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SECTION 12

Manila Remnant vs. CA


Insular vs CA
KO Glass vs. Valenzuela (supra)

G.R. No. 144740 August 31, 2005

SECURITY PACIFIC ASSURANCE CORPORATION, Petitioners,


vs.
THE HON. AMELIA TRIA-INFANTE, In her official capacity as Presiding Judge, Regional Trial
Court, Branch 9, Manila; THE PEOPLE OF THE PHILIPPINES, represented by Spouses
REYNALDO and ZENAIDA ANZURES; and REYNALDO R. BUAZON, In his official capacity as
Sheriff IV, Regional Trial Court, Branch 9, Manila, Respondents.

DECISION

CHICO-NAZARIO, J.:

Before Us is a petition for review on certiorari, assailing the Decision1 and Resolution2 of the Court of
Appeals in CA-G.R. SP No. 58147, dated 16 June 2000 and 22 August 2000, respectively. The said
Decision and Resolution declared that there was no grave abuse of discretion on the part of
respondent Judge in issuing the assailed order dated 31 March 2000, which was the subject in CA-
G.R. SP No. 58147.

THE FACTS

The factual milieu of the instant case can be traced from this Courts decision in G.R. No. 106214
promulgated on 05 September 1997.

On 26 August 1988, Reynaldo Anzures instituted a complaint against Teresita Villaluz (Villaluz) for
violation of Batas Pambansa Blg. 22. The criminal information was brought before the Regional Trial
Court, City of Manila, and raffled off to Branch 9, then presided over by Judge Edilberto G.
Sandoval, docketed as Criminal Case No. 89-69257.

An Ex-Parte Motion for Preliminary Attachment3 dated 06 March 1989 was filed by Reynaldo
Anzures praying that pending the hearing on the merits of the case, a Writ of Preliminary Attachment
be issued ordering the sheriff to attach the properties of Villaluz in accordance with the Rules.

On 03 July 1989, the trial court issued an Order4 for the issuance of a writ of preliminary attachment
"upon complainants posting of a bond which is hereby fixed at P2,123,400.00 and the Courts
approval of the same under the condition prescribed by Sec. 4 of Rule 57 of the Rules of Court."

An attachment bond5 was thereafter posted by Reynaldo Anzures and approved by the court.
Thereafter, the sheriff attached certain properties of Villaluz, which were duly annotated on the
corresponding certificates of title.
On 25 May 1990, the trial court rendered a Decision6 on the case acquitting Villaluz of the crime
charged, but held her civilly liable. The dispositive portion of the said decision is reproduced
hereunder:

WHEREFORE, premises considered, judgment is hereby rendered ACQUITTING the accused


TERESITA E. VILLALUZ with cost de oficio. As to the civil aspect of the case however, accused is
ordered to pay complainant Reynaldo Anzures the sum of TWO MILLION ONE HUNDRED
TWENTY THREE THOUSAND FOUR HUNDRED (P2,123,400.00) PESOS with legal rate of interest
from December 18, 1987 until fully paid, the sum of P50,000.00 as attorneys fees and the cost of
suit.7

Villaluz interposed an appeal with the Court of Appeals, and on 30 April 1992, the latter rendered its
Decision,8 the dispositive portion of which partly reads:

WHEREFORE, in CA-G.R. CV No. 28780, the Decision of the Regional Trial Court of Manila, Branch
9, dated May 25, 1990, as to the civil aspect of Criminal Case No. 89-69257, is hereby AFFIRMED,
in all respects.

The case was elevated to the Supreme Court (G.R. No. 106214), and during its pendency, Villaluz
posted a counter-bond in the amount of P2,500,000.00 issued by petitioner Security Pacific
Assurance Corporation.9 Villaluz, on the same date10 of the counter-bond, filed an Urgent Motion to
Discharge Attachment.11

On 05 September 1997, we promulgated our decision in G.R. No. 106214, affirming in toto the
decision of the Court of Appeals.

In view of the finality of this Courts decision in G.R. No. 106214, the private complainant moved for
execution of judgment before the trial court.12

On 07 May 1999, the trial court, now presided over by respondent Judge, issued a Writ of
Execution.13

Sheriff Reynaldo R. Buazon tried to serve the writ of execution upon Villaluz, but the latter no longer
resided in her given address. This being the case, the sheriff sent a Notice of Garnishment upon
petitioner at its office in Makati City, by virtue of the counter-bond posted by Villaluz with said
insurance corporation in the amount ofP2,500,000.00. As reported by the sheriff, petitioner refused
to assume its obligation on the counter-bond it posted for the discharge of the attachment made by
Villaluz.14

Reynaldo Anzures, through the private prosecutor, filed a Motion to Proceed with
Garnishment,15 which was opposed by petitioner16 contending that it should not be held liable on the
counter-attachment bond.

The trial court, in its Order dated 31 March 2000,17 granted the Motion to Proceed with Garnishment.
The sheriff issued a Follow-Up of Garnishment18 addressed to the President/General Manager of
petitioner dated 03 April 2000.

On 07 April 2000, petitioner filed a Petition for Certiorari with Preliminary Injunction and/or
Temporary Restraining Order19 with the Court of Appeals, seeking the nullification of the trial courts
order dated 31 March 2000 granting the motion to proceed with garnishment. Villaluz was also
named as petitioner. The petitioners contended that the respondent Judge, in issuing the order
dated 31 March 2000, and the sheriff committed grave abuse of discretion and grave errors of law in
proceeding against the petitioner corporation on its counter-attachment bond, despite the fact that
said bond was not approved by the Supreme Court, and that the condition by which said bond was
issued did not happen.20

On 16 June 2000, the Court of Appeals rendered a Decision,21 the dispositive portion of which reads:

WHEREFORE, premises considered, the Court finds no grave abuse of discretion on the part of
respondent judge in issuing the assailed order. Hence, the petition is dismissed.

A Motion for Reconsideration22 was filed by petitioner, but was denied for lack of merit by the Court
of Appeals in its Resolution23 dated 22 August 2000.

Undeterred, petitioner filed the instant petition under Rule 45 of the 1997 Rules of Civil Procedure,
with Urgent Application for a Writ of Preliminary Injunction and/or Temporary Restraining Order.24

On 13 December 2000, this Court issued a Resolution25 requiring the private respondents to file their
Comment to the Petition, which they did. Petitioner was required to file its Reply26 thereafter.

Meanwhile, on 17 January 2001, petitioner and the spouses Reynaldo and Zenaida Anzures
executed a Memorandum of Understanding (MOU).27 In it, it was stipulated that as of said date, the
total amount garnished from petitioner had amounted to P1,541,063.85, and so the remaining
amount still sought to be executed wasP958,936.15.28 Petitioner tendered and paid the amount
of P300,000.00 upon signing of the MOU, and the balance of P658,936.15 was to be paid in
installment at P100,000.00 at the end of each month from February 2001 up to July 2001. At the end
of August 2001, the amount of P58,936.00 would have to be paid. This would make the aggregate
amount paid to the private respondents P2,500,000.00.29 There was, however, a proviso in the MOU
which states that "this contract shall not be construed as a waiver or abandonment of the appellate
review pending before the Supreme Court and that it will be subject to all such interim orders and
final outcome of said case."

On 13 August 2001, the instant petition was given due course, and the parties were obliged to
submit their respective Memoranda.30

ISSUES

The petitioner raises the following issues for the resolution of this Court:

Main Issue - WHETHER OR NOT THE COURT OF Appeals committed reversible error in affirming
the 31 march 2000 order of public respondent judge which allowed execution on the counter-bond
issued by the petitioner.

Corollary Issues (1) WHETHER OR NOT THE COURT OF APPEALS CORRECTLY RULED
THAT THE ATTACHMENT ON THE PROPERTY OF VILLALUZ WAS DISCHARGED WITHOUT
NEED OF COURT APPROVAL OF THE COUNTER-BOND POSTED; and (2) WHETHER OR NOT
THE COURT OF APPEALS CORRECTLY RULED THAT THE ATTACHMENT ON THE PROPERTY
OF VILLALUZ WAS DISCHARGED BY THE MERE ACT OF POSTING THE COUNTER-BOND.

THE COURTS RULING


Petitioner seeks to escape liability by contending, in the main, that the writ of attachment which was
earlier issued against the real properties of Villaluz was not discharged. Since the writ was not
discharged, then its liability did not accrue. The alleged failure of this Court in G.R. No. 106214 to
approve the counter-bond and to cause the discharge of the attachment against Villaluz prevented
the happening of a condition upon which the counter-bonds issuance was premised, such that
petitioner should not be held liable thereon.31

Petitioner further asserts that the agreement between it and Villaluz is not a suretyship agreement in
the sense that petitioner has become an additional debtor in relation to private respondents. It is
merely waiving its right of excussion32 that would ordinarily apply to counter-bond guarantors as
originally contemplated in Section 12, Rule 57 of the 1997 Rules.

In their Comment,33 the private respondents assert that the filing of the counter-bond by Villaluz had
already ipso facto discharged the attachment on the properties and made the petitioner liable on the
bond. Upon acceptance of the premium, there was already an express contract for surety between
Villaluz and petitioner in the amount ofP2,500,000.00 to answer for any adverse judgment/decision
against Villaluz.

Petitioner filed a Reply34 dated 09 May 2001 to private respondents Comment, admitting the binding
effect of the bond as between the parties thereto. What it did not subscribe to was the theory that the
attachment was ipso factoor automatically discharged by the mere filing of the bond in court. Such
theory, according to petitioner, has no foundation. Without an order of discharge of attachment and
approval of the bond, petitioner submits that its stipulated liability on said bond, premised on their
occurrence, could not possibly arise, for to hold otherwise would be to trample upon the statutorily
guaranteed right of the parties to contractual autonomy.

Based on the circumstances present in this case, we find no compelling reason to reverse the ruling
of the Court of Appeals.

Over the years, in a number of cases, we have made certain pronouncements about counter-bonds.

In Tijam v. Sibonghanoy,35 as reiterated in Vanguard Assurance Corp. v. Court of Appeals,36 we


held:

. . . [A]fter the judgment for the plaintiff has become executory and the execution is returned
unsatisfied, as in this case, the liability of the bond automatically attaches and, in failure of the
surety to satisfy the judgment against the defendant despite demand therefore, writ of execution may
issue against the surety to enforce the obligation of the bond.

In Luzon Steel Coporation v. Sia, et al.: 37

. . . [C]ounterbonds posted to obtain the lifting of a writ of attachment is due to these bonds being
security for the payment of any judgment that the attaching party may obtain; they are thus mere
replacements of the property formerly attached, and just as the latter may be levied upon after final
judgment in the case in order to realize the amount adjudged, so is the liability of the countersureties
ascertainable after the judgment has become final. . . .

In Imperial Insurance, Inc. v. De Los Angeles,38 we ruled:

. . . Section 17, Rule 57 of the Rules of Court cannot be construed that an "execution against the
debtor be first returned unsatisfied even if the bond were a solidary one, for a procedural may not
amend the substantive law expressed in the Civil Code, and further would nullify the express
stipulation of the parties that the suretys obligation should be solidary with that of the defendant.

In Philippine British Assurance Co., Inc. v. Intermediate Appellate Court,39 we further held that "the
counterbond is intended to secure the payment of any judgment that the attaching creditor may
recover in the action."

Petitioner does not deny that the contract between it and Villaluz is one of surety. However, it points
out that the kind of surety agreement between them is one that merely waives its right of excussion.
This cannot be so. The counter-bond itself states that the parties jointly and severally bind
themselves to secure the payment of any judgment that the plaintiff may recover against the
defendant in the action. A surety is considered in law as being the same party as the debtor in
relation to whatever is adjudged touching the obligation of the latter, and their liabilities are
interwoven as to be inseparable.40

Suretyship is a contractual relation resulting from an agreement whereby one person, the surety,
engages to be answerable for the debt, default or miscarriage of another, known as the principal.
The suretys obligation is not an original and direct one for the performance of his own act, but
merely accessory or collateral to the obligation contracted by the principal. Nevertheless, although
the contract of a surety is in essence secondary only to a valid principal obligation, his liability to the
creditor or promise of the principal is said to be direct, primary and absolute; in other words, he is
directly and equally bound with the principal. The surety therefore becomes liable for the debt or duty
of another although he possesses no direct or personal interest over the obligations nor does he
receive any benefit therefrom.41

In view of the nature and purpose of a surety agreement, petitioner, thus, is barred from disclaiming
liability.

Petitioners argument that the mere filing of a counter-bond in this case cannot automatically
discharge the attachment without first an order of discharge and approval of the bond, is lame.

Under the Rules, there are two (2) ways to secure the discharge of an attachment. First, the party
whose property has been attached or a person appearing on his behalf may post a security. Second,
said party may show that the order of attachment was improperly or irregularly issued.42 The first
applies in the instant case. Section 12, Rule 57,43 provides:

SEC. 12. Discharge of attachment upon giving counter-bond. After a writ of attachment has been
enforced, the party whose property has been attached, or the person appearing on his behalf, may
move for the discharge of the attachment wholly or in part on the security given. The court shall,
after due notice and hearing, order the discharge of the attachment if the movant makes a cash
deposit, or files a counter-bond executed to the attaching party with the clerk of the court where the
application is made, in an amount equal to that fixed by the court in the order of attachment,
exclusive of costs. But if the attachment is sought to be discharged with respect to a particular
property, the counter-bond shall be equal to the value of that property as determined by the court. In
either case, the cash deposit or the counter-bond shall secure the payment of any judgment that the
attaching party may recover in the action. A notice of the deposit shall forthwith be served on the
attaching party. Upon the discharge of an attachment in accordance with the provisions of this
section, the property attached, or the proceeds of any sale thereof, shall be delivered to the party
making the deposit or giving the counter-bond, or to the person appearing on his behalf, the deposit
or counter-bond aforesaid standing in place of the property so released. Should such counter-bond
for any reason be found to be or become insufficient, and the party furnishing the same fail to file an
additional counter-bond, the attaching party may apply for a new order of attachment.
It should be noted that in G.R. No. 106214, per our Resolution dated 15 January 1997,44 we
permitted Villaluz to file a counter-attachment bond. On 17 February 1997,45 we required the private
respondents to comment on the sufficiency of the counter-bond posted by Villaluz.

It is quite palpable that the necessary steps in the discharge of an attachment upon giving counter-
bond have been taken. To require a specific order for the discharge of the attachment when this
Court, in our decision in G.R. No. 106214, had already declared that the petitioner is solidarily bound
with Villaluz would be mere surplusage. Thus:

During the pendency of this petition, a counter-attachment bond was filed by petitioner Villaluz
before this Court to discharge the attachment earlier issued by the trial court. Said bond amounting
to P2.5 million was furnished by Security Pacific Assurance, Corp. which agreed to bind itself "jointly
and severally" with petitioner for "any judgment" that may be recovered by private respondent
against the former.46

We are not unmindful of our ruling in the case of Belisle Investment and Finance Co., Inc. v. State
Investment House, Inc.,47 where we held:

. . . [T]he Court of Appeals correctly ruled that the mere posting of a counterbond does not
automatically discharge the writ of attachment. It is only after hearing and after the judge has
ordered the discharge of the attachment if a cash deposit is made or a counterbond is executed to
the attaching creditor is filed, that the writ of attachment is properly discharged under Section 12,
Rule 57 of the Rules of Court.

