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RULE 57 PRELIMINARY ATTACHMENT

SECTION 1
G.R. No. L-252
March 30, 1946
TRANQUILINO CALO and DOROTEO SAN JOSE, petitioners,
vs.
ARSENIO C. ROLDAN, Judge of First Instance of Laguna, REGINO RELOVA and TEODULA
BARTOLOME,respondents.
Zosimo D. Tanalega for petitioners.
Estanislao A. Fernandez for respondents Relova and Bartolome.
No appearance for respondent Judge.
FERIA, J.:
This is a petition for writ of certiorari against the respondent Judge Arsenio C. Roldan of the Court
First Instance of Laguna, on the ground that the latter has exceeded his jurisdiction or acted with
grave abuse of discretion in appointing a receiver of certain lands and their fruits which, according to
the complainant filed by the other respondents, as plaintiffs, against petitioners, as defendants, in
case No. 7951, were in the actual possession of and belong to said plaintiffs.
The complaint filed by plaintiffs and respondents against defendants and petitioners in the Court of
First Instance of Laguna reads as follows:
1. That the plaintiffs and the defendants are all of legal age, Filipino citizens, and residents of
Pila, Laguna; the plaintiffs are husband and wife..
2. That the plaintiff spouses are the owners and the possessors of the following described
parcels of land, to wit:.
xxx
xxx
xxx
3. That parcel No. (a) described above is now an unplanted rice land and parcel No. (b)
described in the complaint is a coconut land, both under the possession of the plaintiffs..
4. That the defendants, without any legal right whatsoever and in connivance with each
other, through the use of force, stealth, threats and intimidation, intend or are intending to
enter and work or harvest whatever existing fruits may now be found in the lands abovementioned in violation of plaintiff's in this case ineffectual..
5. That unless defendants are barred, restrained, enjoined, and prohibited from entering or
harvesting the lands or working therein through ex-parte injunction, the plaintiffs will suffer
injustice, damages and irreparable injury to their great prejudice..
6. That the plaintiffs are offering a bond in their application for ex-parte injunction in the
amount of P2,000, subject to the approval of this Hon. Court, which bond is attached hereto
marked as Annex A and made an integral part of this complaint..
7. That on or about June 26, 1945, the defendants, through force, destroyed and took away
the madre-cacao fencer, and barbed wires built on the northwestern portion of the land
designated as parcel No. (b) of this complaint to the damage and prejudice of the plaintiffs in
the amount of at least P200..
Wherefore, it is respectfully prayed:.
(a) That the accompanying bond in the amount of P2,000 be approved;
(b) That a writ of preliminary injunction be issued ex-parte immediately restraining, enjoining
and prohibiting the defendants, their agents, servants, representatives, attorneys, and, (or)
other persons acting for and in their behalf, from entering in, interfering with and/or in any
wise taking any participation in the harvest of the lands belonging to the plaintiffs; or in any
wise working the lands above-described;
(c) That judgment be rendered, after due hearing, declaring the preliminary injunction final;.

(d) That the defendants be condemned jointly and severally to pay the plaintiffs the sum of
P200 as damages; and.
(e) That plaintiffs be given such other and further relief just and equitable with costs of suit to
the defendants.
The defendants filed an opposition dated August 8, 1945, to the issuance of the writ of preliminary
injunction prayed for in the above-quoted complaint, on the ground that they are owners of the lands
and have been in actual possession thereof since the year 1925; and their answer to the complaint
filed on August 14, 1945, they reiterate that they are the owners and were then in actual possession
of said property, and that the plaintiffs have never been in possession thereof.
The hearing of the petition for preliminary injunction was held on August 9, 1945, at which evidence
was introduced by both parties. After the hearing, Judge Rilloraza, then presiding over the Court of
First Instance of Laguna, denied the petition on the ground that the defendants were in actual
possession of said lands. A motion for reconsideration was filed by plaintiffs on August 20, 1945, but
said motion had not yet, up to the hearing of the present case, been decided either by Judge
Rilloraza, who was assigned to another court, or by the respondent judge.
The plaintiffs (respondents) filed on September 4, 1945, a reply to defendants' answer in which,
among others, they reiterate their allegation in the complaint that they are possessors in good faith
of the properties in question.
And on December 17, plaintiffs filed an urgent petition ex-parte praying that plaintiffs' motion for
reconsideration of the order denying their petition for preliminary injunction be granted and or for the
appointment of a receiver of the properties described in the complaint, on the ground that (a) the
plaintiffs have an interest in the properties in question, and the fruits thereof were in danger of being
lost unless a receiver was appointed; and that (b) the appointment of a receiver was the most
convenient and feasible means of preserving, administering and or disposing of the properties in
litigation which included their fruits. Respondents Judge Roldan, on the same date, December 17,
1945, decided that the court would consider the motion for reconsideration in due time, and granted
the petition for appointment of and appointed a receiver in the case.
The question to be determined in the present special civil action of certiorari is, whether or not the
respondent judge acted in excess of his jurisdiction or with grave abuse of discretion in issuing the
order appointing a receiver in the case No. 7951 of the Court of First Instance of Laguna; for it is
evident that there is no appeal or any other plain, speedy, and adequate remedy in the ordinary
course of the law against the said order, which is an incidental or interlocutory one.
It is a truism in legal procedure that what determines the nature of an action filed in the courts are
the facts alleged in the complaint as constituting the cause of the action. The facts averred as a
defense in the defendant's answer do not and can not determine or change the nature of the
plaintiff's action. The theory adopted by the plaintiff in his complaint is one thing, and that of the
defendant in his answer is another. The plaintiff has to establish or prove his theory or cause of
action in order to obtain the remedy he prays for; and the defendant his theory, if necessary, in order
to defeat the claim or action of the plaintiff..
According to the complaint filed in the said case No. 7951, the plaintiff's action is one of ordinary
injunction, for the plaintiffs allege that they are the owners of the lands therein described, and were
in actual possession thereof, and that "the defendants without any legal right whatever and in
connivance with each other, through the use of force, stealth, threat and intimidation, intend or are
intending to enter and work or harvest whatever existing fruits may be found in the lands above
mentioned in violation of plaintiffs' proprietary rights thereto;" and prays "that the defendants, their
agents, servants, representatives, and other persons acting for or in their behalf, be restrained,
enjoined and prohibited from entering in, interfering with, or in any way taking any participation in the
harvest of the lands above describe belonging to the plaintiffs."
That this is the nature of plaintiffs' action corroborated by the fact that they petitioned in the same
complaint for a preliminary prohibitory injunction, which was denied by the court in its order dated
August 17, 1945, and that the plaintiffs, in their motion for reconsideration of said order filed on

August 20 of the same year, and in their urgent petition dated December 17, moving the court to
grant said motion for reconsideration, reiterated that they were actual possessors of the land in
question.
The fact that plaintiffs, in their reply dated September 4, after reiterating their allegation or claim that
they are the owners in fee simple and possessors in good faith of the properties in question, pray
that they be declared the owners in fee simple, has not changed the nature of the action alleged in
the complaint or added a new cause of action thereto; because the allegations in plaintiffs' reply
were in answer to defendants' defenses, and the nature of plaintiffs' cause of action, as set forth in
their complaint, was not and could not be amended or changed by the reply, which plaintiffs had the
right to present as a matter of course. A plaintiff can not, after defendant's answer, amend his
complaint by changing the cause of action or adding a new one without previously obtaining leave of
court (section 2, Rule 17)..
Respondents' contention in paragraph I of their answer that the action filed by them against
petitioners in the case No. 7951 of the Court of First Instance of Laguna is not only for injunction, but
also to quiet title over the two parcels of land described in the complaint, is untenable for the reasons
stated in the previous paragraph. Besides, an equitable action to quiet title, in order to prevent
harrassment by continued assertion of adverse title, or to protect the plaintiff's legal title and
possession, may be filed in courts of equity (and our courts are also of equity), only where no other
remedy at law exists or where the legal remedy invokable would not afford adequate remedy (32
Cyc., 1306, 1307). In the present case wherein plaintiffs alleged that they are the owners and were
in actual possession of the lands described in the complaint and their fruits, the action of injunction
filed by them is the proper and adequate remedy in law, for a judgment in favor of plaintiffs would
quiet their title to said lands..
The provisional remedies denominated attachment, preliminary injunction, receivership, and delivery
of personal property, provided in Rules 59, 60, 61, and 62 of the Rules of Court, respectively, are
remedies to which parties litigant may resort for the preservation or protection of their rights or
interest, and for no other purpose, during the pendency of the principal action. If an action, by its
nature, does not require such protection or preservation, said remedies can not be applied for and
granted. To each kind of action or actions a proper provisional remedy is provided for by law. The
Rules of Court clearly specify the case in which they may be properly granted. .
Attachment may be issued only in the case or actions specifically stated in section 1, Rule 59, in
order that the defendant may not dispose of his property attached, and thus secure the satisfaction
of any judgment that may be recovered by plaintiff from defendant. For that reason a property
subject of litigation between the parties, or claimed by plaintiff as his, can not be attached upon
motion of the same plaintiff..
The special remedy of preliminary prohibitory injunction lies when the plaintiff's principal action is an
ordinary action of injunction, that is, when the relief demanded in the plaintiff's complaint consists in
restraining the commission or continuance of the act complained of, either perpetually or for a limited
period, and the other conditions required by section 3 of Rule 60 are present. The purpose of this
provisional remedy is to preserve the status quo of the things subject of the action or the relation
between the parties, in order to protect the rights of the plaintiff respecting the subject of the action
during the pendency of the suit. Because, otherwise or if no preliminary prohibition injunction were
issued, the defendant may, before final judgment, do or continue the doing of the act which the
plaintiff asks the court to restrain, and thus make ineffectual the final judgment rendered afterwards
granting the relief sought by the plaintiff. But, as this court has repeatedly held, a writ of preliminary
injunction should not be granted to take the property out of the possession of one party to place it in
the hands of another whose title has not been clearly established..
A receiver may be appointed to take charge of personal or real property which is the subject of an
ordinary civil action, when it appears that the party applying for the appointment of a receiver has an
interest in the property or fund which is the subject of the action or litigation, and that such property
or fund is in danger of being lost, removed or materially injured unless a receiver is appointed to
guard and preserve it (section 1 [b], Rule 61); or when it appears that the appointment of a receiver

for there would be no reason for such appointment. the respondent judge would have acted in excess of his jurisdiction or with a grave abuse of discretion in appointing a receiver thereof. Besides. For the owner and possessor of a property is more interested than persons in preserving and administering it.) No such showing has been made in this case as would justify us . The petition for appointment of a receiver filed by the plaintiffs (Exhibit I of the petition) is based on the ground that it is the most convenient and feasible means of preserving.. by order of the court. according to law. who shall give a bond to assure the return thereof or the payment of damages to the defendant in the plaintiff's action to recover possession of the same property fails. It is a matter not only of law but of plain common sense that a plaintiff will not and legally can not ask for the appointment or receiver of property which he alleges to belong to him and to be actually in his possession. The present case falls within this rule. and consequently the ownership and possession thereof were in litigation. neither the lands nor the palay harvested therein. or prevent the defendant from damaging. are in litigation. Because relief by way of receivership is equitable in nature. and the object of appointing a receiver is to secure and preserve the property or thing in controversy pending the litigation. But as the lower court found at the hearing of the said petition for preliminary injunction that the defendants were in possession of the lands. destroying or disposing of the same during the pendency of the suit. Delivery of personal property as a provisional remedy consists in the delivery. as set forth in the complaint. In the case of Mendoza vs. Of course.. plaintiffs insist that they are in actual possession of the lands and. 26).. if it is not in litigation and is in actual possession of the plaintiff. the lower court acted in accordance with law in denying the petition. even if the plaintiffs had amended their complaint and alleged that the lands and palay harvested therein are being claimed by the defendants. 7951 of the Court of First Instance of Laguna. the provisional remedy proper to plaintiffs' action of injunction is a preliminary prohibitory injunction. administering and disposing of the properties in litigation. the latter can not apply for and obtain the appointment of a receiver thereof. therefore. J. therefore be in litigation according to the allegations of the complaint. of the fruits thereof. the appointment should be made only in extreme cases and on a clear showing of necessity therefor in order to save the plaintiff from grave and irremediable loss or damage. and a court of equity will not ordinarily appoint a receiver where the rights of the parties depend on the determination of adverse claims of legal title to real property and one party is in possession (53 C.is the most convenient and feasible means of preserving. Appointment of a receiver is not proper or does not lie in an action of injunction such as the one filed by the plaintiff. and according to plaintiffs' theory or allegations in their complaint. administering or disposing of the property in litigation (section 1 [e] of said Rule). alleged to be the exclusive property and in the actual possession of the plaintiffs. as alleged in paragraph 6 (a) and (b) of the petition filed in this court and not denied by the respondent in paragraph 2 of his answer. in order to protect the plaintiff's right of possession of said property. and where the effect of such an appointment is to take real estate out of the possession of the defendant before the final adjudication of the rights of the parties. Undoubtedly. The litigation or issue raised by plaintiffs in their complaint is not the ownership or possession of the lands and their fruits. if plaintiff's theory. The property or fund must. de Arellano. which was still pending at the time the petition in the present case was heard in this court. of a personal property by the defendant to the plaintiff. that he is the owner and in actual possession of the premises is correct. p. although their motion for reconsideration. 51. it appearing that the defendants (now petitioners) were in possession of the lands and had planted the crop or palay harvested therein. (34 Cyc. It is whether or not defendants intend or were intending to enter or work or harvest whatever existing fruits could then be found in the lands described in the complaint. and cases there cited. Arellano and B. this court said: Appointments of receivers of real estate in cases of this kind lie largely in the sound discretion of the court. From the foregoing it appears evident that the respondent judge acted in excess of his jurisdiction in appointing a receiver in case No.

Glass Construction Co. the plaintiff asked for an attachment against the property of the defendant consisting of collectibles and payables with the Philippine Geothermal. As to the petitioners' petition that respondents Relova be punished for contempt of court for having disobeyed the injunction issued by this court against the respondents requiring them to desist and refrain from enforcing the order of receivership and entering the palay therein.. and therefore the order of said respondent judge appointing the receiver.00..190.. Glass. GLASS CONSTRUCTION CO. as the respondents in their answer allege that the Court of First Instance of Laguna has appointed a receiver in another case No.. alleged to be the agreed rentals of his truck.O. Although the petition is silent on the matter. 1 Finding the petition to be sufficient in form and substance. the petition for contempt of court is denied. a corporation duly organized and existing under Philippine laws. in order to avoid multiplicity of suits. 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.. and is therefore null and void. and ANTONIO D. 63. 59. PINZON. In view of all the foregoing. and even if he does. it appearing from the evidence in the record that the palay was harvested by the receiver and not by said respondents.190. and Kenneth O.O. respondents. the order of the Court of First Instance of Laguna appointing a receiver in said case No. that he has sufficient cause of action against the said defendant. are null and void. Glass Construction Co. Judge of the Court of First Instance of Rizal. we may properly express and do hereby express here our opinion. Pinzon plaintiff. In his verified complaint. 7989 was issued in excess of its jurisdiction. plaintiff can not be prejudiced thereby because his claims are against a corporation which has sufficient funds and property to satisfy his claim. and for the release of the amount of P37. an action was instituted in the Court of First Instance of Rizal by Antonio D. on the grounds that the defendant is a foreigner. and that there is no sufficient security for his claim against the defendant in the event a judgment is rendered in his favor. vs. children of Sofia de Oca and Tranquilino Calo (petitioner in this case). On October 6. Inc. So ordered. G. with costs against the respondents.00. as well as all other orders and proceedings of the court presided over by said judge in connection with the receivership.R. 1977... INC. No. that as the cause of action alleged in the in the complaint filed by the respondents Relova in the other case is substantially the same as the cause of action averred in the complaint filed in the present case. 1982 K. Inc. Inc.in interfering with the exercise by trial judge of his discretion in denying the application for receiver. as well as the value of spare parts which have not been returned to him upon termination of the lease.. we hold that the respondent Judge Arsenio C. the defendant Kenneth O. and submitted copy of the complaint filed by the plaintiffs (now respondents) in case No. 2 Thereupon. Pinzon to recover from Kenneth O. Roldan of the Court of First Instance of Laguna has exceeded his jurisdiction in appointing a receiver in the present case.).. (36 Phil.190. 7989 (Exhibit 9 of the respondents' answer). Glass the sum of P37. 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.: Petition for certiorari to annul and set aside the writ of preliminary attachment issued by the respondent Judge in Civil Case No. versus K. 1977.00. that there is no ground for the issuance of the writ of preliminary attachment as defendant Kenneth O. L-48756 September 11. instituted by the respondents Relova against Roberto Calo and his brothers and sisters. which had been deposited with the Clerk of Court. CONCEPCION. JR. 5902-P of the Court of First Instance of Rizal.O. 7989 of said court. and that the . defendants. 64. to the petitioner. J. Glass never intended to leave the Philippines. petitioner. on November 22. THE HONORABLE MANUEL VALENZUELA. entitled: Antonio D.

Glass Construction Co. Inc. reads. or clerk. or is about to do so. 5 but. Rule 57 of the Revised Rules of Court.00 immediately upon receipt of the order which amount shall remain so deposited to await the judgment to be rendered in the case. 3. or any part thereof. 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: First. the respondent Judge denied the motion and ordered the Philippine Geothermal. Inc.O. 8 Hence. factor.190. or by any other person in a fiduciary capacity. as co-defendant of Kenneth O. (e) In an action against a party who has removed or disposed of his property. 3 By reason thereof. which enumerates the grounds for the issuance of a writ of preliminary attachment. 6 On June 19. as follows: Sec. detention or conversion of which the action is brought. express or implied. or an attorney. when the property.. 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. there was no ground for the issuance of the writ of preliminary attachment. as required by Sec. (f) In an action against a party who resides out of the Philippines. Section 1. (c) In an action to recover the possession of personal property unjustly detained. agent. in the course of his employment as such. against a party who is about to depart from the Philippines with intent to defraud his creditor. 7 but. restraining the respondent Judge from further proceeding with the trial of the case. or for a willful violation of duty. or disposed of to prevent its being found or taken by the applicant or an officer.00 and asked the court for the release of the same amount deposited with the Clerk of Court. 9 We find merit in the petition. Glass Corporation Co. 3. 1978.190. —A plaintiff or any proper party may. to deliver and deposit with the Clerk of Court the amount of P37. (b) In an action for money or property embezzled or fraudulently misapplied or converted to his own use by a public officer. 1978. with intent to defraud his creditors. 1. Inc. the respondent Judge did not order the release of the money deposited. the Court issued a temporary restraining order. or on whom summons may be served by publication. Glass. As prayed for. Rule 57 of the Revised Rules of Court. has been concealed. Pinzon amended his complaint to include K. (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.O. the present recourse. the respondent Judge said and We quote: . 1 of Rule 57. In ordering the issuance of the controversial writ of preliminary attachment. or in concealing or disposing of the property for the taking. broker. Grounds upon which attachment may issue. and not to defendant Kenneth O. 4 On January 26. at the commencement of the action or at any time thereafter. 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. Glass. and (3) the affidavit did not specify any of the grounds enumerated in Sec.money being garnished belongs to the K. removed. (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.. the defendants therein filed a bond in the amount of P37. or an officer of a corporation.

which may be disposed of at any time. the attachment of their properties is not justified. but which properties. 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. a sufficient cause of action exist against said defendants. if not timely attached. 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. may be disposed of by defendants and would render ineffectual the reliefs prayed for by plaintiff in this Complaint. with office address at Citibank Center. Makati. 10 Pinzon however. much less an allegation. but which properties. and that defendant has sufficient leviable assets in the Philippines consisting of collectibles and payables due from Philippine Geothermal. Glass "is a foreigner (who) may. if not all.. Second. that there is no sufficient security for the claim sought to be enforced by this action. (ii) rentals for the lease of plaintiff's Isuzu Cargo truck. may be disposed of by defendants and would render ineffectual the reliefs prayed for by plaintiff in this Complaint. with office address at Citibank Center. Paseo de Roxas. defendant has sufficient assets in the Philippines in the form of collectible and payables due from the Philippine Geothermal. that the defendants are about to depart from the Philippines with intent to defraud their creditor.The plaintiff filed a complaint for a sum of money with prayer for Writ of Preliminary Attachment dated September 14.290. the affairs of defendant CORPORATION. alleging that the defendant who is a foreigner may. The pertinent portion of the complaint reads. however.. Metro Manila. Inc. however. Metro Manila.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.00 arising out for their failure to pay (i) service charges for hauling of construction materials. hence. Inc. at any time. as follows: . at any time. by defendant if no Writ of Preliminary Attachment may be issued. Rule 57 of the Revised Rules of Court reads. depart from the Philippines with intent to defraud his creditors including the plaintiff. that the amount due the plaintiff is as much as the sum for which an order of attachment is sought to be granted." He merely stated that the defendant Kenneth O. did not allege that the defendant Kenneth O. (b) the case is one of those mentioned in Section I (a) of Rule 57. Pinzon alleged the following: 15. an affidavit for attachment must state that (a) sufficient cause of action exists. or that they are non-resident aliens. Under the Rules. and (iii) total cost of the missing/destroyed spare parts of said leased unit. (c) there is no other sufficient security 'or the claim sought to be enforced by the action. Defendants CORPORATION and GLASS have a valid and just obligation to plaintiff in the total sum of P32.290. 12 There being no showing. 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. Section 3. Finding said motion and petition to be sufficient in form and substance. is as much as the sum for which the order is granted above all legal counterclaims. Paseo de Roxas. 11 In his Amended Complaint. 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. the affidavit submitted by Pinzon does not comply with the Rules. Inc. Makati. depart from the Philippines with intent to defraud his creditors including the plaintiff herein. Plaintiff hereby avers under oath that defendant GLASS is an American citizen who controls most. a sufficient cause of action exists against said defendant. and (iii) total cost of the missing/destroyed spare parts of said leased unit: hence. defendant CORPORATION has sufficient assets in the Philippines in the form of collectibles and payables due from the Philippine Geothermal. as follows: 15. if not timely attached. Glass is a foreigner. 1977.

(iii) On September 7. order the discharge of the attachment if . for a consideration of P50. 1. October 11. Glass. (ii) Also. as follows: Section 12. and the judge issuing it is deemed to have acted in excess of his jurisdiction. depose and states that. As of today. and that the amount due to the applicant.290. Kenneth 0. apply to the judge who granted the order. 4. of legal age.Section 3. Manila. is as much as the sum for which the order is granted above all legal counterclaims. a case against Kenneth O. namely: (i) On February 15. Affidavit and bond required. monthly rentals for the lease Isuzu truck and the peso equivalent of the spare parts that were either destroyed or misappropriated by him. 13 While Pinzon may have stated in his affidavit that a sufficient cause of action exists against the defendant Kenneth O. 5902-P." It has been held that the failure to allege in the affidavit the requisites prescribed for the issuance of a writ of preliminary attachment. married and with residence and postal address at 1422 A. we mutually agreed that I undertake to haul his construction materials from Manila to his construction project in Bulalo. PINZON Filipino. that there is no other sufficient security for the claim sought to be enforced by the action. ANTONIO D. Discharge of attachment upon giving counterbond. On October 6.I filed with the Court of First Instance of Rizal. renders the writ of preliminary attachment issued against the property of the defendant fatally defective. The affidavit.00 to answer for any judgment that may be rendered against the defendant. Pinzon stated the following: I. My Complaint against Kenneth O. the party whose property has been attached. GLASS'. Glass is based on several causes of action. must be duly filed with the clerk or judge of the court before the order issues. after making use of my Isuzu truck. 1977. 2. Mabini Street. KENNETH O. after hearing. 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. Laguna and vice-versa. or to the judge of the court in which the action is pending. 1977. Glass entitled 'ANTONIO D. may upon reasonable notice to the applicant. 1977. Upon receipt of the counter-bond the respondent Judge should have discharged the attachment pursuant to Section 12. and that the amount due to the applicant is as much as the sum for which the order granted above all legal counter-claims. Glass still owes me the total sum of P32. for an order discharging the attachment wholly or in part on the security given.000. docketed as Civil Case No. that there is no other sufficient security for the claim sought to be enforced by the action. on June 18. 14 Finally. he did not state therein that "the case is one of those mentioned in Section 1 hereof. PINZON vs. or the person appearing on his behalf.—An order of attachment shall be granted only when it is made to appear by the affidavit of the applicant.00 representing his obligation arising from the hauling of his construction materials. and the bond required by the next succeeding section. we entered into a separate agreement whereby my Isuzu cargo truck will be leased to him for a consideration of P4. Ermita.00 per hour. Mr.00 a month payable on the 15th day of each month.190.—At any time after an order of attachment has been granted. In his affidavit. Bay. 3. The judge shall. Rule 57 of the Revised Rules of Court which reads. subscribing under oath. 1977. that a sufficient cause of action exists that the case is one of those mentioned in Section 1 hereof. or of some person who personally knows the facts. 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. it appears that the petitioner has filed a counterbond in the amount of P37.1977. Pasay City Branch. or the value of the property the possession of which he is entitled to recover.

