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SECOND DIVISION

[G.R. No. 123031. October 12, 1999]

CEBU INTERNATIONAL FINANCE CORPORATION, petitioner, vs. COURT OF APPEALS, VICENTE ALEGRE, respondents.
DECISION
QUISUMBING, J.:

This petition for review on certiorari assails respondent appellate courts Decision,[1] dated December 8, 1995, in CA G.R. CV No. 44085, which
affirmed the ruling of the Regional Trial Court of Makati, Branch 132. The dispositive portion of the trial courts decision reads:

WHEREFORE, judgment is hereby rendered ordering defendant [herein petitioner] to pay plaintiff [herein private respondent]:

(1) the principal sum of P514,390.94 with legal interest thereon computed from August 6, 1991 until fully paid; and

(2) the costs of suit.

SO ORDERED.[2]

Based on the records, the following are the pertinent facts of the case:

Cebu International Finance Corporation (CIFC), a quasi-banking institution, is engaged in money market operations.

On April 25, 1991, private respondent, Vicente Alegre, invested with CIFC, five hundred thousand (P500,000.00) pesos, in cash. Petitioner issued a
promissory note to mature on May 27, 1991. The note for five hundred sixteen thousand, two hundred thirty-eight pesos and sixty-seven centavos
(P516,238.67) covered private respondents placement plus interest at twenty and a half (20.5%) percent for thirty-two (32) days.

On May 27, 1991, CIFC issued BPI Check No. 513397 (hereinafter the CHECK) for five hundred fourteen thousand, three hundred ninety pesos and
ninety-four centavos (P514,390.94) in favor of the private respondent as proceeds of his matured investment plus interest. The CHECK was drawn
from petitioners current account number 0011-0803-59, maintained with the Bank of the Philippine Islands (BPI), main branch at Makati City.

On June 17, 1991, private respondents wife deposited the CHECK with Rizal Commercial Banking Corp. (RCBC), in Puerto Princesa, Palawan. BPI
dishonored the CHECK with the annotation, that the Check (is) Subject of an Investigation. BPI took custody of the CHECK pending an investigation
of several counterfeit checks drawn against CIFCs aforestated checking account. BPI used the check to trace the perpetrators of the forgery.

Immediately, private respondent notified CIFC of the dishonored CHECK and demanded, on several occasions, that he be paid in cash. CIFC refused
the request, and instead instructed private respondent to wait for its ongoing bank reconciliation with BPI. Thereafter, private respondent, through
counsel, made a formal demand for the payment of his money market placement. In turn, CIFC promised to replace the CHECK but required an
impossible condition that the original must first be surrendered.

On February 25, 1992, private respondent Alegre filed a complaint[3] for recovery of a sum of money against the petitioner with the Regional Trial
Court of Makati (RTC-Makati), Branch 132.

On July 13, 1992, CIFC sought to recover its lost funds and formally filed against BPI, a separate civil action[4] for collection of a sum of money with
the RTC-Makati, Branch 147. The collection suit alleged that BPI unlawfully deducted from CIFCs checking account, counterfeit checks amounting to
one million, seven hundred twenty-four thousand, three hundred sixty-four pesos and fifty-eight centavos (P1,724,364.58). The action included the
prayer to collect the amount of the CHECK paid to Vicente Alegre but dishonored by BPI.

Meanwhile, in response to Alegres complaint with RTC-Makati, Branch 132, CIFC filed a motion for leave of court to file a third-party complaint
against BPI. BPI was impleaded by CIFC to enforce a right, for contribution and indemnity, with respect to Alegres claim. CIFC asserted that the
CHECK it issued in favor of Alegre was genuine, valid and sufficiently funded.

On July 23, 1992, the trial court granted CIFCs motion. However, BPI moved to dismiss the third-party complaint on the ground of pendency of
another action with RTC-Makati, Branch 147. Acting on the motion, the trial court dismissed the third-party complaint on November 4, 1992, after
finding that the third party complaint filed by CIFC against BPI is similar to its ancillary claim against the bank, filed with RTC-Makati Branch 147.

Thereafter, during the hearing by RTC-Makati, Branch 132, held on May 27, and June 22, 1993, Vito Arieta, Bank Manager of BPI, testified that the
bank, indeed, dishonored the CHECK, retained the original copy and forwarded only a certified true copy to RCBC. When Arieta was recalled on July
20, 1993, he testified that on July 16, 1993, BPI encashed and deducted the said amount from the account of CIFC, but the proceeds, as well as the
CHECK remained in BPIs custody. The banks move was in accordance with the Compromise Agreement[5] it entered with CIFC to end the litigation
in RTC-Makati, Branch 147. The compromise agreement, which was submitted for the approval of the said court, provided that:

1. Defendant [BPI] shall pay to the plaintiff [CIFC] the amount of P1,724,364.58 plus P 20,000 litigation expenses as full and final settlement of all of
plaintiffs claims as contained in the Amended Complaint dated September 10, 1992. The aforementioned amount shall be credited to plaintiffs current
account No. 0011-0803-59 maintained at defendants Main Branch upon execution of this Compromise Agreement.

2. Thereupon, defendant shall debit the sum of P 514,390.94 from the aforesaid current account representing payment/discharge of BPI Check No.
513397 payable to Vicente Alegre.

3. In case plaintiff is adjudged liable to Vicente Alegre in Civil Case No. 92-515 arising from the alleged dishonor of BPI Check No. 513397, plaintiff
cannot go after the defendant: otherwise stated, the defendant shall not be liable to the plaintiff. Plaintiff [CIFC] may however set-up the defense of
payment/discharge stipulated in par. 2 above.[6]
On July 27, 1993, BPI filed a separate collection suit[7] against Vicente Alegre with the RTC-Makati, Branch 62. The complaint alleged that Vicente
Alegre connived with certain Lina A. Pena and Lita A. Anda and forged several checks of BPIs client, CIFC. The total amount of counterfeit checks
was P 1,724,364.58. BPI prevented the encashment of some checks amounting to two hundred ninety five thousand, seven hundred seventy-five
pesos and seven centavos (P295,775.07). BPI admitted that the CHECK, payable to Vicente Alegre for P514,390.94, was deducted from BPIs claim,
hence, the balance of the loss incurred by BPI was nine hundred fourteen thousand, one hundred ninety-eight pesos and fifty-seven centavos
(P914,198.57), plus costs of suit for twenty thousand (P20,000.00) pesos. The records are silent on the outcome of this case.

On September 27, 1993, RTC-Makati, Branch 132, rendered judgment in favor of Vicente Alegre.

CIFC appealed from the adverse decision of the trial court. The respondent court affirmed the decision of the trial court.

Hence this appeal,[8] in which petitioner interposes the following assignments of errors:

1. The Honorable Court of Appeals erred in affirming the finding of the Honorable Trial Court holding that petitioner was not discharged from the
liability of paying the value of the subject check to private respondent after BPI has debited the value thereof against petitioners current account.

2. The Honorable Court of Appeals erred in applying the provisions of paragraph 2 of Article 1249 of the Civil Code in the instant case. The applicable
law being the Negotiable Instruments Law.

3. The Honorable Court of Appeals erred in affirming the Honorable Trial Courts findings that the petitioner was guilty of negligence and delay in the
performance of its obligation to the private respondent.

4. The Honorable Court of Appeals erred in affirming the Honorable Trial Courts decision ordering petitioner to pay legal interest and the cost of suit.

5. The Honorable Court of Appeals erred in affirming the Honorable Trial Courts dismissal of petitioners third-party complaint against BPI.

These issues may be synthesized into three:

1. WHETHER OR NOT ARTICLE 1249 OF THE NEW CIVIL CODE APPLIES IN THE PRESENT CASE;

2. WHETHER OR NOT BPI CHECK NO. 513397 WAS VALIDLY DISCHARGED; and

3. WHETHER OR NOT THE DISMISSAL OF THE THIRD PARTY COMPLAINT OF PETITIONER AGAINST BPI BY REASON OF LIS PENDENS
WAS PROPER?
On the first issue, petitioner contends that the provisions of the Negotiable Instruments Law (NIL) are the pertinent laws to govern its money market
transaction with private respondent, and not paragraph 2 of Article 1249 of the Civil Code. Petitioner stresses that it had already been discharged
from the liability of paying the value of the CHECK due to the following circumstances:

1) There was ACCEPTANCE of the subject check by BPI, the drawee bank, as defined under the Negotiable Instruments Law, and therefore, BPI, the
drawee bank, became primarily liable for the payment of the check, and consequently, the drawer, herein petitioner, was discharged from its liability
thereon;

2) Moreover, BPI, the drawee bank, has not validly DISHONORED the subject check; and,

3) The act of BPI, the drawee bank of debiting/deducting the value of the check from petitioners account amounted to and/or constituted a discharge
of the drawers (petitioners) liability under the instrument/subject check.[9]

Petitioner cites Section 137 of the Negotiable Instruments Law, which states:

Liability of drawee retaining or destroying bill - Where a drawee to whom a bill is delivered for acceptance destroys the same, or refuses within
twenty-four hours after such delivery or such other period as the holder may allow, to return the bill accepted or non-accepted to the Holder, he will be
deemed to have accepted the same.

Petitioner asserts that since BPI accepted the instrument, the bank became primarily liable for the payment of the CHECK. Consequently, when BPI
offset the value of CHECK against the losses from the forged checks allegedly committed by the private respondent, the check was deemed paid.

Article 1249 of the New Civil Code deals with a mode of extinction of an obligation and expressly provides for the medium in the payment of debts. It
provides that:

The payment of debts in money shall be made in the currency stipulated, and if it is not possible to deliver such currency, then in the currency, which
is legal tender in the Philippines.

The delivery of promissory notes payable to order, or bills of exchange or other mercantile documents shall produce the effect of payment only when
they have been cashed, or when through the fault of the creditor they have been impaired.

In the meantime, the action derived from the original obligation shall be held in abeyance.

Considering the nature of a money market transaction, the above-quoted provision should be applied in the present controversy. As held in Perez vs.
Court of Appeals,[10] a money market is a market dealing in standardized short-term credit instruments (involving large amounts) where lenders and
borrowers do not deal directly with each other but through a middle man or dealer in open market. In a money market transaction, the investor is a
lender who loans his money to a borrower through a middleman or dealer.[11]
In the case at bar, the money market transaction between the petitioner and the private respondent is in the nature of a loan. The private respondent
accepted the CHECK, instead of requiring payment in money. Yet, when he presented it to RCBC for encashment, as early as June 17, 1991, the
same was dishonored by non-acceptance, with BPIs annotation: Check (is) subject of an investigation. These facts were testified to by BPIs manager.
Under these circumstances, and after the notice of dishonor,[12] the holder has an immediate right of recourse against the drawer,[13] and
consequently could immediately file an action for the recovery of the value of the check.