The ruling in Belisle, at first glance, would suggest an error in the assailed ruling of the Court of
Appeals because there was no specific resolution discharging the attachment and approving the
counter-bond. As above-explained, however, consideration of our decision in G.R. No. 106214 in its
entirety will readily show that this Court has virtually discharged the attachment after all the parties
therein have been heard on the matter.

On this score, we hew to the pertinent ratiocination of the Court of Appeals as regards the heretofore
cited provision of Section 12, Rule 57 of the 1997 Rules of Civil Procedure, on the discharge of
attachment upon giving counter-bond:

. . . The filing of the counter-attachment bond by petitioner Villaluz has discharged the attachment on
the properties and made the petitioner corporation liable on the counter-attachment bond. This can
be gleaned from the "DEFENDANTS BOND FOR THE DISSOLUTION OF ATTACHMENT", which
states that Security Pacific Assurance Corporation, as surety, in consideration of the dissolution of
the said attachment jointly and severally, binds itself with petitioner Villaluz for any judgment that
may be recovered by private respondent Anzures against petitioner Villaluz.

The contract of surety is only between petitioner Villaluz and petitioner corporation. The petitioner
corporation cannot escape liability by stating that a court approval is needed before it can be made
liable. This defense can only be availed by petitioner corporation against petitioner Villaluz but not
against third persons who are not parties to the contract of surety. The petitioners hold themselves
out as jointly and severally liable without any conditions in the counter-attachment bond. The
petitioner corporation cannot impose requisites before it can be made liable when the law
clearly does not require such requisites to be fulfilled.48 (Emphases supplied.)

Verily, a judgment must be read in its entirety, and it must be construed as a whole so as to bring all
of its parts into harmony as far as this can be done by fair and reasonable interpretation and so as to
give effect to every word and part, if possible, and to effectuate the intention and purpose of the
Court, consistent with the provisions of the organic law.49

Insurance companies are prone to invent excuses to avoid their just obligation.50 It seems that this
statement very well fits the instant case.

WHEREFORE, in view of all the foregoing, the Decision and Resolution of the Court of Appeals
dated 16 June 2000 and 22 August 2000, respectively, are both AFFIRMED. Costs against
petitioner.

SO ORDERED.

Calderon vs. IAC (supra.)

G.R. No. 171741 November 27, 2009

METRO, INC. and SPOUSES FREDERICK JUAN and LIZA JUAN, Petitioners,
vs.
LARA'S GIFTS AND DECORS, INC., LUIS VILLAFUERTE, JR. and LARA MARIA R.
VILLAFUERTE,Respondents.

DECISION

CARPIO, J.:

The Case

This is a petition for review1 of the 29 September 2004 Decision2 and 2 March 2006 Resolution3 of
the Court of Appeals in CA-G.R. SP No. 79475. In its 29 September 2004 Decision, the Court of
Appeals granted the petition for certiorari of respondents Laras Gifts and Decors, Inc., Luis
Villafuerte, Jr., and Lara Maria R. Villafuerte (respondents). In its 2 March 2006 Resolution, the
Court of Appeals denied the motion for reconsideration of petitioners Metro, Inc., Frederick Juan and
Liza Juan (petitioners).

The Facts

Laras Gifts and Decors Inc. (LGD) and Metro, Inc. are corporations engaged in the business of
manufacturing, producing, selling and exporting handicrafts. Luis Villafuerte, Jr. and Lara Maria R.
Villafuerte are the president and vice-president of LGD respectively. Frederick Juan and Liza Juan
are the principal officers of Metro, Inc.

Sometime in 2001, petitioners and respondents agreed that respondents would endorse to
petitioners purchase orders received by respondents from their buyers in the United States of
America in exchange for a 15% commission, to be shared equally by respondents and James R.
Paddon (JRP), LGDs agent. The terms of the agreement were later embodied in an e-mail labeled
as the "2001 Agreement."4

In May 2003, respondents filed with the Regional Trial Court, Branch 197, Las Pias City (trial court)
a complaint against petitioners for sum of money and damages with a prayer for the issuance of a
writ of preliminary attachment. Subsequently, respondents filed an amended complaint5 and alleged
that, as of July 2002, petitioners defrauded them in the amount of $521,841.62. Respondents also
prayed for P1,000,000 as moral damages, P1,000,000 as exemplary damages and 10% of the
judgment award as attorneys fees. Respondents also prayed for the issuance of a writ of preliminary
attachment.

In its 23 June 2003 Order,6 the trial court granted respondents prayer and issued the writ of
attachment against the properties and assets of petitioners. The 23 June 2003 Order provides:

WHEREFORE, let a Writ of Preliminary Attachment issue against the properties and assets of
Defendant METRO, INC. and against the properties and assets of Defendant SPOUSES
FREDERICK AND LIZA JUAN not exempt from execution, as may be sufficient to satisfy the
applicants demand of US$521,841.62 US Dollars or its equivalent in Pesos upon actual attachment,
which is about P27 Million, unless such Defendants make a deposit or give a bond in an amount
equal to P27 Million to satisfy the applicants demand exclusive of costs, upon posting by the
Plaintiffs of a Bond for Preliminary Attachment in the amount of twenty five million pesos
(P25,000,000.00), subject to the approval of this Court.

SO ORDERED.7

On 26 June 2003, petitioners filed a motion to discharge the writ of attachment. Petitioners argued
that the writ of attachment should be discharged on the following grounds: (1) that the 2001
agreement was not a valid contract because it did not show that there was a meeting of the minds
between the parties; (2) assuming that the 2001 agreement was a valid contract, the same was
inadmissible because respondents failed to authenticate it in accordance with the Rules on
Electronic Evidence; (3) that respondents failed to substantiate their allegations of fraud with specific
acts or deeds showing how petitioners defrauded them; and (4) that respondents failed to establish
that the unpaid commissions were already due and demandable.

After considering the arguments of the parties, the trial court granted petitioners motion and lifted
the writ of attachment. The 12 August 2003 Order8 of the trial court provides:

Premises considered, after having taken a second hard look at the Order dated June 23, 2003
granting plaintiffs application for the issuance of a writ of preliminary attachment, the Court holds
that the issuance of a writ of preliminary attachment in this case is not justified.

WHEREFORE, the writ of preliminary attachment issued in the instant case is hereby ordered
immediately discharged and/or lifted.

SO ORDERED.9

Respondents filed a motion for reconsideration. In its 10 September 2003 Order, the trial court
denied the motion.

Respondents filed a petition for certiorari before the Court of Appeals. Respondents alleged that the
trial court gravely abused its discretion when it ordered the discharge of the writ of attachment
without requiring petitioners to post a counter-bond.

In its 29 September 2004 Decision, the Court of Appeals granted respondents petition. The 29
September 2004 Decision provides:
WHEREFORE, finding merit in the petition, We GRANT the same. The assailed Orders are hereby
ANNULLED and SET ASIDE. However, the issued Writ of Preliminary Attachment may be ordered
discharged upon the filing by the private respondents of the proper counter-bond pursuant to Section
12, Rule 57 of the Rules of Civil Procedure.

SO ORDERED.10

Petitioners filed a motion for reconsideration. In its 2 March 2006 Resolution, the Court of Appeals
denied the motion.

Hence, this petition.

The 12 August 2003 Order of the Trial Court

According to the trial court, respondents failed to sufficiently show that petitioners were guilty of
fraud either in incurring the obligation upon which the action was brought, or in the performance
thereof. The trial court found no proof that petitioners were motivated by malice in entering into the
2001 agreement. The trial court also declared that petitioners failure to fully comply with their
obligation, absent other facts or circumstances to indicate evil intent, does not automatically amount
to fraud. Consequently, the trial court ordered the discharge of the writ of attachment for lack of
evidence of fraud.

The 29 September 2004 Decision of the Court of Appeals

According to the Court Appeals, the trial court gravely abused its discretion when it ordered the
discharge of the writ of attachment without requiring petitioners to post a counter-bond. The Court of
Appeals said that when the writ of attachment is issued upon a ground which is at the same time
also the applicants cause of action, courts are precluded from hearing the motion for dissolution of
the writ when such hearing would necessarily force a trial on the merits of a case on a mere
motion.11 The Court of Appeals pointed out that, in this case, fraud was not only alleged as the
ground for the issuance of the writ of attachment, but was actually the core of respondents
complaint. The Court of Appeals declared that the only way that the writ of attachment can be
discharged is by posting a counter-bond in accordance with Section 12,12 Rule 57 of the Rules of
Court.

The Issue

Petitioners raise the question of whether the writ of attachment issued by the trial court was
improperly issued such that it may be discharged without the filing of a counter-bond.

The Ruling of the Court

The petition has no merit.

Petitioners contend that the writ of attachment was improperly issued because respondents
amended complaint failed to allege specific acts or circumstances constitutive of fraud. Petitioners
insist that the improperly issued writ of attachment may be discharged without the necessity of filing
a counter-bond. Petitioners also argue that respondents failed to show that the writ of attachment
was issued upon a ground which is at the same time also respondents cause of action. Petitioners
maintain that respondents amended complaint was not an action based on fraud but was a simple
case for collection of sum of money plus damages.
On the other hand, respondents argue that the Court of Appeals did not err in ruling that the writ of
attachment can only be discharged by filing a counter-bond. According to respondents, petitioners
cannot avail of Section 13,13 Rule 57 of the Rules of Court to have the attachment set aside because
the ground for the issuance of the writ of attachment is also the basis of respondents amended
complaint. Respondents assert that the amended complaint is a complaint for damages for the
breach of obligation and acts of fraud committed by petitioners. 1 a vv p h i 1

In this case, the basis of respondents application for the issuance of a writ of preliminary attachment
is Section 1(d), Rule 57 of the Rules of Court which provides:

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

(d) In an action against a party who has been guilty of fraud in contracting the debt or incurring the
obligation upon which the action is brought, or in the performance thereof; x x x

In Liberty Insurance Corporation v. Court of Appeals,14 we explained:

To sustain an attachment on this ground, it must be shown that the debtor in contracting the debt or
incurring the obligation intended to defraud the creditor. The fraud must relate to the execution of the
agreement and must have been the reason which induced the other party into giving consent which
he would not have otherwise given. To constitute a ground for attachment in Section 1(d), Rule 57 of
the Rules of Court, fraud should be committed upon contracting the obligation sued upon. A debt is
fraudulently contracted if at the time of contracting it the debtor has a preconceived plan or intention
not to pay, as it is in this case.15

The applicant for a writ of preliminary attachment must sufficiently show the factual circumstances of
the alleged fraud because fraudulent intent cannot be inferred from the debtors mere non-payment
of the debt or failure to comply with his obligation.16

In their amended complaint, respondents alleged the following in support of their prayer for a writ of
preliminary attachment:

5. Sometime in early 2001, defendant Frederick Juan approached plaintiff spouses and asked them
to help defendants export business. Defendants enticed plaintiffs to enter into a business deal. He
proposed to plaintiff spouses the following:

a. That plaintiffs transfer and endorse to defendant Metro some of the Purchase Orders
(POs) they will receive from their US buyers;

b. That defendants will sell exclusively and "only thru" plaintiffs for their US buyer;

xxx

6. After several discussions on the matter and further inducement on the part of defendant spouses,
plaintiff spouses agreed. Thus, on April 21, 2001, defendant spouses confirmed and finalized the
agreement in a letter-document entitled "2001 Agreement" they emailed to plaintiff spouses, a copy
of which is hereto attached as Annex "A".
xxx

20. Defendants are guilty of fraud committed both at the inception of the agreement and in the
performance of the obligation. Through machinations and schemes, defendants successfully enticed
plaintiffs to enter into the 2001 Agreement. In order to secure plaintiffs full trust in them and lure
plaintiffs to endorse more POs and increase the volume of the orders, defendants during the early
part, remitted to plaintiffs shares under the Agreement.

21. However, soon thereafter, just when the orders increased and the amount involved likewise
increased, defendants suddenly, without any justifiable reasons and in pure bad faith and fraud,
abandoned their contractual obligations to remit to plaintiffs their shares. And worse, defendants
transacted directly with plaintiffs foreign buyer to the latters exclusion and damage. Clearly,
defendants planned everything from the beginning, employed ploy and machinations to defraud
plaintiffs, and consequently take from them a valuable client.

22. Defendants are likewise guilty of fraud by violating the trust and confidence reposed upon them
by plaintiffs. Defendants received the proceeds of plaintiffs LCs with the clear obligation of remitting
15% thereof to the plaintiffs. Their refusal and failure to remit the said amount despite demand
constitutes a breach of trust amounting to malice and fraud.17 (Emphasis and underscoring in the
original) (Boldfacing and italicization supplied)

We rule that respondents allegation that petitioners undertook to sell exclusively and only through
JRP/LGD for Target Stores Corporation but that petitioners transacted directly with respondents
foreign buyer is sufficient allegation of fraud to support their application for a writ of preliminary
attachment. Since the writ of preliminary attachment was properly issued, the only way it can be
dissolved is by filing a counter-bond in accordance with Section 12, Rule 57 of the Rules of Court.

Moreover, the reliance of the Court of Appeals in the cases of Chuidian v. Sandiganbayan,18 FCY
Construction Group, Inc. v. Court of Appeals,19 and Liberty Insurance Corporation v. Court of
Appeals20 is proper. The rule that "when the writ of attachment is issued upon a ground which is at
the same time the applicants cause of action, the only other way the writ can be lifted or dissolved is
by a counter-bond"21 is applicable in this case. It is clear that in respondents amended complaint of
fraud is not only alleged as a ground for the issuance of the writ of preliminary attachment, but it is
also the core of respondents complaint. The fear of the Court of Appeals that petitioners could force
a trial on the merits of the case on the strength of a mere motion to dissolve the attachment has a
basis.

WHEREFORE, we DENY the petition. We AFFIRM the 29 September 2004 Decision and 2 March
2006 Resolution of the Court of Appeals in CA-G.R. SP No. 79475.

SO ORDERED.

SECTION 13

G.R. No. 76026 November 9, 1988

PORFIRIO JOPILLO, JR., petitioner,


vs.
HON. COURT OF APPEALS, HON. BALTAZAR R. DIZON, ARSENIO C. DE GUZMAN and
RAYMOND LIM,respondents.
GANCAYCO, J.:

By this petition the Court is asked to resolve the question of whether or not a motion to discharge a
writ of attachment should be granted upon presentation of evidence by the party whose property has
been attached to show that the attachment is improper or irregular.

On October 18, 1985, private respondent Raymond Lim filed a complaint for the collection of a sum
of money in the amount of about P100,000.00 with a prayer for preliminary attachment in the
Regional Trial Court of Pasay City. It is alleged in the complaint that petitioner was, among others,
guilty of fraud in contracting the obligation in that from the very beginning he had no intention to pay
the same and that he is disposing of the scrap materials subject of their agreement to defraud
private respondent.

On October 21, 1985, the trial court granted ex-parte the prayer for a writ of preliminary attachment
having found sufficient cause therefor based on the verified complaint and the affidavit of merit
executed by private respondent. The court, however, required the private respondent to file a bond
in the amount of P100,000.00. Pursuant to the said order respondent sheriff Arsenio de Guzman
attached a Chevrolet truck owned by petitioner.