1946. Armando and Gracia (minors). He claimed it was premature. and the party furnishing the same fail to file an additional counter-bond the attaching creditor may apply for a new order of attachment. The temporary restraining order. and February 3. petitioner. in civil case No. SO ORDERED. copy thereof shall forthwith be served on the attaching creditor or his lawyer. or the proceeds of any sale thereof. Should such counter-bond for any reason be found to be. Denial of this motion and of the subsequent plea for reconsideration.) LUIS F. Luis F. with the clerk or judge of the court where the application is made. January 26. J. which we find to be . No. the deposit or counter-bond aforesaid standing in the place of the property so released. vs. Pinzon. 1947 LUIS F. General. worded as follows: For value received. heretofore issued. also representing Ernesto. Camarines Sur. GENERAL It prayed additionally for preliminary attachment of defendant's property. prompted the institution of this special civil action. BENGZON. a motion praying for dismissal of the complaint and dissolution of the attachment. and PETRA VDA. Gregorio Ruedas the amount of four thousand pesos (P4. is hereby lifted and set aside. The orders issued by the respondent Judge on October 11. respondents. 1978. shall be delivered to the party making the deposit or giving the counter-bond. 25 and 32 of 1945). Upon the discharge of an attachment in accordance with the provisions of this section the property attached. Naga. 15 WHEREFORE. on behalf of the adverse party. in an amount equal to the value of the property attached as determined by the judge. 364 therein entitled. on June 11. GENERAL. I promise to pay Mr. to secure the payment of any judgment that the attaching creditor may recover in the action. 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. 1944.000). Having been served with summons. upon the allegation that the latter was about to dispose of his assets to defraud creditors.: Petition for certiorari to annul the order of the Court of First Instance of Camarines Sur denying the motion to dismiss the complaint. Luis F. the defendant therein.00 to the petitioner. Costs against the private respondent Antonio D. 1946. Two days later. in Philippine currency within six (6) months after peace has been declared and government established in the Philippines.a cash deposit is made or a counterbond executed to the attaching creditor is filed. and to vacate the attachment issued. 1978 in Civil Case No. insofar as they relate to the issuance of the writ of preliminary attachment. or become. (Sgd. G. 19719.190.R. JOSE R. to recover the value of a promissory note. DE RUEDAS. the petition is GRANTED and the writ prayed for is issued. 5902-P of the Court of First Instance of Rizal. "Ruedas vs. should be as they are hereby ANNULLED and SET ASIDE and the respondents are hereby ordered to forthwith release the garnished amount of P37. Judge of First Instance of Camarines Sur." That complaint was filed on June 4. submitted. General. the writ of attachment was issued upon the filing of a suitable bond. or the person appearing on his behalf. insufficient. Upon the filing of such counter-bond. L-894 July 30. DE VENECIA. in view of the provisions of the debt moratorium orders of the President of the Philippines (Executive Orders Nos. September 25.

) Wherefore. No. and the complaint should have been dismissed and the attachment lifted. 1983. Rule 59). "the general rule is that. Sotto. vs.J.R. And the issuance of a writ of attachment upon such complaint may not. 01914 which declared null-and void. Branch XXXIII. there existed no cause of action against him.meritorious. pending action by the Government." (7 C. (Leung Ben vs. 182. 3. for the reason that the attachment was improvidently permitted. Barbers. FELIX V. upon objection by the debtor.. his sisters Monique Miailhe Sichere. It is our view that. the remedy by attachment is not available in respect to a demand which is not due and payable. Orbeta vs.000 "within six months after peace has been declared. her daughter Monique and son William Alain (herein petitioner) failed to secure an out-of court partition thereof due to the unwillingness or opposition of respondent Elaine. of course. The pertinent facts that gave rise to the instant petition are as follows: Petitioner William Alain Miailhe. L-67715 July 11. ELAINE M. PARAS. RTC of Manila.: This petition is an appeal by certiorari from the Decision of the Intermediate Appellate Court in ACG. Judge Felix V. it is obvious that the six-month period has not begun. dated April 14. Miailhe. 1983 denying respondent's motion to lift said attachment. no court may now proceed to hear a complaint that seeks to compel payment of a monetary obligation coming within the purview of the moratorium. because the remedy by appeal is either unavailable or inadequate. 75 Phil. G. p. as stated in the order. O'Brien. Among the issues presented in the partition case was the matter of petitioner's account as administrator of the properties sought to be .. 32). SP. Concepcion. . General has at present and in June. Madame Victoria D. no demandable duty to make payment to plaintiffs. 384. So ordered.S. supra. On the question of validity of the attachment. issued in Civil Case No. 50).. they filed in the Court of First Instance of Manila (now Regional Trial Court) an action for Partition. presided over by Judge Pedro Ramirez. . But the case for petitioner is stronger when we reflect that his promise is to pay P4.) And although it is the general principle that certiorari is not available to correct judicial errors that could be straightened out in an appeal. No. 1946. General has not as yet become demandable. 38 Phil. Director of Commerce and Industry vs. the Order of the Hon. enforcement which. and that no competent official has formally declared the advent of peace (see Raquiza vs. Miailhe are co-owners of several registered real properties located in Metro Manila. J. respondents-appellees. and if an attachment is issued upon such a demand without statutory authority it is void.) It must be observed that under our rules governing the matter the person seeking a preliminary attachment must show that "a sufficient cause of action exists" and that the amount due him is as much as the sum for which the order of attachment is granted" (sec. 43 Phil. petitioners-appellants. Sotto. which was docketed as Civil Case No." It being a matter of contemporary history that the peace treaty between the United States and Japan has not even been drafted. As Madame Victoria D. 105774 and assigned to Branch . Such levy is necessarily one step in the enforcement of the obligation. the writ of attachment is quashed and the complaint is dismissed. unless the statute expressly so provides. 204. (Orbeta vs. thereof. DE LENCQUESAING and HERVE DE LENCQUESAING. the debt being within the terms of the decree of moratorium (Executive Order No. 58 Phil. Bardford.. Inasmuch as the commitment of Luis F. 505. and Luis F. independently of the moratorium directive. BARBERS. is suspended temporarily.R. 1986 WILLIAM ALAIN MIAILHE and THE HON. in his capacity as Presiding Judge. Elaine Miailhe de Lencquesaing and their mother. 83-16829.. Costs for petitioner. we have adopted the course that where an attachment has been wrongly levied the writ may be applied for. petitioner William Alain has been administering said properties since 1960. be allowed. By common consent of the said co-owners. granting petitioner's application for the issuance of a writ of preliminary attachment and the Order dated September 13.

for Damages in the amount of P2.000. We find the petition meritless. 1983. Likewise. respondent Elaine filed a criminal complaint for estafa against petitioner William Alain. respondent thru counsel filed a motion to lift or dissolve the writ of attachment on the ground that the complaint did not comply with the provisions of Sec. Judge Pedro Ramirez granted the motion in his Order dated December 19. with the office of the City Fiscal of Manila. 1983.000. No.partitioned. respondent filed with the Intermediate Appellate Court a special action for certiorari under AC-G. Branch XXXIII presided over by the Honorable Felix V. which should have been turned over to her as her share in the net rentals of the common properties. pursuant to paragraph (f).167. this present petition which was given due course in the Resolution of this Court dated February 6. 1983 which order is now the subject of a certiorari proceeding in the Intermediate Appellate Court under AC-G. in relation to Section 17. Section 1. and so hold that respondent court had exceeded its jurisdiction in issuing the writ of attachment on a claim based on an action for damages arising from delict and quasi delict the amount of which is uncertain and had not been reduced to judgment just because the defendant is not a resident of the Philippines. be ordered delivered to her by petitioner William Alain.R.00. Petitioner filed said bond and upon its approval. therefore. 1983 which was served on the Deputy Clerk of Court of Branch XXX before whom the action for Partition was pending. In its now assailed decision. March 4. the Writ of Preliminary Attachment was issued on April 18.00 and attorney's fees of P250. had been charged with Estafa of several million pesos by his own sister with the office of the City Fiscal of Manila. petitioner prayed for the issuance of a writ of preliminary attachment of the properties of respondent consisting of 1/6 undivided interests in certain real properties in the City of Manila on the ground that "respondentdefendant is a non-resident of the Philippines". Meanwhile however.000. The motion to lift attachment having been denied. and more specifically on February 28. 1983 issue of the Bulletin Today. a few days after the filing of the criminal complaint. In his verified complaint. On April 4. SP-03070. a consul of the Philippines in the Republic of France. 1983. 1983 issue. 1983. Petitioner further charged respondent with having caused the publication in the March 4. This case for Damages was docketed as Civil Case No. alleging in her supporting affidavit that on the face of the very account submitted by him as Administrator. the IAC issued its now assailed Decision declaring null and void the aforesaid Writ of preliminary attachment.000. On May 17. Judge Barbers granted petitioner's application for preliminary attachment upon a bond to be filed by petitioner in the amount of P2. SP No.R. On April 14. 1982. Barbers. 1985. petitioner Alain filed a verified complaint against respondent Elaine. 1984. respondent flew back to Paris.36 which allegedly appeared as a cash balance in her favor as of December 31.00 allegedly sustained by him by reason of the filing by respondent (then defendant) of a criminal complaint for estafa. Rule 57. an extensive news item about it appeared prominently in the Bulletin Today. But while the said administrator's account was still being examined. he had misappropriated considerable amounts. the City of her residence. On April 12. Against the opposition of petitioner and the other co-owners. Two days after filing the complaint. Rule 14 of the Revised Rules of Court.000. . respondent Elaine filed a motion praying that the sum of P203. Petitioner filed a motion for the reconsideration of the Decision but it was denied hence. 01914 alleging that Judge Barbers had acted with grave abuse of discretion in the premises. 83-16829 of the Regional Trial Court of Manila. 3 of Rule 57. (f) Rule 57 of the Rules of Court to be applicable only in case the claim of the plaintiff is for liquidated damages (and therefore not where he seeks to recover unliquidated damages arising from a crime or tort). stating substantially that Alain Miailhe. the IAC stated — We find. of a libelous news item. Rules of Court and that petitioner's claim was for unliquidated damages. France. solely for the purpose of embarrassing petitioner (then plaintiff) and besmirching his honor and reputation as a private person and as an Honorary Consul of the Republic of the Philippine's in the City of Bordeaux. The most important issue raised by petitioner is whether or not the Intermediate Appellate Court erred in construing Section 1 par.

(b) In an action for money or property embezzled or fraudulently misapplied or converted to his own use by a public officer. 495. DECISION GARCIA. Albert.: Thru this appeal via a petition for review on certiorari under Rule 45 of the Rules of Court. (f) In an action against a party who resides out of the Philippines. the Decision appealed from is hereby AFFIRMED. factor. J. have the property of the adverse party attached as security for the satisfaction of any judgment that may be recovered in the following cases: (a) In an action for the recovery of money or damages on a cause of action arising fromcontract." still it is imperative that the amount sought be liquidated. 58 Phil. 3 of Rule 57 or alleged in the verified complaint of plaintiff. or in concealing or disposing of the property for the taking. (e) In an action against a party who has removed or disposed of his property. in his capacity as Presiding Judge of Branch 135 of the Regional Trial Court of Makati. (c) In an action to recover the possession of personal property unjustly detained. COURT OF APPEALS. In view of the foregoing. (emphasis supplied) While it is true that from the aforequoted provision attachment may issue "in an action against a party who resides out of the Philippines. petitioner Insular Savings Bank seeks to set aside the D E C I S I O N1 dated October 9. The attachment issued in the case was therefore null and void. at the commencement of the action or at any time thereafter. 123638 June 15. or disposed of to prevent its being found or taken by the applicant or an officer. Respondents. G. or clerk. A plaintiff or any proper party may. express or implied. or on whom summons may be served by publication. when the property. 2005 INSULAR SAVINGS BANK. or by any other person in a fiduciary capacity. and while it is also true that in the case of Cu Unjieng. SO ORDERED. Petitioner. in the course of his employment as such. and FAR EAST BANK AND TRUST COMPANY. vs. or is about to do so. (d) In an action against a party who has been guilty of a fraud in contracting the debt or incurring the obligation upon which the action is brought. or for a willful violation of duty. with intent to defraud his creditors. has been concealed. Grounds upon which attachment may issue. removed. AMIN. 1995 of . it was held that "each of the six grounds treated ante is independent of the others. We agree. one of the indispensable requirements for the issuance of a writ of attachment which should be stated in the affidavit of applicant as required in Sec. or an officer of a corporation or an attorney. 1. Section 1 of Rule 57 of the Rules of Court provides — SEC.R. agent. against a party who is about to depart from the Philippines with intent to defraud his creditors. " irrespective of the nature of the action or suit. et al vs. detention or conversion of which the action is brought. or any part thereof.Because of the uncertainty of the amount of plaintiff's claim it cannot be said that said claim is over and above all legal counterclaims that defendant may have against plaintiff. JUDGE OMAR U. broker. NO.

1994. in arriving at such amount.000.000.200.200. grave abuse of discretion in denying petitioner’s motion to discharge attachment by counter-bond in Civil Case No. On January 27. On June 13. such as actual and exemplary damages.600. The assailed decision of October 9. faulting the appellate court. as follows: "On December 11. on January 17. infra.00. FOR THE PRELIMINARY ATTACHMENT WAS ISSUED FOR THE SAID AMOUNT ONLY. the RTC’s order may be defended by.00 while the dispute has not yet been resolved. SP No. 1994. ascribing on the trial court the commission of grave abuse of discretion amounting to lack of jurisdiction. nonetheless denied due course to and dismissed the petition. For. 1992. 92-145. while the equally assailed resolution of January 24.200. respondent Bank [Far East Bank and Trust Company] instituted Arbitration Case No. [but after petitioner’s account with PCHC was credited with the amount of P25.00 is in the possession of respondent Bank.the Court of Appeals in CA-G. 1992 before the Arbitration Committee of the Philippine Clearing House Corporation. 34876. in that he erroneously factored in.237. The checks were drawn against respondent Bank and were presented by petitioner for clearing. The undisputed facts are summarized in the appellate court’s decision3 under review.00] petitioner refused to refund the money to respondent Bank. 1992. legal interest. The CA added that. 1995. 91-069 against petitioner [Insular Savings Bank] before the Arbitration Committee of the Philippine Clearing House Corporation [PCHC]. 1994" (Emphasis and words in bracket added).00". in the herein assailed decision dated October 9. As a result. The dispute between the parties involved three [unfunded] checks with a total value ofP25. respondent Bank instituted Civil Case No.R. On June 27. Branch 133 of the Regional Trial Court of Makati issued a writ of preliminary attachment for the amount ofP25. 92-145 in the Regional Trial Court of Makati and prayed for the issuance of a writ of preliminary attachment.R.200.000. "II. While acknowledging that "[R]espondent Judge may have erred in his Order of June 13. 1994 that the counter-bond should be in the amount of P27.000.000. SP No.000. 1996. assuming that the RTC erred on the matter of computing the amount of the discharging counter-bond. as petitioner alleged.700. Branch 133 of the Regional Trial Court of Makati issued an Order granting the application for preliminary attachment upon posting by respondent Bank of an attachment bond in the amount of P6. 1995 cleared the Regional Trial Court (RTC) at Makati. On March 9. unliquidated claim items. the CA. Branch 135. As respondent Bank returned the checks beyond the reglementary period. petitioner went to the Court of Appeals on a petition for certiorari thereat docketed as CA-G. according to the appellate court. From the order denying its motion to discharge attachment by counter-bond. petitioner filed a motion for reconsideration which was denied in the second assailed order dated July 20. of committing. 1994. 34876 and its resolution dated January 24. 1991. attorney’s fees and expenses of litigation. . among others. 1992. THE COURT OF APPEALS ERRED IN NOT RULING THAT THE ARGUMENT THAT THE AMOUNT OF THE COUNTER-BOND SHOULD BE BASED ON THE VALUE OF THE PROPERTY ATTACHED CANNOT BE RAISED FOR THE FIRST TIME IN THE COURT OF APPEALS. as follows: "I.00. respondent Judge issued the first assailed order denying the motion. During the hearing on February 11.000. its error does not amount to grave abuse of discretion.00. petitioner is now with us.000. On January 22. petitioner and respondent Bank agreed to temporarily divide between them the disputed amount of P25. THE COURT OF APPEALS ERRED IN NOT RULING THAT THE PRINCIPAL AMOUNT CLAIMED BY RESPONDENT BANK SHOULD BE THE BASIS FOR COMPUTING THE AMOUNT OF THE COUNTER-BOND. With its motion for reconsideration having been similarly denied.00. 1996 denied petitioner’s motion for reconsideration.2 denying petitioner’s motion for reconsideration. petitioner filed a motion to discharge attachment by counter-bond in the amount of P12.600. the provision of Section 12 of Rule 57 of the Rules of Court. While the dispute was pending arbitration. the sum ofP12.

"III. on the other hand. x x x . however. The judge shall. or approximately match the attaching creditor’s principal claim. the issue is whether or not the CA erred in not ruling that the trial court committed grave abuse of discretion in denying petitioner’s motion to discharge attachment by counter-bond in the amount of P12.000. to be measured against the value of the attached property. As we held in Asuncion vs. to secure the payment of any judgment that the attaching creditor may recover in the action. 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. in this case P25. .00. find the counter-attachment bond in the amount of P301.00 with a total amount of P27.00 for the issuance of the writ of preliminary attachment. may upon reasonable notice to the applicant. provides as follows: "SEC.805. we deem it reasonable to lower the amount of the counter-attachment bond to be posted by the private respondent .237. 184 SCRA 31 (1990)".000. Considering that the principal amounts claimed by the petitioner ." .000.00 (Adlawan vs. . so petitioner argues.00 should. in turn. be the basis for computing the amount of the counter-bond. which ought to be avoided at all times. The Court rules for the petitioner.600. excluding contingent expenses and unliquidated amount of damages.935. . and attorney’s fees and expenses of litigation in the amount ofP1. as determined by the judge to secure the payment of any judgment that the attaching creditor may recover in the action. but equally. excessive attachment.000.should as much as possible correspond in value to. Legal interest of 12% percent per annum from October 21. to the sum of P185.000. And since there was a mutual agreement between the parties to temporarily. the attaching party may apply for a new order of attachment" 4 (Emphasis supplied). Says the trial court in its Order of June 13.000.000. Court of Appeals:5 "We. or become insufficient.and logically the counter-bond necessary to discharge the lien on such property . argues that the starting point in computing the amount of counter-bond is the amount of the respondent’s demand or claim only." Simply put.700.600.000.685. the amount of the counter-attachment bond is. Tomol. Albeit not explicitly stated in the same section and without necessarily diminishing the sound discretion of the issuing judge on matters of bond approval. to the proposition that the attached property . . or a counter-bond executed to the attaching creditor is filed.685. total only P185. Should such counter-bond for any reason be found to be.41 required of the private respondent by the trial court as rather excessive under the circumstances.00 as agreed by means of arbitration between [respondent] and [petitioner].600. the amount of P12. shall ensue.00. – At any time after an order of attachment has been granted. . 1994: "xxx (T)he counter-bond posted by [petitioner] Insular Savings Bank should include the unsecured portion of [respondent’s] claim of P12. order the discharge of the attachment if a cash deposit is made. apply to the judge who granted the order or to the judge of the court which the action is pending. .200. . 1991 in the amount of P3. Else. after hearing. under the terms of the aforequoted Section 12.4 As may be noted. divide between themselves the said amount pending and subject to the final outcome of the arbitration. The then pertinent provision of Rule 57 (Preliminary Attachment) of the Rules of Court under which the appellate court issued its assailed decision and resolution.00. 12.00. Exemplary damages in the amount of P2.00. Petitioner.000. and that he had posted a bond of only P80. and the party furnishing the same fail to file an additional counter-bond. 1991 in the amount ofP7. Actual damages at 25% percent per annum of unsecured amount of claim from October 21. for an order discharging the attachment wholly or in part on the security given.00. there can be no serious objection.827.500. Discharge of attachment upon giving counter-bond.200. on behalf of the adverse party.00. the party whose property has been attached. THE COURT OF APPEALS ERRED IN RULING THAT THE AMOUNT OF THE COUNTER-BOND SHOULD BE BASED ON THE VALUE OF THE PROPERTY ATTACHED EVEN IF IT WILL RESULT IN MAKING THE AMOUNT OF THE COUNTER-BOND EXCEED THE AMOUNT FOR WHICH PRELIMINARY ATTACHMENT WAS ISSUED.

petitioner and respondent.000. did not pray for attachment on its other claims. as later reduced to P12. before the Arbitration Committee of the Philippine Clearing House Corporation. and the amount of the adverse party’s deposit or counter-bond may be equal to the applicant’s bond. therefore. drive home the same point articulated in Asuncion: "The sheriff is required to attach only so much of the property of the party against whom the order is issued as may be sufficient to satisfy the applicant’s demand. it bears to stress. and presented for clearing to. committed grave abuse of discretion when it denied petitioner’s motion to discharge attachment by counter-bond in the amount of P12.00. as plaintiff a quo. that the certiorari proceedings before the appellate court and the denial of the motion to discharge attachment subject of such proceedings. VII.200.2 Million.. subject to the outcome of the arbitration proceedings. therefore. Simple common sense.200.000. transpired under the old rules on preliminary attachment which has since been revised. SP No. respondent bank. Be that as it may. 1992 fixed the bond to be posted by respondent. REMEDIAL LAW.600. Turning to the case at bar. in requiring petitioner to post a counter-bond in the amount ofP27. the records show that the principal claim of respondent. On March 7. to petitioner. obviously glossed over one certain fundamental. While the records do not indicate. The writ of attachment issued on January 27.000. 1994. however.000.200. the Court of Appeals committed reversible error when it dismissed petitioner’s recourse thereto in CA-G. the amount of which is stated in the order. the release by petitioner of the amount of P12. 1992.00. The writ of preliminary attachment is issued upon approval of the requisite bond". citing retired Justice Jose Y. agreed to equally divide between themselves. Jurisprudence teaches that a writ of attachment cannot be issued for moral and exemplary damages.000.600. albeit on a temporary basis. the trial court. The trial court. the amount of the applicant’s bond may be equal to the value of said property. Accordingly. It may be that a counter-bond is intended to secure the payment of any judgment that the attaching party may recover in the main action. Thus. (Emphasis supplied).The following excerpts from Herrera.00.000. the disputed amount of P25. contingent and unliquidated as they were.00 to respondent. Feria. it was simply unjust for the trial court to base the amount of the counter-bond on a figure beyond theP25. dictates that a part of a possible judgment that has veritably been preemptively satisfied or secured need not be covered by the counter-bond. However. The trial court was fully aware of this reality.00 threshold. 1992. As a necessary consequence.009 which. It bears to stress. As things stood. if not consideration of fair play. p. If a portion of the claim is already secured. too. expressly indicated that petitioner is justly indebted to respondent in the amount of P25. we see no justifiable reason why such portion should still be subject of counter-bond. 61.00. 7 The order of attachment dated January 22. We refer to the fact that the attachment respondent applied for and the corresponding writ issued was only for the amount of P25. respondent’s principal claim against petitioner immediately prior to the filing of the motion to discharge attachment has effectively been pruned down to P12.000. respondent. and given by. an amount more than double the attachment bond required of.000.000. petitioner filed a motion to discharge attachment by counter-bond in the amount ofP12. With the view we take of this case.6 representing the three (3) unfunded checks drawn against.600. however. Vol.00.R.600. as a final consideration.net .00. it should have allowed a total discharge of the attachment on a counter-bond based on the reduced claim of respondent. let alone provide a clear answer as to the actual value of the property levied upon.8 On February 11. Then. as applicant. unless a deposit is made or a counter-bond is given equal to said amount. and other unliquidated or contingent claim.600. is the extent that respondent may actually be prejudiced in the event its basic complaint for recovery of money against petitioner prospers. 1997 ed. in turn.000.237. 10 And unlike the former Section 12 of Rule 57 of the Rules of Court where the value of the property attached shall be the 1avvphi1.200. if the value of the property to be attached is less than the amount of the demand.700. Respondent.200. 34876.00.00. atP6. it may reasonably be assumed that it is equal to respondent’s principal claim. the attaching writ rightly excluded such claims. is in the amount of P25.