In a loan transaction, the obligation to pay a sum certain in money may be paid in money, which is the legal tender or, by the use of a check. A check
is not a legal tender, and therefore cannot constitute valid tender of payment. In the case of Philippine Airlines, Inc. vs. Court of Appeals,[14] this
Court held:

Since a negotiable instrument is only a substitute for money and not money, the delivery of such an instrument does not, by itself, operate as payment
(citation omitted). A check, whether a managers check or ordinary check, is not legal tender, and an offer of a check in payment of a debt is not a valid
tender of payment and may be refused receipt by the obligee or creditor. Mere delivery of checks does not discharge the obligation under a judgment.
The obligation is not extinguished and remains suspended until the payment by commercial document is actually realized (Art. 1249, Civil Code, par.
3.)[15]

Turning now to the second issue, when the bank deducted the amount of the CHECK from CIFCs current account, this did not ipso facto operate as a
discharge or payment of the instrument. Although the value of the CHECK was deducted from the funds of CIFC, it was not delivered to the payee,
Vicente Alegre. Instead, BPI offset the amount against the losses it incurred from forgeries of CIFC checks, allegedly committed by Alegre. The
confiscation of the value of the check was agreed upon by CIFC and BPI. The parties intended to amicably settle the collection suit filed by CIFC with
the RTC-Makati, Branch 147, by entering into a compromise agreement, which reads:

xxx

2. Thereupon, defendant shall debit the sum of P 514,390.94 from the aforesaid current account representing payment/discharge of BPI Check No.
513397 payable to Vicente Alegre.

3. In case plaintiff is adjudged liable to Vicente Alegre in Civil Case No. 92-515 arising from the alleged dishonor of BPI Check No. 513397, plaintiff
cannot go after the defendant; otherwise stated, the defendant shall not be liable to the plaintiff. Plaintiff however (sic) set-up the defense of payment/
discharge stipulated in par. 2 above.[16]

A compromise is a contract whereby the parties, by making reciprocal concessions, avoid a litigation or put an end to one already commenced.[17] It
is an agreement between two or more persons who, for preventing or putting an end to a lawsuit, adjust their difficulties by mutual consent in the
manner which they agree on, and which everyone of them prefers in the hope of gaining, balanced by the danger of losing.[18] The compromise
agreement could not bind a party who did not sign the compromise agreement nor avail of its benefits.[19] Thus, the stipulations in the compromise
agreement is unenforceable against Vicente Alegre, not a party thereto. His money could not be the subject of an agreement between CIFC and BPI.
Although Alegres money was in custody of the bank, the banks possession of it was not in the concept of an owner. BPI cannot validly appropriate the
money as its own. The codal admonition on this issue is clear:

Art. 1317 -

No one may contract in the name of another without being authorized by the latter, or unless he has by law a right to represent him.

A Contract entered into in the name of another by one who has no authority or legal representation, or who has acted beyond his powers, shall be
unenforceable, unless it is ratified, expressly or impliedly, by the person on whose behalf it has been executed, before it is revoked by the other
contracting party.[20]

BPIs confiscation of Alegres money constitutes garnishment without the parties going through a valid proceeding in court. Garnishment is an
attachment by means of which the plaintiff seeks to subject to his claim the property of the defendant in the hands of a third person or money owed to
such third person or a garnishee to the defendant.[21] The garnishment procedure must be upon proper order of RTC-Makati, Branch 62, the court
who had jurisdiction over the collection suit filed by BPI against Alegre. In effect, CIFC has not yet tendered a valid payment of its obligation to the
private respondent. Tender of payment involves a positive and unconditional act by the obligor of offering legal tender currency as payment to the
obligee for the formers obligation and demanding that the latter accept the same.[22] Tender of payment cannot be presumed by a mere inference
from surrounding circumstances.

With regard to the third issue, for litis pendentia to be a ground for the dismissal of an action, the following requisites must concur: (a) identity of
parties or at least such as to represent the same interest in both actions; (b) identity of rights asserted and relief prayed for, the relief being founded
on the same acts; and (c) the identity in the two cases should be such that the judgment which may be rendered in one would, regardless of which
party is successful, amount to res judicata in the other.[23]

The trial courts ruling as adopted by the respondent court states, thus:

A perusal of the complaint in Civil Case No. 92-1940, entitled Cebu International Finance Corporation vs. Bank of the Philippine Islands now pending
before Branch 147 of this Court and the Third Party Complaint in the instant case would readily show that the parties are not only identical but also
the cause of action being asserted, which is the recovery of the value of BPI Check No. 513397 is the same. In Civil Case No. 92-1940 and in the
Third Party Complaint the rights asserted and relief prayed for, the reliefs being founded on the facts, are identical.

xxx

WHEREFORE, the motion to dismiss is granted and consequently, the Third Party Complaint is hereby ordered dismissed on ground of lis pendens.
[24]
We agree with the observation of the respondent court that, as between the third party claim filed by the petitioner against BPI in Civil Case No.
92-515 and petitioners ancillary claim against the bank in Civil Case No. 92-1940, there is identity of parties as well as identity of rights asserted, and
that any judgment that may be rendered in one case will amount to res judicata in another.

The compromise agreement between CIFC and BPI, categorically provided that In case plaintiff is adjudged liable to Vicente Alegre in Civil Case No.
92-515 arising from the alleged dishonor of BPI Check No. 513397, plaintiff (CIFC) cannot go after the defendant (BPI); otherwise stated, the
defendant shall not be liable to the plaintiff.[25] Clearly, this stipulation expressed that CIFC had already abandoned any further claim against BPI with
respect to the value of BPI Check No. 513397. To ask this Court to allow BPI to be a party in the case at bar, would amount to res judicata and would
violate terms of the compromise agreement between CIFC and BPI. The general rule is that a compromise has upon the parties the effect and
authority of res judicata, with respect to the matter definitely stated therein, or which by implication from its terms should be deemed to have been
included therein.[26] This holds true even if the agreement has not been judicially approved.[27]

WHEREFORE, the instant petition is hereby DENIED. The Decision of the Court of Appeals in CA-G.R. CV No. 44085 is AFFIRMED. Costs against
petitioner.

SO ORDERED.

Case Digest:

Cebu Financial vs CA and Alegre


GR No. 123031, 12 October 1999
316 SCRA 488

FACTS
Vicente Alegre invested with Cebu International Finance Corporation (CIFC) P500,000 in cash. CIFC issued promissory note which covered private
respondents placement. CIFC issued BPI Check No. 513397 (the Check) in favor of private respondent as proceeds of his matured investment. Mrs.
Alegre deposited the Check with RCBC but BPI dishonoured it, annotating therein that the Check is subject of an investigation. BPI took possession
of the Check pending investigation of several counterfeit checks drawn against CIFCs checking account. Private respondent demanded from CIFC
that he be paid in cash but the latter refused. Private respondent Alegre filed a case for recovery of a sum of money against CIFC.

CIFC asserts that since BPI accepted the instrument, the bank became primarily liable for the payment of the Check. When BPI offset the value of the
Check against the losses from the forged cheks allegedly committed by private respondent, the Check was deemed paid.

ISSUE
Whether or not petitioner CIFC is discharged from the liability of paying the value of the Check.
HELD
The Court held in the negative. In a money market transaction, the investor is a lender who loans his money to a borrower through a middleman or
dealer. A check is not legal tender, and therefore cannot constitute valid tender of payment. Since a negotiable instrument is only substitute for money
and not money, the delivery of such an instrument does not by itself, operate as payment. Mere delivery of checks does not discharge the obligation
under a judgment. The obligation is not extinguished and remains suspended until the payment by commercial document is actually realized. (Article
1249)

Petition denied.

EN BANC
[A.M. No. P-04-1885. September 13, 2004]

FLORENTINO A. CAJA, petitioner, vs. ATILANO G. NANQUIL, SHERIFF IV, REGIONAL TRIAL COURT, BRANCH 72, OLONGAPO CITY,
respondent.
DECISION
CHICO-NAZARIO, J.:

Before us is a complaint for Grave Misconduct and Gross Ignorance of the Rules on Execution under the Rules of Court against Atilano G. Nanquil,
Sheriff IV, Regional Trial Court, Branch 72, Olongapo City.

Complainant Florentino A. Caja was a defendant in Civil Case No. 182-0-96 entitled Triangle Ace Corporation, Rep. by its General Manager, Mr.
David J. Sagun versus Subic Realty Corporation, Florentino Caja and Erickson Y. Caja[1] for Sum of Money before Branch 72 of the Regional Trial
Court of Olongapo City.

On November 19, 1996, Judge Eliodoro G. Ubiadas rendered a decision in Civil Case No. 182-0-96, the dispositive portion of which reads:

WHEREFORE, judgment is hereby rendered ordering the defendants to pay the plaintiff jointly and solidarily the amount of P956,285.00 with interest
at the rate of 18% per annum from April 27, 1995, plus the amount of ten (10%) percent of the amount as attorneys fees plus costs of the suit.[2]

On February 12, 1997, a Writ of Execution,[3] addressed to Sheriff Nanquil, was issued.