On October 25, 1985, petitioner filed an urgent motion to discharge the writ of attachment in
accordance with Section 13, Rule 57 of the Rules of Court alleging therein that the issuance of the
writ was irregular and improper. At the hearing of the motion, petitioner testified that their agreement
was for simple loans which have been fully paid by way of off-set when he delivered scrap materials
to private respondent on various occasions. In support thereof, petitioner presented receipts
purportedly signed by the secretary of private respondent accepting deliveries of the scrap
materials. 1

The trial court denied petitioner's motion in an order dated November 6, 1985. The trial court held
that the writ of attachment is within the context of the law and instead required Petitioner to put up a
counterbond in the amount equal to the value of the property attached to discharge the writ of
attachment pursuant to Section 12 of Rule 57 of the Rules of Court. Petitioner filed a motion for
reconsideration of said order asking that the writ be discharged in accordance with Section 13 of
Rule 57. It is alleged in the said motion that through his testimony and documentary evidence, he
had established that the allegations in the affidavit of private respondent are not true and thus there
is no cause of action to justify the issuance of a writ of attachment. The lower court denied the
motion in an order dated November 26, 1985.

Hence, the petitioner filed a petition for certiorari with prayer for the issuance of a restraining order or
the writ of preliminary injunction in the then Intermediate Appellate Court. On June 20, 1986, the
appellate court denied due course to the petition and vacated the restraining order it earlier issued
with costs against petitioner. 2

Petitioner now comes to this Court by way of this petition for review assigning the following errors on
the part of the respondent court:

FIRST ERROR

THE RESPONDENT COURT OF APPEALS COMMITTED AN ERROR OF LAW IN


RULING THAT THE PETITION FOR certiorari FILED BEFORE IT BY THE
PETITIONER DID NOT PRESENT ANY JURISDICTIONAL ISSUE.

SECOND ERROR
THE RESPONDENT COURT OF APPEALS COMMITTED AN ERROR OF LAW IN
HOLDING (BY IMPLICATION) THAT RESPONDENT JUDGE DID NOT COMMIT
GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION.

THIRD ERROR

THE RESPONDENT COURT OF APPEALS COMMITTED AN ERROR OF LAW


FOR HAVING ERRONEOUSLY APPLIED IN APPROPRIATE AUTHORITIES AND
JURISPRUDENCE IN RESOLVING THE PETITION FOR CERTIORARI. (Page 12,
Rollo)

The petition is devoid of merit.

Petitioner argues that the respondent judge committed a grave abuse of discretion amounting to lack
of jurisdiction when he refused to order the discharge of the Writ of attachment. He also contends
that having established by evidence that he had paid in full the obligation sued upon, the private
respondent has no cause of action much less a ground to obtain a writ of attachment against him.

Citing National Coconut Corporation vs. Pecson, 3 petitioner alleges that the attachment may be
considered as improperly or irregularly issued when the facts alleged in the private respondent's affidavit
have been shown to be untrue by petitioner. He contends that it is incumbent upon private respondent to
prove the facts in issue either by affidavit or deposition or some form of evidence. 4

In denying due course to the petition, the appellate court made the following disqualification:

The petition does not present any jurisdictional issue, hence, the remedy of certiorari
is unavailable. Generally, when a court has jurisdiction over the subject matter and of
the person, decisions upon all questions pertinent to the cause are decisions within
its jurisdiction and however irregular or erroneous they may be, they cannot be
corrected by certiorari. (Napa vs. Weissenhagen, 29 Phil. 182; Gala vs. Cui and
Rodriguez, 25 Phil. 522; Matute v. Macadael and Medel, J-9325, May 30, 1956;
NAWASA v. Municipality of Libmauan, 20 SCRA 337). And as the respondent court
had jurisdiction to issue the writ of attachment its errors, if any, committed in the
appreciation of the probative value of the facts stated in the petition for the writ and/
or in the motion to discharge the attachment, does (sic) not affect its jurisdiction but
merely the exercise of such jurisdiction. (Galang v. Endencia, 73 Phil. 399) In the
instant case, respondent Judge having acted within the law, there can be no
capricious and whimsical exercise of judgment equivalent to lack of jurisdiction.

Furthermore, a perusal of the records shows that in order to resolve the issue as to
whether petitioner's evidence proves the falsity of private respondent's allegations,
respondent Court would have to go into the merits of the case aside from the
evidence introduced in support of the motion to discharge the attachment. More
particularly, the respondent Court would have to resolve whether the alleged receipts
of deliveries are really genuine, that two (2) truckloads of scrap materials worth
P30,000.00 was actually delivered and whether the amount of P100,000.00 covered
by the "Agreement" was a loan or advance payment for scrap iron that petitioner
promised to deliver. The merits of the action in which a writ of preliminary attachment
has been issued are not triable on a motion for dissolution of the attachment,
otherwise an applicant for the dissolution could force a trial of the merits of the case
in motion (4 Am. Jur. Sec. 635, 934). Accordingly, while it is competent for the Court
<re||an 1w>

to decide whether the affidavits submitted show the existence of a cause of action
against the defendant, this gives no general right to a trial on such motion of the
merits of such cause. (4 Am. Jur. 933, 934)

Moreover, in this instant petition, since petitioner (defendant in the lower court) has
not yet answered the complaint and the principal action is not ready for trial,
respondent Court cannot resolve the issue on the merits of the case. This,
respondent Court: would have to do to rule on the sufficiency of petitioners evidence
or falsity of the allegations contained in private respondent's affidavit for attachment.
Thus, it has been held:

...considering that the grounds invoked by the petitioner for the


issuance of the writ of attachment form the very basis of the
complaint .... a trial on the merits after answer shall have been filed
by respondent, was necessary. In We case the hearing of the "Motion
to Discharge" was held before the issues have been joined, and the
order of the, respondent Judge discharging the attachment would
have the effect of or prejudging the main action ... (G.B. Inc. vs.
Sanchez 98 Phil. 886)

We agree.

Section 13, Rule 57 of the Rules of Court provides:

SEC. 13. Discharge of a attachmnet for improper or irregular issuance.The party


whose property has been may also, at any tame either before or after the release of
the-attached property, or before any attachment shall have been actually levied,
upon reasonable notice to the attaching creditor, apply to the judge who granted the
order, or to the judge of the court in which the action is pending, for an order to
discharge the attachment on the ground that the same was improperly or irregularly
issued. If the motion be made on affidavits on the part of the party whose property
has been attached, but not otherwise, the attaching creditor may oppose the same
by counter-affidavits or other evidence in addition to that on which the attachment
was made. After hearing, the judge shall order the discharge of the attachment if it
appears that it was improperly or irregularly issued and the defect is not cured
forthwith. (Emphasis supplied.)

A motion to discharge a writ of attachment on the ground that the same was improperly or irregularly
issued may be established by the affidavits submitted by the party whose property has been
attached or such other evidence presented at the hearing of the motion. The attaching creditor may
oppose the same by counter-affidavits or other evidence in addition to that with which the
attachment was made.

If the movant establishes that the facts stated in the plaintiffs affidavit or some of them, are shown to
be false or untrue, the writ of attachment may be considered as improperly or irregularly
issued. 5 The determination of the existence of said grounds to discharge a writ of attachment rests in the
sound discretion of the lower court.

In the present case, although the evidence submitted by petitioner tended to show payment of the
obligation subject of the complaint, it appears that the genuineness of the alleged receipt of the
scrap materials which petitioner claims to have delivered to private respondent to offset his
obligation is in issue. Besides, the nature of the agreement and the actual deliveries made of the
scrap materials, among others, are factual issues that must be resolved at the trial on the merits and
not at the hearing of the motion to discharge the writ of attachment. If the private respondent did not
present any counter-affidavit or evidence to counteract what has been adduced by petitioner at the
hearing of the motion, it must be because private respondent believed that it was not necessary. As
it is, the trial court was apparently not persuaded by the evidence presented by petitioner so it
ordered that the writ of attachment be maintained and directed that if petitioner wants a discharge of
the writ, he must put up a bond in accordance with Section 12, Rule 57 of the Rules which
provides

SEC. 12. Discharge of attachment upon giving counterbond.At any time after an
order of attachment has been granted, the party whose property has been attached,
or the person appearing on his behalf, may, upon reasonable notice to the applicant,
apply to the judge who granted the order, or to the judge of the court in which the
action is pending, for an order discharging the attachment wholly or in part on the
security given. The judge shall, after hearing, order the, discharge of the attachment
if a cash deposit is made, or a counterbond executed to the attaching creditor is filed,
on behalf of the adverse party, with the clerk or judge of the court where the
application is made, in an amount equal to the value of the property attached as
determined by the judge, to secure the payment of any judgment that the attaching
creditor may recover in the action. Upon the filing of such counter-bond, copy thereof
shall forthwith be served on the attaching creditor or his lawyer. Upon the discharge
of an attachment in accordance with the provisions of this section the property
attached, or the proceeds of any sale thereof, shall be delivered to the party making
the deposit or giving the counter-bond, or the person appearing on his behalf, the
deposit or counter-bond aforesaid standing in place of the property so released.
Should such counter-bond for any reason be found to be, or become, insufficient,
and the party furnishing the same fail to file an additional counter-bond, the attaching
creditor may apply for a new order of attachment.

However, petitioner insists that the attachment should, he discharged in accordance with Section 13
of Rule 57 and refuses to put up a counterbond as suggested by the court a quo.

As correctly ruled by the respondent appellate court, even assuming that the trial court committed an
error in denying the motion to discharge the writ of attachment the error (if it is an error at all) is an
error in judgment which cannot be corrected through the extraordinary remedy of certiorari but by an
ordinary appeal at the proper time.

Finally, the findings of the trial court an to whether or not the writ of attachment had been improperly
or irregularly issued based on the evidence submitted at the hearing may not be disturbed on appeal
unless there is a showing that it committed a grave abuse of discretion in its exercise. This petitioner
failed to establish.

WHEREFORE, the petition is DISMISSED for lack of merit without pronouncement as to costs.

SO ORDERED.

G.R. No. 84481 April 18, 1989

MINDANAO SAVINGS & LOAN ASSOCIATION, INC. (formerly Davao Savings & Loan
Association) & FRANCISCO VILLAMOR, petitioners,
vs.
HON. COURT OF APPEALS, POLY R. MERCADO, and JUAN P. MERCADO, respondents.
GRIO-AQUINO, J.:

On September 10, 1986, private respondents filed in the Regional Trial Court of Davao City, a
complaint against defendants D.S. Homes, Inc., and its directors, Laurentino G. Cuevas, Saturnino
R. Petalcorin, Engr. Uldarico D. Dumdum, Aurora P. De Leon, Ramon D. Basa, Francisco D.
Villamor, Richard F. Magallanes, Geronimo S. Palermo Felicisima V. Ramos and Eugenio M. De los
Santos (hereinafter referred to as D.S. Homes, et al.) for "Rescission of Contract and Damages" with
a prayer for the issuance of a writ of preliminary attachment, docketed as Civil Case No. 18263.

On September 28, 1986, Judge Dinopol issued an order granting ex parte the application for a writ of
preliminary attachment.

On September 22, 1986, the private respondents amended their complaint and on October 10, 1986,
filed a second amended complaint impleading as additional defendants herein petitioners Davao
Savings & Loan Association, Inc. and its president, Francisco Villamor, but dropping Eugenio M. De
los Santos.

On November 5, 1986, Judge Dinopol issued ex parte an amended order of attachment against all
the defendants named in the second amended complaint, including the petitioners but excluding
Eugenio C. de los Santos.

D. S. Homes. Inc., et al. and the Davao Savings & Loan Association (later renamed Mindanao
Savings & Loan Association, Inc. or "MSLA") and Francisco Villamor filed separate motions to quash
the writ of attachment. When their motions were denied by the Court, D.S. Homes, Inc., et al. offered
a counterbond in the amount of Pl,752,861.41 per certificate issued by the Land Bank of the
Philippines, a banking partner of petitioner MSLA The lower court accepted the Land Bank
Certificate of . Deposit for Pl,752,861.41 as counterbond and lifted the writ of preliminary attachment
on June 5, 1987 (Annex V)

On July 29, 1987, MSLA and Villamor filed in the Court of Appeals a petition for certiorari (Annex A)
to annul the order of attachment and the denial of their motion to quash the same (CA-G.R. SP No.
12467). The petitioners alleged that the trial court acted in excess of its jurisdiction in issuing the ex
parte orders of preliminary attachment and in denying their motion to quash the writ of attachment,
D.S. Homes, Inc., et al. did not join them.

On May 5, 1988, the Court of Appeals dismissed the petition for certiorari and remanded the records
of Civil Case No. 18263 to the Regional Trial Court of Davao City, Branch 13, for expeditious
proceedings. It held:

Objections against the writ may no longer be invoked once a counterbond is filed for
its lifting or dissolution.

The grounds invoked for the issuance of the writ form the core of the complaint and it
is right away obvious that a trial on the merits was necessary. The merits of a main
action are not triable in a motion to discharge an attachment otherwise an applicant
for dissolution could force a trial on the merits on his motion (4 Am. Jur., Sec. 635,
934, cited in G.G. Inc. vs. Sanchez, et al., 98 Phil. 886, 890, 891). (Annex B, p. 185,
Rollo.)

Dissatisfied, the petitioners appealed to this Court.


A careful consideration of the petition for review fails to yield any novel legal questions for this Court
to resolve.

The only requisites for the issuance of a writ of preliminary attachment under Section 3, Rule 57 of
the Rules of Court are the affidavit and bond of the applicant.

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

No notice to the adverse party or hearing of the application is required. As a matter of fact a hearing
would defeat the purpose of this provisional remedy. The time which such a hearing would take,
could be enough to enable the defendant to abscond or dispose of his property before a writ of
attachment issues. Nevertheless, while no hearing is required by the Rules of Court for the issuance
of an attachment (Belisle Investment & Finance Co., Inc. vs. State Investment House, Inc., 72927,
June 30, 1987; Filinvest Credit Corp. vs. Relova, 11 7 SCRA 420), a motion to quash the writ may
not be granted without "reasonable notice to the applicant" and only "after hearing" (Secs. 12 and
13, Rule 57, Rules of Court).

The Court of Appeals did not err in holding that objections to the impropriety or irregularity of the writ
of attachment "may no longer be invoked once a counterbond is filed," when the ground for the
issuance of the writ forms the core of the complaint.

Indeed, after the defendant has obtained the discharge of the writ of attachment by filing a
counterbond under Section 12, Rule 57 of the Rules of Court, he may not file another motion under
Section 13, Rule 57 to quash the writ for impropriety or irregularity in issuing it.

The reason is simple. The writ had already been quashed by filing a counterbond, hence, another
motion to quash it would be pointless. Moreover, as the Court of Appeals correctly observed, when
the ground for the issuance of the writ is also the core of the complaint, the question of whether the
plaintiff was entitled to the writ can only be determined after, not before, a full-blown trial on the
merits of the case. This accords with our ruling G.B. Inc. vs. Sanchez, 98 Phil. 886 that: "The merits
of a main action are not triable in a motion to discharge an attachment, otherwise an applicant for
the dissolution could force a trial on the merits of the case on this motion."

May the defendant, after procuring the dissolution of the attachment by filing a counterbond, ask for
the cancellation of the counterbond on the ground that the order of attachment was improperly
issued? That question was answered by this Court when it ruled in Uy Kimpang vs. Javier, 65 Phil.
170, that "the obligors in the bond are absolutely liable for the amount of any judgment that the
plaintiff may recover in the action without reference to the question of whether the attachment was
rightfully or wrongfully issued."

The liability of the surety on the counterbond subsists until the Court shall have finally absolved the
defendant from the plaintiff s claims. Only then may the counterbond be released. The same rule
applies to the plaintiffs attachment bond. "The liability of the surety on the bond subsists because the
final reckoning is when the Court shall finallyadjudge that the attaching creditor was not entitled to
the issuance of the attachment writ," (Calderon vs. Intermediate Appellate Court, 155 SCRA 531.)

