien already exists, whether created by mortgage, contract,
or statute, the preliminary seizure is not necessary; and the court proceeds to enforce such lien
in the manner provided by law precisely as though the property had been seized upon
attachment. (Roller vs. Holly, 176 U. S., 398, 405; 44 L. ed., 520.) It results that the mere
circumstance that in an attachment the property may be seized at the inception of the
proceedings, while in the foreclosure suit it is not taken into legal custody until the time comes
for the sale, does not materially affect the fundamental principle involved in both cases, which is
that the court is here exercising a jurisdiction over the property in a proceeding directed
essentially in rem.
Passing now to a consideration of the jurisdiction of the Court of First Instance in a mortgage
foreclosure, it is evident that the court derives its authority to entertain the action primarily from
the statutes organizing the court. The jurisdiction of the court, in this most general sense, over
the cause of action is obvious and requires no comment. Jurisdiction over the person of the
defendant, if acquired at all in such an action, is obtained by the voluntary submission of the
defendant or by the personal service of process upon him within the territory where the process
is valid. If, however, the defendant is a nonresident and, remaining beyond the range of the
personal process of the court, refuses to come in voluntarily, the court never acquires
jurisdiction over the person at all. Here the property itself is in fact the sole thing which is
impleaded and is the responsible object which is the subject of the exercise of judicial power. It
follows that the jurisdiction of the court in such case is based exclusively on the power which,
under the law, it possesses over the property; and any discussion relative to the jurisdiction of
the court over the person of the defendant is entirely apart from the case. The jurisdiction of the
court over the property, considered as the exclusive object of such action, is evidently based
upon the following conditions and considerations, namely: (1) that the property is located within
the district; (2) that the purpose of the litigation is to subject the property by sale to an
obligation fixed upon it by the mortgage; and (3) that the court at a proper stage of the
proceedings takes the property into custody, if necessary, and expose it to sale for the purpose
of satisfying the mortgage debt. An obvious corollary is that no other relief can be granted in this
proceeding than such as can be enforced against the property.
We may then, from what has been stated, formulated the following proposition relative to the
foreclosure proceeding against the property of a nonresident mortgagor who fails to come in and
submit himself personally to the jurisdiction of the court: (I) That the jurisdiction of the court is
derived from the power which it possesses over the property; (II) that jurisdiction over the
person is not acquired and is nonessential; (III) that the relief granted by the court must be
limited to such as can be enforced against the property itself.
It is important that the bearing of these propositions be clearly apprehended, for there are many
expressions in the American reports from which it might be inferred that the court acquires
personal jurisdiction over the person of the defendant by publication and notice; but such is not
the case. In truth the proposition that jurisdiction over the person of a nonresident cannot be
acquired by publication and notice was never clearly understood even in the American courts
until after the decision had been rendered by the Supreme Court of the United States in the
leading case of Pennoyer vs. Neff (95 U. S. 714; 24 L. ed., 565). In the light of that decision, and
of other decisions which have subsequently been rendered in that and other courts, the
proposition that jurisdiction over the person cannot be thus acquired by publication and notice is
no longer open to question; and it is now fully established that a personal judgment upon
constructive or substituted service against a nonresident who does not appear is wholly invalid.
This doctrine applies to all kinds of constructive or substituted process, including service by
publication and personal service outside of the jurisdiction in which the judgment is rendered;
and the only exception seems to be found in the case where the nonresident defendant has

expressly or impliedly consented to the mode of service. (Note to Raher vs. Raher, 35 L. R. A. [N.
S. ], 292; see also 50 L .R. A., 585; 35 L. R. A. [N. S.], 312
The idea upon which the decision in Pennoyer vs. Neff (supra) proceeds is that the process from
the tribunals of one State cannot run into other States or countries and that due process of law
requires that the defendant shall be brought under the power of the court by service of process
within the State, or by his voluntary appearance, in order to authorize the court to pass upon the
question of his personal liability. The doctrine established by the Supreme Court of the United
States on this point, being based upon the constitutional conception of due process of law, is
binding upon the courts of the Philippine Islands. Involved in this decision is the principle that in
proceedings in rem or quasi in rem against a nonresident who is not served personally within the
state, and who does not appear, the relief must be confined to the res, and the court cannot
lawfully render a personal judgment against him. (Dewey vs. Des Moines, 173 U. S., 193; 43 L.
ed., 665; Heidritter vs. Elizabeth Oil Cloth Co., 112 U. S., 294; 28 L. ed., 729.) Therefore in an
action to foreclose a mortgage against a nonresident, upon whom service has been effected
exclusively by publication, no personal judgment for the deficiency can be entered. (Latta vs.
Tutton, 122 Cal., 279; Blumberg vs. Birch, 99 Cal., 416.)
It is suggested in the brief of the appellant that the judgment entered in the court below offends
against the principle just stated and that this judgment is void because the court in fact entered
a personal judgment against the absent debtor for the full amount of the indebtedness secured
by the mortgage. We do not so interpret the judgment.
In a foreclosure proceeding against a nonresident owner it is necessary for the court, as in all
cases of foreclosure, to ascertain the amount due, as prescribed in section 256 of the Code of
Civil Procedure, and to make an order requiring the defendant to pay the money into court. This
step is a necessary precursor of the order of sale. In the present case the judgment which was
entered contains the following words:
Because it is declared that the said defendant Engracio Palanca Tanquinyeng y
Limquingco, is indebted in the amount of P249,355.32, plus the interest, to the 'Banco
Espanol-Filipino' . . . therefore said appellant is ordered to deliver the above amount
etc., etc.
This is not the language of a personal judgment. Instead it is clearly intended merely as a
compliance with the requirement that the amount due shall be ascertained and that the
evidence of this it may be observed that according to the Code of Civil Procedure a personal
judgment against the debtor for the deficiency is not to be rendered until after the property has
been sold and the proceeds applied to the mortgage debt. (sec. 260).
The conclusion upon this phase of the case is that whatever may be the effect in other respects
of the failure of the clerk of the Court of First Instance to mail the proper papers to the defendant
in Amoy, China, such irregularity could in no wise impair or defeat the jurisdiction of the court,
for in our opinion that jurisdiction rest upon a basis much more secure than would be supplied by
any form of notice that could be given to a resident of a foreign country.
Before leaving this branch of the case, we wish to observe that we are fully aware that many
reported cases can be cited in which it is assumed that the question of the sufficiency of
publication or notice in a case of this kind is a question affecting the jurisdiction of the court, and
the court is sometimes said to acquire jurisdiction by virtue of the publication. This phraseology
was undoubtedly originally adopted by the court because of the analogy between service by the
publication and personal service of process upon the defendant; and, as has already been
suggested, prior to the decision of Pennoyer vs. Neff (supra) the difference between the legal
effects of the two forms of service was obscure. It is accordingly not surprising that the modes of