the instant petition is GRANTED. .: Isidro Tan (alias Tan Lit). as plaintiff. dated April 20. 1935.defining measure in the computation of the discharging counter-attachment bond. that is.000 had been attached under the aforesaid order of February 26. the present less stringent Section 12 of Rule 57 provides that the court shall order the discharge of attachment if the movant "makes a cash deposit. that Isidro Tan (alias Tan Lit) was not given . Four days thereafter. authorizing the attachment of the properties of the defendant Isidro Tan (alias Tan Lit) to the amount of P22." Not being in the nature of a penal statute. the respondent Tiu Chay (alias Tan Kia). DIAZ. passing on said motion. 1935. the DIRECTOR OF PRISON AND TIU CHAY (alias Tan Kia). 1994 of the Regional Trial Court at Makati. Rule 57 of the Rules of Court. and a new one entered GRANTING such motion upon the reposting of the same counter-bond. The respondent judge issued said writ on February 26. 1935. Francisco Zandueta. Judge of First Instances of Manila. however. why he should not be punished for contempt of court. No. 1935 ISIDRO TAN (alias Tan Lit). if any. 1935. by the respondent judge. in Civil Case No. the Rules of Court cannot be given retroactive effect. to file an additional counter bond in the amount of P10.000.000 to which it was later raised.000. Accordingly. the respondent judge entered another order requiring Isidro Tan (alias Tan Lit). that is. 47826 of the Court of First Instance of Manila. asking that the writ referred to be lifted. 1935. already Isidro Tan (alias Tan Lit).500 instead of P5. on April 23. giving him ten days to do so. Upon motion of said defendant. who is at present confined in Bilibid Prison. respondents. confirmatory of that of the 1st of said month. 1994 and July 20.000 above-mentioned in the order of May 6.000. the respondent judge required Isidro Tan (alias Tan Lit) to appear before him and show cause.00. . 92145 insofar they denied petitioner’s motion to discharge attachment by counter-bond in the amount of P12. the assailed decision and resolution of the Courts of Appeals are hereby REVERSED and SET ASIDE. 1935. L-43772 June 15. J. in an amount equal to that fixed by the court in the order of attachment. he will not be released. to put up a counter bond of P17. along with the orders dated June 13. 47826 of the Court of First Instance of Manila.000 only.000 already filed.000 of the amount withdrawn therefrom days before. withdrew from the Philippine National Bank an amount of money of which P22. on the same day. the respondent Tiu Chay (alias Tan Kia) asked that Isidro Tan (alias Tan Lit) be required to put up another counter bond in the amount of P22. obtained a writ of preliminary attachment against the petitioner Isidro Tan (alias Tan Lit) upon the filing of a bond in the amount of P5.R. or in default thereof.000 or that in the amount of P17. prays that he be released from confinement alleging that he is deprived of his liberty by virtue of an illegal order entered in civil case No.000 instead of P15. by virtue of which the defendant put up the required counter bond. On the third day. The order referred to was issued by the said respondent on May 17. or files a counter-bond . the dispositive part of which reads: The court finds the defendant in contempt of court and order that. exclusive of costs. and immediately thereafter.500. WHEREFORE. pending the deposit by him of the amount of P12. on May 2. FRANCISCO ZANDUETA. lifting the writ of attachment conditioned on the filing of a counter bond in the amount of P5. SO ORDERED.11 This disposition should be taken in the light of then Section 12. For failure to file either the counter bond in the amount of P10. on May 6. to deposit anew in the Philippine National Bank P17. that is. After sundry proceedings brought about by a motion of reconsideration presented by the defendant. 1935. Branch 135. the respondent judge issued another order. vs. 1935. The facts alleged in the pleadings may be briefly stated as follows: In case No. The respondent judge. or the filing of a bond in the aforesaid amount. the respondent judge issued an order on April 1. G. 1935.600. petitioner. Believing. April 20.000.

sufficient time to comply with the order of May 2 and 6, 1935, the respondent judge granted him
another day to comply therewith, but reducing this time the counter bond required of him to P12,000
only, with an option to deposit in the bank said amount in case of failure to put up the counter bond
as reduced. As the petitioner, notwithstanding these facilities, neither filed any additional counter
bond nor made the deposit required of him, the respondent judge ordered his arrest on May 17,
1935, and on the same day, after hearing his explanations which the said judge considered
unsatisfactory, he was sent to jail there to remain until he should deposit the amount required of him
or file the aforementioned counter bond.
The petitioner argues that under the provisions of section 440 of Act No. 190, after filing the counter
bond of P5,000 required of him by the court in its order of April 20, 1935, he was authorized and had
a perfect right to withdraw from the Philippine National Bank the amount of his deposit which was
attached by virtue of the orders of February 26 and April 20, 1935. In truth, when he withdrew the
aforesaid amount, there was still no order preventing or restraining him from doing so, and requiring
him to file an additional counter bound, because the order which imposed upon him that obligation
was issued very much later, that is, on May 2, 1935, or twelve days after the said withdrawal.
A reading of the aforesaid section of law readily shows, that when the property release from an
attachment cannot be returned by the party who secured its release upon the filing of a bond, the
bond takes the place of said property, that is, answers therefor, because the law on the points is
couched in the following language: "the obligation aforesaid standing in place of the property so
released."
Moreover, the provision of said section, to the effect that the defendant and surety will, on demand,
pay to the plaintiff the full value of the property released, proceeds on the assumption that a
judgment has been rendered in favor of the plaintiff; and the case at bar, in connection with the
present status of case No. 47826 of the Court of First Instance of Manila, is not such as to fall under
said provision of law, because up to the present no judgment has been rendered against the
defendant, that is, the petitioner Isidro Tan (alias Tan Lit), the question of whether or not the
respondent Tiu Chay (alias Tan Kia) is entitled to the amount claimed by him as plaintiff in the said
case, being still pending resolution.
Respondents' contention that the respondent judge proceeded according to law in requiring an
additional counter bond of P12,000 and in later ordering the confinement of the petitioner pending
the filing of said bond or the deposit of an equal amount with the bank, because he had not lost
jurisdiction over the property released pursuant to the provisions of section 440 of Act No. 90, is not
only without merit but also untenable. From the moment the said respondent authorized the
petitioner to put up the counter bond of P5,000 and from the moment the said petitioner filed said
counter bond in order to be able to withdraw his deposit in the Philippine National Bank, it can be
said that the respondent lost jurisdiction over the said property, although he retained jurisdiction to
resolve the principal question whether or not the respondent Tiu Chay (alias Tan Kia) was entitled to
the relief prayed for in his complaint, because he permitted and the law likewise permits that the
counter bond of the petitioner stand and answer for the said property.
In view of the foregoing, we are of the opinion, and so hold, that the petitioner is in fact deprived of
his liberty by virtue of an illegal order; wherefore, we order his immediate release, with the costs
taxes against the respondent Tiu Chay (alias Tan Kia). So ordered.
G.R. No. L-18740
April 28, 1922
WALTER E. OLSEN & CO., INC., petitioner,
vs.
VICENTE ALDANESE, as Insular Collector of Customs of the Philippine Islands, and W.
TRINIDAD, as Collector of Internal Revenue, respondents.
STATEMENT
On March 29, 1922, respondents' demurrer to the petition was overruled; on April 3, an answer was
duly filed; and on April 21, the petitioner filed a motion for judgment on the pleadings.
The facts are fully stated in the former opinion.1

Paragraph 4 of the petition contains certain subdivisions of section 6 of Act No. 2613 of the
Philippine Legislature, passed February 4, 1916, entitled "an act to improve the methods of
production and the quality of tobacco in the Philippine and to develop the export trade therein." They
empower the Collector of Internal Revenue to establish certain general and local rules respecting the
classification, marking and parking of tobacco for domestic sale or for exportation to the United
States, and, among other things, provide:
No leaf tobacco or manufactured tobacco shall be exported from the Philippine Islands to the
United States until it shall have been inspected by the Collector of Internal Revenue or his
duly authorized representative and found to be standard for export ...
In order to facilitate the free entry of tobacco products from the Philippine Islands into the
United States, the Collector of Internal Revenue is authorized to act as stamp agent for the
Untied States Commissioner of Internal Revenue, and to certify to the Insular Collector of
Customs that the standard tobacco exported is the growth and product of the Philippine
Islands. The Insular Collector of Customs upon certificate from the Collector of Internal
Revenue as aforesaid, shall issue such certificate of origin as may be necessary to insure
the speedy admission of the standard tobacco into the United States free of customs duties.
Paragraph 5 of the petition alleges that under clause B of section 6 of the Act, the Collector of
Internal Revenue promulgated Administrative Order No. 35, known as "Tobacco Inspection
Regulations," in which it is said:
To be classed as standard, cigars must be manufactured under sanitary conditions from
good, clean, selected tobacco, properly cured and seasoned, of a crop which has been
harvested at least six months, exclusively the product of the provinces of Cagayan, Isabela,
or Nueva Vizcaya. The cigars must be well made, with suitable spiral wrapper and with long
filler, etc.
Paragraph 6 pleads the provisions of section 1 of article 1 of the Constitution of the United States,
and paragraph 7 pleads section 10 of the "Jones Law."
The answer admits paragraphs 4, 5, 6, and 7 of the petition.
Paragraph 6 of the answer says:
They admit the facts alleged in Paragraph XI of the petition in so far as they refer to the
Insular Collector of Customs, but they deny that the acts performed by the said officer are
wrongful or illegal; and they also deny the others facts alleged in the same paragraph except
as they may hereinafter be impliedly admitted, that is, that on or about February 6, 1922, the
petitioner applied to the Collector of Internal Revenue for a certificate of origin covering a
consignment of 10,000 machine-made cigars to San Francisco, and as the petitioner himself
stated on making such application that the cigars sought to be exported must have been
manufactured from short-filler tobacco which was not the product of the provinces of
Cagayan, Isabela, and Nueva Vizcaya, the Collector of Internal Revenue did not deem it
necessary to make an actual examination and inspection of said cigars and stated to the
petitioner that he did not see his ways clear to the granting of petitioner's request, in view of
the fact that the cigars which the petitioner's request, in view of the fact that the cigars which
the petitioner was seeking to export were not made with long-filler nor were they made from
tobacco exclusively the product of any of the three mentioned provinces, and the said cigars
were neither inspected nor examined by the Collector of Internal Revenue.
As a special defense, the respondents allege that under section 11 of Act No. 2613 and section 5 of
the Administrative Code of 1917, the Collector of Internal Revenue has discretionary power to decide
whether the manufactured tobacco that the petitioner seeks to export to the United States fulfills the
requisites prescribed by Administrative Order No. 35. That it is not within the jurisdiction of this court
to order the Collector of Internal Revenue to issue a certificate to the petitioner to the effect that the
manufactured tobacco that the petitioner seeks to export is a product of the Philippine Islands, but it
is for the Collector of Internal Revenue to exercise the power of issuing said certificate if after an
inspection of said tobacco, he should find that "it conforms to the conditions required by

Administrative order No. 35 with the exclusion of those conditions which, according to the said
decision of the Supreme Courts, the Collector of Internal Revenue is not authorized to required
under Act No. 2613."
That the cigars which petitioner seeks to export to the United States have not as yet been
examined or inspected by the Collector of Internal Revenue.
Wherefore, the defendants pray that the petition be dismissed, with costs.
The question presented is whether under the facts admitted, the answer is a good defense to the
petition.

JOHNS, J.:
The defendants are public officers of the Philippine Islands, and the acts of which the petitioner
complains are their official acts.
In paragraph 11 of the petition, among other things, it is alleged:
That on the 6th day of February the said respondent Collector of Internal Revenue wrongfully
and unlawfully refused and neglected and still unlawfully refuses and neglects to issue such
certificate of origin on the ground that said cigars were not manufactured of long-filler
tobacco produced exlusively in the provisions of Cagayan, Isabela, or Nueva Vizcaya.
Paragraph 6 of the answer says:
"The petitioner applied to the Collector of Internal Revenue for a certificate of origin covering a
consignment of 10,000 machine-made cigars to San Francisco," and represented that the cigars
were made from short-filler tobacco which was not the product of Cagayan, Isabela, and Nueva
Vizcaya. The Collector of Internal Revenue did not deem it necessary to make an actual examination
and inspection of said cigars, and stated to the petitioner that he did not see his way clear to the
granting of petitioner's request, in view of the fact that the cigars which the petitioner was seeking to
export were not made with long-filler nor were they made from tobacco exclusively the product of
any of the three provinces, and the said cigars were neither inspected nor examined by the Collector
of Internal Revenue.
In its final analysis, this is an admission by the defendants the cigars in question were rejected by
the Collector of Internal Revenue, for the specified reason that they were not long-filler cigars
manufactured from tobacco grown in one of the three provinces. That the Collector accepted and
treated the statement to the petitioner as true, and, relying thereon, refused to use the certificate of
origin, for the sole reason that the cigars in question were not long-filler cigars, and were not
manufactured from tobacco grown in one of the three provinces.
If, when the cigars were presented, the Collector of Internal Revenue had simply refused to issue the
certificate of origin and had not specified any grounds for such refusal he would then have a legal
right to plead and rely upon any and all grounds of refusal. But where, as in the instant case, it is
alleged in the petition, and, in legal effects, admitted in the answer, that the cigars were rejected
because they were not long-filler and were not manufactured from tobacco grown in one of the three
provinces, then, under the authorities and rule of construction, the defendants are confined and
limited to the specified grounds of refusal, and cannot be heard to say that the cigars were rejected
upon any other or different grounds than those specified in the refusal.
Again, it appears from the whole purport and tenor of the answer that, in their refusal, the defendant
were acting under, and relying upon, those portions of Administrative Order No. 35, known as
"Tobacco Inspection Regulations," which this court held to be null and void in its former opinion.
Although in this class of cases, as a general rule, a demand and refusal is prerequisite to the
granting of a writ, it is not necessary where it appears from the record that the demand, if made,
would have been refused.
Merrill on Mandamus, section 225, says:

So ordered. Rep. as prayed for in the petition. at the rate of P3 per cavan. and the writ will issue. wherein said defendant Pablo Tiongson was ordered to pay the plaintiff Urbano Santos the value of 778 cavans and 38 kilos of palay. 35.. instead of indicating a willingness to execute the bonds. ET AL. 1929 URBANO SANTOS. No. vs. it would be a work of supererogation to require that a demand should be made for its performance. 456).The law never demands a vain thing. without special pronouncement as to costs. Cyc. known as "Tobacco Inspections Regulations. and when the conduct and action of the officer is equivalent to a refusal to perform the duty desired. R. it was his duty to refuse petitioner's request. VILLA-REAL. have been a vain and useless thing for the Collector of Internal Revenue to his examined or inspected the cigars.: This appeal was taken by the defendants Pablo Tiongson and the Provincial Sheriff of Bulacan from the judgment of the Court of First of said province. and denied the existence of any obligation or duty to issue and deliver them. Anything showing that the defendant does not intend to perform the duty is sufficient to warrant the issue of a mandamus.. . the Collector of Internal Revenue of the Philippine Islands promulgated Administrative Order No. the question of a formal demand is no longer important.) In United States vs. PABLO TIONGSON and THE PROVINCIAL SHERIFF OF BULACAN. it is very apparent that a request thereafter made examine or inspect the cigars would also have been refused. and that they were not manufactured from tobacco grown in one of the three provinces.. It appears that it would have been useless and foolish. vs. Harris (30 Pac. still if the defendant has shown by his conduct that he does not intend to perform the act. Having distinctly manifested their purpose not to perform this duty. The commencement of this proceeding was at least a sufficient demand. It appears from the record that the cigars in question were not long-filler cigars. as where the course and conduct of officers is such as to show a settled purpose not to perform the imposed duty. The motion for judgment on the pleadings is sustained. expressly denied the right of the plaintiff to the bonds. After such refusal and upon such grounds. plaintiff-appellee. Having refused to issue the certificate of origin for the reason above assigned. 473). G. Auditors of Town of Brooklyn (8 Fe. 26. BERNABE. K. and the law rarely requires the doing of a useless act. 182. says: Where it appears that a demand would be unavailing it need not be made. it would indeed. The facts in this case are peculiar. it is not necessary to go through the useless formality of demanding its performance. because the cigars tendered were not of the specified kind. having been promulgated by that officer. vol. Under the provisions of Act No. 2613. we have a right to assume that he was acting under such rules and regulations when he refused to issue the certificate of origin.R. & W." Such rules and regulations. the court says: But while it is generally true that a court will not issue a mandamus to compel the performance of an act which it is merely anticipated the defendant will not perform. Co. and we have a right to assume that he performed his official duty as the understood it. defendants. and that fact is apparent to the court. By the express terms and provisions of such rules and regulations promulgated by the Collector of Internal Revenue. the court says: The action of the officers before and since the commencement of this action clearly shows that a formal demand would have been unavailing. and the defendants. on page 459. J. appellants.. and decline the certificate or origin. JOSE C. p. (Citing a number of authorities. without costs. L-31163 November 6. In the case of Chicago.

3. 1928. there were deposited in Jose C. who obtained judgment in said case. At the same time. In the complaint filed by Pablo Tiongson against Jose C. including the 924 cavans and 31 ½ kilos of palay found by the sheriff in his warehouse. Urbano Santos. and the attachable property of Jose C. Bernabe.026 cavans and 9 kilos of palay belonging to the defendant Pablo Tiongson in Jose C. Bernabe's warehouse. the application of Pablo Tiongson for a writ of attachment was granted. deposited in Jose C. The plaintiff-appellee Urbano Santos contends that Pablo Tiongson cannot claim the 924 cavans and 31 ½ kilos of palay attached by the defendant sheriff as part of those deposited by him in Jose C. bore any marks or signs. The following facts were conclusively proved at the trial: On March 20. and the proceedings under it. Bernabe's warehouse. Bernabe may be construed as a claim for the delivery of the sacks of palay deposited by the former with the latter. considering the provisions of section 2 of the Code of Civil Procedure of the effect that "the provisions of this Code. the plaintiff applied for a preliminary writ of attachment of the defendant's property. intervened in the attachment of the palay. March 20. to recover from the latter the 1. in asking for the attachment thereof.net ." Liberally construing. giving rise to the present complaint. in order to promote its object and assist the parties in obtaining speedy justice. the refund of which is claimed by said plaintiff. The 778 cavans and 38 kilos of palay belonging to the plaintiff Urbano Santos. therefore. to wit: 1. It does not appear that the sacks of palay of Urbano Santos and those of Pablo Tiongson. shall be liberally construed. Upon filing said complaint. because. nor were they separated one from the other. he impliedly acknowledged that the same belonged to Jose C. or the value thereof. and the proceeds thereof delivered to said defendant Pablo Tiongson. at the rate of P3 per cavan was claimed therein. 1928. Bernabe's warehouse.In support of their appeal. Bernabe. the writ of attachment applied for by Pablo Tiongson against the property of Jose C. having been mixed with the 1. were attached. The court erred in holding that it has been proved that in the cavans of palay attached by the herein defendant Pablo Tiongson from the defendant Jose C.026 cavans and 9 kilos of palay. The court erred in ordering the defendant Pablo Tiongson to pay the plaintiff the value of 778 cavans and 38 kilos of palay. were attached. Bernabe and not to him. The herein plaintiff. The court erred in denying the defendants' motion for a new trial. On said date. civil case No. the appellants assign the following alleged errors committed by the lower court in its judgment. the sheriff having found only 924 cavans and 31 1/2 kilos of palay in said 1awphil. Bernabe is that provided in section 262 of the Code of Civil Procedure for the delivery of personal property. the return of which. 2. the above cited provisions of section 262 of the Code of Civil Procedure. It will be seen that the action brought by Pablo Tiongson against Jose C. the sheriff proceeded with the attachment.026 cavans and 9 kilos of palay deposited in the defendant's warehouse. it is alleged that said plaintiff deposited in the defendant's warehouse 1. but upon Pablo Tiongson's filing the proper bond. and the defendant's property. 3665 of the Court of First Instance of Bulacan. Pablo Tiongson filed with the Court of First Instance of Bulacan a complaint against Jose C. Bernabe. sold at public auction. the procedure followed by him may be construed as equivalent thereto. including 924 cavans and 31 1/2 kilos of palay found by the sheriff in his warehouse. which was accordingly issued. Bernabe's warehouse by the plaintiff Urbano Santos 778 cavans and 38 kilos of palay and by Pablo Tiongson 1. Although it is true that the plaintiff and his attorney did not follow strictly the procedure provided in said section for claiming the delivery of said personal property nevertheless.026 cavans and 9 kilos of the same grain. Bernabe were included those claimed by the plaintiff in this cause.

who deposited 778 cavans.000 (Annex C) and P4. 1983.'s construction receivables from the Development Academy of the Philippines to the extent of P100. Wherefore. respondent P. 398.. they bounced for insufficient funds.O. Inc. 1981) was entered into.342. 1981. Valdez.1977. according to the value of the things mixed or commingled. VALDEZ.010.. 1988 STATE INVESTMENT HOUSE.066. No.49 cavans of palay at the rate of P3 a cavan. Inc. private respondents turned over to the petitioner various certificates of stock of several corporations such as CDCP-Mining. The number of kilos in a cavan not having been determined. If. DOROTEO N. Valdez. COURT OF APPEALS.20. in his capacity as Presiding Judge of Branch 20. the judgment appealed from is hereby modified. who deposited 1.O. and PEDRO 0. Valdez.410. Valdez and Rudy H. and there being no means of separating form said 924 cavans and 31 1/2 of palay belonging to Urbano Santos and those belonging to Pablo Tiongson.49 thereof.026 cavans. HON. Northern Lines. respondent corporation failed to pay its obligations to petitioner amounting to P6. J. Four years later.O.51.O. and Pablo Tiongson. P. if in the latter case the things cannot be separated without injury.R. by the will of their owners. Valdez. Later. 1983. On September 30 and October 31. is applicable: Art. Inc.) When Pedro Valdez' two checks were deposited by the petitioner upon maturity. Valdez. private respondents were also made to execute a Deed of Sale dated December 29.O. a domestic corporation engaged in quasi banking. petitioner . Inc. we will take the proportion only of the 924 cavans of palay which were attached and sold. Oriental Petroleum and others. Inc. 82446 July 29.934. entered into an agreement for discounting with the petitioner the receivables of P. was required to provide collateral security for the loan. each owner shall acquire a right in the mixture proportionate to the part belonging to him. CANEBA. Presumably because the proceeds of the foreclosure were insufficient to satisfy the debt. covering P.70 as of April 11. Inc.O. thereby giving Urbano Santos.31 and a Deed of Assignment dated January 4. petitioner. (p.000. not exceeding the sums of P500. and Pablo Tiongson is hereby ordered to pay the plaintiff Urbano Santos the value of 398. on July 30. Pedro 0. And pursuant thereto. or if the mixture occurs accidentally. without special pronouncement as to costs.O. Manila. So ordered. 525. vs. the following rule prescribed in article 381 of the Civil Code for cases of this nature. (Annex E). HON. Sales executed two Comprehensive Surety Agreements to secure any and all loans of P. Regional Trial Court.: The issue posed by the petition in this case is whether the trial court (whom the Court of Appeals sustained) gravely abused its discretion in lifting the preliminary attachment on the private respondents' properties. Valdez. Inc. In addition. INC. 381. Inc. two things of identical or dissimilar nature are mixed. G. or the value thereof at the rate of P3 per cavan. 1985 and acquired them as the highest bidder in the foreclosure sale. Petitioner foreclosed its real estate mortgage on the two lots in Benguet of Pedro and Remedios Valdez on April 11. 1982 covering the proceeds of a postdated check for P4.. INC. another Deed of Sale dated January 4. VALDEZ. Despite demands.00.855. respondents. Rollo. GRIÑO-AQUINO..warehouse at the time of the attachment thereof. are recited in the decision of the Court of Appeals as follows: At the time the basic loan agreement (which is the Agreement dated July 30. 1985. 34. covering the proceeds as a postdated check for P197.000 (Annex D) from the petitioner State Investment House. petitioner and P. The other details of the transactions between the petitioner and P. private respondents executed a Real Estate Mortgage in favor of the petitioner covering two (2) parcels of land located outside Baguio City.