WHEREFORE, finding no reversible error in the decision of the Court of Appeals in CA-G.R. SP No.
12467, the petition for review is denied for lack of merit with costs against the petitioners.

SO ORDERED.

G.R. No. 71535 September 15, 1987

HELENA Z. T. BENITEZ, petitioner-appellee,


vs.
THE INTERMEDIATE APPELLATE COURT, ROSARIO R. VELOSO, in her capacity as Judge of
the Regional Trial Court, National Capital Judicial Region, Branch 133, et al., respondents-
appellants.

YAP, J.:

This is a petition for review on certiorari of the decision of respondent Intermediate Appellate Court
dated July 25, 1985, affirming the questioned orders of the Regional Trial Court of Makati, to wit: (a)
the order dated December 11, 1984, granting the private respondents' petition for a writ of
attachment ex-parte; (b) the order dated January 31, 1985, denying petitioner's urgent motion to
discharge attachment; and (c) the order dated April 24, 1985, denying petitioner's motion for
reconsideration.

The records show that on December 6, 1984, private respondent Casa Filipina Development
Corporation (Casa Filipina for brevity) filed a complaint against herein petitioner Helena T. Benitez
for recission of contract, plus damages, with a prayer for preliminary attachment. The complaint
alleged that sometime on April 16, 1983, the plaintiff Casa Filipina, a real estate corporation,
represented by Renato P. Dragon, and defendant Benitez (the petitioner herein), entered into a
verbal contract whereby Benitez allegedly agreed to undertake to purchase/convey land for Casa
Filipina in the total value of One Million Pesos (P1,000,000.00) within the period of four (4) months
from receipt of the total amount. On the same date, Casa Filipina tendered a check payment in the
amount of Five Hundred Thousand Pesos (P500,000.00) in the name of Benitez. On August 26,
1983, to complete the amount of One Million Pesos as allegedly agreed upon, Casa Filipina issued
again another check in the amount of Five Hundred Thousand Pesos (P500,000.00). Both checks
were deposited and credited in petitioner's bank account. The four-month period allegedly elapsed
without Benitez having purchased nor conveyed any real estate in the total value of One Million
Pesos (P1,000,000.00) in favor of Casa Filipina, but instead Benitez converted the entrusted money
for her own personal use in violation of her fiduciary relationship with plaintiff and that despite
repeated demands for the refund or return of the aforementioned amount, Benitez chose to ignore
the same. Praying for a writ of preliminary attachment, Casa Filipina submitted with its complaint, the
affidavit of one Nestor P. Borromeo, the corporate secretary and acting treasurer of the corporation.

The writ of attachment was granted by respondent court exparte in an order dated December 11,
1985.

On December 27, 1984, the Clerk of Court issued a writ of preliminary attachment, by virtue of which
the respondent Sheriff served notices of garnishment to the Philippine Women's University, Taft
Avenue, Manila, the Unlad Development Resources Corporation and Bank of the Philippine Islands,
Unlad Condominium, Taft Avenue, Manila, thereby garnishing the deposits, shares of stocks,
salaries and other personal property of the petitioner. Likewise on January 30, 1984, petitioner was
advised by the Acting Register of Deeds of Quezon City that a notice of levy was filed with the
Registrar's Office affecting two parcels of prime land at Mariposa Street, with an aggregate area of
4,304 square meters which are owned by and registered in the name of the petitioner.

Earlier on January 21, 1985, Benitez filed an answer with counterclaim and opposition to the petition
for issuance of a writ of preliminary attachment. On the same date, Benitez also filed an Urgent
Motion to Discharge Writ of Preliminary Attachment under Section 13, Rule 57 of the Rules of Court,
on the ground that the same was improperly or irregularly issued. Benitez alleged that sometime in
March 1983, Mr. Renato Dragon, acting for himself and Casa Filipina agreed to buy ten (10)
hectares of petitioner's land in Dasmarinas, Cavite, for a price of P15.00 per square meter or for a
total consideration of One Million Five Hundred Thousand Pesos (P1,500,000.00); that it was agreed
upon by the parties that it is only upon full payment of the amount of P1,500,000.00 that delivery of
the ten-hectare property of the petitioner will be made; that Casa Filipina was not able to comply with
the obligation to pay the balance of P500,000.00 despite repeated demands and instead filed the
present action for recission.

In support of its urgent motion to discharge the writ of preliminary attachment, petitioner attached
thereto the affidavit of her technical assistant and attorney-in-fact by the name of Virginia Real, who
alleged. among other things, that she knows for a fact that the transaction between Benitez and
Dragon for Casa Filipina, was one of purchase and sale; that a copy of TCT No. 9833 covering the
land to be purchased was furnished the office of Mr. Dragon on February 28, 1984; that petitioner is
willing and able to execute a deed of absolute sale in favor of Casa Filipina upon full payment of the
balance of P500,000.00.

The said motion was set for hearing on January 25, 1985 but the private respondent and its counsel
failed to appear despite notice. Consequently, the motion was deemed submitted for resolution.

On January 31, 1985, respondent Court denied petitioner's motion to discharge writ of preliminary
attachment. The said order reads:

Considering defendant's motion to quash and/or lift the writ of preliminary attachment issued by this
Court upon properties of defendant on the ground that the same was predicated upon false and
untrue allegations, the Court believes and so rules that the issue cannot be determined without
adducing evidence at the same time going into the merits of the case which in the opinion of the
Court could not be done at this stage of the proceedings.

Considering that the writ of preliminary attachment was issued after having satisfied the
requirements of the rules, the same may not be lifted or discharged without the defendant filing a
counterbond.

WHEREFORE, the motion to lift and/or discharge the writ of preliminary attachment is hereby
denied.

SO ORDERED.

On February 5, 1985, despite the lower court's denial of petitioner's motion to discharge preliminary
attachment, the private respondent filed a belated opposition to the said motion, to which the
petitioner filed a reply a February 18, 1985.

On March 14, 1985, petitioner discovered that her motion to discharge preliminary attachment was
denied. Hence, on March 20, 1985, petitioner filed a motion for reconsideration which was likewise
denied by respondent judge on April 24, 1985, Whereupon, a petition for certiorari, mandamus and
prohibition was filed by the petitioner before respondent Intermediate Appellate Court, which, as
stated earlier, was dismissed for I acknowledge of merit. Hence, this petition.

On January 8, 1986, the Court gave due course to the petition and required the parties to submit
their memoranda.

Petitioner poses the following questions for resolution, to wit:

1. Whether a counter-attachment bond is necessary and indispensable under the circumstances


before the subject writ of preliminary attachment may be recalled, quashed and/or discharged?

2. Whether or not the issue on the propriety of the issuance of the subject writ may be resolved
without going into the merits of the principal action?

We find the petition meritorious.

The attachment was granted by the lower court ex-parte under Section 1 (b), Rule 57, Rules of
Court, upon the allegation of respondent Casa Filipina, that petitioner Helena Benitez, the defendant,
had violated their alleged fiduciary relationship and had unlawfully converted the amount of
P1,000,000.00 for her own use. Petitioner promptly filed an urgent motion to discharge writ of
preliminary attachment for improper or irregular issuance, supported by the affidavit of Virginia Real,
who alleged that there was no fiduciary relationship between the plaintiff and defendant inasmuch as
the transaction between them was one of sale of real property. Thus, in effect, the petitioner claims
that the private respondent's allegation of fraud was false, that hence there was no ground for the
attachment, and that consequently, the attachment order was improperly or irregularly issued.

In Villongco, et al. vs. Hon. Panlilio, et al., 1 we held that the affidavit supporting the petition for the issuance of the
preliminary attachment may have been sufficient to justify the issuance of the preliminary writ, but it cannot be considered as proof of the
allegations contained in the affidavit, which are mere conclusions of law, not statement of facts. Petitioner in the instant case having squarely
controverted the private respondent's allegation of fraud, it was incumbent on the latter to prove its allegation. The burden of proving that
there indeed was fraud lies with the party making such allegation. This finds support in Section 1, Rule 131 of the Rules of Court which
provides: "Each party must prove his own affirmation allegations. . . . The burden of proof lies on the party who would be defeated if no
evidence were given on either side." In this jurisdiction, fraud is never presumed. 2

The petitioner's Urgent Motion to Discharge Writ of Preliminary Attachment was filed under Section
13, Rule 57. The last sentence of said provision indicates that a hearing must be conducted by the
judge for the purpose of determining whether or not there really was a defect in the issuance of the
attachment.

It appears from the records that no hearing was conducted by the lower court. Indeed, when the
case was called for hearing, the plaintiff (private respondent herein), failed to appear and the
petitioner's motion was considered submitted for resolution.

Private respondent has alleged in its memorandum that petitioner did not file an affidavit in support
of her Urgent Motion to Discharge Attachment, as required under Section 13 of Rule 57, hence, it
was not necessary or imperative that a hearing be held. The Court finds private respondent's
allegation to be irresponsible, for attached to petitioner's motion was the supporting affidavit of
Virginia L. Real, the technical assistant of petitioner Benitez. In her affidavit, she stated that she had
personal knowledge of the transaction between respondent Casa Filipina and petitioner Benitez; that
Mr. Renato Dragon, for himself and/or Casa Filipina, agreed to buy a portion consisting of 10
hectares of a parcel of land belonging to Benitez in Dasmarinas, Cavite, for the total price of
P1,500,000.00 of which private respondent made a downpayment of P500,000.00 on April 16, 1983;
and a second payment of P500,000.00 on August 27, 1983; that private respondent having failed to
pay the balance of P500,000.00, the deed of sale could not be executed in favor of private
respondent. The record amply supports petitioner's version, as against the private respondent's
allegation that Benitez had acted as agent in receiving the money and converted the same for her
own use in violation of the fiduciary relationship existing between her and private respondent. Private
respondent acknowledged the receipt of a xerox copy of TCT No. 9833 covering petitioner's land in
Dasmarinas, Cavite, 3 and the check voucher issued by private respondent on April 16, 1983 showed
that the check for P500,000.00 was for "Payment for downpayment of lot to be purchased" 4 and the
check voucher dated August 27, 1983 for P500,000.00 was for "Second payment for lot to be
purchased." 5

It was grave abuse of discretion on the part of respondent Judge Rosario Veloso to deny petitioner's
Urgent Motion to Discharge Writ of Preliminary Attachment, without conducting a hearing and
requiring the plaintiff to substantiate its allegation of fraud. Neither can respondent Judge avoid
deciding the issue raised in petitioner's urgent motion by ruling that "the issue cannot be determined
without adducing evidence at the same time going into the merits of the case." Having issued the
writ of preliminary attachment ex parte, it was incumbent on the respondent court, upon proper
challenge of its order, to determine whether or not the same was improvidently issued. A preliminary
attachment is a rigorous remedy which exposes the debtor to humiliation and annoyance, such that
it should not be abused to cause unnecessary prejudice and, if wrongfully issued on the basis of
false allegation, should at once be corrected.

We agree with petitioner that a writ of attachment may be discharged pursuant to Section 13, Rule
57, without the necessity of filing a cash deposit or counterbond. The provisions of the aforesaid
section grants an aggrieved party relief from baseless and unjustifiable attachments procured,
among others, upon false allegations, without having to file any cash deposit or counterbond.

WHEREFORE, in view of the foregoing, the appealed decision is hereby reversed and the ex
parte writ of preliminary attachment issued by the respondent Regional Trial Court on December 11,
1984 is ANNULLED and SET ASIDE. Costs against private respondent.

SO ORDERED.

Davao Light vs. CA


Cuartero vs. CA (supra)

G.R. No. L-43461 December 16, 1937

J. UY KIMPANG & CO., plaintiff-appellant,


vs.
VICENTE JAVIER, ET AL., defendants;
JUAN AUTAJAY and SEVERINO MAGBANUA, sureties-appellees.

DIAZ, J.:

By virtue of a writ of execution issued by the Court of First Instance of Antique on August 8, 1933 to
enforce the payment to the plaintiff of the sum of P6,678.84 plus interest and costs, which the
defendants Vicente Javier, Ramon Majandog, Zenon Javier, Paz Javier with her husband Hugo
Mabaquiao and Ramon Maza, in case G. R. No. 36414 1 (civil case No. 1253 of the Court of First
Instance of Antique), were sentenced by this court to pay, the sheriff of the aforesaid province levied upon
the seven parcels of land belonging to the defendant Ramona Majandog and enumerated in the return of
said sheriff of September 9, 1933 for the purpose of selling, as he in fact later sold, them at public auction
to the highest bidder who was found in the person of Uy Cay Ju, manager of the plaintiff entity, for the
sum of only P1,730. In view of the fact that this sum was not sufficient to cover the full value of the
judgment and that the defendants failed to deliver to the sheriff the properties which were released from
the attachment by the virtue of the obligation which, on December 29, 1925 and the approval of the court,
they executed jointly with their sureties Severino Magbanua and Juan Autajay, the plaintiff in its motion of
January 23, 1934 moved the court to again order the execution of the aforesaid judgement, but this time
against the properties of two sureties. The surety Juan Autajay objected to the plaintiff's motion on the
grounds: (1) That the attachment of the properties of the defendants was null and void because it does
not appear that they were served with a copy of the writ ordering the same; (2) that said attachment was
not inscribed in the registry of properties; (3) that he (Autajay) was released from his obligation as surety
because his undertaking had been cancelled when the court, in its order of February 15, 1930, permitted
him to withdraw therefrom; (4)that the undertaking should in any event be enforced exclusively against
the other surety (Severino Magbanua) inasmuch as he did not withdraw therefrom.

After passing upon the question raised by Juan Autajay, the lower court, in its order of July 18, 1934,
denied the plaintiff's motion for the following reasons:

(a) That in view of the amount in litigation (P9,352), the justice of the peace of the capital of antique,
even in the absence of the Judge of First Instance of said province, had no power to issue the writ of
attachment in question;

(b) That the issuance of the said writ by the clerk was illegal, because only the justices and the
judges of First Instance may issue such writs, and their power cannot in any case be delegated to
the clerk;

(c) That there was no valid attachment because, aside from the fact that the basic writ was not
signed by any judge, the obligation executed by the plaintiff was not approved by the court; and

(d) that, in violation of the provisions of section 440 of Act No. 190, the discharge of the attachment
levied upon the properties of the defendants was not ordered.

The plaintiff duly appealed from the order denying his motion and now contends that the lower court
erred:lawphil.net

1. In holding that the justice of the peace of the capital of Antique could not issue the writ of
attachment because the amount sued for was in excess of that provided by law in the cases in which
justice of the peace of the provincial capitals may order an attachment;

2. In holding that the writ of attachment was illegal because it was issued by the clerk and not by the
judge, and that the order authorizing the clerk to issue the same was likewise illegal because it
conferred powers which under the law could not be delegated;

3. In holding that the properties of the defendants were not validly attached, because the writ of
attachment was not signed by the judge;

4. In holding that the obligation executed by the plaintiff was not valid, because it was not approved
by the court;

5. In holding that the counterobligation executed by Juan Autajay and Severino Magbanua is without
any legal effect;
6. In holding that the plaintiff has no right to enforce the counterobligation signed by Juan Autajay
and Severino Magbanua, and in denying its motion for the enforcement thereof; and

7. In not granting its motion for reconsideration and in denying its motion for new trial. lawphil.net

The background necessary to a better grasp of the facts of the case may be briefly stated as follows:
On December 20, 1925 the plaintiff filed in the Court of First Instance of Antique a verified complaint
in which it alleged among other things that the defendant were indebted to it in the sum of P9,352
plus interest from May, 1918, at the rate of 12 per cent per annum; that the defendants were
disposing or about to dispose of their properties with intent to defraud their creditors and the plaintiff;
that in order to secure plaintiff's rights, it was necessary to attach the properties of said defendants,
unless they were willing to execute an obligation as guaranty for their solvency; and that to obtain
such remedy, it was ready to execute the requisite obligation. Four days later, or on December 24,
1925, the plaintiff filed a motion in which, after reiterating the allegations of its complaint, it was
prayed that a writ of attachment be issued against the defendant. The justice of the peace of the
capital of Antique, acting in the place of the Judge of the Court of First Instance of said province,
ruled favorably on the plaintiff's motion and stated the following in his order of December 24, 1925.