expression which had already been molded into legal tradition before that case was decided
have been brought down to the present day. But it is clear that the legal principle here involved
is not effected by the peculiar language in which the courts have expounded their ideas.
We now proceed to a discussion of the question whether the supposed irregularity in the
proceedings was of such gravity as to amount to a denial of that "due process of law" which was
secured by the Act of Congress in force in these Islands at the time this mortgage was
foreclosed. (Act of July 1, 1902, sec. 5.) In dealing with questions involving the application of the
constitutional provisions relating to due process of law the Supreme Court of the United States
has refrained from attempting to define with precision the meaning of that expression, the
reason being that the idea expressed therein is applicable under so many diverse conditions as
to make any attempt ay precise definition hazardous and unprofitable. As applied to a judicial
proceeding, however, it may be laid down with certainty that the requirement of due process is
satisfied if the following conditions are present, namely; (1) There must be a court or tribunal
clothed with judicial power to hear and determine the matter before it; (2) jurisdiction must be
lawfully acquired over the person of the defendant or over the property which is the subject of
the proceeding; (3) the defendant must be given an opportunity to be heard; and (4) judgment
must be rendered upon lawful hearing.
Passing at once to the requisite that the defendant shall have an opportunity to be heard, we
observe that in a foreclosure case some notification of the proceedings to the nonresident
owner, prescribing the time within which appearance must be made, is everywhere recognized
as essential. To answer this necessity the statutes generally provide for publication, and usually
in addition thereto, for the mailing of notice to the defendant, if his residence is known. Though
commonly called constructive, or substituted service of process in any true sense. It is merely a
means provided by law whereby the owner may be admonished that his property is the subject
of judicial proceedings and that it is incumbent upon him to take such steps as he sees fit to
protect it. In speaking of notice of this character a distinguish master of constitutional law has
used the following language:
. . . if the owners are named in the proceedings, and personal notice is provided for, it
is rather from tenderness to their interests, and in order to make sure that the
opportunity for a hearing shall not be lost to them, than from any necessity that the
case shall assume that form. (Cooley on Taxation [2d. ed.], 527, quoted in Leigh vs.
Green, 193 U. S., 79, 80.)
It will be observed that this mode of notification does not involve any absolute assurance that
the absent owner shall thereby receive actual notice. The periodical containing the publication
may never in fact come to his hands, and the chances that he should discover the notice may
often be very slight. Even where notice is sent by mail the probability of his receiving it, though
much increased, is dependent upon the correctness of the address to which it is forwarded as
well as upon the regularity and security of the mail service. It will be noted, furthermore, that the
provision of our law relative to the mailing of notice does not absolutely require the mailing of
notice unconditionally and in every event, but only in the case where the defendant's residence
is known. In the light of all these facts, it is evident that actual notice to the defendant in cases
of this kind is not, under the law, to be considered absolutely necessary.
The idea upon which the law proceeds in recognizing the efficacy of a means of notification
which may fall short of actual notice is apparently this: Property is always assumed to be in the
possession of its owner, in person or by agent; and he may be safely held, under certain
conditions, to be affected with knowledge that proceedings have been instituted for its
condemnation and sale.

It is the duty of the owner of real estate, who is a nonresident, to take measures that
in some way he shall be represented when his property is called into requisition, and if
he fails to do this, and fails to get notice by the ordinary publications which have
usually been required in such cases, it is his misfortune, and he must abide the
consequences. (6 R. C. L., sec. 445 [p. 450]).
It has been well said by an American court:
If property of a nonresident cannot be reached by legal process upon the constructive
notice, then our statutes were passed in vain, and are mere empty legislative
declarations, without either force, or meaning; for if the person is not within the
jurisdiction of the court, no personal judgment can be rendered, and if the judgment
cannot operate upon the property, then no effective judgment at all can be rendered,
so that the result would be that the courts would be powerless to assist a citizen
against a nonresident. Such a result would be a deplorable one. (Quarl vs. Abbett, 102
Ind., 233; 52 Am. Rep., 662, 667.)
It is, of course universally recognized that the statutory provisions relative to publication or other
form of notice against a nonresident owner should be complied with; and in respect to the
publication of notice in the newspaper it may be stated that strict compliance with the
requirements of the law has been held to be essential. In Guaranty Trust etc. Co. vs. Green Cove
etc., Railroad Co. (139 U. S., 137, 138), it was held that where newspaper publication was made
for 19 weeks, when the statute required 20, the publication was insufficient.
With respect to the provisions of our own statute, relative to the sending of notice by mail, the
requirement is that the judge shall direct that the notice be deposited in the mail by the clerk of
the court, and it is not in terms declared that the notice must be deposited in the mail. We
consider this to be of some significance; and it seems to us that, having due regard to the
principles upon which the giving of such notice is required, the absent owner of the mortgaged
property must, so far as the due process of law is concerned, take the risk incident to the
possible failure of the clerk to perform his duty, somewhat as he takes the risk that the mail
clerk or the mail carrier might possibly lose or destroy the parcel or envelope containing the
notice before it should reach its destination and be delivered to him. This idea seems to be
strengthened by the consideration that placing upon the clerk the duty of sending notice by
mail, the performance of that act is put effectually beyond the control of the plaintiff in the
litigation. At any rate it is obvious that so much of section 399 of the Code of Civil Procedure as
relates to the sending of notice by mail was complied with when the court made the order. The
question as to what may be the consequences of the failure of the record to show the proof of
compliance with that requirement will be discussed by us further on.
The observations which have just been made lead to the conclusion that the failure of the clerk
to mail the notice, if in fact he did so fail in his duty, is not such an irregularity, as amounts to a
denial of due process of law; and hence in our opinion that irregularity, if proved, would not
avoid the judgment in this case. Notice was given by publication in a newspaper and this is the
only form of notice which the law unconditionally requires. This in our opinion is all that was
absolutely necessary to sustain the proceedings.
It will be observed that in considering the effect of this irregularity, it makes a difference whether
it be viewed as a question involving jurisdiction or as a question involving due process of law. In
the matter of jurisdiction there can be no distinction between the much and the little. The court
either has jurisdiction or it has not; and if the requirement as to the mailing of notice should be
considered as a step antecedent to the acquiring of jurisdiction, there could be no escape from
the conclusion that the failure to take that step was fatal to the validity of the judgment. In the
application of the idea of due process of law, on the other hand, it is clearly unnecessary to be