O. 101 SCRA 351). It was docketed in the Regional Trial Court of Manila as Civil Case No. Nevertheless. The motion was opposed by the petitioner. Valdez filed a motion for reconsideration. in the Agreement for Discounting Receivables and in the deeds of sale of said receivables. With respect to the two postdated checks which bounced. P. It observed that: 1. that the two checks or receivables" issued by Pedro Valdez were payment for "actual . the National Engineering Building in the U. Caneba (who succeeded Justice Martinez) denied the motion." (Annex K).O.P. 1988 (Annex A).. These factual conclusions of the Court of Appeals are binding on US (Bernardo vs. Inc. 8533050 entitled "STATE INVESTMENT HOUSE. but without success (Annex L). With respect to the two parcels of land which were mortgaged to the petitioner. Valdez can be faulted nor could they be charged of incurring fraudulent acts in obtaining the loan agreement. Inc. the defendants filed their answer to the complaint. Valdez. the DAP Building in Pasig. and the UP Hostel for Economics. respondent Judge Doroteo N. 1986. The Court of Appeals dismissed the petition on January 28. P. The petitioner opposed it. filed a third-party claim to certain properties titled in the name of Pedro Valdez. the Court of Appeals observed that since they were "sold" to the petitioner after the loan had been granted to private respondents. through Judge (now CA Justice) Antonio Martinez. Quezon City. Valdez and Remedios Valdez on the ground that their conjugal properties may not be attached to answer for the debts of the corporation which has a juridical personality distinct from its incorporators. PEDRO 0. certain real and personal properties of the defendants were attached. Campus. vs. On May 22. Tropical Homes." On November 5. 2. In the meantime. Valdez. Inc.P. VALDEZ.. It held that "neither P. and if any fraud existed. Diliman. 3. the latter should also have declined to accept them as collateral if it believed they were worth less than their supposed value. VALDEZ and RUDY H.O. namely. They admitted that they obtained loans from the petitioner to finance their construction projects. a motion to lift the attachment on those properties. it was in the performance of the obligations. the claimant filed on March 26. INC. Inc. SALES. Bernardo.also filed a collection suit. their issuance did not fraudulently induce the petitioner to grant the loan applied for. as reproduced in the decision of the Court of Appeals. It was denied by the lower court on November 19. For the private respondents could not have foreseen how the stocks would fare in the market. Petitioner went to the Court of Appeals on a petition for certiorari and prohibition alleging grave abuse of discretion on the part of the lower court in lifting the writ of preliminary attachment on the properties of the Valdez spouses (Annex K). (Annexes E. with a prayer for preliminary attachment. And if the petitioner thought they were worthless at the time. and G). F. the court. the petitioner having failed to submit a copy of its complaint as an annex of its petition for certiorari.O. As the sheriff failed to act on the third-party claim. On June 24. It was opposed by the petitioner. 1986. and (sic) Pedro O. Furthermore. 1986. The main thrust of the prayer for preliminary attachment is the alleged misrepresentation of the debtor P. issued a writ of preliminary attachment against the defendants' properties (Annex J). With respect to the shares of stock which the respondents pledged as additional security for the loan. and Pedro Valdez filed a motion to discharge the attachment on the ground that there was no fraud in contracting the loans. 1985. It was the petitioner's turn to file a motion for reconsideration. 1 986. It affirmed the lower court's finding that there was no fraud in contracting the debt. it should have rejected them as collateral. Pursuant thereto. They were "mere evidence of the private respondents" standing loan obligation to the petitioner" or "mere collaterals for the loan granted by the petitioner to the private respondents" (Annex A). Judge Cañeba granted the motion for reconsideration and discharged the preliminary attachment on the properties of Pedro O. Valdez. INC. also in U. the decline in their value did not mean that the private respondents entered into the loan transaction in bad faith or with fraudulent intent. We have examined the grounds enumerated in the petitioner's prayer for a writ of preliminary attachment.

respondent. the Court of Appeals declared "null and void the order/writ of attachment dated November 3. WHEREFORE. On giving due course to the petition. of which he was the president. L-35990 June 17. much less to defraud its creditors. Baldovino Lagbao. received from it independent consideration for the "sale" of Pedro Valdez' checks to it. We are constrained to affirm the finding of the court of Appeals that Valdez's checks are "mere evidence of the outstanding obligation of P." The petition was not defrauded by their issuance for the loans had been contracted and released to P. which defendant therein. Cusi Jr.O. was not a "buyer" of the "merchandise and personalities made in the ordinary course of business" by P. . COTABATO BUS COMPANY. has been acquiring and buying more assets". Inc. the provincial sheriff attached personal properties of the defendant bus company consisting of some buses. neither does it intend to do so. the respondent in the instant case. valid and subsisting and represent bona fide sales of merchandise and/or personalities made in the ordinary course of business" (par. c). The ground for the issuance of the writ is.O. Valdez. 7329. 1971. that the issuer of the checks. SO ORDERED. Valdez.. or should have known . By virtue of the writ of preliminary attachment.41. Aboitiz & Co. Vicente R. corroborates the facts in the plaintiff's affidavit instead of disproving or showing them to be untrue. apart from the loans previously extended to the corporations. 1971 and the orders of December 2. the Court of Appeals issued a restraining order restraining the trial court from enforcing further the writ of attachment and from proceeding with the hearing of Civil Case No. as well as that of . Inc. 7329 of the Court of First Instance of Davao (Branch 1) in which a writ of preliminary attachment was issued ex-parte by the Court on the strength of an affidavit of merit attached to the verified complaint filed by petitioner herein. witness for the defendant. 1971. the petitioners cannot claim to have been deceived or deluded by them because it knew. alleging among other things that "the Cotabato Bus Company has not been selling or disposing of its properties. Valdez. that P. that the defendant "has removed or disposed of its properties or assets. J. INC. long before the checks were issued. owed the said petitioner. petitioners.O. Inc. An opposition and a supplemental opposition were filed to the urgent motion. or is about to do so. were genuine. as alleged in the complaint and the affidavit of merit executed by the Assistant Manager of petitioner." Respondent company filed in the lower court an "Urgent Motion to Dissolve or Quash Writ of Attachment" to which was attached an affidavit executed by its Assistant Manager. It can hardly be doubted that those representations in petitioner's printed deeds of sale were false. the defendant went to the Court of Appeals on a petition for certiorari alleging grave abuse of discretion on the part of herein respondent Judge. 1971. INC. CUSI JR. a) and "that the receivables . to the petitioner. Cotabato Bus Co. for the collection of money in the sum of P 155.. Valdez. as plaintiff in said case. .739. But false though they were. Hon. Valdez. and the PROVINCIAL SHERIFF OF DAVAO DEL SUR. Pedro O. on November 2. In its decision promulgated on October 3. G. vs. machinery and equipment. Inc.O. DE CASTRO. Hence. Since the petitioner failed to prove during the hearing of private respondents' motion to lift the preliminary writ of attachment. that also the Cotabato Bus Company.sales of its merchandise and/or personalities made to its customers or otherwise arising from its other legitimate business transactions" (par. Inc.R.. the petition for certiorari is denied for lack of merit. HONORABLE VICENTE N. 1981 ABOITIZ & COMPANY. Inc.. Judge of the Court of First Instance of Davao.: The instant petition stemmed from Civil Case No.. with intent to defraud its creditors. No.. The lower court denied the motion stating in its Order that "the testimony of Baldovino Lagbao." A motion for reconsideration was filed by the defendant bus company but the lower court denied it.

UNDER REP. TO BRING. factual revolving on whether respondent bus company has in fact removed its properties. AS A FURTHER ACT OF REMOVAL OF PROPERTIES BY RESPONDENT WITH INTENT TO DEFRAUD PETITIONER COMPANY.000. and made the restraining order originally issued permanent. 1405. and its debts to several creditors. IN COMPLIANCE WITH A subpoena DUCES TECUM TO THE TRIAL COURT ALL THE RECORDS OF RESPONDENT'S DEPOSITS AND WITHDRAWALS UNDER ITS CURRENT AND SAVINGS ACCOUNTS (NOW NIL) FOR EXAMINATION BY PETITIONER COMPANY FOR THE PURPOSE OF SHOWING DIRECTLY THE REMOVAL. ESTABLISHED BY DOCUMENTARY EVIDENCE AND NOT DENIED BY RESPONDENT. THE METROPOLITAN BANK & TRUST CO. (Branch I). including secured ones like the .December 11. IS MENTIONED ONLY AS A "CLAIM" OF PETITIONER COMPANY. However. 3) THE DECISION IGNORES THE SIGNIFICANCE OF THE REFUSAL OF RESPONDENT TO PERMIT. ASSEMBLED AND PRESENTED BY PETITIONER COMPANY SHOWING IN — THEIR TOTALITY — THAT RESPONDENT HAS REMOVED. TRIAL COURT. FOR WHOSE BENEFIT SAID BUSES HAD BEEN ATTACHED. INCOME AND OTHER LIQUID ASSETS WITH INTENT TO DEFRAUD ITS CREDITORS. or is about to do so. in fraud of its creditors. and should no longer be disturbed. The present recourse is an appeal by certiorari from the decision of the Court of Appeals reversing the assailed orders of the Court of First Instance of Davao.00 payment thereof was made with a personal check of the respondent company's president and majority stockholder. This may be inferred from the emphasis laid by petitioner on the fact that even for the measly amount of P 634. ESPECIALLY ITS UNSECURED SUPPLIERS. DIVERSION OR DISPOSAL OF RESPONDENT'S DEPOSITS AND INCOME WITH INTENT TO DEFRAUD ITS CREDITORS. ON OCTOBER 3. ordered the release of the attached properties. 1971. petitioner assigning against the lower court the following errors: ERROR I THE COURT OF APPEALS ERRED IN HASTILY AND PERFUNCTORILY RENDERING. 2) THE DECISION CONTAINS NO DISCUSSION AND APPRECIATION OF THE FACTS AS PROVED. ACT NO. the findings of the Court of Appeals on said issues of facts are generally considered conclusive and final. A DECISION WITHOUT CONSIDERING MOST OF THE EVIDENCE SUCH THAT — l) EVEN AN IMPORTANT FACT.00 A DAY AND THE EVIDENCE THAT IT CANNOT PRODUCE P 634. DIVERTED OR DISPOSED OF ITS BANK DEPOSITS. ERROR II THE COURT OF APPEALS ERRED IN NOT APPRECIATING THE FACTS THAT RESPONDENT'S BANK DEPOSITS ARE NIL AS PROOF WHICH . We gave due course to the petition because it raises also a legal question of whether the writ of attachment was properly issued upon a showing that defendant is on the verge of insolvency and may no longer satisfy its just debts without issuing the writ. 1971. ERROR III THE COURT OF APPEALS ERRED IN NOT APPRECIATING THE RESCUE AND REMOVAL BY RESPONDENT OF FIVE ATTACHED BUSES. The questions raised are mainly. if not solely. AND OTHER EVIDENCE — SHOWS THE REMOVAL OR CHANNELING OF ITS INCOME TO THE LATTER.00 to P 14. DURING THE DEPENDENCY OF ITS MOTION TO DISSOLVE THE ATTACHMENT IN THE.00 WITHOUT USING A PERSONAL CHECK OF ITS PRESIDENT AND MAJORITY STOCKHOLDER. This being so.TOGETHER WITH RESPONDENT'S ADMISSION OF AN INCOME OF FROM P10.000.

Inc. it should not allow its buses to fall into disuse by lack of repairs. despite its daily income averaging P12. vs. have remained unpaid. vs. as was the obvious purpose of their substitution to be placed in running condition. plaintiff-appellee. disclaims any intention of advancing the theory that insolvency is a ground for the issuance of a writ of attachment .000. It is an undisputed fact that. the instant petition is hereby denied. indeed the income of the company were sufficiently profitable. The dwindling of respondent's bank account despite its daily income of from P10. Philippine Ready Mix Concrete Company. Accordingly. including secured creditors like the DBP to which all its buses have been mortgaged. altogether. Aside from the reference petitioner had made to respondent company's "nil" bank account. However. PARAS. Baldovino Lagbao. the respondent Court of Appeals correctly took its position in the negative on the strength of the explicit ruling of this Court in Max Chamorro & Co. and Hon. which petitioners in effect claims to have been proven by the evidence. except that the restraining order issued by it should not have included restraining the trial court from hearing the case. SO ORDERED. Petitioner is only one of the suppliers. as if to show removal of company's funds. 2 Petitioner. and other needs of the company to keep its business a going concern. indeed. but they were substituted with five buses which were also in the same condition as the five repaired ones before the repair.00 is easily explained by its having to meet heavy operating expenses. 1 Going forthwith to this question of whether insolvency. If. therefore. both civil and criminal. The sale or other form of disposition of any of this kind of property is not difficult of detection or discovery. machinery and other equipments which respondent company have to own and keep to be able to engage and continue in the operation of its transportation business. particularly by company's bank account which has been reduced to nil. petitioner also cited the alleged non-payment of its other creditors. It is. 3 and insists that its evidence -is intended to prove his assertion that respondent company has disposed. ANTONIO Y. The repair of the five buses was evidently motivated by a desire to serve the interest of the riding public. as declared by its assistant manager. as the buses were mortgaged to the DBP.DBP. 7329 and decide it in accordance with the law and the evidence. or is about to dispose. No. In the main. despite its supposed daily income of an average of P 12. Moreover. which seems to exist only in petitioner's apprehensive imagination. the DBP should not have failed to take proper court action. Manuel P. as there is no showing that they were not put on the run after their repairs. defendants-appellants. This cannot be the removal intended as ground for the issuance of a writ of attachment under section 1 (e). We find that the respondent Court of Appeals has not committed any reversible error. G. if not nil. No special pronouncement as to costs. and the rescue and removal of five attached buses. Rule 57. which should have been easily obtainable.00. and strangely. If removal of the buses had in fact been committed. which include salaries and wages of employees and workers. Barcelona. in fraud of its creditors. of the Rules of Court. clearly not to defraud its creditors.00 to P14. five of them were repaired.00. upon permission by the sheriff. but the trial court is hereby ordered to immediately proceed with the hearing of Civil Case No. has adduced no proof of any sale or transfer of any of them. may be a ground for the issuance of a writ of attachment. much less grave abuse of discretion. SYVEL'S INCORPORATED. 1988 PEOPLE'S BANK AND TRUST COMPANY. which apparently has not been done. L-29280 August 11. petitioner. as averred by petitioner itself. It should also maintain a good credit standing with its suppliers of equipment.000. SYYAP and ANGEL Y SYYAP.R. extremely hard to remove the buses. however.000. of its properties.000. J. their removal or disposal as alleged by petitioner to provide the basis for its prayer for the issuance of a writ of attachment should be very remote. the several buses attached are nearly junks.: .

Assistant Vice President of the plaintiff bank and Atty. to the effect. was executed by the defendant Antonio V. the decretal portion of which states: IN VIEW OF THE FOREGOING. Rollo) The facts of the case based on the statement of facts.. In that deed of . 10-11 Cartimar Avenue. Leopoldo R. 89-90. Against the credit line granted the defendant Syvel's Incorporated the latter drew advances in the form of promissory notes which are attached to the complaint as Annexes "C" to "l. materials and stocks covered by the chattel mortgages be sold at public auction in conformity with the Provisions of Sec. Mendoza were present. Branch XII in Civil Case No. plus 10% of the total amount due for attorney's fees and the costs of suit. As no payment had been paid. because of an attempt to have the matter settled.000. On petition of the plaintiff based on the affidavits executed by Mr. 1967. 886 Nicanor Reyes. Syyap and Atty. 1965. Nos. Jr.633. Berenguer on January 12. this case was even tually filed in this Court. made by the trial court in its decision as cited in the briefs of both parties are as follows: This is an action for foreclosure of chattel mortgage executed in favor of the plaintiff by the defendant Syvel's Incorporated on its stocks of goods. Manila. judgment is rendered sentencing all the defendants to pay the plaintiff jointly and severally the sum of P601. 14 of the Chattel Mortgage Law. Eduardo J.00 granted the said defendant corporation. (formerly Morayta). personal properties and other materials owned by it and located at its stores or warehouses at No. Escolta. However. 764-766 Rizal Avenue. the defendants. plaintiff. Should the defendants fail to pay the same to the plaintiff. As a consequence of the issuance of the writ of attachment. defendants Antonio V. 1967." In view of the failure of the defendant corporation to make payment in accordance with the terms and conditions agreed upon in the Commercial Credit Agreement the plaintiff started to foreclose extrajudicially the chattel mortgage. The counterclaim of the defendants. On May 20. After the filing of this case in this court and during its pendency defendant Antonio v. in their answer to the complaint set up a compulsory counterclaim for damages. Antonio de las Alas. Syyap proposed to have the case settled amicably and to that end a conference was held in which Mr.01 with interest thereon at the rate of 11% per annum from June 17. Mr. Syyap executed an undertaking in favor of the plaintiff whereby they both agreed to guarantee absolutely and unconditionally and without the benefit of excussion the full and prompt payment of any indebtedness to be incurred on account of the said credit line. 15. Syyap and Angel Y. and the proceeds thereof applied to satisfy the judgment herein rendered. and offered to execute a real estate mortgage on his real property located in Bacoor. 1966. particularly the plaintiff herein. until the whole amount is paid. Syyap requested that the plaintiff dismiss this case because he did not want to have the goodwill of Syvel's Incorporated impaired. the expiry date of which was May 20. a preliminary writ of attachment was issued. De las Alas consented. 68095. and so the Real Estate Mortgage. that the defendants are disposing of their properties with intent to defraud their creditors. Manila. Mr. No. the extra-judicial foreclosure was not pushed thru. p. Vice President of the Bank. among others.This is an appeal from the decision dated May 16. 406. is dismissed for lack of merit. Rivera. Syyap and his wife Margarita Bengco Syyap on June 22. Nos. marked as Exhibit A. defendant Antonio V. Sr. then it is ordered that all the effects. Manila. as evidenced by Annex"A."The chattel mortgage was duly registered in the corresponding registry of deeds of Manila and Pasay City. upon the evidence presented and in the light of the authorities above cited. The chattel mortgage was in connection with a credit commercial line in the amount of P900. 1968 rendered by the Court of First Instance of Manila. Cavite. SO ORDERED (pp. Record on Appeal. Pasay City. 1967.

78). the obligation secured by the chattel mortgage subject of this case was novated. Hence. No part of the amount has been paid by either of the defendants. and therefore. There is likewise no dispute that the defendants Syyap guaranteed absolutely and unconditionally and without the benefit of excussion the full and prompt payment of any indebtedness incurred by the defendant corporation under the credit line granted it by the plaintiff. pp. appellants assign the following errors: I The lower court erred in not holding that the obligation secured by the Chattel Mortgage sought to be foreclosed in the above-entitled case was novated by the subsequent execution between appellee and appellant Antonio V. 1967. its indebtedness was in the total amount of P601. appellee's cause of action thereon was extinguished. but the defendants did not want to agree if the dismissal would mean also the dismissal of their counterclaim Against the plaintiff.. Complying with the promise of the plaintiff thru its Vice President to ask for the dismissal of this case.633. Syyap proposed to have the case amicably settled and for that purpose a conference was held in which Mr. defendant Antonio V.01. Syyap of a real estate mortgage as additional collateral to the obligation secured by said chattel mortgage. This was admitted by defendant Antonio V.577. . defendant Syyap admitted that as of June 16. Rollo) Appellants admit that they are indebted to the appellee bank in the amount of P601. trial proceeded. and offered to execute a real estate mortgage on his real property located in Bacoor. Syyap requested that the plaintiff dismiss this case as he did not want to have the goodwill of Syvel's Incorporated impaired. 1967.mortgage. 26.000. Syyap in the deed of real estate mortgage executed by him. Vice President of plaintiff People's Bank and Trust Company. In an Order dated September 23. IV The lower court erred in dismissing appellants'counterclaim and in not holding appellee liable to appellants for the consequent damages arising out of a wrongful attachment. the breakdown of which is as follows: P568. Mr. Brief for the Appellants.01.00 was granted to the defendant corporation on the guaranty of the merchandise or stocks in goods of the said corporation which were covered by chattel mortgage duly registered as required by law. a motion to dismiss this case without prejudice was prepared. Cavite. the indebtedness of Syvel's Incorporated was P601. Brief for Appellee. As regards the liabilities of the defendants.76 as principal and P33. Antonio de las Alas. there is no dispute that a credit line to the maximum amount of P900. Jr.633. II The lower court erred in not dismissing the above-entitled case and in finding appellants liable under the complaint. As of June 16. p.633. de las Alas consented. Exhibit C. p. and so the Real Estate Mortgage (Exhibit "A") was executed by defendant Antonio Syyap and his wife Margarita Bengco Syyap on June 22.25 as interest. 3-6. defendant Antonio V.055. After the filing of the case and during its pendency. Syyap and Atty. 1967. Mr. the motion was denied for not being well founded (record on Appeal. Hence their liabilities cannot be questioned. 68-72) on the ground that by the execution of said real estate mortgage.577. 1-2. breakdown of which is as follows: P568.25 as interest. 1967. Defendants did not agree with plaintiffs motion to dismiss which included the dismissal of their counterclaim and filed instead their own motion to dismiss (Record on Appeal.055. (pp. Rollo) In their brief. 25.01. p. III The lower court erred in not holding that the writ of preliminary attachment is devoid of any legal and factual basis whatsoever.76 as principal and P33. Mendoza were present. (pp.

In the determination of the legality of the writ of attachment by the Court of First Instance of Manila. I. 1985. 47 Phil. National Power Corp. Moreover. They testified that Syvel's Inc. It is elementary that novation is never presumed. No. records show that in the real estate mortgage. it is a well established rule that the grant or denial of a writ of attachment rests upon the sound discretion of the court. p. intent to defraud may be and usually is inferred from the facts and circumstances of the case. 57). Therefore. Page No. Novation takes place when the object or principal condition of an obligation is changed or altered. Book No. 1970 Ed. real estate mortgage executed by Angel V.. v. Putnam Corset Co. the actuations of appellants were clearly seen by the witnesses who "saw a Fiat Bantam Car-Fiat Car. that a novation was not intended. Rizal Avenue and Morayta Street were no longer operated by appellants and that the latter were disposing of their properties to defraud appellee bank. had disposed of all the articles covered by the chattel mortgage but had not remitted the proceeds to appellee bank. Rivera and Berenguer on which the lower court based the issuance of the writ of preliminary attachment relied on the reports of credit investigators sent to the field and not on the personal knowledge of the affiants. 439. Comments on the Rules of Court. Dayrit.." (4 Am. as shown by the records (McTaggert v.I. Records are bereft of any evidence that grave abuse of discretion was committed by respondent judge in the issuance of the writ of attachment. In any case. the attachment sought on the ground of actual removal of property is justified where there is physical removal thereof by the debtor. a small car and about three or four persons hurrying. It is clear. pp. they were carrying goods coming from the back portion of this store of Syvels at the Escolta. appellants agreed that the chattel mortgage "shall remain in full force and shall not be impaired by this (real estate) mortgage. Series of 1965. I. Hence.Y. Series of 1965. Revised Rules of Court. 24-25). Vol. Such contention deserves scant consideration. 125 SCRA 849 [1983]). Appellants contend that the affidavits of Messrs. The real estate mortgage was evidently taken as additional security for the performance of the contract (Bank of P. Merris. Syyap (Doc. The contract on its face does not show the existence of an explicit novation nor incompatibility on every point between the "old and the "new" agreements as the second contract evidently indicates that the same was executed as new additional security to the chattel mortgage previously entered into by the parties. 24). Evidence adduced during the trial strongly shows that the witnesses have personal knowledge of the facts stated in their affidavits in support of the application for the writ.on of the stocks of Syvel's Incorporated in order to render . it can rarely be proved by direct evidence. Revised Rules of Court.Appellants contention is without merit. In fact the trial court is impressed "that not only has the plaintiff acted in perfect good faith but also on facts sufficient in themselves to convince an ordinary man that the defendants were obviously trying to spirit away a port. that the Syvel's Stores at the Escolta. Notary Public Jose C. p. "the act of debtor (appellant) in taking his stock of goods from the rear of his store at night. In the case at bar. 45-46). 8 N. therefore. Second Edition. No. 144 SCRA 223 [1986]. v. 7). Book No. 3. 5. the principle may be applied that every person is presumed to intend the natural consequences of his acts (Francisco. S 800 cited in Moran. CA. Syyap and Rita V. Jur. (Doc. is sufficient to support an attachment upon the ground of the fraudulent concealment of property for the purpose of delaying and defrauding creditors. Notary Public Jose C. Manila) shall remain in full force and shall not be impaired by this mortgage (par.. 14). Herrige." The pertinent provision of the contract is quoted as follows: That the chattel mortgage executed by Syvel's Inc." Emphasis ours). p. Exhibit"A. 90. 841 cited in Francisco. Merris. It may be gleaned also from the statements and conduct of the debtor. Such testimonies and circumstances were given full credit by the trial court in its decision (Brief for Appellee. and in this connection. pp. it must be explicitly stated or there must be manifest incompatibility between the old and the new obligations in every aspect (Goni v. supra. Manila). there is nothing in the Real Estate Mortgage which supports appellants'submission. between 5:30 and 6:00 o'clock in the evening. 441.." (Record on Appeal. Besides.

The motion was favorably acted upon. QUIASON. and THE PROVINCIAL SHERIFFS OF CEBU. consequently. on July 13. ABOITIZ & COMPANY. (Civil Case No. CEB-1185 and the Order dated September 26. ADLAWAN and ELENA S. respondent Aboitiz and Company. 1983 of respondent Judge Ramon Am.R. resulting in the seizure of heavy construction equipment. Acting on the ex parte application for attachment. in Civil Case No. (2) technical and managerial services rendered. CEB-1186. (Aboitiz) sought to collect from petitioners a sum of money representing payments for: (1) the unpaid amortizations of a loan. emphasizing that all orders of the court issued prior to . as Presiding Judge of Branch 6. R-21761). Record on Appeal. Branch 11 issued an order confirming the notice of dismissal.000. the Executive Judge of the Court of First Instance of Cebu. In fact. RIZAL and METRO MANILA. praying for the stay of the July 6. vs. motor vehicle spare parts. Civil Case No. The said court also granted the motion of respondent Aboitiz to take possession and custody of the attached property of petitioners and ordered the Provincial Sheriff of Davao to deliver the property to respondent Aboitiz. 37). Regional Trial Court Cebu City. Respectively. Hon.ineffectual at least partially anyjudgment that may be rendered in favor of the plaintiff. Consequently. the case was raffled to Branch 11 of the Court of First Instance of Cebu.000. respondents. and (3) the unpaid installments of the equipment provided by respondent Aboitiz to petitioners (Rollo. PREMISES CONSIDERED. 68095. issued on May 14. TORRES. INC. 1994 ELEAZAR V. Subsequently. Inc. CEB-1186. the discharge of the property levied upon. which granted the motion for the issuance of writs of preliminary attachment for the seizure of the property of petitioners by respondent Provincial Sheriffs. 1982 filed with the Court of First Instance of Cebu. Petitioners moved for a bill of particulars and to set aside the ex parte writ of attachment. Torres in the consolidated cases. and (2) the Order dated December 12. DAVAO. 1983 of Judge Emilio A. 1982. the allegations in the appellee's complaint more than justify the issuance of the writ of attachment. ADLAWAN. Branch 6. p. 65957-58 July 5." (Decision. G. the claim of the former for damages is evidently negated. 88-89). 1983 of respondent Judge Ramon Am. Branch 11 ordered on July 6. an order directing the issuance of the writ of preliminary attachment against the property of petitioners upon the filing by respondent Aboitiz of an attachment bond. petitioners. pp. which issued a writ of attachment addressed to the Provincial Sheriffs of Cebu and the City Sheriff of Davao City. SO ORDERED. Civil Case No. Nos. Appellants having failed to adduce evidence of bad faith or malice on the part of appellee in the procurement of the writ of preliminary attachment. Jacinto of Branch 23 of the same court in Civil Case No. 1982 Order for a period of 15 days for it to be able to appeal the order. Finding merit in the motion to set aside the writ. Respondent Aboitiz filed an urgent ex parte motion.00. It was the Sheriff of Davao City who enforced the writ of attachment. this appeal is DISMISSED for lack of merit and the judgment appealed from is AFFIRMED. respondent Aboitiz filed a notice of dismissal of its complaint in accordance with Section 1. Cebu City. now Regional Trial Court. Rule 17 of the Revised Rules of Court. J. I In a complaint dated April 24.: This is a petitioner for certiorari and mandamus with preliminary injunction or restraining order to nullify: (1) the Order dated September 14. 1982 the lifting of the writ and. 1982. However. Torres of the Regional Trial Court. Judge RAMON AM. CEB-1185 and Civil Case No. and other personal property with the aggregate value of P15.