Wherefore the court, being of the opinion that the plaintiff entity is entitled thereto, hereby
orders the clerk of court to issue a writ of attachment against the properties of the said
defendants upon the execution by the plaintiff of an obligation in the sum of P9,500 which will
respond for the damages recoverable by the defendants in case the court decides this case
in their favor.

So ordered.

San Jose, Antique, P.I., December 24, 1925.


(Sgd.) DELFIN HOFILEA
Justice of the Peace of the Capital
of San Jose, Antique, acting in the
Seventeenth District.

After the plaintiff had executed the obligation in the sum of P9,500 as required in this order, issued
on December 29,1925 the writ of attachment in question, notwithstanding the fact that the aforesaid
obligation was not yet approved.

The provincial sheriff, upon receipt of the writ, attached the properties belonging to defendants and
enumerated in the sheriff's return, the assessed value of which was noted at the bottom of said
return. On the same day, December 29, 1925, the defendants executed a counterobligation in the
sum of P9,500 with a view to dissolving the attachment levied upon their properties. Said
counterbond, which was approved on the same date by the justice of the peace who issued the
order of attachment, was signed by all the defendant and their sureties Juan Autajay and Severino
Magbanua who bound themselves jointly and severally thereunder.

On March 29, Juan Autajay prayed that he be permitted to withdraw from his obligation as surety of
the defendant. In view, however, of the opposition registered by the plaintiff in which it was alleged
that the purpose of Juan Autajay was merely to evade the performance of an obligation voluntarily
contracted and to defeat the judgment which might be entered in plaintiff's favor, the trial court
denied the motion in its order of April 17, 1926 the dispositive part of which reads as follows:
The court, after hearing the arguments of both parties, sustains the demurrer, admits the
amended complaint, and denies the motion of Juan Autajay, unless the defendant Vicente
Javier should execute a new obligation within the period of thirty days.

Two other similar motions were filed by Autajay and by the surety Magbanua on November 21 and
December 17, 1927, but they were not acted upon by the court for lack of prosecution. On January
31, 1930, Autajay filed another motion, the plaintiff objected; but the trial court granted the same
under the conditions expressed in the order of February 15, 1930 to wit:

Considering the motion of the surety Juan Autajay and the statement of the Attorney Hon.
Segundo C. Moscoso in representation of the defendants Vicente Javier and other the
withdrawal of the movant Juan Autajay is hereby granted and said defendants are given sixty
days within which to submit to the court for approval another obligation in substitution for the
one to be rendered ineffective by the withdrawal of the surety Juan Autajay.

The fact, however, remains that the defendant did not execute the new obligation required in the
foregoing order.

I. The question raised under the first error alleged to have been resolve by this court in an analogous
case wherein it was held that the justice of the peace of the capital acting "in the absence of the
Justice of First Instance" has the power to issue an order of attachment in spite of the fact that the
amount litigated is in excess of that fixed by law for his ordinary jurisdiction. (Wise & Co. vs. Larion,
45 Phil., 314.)

Section 1, paragraph 4, of act No. 2131 which was in force on December 24, 1925, the date of the
attachment, provides that the justice of the peace in the capitals of provinces organized under the
Provincial Government Act, in the absence of the judge of the province, may exercise within the
province like interlocutory jurisdiction as that of the said judge, including the appointment of
receivers and the issuance of all other orders which are final and do not involve, as the attachment
under consideration, a decision of the case on its merits.

The defendants failed to prove that the Judge of the Court of First Instance of Antique was then
holding sessions in said province; and, in the absence of proof to the contrary, the legal presumption
being that official duty has been regularly performed (sec. 334, No. 14, Act No. 190), it much be held
that said judge was absence from his district on December 24, 1925. It must follow that the justice of
the peace of the capital acted in full conformity with the law in issuing the aforesaid order.

II. There is no doubt that, under the provisions of sections 425, 426 and 427 of Act No. 190, only the
justice, judges of First Instance, and justices of the peace or municipal judges may issue an order of
attachment when prayed for, provided the legal requisites are present. In the case at bar all the
requirements of the law were complied with. Inasmuch as the order of December 24, 1925 under
which the questioned writ of attachment was issued, was entered by a competent judge, it cannot be
alleged that said writ was a mere capricious act of the clerk. On the contrary, it may and should be
inferred that the writ was issue in strict compliance with a perfectly valid order given to him. The law
does not provide or state that the writs of attachment must be issued by the very justice or judge
who is to authorize it; it simply determines the judicial authority who shall have the power to grant an
attachment. Even supposing that the writ in dispute is defective because it was not signed by the
judge who authorized its issuance, it is now too late to raise the question after the same was
accepted and believed to be valid not only by the defendants but by their sureties. It is noteworthy
that in their counterobligation they made it understood that they were aware of the issuance of a writ
of attachment against the defendants; that the properties of the latter had been attached by the
sheriff; that all wanted or at least prayed that said attachment be discharged; and that they offered to
execute, as in fact they immediately did execute, the counterobligation required. The general rule is
that "irregularities and defects in attachment or garnishment proceedings which render the
attachment merely voidable and not void, are deemed to be waived unless promptly taken
advantage of by appropriate mode of raising objection thereto." (4 Am. Jur., par., 616, p. 923.)

In case of Hammond vs. Starr (79 Cal., 556, 559; 21 Pac., 971), it was held that:

Irregularities in affidavit and undertaking or in proceedings to procure attachment, if waived


in attachment suit, cannot be taken advantage of by sureties in collateral proceedings on
undertaking given to secure release of attachment.

In the case of Moffitt vs. Garrett, the supreme Court of Oklahoma (100 Pac. Rep., 533), construing
two legal provisions of said State, 4404 and 4376 (4851 and 4821), which are analogous to section
440 of Act No. 190, and adhering to the decisions of the court of Iowa, New York, Illinois, Wisconsin,
Michigan, Minnesota, Texas, Washington, Rhode Island, California, Oregon, North Dakota and
South Dakota, held that:

The court in these states have held that the execution of a bond under and in accordance
with these statutes estops the defendant from controverting the attachment, and renders the
obligors in the bond absolutely liable for the amount of any judgment the plaintiff recovers in
the action, without reference to the question whether the attachment was rightfully or
wrongfully sued out. And concluded that:

The obligors in the bond are precluded and estopped from traversing the truth of the
allegations of the affidavit, or setting up that the defendant in attachment was not the owner
of the property levied on.

What has been stated also disposes of the contention advanced by the sureties-appellees to the
effect that the defendants were not given a copy of the order of attachment, which is an essential
requisite prescribed by section 429 of Act No. 190. The Inference must be drawn that they were
notified of said order; otherwise, they would not have stated in their counterobligation that:

"The defendant having prayed for the discharge of the attachment levied upon his properties in an
action pending in the Court of First Instance of the Province of Antique, Philippines Island, in which
J. Uy Kimpang & Co. is plaintiff and Vicente Javier and Others, defendant, . . . ." The other
contention that the plaintiff's motion praying for the issuance of a attachment was not sworn to as
required by law, is likewise disposed of. It was unnecessary that the same should be under oath
because it was merely a repetition or renewal of what was already prayed for in the complaint which
was verified. In order not to nullify the purposes of the law, technicalities should be disregarded,
especially when, as in the case under advisement, there was substantial compliance therewith. On
the other hand, the law enjoins that the provisions of the Code of Civil Procedure shall be liberally
construed in order to promote its object and assist the parties in obtaining speedy justice, bearing in
mind, in construing and applying them, their spirit and purpose, rather than their strict letter (sec. 2,
Act No. 190, Garcia vs. Ambler and Sweeney, 4 Phil., 81).

The conditions of the counterobligation executed by the defendants and the sureties-appellees are
as follows:

Should the judgment be favorable to the plaintiff, the defendant, upon being required, shall
redeliver to the officer of the court the property discharge from the attachment, in order that it
may be applied to the payment of the judgment, and in case of failure to do so , the
defendant and his sureties, when required, shall pay to the plaintiff the full value of attached
property. (Page 16, Bill of Exceptions.)

It must be remembered that the defendants and the sureties-appellees not only failed to object to the
procedure followed by the clerk but, as already stated, executed the counterobligation required by
law for discharge of the attachment levied upon the properties of the defendant, and that Autajay
and Magbanua were the ones who signed the counterobligation as sureties and submitted the same
to the justice of the peace of the capital for approval. It must also be remembered that in all the
motions which they subsequently filed in these proceedings, the said sureties confined themselves
to the request that they be permitted to withdraw from their obligation for the reason that it was
against their interest to continue being sureties of the defendants. Under these circumstances, we
believe we should adhere to the rule that:

All objections to the writ will be waived by moving to set aside the attachment on other
grounds and failing to make the objections before bond for the release of the property. (6
C.J., par. 346, p. 190.)

because,

After issue made and trial begun upon the merits of a case, it is too late for an objection of
the petition or attachment for want of verification. (Id.)

For the reasons given, we hold that the trial court committed the second error assigned by the
appellant.

III. The question whether or not there was valid attachment is impliedly resolved in the discussion of
the appellant's second assignment of error. The omission referred to by the trial court could be
supplied and was not in any wise capital, because, as already said, the writ signed by the clerk was
issued by him in compliance with the order entered on December 24, 1925 by the justice of the
peace of the capital who was authorized by law (Act No. 2131) to do so in the absence of the Judge
of First Instance of the District.

IV Inasmuch as both the defendants and the sureties-appellees, by executing the counterobligation
required by law for the discharge of the attachment, had accepted the obligation filed by the plaintiff
with the justice of the peace of the capital for the issuance of the writ of attachment against the
defendants, it is now too late and futile to allege that the said obligation is invalid for lack of approval
by the judge. They are estopped from doing so by their own acts, inasmuch as their failure to
question the said obligation at the proper time constitutes a waiver of their right. One who has any
objection to the sufficiency or validity of an obligation in attachment proceedings, should record the
same before executing the counterobligation required for the discharge of the attachment; otherwise,
it will be understood that he does not question, or that he renounces his right to question, the
sufficiency or validity of the said obligation.

V. There is no importance in the fact that it does not appear in the record that the court had
dissolved, after the approval of the aforesaid counterobligation, the attachment levied upon the
properties of the defendants. It must be assumed that the court discharged it by virtue of the said
counterobligation; otherwise, the reason for approving it cannot be explained, and said approval
would have no finality.

In the case of Rosenthal (123 Cal., 240), where a similar question was involved, the court said:
Where the goods were in fact released as a consequence of the bond being given, and the
undertaking for the released of the attached property recited that it was given pursuant to an
order of the court requiring it to be given, and the officer accepted the bond and surrendered
the property, it must be presumed that an order discharging the attachment was made . . .
and that the officer regularly performed his duty in releasing the goods.

VI and VII. Inasmuch as the trial court committed the preceding five errors, it must follow that it also
committed errors 6 and 7 which are a necessary consequence thereof. The counterobligation
executed by the sureties-appellees is enforceable under the provisions of section 440 of Act No. 190
(Bautista vs. Joaquin, 46 Phil., 885), because, when the defendants were required to deliver to the
sheriff the properties released from the attachment, they could not do so, as at least three of said
properties (Exhs. A, B and E of the opposition of the appellee Juan Autajay, dated June 11, 1934)
were sold after their release, and the appellees failed to proved that the defendants had other
properties susceptible of attachment and execution.

It is superfluous to state that there is no basis for the contention of the appellee Juan Autajay that he
was released from his obligation as surety of the defendants, because he was never so released in
view of the failure of the defendants to execute the new obligation required by the order of February
15, 1930 which has hereinbefore been referred to.

Wherefore, the order of July 18, 1934 is set aside and the lower court is ordered to issue another
writ of execution against the properties of the sureties-appellees, to the extent of the value of their
obligation of December 29, 1925, with a view to satisfying the unpaid portion of the judgment
rendered in civil case No. 1253 of the Court of First Instance of Antique, without prejudice to the right
of the said sureties to recover from the defendants the amount that may be paid by virtue of the
execution herein ordered. The costs will be assessed against the appellees. So ordered.

G.R. No. L-50378 September 30, 1982

FILINVEST CREDIT CORPORATION, petitioner,


vs.
THE HONORABLE JUDGE BENJAMIN RELOVA (In his capacity as Presiding Judge of the
Court of First Instance of Manila, Branch XI) and ERNESTO SALAZAR, respondents.

GUERRERO, J.:

This is a special civil action for certiorari, with prayer for restraining order or preliminary injunction,
filed by petitioner Filinvest Credit Corporation seeking to annul the Orders issued by respondent
Judge dated February 2, 1979 and April 4, 1979 in Civil Case No. 109900.

As shown by the records, the antecedents of the instant Petition are as follows:

On August 2, 1977, Filinvest Credit Corporation (hereinafter referred to as FILINVEST) filed a


complaint in the lower court against defendants Rallye Motor Co., Inc. (hereinafter referred to as
RALLYE) and Emesto Salazar for the collection of a sum of money with damages and preliminary
writ of attachment. From the allegations of the complaint, 1 it appears that in payment of a motor
vehicle described as: "One (1) Unit MAZDA DIESEL SCHOOL BUS, Model: E4100, Serial No.: EXC43P-
02356, Motor No.: Y-13676," Salazar executed a promissory note dated May 5, 1977 in favor of RALLYE
for the amount of P99,828.00. To secure the note, Salazar also executed in favor of RALLYE a deed of
chattel mortgage over the above described motor vehicle. On May 7, 1977, RALLYE, for valuable
consideration, assigned all its rights, title and interest to the aforementioned note and mortgage to
FILINVEST. Thereafter, FILINVEST came to know that RALLYE had not delivered the motor vehicle
subject of the chattel mortgage to Salazar, "as the said vehicle (had) been the subject of a sales
agreement between the codefendants." Salazar defaulted in complying with the terms and conditions of
the aforesaid promissory note and chattel mortgage. RALLYE, as assignor who guaranteed the validity of
the obligation, also failed and refused to pay FILINVEST despite demand. According to FILINVEST, the
defendants intentionally, fraudulently and with malice concealed from it the fact that there was no vehicle
delivered under the documents negotiated and assigned to it, otherwise, it would not have accepted the
negotiation and assignment of the rights and interest covered by the promissory note and chattel
mortgage. Praying for a writ of preliminary attachment, FILINVEST submitted with its complaint the
affidavit of one Gil Mananghaya, pertinent portions of which read thus:

That he is the Collection Manager, Automotive Division of Filinvest Credit


Corporation;

That in the performance of his duties, he came to know of the account of Ernesto
Salazar, which is covered by a Promissory Note and secured by a Chattel Mortgage,
which documents together with all the rights and interest thereto were assigned by
Rallye Motor Co., Inc.;

That for failure to pay a stipulated installment, and the fact that the principal debtor,
Ernesto Salazar, and the assignor, Rallye Motor Co., Inc. concealed the fact that
there was really no motor vehicle mortgaged under the terms of the Promissory Note
and the Chattel Mortgage, the entire amount of the obligation stated in the
Promissory Note becomes due and demandable, which Ernesto Salazar and Rallye
Motor Co., Inc. failed and refused to pay, so much so that a sufficient cause of action
really exists for Filinvest Credit Corporation to institute the corresponding complaint
against said person and entity;

That the case is one of those mentioned in Section 1, Rule 57 of his Rules of Court,
particularly an action against parties who have been guilty of a fraud in contracting
the debt or incurring the obligation upon which the action is brought;

That there is no other sufficient security for the claim sought to be enforced by the
action, and that the amount due to the applicant Filinvest Credit Corporation is as
much as the sum for which the order is granted above all legal counterclaims;

That this affidavit is executed for the purpose of securing a writ of attachment from
the court. 2

The specific provision adverted to in the above Affidavit is Section 1(d) of Rule 57 which includes "an
action against a party who has been guilty of fraud in contracting the debt or incurring the obligation
upon which the action is brought, or in concealing or disposing of the property for the taking,
detention or conversion of which the action is brought" as one of the cases in which a "plaintiff or any
proper party may, at the commencement of the action or at any time thereafter, have the property of
the adverse party attached as security for the satisfaction of any judgment that may be recovered."