On February 27, 1997, Sheriff Nanquil sent a Notice of Garnishment to the Manager of PAG-IBIG (Take-Out Office) informing the latter not to deliver,
transfer or dispose defendants money, credits, shares, interests and deposits therein except upon orders from the court.[4] In the Answer to Notice of
Garnishment dated March 3, 1997, Daisy R. Roldan, Head, Mortgage Take-Out Center, NCR-I, stated that they will hold on to the account of one
Edgar Ballesteros (P157,500.00).[5]
On May 19, 1997, per Sheriffs Return, the Writ of Execution was returned unsatisfied.[6] Hence, an Alias Writ of Execution was subsequently issued
on May 19, 1997.[7]

Per Notice of Levy dated May 19, 1997, Sheriff Nanquil levied a parcel of land covered by Transfer Certificate of Title No. T-46478, including its
improvements, declared in the name of Subic Realty Corporation under Tax Declaration No. 010-1356 with a total assessed value of P1,786,870.00.
[8]

On July 1, 1997, Sheriff Nanquil levied the following personal properties of defendants:

1. One Payloader, 75 B Michigan,


TCM Engine No. PD6-072064

2. One Dump Truck


Chassis No. CXZ 19J-1992977
Color Blue[9]

On the same date, he issued an Additional Notice of Levy for seventy-seven (77) pieces of G.I. Sheets (gauge 26 by 7 feet).[10]

On July 8, 1997, a Notice of Third Party Claim was filed by Antero T. Dominguez, Account Officer of the Marketing Department of BAP Credit
Guaranty Corporation (BCGC), before Branch 72 of Regional Trial Court of Olongapo City, informing its sheriff, that the payloader and dump truck he
levied were previously mortgaged to BCGC. He requested that the levy thereon be immediately lifted and/or discharged in accordance with Section
17, Rule 39 of the Revised Rules of Court.[11]

Third Party Claimant BCGC filed an Urgent Motion to Lift Writ of Attachment dated December 15, 1997 praying that the writ be lifted and aforesaid
levied equipment be delivered to it so it can foreclose the same.[12] On December 17, 1997, plaintiff Triangle Ace Corporation filed a Motion to Strike
Out Motion to Lift Writ of Attachment.[13]

On May 7, 1998, Judge Ubiadas denied the Urgent Motion to Lift Writ of Attachment[14] to which Third Party Claimant BCGC filed a Motion for
Reconsideration.[15] Plaintiff moved to strike out said motion which Third Party Claimant BCGC opposed.[16]

In an Order dated November 27, 1998, Judge Ubiadas granted plaintiffs motion to strike out the Motion for Reconsideration.[17]

On January 18, 2000, defendants Subic Realty Corporation, Florentino Caja and Erickson Y. Caja filed a Motion to Lift Levy on Execution praying that
the levy on their real property made on May 19, 1997 be lifted on the ground that the levy made on their personal properties is sufficient to satisfy the
judgment. They likewise asked the lower court to direct the sheriff to conduct the appropriate execution sale.[18]
On March 6, 2001, Judge Ubiadas denied the Motion to Lift Levy arguing that it cannot be determined at that time if the amount levied is way above
the amount necessary to satisfy the judgment creditor. He further ordered Sheriff Nanquil to immediately schedule the auction sale of defendants real
and personal properties that were levied in accordance with the writ of execution.[19]

On April 26, 2001, the Office of Acting Court Administrator Zenaida N. Elepao received the complaint at bar dated April 10, 2001 filed by Florentino A.
Caja against Sheriff Nanquil. The complaint alleged, among others things, the following:

Sometime on May 19, 1997, Sheriff Atilano Nanquil issued a Notice of Levy of the real property owned by Subic Realty Corporation (the undersigned
as the President) with an assessed value of PhP1,786,870.00. Again, on July 1, 1997, the same Sheriff issued a Notice of Levy on the personal
properties of the defendant Subic Realty Corporation with assessed value fixed at PhP2,900,000.00.

Under the Rules of Civil Procedure particularly in execution, the sheriff in making the levy must only levy as is sufficient to satisfy the judgment but not
beyond what is stated therein. In the instant case, there was an over levy made by Sheriff Nanquil in utter disregard of the rules.

xxxxxxxxx

After the levy on the properties of the judgment debtor, the Sheriff must deliver the same to the court for execution sale. However, in the instant case,
the properties levied by Sheriff Nanquil on execution were delivered directly to the judgment creditor (plaintiff Triangle Ace Corporation) without
conducting the auction sale as provided in Rule 39, Section 19 of the Rules of Civil Procedure.

Moreover, Sheriff Nanquil, in violation of Section 9(b) of Rule 39 of the Rules of Civil Procedure, which states:

x x x If the judgment obligor does not exercise the option, the officer shall first levy on the personal properties, if any, and then on the real properties if
the personal properties were insufficient to answer for the judgment.[20]

On April 30, 2001, Deputy Court Administrator Jose P. Perez indorsed the complaint to Sheriff Nanquil requiring him to submit his comment thereon
within ten days from receipt thereof.[21]

On May 23, 2001, Sheriff Nanquil issued a Notice of Sheriffs Sale announcing that on June 14, 2001, at 10 a.m., in front of the Hall of Justice, West
Bajac-Bajac, Olongapo City, he would be selling at public auction to the highest bidder and for cash, the following levied properties:

1. One Payloader, 75 B Michigan, TCM


Engine No. PD6-072064

2. One Dump Truck


Chassis No. CXZ 19J-1992977
3. 77 pieces of G.I. sheets
Gauge 26 x 7 feet[22]

On the same date, Judge Ubiadas forwarded to Deputy Court Administrator Perez the Comment of Sheriff Nanquil.[23] It reads in part:

2) The complaint against the undersigned arose out of Civil Case No. 182-0-96 entitled Triangle Ace Corp., represented by its General Manager, Mr.
David J. Sagun vs. Subic Realty Corporation, Florentino Caja and Erickson Caja which was raffled, heard and decided by this Court (RTC Br. 72);

3) That on May 29, 1996, a Writ of Attachment was issued in said case upon hearing of the application for its issuance and the filing of attachment
bond which was approved by this Court;

4) Hence, on July 11, 1996, a Notice of Levy was made on the following which were undergoing overhauling, to wit:

a. STD 25 Payloader DA 220-15420


Serial No. 6202641; and

b. D-80 Bulldozer Komatsu


Serial No. 19836

Attached herewith to form an integral part of this Comment is a copy of the Notice of Levy and marked as Annex A;

5) Thereafter, the Decision was issued on November 19, 1996 and a Writ of Execution was received by the undersigned on February 17, 1997 where
a Notice of Garnishment was issued to the Manager, Pag-ibig (Take out Office, Atrium Bldg., Makati Avenue, Makati City) and the Answer to the same
was received on April 2, 1997 amounting only to P157,500.00 in the account of Edgar Ballesteros being held therein and marked as Annexes B and
C, respectively;

6) Diligent efforts have been exerted to locate other personal properties but in vain;

7) Considering that the lifetime then of the Writ of Execution was Sixty (60) Days from his receipt, undersigned made a return for the same on May 19,
1997;

8) On May 19, 1997, an Alias Writ of Execution was issued upon motion of the plaintiff;

9) That on May 19, 1997 undersigned has levied the real property of the defendant relative to the Alias Writ of Execution issued in Civil Case No.
182-0-96, a copy of which is hereto attached together with a copy of the Notice of Levy which was duly registered with the Office of the Register of
Deeds of Zambales and marked as Annexes D and D-1, respectively;
10) That undersigned levied the aforesaid real property instead of the personal properties for the reason that undersigned Sheriff could not find any
attachable personal properties of the defendants enough to satisfy the judgment debt despite diligent efforts exerted;

11) Thereafter, an information was relayed that the defendants still have other personal property, hence, on July 1, 1997, undersigned levied the
personal properties of the defendants consisting of one Payloader, one Dump Truck and 77 G.I. sheets gauge 26 x 7 feet, a copy of the Notices of
Levy are hereto attached and marked as Annexes E and E-1;

12) The undersigned kept the said equipments (sic) in a vacant lot owned by the plaintiff considering that there is no available place in the Hall of
Justice of Olongapo City neither in any other place in Olongapo City that would not be exposed to elements; likewise, this was with the knowledge
and consent of the defendants but no complaint was made;

13) That it was only on March 6, 2001 that the Court ordered the immediate sale of the properties levied to determine [whether] the proceeds of sale
is enough to satisfy the judgment; a copy of the Order is attached as Annex F hereof;

14) That undersigned has scheduled the auction sale of the above-mentioned equipments (sic) on June 14, 2001, a copy of the Notice of Sheriffs
Sale is hereto attached and marked as Annex G;

15) That undersigned did not include the real property in the auction sale as the same is mortgaged with a certain bank in Bulacan according to the
Register of Deeds of Zambales in the amount of P10,000,000.00.[24]

On June 14, 2001, the levied personal properties were sold at public auction with judgment creditor Triangle Ace Corporation declared as the highest
bidder for P705,500.00 (P350,000.00 payloader; P350,000.00 dumptruck; G.I. sheets P5,500.00). By way of a Certificate of Sale, said personal
properties were transferred, ceded and conveyed to Triangle Ace Corporation. The amount of P705,500.00 was not paid to respondent sheriff since
the same did not exceed the total obligation of judgment debtors.[25]

On July 26, 2002, Court Administrator Presbitero J. Velasco, Jr. submitted a report on the investigation of the complaint where he recommended that
the Initial Preliminary Investigation be dismissed for lack of merit.[26]

On August 26, 2002, this Court required complainant Caja to file his reply to respondent sheriffs comment.[27] The Reply was received on October 7,
2002.[28]

On November 11, 2002, We referred the administrative matter to the Executive Judge of Olongapo City for investigation, report and recommendation.
[29]

Per manifestation of complainant Caja that respondent Nanquil is assigned to the Judge to whom the investigation of the complaint was referred to,
the Court revoked the designation of said judge as investigator, and referred the case to Judge Avelino A. Lazo of Branch 75, Regional Trial Court,
Olongapo City for investigation, report and recommendation.[30]
As required by the Investigating Judge, complainant and respondent filed their respective position papers.[31]

Complainant Florentino Caja and Hipolito Erickson Caja testified before the Investigating Judge.[32] For the defense, respondent Nanquil took the
witness stand, together with John Aquino.[33]

After the parties concluded the presentation of their evidence, they filed their respective memoranda.[34]

On October 9, 2003, the Investigating Judge forwarded to this Court the resolution and entire record of the proceedings. In his resolution, he
recommended that the administrative complaint against respondent sheriff be dismissed for lack of merit.[35]

We referred the report of Judge Lazo to the Office of the Court Administrator for evaluation, report and recommendation.[36] In his memorandum to
Associate Justice Reynato S. Puno, the Court Administrator recommended the dismissal of the administrative complaint against respondent sheriff.
[37]

Complainant alleged that respondent sheriff committed the following irregularities amounting to Gross Misconduct:

1. Respondent sheriff levied defendants real property ahead of their personal properties;

2. Respondent sheriff made an excessive levy;

3. Respondent sheriff levied defendants personal properties without serving a Notice of Levy or issuing a receipt therefor;

4. Respondent sheriff delivered the levied personal properties to the judgment creditor without conducting an auction sale; and

5. Respondent sold the levied personal properties in an auction sale almost four years after being levied. [38]

Complainant contends that respondent sheriff levied his real property ahead of his personal properties as shown by the Notice of Levy on his real
property dated May 19, 1997, and Notice of Levy and Additional Notice of Levy on his personal properties both dated July 1, 1997, in violation of the
Alias Writ of Execution and Section 9(b) of Rule 39[39] of the Revised Rules of Court.