1990. docketed as Civil Cases Nos. He also averred that the property seized were in custodia legis by virtue of the writ of attachment issued by Branch 11. Alleging that while his office was situated in Cebu City. however. CEB-1185 alleged that petitioner Eleazar Adlawan (defendant therein) was awarded a contract for the construction of the Tago Diversion Works for the Tago River Irrigation Project by the National Irrigation Administration and that respondent Aboitiz (plaintiff therein) loaned him money and . In the Resolution dated September 10. 63225). and the filing by petitioner Eleazar Adlawan before Branch 10 of the same court of an action for damages in connection with the seizure of his property under the writ of attachment.R. denied with finality in the Resolution of July 11. p. No. this Court rules that the attached properties left in the custody of private respondent Aboitiz and Company. he filed a motion for reconsideration which was not granted. and the dismissal of the complaint. but that was not to be. respondent Aboitiz filed a second motion for reconsideration with a prayer that the dispositive portion of the decision be clarified. 619-L be continued in custodia legis of said court pending litigation therein. The motion was. 1990 decision of the Third Division of this Court was modified to read as follows: WHEREFORE.R. Branch 16 ordered the seizure and delivery of the property described in the complaint. Adlawan without prejudice to the outcome of the cases filed by both parties (Rollo. therefore. Said property were later delivered by the provincial sheriff to respondent Aboitiz.the filing of said notice of dismissal had been rendered functus oficio. His omnibus motion was denied. 1990 that since attachment is an ancillary remedy. R-21761 be returned to the petitioner. the Court disposed of the case as follows: WHEREFORE. the withdrawal of the complaint left it with no leg to stand on. Adlawan was a resident of Minglanilla. the Lapu-lapu City court should not entertain the action for replevin. 63225 having become final and executory." Accordingly. the dispositive portion of the April 3. Petitioner Eleazar Adlawan filed a motion praying that the July 6. The Decision in G. remained in force as the Third Division of the Supreme Court had not found it illegal. be returned to petitioner Eleazar V. this Court rules that the properties in the custody of the private respondent Aboitiz & Company by virtue of the writ of attachment issued in Civil Case No. Inc. It asserted that because the writ of preliminary attachment was different from the writ of replevin. This should have terminated the controversy between petitioners and respondent Aboitiz insofar as the Supreme Court was concerned. we should rule that the property subject of the latter writ should remain in custodia legis of the court issuing the said writ. Subsequently. The denial of his omnibus motion led petitioner Eleazar Adlawan to file a petition for certiorari and mandamus in the Supreme Court (G. 1990. 619-L). in view of the foregoing. and therefore. The Third Division of this Court ruled on April 3. Thus. In the replevin suit. Branch 23. the retrieval of the property seized. but properties in the custody of the private respondent by virtue of the writ of replevin issued in Civil Case No. CEB-1185 and CEB-1186. It argued that the writ of replevin. however. 1983 respondent Aboitiz filed against petitioners two complaints for collection of sums of money with prayers for the issuance of writs of attachment in the Regional Trail Court. entry of judgment was made on November 15. 324). contending that the replevin case was distinct and separate from the case where the writ of attachment was issued. Undaunted. the Third Division stated that "the properties to be returned to petitioner are only those held by private respondent (Aboitiz) by virtue of the writ of attachment which has been declared non-existent. 1982 Order be implemented and enforced. 1990. and considering all pending incidents in the case as moot and academic. in view of the foregoing. Respondent Aboitiz filed a motion for reconsideration of the decision. The complaint in Civil Case No. Petitioner Eleazar Adlawan filed an omnibus motion praying for the reconsideration and dissolution of the writ of seizure. No. Branch 11 denied the motion on account of the filing by respondent Aboitiz before Branch 16 of the Court of First Instance of Cebu in Lapu-lapu City of an action for delivery of personal property (Civil Case No. Cebu City. On September 9. On December 20.

R. On December 12. It averred that the issuance of the writ of attachment was justified because petitioners were intending to defraud respondent Aboitiz by mortgaging 11 parcels of land to the Philippine Commercial and Industrial Bank (PCIB) in consideration of the loan of P1.672. (Rollo.00. Rule 17 of the Revised Rules of Court was without prejudice to the institution of another action based on the same subject matter. On December 15. the Acting Provincial Sheriff of Cebu issued separate writs dated September 26. which was raffled to Branch 23. Jacinto ordered the issuance of a writ of attachment upon the filing of a bond of P2.000. 65-66). Davao and Metro Manila "to proceed with the enforcement and implementation of the writs of preliminary attachment.000. the filing of the two cases. defendants executed a real estate mortgage covering eleven (11) parcels of land in favor of Philippine Commercial and Industrial Bank (PCIB) to secure a P1. pp. petitioners filed an ex parte motion praying: (1) that the December 12.00. in its comment on petitioners' motion to withhold the enforcement of the writs of attachment. Branch 6. respondent Aboitiz alleged that the voluntary dismissal of Civil Case No. the same property were under custodia legis and therefore could not be the subject of other writs of attachment. an order directing the transfer to Branch 6 of Civil Case No. 109-113). CEB-1185 and CEB-1186 urgent motions to hold in abeyance the enforcement of the writs of attachments." Respondent Judge ruled that the writs of attachment were issued on the basis of the supporting affidavits alleging that petitioner had removed or disposed of their property with intent to defraud respondent Aboitiz (Rollo. pp.000. . which indebtedness as of June 30. presided by respondent Judge Ramon Am.08.00.259.259. CEB-1186. 1983 addressed to the Sheriffs of Cebu. CEB-1186. 1983. That. 1983 totalled P5. thereby making PCIB a preferred creditor to the prejudice of respondent Aboitiz. obviously to defraud the plaintiff. On September 14. Paragraph 16 of the complaint states: 16.000. CEB-1185 was raffled to the Regional Trial Court. contending that since the property subject of the writ of attachment have earlier been attached or replevied. .00 loan with said bank and was able to remove. in Civil Case No. 63225. 1983 Order be set for hearing. 1983.000.000. CEB-1185.100.14. which indebtedness as of June 30. No. CEB-1185. constituted undue interference with the processes of this court in the then pending petition involving the same property. Meanwhile. Accordingly. Petitioners then filed in Civil Cases Nos. . (2) that they be given 15 days within which to either file a motion for reconsideration or elevate the matter to this Court or the then Intermediate Appellate Court. Civil Case No. . R-21761 under Section 1. presiding Judge Emilio A.370. Similarly. in Civil Case No. Davao and Metro Manila. They alleged in the main that since their property had been previously attached and said attachment was being questioned before the Supreme Court in G. which had an exposure amounting to P13. Upon motion of respondent Aboitiz. Branch 23 issued on October 13. CEB-1185. respondent Judge ordered the issuance of a writ of attachment upon respondent Aboitiz' filing of a bond of P5. Paragraph 15 of the complaint is similarly worded as paragraph 16 of the complaint in Civil Case No. however.equipment. CEB-1186 for consolidation with Civil Case No.14. issued in Civil Case No.500. Petitioners then filed a rejoinder to said comment. CEB-1186 alleged that petitioner Eleazar Adlawan (defendant therein) was awarded a contract for the construction of the Lasang River Irrigation Project by the National Irrigation Administration and that respondent Aboitiz (plaintiff therein) loaned him money and equipment. The complaint in Civil Case No. conceal and dispose of their properties. respondent Judge issued an order finding no merit in petitioners' motion for reconsideration and directing the sheriffs of Cebu. and (3) that within the same 15-day period the implementation or enforcement of the writs of attachment be held in abeyance. as well as the issuance of the writs of attachment. Torres.430. in view of the enormous liabilities which the defendants have with the plaintiff.430. No writ of preliminary attachment was. 1983. 1983 totaled P13.

Moreover.. That a sufficient cause of action exists against the defendants named therein because the said defendants are indebted to the plaintiffs in the amount of P13. 63225 in this Court. the factual basis on defendant's intent to defraud must be clearly alleged in the affidavit in support of the prayer for the writ of attachment if not so specifically alleged in the verified complaint. to justify a preliminary attachment.S. They alleged that respondent Judge gravely abused his discretion in ordering the issuance of the writs of preliminary attachment inasmuch as the real estate mortgage executed by them in favor of PCIB did not constitute fraudulent removal. Proof of fraud is mandated by paragraphs (d) and (e) of Section 1.) S... Branch 11 had ruled that the loan for which the mortgage was executed was contracted in good faith. it was not per se a ground for attachment lacking proof of intent to defraud the creditors of the defendant...00 loan with the same bank. The affidavit submitted by respondent Aboitiz in support of its prayer for the writ of attachment does not meet the requirements of Rule 57 of the Revised Rules of Court regarding the allegations on impending fraudulent removal. Rule 57 of the Rules of Court..000. we issued a temporary restraining order on January 6.430. Rule 57 of the Revised Rules of Court on the grounds upon which attachment may issue. Macadaeg..14 exclusive of interests thereon and damages claimed. p. they argued that respondent Judge gravely abused his discretion in proceeding with the case. without first hearing the parties on the motion for attachment and the motion to dissolve the attachment. On December 27. petitioners filed the instant petition for certiorari and mandamus. No. plaintiff herein. all dated September 26.. concealment and disposition of defendant's property. ROMAN S. The affidavit submitted by respondent Aboitiz states: REPUBLIC OF THE PHILIPPINES CITY OF CEBU .R. I. CEB 1185 and 1186" (Rollo. their creditor. RONQUILLO.. 21761. concealment or disposition of property. hereby depose and say: That I am the Vice-President of the plaintiff corporation in the above-entitled case. whereby a writ preliminary attachment may lawfully issue because the action therein is one against parties who have removed or disposed of their properties with intent to defraud their creditor. They argued that granting the mortgage constituted removal or disposition of property.259. As held in Carpio v.000.On the same day. 9 SCRA 552 (1963). II The resolution of this case centers on the issue of the legality of the writ of attachment issued by respondent Judge in the consolidated cases for collection of sums of money. That the defendants have removed or disposed of their properties with intent to defraud the plaintiff. 116). because on May 27. of legal age. married and a resident of Cebu City. That this action is one of those specifically mentioned in Section 1. 118).. the removal or disposal must have been made with intent to defraud defendant's creditors.. respondent Judge issued an order holding in abeyance the enforcement of the writs of preliminary attachment in order to afford petitioners an opportunity to seek their other remedies (Rollo.. as it was necessary for them to continue their business operations even after respondent Aboitiz had stopped giving them financial aid. p. 1983 and issued in Civil Cases Nos. 1982 they executed a real estate mortgage in favor of Philippine Commercial and Industrial Bank (PCIB) covering eleven (11) of their fifteen (15) parcels of land in Cebu to secure a P1. Thus. Petitioners contended that in Civil Case No. Petitioners also contended that respondent Judge exceeded his jurisdiction when he issued the Order of December 12. 1984 "enjoining the respondents from enforcing or implementing the writs of preliminary attachment against the property of petitioners.. after being sworn in accordance with law. 1983. notwithstanding that his attention had been called with regard to the pendency of G. As prayed for by petitioners.. .

RONQ UILLO Affiant (Rollo. excluding interests and claim for damages and is as much the sum for which an order of attachment is herein sought to be granted. 212 SCRA 713 [1992]). I hereunto set my hand this 24th day of August 1983 at Cebu City. Jr." Bare allegation that an encumbrance of a property is in fraud of the creditor does not suffice. a writ of attachment can only be granted on concrete and specific grounds and not on general averments quoting perfunctorily the words of the Rules (D.430. the inability to pay one's creditors is not necessarily synonymous with fraudulent intent not to honor an obligation (Insular Bank of Asia & America. v. instead of at the termination of the suit (Santos v. IN VIEW WHEREOF. That the total amount due to the plaintiff in the above-entitled case is P13. The execution of a mortgage in favor of another creditor is not conceived by the Rules as one of the means of fraudulently disposing of one's property. 191 SCRA 423 [1990]). No. 205 SCRA 127 [1992]. respondent Judge should have considered it as a motion for the discharge of the attachment and should have conducted a hearing or required submission of counter-affidavits from the petitioners.P. Nicolas. a debtor merely subjects it to a lien but ownership thereof is not parted with. As this Court said in Jardine-Manila Finance. (Sgd. . This procedure should be followed because. We find. CEB-1185 and CEB-1186 constituted undue interference with the proceedings in G. 63225 in view of the entry of judgment in the latter case. 167 SCRA 247 [1988]). This is what Section 13 of Rule 57 mandates. 190 SCRA 629 [1990]). Consequently. One overriding consideration is that a writ of attachment is substantially a writ of execution except that it emanates at the beginning. We need not discuss the issue of whether or not Civil Cases Nos. which encumbrance respondent Aboitiz considered as fraudulent concealment of property to its prejudice. as the Court has time and again said. v. and if none be filed or one be filed which wholly fails to set out some facts required by law to be stated therein. that there is no factual allegation which may constitute as a valid basis for the contention that the mortgage was in fraud of respondent Aboitiz. above all legal counter-claims on the part of the defendants. Verily. extraordinary and summary remedy and the rules governing its issuance must be construed strictly against the applicant. "[T]he general rule is that the affidavit is the foundation of the writ. Jr. Court of Appeals. Tay Chun Suy v. By mortgaging a piece of property. The judge before whom the application is made exercises full discretion in considering the supporting evidence proffered by the applicant. Inc. Factual bases for such conclusion must be clearly averred. Court of Appeals. however.) RAMO N S.R. Court of Appeals. 171 SCRA 636 (1989).. v. Court of Appeals.14. pp. 171-172) It is evident from said affidavit that the prayer for attachment rests on the mortgage by petitioners of 11 parcels of land in Cebu. when petitioners filed a motion for the reconsideration of the order directing the issuance of the writ of attachment. v. attachment is a harsh. Furthermore. Philippines.That there is no sufficient security for the claims sought to be enforced by the present action. Aquino. there is no jurisdiction and the proceedings are null and void. Inc. Lub Oil Marketing Center.259. if only to gather facts in support of the allegation of fraud (Jopillo. Inc.

1932. Grey receiver of the property of the petitioner. the respondent. attacking the validity of the order of the respondent judge issued the same day on the petition of the respondent Philippine Advertising Corporation.R. . the second. on April 6. the respondent judge issued the writ of attachment as prayed for. J. and the sheriff has attached all the properties of the petitioner in the Philippine Islands. S. vs. (the petitioner herein) was about to depart from the Philippine Islands with intent to defraud its creditors or that it was insolvent or had removed or disposed of its property or was about to do so with intent to defraud its creditors. respondents. Motions to dissolve said writ of attachment and receivership were fled in the court below. On April 5. 1932. Grey receiver of said properties of the petitioner. The petitioner for certiorari prays that the writ of attachment issued by the respondent judge on April 6.000 as damages for alleged breach of the agency contract existing between the said respondent and the petitioner. Judge of First Instance of Manila. as well as the order of the same date. and intended only to injure the petitioner and to depreciate the value of its holdings in the Philippine Islands. declaring that the writ of attachment conforms to section 424 of the Code of Civil Procedure. On the same date. petitioner. that the filing of said suit was malicious. L-37682 November 26. Inc. is highly prejudicial to it as it is unable to proceed with its business in the Philippine Islands and irreparable loss will result to it unless such attachment be raised. On June 20 1932. fixing his bond at P3. without foundation. the respondent Philippine Advertising Corporation filed suit against the petitioner in the Court of First Instance of Manila. Branch 6. CEB-1185 and CEB-1186 with deliberate dispatch. No... and it has faithfully complied with every condition of said contract. Claude Neon Lights. as well as its other assets. U. said respondent filed in said court an application for writ of attachment duly verified in which it is stated that the defendant (petitioner herein) is a foreign corporation having its principal place of business in the City of Washington. Cebu City. G. PHILIPPINE ADVERTISING CORPORATION and FRANCISCO SANTAMARIA.WHEREFORE. appointing a receiver of the property which was seized by the sheriff under said writ of attachment. 1984 is made PERMANENT. among other things.000. claiming P300. 1932.: This case is to be determined upon the petition for writ of certiorari and the demurrer thereto filed by the respondents. the petition is GRANTED and the Temporary Restraining Order issued on January 6. the court denied said motions to vacate the attachment and receivership. The only statutory ground relied upon in the court below and in this court for the issuance of the writ of attachment against the petitioner is paragraph 2 of section 424 of the Code of Civil Procedure. supported by affidavits of the attorney in fact for the petitioner in which it is recited. It does not appear that any answer was made to said motion in which said allegations were denied or that any refuting evidence was offered. A. 1932. which provides that plaintiff may have the property of the defendant attached "in an action against a defendant not residing in the Philippine Islands". At the same time. BUTTE. be annulled. appointing Manuel C. on the ex parte petition and nomination of the respondent. the respondent judge appointed Manuel C. FEDERAL INC. It is not alleged in said application that the defendant. The petition sets up two causes of action: one attacking the validity of a writ of attachment issued by the respondent judge on the petition and affidavit of the respondent Philippine Advertising Corporation. SO ORDERED. Respondent Judge or whoever is the presiding judge of the Regional Trial Court. is DIRECTED to PROCEED with the resolution of Civil Cases Nos. On April 6. that the petitioner is not indebted to the respondent in any sum whatever nor has it in any way breached any contracts with the respondent or at any time interfered in the management of its business in the Philippine Islands as carried on by its agent. District of Columbia. 1932 CLAUDE NEON LIGHTS. that the attachment of the machinery and plants of the petitioner.

the Insular Treasurer. in the manner hereinafter provided. The law does not require the latter. unless the defendant gives security to pay such judgment. a corporation is sometimes said. — A plaintiff may. But that fiction or analogy between corporations and natural persons by no means extends so far that it can be said that every statute applicable to natural persons is applicable to corporations. 127 U. as may exist in the case of a natural person not residing in the Philippine Islands. Pelican Insurance Co. section 71. reads as follows: Attachment. In an action against a defendant not residing in the Philippine Islands. 2. His books and papers are not liable to examination "at any time" by the Attorney-General.. A corporation has no home or residence in the sense in which those terms are applied to natural persons.The sufficiency of the application for the writ of attachment assailed by the petitioner upon several grounds but we shall confine ourselves to the consideration of the question whether or not paragraph 2 of section 424 of the Code of Civil Procedure is applicable to this petitioner. which consisted to its manufacturing plant. or to produce evidence of "fair dealing" (ibid. machinery. the Insular Auditor. He pays no license fee nor is his business subject at any time to investigation by the Secretary of Finance and the Governor-General. 169). 1459 of the Corporation Law). Act No. The petitioner is a corporation duly organized under the laws of the District of Columbia. Considered from a practical and economic viewpoint. paragraph 2. merchandise and a large income under valuable contracts. be deemed as "not residing in the Philippine Islands" in the sense in which that expression would apply to a natural person. nor to prove to the satisfaction of the Government before he does business here. 1459. In all the cases mentioned in section four hundred and twelve. its position in the business community was indistinguishable from that of a domestic corporation. we are of the opinion that there is not the same reason for subjecting a duly licensed foreign corporation to the attachment of its property by a plaintiff under section 424. as the foreign corporation must prove. in a metaphorical sense.. It is only by a fiction that it can be held that a corporation is "not residing in the Philippine Islands". in the following cases. S. For practical purposes. he shall not be entitled to both orders. at the commencement of his action. But the plaintiff must make an election as to whether he will ask for an order of arrest or an order of attachment. to appoint a resident agent for service of process. providing for the arrest of a defendant. in a metaphorical sense.. have the property of the defendant attached as security for the satisfaction of any judgment that may be recovered. supra. nor is his right to continue to do business revocable by the Government (Cf. Section 242 of the Code of Civil Procedure under which the petitioner's property was attached. "or any other officer of the Government" . Having regard to the reason for the statute which is the protection of the creditors of a non-resident. It may be observed at the outset that the words of section 424. shall. a foreign corporation. within the same jurisdiction a corporation has been held to be a "citizen" of the state of its creation for the purpose of determining the jurisdiction of the Federal courts (Wisconsin vs. Virginia. the Corporation Law). 8 Wall. The question arises whether this petitioner. taken in their literal sense seem to refer to a physical defendant who is capable of being "arrested" or who is "not residing in the Philippine Islands". on the date said attachment was levied.). 265) but not a "citizen" within the meaning of section 2 of article 4 of the Constitution of the United States which provides that the citizens of each state shall be entitled to all the privileges and immunities of citizens of the several states (Paul vs. or at any time afterwards. Act No. as the agent of the petitioner. Indeed. 1. as it does the former. all of which property was in the possession and under the control and management of the respondent Philippine Advertising Corporation. as amended. to be "a resident" of a certain state or a "citizen" of a certain country. that he "is solvent and in sound financial condition" (section 68. The petitioner was actively engaged in doing business in the Philippine Islands and had considerable property therein. which is usually the state or country by which or under the laws of which it was created. it had complied with all the requirements of the Philippine laws and the was duly licensed to do business in the Philippine Islands on the date said writ of attachment was issues.

Kuenzle & Streiff vs. 1459. 20. (section 73. the foreign corporation never. if not entirely defeated. The latter. vs. supra does not apply to a domestic corporation. Elser & Co. 611. 185. 70. contemplates that the proceedings instituted by the Attorney-General shall effect the protection of all creditors and the public equally. are contiguous and separated by imaginary lines. Charles Friend & Co. Hartford. E. so that to all intents and purposes. supra. (New Jersey. 1929). Our laws and jurisprudence indicate a purpose to assimilate foreign corporations. who levied the writ. Act No. A higher degree of protection against irresponsible corporations may be more necessary there than here. that the corporation is "not residing in the Philippine Islands".. but in addition with every requirement of law made of domestic corporations. are effectually excluded from our Islands both by our laws and by our geographical and economic situation. We have no interstate business. (Section 72. (Cf. as a rule. He can evade service of summons and other legal process. are less mobile than individuals. a particularly monstrous result has followed as s consequence of the granting of the writ attaching all of the property of the petitioner on the sole allegation that it "is not residing in the Philippine Islands".. They possess. it became necessary on the same day for the court to appoint a receiver. Henry W. 146 Atl. should not be held applicable to foreign corporations duly licensed to do business in the Philippine Islands both because the language and the reason of the statute limit it to natural persons. 107 So. as a rule. if a creditor or a few creditors can obtain privileged liens by writs of attachment based on the sole allegation. and Marshall Wells Co. Villanueva. Only the central government grants charters to corporations.) Corporations..) It is true that the majority of the states in the American Union hold the contrary rule. which provides in substance that if the Secretary of Finance or the Secretary of Commerce and Communications and the Governor-General find a duly licensed foreign corporation to be insolvent or that its continuance in business will involve probable loss to its creditors. 206.. vs. 1907). all the property of the petitioner in the Philippine Islands was seized and delivered into the hands of the respondent Philippine Advertising Corporation. 411. 47 Phil. Section 73. which are designed to protect creditors and the public. Gold Smith & Co.).) We think it would be entirely out of line with this policy should we make a discrimination against a foreign corporation. 67 Atl. "was and is an employee working under the president of the respondent Philippine Advertising Corporation. which the sheriff. (Cf. . they may revoke its license and "the Attorney-General shall take such proceedings as may be proper to protect creditors and the public". Yu Cong Eng vs. as the demurrer admits. As the petitioner's business was a going concern. and more nearly in harmony with the policy of our law both under the Spanish regime and since the American occupation. This minority rule is supported by the following authorities: Brand vs." lawphil. Fullilove vs.net . the benefit of that section will be minimized. 46 Phil. paragraph 2. (New Jersey. If. like a foreign corporation "bound by all laws. Auto Service Co. Edward V.. . (Illinois. 1926). like the petitioner.Trinidad. section 424. which is easily and safely made. all creating corporations which do a tremendous interstate business. 385. both geographical and economical. Act No. In the present instance. Central State Bank (Louisiana.. There forty-eight states and the central government. 138 N. This is a specially true of foreign corporations that are carrying on business by proper authority in these Islands. He is not. 590. Section 71. supra. we sustain and reinforce the provisions of section 71 of the Corporation Law. 19. obviously could not manage. This receiver. Obviously. great capital which is seeking lucrative and more or less permanent investment in young and developing countries like our Philippines. But our situation is obviously very dissimilar from that of a state in the American Union. as we believe. ibid. (Section 73. Some of them came here as far back as the Spanish regime and are still important factors in our financial and industrial life.. But even in the American Union there is a minority rule which we regard as the better reasoned and the better suited to our conditions. Mellor vs. and subject its property to the harsh writ of seizure by attachment when it has complied not only with every requirement of law made especially of foreign corporations. 1459. They are anything but "fly-bynight" concerns. 41 Phil. we believe. to the status of domestic corporations.on the order of the Governor-General (section 54.) Paragraph 2 of section 424.. Inc. 76. duly licensed to do business here. 1923). rules and regulations applicable to domestic corporations" . ibid. ibid.).

xxx xxx xxx . Proc.A. INC.920. Philippine Advertising Corporation. writs of preliminary attachment had been issued which were executed on "the royalty/profit sharing payments due CMI from Benguet Consolidated Mining. may be considered "residents of the Philippine Islands" within the meaning of Section 20 of the Insolvency Law (Act No.434." and 3) that CMI had "committed specific acts of insolvency as provided in Section 20 of the Insolvency Law.. Inc. and that on application of said plaintiffs. Such petition must be filed in the Court of First Instance of the province or city in which the debtor resides or has his principal place of business. they jointly filed with the Court of First Instance of Rizal a petition for involuntary insolvency of Consolidated Mines. 1981. and must be verified by at least three (3) of the petitioners. NARVASA.831. Nos. So ordered. The order and writ of attachment complained of are annulled and set aside and the court below is directed to vacate the order appointing Manuel C. 1956.24 2) that in November.297. which they amended four days later.233.367. that he (CMI) has suffered his (CMI's) property to remain under attachment or legal process for three days for the purpose of hindering or delaying or defrauding his (CMI's) creditors. N.389. . The foreign banks involved in the controversy are Bank of America NT and SA. however made.969. 9263 and assigned to Branch 28 of the Court. 79926-27 October 17. respondents. Citibank N.548. that none of said creditors has become a creditor by assignment. CITIBANK. whose credits or demands accrued in the Philippine Islands. G. 1981. INC. State Investment House.12 (as of November 30. 2 The case was docketed as Sp.A.85 (as of December 10. P6..The prayer of the petitioner is granted. 1981. 1981) c) In favor of Hongkong & Shanghai Bank US$ 5. Grey to submit his final report at the earliest practicable date. and Hongkong and Shanghai Banking Corporation. J. and the COURT OF APPEALS. 1981) US$ 4.88 (b) In favor of Citibank US$ 4. vs. On December 11.67 (as of December 10. and that as of November/December. Inc. . No. 1991 STATE INVESTMENT HOUSE. 1909) reading in part as follows: 1 An adjudication of insolvency may be made on the petition of three or more creditors. 1981). docketed respectively as Civil Cases Numbered 43588 and 43677. (SIHI) and State Financing Center. Inc. HONGKONG & SHANGHAI BANKING CORPORATION. as amended. and the amount of which credits or demands are in the aggregate not less than one thousand pesos: Provided. Inc. (SFCI) had separately instituted actions for collection of sums of money and damages in the Court of First Instance of Rizal against CMI. Grey receiver of the property of the petitioner and to require said Manuel C. The petition for involuntary insolvency alleged: 1) that CMI had obtained loans from the three petitioning banks.175. to wit: xxx xxx xxx 5. residents of the Philippine Islands. NT & SA. May 20. petitioners. within thirty days prior to the filing of said petition.R. BANK OF AMERICA. its outstanding obligations were as follows: a) In favor of Bank of America (BA) P15. and STATE FINANCING CENTER. .:p The chief question in the appeal at bar is whether or not foreign banks licensed to do business in the Philippines. Costs in both instances to be borne by the respondent. (CMI). eff.