Judge Jorge R. Coquia (now Justice of the Court of Appeals), then presiding Judge of the lower
court, granted the prayer for a writ of attachment in an Order dated August 17, 1977 stating that:

Finding the complaint sufficient in form and substance, and in view of the sworn
statement of Gil Mananghaya, Collection Manager of the plaintiff that defendants
have committed fraud in securing the obligation and are now avoiding payment of the
same, let a writ of attachment issue upon the plaintiff's filing of a bond in the sum of
P97,000.00.

In the meantime, let summons issue on the defendants. 3

More than a year later, in an Urgent Motion dated December 11, 1978, 4 defendant Salazar prayed
that the writ of preliminary attachment issued ex parte and implemented solely against his property be
recalled and/or quashed. He argued that when he signed the promissory note and chattel mortgage on
May 5, 1977 in favor of RALLYE, FILINVEST was hot vet his creditor or obligee, therefore, he could not
be said to have committed fraud when he contracted the obligation on May 5, 1977. Salazar added that
as the motor vehicle which was the object of the chattel mortgage and the consideration for the
promissory note had admittedly not been delivered to him by RALLYE, his repudiation of the loan and
mortgage is more justifiable.

FILINVEST filed an Opposition, but on February 2, 1979, the court a quo, this time presided over by
herein respondent Judge, ordered the dissolution and setting aside of the writ of preliminary
attachment issued on August 17, 1977 and the return to defendant Salazar of all his properties
attached by the Sheriff by virtue of the said writ. In this Order, respondent Judge explained that:

When the incident was called for hearing, the Court announced that, as a matter of
procedure, when a motion to quash a writ of preliminary attachment is filed, it is
incumbent upon the plaintiff to prove the truth of the allegations which were the basis
for the issuance of said writ. In this hearing, counsel for the plaintiff manifested that
he was not going to present evidence in support of the allegation of fraud. He
maintained that it should be the defendant who should prove the truth of his
allegation in the motion to dissolve the said writ. The Court disagrees. 5

FILINVEST filed a Motion for Reconsideration of the above Order, and was subsequently allowed to
adduce evidence to prove that Salazar committed fraud as alleged in the affidavit of Gil Mananghaya
earlier quoted. This notwithstanding, respondent Judge denied the Motion in an Order dated April 4,
1979 reasoning thus:

The plaintiff's evidence show that the defendant Rallye Motor assigned to the former
defendant Salazar's promissory note and chattel mortgage by virtue of which plaintiff
discounted the note. Defendant Salazar refused to pay the plaintiff for the reason that
Rallye Motor has not delivered to Salazar the motor vehicle which he bought from
Rallye. It is the position of plaintiff that defendant Salazar was in conspiracy with
Rallye Motor in defrauding plaintiff.

Ernesto Salazar, on his part complained that he was himself defrauded, because
while he signed a promissory note and chattel mortgage over the motor vehicle
which he bought from Rallye Motor, Rallye Motor did not deliver to him the personal
property he bought; that the address and existence of Rallye Motor can no longer be
found.

While it is true that the plaintiff may have been defrauded in this transaction, it having
paid Rallye Motor the amount of the promissory note, there is no evidence that
Ernesto Salazar had connived or in any way conspired with Rallye Motor in the
assignment of the promissory note to the plaintiff, because of which the plaintiff paid
Rallye Motor the amount of the promissory note. Defendant Ernesto Salazar was
himself a victim of fraud. Rallye Motor was the only party which committed it. 6
From the above order denying reconsideration and ordering the sheriff to return to Salazar the
personal property attached by virtue of the writ of preliminary attachment issued on August 17, 1977,
FILINVEST filed the instant Petition on April 19, 1979. On July 16, 1979, petitioner FILINVEST also
filed an Urgent Petition for Restraining Order7 alleging, among others, that pending this certiorari
proceeding in this court, private respondent Salazar filed a Motion for Contempt of Court in the court
below directed against FILINVEST and four other persons allegedly for their failure to obey the Order of
respondent Judge dated April 4, 1979, which Order is the subject of this Petition. On July 23, 1979, this
Court issued a temporary restraining order "enjoining respondent Judge or any person or persons acting
in his behalf from hearing private respondent's motion for contempt in Civil Case No. 109900, entitled,
'Filinvest Credit Corporation, Plaintiff, versus The Rallye Motor Co., Inc., et al., Defendants' of the Court of
First Instance of Manila, Branch XI. " 8

Petitioner FILINVEST in its MEMORANDUM contends that respondent Judge erred:

(1) In dissolving the writ of preliminary attachment already enforced by the Sheriff of
Manila without Salazar's posting a counter-replevin bond as required by Rule 57,
Section 12; and

(2) In finding that there was no fraud on the part of Salazar, despite evidence in
abundance to show the fraud perpetrated by Salazar at the very inception of the
contract.

It is urged in petitioner's first assignment of error that the writ of preliminary attachment having been
validly and properly issued by the lower court on August 17, 1977, the same may only be dissolved,
quashed or recalled by the posting of a counter-replevin bond under Section 12, Rule 57 of the
Revised Rules of Court which provides that:

Section 12. Discharge of Attachment upon, gluing counterbond.At any time after
an order of attachment has been granted, the party whose property has been
attached, or the person appearing on his behalf, may, upon reasonable notice to the
applicant, apply to the judge who granted the order, or to the judge of the court, in
which the action is pending, for an order discharging the attachment wholly or in part
on the security given. The judge shall, after hearing, order the discharge of the
attachment if a cash deposit is made, or a counter-bond executed to the attaching
creditor is filed, on behalf of the adverse party, with the clerk or judge of the court
where the application is made, in an amount equal to the value of the property
attached as determined by the judge, to secure the payment of any judgment that the
attaching creditor may recover in the action. ...

Citing the above provision, petitioner contends that the court below should not have issued the
Orders dated February 2, 1979 and April 4, 1979 for failure of private respondent Salazar to make a
cash deposit or to file a counter-bond.

On the other hand, private respondent counters that the subject writ of preliminary attachment was
improperly or irregularly issued in the first place, in that it was issued ex parte without notice to him
and without hearing.

We do not agree with the contention of private respondent. Nothing in the Rules of Court makes
notice and hearing indispensable and mandatory requisites for the issuance of a writ of attachment.
The statement in the case of Blue Green Waters, Inc. vs. Hon. Sundiam and Tan 9 cited by private
respondent, to the effect that the order of attachment issued without notice to therein petitioner Blue
Green Waters, Inc. and without giving it a chance to prove that it was not fraudulently disposing of its
properties is irregular, gives the wrong implication. As clarified in the separate opinion of Mr. Justice
Claudio Teehankee in the same cited case, 10 a writ of attachment may be issued ex parte. Sections 3
and 4, Rule 57, merely require that an applicant for an order of attachment file an affidavit and a bond:
the affidavit to be executed by the applicant himself or some other person who personally knows the facts
and to show that (1) there is a sufficient cause of action, (2) the case is one of those mentioned in Section
1 of Rule 57, (3) there is no other sufficient security for the claim sought to be enforced, and (4) the
amount claimed in the action is as much as the sum for which the order is granted above all legal
counterclaims; and the bond to be "executed to the adverse party in an amount fixed by the judge, not
exceeding the applicant's claim, conditioned that the latter will pay all the costs which may be adjudged to
the adverse party and all damages which he may sustain by reason of the attachment, if the court shall
finally adjudge that the applicant was not entitled thereto."

We agree, however, with private respondents contention that a writ of attachment may be
discharged without the necessity of filing the cash deposit or counter-bond required by Section 12,
Rule 57, cited by petitioner. The following provision of the same Rule allows it:

Sec. 13. Discharge of attachment for improper or irregular issuance.The party


whose property has been attached may also, at any time either before or after the
release of the attached property, or before any attachment shall have been actually
levied, upon reasonable notice to the attaching creditor, apply to the judge who
granted the order, or to the judge of the court in which the action is pending, for an
order to discharge the attachment on the ground that the same was improperly or
irregularly issued. If the motion be made on affidavits on the part of the party whose
property has been attached, but not otherwise, the attaching creditor may oppose the
same by counter-affidavits or other evidence in addition to that on which the
attachment was made. After hearing, the judge shall order the discharge of the
attachment if it appears that it was improperly or irregularly issued and the defect is
not cured forthwith."(Emphasis supplied)

The foregoing provision grants an aggrieved party relief from baseless and unjustifiable attachments
procured, among others, upon false allegations, without having to file any cash deposit or counter-
bond. In the instant case the order of attachment was granted upon the allegation of petitioner, as
plaintiff in the court below, that private respondent RALLYE, the defendants, had committed "fraud in
contracting the debt or incurring the obligation upon which the action is brought," covered by Section
i(d), Rule 57, earlier quoted. Subsequent to the issuance of the attachment order on August 17,
1977, private respondent filed in the lower court an "Urgent Motion for the Recall and Quashal of the
Writ of Preliminary Attachment on (his property)" dated December 11, 1978 11 precisely upon the
assertion that there was "absolutely no fraud on (his) part" in contracting the obligation sued upon by
petitioner. Private respondent was in effect claiming that petitioner's allegation of fraud was false, that
hence there was no ground for attachment, and that therefore the attachment order was "improperly or
irregularly issued." This Court was held that "(i)f the grounds upon which the attachment was issued were
not true ..., the defendant has his remedy by immediately presenting a motion for the dissolution of the
same. 12 We find that private respondent's abovementioned Urgent Motion was filed under option 13, Rule
57.

The last sentence of the said provision, however, indicates that a hearing must be conducted by the
judge for the purpose of determining whether or not there reality was a defect in the issuance of the
attachment. The question is: At this hearing, on whom does the burden of proof lie? Under the
circumstances of the present case, We sustain the ruling of the court a quo in its questioned Order
dated February 2, 1979 that it should be the plaintiff (attaching creditor), who should prove his
allegation of fraud. This pronouncement finds support in the first sentence of Section 1, Rule 131,
which states that: "Each party must prove his own affirmative allegations." The last part of the same
provision also provides that: "The burden of proof lies on the party who would be defeated if no
evidence were given on either side." It must be brne in mind that in this jurisdiction, fraud is never
presumed. FRAUS EST IdIOS ET NON PRAESUMENDA. 13 Indeed, private transactions are
presumed to have been fair and regular. 14 Likewise, written contracts such as the documents executed
by the parties in the instant case, are presumed to have been entered into for a sufficient consideration. 15

In a similar case of Villongco, et al., vs. Hon. Panlilio, et al., 16 a writ of preliminary attachment was
issued ex parte in a case for damages on the strength of the affidavit of therein petitioners to the effect
that therein respondents had concealed, removed or disposed of their properties, credits or accounts
collectible to defraud their creditors. Subsequently, the lower court dissolved the writ of attachment. This
was questioned in a certiorari proceeding wherein this Court held, inter alia, that:

The affidavit supporting the petition for the issuance of the preliminary attachment
may have been sufficient to justify the issuance of the preliminary writ, but it cannot
be considered as proof of the allegations contained in the affidavit. The reason is
obvious. The allegations are mere conclusions of law, not statement of facts. No acts
of the defendants are ever mentioned in the affidavit to show or prove the supposed
concealment to defraud creditors. Said allegations are affirmative allegations, which
plaintiffs had the obligation to prove ... 17

It appears from the records that both herein private parties did in fact adduce evidence to support
their respective claims. 18 Attached to the instant Petition as its Annex "H" 19 is a Memorandum filed by
herein petitioner FILINVEST in the court below on March 20, 1979. After private respondent filed his
Comment to the Petition, 20 petitioner filed a Reply 21,attaching another copy of the aforesaid
Memorandum as Annex "A" 22 In this case on February 28, 1979 and March 1, 1979, the plaintiff
(FILINVEST) presented in evidence documentary exhibits "marked Exhibit A, A- I, B, B-1, B-2, B-3, B-4,
C, C-1, D, E, F, G and G-1. The Memorandum goes on to state that FILINVEST presented as its witness
defendant Salazar himself who testified that he signed Exhibits A, B, C, D, E and G; that he is a holder of
a master's degree in Business Administration and is himself a very careful and prudent person; that he
does not sign post-dated documents; that he does not sign contracts which do not reflect the truth or
which are irregular on their face, that he intended to purchase a school bus from Rallye Motors Co., Inc.
from whom he had already acquired one unit; that he had been dealing with Abel Sahagun, manager of
RALLYE, whom he had known for a long time that he intended to purchase the school bus on installment
basis so he applied for financing with the FILINVEST; that he knew his application was approved; that
with his experience as a business executive, he knew that under a financing arrangement, upon approval
of his application, when he signed Exhibits A, B, C, D, E and G, the financing company (FILINVEST)
would release the proceeds of the loan to RALLYE and that he would be obligated to pay the installments
to FILINVEST; that he signed Exhibits A, B and C simultaneously; that it was his wife who was always
transacting business with RALLYE and Abel Sahagun. 23

Without disputing the above summary of evidence, private respondent Salazar states in his
Comment that "the same evidence proferred by (petitioner's) counsel was adopted by (private
respondent) Ernesto Salazar during the proceedings. 24

According to the court a quo in its assailed order of April 4, 1979, Emesto Salazar "was himself
defrauded because while he signed the promissory note and the chattel mortgage over the vehicle
which he bought from Rallye Motors, RALLYE did not deliver to him the personal property he
bought." And since no fraud was committed by Salazar, the court accordingly ordered the sheriff to
return to Salazar the properties attached by virtue of the writ of preliminary attachment issued on
August 17, 1977.

We do not agree. Considering the claim of respondent Salazar that Rallye Motors did not deliver the
motor vehicle to him, it follows that the Invoice, Exhibit "C", for the motor vehicle and the Receipt,
Exhibit "G", for its delivery and both signed by Salazar, Exhibits "C-1 " and "G-1", were fictitious. It
also follows that the Promissory Note, Exhibit "A", to pay the price of the undelivered vehicle was
without consideration and therefore fake; the Chattel Mortgage, Exhibit "B", over the non-existent
vehicle was likewise a fraud; the registration of the vehicle in the name of Salazar was a falsity and
the assignment of the promissory note by RALLYE with the conforme of respondent Salazar in favor
of petitioner over the undelivered motor vehicle was fraudulent and a falsification.