so rigorous. The jurisdiction being once established, all that due process of law thereafter
requires is an opportunity for the defendant to be heard; and as publication was duly made in
the newspaper, it would seem highly unreasonable to hold that failure to mail the notice was
fatal. We think that in applying the requirement of due process of law, it is permissible to reflect
upon the purposes of the provision which is supposed to have been violated and the principle
underlying the exercise of judicial power in these proceedings. Judge in the light of these
conceptions, we think that the provision of Act of Congress declaring that no person shall be
deprived of his property without due process of law has not been infringed.
In the progress of this discussion we have stated the two conclusions; (1) that the failure of the
clerk to send the notice to the defendant by mail did not destroy the jurisdiction of the court and
(2) that such irregularity did not infringe the requirement of due process of law. As a
consequence of these conclusions the irregularity in question is in some measure shorn of its
potency. It is still necessary, however, to consider its effect considered as a simple irregularity of
procedure; and it would be idle to pretend that even in this aspect the irregularity is not grave
enough. From this point of view, however, it is obvious that any motion to vacate the judgment
on the ground of the irregularity in question must fail unless it shows that the defendant was
prejudiced by that irregularity. The least, therefore, that can be required of the proponent of such
a motion is to show that he had a good defense against the action to foreclose the mortgage.
Nothing of the kind is, however, shown either in the motion or in the affidavit which accompanies
the motion.
An application to open or vacate a judgment because of an irregularity or defect in the
proceedings is usually required to be supported by an affidavit showing the grounds on which
the relief is sought, and in addition to this showing also a meritorious defense to the action. It is
held that a general statement that a party has a good defense to the action is insufficient. The
necessary facts must be averred. Of course if a judgment is void upon its face a showing of the
existence of a meritorious defense is not necessary. (10 R. C. L., 718.)
The lapse of time is also a circumstance deeply affecting this aspect of the case. In this
connection we quote the following passage from the encyclopedic treatise now in course of
publication:
Where, however, the judgment is not void on its face, and may therefore be enforced
if permitted to stand on the record, courts in many instances refuse to exercise their
quasi equitable powers to vacate a judgement after the lapse of the term ay which it
was entered, except in clear cases, to promote the ends of justice, and where it
appears that the party making the application is himself without fault and has acted in
good faith and with ordinary diligence. Laches on the part of the applicant, if
unexplained, is deemed sufficient ground for refusing the relief to which he might
otherwise be entitled. Something is due to the finality of judgments, and acquiescence
or unnecessary delay is fatal to motions of this character, since courts are always
reluctant to interfere with judgments, and especially where they have been executed
or satisfied. The moving party has the burden of showing diligence, and unless it is
shown affirmatively the court will not ordinarily exercise its discretion in his favor. (15
R. C. L., 694, 695.)
It is stated in the affidavit that the defendant, Engracio Palanca Tanquinyeng y Limquingco, died
January 29, 1910. The mortgage under which the property was sold was executed far back in
1906; and the proceedings in the foreclosure were closed by the order of court confirming the
sale dated August 7, 1908. It passes the rational bounds of human credulity to suppose that a
man who had placed a mortgage upon property worth nearly P300,000 and had then gone away
from the scene of his life activities to end his days in the city of Amoy, China, should have long
remained in ignorance of the fact that the mortgage had been foreclosed and the property sold,
even supposing that he had no knowledge of those proceedings while they were being