In answer thereto, respondent admitted that he first levied real property under TCT No. T-46478 but since the same was heavily mortgaged for
P5,000,000.00, the judgment creditor, Triangle Ace Corporation, desisted from proceeding with the levy. It was because of this that he levied the
personal properties consisting of the payloader, dump truck and G.I. sheets. He maintains that his action was in accordance with Section 9(b) of the
New Rules of Civil Procedure which states that the officer shall levy upon the properties of the judgment obligor of every kind and nature whatsoever
which may be disposed for value and not otherwise exempt from execution. He added that although the aforesaid section provides that the officer
shall first levy on the personal properties, if any, then on the real properties if the personal properties are insufficient to answer the judgment, this
section has been nullified by the succeeding paragraph which says (w)hen there is more property of the judgment obligor that is sufficient to satisfy
the judgment and lawful fees, he must sell only so much of the personal or real property as is sufficient to satisfy the judgment and lawful fees.

At the outset, it must be determined whether or not the 1997 Rules of Civil Procedure which took effect on July 1, 1997[40] applies to the case at bar.
From the record of the case, it is apparent that respondent sheriff, after Judge Eliodoro G. Ubiadas rendered his decision in Civil Case No. 182-0-96
on November 19, 1996, issued a Notice of Garnishment dated February 27, 1997 and a Notice of Levy on real property dated May 19, 1997.
Thereafter, on July 1, 1997, he issued a Notice of Levy and an Additional Notice of Levy on personal properties.

The Rules of Court shall govern all cases brought after they take effect, and also all further proceedings in cases then pending, except to the extent
that in the opinion of the court their application would not be feasible or would work injustice, in which event the former procedure shall apply.[41]
Inasmuch as respondent sheriff started levying the properties of complainant before the effectivity of the 1997 Rules of Civil Procedure, and
considering further that the provision he is invoking was inexistent then, it is only proper to apply the rules prevailing when he began levying
complainants properties. To do otherwise would create unfairness and cause inequity in the application of the rules.

Since the case stemmed from the final judgment of the lower court in a collection case, the pertinent rules are the provisions of the Rules of Court
regarding writs of execution and execution of money judgments.

Section 8 of Rule 39 deals with the issuance, form and contents of a writ of execution. Said section reads:

Sec. 8. Issuance, form and contents of a writ of execution --- The writ of execution must issue in the name of the Republic of the Philippines from the
court in which the judgment or order is entered; must intelligently refer to such judgment or order, stating the court, province, and municipality where it
is of record, and the amount actually due thereon if it be for money; and must require the sheriff or other proper officer to whom it is directed
substantially as follows:

(a) If the execution be against the property of the judgment debtor, to satisfy the judgment, with interest, out of the personal property of such debtor,
and if sufficient personal property cannot be found, then out of his real property; x x x. (underscoring supplied)

Section 15 of Rule 39 provides the manner by which the execution of a money judgment must be enforced:

Sec. 15. Execution of money judgments. --- The officer must enforce an execution of a money judgment by levying on all the property, real and
personal of every name and nature whatsoever, and which may be disposed for value, of the judgment debtor not exempt from execution, or on a
sufficient amount of such property, if there be sufficient, and selling the same, and paying to the judgment creditor, or his attorney, so much of the
proceeds as will satisfy the judgment. Any excess in the proceeds over the judgment and accruing costs must be delivered to the judgment debtor,
unless otherwise directed by the judgment or order of the court. When there is more property of the judgment debtor than is sufficient to satisfy the
judgment and accruing costs, within the view of the officer, he must levy only on such part of the property as is amply sufficient to satisfy the judgment
and costs.
Real property, stocks, shares, debts, credits, and other personal property, or any interest in either real or personal property, may be levied on in like
manner and with like effect as under a writ of attachment.

It is clear in Section 8(a) of Rule 39 that satisfaction of the judgment must be carried out first through the personal property of the judgment debtor,
and then through his real property. This directive is evident from the Writ of Execution and Alias Writ of Execution issued by the Regional Trial Court
which reads:

NOW THEREFORE, you are hereby commanded to order the defendants to pay the plaintiff jointly and solidarily the amount of P956,285.00 with
interest at the rate of 18% per annum from April 27, 1995, plus the amount of ten (10%) percent of the amount as attorneys fees plus costs of the suit
and in default of such payment, you cause to be made said sum out of the goods and chattels of the defendants aside from your lawful fees.

BUT, if sufficient personal properties cannot be found, then you are commanded that of the lands and buildings of the defendants, you cause to be
made the said sum in the manner required for by the Rules of Court and make return of this writ within sixty (60) days together with your proceedings
indorsed thereon.[42]

Going over the record of the case, it appears that after the decision of the lower court became final and a writ of execution was issued, the first thing
respondent sheriff did was to serve a Notice of Garnishment to the Manager of PAG-IBIG (Take-Out Office) advising the latter not to deliver, transfer
or dispose of money credits, shares, interests, and deposits in his control and possession belonging to Subic Realty Corporation, Florentino Caja and
Erickson Y. Caja.[43] Subsequently, an alias writ of execution was issued and pursuant thereto, he levied the real property of complainant on May 19,
1997 and then the latters personal properties on July 1, 1997.

Clearly, what respondent sheriff levied first was personal property via garnishment. Garnishment is considered as a specie of attachment for reaching
credits belonging to the judgment debtor and owing to him from a stranger to the litigation.[44] It involves money, stocks, credits, and other
incorporeal property which belong to the party but is in the possession or under the control of a third person.[45] Since the properties involved in
garnishment are personal properties, garnishment is thus a levy on personal property.

We, however, find that respondent sheriff still violated the rule that satisfaction of the judgment must be carried out first through the personal property
of the judgment debtor, and then through his real property. After levying the real property of complainant, respondent sheriff then levied complainants
personal properties which is a direct violation of Section 8, Rule 39 and of the writ and alias writ of execution issued by the court.

Respondent sheriffs contention that he levied the personal properties of complainant after the judgment creditor desisted from proceeding with the
levy on the real property when it was discovered that the real property he previously levied was already mortgaged for P5,000,000.00, cannot give
him any relief.

First, there was negligence on his part when he immediately levied the real property of complainant without checking if the latter has other personal
properties that could satisfy the judgment. He could have easily asked the Land Transportation Office if complainant had vehicles registered in his
name. If he had done so, respondent sheriff could have known that complainant had vehicles which he could levy first before levying any real
property. He should have exhausted all means before going after the real property. This, he did not do. It was only after levying complainants real
property and after discovering that said property was encumbered did he look for other personal property.

Second, the claim that the judgment creditor desisted from proceeding with the levy on the real property is no excuse. The levy on complainants real
property was already effected and annotated as shown by Entry No. 122714 in TCT No. T-46478. It was the sale of the real property in an execution
sale which the judgment creditor did not insist on because the same was already mortgaged for P10,000,000.00 in favor of Town Savings and Loan
Bank of Bulacan per Entry No. 121262.[46]

Complainant further accuses respondent of making an excessive levy. The decision, he said, calls only for the payment of P956,285.00 with interest
at the rate of 18% per annum from April 27, 1995 plus ten (10%) percent of the amount as attorneys fees plus costs of the suit, but respondent levied
properties totaling almost five million pesos which is an amount over and above the judgment debt to be satisfied. He alleged that the personal
properties respondent levied have an amount of more than three million pesos,[47] and the real property had an assessed value of P1,786,870.00
and is mortgaged for ten million pesos.[48] He added that respondent sheriff was offered other real properties which are smaller in value and not
encumbered but he insisted on levying the real property which has a conservative assessed value of double the amount to be satisfied.

Respondent sheriff countered that, anyway, the levy on the real property was not continued because the property was heavily indebted at five million
pesos. As to the levy on the personal properties, he alleged that same cannot be excessive because their acquisition cost is not the price in an
auction sale, the latter being much lower than the former.

As stated in the second paragraph of the aforecited section, the manner by which a levy on execution is to be effected is the same as that under a
writ of attachment. Section 7 of Rule 57 illustrates how a property is attached:

Sec. 7. Attachment of real and personal property; recording thereof. --- Properties shall be attached by the officer executing the order in the following
manner:

a) Real property, or growing crops thereon, standing upon the records of the registrar of deeds of the province in the name of the party against whom
attachment is issued, or not appearing at all upon such records, by filing with the registrar of deeds a copy of the order, together with a description of
the property attached, and a notice that it is attached, and by leaving a copy of such order, description, and notice with the occupant of the property, if
any there be. Where the property has been brought under the operation of the Land Registration Act, the notice shall contain a reference to the
number of the certificate of title and the volume and page in the registration book where the certificate is registered. The registrar must index
attachments filed under this paragraph in the names both of the applicant and the adverse party.

xxxxxxxxx

(c) Personal property capable of manual delivery, by taking and safely keeping it in his capacity, after issuing the corresponding receipt therefor; x x x.
We find respondent sheriffs contention that the levy on complainants real property was not continued because it was previously mortgaged to be
untenable. The levy thereon was completed as shown by the annotation (Entry No. 122714) of the Notice of Levy on Transfer Certificate of Title No.
T-46478. In fact, complainant, together with the other defendants in Civil Case No. 182-0-96, filed a Motion to Lift Levy on Execution dated January
18, 2000 asking that the levy on the real property be lifted because the levy on the personal properties was sufficient to satisfy the judgment debt.
Unfortunately, the motion was denied by the lower court. It is clear that the levy on the real property is still subsisting. There was a valid levy on the
real property. Thus, it is improper for respondent sheriff to rely, as a defense, on his claim that the levy on the real property was not continued. It was
the sale of the levied real property in an execution sale which did not push through.

Levy is different from an execution sale. Levy has been defined as the act or acts by which an officer sets apart or appropriates a part or the whole of
a judgment debtors property for the purpose of satisfying the command of the writ of execution.[49] On the other hand, an execution sale is a sale by
a sheriff or other ministerial officer under the authority of a writ of execution which he has levied on property of the debtor.[50] In the case before us,
there was a levy on real property but the levied property was not sold in an execution sale because said property, if sold, will not satisfy the judgment
debt because of an existing encumbrance thereon.