Respondent Salazar, knowing that no motor vehicle was delivered to him by RALLYE, executed and
committed all the above acts as shown the exhibits enumerated above. He agreed and consented to
the assignment by RALLYE of the fictitious promissory note and the fraudulent chattel mortgage,
affixing his signature thereto, in favor of petitioner FILINVEST who, in the ordinary course of
business, relied on the regularity and validity of the transaction. Respondent had previously applied
for financing assistance from petitioner FILINVEST as shown in Exhibits "E " and "E-1 " and his
application was approved, thus he negotiated for the acquisition of the motor vehicle in question
from Rallye Motors. Since he claimed that the motor vehicle was not delivered to him, then he was
duty-bound to reveal that to FILINVEST, it being material in inducing the latter to accept the
assignment of the promissory note and the chattel mortgage. More than that, good faith as well as
commercial usages or customs require the disclosure of facts and circumstances which go into the
very object and consideration of the contractual obligation. We rule that the failure of respondent
Salazar to disclose the material fact of non-delivery of the motor vehicle, there being a duty on his
part to reveal them, constitutes fraud. (Article 1339, New Civil Code).

We hold that the court a quo committed grave abuse of discretion in dissolving and setting aside the
writ of preliminary attachment issued on August 17, 1977.

WHEREFORE, IN VIEW OF THE FOREGOING, the appealed Orders of the lower court dated
February 2, 1979 and April 4, 1979 are hereby REVERSED and SET ASIDE. The temporary
restraining order issued by Us on July 23, 1979 is hereby made permanent. No costs.

Petition granted.

SO ORDERED.

G.R. No. 80030 October 26, 1989

ROGELIO A. MIRANDA, petitioner,


vs.
THE COURT OF APPEALS and SPOUSES ORLANDO A. RAYOS and MERCEDES T.
RAYOS, respondents.

CRUZ, J.:

Challenged in this case is the decision of the Court of Appeals affirming the order of the trial court
lifting a writ of attachment previously issued by it under Rule 57, Section 1 (d) of the Rules of Court.
This provision authorizes the issuance of such writ:

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.
The writ was issued in connection with a complaint for damages filed by the petitioner against the
private respondents on January 2,1987. This was docketed as Civil Case No. 15639 in the Regional
Trial Court of Makati, Branch 143, presided by Judge Socorro Tirona Liwag. The writ was later
discharged by her on the finding that the private respondent could not be faulted with fraud under the
aforecited provision of the Rules.

In his complaint, the petitioner alleged that the spouses Orlando and Mercedes Rayos sold him a
parcel of land on December 26,1985, for the sum of P250,000.00 under a Deed of Sale with
Assumption of Mortgage prepared by Orlando Rayos, who is a lawyer. It is not denied that Miranda
directly paid Rayos the sum of P150,000. 00 and thereafter also paid the first three quarterly
amortizations in the total amount of P87,864.94 to the Philippine Savings Bank as the mortgagee on
the loan contracted by Rayos. Miranda claims that the bank at first refused to accept his third
quarterly payment but relented when he showed it the contract he had entered into with Rayos.
However, when he offered to make the fourth and last payment on December 24,1986, the bank
refused to accept it, informing him that Rayos had already made the payment and had asked it not to
deliver the Torrens certificate of the mortgaged land to Miranda. This certificate was subsequently
recovered by Rayos, who had since then refused to surrender it to him or to refund him the total
amount of P267,088.61 which he said he had paid on their contract.

On the basis of these allegations, the trial judge issued the writ of attachment Miranda had also
prayed for. Rayos then filed a motion to discharge the attachment, claiming there was no proof that
he had committed fraud in contracting the debt or incurring the obligation on which the complaint
was based. After considering the arguments of the parties, Judge Liwag granted the motion in her
order dated March 5, 1987, 1 which she subsequently affirmed in her order dated March 18, 1987
. 2 Miranda then went on certiorari to the respondent court, 3 which dismissed his petition for lack of merit
in its decision dated September 9, 1987. 4

We affirm.

The petitioner insists that there was a valid ground for the issuance of the writ of attachment
because the Deed of Sale with Assumption of Mortgage prepared by Rayos was attended at the
inception with fraud that brought it under the provision of Rule 57, Section 1(d) of the Rules of Court.
That fraud consisted of the deception employed by Rayos in inveigling him to enter into the contract
of sale without cautioning him that his assumption of mortgage might be disapproved by the
Philippine Savings Bank.

The Court cannot accept this contention in the light of the evidence of record. If at all and on this
we do not rule categorically as the matter is yet to be litigated in the court a quo the fraud might
have been committed by Rayosafter the conclusion of the contract. However, such fraud is not
covered by the aforesaid rule, let alone the fact that it has yet to be established.

What is clear at this time is that Rayos cannot be said to have deluded Miranda into entering into the
contract by taking advantage of his position as a lawyer and withholding necessary information from
Miranda. Miranda insists he did not know any better as a layman. He complains that Rayos did not
warn him that the assumption of mortgage would have to be approved by the Philippine Savings
Bank and that their transaction would be nullified without such approval. He stresses that had he
been properly warned, he would not have invested an initial payment of P150,000.00 and later made
the three amortization payments of P87,864.94, not to mention the last quarterly payment he also
remitted to the Bank.

The private respondent's position is that he had in fact informed Miranda that the assumption of
mortgage was subject to the approval of the mortgagee bank and that he had sent the petitioner the
appropriate forms to accomplish. Miranda, for his part, maintains that such form was merely an
application for individual loans and did not constitute the sufficient advise or warning that Rayos
should have given him. On this point, the respondent court correctly affirmed the following findings of
the trial court:

The plaintiff, in his Comment on Compliance dated March 13, 1987 argued as
follows:

The "Application for Loan" form sent by defendant Orlando Rayos to


plaintiff has no relevance and materiality to the assumption of
defendant Rayos' loan account with defendant Philippine Savings
Bank. That application form of PSB accomplished by plaintiff is strictly
for individual loan application filed by plaintiff for P100,000.00 for
himself. It does not constitute in any manner a "warning" or an
"instruction" to plaintiff that it was incumbent upon plaintiff to get an
express approval by the bank (PSB) for his assumption of Rayos'
mortgage,... if by sending that application form of PSB to plaintiff,
defendant Orlando Rayos wanted to inform plaintiff about the
necessity to get or obtain the express approval of the assumption of
mortgage from PSB, why did he not say in clear terms to the plaintiff?

The Court finds this argument untenable. The Loan Application Form sent by
defendant Rayos was actually filled up and signed by the plaintiff and his wife dated
March 4, 1986. In said loan application, the amount of the loan appears as
P100,000.00, the same amount as the mortgage to be assumed, the security offered
also appears as TCT No. 100156 the same property bought by the plaintiff from the
defendants with assumption of the mortgage in favor of the Philippine Savings Bank
(See Deed of Sale with Assumption of Mortgage, par. 2(6), Annex "D", Complaint).
How can the plaintiff now say that the Application for Loan form sent by the
defendant to plaintiff "has no relevance and materiality to the assumption of the
defendant Rayos' loan account with defendant Philippine Savings Bank."

It appears from the Loan Application and the General Information Sheet in
connection with said Loan Application which the plaintiff and his wife also signed that
the plaintiff and his wife are both degree holders and the plaintiff is the Acting
Municipal Treasurer of the Municipality of Las Pinas. There is every reason to
believe, therefore, that they understood what the Loan Application Form given to
them by the defendant was for and there was no necessity for the defendant to state
"in clear terms" that there was a need to apply to the bank in order for them to
assume the mortgage.

The above findings are entirely logical and belie the petitioner's pretensions that he was completely
duped as if he were a babe in arms. Being a layman did not excuse him from knowledge of the basic
principles involved in this case of which he feigns total ignorance. Moreover, the evidence shows
that he was in fact informed of the need for the approval of the assumption of mortgage and actually
sought to secure such approval although unsuccessfully. This shows that no fraud was imposed on
him by Rayos when they entered into the Deed of Sale with Assumption of Mortgage, which also
means that there was really no ground for the issuance of the writ of attachment.

As the writ of attachment was improperly granted, it was only fitting that it be discharged by the trial
court in rectification of its initial error. Hence, there was no need at all for the private respondent to
post a counterbond. Finally, we also agree with the respondent court that the order lifting the
attachment being merely interlocutory, it should not have been questioned on certiorari. This
extraordinary remedy is available only when there is a clear showing of a grave abuse of discretion
amounting to lack of jurisdiction, and there is no such showing here.

WHEREFORE, the petition is DENIED with costs against the petitioner. It is so ordered.

Adlawan vs. Torres (supra)

G.R. No. 92813 July 31, 1991

PEROXIDE PHILIPPINES CORPORATION, EASTMAN CHEMICAL INDUSTRIES, INC.,


EDMUNDO O. MAPUA and ROSE U. MAPUA, petitioners,
vs.
HON. COURT OF APPEALS and BANK OF THE PHILIPPINE, ISLANDS, respondents.

REGALADO, J.:p

Assailed in this petition for review on certiorari are the decision 1 of respondent Court of Appeals,
promulgated on September 4, 1989 in CA-G. R. SP No. 15672, granting the petition for certiorari filed by
private respondent, and its resolution 2 of March 29, 1990 denying petitioners' motion for reconsideration.
On December 6, 1982, herein private respondent Bank of the Philippine Islands (BPI) sued herein
petitioners Peroxide Philippines Corporation (Peroxide), Eastman Chemical Industries, Inc. (Eastman),
and the spouses Edmund O. Mapua and Rose U. Mapua (Mapuas) in Civil Case No. 48849 of the then
Court of First Instance of Pasig, Metro Manila for the collection of an indebtedness of Peroxide wherein
Eastman and the Mapuas bound themselves to be solidarily liable.

Upon the filing of said action, the trial court, then presided over by Judge Gregorio G. Pineda,
ordered the issuance of a writ of preliminary attachment which was actually done on January 7, 1983
after BPI filed an attachment bond in the amount of P32,700,000.00. Petitioners' properties were
accordingly attached by the sheriff.

On January 11, 1983, Eastman and the Mapuas moved to lift the attachment, which motion was set
for hearing on January 14, 1983. On said date and on motion of BPI, it was granted up to January
17, 1983 to file a written opposition to the motion to lift the writ of attachment. BPI also filed a motion
to set for hearing the said motion to lift attachment and its opposition thereto.

However, on January 17, 1983, Judge Pineda issued two (2) orders, the first, denying BPI's motion
for a hearing, and, the second, lifting the writ of attachment as prayed for by Eastman and the
Mapuas. BPI filed a motion for reconsideration but, consequent to the then judiciary reorganization,
the case was re-raffled and assigned to the sala of Judge Pastor Reyes.

On November 28, 1983, Judge Reyes issued an order with an explicit finding that the attachment
against the properties of Eastman and the Mapuas was proper on the ground that they had disposed
of their properties in fraud of BPI. It also directed the sheriff to implement the writ of attachment upon
the finality of said order.

After a motion for partial reconsideration by BPI and some exchanges between the parties, on
December 17, 1984 the trial court, this time with Judge Eficio B. Acosta presiding, issued an order
granting BPI's motion for partial reconsideration by finding, inter alia, that "(c)onsidering the lapse of
more than a year since the Order of November 28, 1983 and the nature and purpose of attachment,
the writ of attachment revived in the Order of November 28, 1983 and hereby re-affirmed may be
executed and implemented immediately," and directing the sheriff to execute said writ which "is
hereby declared immediately executory." 3

Contending that said order of December 17, 1984 was rendered with grave abuse of discretion
amounting to lack of jurisdiction, petitioners sought the annulment thereof in a petition
for certiorari and prohibition in AC-G.R. SP No. 05043 of the Intermediate Appellate Court, wherein a
temporary restraining order was issued. This restraining order was lifted when said court rendered
its decision in said case on March 14, 1986 4 dismissing the petition and holding, among others, that:

We find nothing wrong with the attachment of the properties of PEROXIDE. Even
were We to assume that the original petition for attachment was defective for failure
to specify the particular transactions involved in the alleged "alienation" of
PEROXIDE's properties, the fact is that the defect, if any, was cured by the other
pleadings (like the opposition or virtual amendment) filed by BANK With such
amendment, the specific properties concerned were distinctly enumerated. 5

Petitioners then sought the review of said decision by this Court in G.R. No. 74558, but no temporary
restraining order was granted therein. In the meantime, on May 29, 1986, Judge Acosta issued an
order 6 suspending the writ of preliminary attachment in the aforesaid Civil Case No. 48849 pursuant to
an ex parte motion filed by herein petitioners.

Thereafter, in its resolution dated October 27, 1986, this Court denied the aforesaid petition for
review on certiorari"considering that the writ of preliminary attachment issued was in accordance
with law and applicable jurisprudence." 7 Petitioners' motion for reconsideration was denied with finality
8
in our resolution of October 6, 1987.

Dissatisfied, petitioners again filed an urgent motion for clarification submitting that the Court failed
to pass upon two issues, namely: (1) whether Eastman and the Mapuas were sureties or mere
guarantors of Peroxide, and (2) whether Rose U. Mapua was bound by the "Continuing Guarantee"
executed by her husband, Edmund O. Mapua. Acting upon said motion, on November 10, 1987 the
Court resolved to deny the same for the reason, among others, that the clarification sought regarding
the propriety of the attachment of the properties of Eastman and the Mapuas involves questions of
fact. 9

On July 30, 1987, BPI filed a motion to order Bataan Pulp and Paper Mills, Inc. (Bataan), jointly and
severally with petitioners, to deliver to the sheriff the cash dividends declared on the garnished
shares of stock of said petitioners with said paper company, and to cite for contempt the officers of
Bataan for releasing and/or paying the dividends to petitioners in disregard of the notice of
garnishment.

In an exhaustive order dated December 16, 1987, 10 the trial court, now presided over by Judge
Fernando L. Gerona, Jr. and wherein Civil Case No. 48849 was then pending, addressing all the issues
raised by the parties, granted BPI's motion for delivery of the dividends. Judge Gerona sustained the
position of BPI that dividends are but incidents or mere fruits of the shares of stock and as such the
attachment of the stock necessarily included the dividends declared thereon if they were declared
subsequent to the notice of garnishment.

He further held that the preliminary attachment, being a provisional remedy, must necessarily
become effective immediately upon the issuance thereof and must continue to be effective even
during the pendency of an appeal from a judgment of the court which issued the said provisional
remedy and will only cease to have effect when the judgment is satisfied or the attachment is
discharged or vacated in some manner provided by law. The motion to cite the officers of Bataan
was, however, denied.

Petitioners moved for reconsideration but the same was denied for the reason that the order of May
29, 1986 of Judge Acosta was based on an ex parte motion without reasonable notice, hence a
patent nullity for lack of due process. Accordingly, the aforesaid order of December 16, 1987 held
that the writ of attachment continued to be effective. 11

Petitioners thereafter filed a second motion for reconsideration which, however, remained pending
and unresolved when Judge Gerona inhibited himself from further sitting in the case. Said case was
then re-raffled to the sala of Judge Jainal D. Rasul who required the parties to re-summarize their
respective positions upon the issue of the attachment.