conducted. It is more in keeping with the ordinary course of things that he should have acquired
information as to what was transpiring in his affairs at Manila; and upon the basis of this rational
assumption we are authorized, in the absence of proof to the contrary, to presume that he did
have, or soon acquired, information as to the sale of his property.
The Code of Civil Procedure, indeed, expressly declares that there is a presumption that things
have happened according to the ordinary habits of life (sec. 334 [26]); and we cannot conceive
of a situation more appropriate than this for applying the presumption thus defined by the
lawgiver. In support of this presumption, as applied to the present case, it is permissible to
consider the probability that the defendant may have received actual notice of these
proceedings from the unofficial notice addressed to him in Manila which was mailed by an
employee of the bank's attorneys. Adopting almost the exact words used by the Supreme Court
of the United States in Grannis vs. Ordeans (234 U. S., 385; 58 L. ed., 1363), we may say that in
view of the well-known skill of postal officials and employees in making proper delivery of letters
defectively addressed, we think the presumption is clear and strong that this notice reached the
defendant, there being no proof that it was ever returned by the postal officials as undelivered.
And if it was delivered in Manila, instead of being forwarded to Amoy, China, there is a
probability that the recipient was a person sufficiently interested in his affairs to send it or
communicate its contents to him.
Of course if the jurisdiction of the court or the sufficiency of the process of law depended upon
the mailing of the notice by the clerk, the reflections in which we are now indulging would be idle
and frivolous; but the considerations mentioned are introduced in order to show the propriety of
applying to this situation the legal presumption to which allusion has been made. Upon that
presumption, supported by the circumstances of this case, ,we do not hesitate to found the
conclusion that the defendant voluntarily abandoned all thought of saving his property from the
obligation which he had placed upon it; that knowledge of the proceedings should be imputed to
him; and that he acquiesced in the consequences of those proceedings after they had been
accomplished. Under these circumstances it is clear that the merit of this motion is, as we have
already stated, adversely affected in a high degree by the delay in asking for relief. Nor is it an
adequate reply to say that the proponent of this motion is an administrator who only qualified a
few months before this motion was made. No disability on the part of the defendant himself
existed from the time when the foreclosure was effected until his death; and we believe that the
delay in the appointment of the administrator and institution of this action is a circumstance
which is imputable to the parties in interest whoever they may have been. Of course if the minor
heirs had instituted an action in their own right to recover the property, it would have been
different.
It is, however, argued that the defendant has suffered prejudice by reason of the fact that the
bank became the purchaser of the property at the foreclosure sale for a price greatly below that
which had been agreed upon in the mortgage as the upset price of the property. In this
connection, it appears that in article nine of the mortgage which was the subject of this
foreclosure, as amended by the notarial document of July 19, 1906, the parties to this mortgage
made a stipulation to the effect that the value therein placed upon the mortgaged properties
should serve as a basis of sale in case the debt should remain unpaid and the bank should
proceed to a foreclosure. The upset price stated in that stipulation for all the parcels involved in
this foreclosure was P286,000. It is said in behalf of the appellant that when the bank bought in
the property for the sum of P110,200 it violated that stipulation.
It has been held by this court that a clause in a mortgage providing for a tipo, or upset price,
does not prevent a foreclosure, nor affect the validity of a sale made in the foreclosure
proceedings. (Yangco vs. Cruz Herrera and Wy Piaco, 11 Phil. Rep., 402; Banco-Espaol Filipino
vs. Donaldson, Sim and Co., 5 Phil. Rep., 418.) In both the cases here cited the property was
purchased at the foreclosure sale, not by the creditor or mortgagee, but by a third party.
Whether the same rule should be applied in a case where the mortgagee himself becomes the

purchaser has apparently not been decided by this court in any reported decision, and this
question need not here be considered, since it is evident that if any liability was incurred by the
bank by purchasing for a price below that fixed in the stipulation, its liability was a personal
liability derived from the contract of mortgage; and as we have already demonstrated such a
liability could not be the subject of adjudication in an action where the court had no jurisdiction
over the person of the defendant. If the plaintiff bank became liable to account for the difference
between the upset price and the price at which in bought in the property, that liability remains
unaffected by the disposition which the court made of this case; and the fact that the bank may
have violated such an obligation can in no wise affect the validity of the judgment entered in the
Court of First Instance.
In connection with the entire failure of the motion to show either a meritorious defense to the
action or that the defendant had suffered any prejudice of which the law can take notice, we
may be permitted to add that in our opinion a motion of this kind, which proposes to unsettle
judicial proceedings long ago closed, can not be considered with favor, unless based upon
grounds which appeal to the conscience of the court. Public policy requires that judicial
proceedings be upheld. The maximum here applicable is non quieta movere. As was once said
by Judge Brewer, afterwards a member of the Supreme Court of the United States:
Public policy requires that judicial proceedings be upheld, and that titles obtained in
those proceedings be safe from the ruthless hand of collateral attack. If technical
defects are adjudged potent to destroy such titles, a judicial sale will never realize that
value of the property, for no prudent man will risk his money in bidding for and buying
that title which he has reason to fear may years thereafter be swept away through
some occult and not readily discoverable defect. (Martin vs. Pond, 30 Fed., 15.)
In the case where that language was used an attempt was made to annul certain foreclosure
proceedings on the ground that the affidavit upon which the order of publication was based
erroneously stated that the State of Kansas, when he was in fact residing in another State. It was
held that this mistake did not affect the validity of the proceedings.
In the preceding discussion we have assumed that the clerk failed to send the notice by post as
required by the order of the court. We now proceed to consider whether this is a proper
assumption; and the proposition which we propose to establish is that there is a legal
presumption that the clerk performed his duty as the ministerial officer of the court, which
presumption is not overcome by any other facts appearing in the cause.
In subsection 14 of section 334 of the Code of Civil Procedure it is declared that there is a
presumption "that official duty has been regularly performed;" and in subsection 18 it is declared
that there is a presumption "that the ordinary course of business has been followed." These
presumptions are of course in no sense novelties, as they express ideas which have always been
recognized. Omnia presumuntur rite et solemniter esse acta donec probetur in contrarium. There
is therefore clearly a legal presumption that the clerk performed his duty about mailing this
notice; and we think that strong considerations of policy require that this presumption should be
allowed to operate with full force under the circumstances of this case. A party to an action has
no control over the clerk of the court; and has no right to meddle unduly with the business of the
clerk in the performance of his duties. Having no control over this officer, the litigant must
depend upon the court to see that the duties imposed on the clerk are performed.
Other considerations no less potent contribute to strengthen the conclusion just stated. There is
no principle of law better settled than that after jurisdiction has once been required, every act of
a court of general jurisdiction shall be presumed to have been rightly done. This rule is applied
to every judgment or decree rendered in the various stages of the proceedings from their
initiation to their completion (Voorhees vs. United States Bank, 10 Pet., 314; 35 U. S., 449); and