There being a levy on the complainants real property, the amount thereof must be considered in determining if there was an overlevy. As gathered
from the Tax Declaration of the real property involved, including its improvements, its assessed value amounted to P1,786,870.00. It must be
remembered, however, that said property is mortgaged for P10,000,000.00 in favor of Town Savings and Loan Bank of Bulacan. The fact that the
property is mortgaged for ten million pesos only means that its value is more than said amount. This Court takes judicial notice of the fact that the
value of a property is usually bigger than the amount for which it can be mortgaged. No person, in the ordinary course of business, would give a loan
which is bigger than the value of the property that is used to secure such debt. Certainly, the issue of what is bigger -- the amount of the loan or the
amount of the security for its payment -- is within public knowledge and capable of unquestionable demonstration.[51]

The amount of the real property levied upon is definitely more than ten million pesos since the property was mortgaged for ten million. This amount
alone is more or less ten times greater than the judgment debt. As it is, there is already a clear case of overlevy. Although the levied realty was not
auctioned at an execution sale, its value should still be taken into account in computing the total amount levied by respondent sheriff.

Respondent sheriffs act of levying complainants real property despite its being mortgaged is tantamount to negligence. As an officer of the court, he
knew fully well that the property cannot be used to satisfy the judgment debt since the mortgagee is the preferred creditor in relation to said property.

Anent the levy on the complainants personal properties, he avers that respondent made an overlevy since the value of the payloader and the
dumptruck amounted to three million pesos which is over and above the judgment debt.

In the determination of the value of the two vehicles, it is the duty of complainant to show their true value as substantiated by competent proof. In the
case before us, complainant failed to present the best proof to accurately show their value. He should have adduced in evidence the deeds of sale of
said vehicles, but instead, he merely presented the invoices and delivery receipts. These pieces of evidence are not sufficient to prove the value of
these properties as claimed by complainant considering that when the same, together with the G.I. sheets, were sold in public auction, the bid
amounted only to P705,500.00 which is way below the judgment debt.
The rule is well-settled that a sheriff is guilty of misconduct where he failed to limit the goods to be levied to the amount called for in the writ.[52] A
deputy sheriff who made a levy far and in excess of the value of the judgment commits a misconduct in office.[53] In the case before us, respondent
sheriff clearly made an excessive levy when he levied complainants real property which was valued at more than ten million pesos (P10,000,000.00).

Complainant accuses respondent sheriff of surreptitiously taking the personal properties on July 1, 1997 without serving any Notice of Levy or issuing
any receipt for the same.

Respondent sheriff maintains that the Notice of Levy was not given to complainant or to anybody at the place where the personal properties were
taken because nobody would receive it. He added that complainant knew where they were taken. Moreover, he said, despite meeting complainant
several times, the latter neither complained to him about the levy nor filed any complaint in court.

As regards the notice of levy for the payloader and dump truck, respondent testified as follows:

ATTY. CESA

Q Let us go to this Notice of Levy on the payloader and dumptruck. When you made the levy on the payloader and the dumptruck, you issued a
notice of levy as brought out by the evidence?

A Yes, sir.

Q Did you, as a matter of procedure or practice leave a copy of the notice of levy before taking possession of the payloader and dumptruck?

A This is [the] usual practice, but at the time I was trying to leave a copy to the son of the complainant here, they were shouting at me and they told
me I will have to wait for their brother.

Q What did you do insofar as serving to them the notice of levy was concerned?

A I proceeded in the taking of the units.

Q Did you leave a copy of the notice of levy inspite of the fact that they refused to accept it?

ATTY. LOBIGAS

Objection, Leading.

ATTY. CESA
Anyway, this is only . . .

COURT

Preliminary. You can cross examine him.

ATTY. CESA (to witness)

Q Did you leave a copy of the notice of levy?

A I could not exactly remember if they have accepted it because I just showed him the notice of levy; that they dont want to get near of me and
because I was prevented in the taking away of . . .

COURT

The question is very simple.

(to witness)

Q Did you leave or did you not, a copy of the notice of levy to the party who was there?

A I could not remember anymore.[54]

Respondent sheriffs answer that he cannot remember if he did leave a copy of the Notice of Levy with the judgment debtor only shows that he was
not performing his duty as sheriff. As sheriff, it was his duty to give the notice of levy or receipt to the person to whom the personal properties were
taken. If no one would like to receive the same, it was his duty to leave copies of the notice at the place where he levied the personal property.
Thereafter, he should have reported the proceedings by filing a report or return to the court. In the case at bar, even assuming that no one was willing
to accept the notice of levy, the record is bereft of any evidence showing that respondent sheriff reported his failure to leave a copy of the notice of
levy. Sheriffs are officers of the court who serve and execute writs addressed to them by the court, and who prepare and submit returns of their
proceedings.[55] On this score, respondent was again remiss in his duty as a sheriff.

Complainant claims that respondent sheriff delivered the heavy equipment and G.I. sheets to the judgment creditor without conducting an auction
sale which is in contravention of the Alias Writ of Execution and a violation of Section 9(b), Rule 39 of the Rules of Court.

Respondent sheriff argues that he never delivered said personal properties to the judgment creditor but merely kept the same in a secured place
owned by the latter. He brought them there because the Sheriffs Office and the Regional Trial Court of Olongapo City had no warehouse or place to
keep levied personal properties. In support thereto, he presented John Aquino, Clerk of Court of the Regional Trial Court of Olongapo City, who
testified that they have no designated warehouse or building where sheriffs can keep levied personal properties. In so far as large motor vehicles, the
practice as to where to keep them is left at the discretion of the sheriff.[56]

Respondent sheriffs argument that he kept the levied personal properties at the judgment creditors place because the Regional Trial Court of
Olongapo City does not have any warehouse or place to keep the same does not hold water. A levying officer must keep the levied properties
securely in his custody. The levied property must be in the substantial presence and possession of the levying officer who cannot act as special
deputy of any party litigant.[57] They should not have been delivered to any of the parties[58] or their representative.[59] The courts lack of storage
facility to house the attached properties is no justification.[60] Respondent sheriff could have deposited the same in a bonded warehouse[61] or could
have sought prior authorization from the court that issued the writ of execution.[62]

In the case at bench, respondent sheriff brought the personal properties he levied directly to the vacant lot of Triangle Ace Corporation, plaintiff in Civil
Case No. 182-0-96, in violation of the rule requiring him to safely keep them in his capacity, after issuing the corresponding receipt therefor.[63] There
is nothing in the record that shows that prior to his delivery of the levied properties to Triangle Ace Corporation, he sought permission of the court that
issued the writ he enforced to keep the properties.

Furthermore, Erickson Caja said he once saw the levied dumptruck being used in hauling desilted materials from the Kalaklan River in Olongapo City.
[64] This claim was buttressed by BCGC in its Urgent Motion to Lift Writ of Attachment when it said:

5. Also on December 10, 1997, an ocular inspection was made on the premises of Plaintiff, located along Magsaysay Ave., Olongapo City, where the
subject dumptruck and payloader were temporarily stored, however, the truck and payloader were not there. Inquiries were made but no satisfactory
explanation nor answer were elicited from Sheriff Atilano G. Nanquil, the Sheriff-in-charge and/or from Mr. David J. Sagun, the Plaintiffs General
Manager.[65]

From these, it is apparent that respondent sheriff was again imprudent in his duty in safekeeping the properties he levied. In delivering the levied
personal properties to the judgment creditor, he allowed others to use them before they can be sold in a public auction. In allowing the levied
properties to be used is evidence that he had not taken care of, and safely kept, them in his substantial presence, possession and control.

Respondent sheriffs contention that complainant has not presented evidence that the levied properties sustained damages in the judgment creditors
vacant lot cannot legalize an act which is contrary to the Rules and to the writ of execution. The fact that he delivered the levied personal properties in
judgment creditors vacant lot is already a contravention of the Rules and of the writ of execution.

Respondent sheriff faults complainant for not complaining before the lower court on the alleged excessiveness of the levy, his failure to serve or leave
a notice of levy, and the manner of safekeeping the levied properties.

The failure of complainant to lodge a complaint before the lower court will not justify respondents improper actions. It is incumbent upon the latter to
know that his actions were not in accord with the Rules of Court. The non-filing of a complaint will not validate his objectionable actions.
The last irregularity complainant claims that respondent sheriff committed was it took the latter almost four years from the time he levied the personal
properties on July 1, 1997 to schedule the auction sale thereof, causing the chattels to deteriorate greatly in value.

Respondent sheriff retorted that the sale was authorized by the court through its order dated March 8, 2001. He said he deferred his action in
consultation with the court and that the court was aware of the situation of the levied properties. We sustain him in this aspect.

The delay of the scheduling of the auction sale cannot be attributed to respondent sheriff. There were pending incidents that had to be resolved by the
court before the execution sale can be held. After the personal properties were levied on July 1, 1997, a Notice of Third Party Claim was filed by
BCGC on July 8, 1997. Thereafter, BCGC filed an Urgent Motion to Lift Writ of Attachment dated December 15, 1997 which Judge Ubiadas denied on
May 7, 1998. A Motion for Reconsideration was filed but the same was stricken off the record per order dated November 27, 1998 upon motion of
plaintiff Triangle Ace Corporation. On January 18, 2000, defendants Subic Realty Corporation, Florentino Caja and Erickson Y. Caja filed a Motion to
Lift Levy on Execution which motion Judge Ubiadas denied on March 6, 2001. In said order, Sheriff Nanquil was ordered to immediately schedule the
auction sale of defendants levied real and personal properties. From the foregoing, respondent sheriff cannot be held liable for any delay of the
scheduling of the execution sale for he merely waited for the judge to rule on matters relative to the properties he had levied.