R. .R. By Order dated October 10." echoing the theory of SIHI and SFCI that the petitioner banks are not "Philippine residents. . However.800. motions and admissions of the parties. (SFCI). No. the Trial Court approved on May 3. 7 and served on the three petitioner banks requests for admission of certain facts in accordance with Rule 26 of the Rules of Court. with costs against petitioners. . . It ruled: . No. by Resolution dated May 16. SP 03674 and AC-G. where it was docketed as AC SP-03674." 14 It ruled that on the basis of the "facts on record. 66804)." and CMI was not a "merchant or tradesman" nor had it "generally defaulted in the payment of (its) obligations for a period of thirty days . 1987 by the Fifteenth Division of said Court.R. Inc. SP 03674.11. impugning that denial. 1983 "on the ground that. . the court referred the petition for review to the Intermediate Appellate Court. CMI filed its Answer to the petition for insolvency. 1985 the banks' record on appeal and transmitted it to this Court." 5 Resolution on the motion was "deferred until after hearing of the case on the merits" it appearing to the Court that the grounds therefor did not appear to be indubitable. which had been referred to the Intermediate Appellate Court and was there pending as AC-G.R. and 4) the Court has no power to set aside the attachment issued in favor of intervenors-oppositors SIHI and SFCI." 10Oppositions to the motion were filed. this Court required the banks to file a petition for review under Rule 45. . they had "received for the account of CMI substantial payments aggregating P10. . The petition was opposed by State Investment House. No. 15 SIHI and SFCI moved to dismiss their appeal claiming it was attempted out of time. 18 The Appellate Court reversed the Trial Court's Order of October 10. an insolvency court could "not acquire jurisdiction to adjudicate the debtor as insolvent if the creditors petitioning for adjudication of insolvency are not "residents" of the Philippines" — citing a decision of the California Supreme Court which it declared "squarely applicable especially considering that one of the sources of our Insolvency Law is the Insolvency Act of California of 1895 . based on the pleadings and admissions on record. 3 It claimed that: 1) the three petitioner banks had come to court with unclean hands in that they filed the petition for insolvency — alleging the CMI was defrauding its creditors. 9 SIHI and SFCI then filed a Motion for Summary Judgment dated May 23. 11 to which a reply was submitted. as shown in the pleadings. They filed a notice of appeal and a record on appeal. " And it declared that since petitioners had been merely licensed to do business in the Philippines. 16 This the banks did (their petition was docketed as G. CV 07830. 4 and later filed a "Motion to Dismiss Based on Affirmative Defense of Petitioner's Lack of Capacity to Sue. asserting in the main that it was not insolvent. No.R. 1986. (SIHI) and State Financing Center. . As might have been expected. 17 In the meantime. . 6 SIHI and SFCI filed their own Answer-in-Intervention. and they wished all creditors to share in its assets — although a few days earlier. they could not be deemed residents thereof.00. and Decision thereon was promulgated on July 14." 3) the Court had no jurisdiction to take cognizance of the petition for insolvency because petitioners are not resident creditors of CMI in contemplation of the Insolvency Law." 2) the Court had no jurisdiction because the alleged acts of insolvency were false: the writs of attachment against CMI had remained in force because there were "just. it rendered "summary judgment dismissing the . were consolidated by Resolution of the Court of Appeals dated April 9. 66449). The Court dismissed the petition and instead required the three banks to file a petition for review in accordance with Rule 45 of the Rules of Court. The Trial Court denied the motion. 8 receiving a response only from Hongkong & Shanghai Bank.R. This Court then also referred UDK-6866 to the Intermediate Appellate Court where it was docketed as AC-G. The three foreign banks sought to take an appeal from the Order of October 10. supra. petition for lack of jurisdiction over the subject matter. Both referred cases. Inc. SIHI and SFCI filed with this Court a petition for certiorari and prohibition (G.000. 1984. the trial court had no jurisdiction to adjudicate CMI insolvent since the petitioners (respondent foreign banks) are not "resident creditors" of CMI as required under the Insolvency Law. but they asked to be excused from doing so since they had already filed such a petition. AC-G. where it was recorded as UDK-6866. valid and lawful grounds for the(ir) issuance. . NO. 12 The Regional Trial Court 13 found merit in the motion for summary judgment. 1983 and remanded the case to it for further proceedings. 1983. CV 07830. 1983. that being a merchant or tradesman he (CMI) has generally defaulted in the payment of his (CMI's) current obligations for a period of thirty days. No.

4) actually. took an appeal to this Court. the three banks "are in truth and in fact considered as "residents" of the Philippines for purposes of doing business in the Philippines and even for taxation matters. or at least a portion thereof. the three banks are not Philippine residents because: a) corporations have domicile and residence only in the state of their incorporation or in the place designated by law. 3) in fact and in law. a Philippine corporation is allowed the reciprocal right to petition for a debtor's involuntary insolvency." 3) that in light of said statutes.1) that the purpose of the Insolvency Law was "to convert the assets of the bankrupt in cash for distribution among creditors. free from the obligations and responsibilities consequent upon business misfortunes. like the Corporation Code of the Philippines. Inc. b) juridical persons may not have residence separate from their domicile." and 5) that the terms "residence" and "domicile" do not mean the same thing. although for limited and exclusive purposes." that the authority granted to them by the Securities and Exchange Commission upon orders of the Monetary Board "covers not only transacting banking business ." and "the better approach ." 2) that the Trial Court had placed "a very strained and restrictive interpretation of the term "resident. and then to relieve the honest debtor from the weight of oppressive indebtedness and permit him to start life anew. 6) no substantive law explicitly grants foreign banks the power to petition for the adjudication of the Philippine corporation as a bankrupt." 4) that the banks had "complied with all the laws. . (of the Insolvency Law) with similar provisions of other succeeding laws. and has a "residence" wherever it conducts its ordinary business. the non-resident status of the banks within the context of the Insolvency Law is confirmed by other laws. 5) the license granted to the banks to do business in the Philippines does not make them residents. other states may consider them as residents.. . . and that as regards a corporation. 2) also fatal to their cause is their failure to prove. the General Banking Act. . ." is fatal to their cause. SIHI and SFCI moved for reconsideration and then. rules and regulations (for doing business in the country) and have been doing business in the Philippines for many years now." the object being "to provide not only for the suspension of payments and the protection of creditors but also the discharge of insolvent honest debtors to enable them to have a fresh start. . when rebuffed. would discourage their operations in economic development projects that create not only jobs for our people but also opportunities for advancement as a nation. claims or demand whatsoever. would have been to harmonize the provisions . much less allege. Here. . wishing only to "be considered Philippine residents. and may have its legal "domicile" in one place and "residence" in another." and that their petition for involuntary insolvency was "nothing more than a suit aimed at recovering a debt granted by them to Consolidated Mines. ." 19 and that it was "crystal clear" that the law was "designed not only for the benefit of the creditors but more importantly for the benefit of the debtor himself. the Offshore Banking Law and the National Internal Revenue Code in connection with or related to their doing business in the Philippines. . it is generally deemed an "inhabitant" of the state under whose law it is incorporated." 4) that to deprive the foreign banks of their right to proceed against their debtors through insolvency proceedings would "contravene the basic standards of equity and fair play." as to exclude foreign banks which have been operating in this country since the early part of the century. . but likewise maintaining suits "for recovery of any debt. that under the domiciliary laws of the foreign banks. they argue that the Appellate Court's judgment should be reversed because it failed to declare that — 1) the failure of the three foreign banks to allege under oath in their petition for involuntary insolvency that they are Philippine residents.

. one of them. 76. or dissolution of corporations or as fix the relation." as distinguished from a " "non-resident foreign corporation" . stockholders or officers or corporations. . duly licensed to do business here." in fact. except such laws. . Section 73. it must be considered a party who does reside in the Philippines. like the petitioner. organization. places "branches and agencies in the Philippines of foreign banks ." 24 This Court itself has already had occasion to hold 25 that a foreign corporation licitly doing business in the Philippines. Henry W." Parenthetically. development banks. from which enlightening notions of the term may be derived. their filing of the petition for involuntary insolvency being an attempt to defeat validly acquired rights of domestic corporations. a preliminary attachment may not be applied for and granted solely on the asserted fact that the defendant is a foreign corporation authorized to do business in the Philippines — and is consequently and necessarily. Republic Act No. subsidiaries. Trinidad. then. but in addition with every requirement of law made of domestic corporations. which is a defendant in a civil suit." There is no question that the three banks are foreign corporations in this sence. with principal offices situated outside of the Philippines. albeit of subsequent enactment and effectivity. . . 23 declaring on the contrary that in "all matters not specifically covered by special provisions applicable only to foreign banks. savings associations. There are however other statutes. or their branches and agencies in the Philippines. (which is one) not engaged in trade or business within the Philippines. only the right to "petition for the harsh remedy of involuntary insolvency" not being conceded to them. 337. 1034. rural banks. who is a resident of the country. rules. supra." 22 The General Banking Act. The answer cannot be found in the Insolvency Law itself. . Be this as it may. stock savings and loan associations" (which have been formed and organized under Philippine laws). logically." 21 The Offshore Banking Law.. organized or existing under laws other than those of the Philippines and . Our laws and jurisprudence indicate a purpose to assimilate foreign corporations. The National Internal Revenue Code declares that the term "'resident foreign corporation' applies to a foreign corporation engaged in trade or business within the Philippines. affiliation. to the status of domestic corporations. . Presidential Decree No. said foreign banks or their branches and agencies lawfully doing business in the Philippines "shall be bound by all laws. . and regulations applicable to domestic banking corporations of the same class. There is no question either that said banks have been licensed to do business in this country and have in fact been doing business here for many years. . 385. through branch offices or agencies. and Marshall Wells Co. 9) said banks have come to court with unclean hands." in the same category as "commercial banks. Hongkong & Shanghai Bank has been doing business in the Philippines since as early as 1875. The issue is whether these Philippine branches or units may be considered "residents of the Philippine Islands" as that term is used in Section 20 of the Insolvency Law. or any clear indication of its meaning. . if it may not be considered as a party not residing in the Philippines. . resident. liabilities. .7) the Monetary Board can not appoint a conservator or receiver for a foreign bank or orders its liquidation having only the power to revoke its license. 20 or residents of the state under the laws of which they were respectively incorporated. which contains no definition of the term. rules and regulations as provided for the creation. subject to such proceedings as the Solicitor General may thereafter deem proper to protect its creditors. . formation." 26 in other words. . and subject its property to the harsh writ of seizure by attachment when it has complied not only with every requirement of law made specially of foreign corporations. or as a party who resides out of the country. The concept of a foreign corporation under Section 123 of the Corporation Code is of "one formed. Cong Eng vs. (which are) called Philippine branches. (Cf. responsibilities. states "that branches. this Court pointed out that: . as the terms "banking institutions" and "bank" are used in the Act. including "foreign currency deposit units. "a party who resides out of the Philippines. (which) laws allow Filipino citizens and corporations to do business . 411) We think it would be entirely out of line with this policy should we make a discrimination against a foreign corporation. 8) the foreign banks are not denied the right to collect their credits against Philippine debtors. . 70. extension offices or any other units of corporation or juridical person organized under the laws of any foreign country operating in the Philippines shall be considered residents of the Philippines. vs. mortgage banks. or duties of members. Elser & Co. making no distinction between the former and the later in so far. may not be considered a non-resident within the scope of the legal provision authorizing attachment against a defendant not residing in the Philippine Islands. Act No. 1459. 47 Phil. . 46 Phil. Yu.

. allow Filipino citizens and corporations to do business in its own country or state. Neither can the Court accept the theory that the omission by the banks in their petition for involuntary insolvency of an explicit and categorical statement that they are "residents of the Philippine Islands. although their capacity to petition for insolvency can scarcely be disputed and is not in truth disputed by petitioners.considered as dwelling "in the place where its business is done . whether it be a bank or not or it be a foreign or domestic corporation. . Now. Section 123 does not say. as petitioners argue." that it is . the "necessary element in . ." 29 The foregoing propositions are in accord with the dictionary concept of residence as applied to juridical persons. . natural or juridical. resident corporation. and actually doing business in this Country through branch offices or agencies. as petitioners assert.e." and as being "present where it is engaged in the prosecution of the corporate enterprise. ..Obviously. in light of the concept of resident foreign corporations just expounded. reciprocal rights. It also seems to the Court quite apparent that the Insolvency Law contains no requirement that the laws of the state under which a foreign corporation has been formed or organized should grant reciprocal rights to Philippine citizens to apply for . the license merely gives legitimacy to its doing business here. the place where they operate and transact business) separate from their domicile (i. . licensed to do business in the Philippines. . the assimilation of foreign corporations authorized to do business in the Philippines "to the status ofdomestic corporations. What effectively makes such a foreign corporation a resident corporation in the Philippines is its actually being in the Philippines and licitly doing business here." subsumes their being found and operating as corporations. In truth. and not only at its chief place or home office. of course. when they alleged in that petition that they are foreign banking corporations." What it does say is that the laws of the country or state under which a foreign corporation is "formed. a term which appears to comprehend permanent as well as temporary residence. "locality of existence" being. that it is required that the laws under which foreign corporations are formed "give Philippine nationals. the state of their formation or organization). in the country. as petitioners correctly aver. The same principle is recognized in American law: that the "residence of a corporation." is fatal to their cause."27 Courts have held that "a domestic corporation is regarded as having a residence within the state at any place where it is engaged in the particulars of the corporate enterprise. however. . .e. no substantive law explicitly granting foreign banks the power to petition for the adjudication of a Philippine corporation as a bankrupt. There is. Of course." that a "foreign corporation licensed to do business in a state is a resident of any country where it maintains an office or agent for transaction of its usual and customary business for venue purposes. they were in effect stating that they are resident foreign corporations in the Philippines. as to natural persons as well. . its legal domicil in the state of its creation presents no impediment to its residence in a real and practical sense in the state of its business activities." As basis for the argument they invoke Section 123 of the Corporation Code which. This is inconsequential. it is not really the grant of a license to a foreign corporation to do business in this country that makes it a resident. organized or existing . The law plainly grants to a juridical person. residing. if it can be said to have a residence. for neither is there any legal provision expressly giving domestic banks the same power. hence. and that they may be considered by other states as residents only for limited and exclusive purposes." and that the "necessary element in its signification is locality of existence. such a power to petition for the adjudication of bankruptcy of any person. The Court cannot thus accept the petitioners' theory that corporations may not have a residence (i. it seems to the Court that there can be no serious debate about the fact that the laws of the countries under which the three (3) respondent banks were formed or organized (Hongkong and the United States) do "allow Filipino citizens and corporations to do business" in their own territory and jurisdiction. The petitioners next argue that "Philippine law is emphatic that only foreign corporations whose own laws give Philippine nationals reciprocal rights may do business in the Philippines. provided that it is a resident corporation and joins at least two other residents in presenting the petition to the Bankruptcy Court." as being "located where its franchises are exercised . does not formulate the proposition in the same way. . . (the) signification" of the term." 28 that "a corporation may be domiciled in one state and resident in another.. ." which is not quite the same thing. is necessarily where it exercises corporate functions . to repeat.

531.336. These three (3) options are the following: 1) (that singled out and quoted by the petitioners. is of no moment. subject to such proceedings as the Solicitor General may thereafter deem proper to protect its creditors.50.010.800. and will be observed by the Insolvency Court regardless of whatever motives — apart from the desire to share in the assets of the insolvent in satisfying its credits — that the party instituting the proceedings might have. was P135. That the Monetary Board can not appoint a conservator or receiver for a foreign bank or order its liquidation having only the power to revoke its license. Moreover. that the law is not lacking in sanctions against foreign banks or powerless to protect the latter's creditors.:) "incorporate its branch or branches into a new bank in accordance with Philippine laws .41 as of December. . the average rate of exchange during December.451. that the respondent banks have come to court with unclean hands."Non sequitur. with the result that they were "preferred in the distribution of CMI's assets thereby defrauding other creditors of CMI. expressed in Philippine currency. The Court wishes to simply point out that the effects of the institution of bankruptcy proceedings on all the creditors of the alleged bankrupt are clearly spelled out by the law.010. Converted into Philippine currency at the rate of P7. WHEREFORE. . The total liabilities of CMI to the three respondent banks as of December.00. . which is the issue at hand. . and US$14.85. but it should not be considered a ground for giving the petition for insolvency short shrift. in any event.involuntary insolvency of a resident or citizen thereof. SO ORDERED. . not merely with one sole requirement. and therefore the payment to them of P6. The argument is based on an incomplete and inaccurate quotation of the cited Section. The fact is. they received from the latter substantial payments on account in the aggregate amount of P6. . i.e.788.423. was to comply with any of three (3) options.42% of the total indebtedness. in an amount which shall not be less than the minimum amount of capital accounts required for domestic commercial banks under section twenty-two of this Act. It has no logical connection to the matter of whether or not the foreign bank may properly ask for a judicial declaration of the involuntary insolvency of a domestic corporation. 1981. What Section 68 required of a "foreign bank presently having branches and agencies in the Philippines. or 2) "assign capital permanently to the local branch with the concurrent maintenance of a 'net due to' head office account which shall include all net amounts due to other branches outside the Philippines in an amount which when added to the assigned capital shall at all times be not less than the minimum amount of capital accounts required for domestic commercial banks under section twenty-two of this Act. Still another argument put forth by the petitioners is that the three banks' failure to incorporate their branches in the Philippines into new banks in accordance with said Section 68 of the General Banking Act connotes an intention on their part to continue as residents of their respective states of incorporation and not to be regarded as residents of the Philippines. within one year from the effectivity" of the General Banking Act. the aggregate liabilities of CMI to the banks.814.954. The petitioners' point is thus not well taken and need not be belabored.800. 1981." The less said about this argument then." or 3) "maintain a "net due to" head office account which shall include all net amounts due to other branches outside the Philippines.485.91. too. Thus. 30 the dollar account would be P114. . 1981 was P21.00 constituted only some 4. It is in any case a circumstance that the Bankruptcy Court may well take into consideration in determining the manner and proportion by which the assets of the insolvent company shall be distributed among its creditors. which is another point that petitioners seek to make. The petitioners contend. their filing of the petition for involuntary insolvency being an attempt to defeat validly acquired rights of domestic corporations. the better. the petition is DENIED and the challenged Decision of the Court of Appeals is AFFIRMED in toto. The petitioners allege that three days before respondent banks filed their petition for involuntary insolvency against CMI. with costs against the petitioners. the payment adverted to does not appear to be all that large.899 to the dollar.

Palanca. where the property is seized at the beginning of the action. Valeriano S. The gist of this Court's ruling in these cases. He has no property in the Philippine except an alleged debt owing him by a resident of the municipality of Occidental Misamis. i. But. upon petition of the plaintiff.. vs. or its counterpart in the former Code of Civil Procedure. though at all times within the potential power of the court. are Banco Español-Filipino vs. 1948 ROMAN MABANAG. Rule 5. section 377 and 395. was attached to the extent of plaintiff's claim for the payment of which the action was brought. the power of the court over the property is recognized and made effective.e. The defendant is said to be residing in Los Angeles. is found in the proceeding to register the title of land under our system for the registration of land. of the Rules of Court provides: If any of the defendants does not reside and is not found in the Philippines. may never be taken into actual custody at all. the Philippine courts cannot try any case against him because of the impossibility of acquiring jurisdiction over his person. without taking actual physical control over the property assumes. the personal status of the plaintiff or the property of the defendant. the question is whether the action is in personam or one in rem. 216. No. real or personal. The Philippine leading cases in which this Rule. or it may result from the institution of legal proceedings wherein. 2d Ed. at the instance of some person . it may be validly tried by the Philippine courts. U. they have jurisdiction over the res. [3d Suppl. A. Section 2. Gaz. plaintiff-appellant. or some subsequent stage of its progress. There is no appearance before this Court to oppose the appeal.: This case.. S. of the defendant. Dizon.R. whereby it is brought into the actual custody of the law. California. an amount said to have been paid by the plaintiff to the defendant for two parcels of land whose sale was afterward annulled. or any portion thereof. in so far as it is relevant to the present issues. An illustration of what we term potential jurisdiction over the res. 40 Off. located in the Philippines. L-825 July 20. This debt. and Slade Perkins vs. TUASON. 37 Phil. when the action affects the personal status of the plaintiff residing in the Philippines. defendant-appellee. p. But the attachment was dissolved in the same order dismissing the case. or is intended to seize or dispose of any property. No. JOSEPH M. Joseph M. when the defendant is not residing and is not found in the Philippines.]. Kaamino who has amicus curiæ filed the motion to dismiss and to set aside the attachment. In the latter case the property. The purpose of the action is to recover P735. under special provisions of law. after the filing of the complaint and before the suit was dismissed.. for then. is situated or found. Literally this Court said: Jurisdiction over the property which is the subject of litigation may result either from a seizure of the property under legal process.G. the action may be commenced and tried in the province where the plaintiff resides or the property. here on appeal from an order dismissal by the Court of First Instance of Occidental Misamis. and the action effects the personal status of the plaintiff. J. or any property of the defendant located in the Philippines. It was Atty.18. Gallemore for being a non-resident. and held to abide the final event of the litigation. GALLEMORE. were cited and applied. or where the property of the defendant or a part thereof involved in the litigation is located. is given in I Moran's Comments on the Rules of Court. raises the question of the court's jurisdiction. Here the court. The trial court opined that it is the first and that it "has no authority nor jurisdiction to render judgment against the herein defendant. More specifically. unless he voluntarily appears in court. and their jurisdiction over the person of the non-resident defendant is not essential. 105: As a general rule. An illustration of the jurisdiction acquired by actual seizure is found in attachment proceedings. Venue in such cases may be laid in the province where the plaintiff whose personal status is in question resides. 921. 7.