if the record is silent with respect to any fact which must have been established before the court
could have rightly acted, it will be presumed that such fact was properly brought to its
knowledge. (The Lessee of Grignon vs. Astor, 2 How., 319; 11 L. ed., 283.)
In making the order of sale [of the real state of a decedent] the court are presumed to
have adjudged every question necessary to justify such order or decree, viz: The
death of the owners; that the petitioners were his administrators; that the personal
estate was insufficient to pay the debts of the deceased; that the private acts of
Assembly, as to the manner of sale, were within the constitutional power of the
Legislature, and that all the provisions of the law as to notices which are directory to
the administrators have been complied with. . . . The court is not bound to enter upon
the record the evidence on which any fact was decided. (Florentine vs. Barton, 2 Wall.,
210; 17 L. ed., 785.) Especially does all this apply after long lapse of time.
Applegate vs. Lexington and Carter County Mining Co. (117 U. S., 255) contains an instructive
discussion in a case analogous to that which is now before us. It there appeared that in order to
foreclose a mortgage in the State of Kentucky against a nonresident debtor it was necessary that
publication should be made in a newspaper for a specified period of time, also be posted at the
front door of the court house and be published on some Sunday, immediately after divine
service, in such church as the court should direct. In a certain action judgment had been entered
against a nonresident, after publication in pursuance of these provisions. Many years later the
validity of the proceedings was called in question in another action. It was proved from the files
of an ancient periodical that publication had been made in its columns as required by law; but no
proof was offered to show the publication of the order at the church, or the posting of it at the
front door of the court-house. It was insisted by one of the parties that the judgment of the court
was void for lack of jurisdiction. But the Supreme Court of the United States said:
The court which made the decree . . . was a court of general jurisdiction. Therefore
every presumption not inconsistent with the record is to be indulged in favor of its
jurisdiction. . . . It is to be presumed that the court before making its decree took care
of to see that its order for constructive service, on which its right to make the decree
depended, had been obeyed.
It is true that in this case the former judgment was the subject of collateral , or indirect attack,
while in the case at bar the motion to vacate the judgment is direct proceeding for relief against
it. The same general presumption, however, is indulged in favor of the judgment of a court of
general jurisdiction, whether it is the subject of direct or indirect attack the only difference being
that in case of indirect attack the judgment is conclusively presumed to be valid unless the
record affirmatively shows it to be void, while in case of direct attack the presumption in favor of
its validity may in certain cases be overcome by proof extrinsic to the record.
The presumption that the clerk performed his duty and that the court made its decree with the
knowledge that the requirements of law had been complied with appear to be amply sufficient to
support the conclusion that the notice was sent by the clerk as required by the order. It is true
that there ought to be found among the papers on file in this cause an affidavit, as required by
section 400 of the Code of Civil Procedure, showing that the order was in fact so sent by the
clerk; and no such affidavit appears. The record is therefore silent where it ought to speak. But
the very purpose of the law in recognizing these presumptions is to enable the court to sustain a
prior judgment in the face of such an omission. If we were to hold that the judgment in this case
is void because the proper affidavit is not present in the file of papers which we call the record,
the result would be that in the future every title in the Islands resting upon a judgment like that
now before us would depend, for its continued security, upon the presence of such affidavit
among the papers and would be liable at any moment to be destroyed by the disappearance of
that piece of paper. We think that no court, with a proper regard for the security of judicial
proceedings and for the interests which have by law been confided to the courts, would incline

to favor such a conclusion. In our opinion the proper course in a case of this kind is to hold that
the legal presumption that the clerk performed his duty still maintains notwithstanding the
absence from the record of the proper proof of that fact.
In this connection it is important to bear in mind that under the practice prevailing in the
Philippine Islands the word "record" is used in a loose and broad sense, as indicating the
collective mass of papers which contain the history of all the successive steps taken in a case
and which are finally deposited in the archives of the clerk's office as a memorial of the
litigation. It is a matter of general information that no judgment roll, or book of final record, is
commonly kept in our courts for the purpose of recording the pleadings and principal
proceedings in actions which have been terminated; and in particular, no such record is kept in
the Court of First Instance of the city of Manila. There is, indeed, a section of the Code of Civil
Procedure which directs that such a book of final record shall be kept; but this provision has, as a
matter of common knowledge, been generally ignored. The result is that in the present case we
do not have the assistance of the recitals of such a record to enable us to pass upon the validity
of this judgment and as already stated the question must be determined by examining the
papers contained in the entire file.
But it is insisted by counsel for this motion that the affidavit of Bernardo Chan y Garcia showing
that upon April 4, 1908, he sent a notification through the mail addressed to the defendant at
Manila, Philippine Islands, should be accepted as affirmative proof that the clerk of the court
failed in his duty and that, instead of himself sending the requisite notice through the mail, he
relied upon Bernardo to send it for him. We do not think that this is by any means a necessary
inference. Of course if it had affirmatively appeared that the clerk himself had attempted to
comply with this order and had directed the notification to Manila when he should have directed
it to Amoy, this would be conclusive that he had failed to comply with the exact terms of the
order; but such is not this case. That the clerk of the attorneys for the plaintiff erroneously sent a
notification to the defendant at a mistaken address affords in our opinion very slight basis for
supposing that the clerk may not have sent notice to the right address.
There is undoubtedly good authority to support the position that when the record states the
evidence or makes an averment with reference to a jurisdictional fact, it will not be presumed
that there was other or different evidence respecting the fact, or that the fact was otherwise
than stated. If, to give an illustration, it appears from the return of the officer that the summons
was served at a particular place or in a particular manner, it will not be presumed that service
was also made at another place or in a different manner; or if it appears that service was made
upon a person other than the defendant, it will not be presumed, in the silence of the record,
that it was made upon the defendant also (Galpin vs. Page, 18 Wall., 350, 366; Settlemier vs.
Sullivan, 97 U. S., 444, 449). While we believe that these propositions are entirely correct as
applied to the case where the person making the return is the officer who is by law required to
make the return, we do not think that it is properly applicable where, as in the present case, the
affidavit was made by a person who, so far as the provisions of law are concerned, was a mere
intermeddler.
The last question of importance which we propose to consider is whether a motion in the cause
is admissible as a proceeding to obtain relief in such a case as this. If the motion prevails the
judgment of July 2, 1908, and all subsequent proceedings will be set aside, and the litigation will
be renewed, proceeding again from the date mentioned as if the progress of the action had not
been interrupted. The proponent of the motion does not ask the favor of being permitted to
interpose a defense. His purpose is merely to annul the effective judgment of the court, to the
end that the litigation may again resume its regular course.
There is only one section of the Code of Civil Procedure which expressly recognizes the authority
of a Court of First Instance to set aside a final judgment and permit a renewal of the litigation in
the same cause. This is as follows:

SEC. 113. Upon such terms as may be just the court may relieve a party or legal
representative from the judgment, order, or other proceeding taken against him
through his mistake, inadvertence, surprise, or excusable neglect; Provided, That
application thereof be made within a reasonable time, but in no case exceeding six
months after such judgment, order, or proceeding was taken.
An additional remedy by petition to the Supreme Court is supplied by section 513 of the same
Code. The first paragraph of this section, in so far as pertinent to this discussion, provides as
follows:
When a judgment is rendered by a Court of First Instance upon default, and a party
thereto is unjustly deprived of a hearing by fraud, accident, mistake or excusable
negligence, and the Court of First Instance which rendered the judgment has finally
adjourned so that no adequate remedy exists in that court, the party so deprived of a
hearing may present his petition to the Supreme Court within sixty days after he first
learns of the rendition of such judgment, and not thereafter, setting forth the facts and
praying to have judgment set aside. . . .
It is evident that the proceeding contemplated in this section is intended to supplement the
remedy provided by section 113; and we believe the conclusion irresistible that there is no other
means recognized by law whereby a defeated party can, by a proceeding in the same cause,
procure a judgment to be set aside, with a view to the renewal of the litigation.
The Code of Civil Procedure purports to be a complete system of practice in civil causes, and it
contains provisions describing with much fullness the various steps to be taken in the conduct of
such proceedings. To this end it defines with precision the method of beginning, conducting, and
concluding the civil action of whatever species; and by section 795 of the same Code it is
declared that the procedure in all civil action shall be in accordance with the provisions of this
Code. We are therefore of the opinion that the remedies prescribed in sections 113 and 513 are
exclusive of all others, so far as relates to the opening and continuation of a litigation which has
been once concluded.
The motion in the present case does not conform to the requirements of either of these
provisions; and the consequence is that in our opinion the action of the Court of First Instance in
dismissing the motion was proper.
If the question were admittedly one relating merely to an irregularity of procedure, we cannot
suppose that this proceeding would have taken the form of a motion in the cause, since it is
clear that, if based on such an error, the came to late for relief in the Court of First Instance. But
as we have already seen, the motion attacks the judgment of the court as void for want of
jurisdiction over the defendant. The idea underlying the motion therefore is that inasmuch as the
judgment is a nullity it can be attacked in any way and at any time. If the judgment were in fact
void upon its face, that is, if it were shown to be a nullity by virtue of its own recitals, there
might possibly be something in this. Where a judgment or judicial order is void in this sense it
may be said to be a lawless thing, which can be treated as an outlaw and slain at sight, or
ignored wherever and whenever it exhibits its head.
But the judgment in question is not void in any such sense. It is entirely regular in form, and the
alleged defect is one which is not apparent upon its face. It follows that even if the judgment
could be shown to be void for want of jurisdiction, or for lack of due process of law, the party
aggrieved thereby is bound to resort to some appropriate proceeding to obtain relief. Under
accepted principles of law and practice, long recognized in American courts, a proper remedy in
such case, after the time for appeal or review has passed, is for the aggrieved party to bring an
action to enjoin the judgment, if not already carried into effect; or if the property has already

been disposed of he may institute suit to recover it. In every situation of this character an
appropriate remedy is at hand; and if property has been taken without due process, the law
concedes due process to recover it. We accordingly old that, assuming the judgment to have
been void as alleged by the proponent of this motion, the proper remedy was by an original
proceeding and not by motion in the cause. As we have already seen our Code of Civil Procedure
defines the conditions under which relief against a judgment may be productive of conclusion for
this court to recognize such a proceeding as proper under conditions different from those
defined by law. Upon the point of procedure here involved, we refer to the case of People vs.
Harrison (84 Cal., 607) wherein it was held that a motion will not lie to vacate a judgment after
the lapse of the time limited by statute if the judgment is not void on its face; and in all cases,
after the lapse of the time limited by statute if the judgment is not void on its face; and all cases,
after the lapse of such time, when an attempt is made to vacate the judgment by a proceeding
in court for that purpose an action regularly brought is preferable, and should be required. It will
be noted taken verbatim from the California Code (sec. 473).
The conclusions stated in this opinion indicate that the judgment appealed from is without error,
and the same is accordingly affirmed, with costs. So ordered.
Arellano, C.J., Torres, Carson, and Avancea, JJ., concur.

Thereupon, on November 22, 1977, the defendant Kenneth O. Glass moved to quash the writ of
attachment on the grounds that there is no cause of action against him since the transactions or
claims of the plaintiff were entered into by and between the plaintiff and the K.O. Glass
Construction Co., Inc., a corporation duly organized and existing under Philippine laws; that there
is no ground for the issuance of the writ of preliminary attachment as defendant Kenneth O.
Glass never intended to leave the Philippines, and even if he does, plaintiff can not be prejudiced
thereby because his claims are against a corporation which has sufficient funds and property to
satisfy his claim; and that the money being garnished belongs to the K.O. Glass Corporation Co.,
Inc. and not to defendant Kenneth O. Glass. 3
By reason thereof, Pinzon amended his complaint to include K.O. Glass Construction Co., Inc. as
co-defendant of Kenneth O. Glass. 4

6. G.R. No. L-48756 September 11, 1982


K.O. GLASS CONSTRUCTION CO., INC., petitioner,
vs.
THE HONORABLE MANUEL VALENZUELA, Judge of the Court of First Instance of Rizal,
and ANTONIO D. PINZON, respondents.
Guillermo E. Aragones for petitioner.
Ruben V. Lopez for respondent Antonio D. Pinzon.