A public office is a public trust. All public officers and employees must, at all times, be accountable to the people. They ought to perform their duties
with utmost responsibility, integrity, competence, and loyalty, and with patriotism and justice, lead modest lives, and uphold public interest over
personal interest.[66] Every officer and man of the judiciary is expected to serve with the highest degree of responsibility, integrity, loyalty and
efficiency and to conduct themselves with propriety and decorum at all times.[67]

Sheriffs play an important role in the administration of justice and they should always hold inviolate and invigorate the tenet that a public office is a
public trust.[68] Being in the grassroots of our judicial machinery, sheriffs and deputy sheriffs are in close contact with the litigants; hence, their
conduct should all the more maintain the prestige and the integrity of the court.[69] By the very nature of their functions, sheriffs must conduct
themselves with propriety and decorum, so as to be above suspicion.[70] Sheriffs cannot afford to err in serving court writs and processes and in
implementing court orders lest they undermine the integrity of their office and the efficient administration of justice.[71]

It is undisputable that the most difficult phase of any proceeding is the execution of judgment.[72] The officer charged with this delicate task is the
sheriff. Despite being exposed to hazards that come with the implementation of the judgment, the sheriff must perform his duties by the book.
Respondent Nanquil failed to perform what was expected of him. As above discussed, his negligence in the discharge of his duties and his failure to
strictly comply with the provisions of the Rules of Court have left a stain not only on himself but more importantly in the office he holds which may lead
to the erosion of the peoples faith and confidence in the judicial system.

In a number of cases,[73] this Court imposed the penalty of dismissal on sheriffs found guilty of grave misconduct. Considering that the respondent
had spent the best years of his life in the Government Service he has been in the service for more than thirty-five (35) years, and is about to retire and
considering further that the offense he committed appears to be his first, the Court is inclined to grant him certain leniency without, nonetheless, being
unmindful of the fact that he had breached the provisions of the Rules of Court. For this reason, the Court is wont to impose the penalty of suspension
of six (6) months, without pay. However, since respondent sheriff will be compulsorily retiring this year,[74] the penalty imposed can no longer be fully
served. Thus, the Court resolves, in lieu of the suspension, to impose a fine equivalent to his six (6) months salary or Seventy-Nine Thousand Six
Hundred Forty-Four (P79,644.00) Pesos,[75] the same to be deducted from his retirement benefits.

WHEREFORE, respondent Atilano G. Nanquil, Sheriff IV, Regional Trial Court, Branch 72, Olongapo City, is found GUILTY of Gross Misconduct in the
discharge of his duties and is hereby FINED the amount of Seventy-Nine Thousand Six Hundred Forty-Four (P79,644.00) Pesos, same to be
deducted from his retirement benefits.

SO ORDERED.

Case Digest:
CAJA vs. NANQUIL
AM No. P-04-1885, September 13, 2004
FACTS: Complaint was a defendant in a civil case for Sum of Money which was decided against him. Respondent Sheriff was charged by petitioner
for grave misconduct and gross ignorance of the rules on execution. Respondent sheriff levied personal properties of the petitioner when the writ of
execution did not materialize. Complainant contends that respondent sheriff levied his real property ahead of his personal properties.

ISSUE: Whether or not it is the Civil Code or Rules of Court is applicable in the case regarding levying of properties.

RULING: The Rules of Court shall govern all cases brought after they take effect, and also all further proceedings in cases then pending. In as much
as respondent sheriff started levying the properties of complainant before the effectivity of the 1997 Rules of Civil Procedure, and considering further
that the provision he is invoking (Civil Code) was in existent then, it is only proper to apply the rules prevailing when he began
levying complainants properties. Since the case stemmed from the final

G.R. No. L-48955 July 27, 1943

GERVASIO ERAA, et al., petitioners,


vs.
JOSE O. VERA, Judge of First Instance of Manila, and MARIE JOSEPHINE PANZANI, respondents.

Vicente J. Francisco for petitioners.


Mariano H. de Joya for respondents.

MORAN, J.:

Respondent Marie Josephine Panzani was charged in the Court of First Instance of Manila with the crime of murder committed against Dr. Francisco
Erana and with the crime of frustrated murder committed against Bienvenido P. Erana. In these two criminal cases, the offended parties reserved their
right to institute a separate civil action for the civil liability arising from the two crimes charged. The same respondent was charged in the same court
in another criminal case with estafa wherein the right to institute a separate civil action was not waived nor reserved by the offended persons.

In these three criminal cases for murder, frustrated murder and estafa a petition was filed by the offended parties wherein a preliminary
attachment of the properties belonging to respondent was applied for upon some of the grounds specified in Rule 59, section 1, of the new Rules of
Court. The Court issued an order declaring itself to be without authority to issue writs of preliminary attachment in criminal cases. Hence, this petition
for combined writs of certiorari and mandamus to annul such order and to compel the respondent court to consider the merits of the motion for
preliminary attachment.

The question here raised is, therefore, whether or not a court, acting on a criminal case, has authority to grant preliminary attachment. According to
Rule 107, section 1, of the new Rules of Court, "when a criminal action is instituted, the civil action for recovery of civil liability arising from the offense
charged is impliedly instituted with the criminal action, unless the offended party expressly waives the civil action or reserves his right to institute it
separately." In the estafa case, since the offended persons did not either waive or reserve their right to institute their civil action separately, the same
is deemed instituted with the criminal action. There were therefore, in the estafa case two actions before the court: the criminal action for the
punishment of the accused, and the civil action for recovery of the money fraudulently taken by her. If the Court had jurisdiction over the civil action, it
must necessarily have jurisdiction of all its necessary incidents. Indeed, it is expressly provided in Rule 124, section 6, that "when by law jurisdiction is
conferred on a court or judicial officer, all auxilliary writs, processes and other means necessary to carry it into effect may be employed by such court
or officer; and if the procedure to be followed in the exercise of such jurisdiction is not specifically pointed out by these rules, any suitable process or
mode of proceeding may be adopted which appears most conformable to the spirit of said rules." One of the auxiliary writs to carry into effect the
jurisdiction of the court over the civil action is the preliminary writ of attachment without which the judgment of the court awarding civil indemnity may
be nugatory. Other processes which the court may issue are those which refer to the execution of such judgment where the rules applicable in civil
cases should be followed.

Respondents, however, invoke the decisions of this Court in U.S. vs. Namit, 38 Phil., 926 and People vs. Moreno, 60 Phil., 674, wherein it was held
that preliminary attachment is not proper in criminal cases. But this ruling is predicated fundamentally upon the theory that preliminary attachment is a
purely statutory remedy and there was then no clear legal provision making it applicable in criminal proceedings. All doubts on this question have,
however, disappeared upon the promulgation of the new Rules of Court wherein, by clear authority of Rule 124, section 6, above quoted, a criminal
court having jurisdiction over the civil action arising from the offense charged, is now permitted to issue all the auxiliary writs necessary to carry such
jurisdiction into effect. A similar legal principle was recognized before in scattered provisions of law or decisions (see Act No. 136, section 19; Revised
Administrative Code, section 145-G; Act No. 190, section 610; Shioji vs. Harvey, 43 Phil., 333, 344), applicable only in some courts and in certain
cases, and does not seem to cover the question now before us. Now, it is made general and applicable in all cases and in all courts provided the
requirements therein specified are present.

At the hearing of this case, it has been suggested that as the respondent Judge merely followed former decisions of this Court, he should not be
blamed therefor and that accordingly the writ does not lie against him. This suggestion confuses the basic ground for the writ. The personal motives of
the respondent Judge as well as his good or bad faith are in no way material for the grant or denial of the writ. The only issue before us is whether the
action taken by him constitutes a mistake of law. We hold it be such according to our construction of the law as it is. The fact that he has followed
previous rulings of this Court may exempt him from blame but it can in no wise wipe out his mistake. And such mistake, however well-grounded it may
be, is a sufficient basis for granting the writ.

In the criminal cases for murder and frustrated murder, since the offended persons reserved their right to institute their civil action separately,
preliminary attachment is not proper. As the court in said criminal cases has no jurisdiction of the civil actions arising from the offenses charged, there
is nothing before the court to which the preliminary attachment may be considered as an auxiliary writ and, therefore, the court has no jurisdiction to
issue such writ.

Judgment is, therefore, rendered declaring the respondent Court with authority to grant preliminary writ of attachment in the estafa case wherein the
civil action arising from the offense charged is deemed instituted, and the respondent Court is hereby ordered to act upon the merits of the motion for
preliminary attachment filed therein by the offended parties. With respect, however, to the criminal cases for murder and frustrated murder, the
respondent is declared to be without authority to issue preliminary writs of attachment therein, and, accordingly, its order to that effects is valid.
Without costs.

Yulo, C.J., concurs.

PARAS, J.:

I vote for a complete abandonment of the old doctrine because, in my humble opinion, the new interpretation or application of the law or rule is sound
and correct.

Separate Opinions

BOCOBO, J., concurring:

I concur in the judgment which declares the respondent Court with authority to grant a preliminary writ of attachment in the estafa case, wherein the
civil action arising from the offense charged is deemed instituted. But my reasons are different from those set forth in the opinion penned by Mr.
Justice Moran.

In this jurisdiction, criminal responsibility carries with it civil liability, the latter consisting of restitution, reparation of the damaged caused and
indemnification for consequential damages. (Arts. 17 and 119, old Penal Code; and Arts. 100 and 104, Revised Penal Code.) Under the Spanish
Code of Criminal Procedure, the criminal and the civil actions could be brought either jointly or separately (Art. 111). If the criminal action alone was
filed, the civil action was understood to have been likewise utilized ("se entendera tambien utilizada la civil",) unless the civil action was waived or the
right to file it separately was expressly reserved. (Art 112, Spanish Code of Criminal Procedure.) When General Orders No. 58 took effect, no change
was made, for Section 107 of said General Orders provided:
Sec. 107. The privileges now secured by law to the person claiming to be injured by the commission of an offense to take part in the prosecution of
the offense and to recover damages for the injury sustained by reason of the same shall not be held to be abridged by the provisions of this order; but
such person may appear and shall be heard either individually or by attorney at all stages of the case, and the court upon conviction of the accused
may enter judgment against him for the damages occasioned by his wrongful act. It shall, however, be the duty of the promotor fiscal to direct the
prosecution, subject to the right of the person injured to appeal from any decision of the court denying him a legal right. (Emphasis supplied.)

The Code of Civil Procedure (Act 190) authorized the preliminary attachment of defendant's property under Section 424 which reads thus:

Sec. 424. Attachment. A plaintiff may, at the commencement of his action, or at any time afterwards, have the property of the defendant attached
as security for the satisfaction of any judgment that may be recovered, unless the defendant gives security to pay such judgment, in the manner
hereinafter provided, in the following cases:

1. In all cases mentioned in section four hundred and twelve, providing for the arrest of a defendant. But the plaintiff must make an election as to
whether he will ask for an order of arrest or an order of attachment; he shall not be entitled to both orders;

2. In an action against a defendant not residing in the Philippine Islands.

One of the grounds stated in section 412 of Act 190 was the following:

5. When the defendant has removed or disposed of his property, or is about to do so, with intent to defraud his creditors.