). it is then purely in personam. ed. supra. 556-557. If the non-resident has no property in the State. If jurisdiction of the defendant is acquired but jurisdiction of the res is lost. When. which is that the court is here exercising a jurisdiction over the property in a proceeding directed essentially in rem. contract. to exercise a jurisdiction in remover the property and to adjudicate the title in favor of the petitioner against all the world.claiming to be owner. the preliminary seizure is not necessary. p. If a lien already exists. upon the principles that a "State. unless jurisdiction of the res is lost as by dissolution of the attachment. or statute.. Every State owes protection to its own citizens. . when non-residents deal with them. Dizon. 176 U. but the proceedings against the property continues. whether it is by process against or to subject the property or effects of a resident or non-resident of the state. may subject property situated within its limit owned by non-residents to the payment of the demand of its own citizens against them. a proceeding against property without jurisdiction of the person of the defendant is in substance a proceeding in rem. is that it partakes essentially of the nature and character of the proceeding in personam and not of a proceeding in rem. 40 Off. 929-930. Jur. 216. the title thereof being charged by the court without the intervention of the party.) It results that the mere circumstance that in an attachment the property may be seized at the inception of the proceedings. appears in two well known and authoritative works: The main action in an attachment or garnishment suit is in rem until jurisdiction of the defendant is secured. 520. and the inquiry can then be carried only to the extent necessary to control disposition of the property. In this case the lien on the property is acquired by the seizure. . and. But were the defendant fails to appear in the action. If no steps have been taken to acquire jurisdiction of the defendant's person. the proceeding is to be considered as one in the nature of a proceeding in rem. it is elementary that the court must obtain jurisdiction of the property of the defendant. Thereafter. the action relates to property located in the Philippines. 44 Law. through its tribunals. (Id. the Philippine courts may validly try the case.). the proceeding unquestionably is one in rem in the fullest meaning of the term. 398. Holly. it is in personam and also in rem. while in the foreclosure suit it is not taken into legal custody until the time comes for the sale. if the defendant is not personally served. No. (Roller vs. it is a legitimate and just exercise of authority to hold any appropriate any property owned by such non-residents to satisfy the claims of its citizens. and the purpose of the proceeding is to subject the property to that lien. (Banco Español-Filipino vs. In an ordinary attachment proceeding.. [3d Supplement]. A fuller statement of the principle whereunder attachment or garnishment of property of a nonresident defendant confers jurisdiction on the court in an otherwise personal action.) As the remedy is administered in some states. although in form there is but a single proceeding. 927-928. And where the court acts directly on the property. (Slade Perkins vs. 405. whether created by mortgage. and the exercise of this jurisdiction in no respect infringes upon the sovereignty of the State were the owners are domiciled. Gaz. Palanca.). 7. It is in virtue of the State's jurisdiction over the property of the nonresident situated within its limits that its tribunals can inquire into the non-resident's obligations to its own citizens.S. there is nothing upon which the tribunals can adjudicate. In attachment proceedings against a non-resident defendant where personal service on him is lacking. however.. the preliminary seizure is to be considered necessary in order to confer jurisdiction upon the court. And if the defendant appears the action proceeds in accordance with the practice governing proceedings in personam. the theory of an attachment. (4 Am.. and he has not appeared and answered or otherwise submitted himself to the jurisdiction of the . and the court proceeds to enforce such lien in the manner provided by law precisely as though the property had been seized upon attachment. and where there is jurisdiction of the defendant. that proceedings is none the less necessarily in rem. does not materially affect the fundamental principle involved in both cases.

1991. after the filing of a Reply thereto by petitioner.court.nêt .R.4 contending that violation of the trust receipts law constitutes estafa. 1993 Order3 of the Regional Trial Court of Manila. x ---------------------------------------.244. Finally.. private respondents admitted the existence of the surety agreements and trust receipts but countered that they had already made payments on the amount demanded and that the interest and other charges imposed by petitioner were onerous. 32762. Those authorities and decisions. the purchase of which was covered by irrevocable letters of credit and trust receipts executed by petitioner with private respondent Filipinas Textile Mills as obligor. (2 R. In their Answer. HON. SP No. J. private respondent Filipinas Textile Mills and one Sochi Villanueva (now deceased) before the Regional Trial Court of Manila. COURT OF APPEALS and FILIPINAS TEXTILE MILLS. petitioner. granting the issuance of a writ of preliminary attachment in Civil Case No.R. Following the denial of the Motion for Reconsideration filed by private respondent Filipinas Textile Mills.x G. The costs of this appeal will be charged to defendant and appellee. It is our judgment that the court below erred in dismissing the case and dissolving the attachment. C. 2 Both Decisions set aside and nullified the August 11. Both petitions were granted. and it is ordered that. L. 1994 Decision of respondent Court of Appeals in CA-G. G. the lower court issued its August 11. 119723 February 23. petitioner. the court is without jurisdiction to render judgment until there has been a lawful seizure of property owned by him within the jurisdiction of the court.926. In the said Complaint. No. petitioner filed a Motion for Attachment.R. 1993. in turn.. respondents. On May 31. respondents. specifically under paragraphs "b" and "d. upon petition of the plaintiff. are in agreement that though no jurisdiction is obtained over the debtor's person. In CA-G.: Before us are consolidated petitions for review both filed by Philippine Bank of Communications. 1995 Decision in CA-G. Rule 57 of the Revised Rules of Court. 91-56711. 32762. vs. Branch 7. the Court has acquired jurisdiction of the case at bar by virtue of the attachment of the defendant's credit. conditioned upon the filing of an attachment bond. The case commenced with the filing by petitioner.R." Section 1. petitioner sought the payment of P2. petitioner offered to post a bond for the issuance of such writ of attachment. SP No. so plain and comprehensive as to make any discussion unnecessary. albeit on different grounds. SP No.). 115678 February 23.R. The Motion was duly opposed by private respondents and. INC. YNARES-SANTIAGO. 2001 PHILIPPINE BANK OF COMMUNICATIONS. COURT OF APPEALS and BERNARDINO VILLANUEVA. which. thus providing ground for the issuance of a writ of preliminary attachment. it issue a new writ of attachment and then proceed to trial. HON. were covered by surety agreements executed by private respondent Bernardino Villanueva and Sochi Villanueva. one against the May 24. Petitioner further claimed that attachment was necessary since private respondents were disposing of their properties to its detriment as a creditor. on April 8. 2001 PHILIPPINES BANK OF COMMUNICATIONS. 800-804. respondent Court of Appeals ruled that the lower court was guilty of grave abuse of discretion in not conducting a hearing on the application for a writ of preliminary attachment and not requiring petitioner to 1âwphi1. 1993 Order for the issuance of a writ of preliminary attachment. No. the case may proceed to judgment if there is property in the custody of the court that can be applied to its satisfaction.30 representing the proceeds or value of various textile goods. vs. of a Complaint against private respondent Bernardino Villanueva. Tested by the foregoing decisions and authorities. both private respondents filed separate petitions for certiorari before respondent Court assailing the order granting the writ of preliminary attachment. 32863 1 and the other against its March 31.

we are in accord with respondent Court of Appeals in CA-G. Grounds upon which attachment may issue.R. in violation of their fiduciary duty as agent or entrustee. 32863. or an attorney. there exist(s) valid ground for the issuance of a writ of preliminary attachment under Section 1 of Rule 57 of the Revised Rules of Court particularly under sub-paragraphs "b" and "d". in violation of private respondents' fiduciary duty as entrustee. Under Section 13 of P. in the course of his employment as such. have the property of the adverse party attached as security for the satisfaction of any judgment that may be recovered in the following cases: xxx xxx xxx (b) In an action for money or property embezzled or fraudulently misapplied or converted to his us by a public officer. they being mere general averments. embezzlement and misappropriation of the proceeds or goods entrusted to the private respondents. Hence. 2. 4. SP No. xxx xxx xxx . "C" and "D" of the complaint). – A plaintiff or any proper party may. and against a party who has been guilty of fraud in contracting or incurring the debt or obligation. To begin with.D. embezzlement or misappropriation. 115. misappropriation nor incipient fraud may be presumed. Respondent Court of appeals held that neither embezzlement. to wit – SECTION 1. The Motion for Attachment of petitioner states that – 1. factor. constitute embezzlement or misappropriation which is a valid ground for the issuance of a writ of preliminary attachment. or for a willful violation of duty. Herein plaintiff is willing to post a bond in the amount fixed by this Honorable Court as a condition to the issuance of a writ of preliminary attachment against the properties of the defendants. they must be established in order for a writ of preliminary attachment to issue. broker. respondent Court of Appeals found that the grounds cited by petitioner in its Motion do not provide sufficient basis for the issuance of a writ of preliminary attachment. nor to return the goods entrusted thereto. in CAG. Holding that there was no sufficient basis for the issuance of the writ of preliminary attachment in spite of the allegations of fraud. The issuance of a writ of preliminary attachment is likewise urgently necessary as there exist(s) no sufficient security for the satisfaction of any judgment that may be rendered against the defendants as the latter appears to have disposed of their properties to the detriment of the creditors like the herein plaintiff. the instant consolidated5 petitions charging that respondent Court of Appeals erred in – "1. or an officer of a corporation.R. Disregarding the fact that the failure of FTMI and Villanueva to remit the proceeds or return the goods entrusted. i. violation of the trust receipt law constitute(s) estafa (fraud and/or deceit) punishable under Article 315 par. On account of the foregoing. or by any other person in a fiduciary capacity. 5. for embezzlement or fraudulent misapplication or conversion of money (proceeds) or property (goods entrusted) by an agent (entrustee) in violation of his fiduciary duty as such. at the commencement of the action or at any time thereafter. as amended. Rule 57 of the then controlling Revised Rules of Court. 1[b] of the Revised Penal Code.substantiate its allegations of fraud. agent or clerk. Section 1 (b) and (d). 32863 that the Motion for Attachment filed by petitioner and its supporting affidavit did not sufficiently establish the grounds relied upon in applying for the writ of preliminary attachment. SP No. 3."6 We find no merit in the instant petitions. provides. 2.e. On the other hand. The instant case is based on the failure of defendants as entrustee to pay or remit the proceeds of the goods entrusted by plaintiff to defendant as evidenced by the trust receipts (Annexes "B".

There is no other sufficient security for the claim sought to be enforced by the instant case and the amount due to herein plaintiff or the value of the property sought to be recovered is as much as the sum for which the order for attachment is granted. The fraud must relate to the execution of the agreement and must have been the reason which induced the other party into giving consent which he would not have otherwise given.000. 214-216 Juan Luna Street. cannot serve as good ground for issuing a writ of attachment. without more. This particular provision was adequately explained in Liberty Insurance Corporation v. particularly subparagraphs "b" and "d" of said section. of legal age. Rule 57. above. detention or conversion of which the action is brought. after having been sworn in accordance with law. The instant case is one of those mentioned in Section 1 of Rule 57 of the Revised Rules of Court wherein a writ of preliminary attachment may be issued against the defendants. it is alleged by private respondents that out of the total P419. as follows – I. Petitioner cannot insist that its allegation that private respondents failed to remit the proceeds of the sale of the entrusted goods nor to return the same is sufficient for attachment to issue. As correctly held by respondent Court of Appeals.613. It merely states. We note that petitioner anchors its application upon Section 1(d). Gonzales. it lacks particulars upon which the court can discern whether or not a writ of attachment should issue. and as such I have caused the preparation of the above motion for issuance of a writ of preliminary attachment. THAT: 1. An order of attachment cannot be issued on a general averment. (Emphasis ours) We find an absence of factual allegations as to how the fraud alleged by petitioner was committed. the violation of the terms of which is qualified by law as constituting estafa. In fact. such fraudulent intent not to honor the admitted obligation cannot be inferred from the debtor's inability to pay or to comply with the obligations. Hence. fraud may be gleaned from a preconceived plan or intention not to pay. A debt is fraudulently contracted if at the time of contracting it the debtor has a preconceived plan or intention not to pay. AURE. regardless of the arguments . leaving only P19. of the Revised Rules of Court. it does not follow that a writ of attachment can and should automatically issue.7 The supporting Affidavit is even less instructive. This does not appear to be so in the case at bar. 13 SCRA 633). the amount of P400.96 covered by the subject trust receipts. with address at No.613. it must be shown that the debtor in contracting the debt or incurring the obligation intended to defraud the creditor. or in concealing or disposing of the property for the taking. as mere reproduction of the rules. 9 On the other hand. To constitute a ground for attachment in Section 1 (d). as it is in this case.00 had already been paid. Philippine Bank of Communications. Rule 57. 3. do hereby depose and say. Again.8 as follows – To sustain an attachment on this ground. 2. above all legal counterclaims. Binondo. such as one ceremoniously quoting from a pertinent rule. Court of Appeals. as stressed. 4. Fraud is a state of mind and need not be proved by direct evidence but may be inferred from the circumstances attendant in each case (Republic v. xxx xxx xxx While the Motion refers to the transaction complained of as involving trust receipts. I have read and understood its contents which are true and correct of my own knowledge.(d) In an action against a party who has been guilty of fraud in contracting the debt or incurring the obligation upon which the action is brought. 5. DOMINGO S. married. There exist(s) sufficient cause of action against the defendants in the instant case. fraud should be committed upon contracting the obligation sued upon.96 as balance. Manila. Rule 57 of the Rules of Court. Petitioner cannot merely cite Section 1(b) and (d). I am the Assistant Manager for Central Collection Units Acquired Assets Section of the plaintiff.

in accordance with due process. J. ALEJANDRO.. To reiterate. On this score.R. 32762 are AFFIRMED. v. JOSEPH ANTHONY M.10 in applications for attachment.R. Nicolas. for the foregoing reasons. The Court of Appeals was correct. SP No. in its finding in CA-G. 12 WHEREFORE. which granted respondent Joseph Anthony M. embezzlement and misappropriation by averring that private respondent Filipinas Textile Mills could not have done these as it had ceased its operations starting in June of 1984 due to workers' strike. They also refuted the allegations of fraud. We also agree with respondent Court of Appeals in CA-G. 2007 PHILIPPINE COMMERCIAL INTERNATIONAL BANK. SP No. Lub Oil Marketing Center. SP No. 32762 that the lower court should have conducted a hearing and required private petitioner to substantiate its allegations of fraud. respondent Court of Appeals was correct in setting aside the issued writ of preliminary attachment. there was no hearing to afford private respondents an opportunity to ventilate their side. The decision of the Court of Appeals in CA-G. 78200 affirming the August 30. persons and places to support support such a serious assertion that "defendants are disposing of their properties in fraud of creditors.: This petition for review assails the May 31. Time and again. A writ of attachment can only be granted on concrete and specific grounds and not on general averments merely quoting the words of the rules. SP No. Respondent. then the court which issues it acts in excess of its jurisdiction. in accordance with due process. These are matters which should have been addressed in a preliminary hearing to guide the lower court to a judicious exercise of its discretion regarding the attachment prayed for. If all the requisites for the granting of the writ are not present. Inc. Inc.R.nêt .11 not only was petitioner's application defective for having merely given general averments.R. Alejandro’s claim for damages arising from petitioner Philippine Commercial International Bank’s (PCIB) invalid garnishment of respondent’s deposits. This stringency is required because the remedy of attachment is harsh. SO ORDERED.P. As was frowned upon in D. vs. No pronouncement as to costs. this Court cautioned – The petitioner's prayer for a writ of preliminary attachment hinges on the allegations in paragraph 16 of the complaint and paragraph 4 of the affidavit of Daniel Pe which are couched in general terms devoid of particulars of time. No. the instant petitions are DENIED. therefore. it can hardly be said that private respondents harbored a preconceived plan or intention not to pay petitioner.P. 2000 Decision2 of the Regional Trial Court of Makati. 175587 September 21. G.R. 1âwphi1. Lub Oil Marketing Center. what is worse. we have held that the rules on the issuance of a writ of attachment must be construed strictly against the applicants. private respondents claimed that substantial payments were made on the proceeds of the trust receipts sued upon. 2006 Decision1 of the Court of Appeals in CA-G.regarding penalty and interest. As already mentioned. 32863 and CA-G. CV No.R. petitioner's Motion for Attachment fails to meet the standard set in D. embezzlement and misappropriation. In the said case. in order to determine the truthfulness of the allegations. DECISION YNARES-SANTIAGO. 32863 that neither petitioner's Motion or its supporting Affidavit provides sufficient basis for the issuance of the writ of attachment prayed for. But no hearing was afforded to the private respondents the writ having been issued ex parte. extraordinary and summary in nature. Petitioner. in order to determine the truthfulness of the allegations of petitioner." There is thus the necessity of giving to the private respondents an opportunity to ventilate their side in a hearing.

R. is hereby GRANTED. through counsel. 1997. it elevated the case to the Court of Appeals (CA-G.8 Subsequently. 10 where he is a partner. that his stay in Hong Kong is only temporary. On the same date. The dispositive portion of the court’s decision is as follows: WHEREFORE. filed a manifestation informing the court that he is voluntarily submitting to its jurisdiction.828. On May 10. The application for the issuance of a writ was supported with the affidavit of Nepomuceno. petitioner filed against respondent a complaint3 for sum of money with prayer for the issuance of a writ of preliminary attachment. 1997. He also alleged that petitioner knew that he maintains a permanent residence at Calle Victoria. the trial court issued an order quashing the writ and holding that the withdrawal of respondent’s unassigned deposits was not intended to defraud petitioner.16 .13 Petitioner filed a motion for reconsideration but was denied on October 28. 1997. respondent. the case was dismissed for late filing in a minute resolution (G.69. being meritorious. On December 24.6 On October 24. Ciudad Regina.00:JPY127. HO-46764-97. however. and the ORDER of 24 October 1997 is hereby RECONSIDERED and SET ASIDE and the WRIT OF attachment of the same is hereby DISCHARGED.50. 140605) dated January 19. 1999. when the prevailing rate of exchange of the US Dollar to Japanese yen was US$1. petitioner regularly communicated with him through its representatives. the bank deposits of respondent with Rizal Commercial Banking Corporation (RCBC) were garnished. petitioner alleged that (1) respondent fraudulently withdrew his unassigned deposits notwithstanding his verbal promise to PCIB Assistant Vice President Corazon B. On October 27. Respondent. the petition was dismissed for failure to prove that the trial court abused its discretion in issuing the aforesaid order. In both addresses.11 With the denial12 of petitioner’s motion for reconsideration.734. 1999. issued by Prudential Guarantee & Assurance Inc. Batasan Hills. 14 On petition with this Court.5 In praying for the issuance of a writ of preliminary attachment under Section 1 paragraphs (e) and (f) of Rule 57 of the Rules of Court. and an office address in Makati City at the Law Firm Romulo Mabanta Buenaventura Sayoc & De los Angeles. SP No. and (2) that respondent is not a resident of the Philippines. a resident of Hong Kong. 1997.4 It appears that the amount of P249. SO ORDERED. Quezon City. Said complaint alleged that on September 10. It thus concluded that petitioner misrepresented and suppressed the facts regarding respondent’s residence considering that it has personal and official knowledge that for purposes of service of summons.828.On October 23.798. executed in favor of petitioner a promissory note obligating himself to pay P249.. It also found that the representatives of petitioner personally transacted with respondent through his home address in Quezon City and/or his office in Makati City. the trial court granted the application and issued the writ ex parte 7 after petitioner posted a bond in the amount of P18.588. Nepomuceno not to withdraw the same prior to their assignment as security for the loan.R. and that he frequently travels back to the Philippines.15 Petitioner filed a motion for reconsideration but was likewise denied with finality on March 6.90 plus interest. Respondent added that he is the managing partner of the Hong Kong branch of said Law Firm. under Bond No. 1997. respondent’s residence and office addresses are located in the Philippines. respondent filed a motion to quash9 the writ contending that the withdrawal of his unassigned deposits was not fraudulent as it was approved by petitioner. petitioner requested the latter to put up additional security for the loan. sought a reconsideration of said request pointing out petitioner’s alleged mishandling of his account due to its failure to carry out his instruction to close his account as early as April 1997.588.90 was the consolidated amount of a series of yen loans granted by petitioner to respondent during the months of February and April 1997. the URGENT MOTION TO QUASH. In view of the fluctuations in the foreign exchange rates which resulted in the insufficiency of the deposits assigned by respondent as security for the loan. 50748) via a petition for certiorari. 2000. 2000. No. respondent.

2000. to be satisfied against the attachment bond under Prudential Guarantee & Assurance. SO ORDERED. He presented evidence showing that hisP150. considering that the amount of the bond is insufficient to fully satisfy the award for damages. petitioner cannot be said to have been in good faith considering that its knowledge of respondent’s Philippine residence and office address goes into the very issue of the trial court’s jurisdiction which would have been defective had respondent not voluntarily appeared before it. was dishonored by reason of the garnishment of his deposits. 01081. On November 21. Inc. He also testified that he is a graduate of the Ateneo de Manila University in 1982 with a double degree of Economics and Management Engineering and of the University of the Philippines in 1987 with the degree of Bachelor of Laws. and defendant having duly established his claim in the amount ofP25. reduced the amount of damages awarded to petitioner and specified their basis.00 as nominal damages. Inc. JCL (4) No.000. HO-46764-97]. In lieu thereof.18 For its part. can no longer be passed upon by this Court. the trial court awarded damages to respondent in the amount of P25 Million without specifying the basis thereof. respondent filed a claim for damages in the amount of P25 Million17 on the attachment bond (posted by Prudential Guarantee & Assurance. JCL(4) No.798. [Bond No. SP No. The judgment in the prior action operates as estoppel as to those matters in . 50784 and by this Court in G. HO-46764-97) on account of the wrongful garnishment of his deposits. under JCL(4) No. on May 20. 1998. 2006. are now beyond the power of this Court to review having been the subject of a final and executory order.00 RCBC check payable to his counsel as attorney’s fees. and P1. Inc. No. the appeal is PARTIALLY GRANTED and the decision appealed from is hereby MODIFIED. which is solidarily liable with plaintiff to pay defendant the full amount of bond under Prudential Guarantee & Assurance. P5. At the outset.. plaintiff is hereby ordered to pay defendant the amount of P6. thus: WHEREFORE.734. is ORDERED to pay appellee [herein respondent]P2. Prudential Guarantee & [Assurance.20 The trial court denied petitioner’s motion for reconsideration on October 24.69. And. dated 24 October 1997 in the amount of P18.00 as moral damages.201. Inc. 21 Petitioner elevated the case to the Court of Appeals which affirmed the findings of the trial court.].000. the instant petition.000. The dispositive portion of the decision of the Court of Appeals states: WHEREFORE. premises above considered.00.00 is deleted. the Court of Appeals denied petitioner’s motion for reconsideration but granted that of respondent’s by ordering petitioner to pay additional P5Million as exemplary damages.22 Both parties moved for reconsideration.R.23 Hence. It held that in claiming that respondent was not a resident of the Philippines. the conclusions of the court that petitioner bank misrepresented that respondent was residing out of the Philippines and suppressed the fact that respondent has a permanent residence in Metro Manila where he may be served with summons.000.00 as attorney’s fees. The Court of Appeals.000. 2000.19 On August 30. however. 01081.R. The award of damages in the amount of P25.265. precludes the relitigation of a particular fact or issue in another action between the same parties even if based on a different claim or cause of action.000.000.000. judgment is hereby rendered ordering Prudential Guarantee & [Assurance] Co.. Respondent likewise presented witnesses to prove that he is a well known lawyer in the business community both in the Philippines and in Hong Kong. it must be noted that the ruling of the trial court that petitioner is not entitled to a writ of attachment because respondent is a resident of the Philippines and that his act of withdrawing his deposits with petitioner was without intent to defraud. 140605. 01081. SO ORDERED. which obtains under the premises. The rule on conclusiveness of judgment. which is solidarily liable with appellant [herein petitioner]. the lone witness presented by petitioner was Nepomuceno who claimed that she acted in good faith in alleging that respondent is a resident of Hong Kong.000. Said findings were sustained by the Court of Appeals in CA-G.000. More importantly.Meanwhile. Bond No.31.000.

the tenor of said order evidently considers the latter to have acted in bad faith by resorting to a deliberate strategy to mislead the court. Executive Committee of plaintiff BANK. Petitioner also contends that even if respondent is considered a resident of the Philippines. as to those matters actually and directly controverted and determined. . The core issue for resolution is whether petitioner bank is liable for damages for the improper issuance of the writ of attachment against respondent. Notwithstanding the final judgment that petitioner is guilty of misrepresentation and suppression of a material fact. Thus – In the hearings of the motion.24 Hence. personally transacted with defendant mainly through defendant’s permanent residence in METRO-MANILA. Petitioner’s contentions are without merit.. and oral arguments of counsels before the Court. either in defendant’s home address in Quezon City or his main business address at the Romulo Mabanta Buenaventura Sayoc & Delos Angeles in MAKATI and while at times follow ups were made through defendant’s temporary home and business addresses in Hongkong. Rule 57 of the Rules of Court since he (respondent) is a resident who is temporarily out of the Philippines upon whom service of summons may be effected by publication. the bad faith of said party having been previously determined in a final decision which voided the assailed writ. On the above findings. and therefore plaintiff had to resort to this misrepresentation that defendant was residing out of the Philippines and suppressed the fact that defendant’s permanent residence is in METRO MANILA where he could be served with summons. It contends that no malice or bad faith may be imputed to it in procuring the writ.] disposing properties with intent to defraud his creditors. paragraph (f). Escobar claims in its petition that the award of attorney’s fees and injunction bond premium in favor of Hanil is [contrary] to law and jurisprudence. v. Revilla. [Anent the] second ground of attachment x x x [t]he Court finds that the amount withdrawn was not part of defendant’s peso deposits assigned with the bank to secure the loan and as proof that the withdrawal was not intended to defraud plaintiff as creditor is that plaintiff approved and allowed said withdrawals. in his letter dated 6 October 1997 on the subject loan to defendant of the same law firm was addressed to the ROMULO LAW FIRM in MAKATI. it appears that plaintiff BANK through its contracting officers Vice President Corazon B. In fact. this finding is further confirmed by the letter of Mr. JOHN GOKONGWEI.. While the final order of the trial court which quashed the writ did not categorically use the word "bad faith" in characterizing the representations of petitioner. On the above findings. and mainly on the misrepresentations made by plaintiff on the grounds for the issuance of the attachment in the verified complaint. 25 Petitioner is therefore barred by the principle of conclusiveness of judgment from again invoking good faith in the application for the issuance of the writ. We rule in the affirmative. Chairman. attachment is still proper under Section 1.issue or points controverted. Nepomuceno and Executive Vice President Jose Ramon F. the issues of misrepresentation by petitioner and the residence of respondent for purposes of service of summons can no longer be questioned by petitioner in this case. Court of Appeals. JR. Ltd. in the case of Hanil Development Co. It is therefore clear that plaintiff could not deny their personal and official knowledge that defendant’s permanent and official residence for purposes of service of summons is in the Philippines.26the Court debunked the claim of good faith by a party who maliciously sought the issuance of a writ of attachment. Similarly. upon the determination of which the finding or judgment was rendered. the Court concludes that defendant has duly proven its grounds in the MOTION and that plaintiff is not entitled to the attachment. Thus – Apropos the Application for Judgment on the Attachment Bond. The previous judgment is conclusive in the second case.e. the latter contends that it acted in good faith. that defendant resides out of the Philippines. It is even noted that when the Court granted the prayer for attachment it was mainly on the first ground under Section 1(f) of Rule 57 of the 1997 Rules of Civil Procedure. it is obvious that plaintiff already knew from the beginning the deficiency of its second ground for attachment [i.