On January 26, 1978, the defendants therein filed a supplementary motion to discharge and/or
dissolve the writ of preliminary attachment upon the ground that the affidavit filed in support of
the motion for preliminary attachment was not sufficient or wanting in law for the reason that:
(1) the affidavit did not state that the amount of plaintiff's claim was above all legal set-offs or
counterclaims, as required by Sec. 3, Rule 57 of the Revised Rules of Court; (2) the affidavit did
not state that there is no other sufficient security for the claim sought to be recovered by the
action as also required by said Sec. 3; and (3) the affidavit did not specify any of the grounds
enumerated in Sec. 1 of Rule 57, 5 but, the respondent Judge denied the motion and ordered the
Philippine Geothermal, Inc. to deliver and deposit with the Clerk of Court the amount of
P37,190.00 immediately upon receipt of the order which amount shall remain so deposited to
await the judgment to be rendered in the case. 6
On June 19, 1978, the defendants therein filed a bond in the amount of P37,190.00 and asked
the court for the release of the same amount deposited with the Clerk of Court, 7 but, the
respondent Judge did not order the release of the money deposited. 8
Hence, the present recourse. As prayed for, the Court issued a temporary restraining order,
restraining the respondent Judge from further proceeding with the trial of the case. 9

CONCEPCION, JR., J.:

We find merit in the petition. The respondent Judge gravely abused his discretion in issuing the
writ of preliminary attachment and in not ordering the release of the money which had been
deposited with the Clerk of Court for the following reasons:

Petition for certiorari to annul and set aside the writ of preliminary attachment issued by the
respondent Judge in Civil Case No. 5902-P of the Court of First Instance of Rizal, entitled: Antonio
D. Pinzon plaintiff, versus K.O. Glass Construction Co., Inc., and Kenneth O. Glass,
defendants, and for the release of the amount of P37,190.00, which had been deposited with the
Clerk of Court, to the petitioner.

First, there was no ground for the issuance of the writ of preliminary attachment. Section 1, Rule
57 of the Revised Rules of Court, which enumerates the grounds for the issuance of a writ of
preliminary attachment, reads, as follows:

On October 6, 1977, an action was instituted in the Court of First Instance of Rizal by Antonio D.
Pinzon to recover from Kenneth O. Glass the sum of P37,190.00, alleged to be the agreed rentals
of his truck, as well as the value of spare parts which have not been returned to him upon
termination of the lease. In his verified complaint, the plaintiff asked for an attachment against
the property of the defendant consisting of collectibles and payables with the Philippine
Geothermal, Inc., on the grounds that the defendant is a foreigner; that he has sufficient cause
of action against the said defendant; and that there is no sufficient security for his claim against
the defendant in the event a judgment is rendered in his favor. 1
Finding the petition to be sufficient in form and substance, the respondent Judge ordered the
issuance of a writ of attachment against the properties of the defendant upon the plaintiff's filing
of a bond in the amount of P37,190.00. 2

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


proper party may, at the commencement of the action or at any time
thereafter, have the property of the adverse party attached as security for
the satisfaction of any judgment that may be recovered in the following
cases:
(a) In an action for the recovery of money or damages on a cause of action
arising from contract, express or implied, against a party who is about to
depart from the Philippines with intent to defraud his creditor;
(b) In an action for money or property embezzled or fraudulently misapplied
or converted to his own use by a public officer, or an officer of a corporation,
or an attorney, factor, broker, agent, or clerk, in the course of his

employment as such, or by any other person in a fiduciary capacity, or for a


willful violation of duty;
(c) In an action to recover the possession of personal property unjustly
detained, when the property, or any part thereof, has been concealed,
removed, or disposed of to prevent its being found or taken by the applicant
or an officer;
(d) In an action against the party who has been guilty of a fraud in
contracting the debt or incurring the obligation upon which the action is
brought, or in concealing or disposing of the property for the taking,
detention or conversion of which the action is brought;
(e) In an action against a party who has removed or disposed of his
property, or is about to do so, with intent to defraud his creditors;
(f) In an action against a party who resides out of the Philippines, or on
whom summons may be served by publication.
In ordering the issuance of the controversial writ of preliminary attachment, the respondent
Judge said and We quote:
The plaintiff filed a complaint for a sum of money with prayer for Writ of
Preliminary Attachment dated September 14, 1977, alleging that the
defendant who is a foreigner may, at any time, depart from the Philippines
with intent to defraud his creditors including the plaintiff herein; that there is
no sufficient security for the claim sought to be enforced by this action; that
the amount due the plaintiff is as much as the sum for which an order of
attachment is sought to be granted; and that defendant has sufficient
leviable assets in the Philippines consisting of collectibles and payables due
from Philippine Geothermal, Inc., which may be disposed of at any time, by
defendant if no Writ of Preliminary Attachment may be issued. Finding said
motion and petition to be sufficient in form and substance.10
Pinzon however, did not allege that the defendant Kenneth O. Glass "is a foreigner (who) may, at
any time, depart from the Philippines with intent to defraud his creditors including the plaintiff."
He merely stated that the defendant Kenneth O. Glass is a foreigner. The pertinent portion of the
complaint reads, as follows:
15. Plaintiff hereby avers under oath that defendant is a foreigner and that
said defendant has a valid and just obligation to plaintiff in the total sum of
P32,290.00 arising out from his failure to pay (i) service charges for the
hauling of construction materials; (ii) rentals for the lease of plaintiff's Isuzu
Cargo truck, and (iii) total cost of the missing/destroyed spare parts of said
leased unit; hence, a sufficient cause of action exists against
said defendant. Plaintiff also avers under oath that there is no sufficient
security for his claim against the defendant in the event a judgment be
rendered in favor of the plaintiff. however, defendant has sufficient assets in
the Philippines in the form of collectible and payables due from the
Philippine Geothermal, Inc. with office address at Citibank Center, Paseo de
Roxas, Makati, Metro Manila, but which properties, if not timely attached,
may be disposed of bydefendants and would render ineffectual the reliefs
prayed for by plaintiff in this Complaint. 11