In U.S. vs. Namit, 38 Phil., 926 and People vs. Moreno, 60 Phil., 674, this Court held that preliminary attachment being a statutory remedy, and there
being no statute authorizing preliminary attachment in criminal cases, this process was not available in criminal proceedings.

With all due respect to those Justices who held this view in the two cases mentioned, I am of the opinion that at the time these two decisions were
rendered there was already a clear statutory authorization for a preliminary attachment to enforce the civil responsibility for damages arising from a
crime. Unless there was a waiver or a reservation of the civil action, two suits were initiated at the same time, namely, the criminal prosecution and
the civil action. What happened when both the criminal and the civil actions were thus brought and tried together? Each retained (as it now retains) its
own nature and individuality, as shown by the following:

1. In U.S. v. Heery, 25 Phil. 600, this Court held that there is no merger of the two kinds of liability (criminal and civil) from the mere fact that they are
tried together. In that case, this Court upon the first appeal affirmed the sentence of the lower court condemning the defendant appellant to one year
and three months of prision correcional, but the appeal of the injured party against the ruling of the trial court which refused to allow him to submit
evidence on the damages suffered by him was sustained and the case was returned with the following instructions: "It is therefore ordered that the
record be returned to the court whence it came for the execution of the criminal judgment herein affirmed, and for the further purpose of completing
the civil branch of the case." (Emphasis supplied.) Upon the second appeal, the defendant raised the question of double jeopardy, but this Court held
that the remanding of the case for the determination of the civil damages did not subject the accused to double jeopardy. This Court said in part:

Does the fact that in this country civil liability is, as a rule, determined in the criminal action transform it into criminal liability and thus make it a part of
the punishment for the crime? Certainly the mere form of a remedy should not affect its substance. And there are many indications in the Penal Code
that the civil liability therein imposed for the commission of crimes was not intended to be merged into the punishment for the crime. Articles 17,
119-126, which provide for civil liability of offenders, are confined strictly to that subject. Article 23 sharply defines one distinction between the criminal
and civil liability, in that the former cannot be waived by a pardon of the party injured, while the latter may be waived. The chapters of the Penal Code
dealing with the classification and duration of penalties (articles 25 to 62 inclusive), nowhere list the civil liability attached to a crime. And article 133
provides that "Civil liability arising out of crimes or misdemeanors shall be extinguished in the same manner as other obligations, in accordance with
the rules of civil law.

In commenting upon this article, Groizard (vol. 2, p. 717), says:

From crimes arise, as we know, two liabilities: criminal and civil. The first is extinguished by the methods to which we have just adverted. The method
of terminating the second is not a subject of criminal law, but of civil law.

The character of this work does not permit us to tarry for further explanations. We would not be commenting upon subjects included with the Penal
Code but laws of a purely civil character.

And, as a complement of this article, article 1813 of the Civil Code provides that civil liability attached to crimes may be compromised but that the
criminal liability is not thereby extinguished. Other distinctions might be noticed which show that there is no merger of the two kinds of liability from the
mere fact that they are tried together. But these are, we think, sufficient to sustain the point. (Emphasis supplied.)

2. The aggrieved party could take part in the prosecution of the offense. (Articles 109 and 110, Spanish Code of Civil Procedure). This privilege has
been preserved by Section 107, General Orders No. 58, and by Sections 15 and 4, Rule 106 of the new Rules of Court.

3. The extinction of the criminal action did not carry with it that of the civil action, unless the extinction proceeded from a declaration in a final
judgment that the fact from which the civil action might arise did not exist. (Art. 116, Spanish Code of Criminal Procedure). This principle is reiterated
in the new Rules of Court (Rule 107, Sec. 1-d).

Inasmuch as each of the two actions kept its own separate existence and individuality, although both were tried at the same time, it would seem to
follow that each action also retained its own incidents. And one of the incidents of a civil suit was the preliminary attachment provided for in Sections
424 and 412 of the Code of Civil Procedure. If the aggrieved party brought his civil action separately, a preliminary attachment was unquestionably
proper. But in the Namit and Moreno cases, this Court in effect held that if the civil suit was filed together with the criminal prosecution, no such
attachment could be allowed because there was no specific authority therefor. In the one case, the civil damages could be safeguarded, but in the
other, they were precarious and uncertain. I am not inclined to indulge in such a hairsplitting nicely. It is hard for me to believe that the lawmakers
contemplated such a distinction, which made the vitality of a judgment for civil liability depend upon the course taken: whether a separation or a
joining of the criminal and civil actions. If the choice was for the former, the judgment for damages was real, efficacious and commanding, but if the
choice was for the latter, then such judgment might become an egregious delusion and a solemn mockery, because the defendant could dispose of all
his property with intent to evade and defeat his civil liability. Unless the statute is clearly worded to that effect. I cannot bring myself to adhere to an
interpretation and simple, a court judgment might become illusory, the civil redress justly due an aggrieved person might be rendered nugatory and
meaningless, and the accused upon conviction might easily escape his obligation to repair the injury he has caused through his wrongful deed. A
situation so deplorable and so extraordinary, which defies and contravenes every primary concept of right and is gravely destructive of the
administration of justice, should never be countenanced unless the law interpreter is constrained to do so by the explicit and unequivocal terms of the
statutes. And in the instant case, as already indicated, the Philippine statutes authorized a preliminary attachment, whether the civil action was
brought separately from, or jointly with the criminal prosecution.

The fact that in neither the General Orders No. 58, nor the Code of Civil Procedure, was there any specific authority for preliminary attachment in
case a civil action was brought and tried together with a criminal action does not in the least effect my conclusion just formulated, for these reasons:

1. Such explicit provision for the specific case mentioned was not necessary, because when the law said that the civil action was understood to have
been likewise utilized, all the incidents of the civil action were retained, as already explained.

2. Section 107 of General Orders No. 58 when read in connection with Section 112 of the Spanish Code of Criminal Procedure clearly intended that
the right to recover and damages should be undiminished and should conserve its original vigor and efficacy. Such right to damages was later
implemented and strengthened in Sections 424 and 412 of the Code of Civil Procedure. The creation of the auxiliary remedy of the preliminary
attachment in the Code of Civil Procedure rendered it superfluous to provide in an amendment to General Orders No. 58, or in any other subsequent
legislation, for specific authority for preliminary attachment in case a civil action was instituted together with a criminal action.

The above was, I believe, the law when the cases of U.S. v. Namit and People v. Moreno were decided by this Court. Has the law been altered or
modified? I do not think so, because Rule 107, Section 1 (a) of the new Rules of Court which reads:

(a) When a criminal action is instituted, the civil action for recovery of civil liability arising from the offense charged is impliedly instituted with the
criminal action, unless the offended party expressly waives the civil action or reserves his right to institute it separately.

is a mere reiteration of the old principle that if the criminal action alone was filed, the civil action was understood to have been likewise utilized.
Neither does Rule 124, Sec. 6, announce a new principle, inasmuch as before said Rule came into being, every court already had an inherent power
to issue any auxiliary writ or process to carry out is judgments. (14 A. J., 371 and 373; 7 R.C.L., 1033). Today, as before the promulgation of the new
Rules of Court, though the two actions are brought and tried together, each however, retains its own character and individuality; as stated by Mr.
Justice Moran, there were in the estafa case herein" two sections before the court: the criminal action for the punishment of the accused, and the civil
action for the recovery of the money fraudulently taken by her." Today, as before the new Rules of Court took effect, a preliminary attachment under
Section 1 of Rule 59, is an incident in a civil action instituted and tried simultaneously with the criminal prosecution. Today, as before the new Rules of
Court became binding, the existence of authority for a preliminary attachment under Section 1 of Rule 59, of the Rules of Court, renders it
unnecessary that Part III (Rules 103-122) of the same Rules should again specifically provided for such process in case a civil suit is brought and
tried at the same time with the criminal action. Consequently, today as before, the new Rules of Court became operative, there is clear statutory
authority is the preliminary attachment in question. The foregoing construction is supported by precedent. Thus:

While the remedy of attachment or garnishment is statutory and in derogation of the common law, strict construction should not be pushed, to the
extent of nullifying the beneficial intent of the statute or depriving the creditor of recourse thereto in a proper case, for it is an indisputable fact that the
policy of the law is that a man's property shall be amenable to legal process for the satisfaction of his pecuniary indebtedness. Indeed, in view of the
abolition of the copies and of imprisonment for debt, and in view of the enlarged and liberal provisions in more recent statutes on the subject of
attachments and garnishments, it has been said that a more favorable and liberal construction of these laws should be adopted. In some states the
statutes expressly require that a liberal construction be put upon their provisions. In any event, such construction ought to be given to a law, if it will
reasonably admit of it, as will not suffer it to be defeated, and technically should not be allowed to override justice. (4 A.J., 567-568.)

The view which I take of the instant case makes it unnecessary, I believe, to amend Rule 107 of the Rules of Court, as suggested by the dissenting
opinion herein.

The next inquiry which I wish to take up is this: Can certiorari and mandamus be ordered when the trial court simply followed the previous decisions of
this the highest court of the land? The negative answer would seem, at first sight, to be warranted, because the interpretations of the law rendered by
this Court become part and parcel of the Philippine legal system, and are invested with compelling authority that binds all the lower courts in the
country, so a trial court that merely yields to them incurs in no mistake of law, and does not commit any abuse of discretion.

The point urged is that the respondent court cannot be held to have incurred in any error of law when it only applied the law as interpreted by this
Court in previous cases. Such a theory implies the argument that the adoption of this Court of a new and different interpretation of the same law
cannot logically covert the trial court's order, which was correct at the time it was signed according to the highest court's previous pronouncements
into a mistaken one. I believe, however, that this mode of reasoning would prevent this Court from revising or abandoning its previous rulings, a
power which this Court exercises in the interest of justice. There is nothing inviolably sacrosanct in the doctrine of stare decisis, for an orderly and
wholesome development of jurisprudence demands that there should be no undue reluctance to reexamine previous interpretations of the law.