Rule 57 of the Rules of Court. (c) In an action to recover the possession of personal property unjustly or fraudulently taken. on a cause of action arising from law. its Ex Parte Motion to Resolve Petition alleged that "after personal verification by (Escobar) of (Hanil’s) equipment in Cagayan de Oro City.A. there is no merit in petitioner’s contention that respondent can be considered a resident who is temporarily out of the Philippines upon whom service of summons may be effected by publication. petitioner is still not entitled to the issuance of a writ of attachment. agent. Its Petition for the Issuance of Preliminary Attachment made such damning allegations that: Hanil was already able to secure a complete release of its final collection from the MPWH. or is about to do so. The circumstances under which a writ of preliminary attachment may be issued are set forth in Section 1. Escobar’s bad faith in procuring the writ cannot be doubted. other than moral and exemplary. 1. petitioner attempts to give the impression that although it erroneously invoked the ground that respondent does not reside in the Philippines.-G. The question of the illegality of the attachment and Escobar’s bad faith in obtaining it has long been settled in one of the earlier incidents of this case. — At the commencement of the action or at any time before entry of judgment. 1983 in C. or an officer of a corporation or an attorney. Even assuming that the trial court did not make a categorical pronouncement of misrepresentation and suppression of material facts on the part of petitioner. Grounds upon which attachment may issue. quasi-contract. factor.R. it appears that the equipments were no longer existing from their compound. Finally. when the property. in the course of his employment as such. or in the performance thereof. or clerk. or disposed of to prevent its being found or taken by the applicant or an authorized person.Escobar’s protestation is now too late in the day. removed. with intent to defraud his creditors. Rule 57 of the Rules of Court which provides: (f) In an action against a party x x x on whom summons may be served by publication. in its decision rendered on February 3. No. (b) In an action for money or property embezzled or fraudulently misapplied or converted to his own use by a public officer. or any part thereof. even on this alternative ground. In so arguing. or on whom summons may be served by publication. and therefore qualifies as among those against whom a writ of attachment may be issued under Section 1. SP-14512. a plaintiff or any proper party may have the property of the adverse party attached as security for the satisfaction of any judgment that may be recovered in the following cases: (a) In an action for the recovery of a specified amount of money or damages. broker. The Court of Appeals. has been concealed. to wit: SEC. The facts and circumstances omitted are highly material and relevant to the grant or denial of writ of attachment applied for. paragraph (f). or for a willful violation of duty. and it may leave the country anytime. the factual backdrop of this case does not support petitioner’s claim of good faith. detained. voided the challenged writ. However. Worse. delict or quasi-delict against a party who is about to depart from the Philippines with intent to defraud his creditors. (e) In an action against a party who has removed or disposed of his property. or converted. it has moved out some of its heavy equipments for unknown destination. . contract. it should not be made to pay damages because it is in fact entitled to a writ of attachment had it invoked the proper ground under Rule 57. (f) In an action against a party who resides out of the Philippines." All these allegations of Escobar were found to be totally baseless and untrue. (d) In an action against a party who has been guilty of a fraud in contracting the debt or incurring the obligation upon which the action is brought. or by any other person in a fiduciary capacity. having been issued with grave abuse of discretion.

in actions in personam against residents temporarily out of the Philippines. It is usual for such a man to leave at his home or with his business associates information as to where he may be contacted in the event a question that affects him crops up.29 Thus. he leaves his affairs in the hands of one who may be reasonably expected to act in his place and stead. in actions in personam. if the sole purpose of the . but who is temporarily out of it. In Montalban v. Maximo. a local base. the court need not always attach the defendant’s property in order to have authority to try the case. is no longer for the purpose of acquiring jurisdiction but for compliance with the requirements of due process.33 in this wise: A man temporarily absent from this country leaves a definite place of residence. or (c) in any other manner which the court may deem sufficient. 16. Section 16. service may. so to speak. to do all that is necessary to protect his interests. the same must be with prior leave. in order to acquire jurisdiction in actions in personam where defendant resides out of and is not found in the Philippines. where the defendant is a resident who is temporarily out of the Philippines. as under the preceding section. the court may acquire jurisdiction over an action in personam by mere substituted service without need of attaching the property of the defendant. attachment of his/her property in an action in personam.The purposes of preliminary attachment are: (1) to seize the property of the debtor in advance of final judgment and to hold it for purposes of satisfying said judgment. In case the defendant does not reside and is not found in the Philippines (and hence personal and substituted service cannot be effected). – When an action is commenced against a defendant who ordinarily resides within the Philippines.31 however. otherwise the court will not acquire jurisdiction over the defendant. it becomes a matter of course for the court to convert the action into a proceeding in rem or quasi in rem by attaching the defendant’s property. Maximo. a dwelling where he lives. (b) publication coupled with the sending by registered mail of the copy of the summons and the court order to the last known address of the defendant. service of summons may be effected by (a) leaving copies of the summons at the defendant’s residence with some person of suitable discretion residing therein. Where one temporarily absents himself. Thus. Residents temporarily out of the Philippines. The rationale in providing for substituted service as the normal mode of service for residents temporarily out of the Philippines. the Court held that substituted service of summons (under the present Section 7. such as the instant case for collection of sum of money. as in paragraph (f) of the same provision. The service of summons in this case (which may be by publication coupled with the sending by registered mail of the copy of the summons and the court order to the last known address of the defendant). be also effected out of the Philippines. and to communicate with him from time to time any incident of importance that may affect him or his business or his affairs. Rule 57 of the Rules of Court. precisely because.28 summons must be served by personal or substituted service. the remedy of the plaintiff in order for the court to acquire jurisdiction to try the case is to convert the action into a proceeding in rem or quasi in rem by attaching the property of the defendant.27 Corollarily. was expounded in Montalban v.32 Hence. as in the grounds stated in paragraphs (a) to (e) of Section 1. Rule 14 of the Rules of Court) is the normal mode of service of summons that will confer jurisdiction on the court over the person of residents temporarily out of the Philippines. or (b) by leaving copies at the defendant’s office or regular place of business with some competent person in charge thereof. The preceding section referred to in the above provision is Section 15 which provides for extraterritorial service – (a) personal service out of the Philippines. Where the plaintiff seeks to attach the defendant’s property and to resort to the concomitant service of summons by publication. Meaning. 30 However. Rule 14 of the Rules of Court reads: Sec. is not always necessary in order for the court to acquire jurisdiction to hear the case. to which any inquiry about him may be directed and where he is bound to return. or (2) to acquire jurisdiction over the action by actual or constructive seizure of the property in those instances where personal or substituted service of summons on the defendant cannot be effected. by leave of court.

the trial court. In the instant case. be reduced from P2 million toP50.000. Indeed. Likewise. nominal damages may be awarded to a plaintiff whose right has been violated or invaded by the defendant. however. the award of nominal damages is proper considering that the right of respondent to use his money has been violated by its garnishment. they must constitute actual damages duly established by competent proofs.00 considering the short period of 2 months during which the writ was in effect as well as the lack of evidence as to the amount garnished. (2) the labor. (7) the professional character and the social standing of the attorney. substituted service (to persons of suitable discretion at the defendant’s residence or to a competent person in charge of his office or regular place of business) will suffice. if only for the purpose of acquiring jurisdiction. which are. (3) the nature and importance of the litigation and business in which the services were rendered. (4) the responsibility imposed. In light of the foregoing. for the purpose of vindicating or recognizing that right. Had the allegations in the complaint disclosed that respondent has a residence in Quezon City and an office in Makati City. time and trouble involved. however. and summary in nature. the award of attorney’s fees is proper when a party is compelled to incur expenses to lift a wrongfully issued writ of attachment.37 They are recoverable where some injury has been done but the pecuniary value of the damage is not shown by evidence and are thus subject to the discretion of the court according to the circumstances of the case. and not for indemnifying the plaintiff for any loss suffered by him. petitioner is still not entitled to a writ of attachment because the trial court could acquire jurisdiction over the case by substituted service instead of attaching the property of the defendant. It is clear from the foregoing that even on the allegation that respondent is a resident temporarily out of the Philippines. the Court of Appeals properly sustained the finding of the trial court that petitioner is liable for damages for the wrongful issuance of a writ of attachment against respondent.38 In this case. wanting in the present case. 35 It should be resorted to only when necessary and as a last remedy. 36 Nevertheless. But for such losses to be recoverable. it must be stressed that the writ was issued by the trial court mainly on the representation of petitioner that respondent is not a resident of the Philippines. nominal damages are damages in name only and not in fact. the trial court’s issuance of the writ was for the sole purpose of acquiring jurisdiction to hear and decide the case. (6) the skill and the experience called for in the performance of the services. For attachment is harsh. the Court of Appeals is correct in not awarding the same inasmuch as the respondent failed to establish the amount garnished by petitioner. instead of attaching the property of the defendant. or whether there is a need to attach the property of the defendant and resort to service of summons by publication in order for the court to acquire jurisdiction over the case and to comply with the requirements of due process. could have served summons by substituted service on the said addresses. It is a well settled rule that one who has been injured by a wrongful attachment can recover damages for the actual loss resulting therefrom. the latter must determine whether from the allegations in the complaint.attachment is for the court to acquire jurisdiction. The basis of the award thereof is also the amount of money garnished. it is a rigorous remedy which exposes the debtor to humiliation and annoyance. The amount of nominal damages must. (5) the amount of money and the value of the property affected by the controversy or involved in the employment. (8) the results secured. Anent the actual damages. extraordinary.34 Obviously. The misrepresentation of petitioner that respondent does not reside in the Philippines and its omission of his local addresses was thus a deliberate move to ensure that the application for the writ will be granted. The rules on the application of a writ of attachment must be strictly construed in favor of the defendant.40 1âwphi1 . and the length of time respondents have been deprived of the use of their money by reason of the wrongful attachment. Its award is thus not for the purpose of indemnification for a loss but for the recognition and vindication of a right. it being a recognized rule that an attorney may properly charge a much larger fee when it is contingent than when it is not.39 It may also be based upon (1) the amount and the character of the services rendered.

petitioner. Finally.991.41 Moral damages are not intended to enrich a complainant at the expense of a defendant.000. the petition is PARTIALLY GRANTED. the instant case for damages by reason of the invalid issuance of the writ.R.All the aforementioned weighed. While as a general rule. a valued client of Westmont Bank (now United Overseas Bank). Hence. 2006 Resolution2denying the motion for reconsideration thereof. Westmont Investment Corporation (Wincorp). petitioner Philippine Commercial International Bank is ordered to pay respondent Joseph Anthony M. No. MANUEL TANKIANSEE. 01081. The facts are undisputed. made several money placements totaling P210. the absence of evidence as to the professional character and the social standing of the attorney handling the case and the amount garnished. contrary to the claim of petitioner.00. diversion or amusements that will serve to obviate the moral suffering he has undergone.00 as nominal damages. P200. Considering petitioner’s bad faith in securing the writ of attachment.43 Nevertheless. 3 Sometime in February 2000. G. vs.00. survives the dismissal of the main case for sum of money. CV No. to be satisfied against the attachment bond issued by Prudential Guarantee & Assurance Inc.000. 2008 ALEJANDRO NG WEE.000. by reason of petitioner’s culpable action.44 WHEREFORE. the award of exemplary damages in this case should be reduced from P5M to P500. DECISION NACHURA.5B extended by Wincorp to another corporation . Bond No. temperate or nominal) damages. Moral damages are to be fixed upon the discretion of the court taking into consideration the educational. 90130 and its January 6. but only at P200. The May 31. we sustain the award of exemplary damages by way of example or correction for public good. 78200 is AFFIRMED with MODIFICATIONS. social and financial standing of the parties. HO-46764-97. the award of attorney’s fees should be fixed not at P1 Million. however. He then discovered that the company extended a loan equal to his total money placement to a corporation [Power Merge] with a subscribed capital of only P37.. This should deter parties in litigations from resorting to baseless and preposterous allegations to obtain writs of attachments. and P500. Petitioner Alejandro Ng Wee. This credit facility originated from another loan of about P1.00 as attorney’s fees. we find the award in the amount of P5 Million excessive.00 as exemplary damages. exemplary damages may be recovered where the attachment was established to be maliciously sued out. Suffice it to state that the claim for damages arising from such wrongful attachment may arise and be decided separately from the merits of the main action. SO ORDERED.000. petitioner received disturbing news on Wincorp's financial condition prompting him to inquire about and investigate the company's operations and transactions with its borrowers. 171124 February 13. SP No.000. the award of moral damages is reduced to P500.00 as moral damages. the favorable decisions of the courts below. As modified.595. respondent. J. 2005 Decision1 of the Court of Appeals (CA) in CA-G. 2006 Decision of the Court of Appeals in CA-G. a domestic entity engaged in the business of an investment house with the authority and license to extend credit. The courts below correctly awarded moral damages on account of petitioner’s misrepresentation and bad faith.42 They are awarded only to enable the injured party to obtain means. the liability on the attachment bond is limited to actual (or in some cases.: Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court assailing the September 14.00. 45 under JCL (4) No. and considering the short period of time it took to have the writ lifted.5M. and P500. No pronouncement as to costs.000.R.62 with the bank's affiliate.000.R. Moral damages must be commensurate with the loss or injury suffered. Alejandro the following amounts: P50.

2005 Order. 2000. petitioner's money placements were transferred without his knowledge and consent to the loan account of Power Merge through an agreement that virtually freed the latter of any liability. but the CA denied the same in its January 6. 2004. and that the additional grounds were respondent's affirmative defenses that properly pertained to the merits of the case. Inc.19 On September 30. filed their respective motions for reconsideration 14 but the trial court denied the same on October 14. the appellate court rendered the assailed Decision25 reversing and setting aside the aforementioned orders of the trial court and lifting the November 6. When the latter defaulted in its obligation. 22 Ruling that the grounds raised were already passed upon by it in the previous orders affirmed by the CA and this Court. 2001. 2004. 2000 Writ of Preliminary Attachment26 to the extent that it concerned respondent's properties. to petitioner's filing of a P50M-bond. 74610]. through the false representations of Wincorp and its officers and directors. . 2002. Virata (Virata).16 and the motion for reconsideration thereof on March 16. filed cases against the company as they were also victimized by its fraudulent schemes. while respondent opted not to question anymore the said orders. Luis Juan L. No. among others. on October 19. the RTC. however. on the basis of the allegations in the complaint and the October 12. respondent filed before the trial court another Motion to Discharge Attachment.18 We subsequently denied the petition with finality on August 23. Civil Case No.24 respondent filed a certiorari petition before the CA docketed as CA-G. the trial court denied the motion in its January 6. petitioner filed the instant petition on the following grounds: A. petitioner instituted.9The writ was. 11 The other defendants likewise filed similar motions. in G. 162928. 90130. denied the certiorari petition on August 21.R. 2000. his co-defendants. the trial court ordered the issuance of a writ of preliminary attachment against the properties not exempt from execution of all the defendants in the civil case subject. The appellate court. in which he is a major stockholder. 2000.13 denied all the motions for the discharge of the attachment. 2000 Affidavit8 of petitioner. we denied the petition and affirmed the CA rulings on May 19.23 With the denial of its motion for reconsideration. however. consequently. issued on November 6. On September 14.6 One of the defendants impleaded in the complaint is herein respondent Manuel Tankiansee. Wincorp instituted a case against it and its surety.4 Under the scheme agreed upon by Wincorp and Hottick's president. 2006 Resolution. reached in which Hottick's president. assailed the same via certiorari under Rule 65 before the CA [docketed as CA-G. Settlement was. on December 22. Petitioner moved for the reconsideration of the said ruling.15 Incidentally. 2003. moved for the discharge of the attachment. Allegedly.R. assumed the obligation of the surety.R. Virata and UEM-MARA Philippines Corporation (UEM-MARA).12 On October 23. SP No.20 re-pleading the grounds he raised in his first motion but raising the following additional grounds: (1) that he was not present in Wincorp's board meetings approving the questionable transactions.21 and (2) that he could not have connived with Wincorp and the other defendants because he and Pearlbank Securities. Vice-Chairman and Director of Wincorp. respondent. 2004.[Hottick Holdings]. SP No. 00-99006 for damages with the Regional Trial Court (RTC) of Manila. 2005. petitioner was enticed to roll over his placements so that Wincorp could loan the same to Virata/Power Merge. 2000. including respondent herein. 7 On October 26.27 Thus.5 Finding that Virata purportedly used Power Merge as a conduit and connived with Wincorp's officers and directors to fraudulently obtain for his benefit without any intention of paying the said placements. 2004 for Virata's and UEM-MARA's failure to sufficiently show that the appellate court committed any reversible error.17 In a petition for review on certiorari before this Court.10 Arguing that the writ was improperly issued and that the bond furnished was grossly insufficient. The defendants. in an Omnibus Order..

For a writ of attachment to issue under this rule. SINCE IT MERELY RAISED ERRORS IN JUDGMENT. Petitioner cannot also rely on the decisions of the appellate court in CA-G. C. ARE NOT THE PROPER SUBJECTS OF A WRIT OF CERTIORARI.R. that the general and sweeping allegation of fraud against respondent in petitioner's affidavit-respondent as an officer and director of Wincorp allegedly connived with the other defendants to defraud petitioner-is not sufficient basis for the trial court to order the attachment of respondent's properties. No. UNDER PREVAILING JURISPRUDENCE. Respondent further contends that the trial court. SINCE THESE GROUNDS ALREADY RELATE TO THE MERITS OF CIVIL CASE NO. respondent counters. 00-99006 WHICH. All that the court has to examine are the allegations in the complaint and the supporting affidavit. MOREOVER. it must be shown that the debtor in contracting the debt or incurring the obligation intended to defraud the creditor. 30 The applicant must then be able to demonstrate that the debtor has intended to defraud the creditor.32 we explained as follows: To sustain an attachment on this ground. In the case at bench. Court of Appeals. Connivance cannot also be based on mere association but must be particularly alleged and established as a fact. IT IS RESPECTFULLY SUBMITTED THAT THE COURT OF APPEALS ERRED IN SUSTAINING THE ERRORS IN JUDGMENT ALLEGED BY RESPONDENT. a plaintiff or any proper party may have the property of the adverse party attached as security for the satisfaction of any judgment that may be recovered in the following cases: xxxx (d) In an action against a party who has been guilty of a fraud in contracting the debt or incurring the obligation upon which the action is brought. A writ of attachment can only be granted on concrete and specific grounds and not on general averments quoting perfunctorily the words of the Rules. the applicant must sufficiently show the factual circumstances of the alleged fraud because fraudulent intent cannot be inferred from the debtor's mere non-payment of the debt or failure to comply with his obligation. Grounds upon which attachment may issue. LIKEWISE.IT IS RESPECTFULLY SUBMITTED THAT THE COURT OF APPEALS SHOULD NOT HAVE GIVEN DUE COURSE TO THE PETITION FOR CERTIORARI FILED BY RESPONDENT. among others. CANNOT BE USED AS BASIS (SIC) FOR DISCHARGING A WRIT OF PRELIMINARY ATTACHMENT. 74610 and this Court in G. The fraud must relate to the execution of the agreement and must have been the reason which induced the other party .28 For his part. NOT ONLY BECAUSE THESE ARE BELIED BY THE VERY DOCUMENTS HE SUBMITTED AS PROOF OF SUCH ERRORS.29 We agree with respondent's contentions and deny the petition.31 In Liberty Insurance Corporation v. UNDER PREVAILING JURISPRUDENCE. WHICH. IT IS RESPECTFULLY SUBMITTED THAT THE COURT OF APPEALS COMMITTED SERIOUS LEGAL ERROR IN RESOLVING FAVORABLY THE GROUNDS ALLEGED BY RESPONDENT IN HIS PETITION AND (SIC) LIFTING THE WRIT OF PRELIMINARY ATTACHMENT. Nowhere in the said affidavit does petitioner mention the name of respondent and any specific act committed by the latter to defraud the former. the basis of petitioner's application for the issuance of the writ of preliminary attachment against the properties of respondent is Section 1(d) of Rule 57 of the Rules of Court which pertinently reads: Section 1.-At the commencement of the action or at any time before entry of judgment. BUT ALSO BECAUSE THESE HAD EARLIER BEEN RESOLVED WITH FINALITY BY THE LOWER COURT. need not actually delve into the merits of the case. B. SP No. in resolving the Motion to Discharge Attachment. or in the performance thereof.R. 162928 to support his claim because respondent is not a party to the said cases.

Furthermore.. etc. the court shall refrain from issuing it. strictly construed against the applicant. therefore. that. does not affect respondent . v. the general averment in the affidavit that respondent is an officer and director of Wincorp who allegedly connived with the other defendants to commit a fraud.into giving consent which he would not have otherwise given. to whom liability will directly attach. the trial court acted in excess of its jurisdiction when it issued the writ of preliminary attachment against the properties of respondent. affirmed the writ of attachment issued against the latter. therefore. or without any showing of how respondent committed the alleged fraud.41 The rules governing its issuance are.33 In the instant case. which. because the propriety or impropriety of the issuance of the writ in this case can be determined by simply reading the complaint and the affidavit in support of the application. had a preconceived plan or intention not to pay. No.36 Absent any statement of other factual circumstances to show that respondent. by the way. petitioner has not shown any specific act or deed to support the allegation that respondent is guilty of fraud. compelling is the need to give a hint about what constituted the fraud and how it was perpetrated38 because established is the rule that fraud is never presumed. et al. the mere fact that respondent is an officer and director of the company does not necessarily give rise to the inference that he committed a fraud or that he connived with the other defendants to commit a fraud. this is only done when the wrongdoing has been clearly and convincingly established. an officer and director of Wincorp. We are not unmindful of the rule enunciated in G. 162928. our ruling in G. petitioner has not fully satisfied the legal obligation to show the specific acts constitutive of the alleged fraud committed by respondent. The affidavit. is insufficient to support the issuance of a writ of preliminary attachment. in this case. otherwise.39 Verily.R.. the principle finds no application here because petitioner has not yet fulfilled the requirements set by the Rules of Court for the issuance of the writ against the properties of respondent. it should at once be corrected.40 Let it be stressed that the provisional remedy of preliminary attachment is harsh and rigorous for it exposes the debtor to humiliation and annoyance. as it is in this case. to the effect that the writ of attachment is properly issued insofar as it concerns the properties of Virata and UEM-MARA. No other factual averment or circumstance details how respondent committed a fraud or how he connived with the other defendants to commit a fraud in the transaction sued upon. Fraud is a state of mind and need not be proved by direct evidence but may be inferred from the circumstances attendant in each case.B. Inc.43 Likewise. While under certain circumstances. in G.45 that [t]he merits of the main action are not triable in a motion to discharge an attachment otherwise an applicant for the dissolution could force a trial of the merits of the case on his motion. A debt is fraudulently contracted if at the time of contracting it the debtor has a preconceived plan or intention not to pay. Rule 57 of the Rules of Court.46 However.42 such that if the requisites for its grant are not shown to be all present.R. fraud should be committed upon contracting the obligation sued upon. the writ should not be abused to cause unnecessary prejudice.35 must contain such particulars as to how the fraud imputed to respondent was committed for the court to decide whether or not to issue the writ. being the foundation of the writ. In other words. To constitute a ground for attachment in Section 1 (d). courts may treat a corporation as a mere aggroupment of persons. No. If it is wrongfully issued on the basis of false or insufficient allegations. connived with the other defendants in the civil case to defraud petitioner of his money placements. the affidavit merely states that respondent.44 Considering. 162928.47 The evil sought to be prevented by the said ruling will not arise. Sanchez.37 In the application for the writ under the said ground. the court which issues it acts in excess of its jurisdiction. at the time of contracting the obligation. As to the participation of respondent in the said transaction. The affidavit narrated only the alleged fraudulent transaction between Wincorp and Virata and/or Power Merge. 2000 Affidavit34 is bereft of any factual statement that respondent committed a fraud. explains why this Court. for. petitioner's October 12.

herein. We state. as aforesaid. SO ORDERED.R. SP No. that our ruling herein deals only with the writ of preliminary attachment issued against the properties of respondent-it does not concern the other parties in the civil case. 90130 are AFFIRMED. the petition is DENIED. he is not in the same situation as Virata and UEM-MARA since. 2006 Resolution of the Court of Appeals in CA-G. premises considered. The September 14. WHEREFORE. respondent is "never a party thereto. 2005 Decision and the January 6. while petitioner's affidavit detailed the alleged fraudulent scheme perpetrated by Virata and/or Power Merge. in closing. as correctly ruled by the CA. nor affect the trial court's resolution on the merits of the aforesaid civil case. ."48 Also. only a general allegation of fraud was made against respondent. for.