Then, resolving the pending incidents before it, the court a quo issued the disputed order of August
23, 1988, which states, inter alia that:

THIS Court thru Judge Gerona had arrived at the correct conclusion that the
contempt charge against the Officers of the Garnishee Corporation cannot be
sustained, for the reason that they relied on the Order of the Court thru Judge Acosta
under date of May 29, 1986 suspending the Writ of Attachment and since said order
was not then set aside, there was no order or writ violated by said officers. It
follows a fortiori that the release of the cash dividends was valid, legal and not
contemptuous. Consequently, there is no reason to justify or deserve the return of
cash dividends prayed for by the plaintiff.

Besides, the propriety of the attachment of the properties of the defendant Eastman
Chemical Industries, Inc., and defendant Mapua Spouses should still be determined
by this Court as a question of fact, pursuant to the Supreme Court resolution dated
November 23, 1987. Meanwhile, it is only fair that the properties of the Eastman
Chemical Industries, Inc. and the defendants Mapua spouses should not, pending
such proper determination, be attached as to give life and meaning to the Supreme
Court resolution of November 23, 1987.

SO ORDERED. 12

BPI moved for the reconsideration of said order. Thereafter, it learned that Bataan had again
declared a cash dividend on its shares payable on or before September 30, 1988. Furthermore,
Bataan informed BPI that it would be releasing to Eastman and Edmund O. Mapua the cash
dividends on their shares on September 23, 1988 on the strength of the order of the trial court of
August 23, 1988.

Consequently, BPI filed an urgent ex parte motion on September 19, 1988 for the suspension of the
effects of the trial court's order of August 23, 1988 in view of the pending motion for reconsideration
it had filed against said order. In an order likewise dated September 19, 1988, the trial court denied
BPI's motion for suspension of the order of August 23, 1988. 13

BPI then filed a petition for certiorari in respondent court, docketed therein as CA-G.R. SP No.
15672, invoking the following grounds:

1. The trial court acted with grave abuse of discretion in denying BPI's
urgent ex parte motion to suspend the order of August 23, 1988;
2. The order of September 19, 1988 renders moot and academic BPI's pending
motion for reconsideration;

3. The lower court erroneously held that the writ of attachment secured by BPI had
ceased to be valid and effective or had been suspended by virtue of its orders of
January 17, 1983 and May 29, 1986;

4. The trial court committed grave abuse of discretion when it nullified the writ of
attachment as against Eastman and the Mapuas;

5. There is no inconsistency between the resolution of the Supreme Court dated


October 27, 1986 and its subsequent resolution of November 10, 1987;

6. The attachment can validly issue against the conjugal properties of the Mapuas;
and

7. The trial court disregarded the clear and unequivocal records of the case when it
issued its order of August 23, 1988. 14

Ruling on these issues, respondent Court of Appeals declared:

WHEREFORE, the petition for certiorari is hereby GRANTED. Judgment is hereby


rendered as follows:

(a) Declaring the writ of preliminary attachment against the defendants Eastman
Chemical Industries, Inc. and the spouses, Edmund and Rose Mapua valid and
enforceable from the beginning, without prejudice to determining the solidary liability
of said defendants with defendant Peroxide Philippines Corporation;

(b) Setting aside the Order of August 23, 1988 insofar as it decreed that the cash
dividends declared or the garnished shares of stocks (sic) of the defendants with
Bataan Pulp and Paper Mills, Inc. are not subject to attachment;

(c) Ordering the defendants and the Bataan Pulp and Paper Mills, Inc., jointly and
severally, to deliver to the sheriff the cash dividends as may hereafter be declared
and paid on the garnished shares of stock;

(d) Setting aside the Order of September 19, 1988.

With costs against private respondents.

SO ORDERED. 15

Their motion for reconsideration having been denied, petitioners are once again before us on this
spin-off facet of the same case, contending that respondent court has departed from the accepted
and usual course of judicial proceedings.

1. As correctly formulated by respondent court, the threshold issue is the validity of the attachment of
the properties of Eastman and the Mapuas, from which arises the correlative question of whether or
not the disputed cash dividends on the garnished shares of stock are likewise subject thereto.
Necessarily involved is the matter of the continuing validity of the writ or whether or not the same
was validly lifted and suspended by the lower court's orders dated January 17, 1983 and May 29,
1986, respectively.

BPI asserts that the discharge is illegal and void because the order lifting the same is violative of
Section 13, Rule 57 of the Rules of Court which requires, among others, a prior hearing before the
judge may order the discharge of the attachment upon proof adduced therein of the impropriety or
irregularity in the issuance of the writ and the defect is not cured forthwith. We may mention in this
regard that if the petition for the discharge of the writ violates the requirements of the law, the trial
judge does not acquire jurisdiction to act thereon. 16

It is true that petitioner's motion to discharge was set for hearing with notice to BPI but it is likewise
true that counsel for the latter asked for an opportunity to file a written opposition and for a hearing to
which he asked that petitioner Edmund O. Mapua be subpoenaed. Said counsel was allowed to file
a written opposition which he seasonably did, but Judge Pineda denied both the requested
subpoena and hearing and, instead, granted the discharge of the attachment. These are the bases
for BPI's complaint that it was denied due
process. 17

Now, it is undeniable that when the attachment is challenged for having been illegally or improperly
issued, there must be a hearing with the burden of proof to sustain the writ being on the attaching
creditor. 18 That hearing embraces not only the right to present evidence but also a reasonable
opportunity to know the claims of the opposing parties and meet them. The right to submit arguments
implies that opportunity, otherwise the right would be a barren one. It means a fair and open
hearing. 19 And, as provided by the aforecited Section 13 of Rule 57, the attaching creditor should be
allowed to oppose the application for the discharge of the attachment by counter-affidavit or other
evidence, in addition to that on which the attachment was made.

Respondent court was, therefore, correct in holding that, on the above-stated premises, the
attachment of the properties of Eastman and the Mapuas remained valid from its issuance since the
judgment had not been satisfied, nor has the writ been validly discharged either by the filing of a
counterbond or for improper or irregular issuance.

We likewise affirm the findings and conclusion of respondent court that the order of Judge Acosta,
dated May 29, 1986, suspending the writ of attachment was in essence a lifting of said writ which
order, having likewise been issued ex parte and without notice and hearing in disregard of Section
13 of Rule 57, could not have resulted in the discharge of the attachment. Said attachment
continued unaffected by the so-called order or suspension and could not have been deemed
inefficacious until and only by reason of its supposed restoration in the order of December 16, 1987
of Judge Gerona. Under the facts of this case, the ex parte discharge or suspension of the
attachment is a disservice to the orderly administration of justice and nullifies the underlying role and
purpose of preliminary attachment in preserving the rights of the parties pendente lite as an ancillary
remedy.

We, therefore, sustain the position of BPI that the Court of Appeals, in its judgment presently under
challenge, did not err in upholding the continuing and uninterrupted validity and enforceability of the
writ of preliminary attachment issued in Civil Case No. 48849 since the order of discharge and, later,
the order of suspension of the trial court were void and could not have created the operational
lacuna in its effectivity as claimed by petitioners. Further, the cancellation of the annotations
regarding the levy on attachment of petitioners' properties, procured by the sheriff pursuant to the
aforesaid invalid orders, is likewise a nullity and another levy thereon is not required. We observe,
however, that the records do not disclose the lifting of the levy on the Bataan shares of Eastman and
the Mapuas and on their real properties in Caloocan City.
2. Petitioners next call attention to the fact that when the order of Judge Acosta of December 17,
1984, which directed the immediate execution and implementation of the writ of attachment, was
brought on a petition forcertiorari and prohibition to the Intermediate Appellate Court in AC-G.R. SP
No. 05043, said court issued a temporary restraining order.

They allege that although the restraining order was lifted by said appellate court in its decision in the
case on March 14, 1986, the same was reinstated by the court "until further orders" in its order of
April 24, 1986 in connection with petitioners' motion for reconsideration therein. On May 14, 1986,
respondent court denied the motion for reconsideration but, so petitioners insist, "without, however,
stating that it was lifting its restraining order." When the case went on review to this Court in G.R.
No. 74558, no mention was made regarding said restraining order. Hence, petitioners assert, the
said restraining order had not been lifted, in effect arguing that the writ of attachment cannot be
implemented as a consequence.

This misleading argument is confuted by the records in AC-G.R. SP No. 05043. In its aforesaid
resolution of April 24, 1986, the appellate court stated that "(a)s of this date, April 23, 1986, the
motion for reconsideration could not be considered in view of the absence of the comment of the
private respondents." Hence, the court directed that "(i)n order to maintain the status quo of the
parties, . . . the restraining order issued by us on December 28, 1984 is hereby revived and made
effective until further orders." 20

Thereafter, finding no merit in the motion for reconsideration, the court denied the same, declaring
that "(w)ith this resolution, we find no need in resolving the Urgent Motion to Reconsider and set
aside Resolution of April 24, 1985 (sic, 1986) filed by the private respondent BPI and the other
incidents still pending resolution." 21

All incidents in AC-G.R. SP No. 05043 having been disposed of, it follows that the temporary
restraining order which had been expressly lifted in the decision therein, and which was merely
temporarily reinstated for purposes of the motion for reconsideration that was ultimately denied, was
also necessarily lifted. Parenthetically, said temporary restraining order, not having been supplanted
by a writ of preliminary injunction, could not have had an effectivity of more than twenty (20)
days, 22 and this limitation applies to temporary restraining orders issued by the Court of Appeals. 23

3. We reject petitioners' theory that the preliminary attachment is not applicable to Eastman and the
Mapuas. The writ was issued in Civil Case No. 48849 against the properties of all the petitioners
herein. Eastman and the Mapuas moved for the discharge of the attachment on the ground that they
were not disposing of their properties in fraud of creditors, but they did not raise the issue of their
liabilities as being allegedly those of mere guarantors. They did so only when this Court resolved on
October 27, 1986 that the writ of preliminary attachment was issued in accordance with law and
applicable jurisprudence. 24

Also, what was considered in AC-G.R. SP No. 05043 and thereafter in G.R. No. 74558 was the
matter of the validity of the attachment against Eastman and the Mapuas, considering that, even
before the proceedings had reached the Intermediate Appellate Court in AC-G.R. SP No. 05043, BPI
no longer had any attachment against Peroxide whose only remaining asset in Bulacan had been
levied upon and acquired by its other creditors when Judge Pineda lifted the attachment obtained by
BPI.

Petitioners seek to capitalize on a passage in the decision in AC-G.R. SP No. 05043, hereinbefore
quoted, where the appellate court stated that "(w)e find nothing wrong with the attachment of the
properties of PEROXIDE," without mentioning Eastman and the Mapuas. This was clearly in the
nature of peccata minuta, a plain case of harmless oversight, since the properties referred to in the
decision as having been alienated in fraud of BPI were properties of Eastman and the Mapuas, not
of Peroxide.

In fact, as pointed out by private respondent, petitioners' own motion for reconsideration of March
24, 1986 filed in said case specifically adverted to that prefatory statement as being equivocal, with
the following observation: "Actually no properties of Peroxide had been attached. What were
attached were properties of Eastman and Rose Mapua." 25 Private respondent further invites attention
to the petition for certiorari in G.R. No. 74558, against the decision in AC-G.R. SP No. 05043, wherein,
assailing the aforequoted statement therein, petitioners aver:

As can be seen the paragraph begins with the holding that there is nothing wrong
with the attachment of properties of Peroxide. This holding on its face is limited only
to the upholding of attachment against the properties of petitioner Peroxide. And yet
the alienations mentioned in the subsequent sentences do not refer to dispositions of
properties of Peroxide and by Peroxide. A cursory glance of records will show that
they refer to dispositions alleged to have been fraudulently made by Eastman
Chemical Industries, Inc. and Edmund Mapua. Relating this point to the dispositive
portion which in effect sustains the attachment issued by the trial court not only
against Peroxide, but also against Eastman and Mapua spouses. 26

4. As earlier narrated, this Court denied the petition for review on certiorari in G.R. No. 74558, and
when petitioners persisted in seeking a clarification as to the nature of the liability of Eastman and
the Mapuas, the Court denied the same on the ground that the clarification sought involves
questions of fact. As observed by respondent Court of Appeals, the aforesaid ruling was erroneously
construed by the lower court when it declared that the properties of Eastman and the Mapuas should
not, pending proper determination, be attached. In doing so, the court below virtually lifted or
discharged the attachment even before its propriety had been determined.

We sustain respondent court's ratiocination in its decision under review that when petitioners sought
clarification from us regarding the propriety of the attachment on the properties of Eastman and the
Mapuas, and we said that this involves a question of fact, what this means is that the court a
quo should determine the propriety or regularity thereof, and such determination can only be had in
appropriate proceedings conducted for that purpose. However, until such attachment has been
found to be improper and irregular, the attachment is valid and subsisting.

Thus, as correctly posited by BPI, before the determination of the liability of Eastman and the
Mapuas after trial on the merits, the writ of preliminary attachment may properly issue. Even
assuming that when Eastman and the Mapuas asked for the lifting of the attachment they presented
evidence that they were guarantors and not sureties of Peroxide, the trial court could not have
admitted such evidence or ruled upon that issue since the same could be entertained only after a
full-blown trial and not before then. 27 Otherwise, we would have the procedural absurdity wherein the
trial court would be forced to decide in advance and preempt in an auxiliary proceeding an issue which
can and should be determined only in a trial on the merits.

The proceeding in the issuance of a writ of preliminary attachment, as a mere provisional remedy, is
ancillary to an action commenced at or before the time when the attachment is sued out. Accordingly
the attachment does not affect the decision of the case on the merits, the right to recover judgment
on the alleged indebtedness and the right to attach the property of the debtor being entirely separate
and distinct. As a rule, the judgment in the main action neither changes the nature nor determines
the validity of the attachment. 28 At any rate, whether said petitioners are guarantors or sureties, there
exists a valid cause of action against them and their properties were properly attached on the basis of
that indubitable circumstance.
5. Petitioners bewail the fact that respondent court allegedly handled the certiorari case, CA-G.R. SP
No. 15672 now on appeal before us, as if it were a petition for review on certiorari by passing upon
what they submit should be considered as errors of judgment and not errors of jurisdiction. From the
foregoing disquisition, however, it is readily apparent that the petition in said case faults the orders of
the trial court as tainted with grave abuse of discretion equivalent to a jurisdictional flaw. The errors
assigned necessarily involved a discussion of erroneous conclusions and/or lack of factual bases
much beyond the pale of mere errors of judgment or misperception of evidence, and dwelt on the
improvident issuance of orders clearly arbitrary and oppressive for being in defiance of the rules and
devoid of justifying factual moorings. We cannot, therefore, share the sentiments and stance of
petitioners on this score.

Neither do we subscribe to petitioners' charge that respondent court injudiciously gave due course to
the aforesaid petition for certiorari without requiring the prior filing and resolution of a motion for the
reconsideration of the questioned orders of the trial court. There are, admittedly, settled exceptions
to that requisite and which obtain in the present case. A motion for reconsideration was correctly
dispensed with by respondent court since the questions raised in the certiorari proceeding had been
duly raised and passed upon by the lower court. 29 Also, under the circumstances therein, a motion for
reconsideration would serve no practical purpose since the trial judge had already had the opportunity to
consider and pass upon the questions elevated on certiorari to respondent court. 30

FOR ALL THE FOREGOING CONSIDERATIONS, the petition at bar is DENIED and the judgment of
respondent Court of Appeals is hereby AFFIRMED.

SO ORDERED.