In his Amended Complaint, Pinzon alleged the following:


15. Plaintiff hereby avers under oath that defendant GLASS is an American
citizen who controls most, if not all, the affairs of defendant CORPORATION.
Defendants CORPORATION and GLASS have a valid and just obligation to
plaintiff in the total sum of P32,290.00 arising out for their failure to pay (i)
service charges for hauling of construction materials, (ii) rentals for the
lease of plaintiff's Isuzu Cargo truck, and (iii) total cost of the
missing/destroyed spare parts of said leased unit: hence, a sufficient cause
of action exist against said defendants. Plaintiff also avers under oath that
there is no sufficient security for his claim against the defendants in the
event a judgment be rendered in favor of the plaintiff. however, defendant
CORPORATION has sufficient assets in the Philippines in the form of
collectibles and payables due from the Philippine Geothermal., Inc. with
office address at Citibank Center, Paseo de Roxas, Makati, Metro Manila, but
which properties, if not timely attached, may be disposed of
by defendants and would render ineffectual the reliefs prayed for by plaintiff
in this Complaint. 12
There being no showing, much less an allegation, that the defendants are about to depart from
the Philippines with intent to defraud their creditor, or that they are non-resident aliens, the
attachment of their properties is not justified.
Second, the affidavit submitted by Pinzon does not comply with the Rules. Under the Rules, an
affidavit for attachment must state that (a) sufficient cause of action exists, (b) the case is one
of those mentioned in Section I (a) of Rule 57; (c) there is no other sufficient security 'or the
claim sought to be enforced by the action, and (d) the amount due to the applicant for
attachment or the value of the property the possession of which he is entitled to recover, is as
much as the sum for which the order is granted above all legal counterclaims. Section 3, Rule 57
of the Revised Rules of Court reads. as follows:
Section 3. Affidavit and bond required.An order of attachment shall be
granted only when it is made to appear by the affidavit of the applicant, or
of some person who personally knows the facts, that a sufficient cause of
action exists that the case is one of those mentioned in Section 1 hereof;
that there is no other sufficient security for the claim sought to be enforced
by the action, and that the amount due to the applicant, or the value of the
property the possession of which he is entitled to recover, is as much as the
sum for which the order is granted above all legal counterclaims. The
affidavit, and the bond required by the next succeeding section, must be
duly filed with the clerk or judge of the court before the order issues.
In his affidavit, Pinzon stated the following:
I, ANTONIO D. PINZON Filipino, of legal age, married and with residence and
postal address at 1422 A. Mabini Street, Ermita, Manila, subscribing under
oath, depose and states that.
1. On October 6,1977,I filed with the Court of First Instance of Rizal, Pasay
City Branch, a case against Kenneth O. Glass entitled 'ANTONIO D. PINZON
vs. KENNETH O. GLASS', docketed as Civil Case No. 5902-P;

2. My Complaint against Kenneth O. Glass is based on several causes of


action, namely:

Section 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 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 filing 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 the 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.

(i) On February 15, 1977, we mutually agreed that I undertake to haul his
construction materials from Manila to his construction project in Bulalo, Bay,
Laguna and vice-versa, for a consideration of P50.00 per hour;
(ii) Also, on June 18, 1977, we entered into a separate agreement whereby
my Isuzu cargo truck will be leased to him for a consideration of P4,000.00 a
month payable on the 15th day of each month;
(iii) On September 7, 1977, after making use of my Isuzu truck, he
surrendered the same without paying the monthly rentals for the leased
Isuzu truck and the peso equivalent of the spare parts that were either
destroyed or misappropriated by him;
3. As of today, October 11, 1977, Mr. Kenneth 0. Glass still owes me the
total sum of P32,290.00 representing his obligation arising from the hauling
of his construction materials, monthly rentals for the lease Isuzu truck and
the peso equivalent of the spare parts that were either destroyed or
misappropriated by him;
4. I am executing this Affidavit to attest to the truthfulness of the foregoing
and in compliance with the provisions of Rule 57 of the Revised Rules of
Court. 13
While Pinzon may have stated in his affidavit that a sufficient cause of action exists against the
defendant Kenneth O. Glass, he did not state therein that "the case is one of those mentioned in
Section 1 hereof; that there is no other sufficient security for the claim sought to be enforced by
the action; and that the amount due to the applicant is as much as the sum for which the order
granted above all legal counter-claims." It has been held that the failure to allege in the affidavit
the requisites prescribed for the issuance of a writ of preliminary attachment, renders the writ of
preliminary attachment issued against the property of the defendant fatally defective, and the
judge issuing it is deemed to have acted in excess of his jurisdiction. 14
Finally, it appears that the petitioner has filed a counterbond in the amount of P37,190.00 to
answer for any judgment that may be rendered against the defendant. Upon receipt of the
counter-bond the respondent Judge should have discharged the attachment pursuant to Section
12, Rule 57 of the Revised Rules of Court which reads, as follows:

The filing of the counter-bond will serve the purpose of preserving the defendant's property and
at the same time give the plaintiff security for any judgment that may be obtained against the
defendant. 15
WHEREFORE, the petition is GRANTED and the writ prayed for is issued. The orders issued by the
respondent Judge on October 11, 19719, January 26, 1978, and February 3, 1978 in Civil Case
No. 5902-P of the Court of First Instance of Rizal, insofar as they relate to the issuance of the writ
of preliminary attachment, should be as they are hereby ANNULLED and SET ASIDE and the
respondents are hereby ordered to forthwith release the garnished amount of P37,190.00 to the
petitioner. The temporary restraining order, heretofore issued, is hereby lifted and set aside.
Costs against the private respondent Antonio D. Pinzon.
SO ORDERED.