This is especially true when the former view of the law was not unanimously held. In U.S. v. Namit, five Justices were on the majority, while one
Justice dissented. In People v. Moreno, seven Justices constituted the majority, while four Justices formed the minority. The existence of a forceful
dissenting opinion and dissenting opinions are often of that character dulls the edge of the majority decision. It would seem that an opinion
whose power is thus impaired, while technically it may be cited as a precedent because it is presumed to be the correct view until the contrary is
maintained by the court in a subsequent decision nevertheless practically leaves the legal question open for further examination in future cases. If
the original interpretation is intrinsically sound, it can stand the pressure of additional discussion and inquiry in subsequent cases, and instead of
being weakened, it will gather greater strength and momentum. But if on the other hand, the original view of the minority bears within itself the
pursuant urge of reason and the driving impetus of justice, it will eventually, after one or more searching re-examinations of the issue involved, gain
ascendancy, thus replacing the old proposition. It is this possibility, among other considerations, that justifies the writing of dissenting opinions, and
makes it particularly desirable and necessary that the original majority ruling be re-studied.
The stability of judicial decisions, which is earnestly to be sought, requires that a legal interpretation which is still on the way toward final
crystallization, as it has yet to gain general acceptance (a majority opinion questioned by a strong dissent being of such type) should not be looked
upon with awesome reverence as a primitive taboo. On the contrary, it should be openly subjected to the most thorough discussion in order to find out
whether it is sufficiently solid and enduring to be incorporated into the legal structure. Without such a rigid and severe test, the rule of law announced
by a majority of the court will continue to languish in the penumbra of doubt, whereas the doctrine of stare decisis can thrive only in the life-giving
sunshine of reason and justice, and in the clear atmosphere of widespread concord in the legal profession.

In view of the foregoing, my vote is that the respondent court had authority to grant the preliminary attachment prayed for in the civil action impliedly
instituted with the criminal action for estafa.

G.R. No. L-1329 May 15, 1947

RAMCAR, INCORPORATED, Petitioner, vs. DIONISIO DE LEON, Judge of First Instance of Manila, ET AL., Respondents.

Roman A. Cruz for petitioner.


Ferdinand E. Marcos for respondents.

PERFECTO, J.:

On December 26, 1946, petitioner initiated a civil action against Daniel Francisco, Ulysses S. Tread, Jr., and Antonio Lloret, by filing a complaint for
damages with the Court of First Instance of Manila, praying that defendants be sentenced to pay the sum of P5,000, value of a stolen taxicab, P500,
a price offered through the newspaper to anyone who could point the whereabouts of said taxicab, plus P50 per day as the average minimum daily
income of the car and the costs of the suit, and that, pending all proceedings attachment of the properties of defendants be ordered, upon such bond
and in the amount that the court may deem proper to fix.chanroblesvirtualawlibrary chanrobles virtual law library

Plaintiff alleged that he owns, among other taxicabs, a Renault car with motor No. 36428, painted black and white and provided with a taximeter, the
total value of which is P5,000, and that about December 2, 1946, it was stolen from the parking place in front of the premises of plaintiff at 1049 R.
Hidalgo, Manila, and after many days of fruitless search, an offer of P500 through the newspapers was made to anyone who could point to its
whereabouts, and that said car, already in dismantled condition, was found in and recovered from the possession of defendants, who confessed to
the representative of plaintiff and the police authorities as being the authors of the theft of said car and of dismantling it to pieces, making it
completely unserviceable and a total loss. In support of the petition for the issuance of a writ of attachment, plaintiff alleged that defendants were
concealing their properties and were about to dispose of them with intent of defrauding their creditos, including plaintiff.chanroblesvirtualawlibrary
chanrobles virtual law library
Two days later, on December 28, an information for the theft of the above-described taxicab and based on the same facts alleged in the complaint,
was filed with the court of first instance against the said three defendants.chanroblesvirtualawlibrary chanrobles virtual law library

On January 2, 1947, after petitioner had filed a bond in the amount of P5,000, a writ of attachment was issued against the properties of defendants.
On January 14, 1947, defendant Daniel Francisco filed a petition praying for the dismissal of the complaint and for the setting aside of the writ of
attachment. On January 27, 1947, defendant Ulysses S. Tread, Jr., moved for the suspension of the time within which to file a responsive pleading to
the complaint and to dissolve the writ of attachment. On January 30, 1947 respondent judge issued an order denying the dismissal of the complaint
prayed for by Daniel Francisco, but granted its petition to set aside the writ of attachment against him. On February 3, the same judge granted the
petition of defendant Ulysses S, Tread, Jr., dated January 27, 1947. On February 20, 1947, respondent judge denied the motion for reconsideration
filed by plaintiff who, consequently, filed with this Supreme Court the petition which is now under our consideration, praying that the orders of
respondent judge of January 30 and February 3 and 20, 1947, be declared null and void and that the writ of attachment of January 2, 1947, be
declared valid and in force.chanroblesvirtualawlibrary chanrobles virtual law library

Respondent judge set aside the writ of attachment of January 2, 1947, upon the theory that it was improperly issued because at the time of its
issuance the information in the criminal case had already been filed, the theory being based on the lower court's interpretation of section 1 of Rule
107 in which it is read:

(b) Criminal and civil actions arising from the same offense may be instituted separately, but after the criminal action has been commenced the civil
action cannot be instituted until final judgment has been rendered in the criminal action;chanrobles virtual law library

(c) After a criminal action has been commenced, no civil action arising from the same offense can be prosecuted; and the same shall be suspended,
in whatever stage it may be found, until final judgment in the criminal proceeding has been rendered.

From the provisions of Rule 107 it is clear that, unless there is a waiver of civil action or reserve of the right to initiate it expressly, criminal action
always carries the civil action for recovery of liability arising from the offense charged; that when criminal action has been commenced before the civil
action, the latter cannot be instituted until final judgment has been rendered in the former; that when the civil action has been commenced before the
criminal action, the former shall be suspended upon the institution of the latter and until final judgment is rendered in the same; that, generally,
extinction of the criminal action does not carry with it extinction of the civil; and that final judgment rendered in a civil action in absolving defendant
from the civil liability is no bar to a criminal action.chanroblesvirtualawlibrary chanrobles virtual law library

The above-quoted subsection (c) is the one directly applicable to the facts in this case, although it should not be interpreted as an isolate provision,
but in conjunction with the rest of Rule 107. Said subsection enjoins that the civil action arising from the same offense can be prosecuted after a
criminal action has been commenced, and if the civil action has been instituted before the criminal, it "shall be suspended, in whatever stage it may
be found, until final judgment in the criminal proceeding has been rendered." The question is whether, under such injunctions, the lower court was,
after the filing of the information in the criminal case, ipso facto deprived of the power to issue preliminary and auxiliary writs, such as preliminary
injunction, attachment, appointment of receiver, fixing amounts of bonds to be filed, and other processes of similar nature, none of which goes into the
merits of the case.chanroblesvirtualawlibrary chanrobles virtual law library
Under the subsection in question, the civil action undergoes a procedural freezing. But, in the same way that in physical congelation not all
manifestations of life are wiped out, the procedural freezing in question does not have the effect of wiping out all manifestations of the existence of the
suspended civil action. Marmots and certain species of bats, including pipistrels, when hibernating in burrows and caves during winter, offer the
appearance of immobile corpses or simple lumps of ice. But within the lifeless appearance that deceives human perception, because metabolism,
heart-beat rate, breathing and body temperature drop so low, there lies the mysteriously latent vitality that, when hibernation is over, will permit those
animals to run with surprising agility and to soar high in cross-country flying. Suspension is not termination. Suspension is not final ending, is not
destruction, is not death. The suspended civil action continues to be alive. Only its evolution to maturity is temporarily stopped. Only it has to bide
time. In meantime, while it is waiting to be tried and decided on the merits, it may avail itself of the ancillary processes which, expressly authorized by
law, will permit it to accomplish its purposes efficaciously, and may defend itself against bad faith, fraud and other evil practices, intended to make
nugatory the relief sought by it and to defeat the ends of the administration of justice. If those ancillary processes cannot be resorted to during the
suspension, there is no sense in the rule providing only for suspension, when its effect is to kill the action. We cannot subscribe to the idea that the
authors of the subsection in question, in providing for the suspension of the civil action during the life of the criminal action, had the purpose of
crippling to death the civil action, but lacked the honesty of saying so in an outright manner, seeking rather the hypocritical method of concealing their
purpose under a deceitful word.chanroblesvirtualawlibrary chanrobles virtual law library

No one should forget that civil action for recovery of civil liability arising from an offense has always deserved the concern of the law. The Revised
Penal Code, although it is supposed to deal only on criminal offenses, contains an express provision reserving to offended parties such civil action. To
make effective that right of recovery of civil liability, section 2 of Rule 106 grants to the offended party the right to commence a criminal action through
a complaint, and section 16 of the same rule guarantees to the offended party the right of intervention in criminal action, either personally or by
attorney. Rule 107 has been drafted to further guarantee to the offended party the right of recovery abovementioned.chanroblesvirtualawlibrary
chanrobles virtual law library

When no civil action is expressly instituted, according to subsection (a) of section 1 of Rule 107, it shall be impliedly jointly "instituted with the criminal
action." That means as if two actions are joined in one as twins, each one complete with the same completeness as any of the two normal persons
composing a twin. It means that the civil action may be tried and prosecuted, with all the ancillary processes provided by law. Such was the idea of
the Supreme Court in United States vs. Heery (25 Phil., 600) where, besides affirming the criminal judgment rendered therein, it ordered the record
returned to the lower court "for the further purpose of completing the civil branch of the case." Therefore, within the criminal action, with which the civil
action is "impliedly instituted," the offended party may obtain the preliminary writ of attachment. There is no logic in denying that right to the plaintiff,
when the civil action is separately instituted.chanroblesvirtualawlibrary chanrobles virtual law library

The orders of the respondent judge dated January 30 and February 3, 1947, having been issued upon a wrong interpretation of subsection (c) of
section 1 of Rule 107, and no intimation to the contrary having been made, we should assume that, without said wrong interpretation, the writ of
attachment was issued because the plaintiff was, under the facts and the law, entitled to its issuance, and that there was the duty of the lower court to
issue it.chanroblesvirtualawlibrary chanrobles virtual law library
For all the foregoing, the orders of the respondent judge of January 30 and February 3, 1947, are set aside, and the writ of attachment of January 2,
1947, is maintained, unless and until lifted through a proper counter-bond that the defendants may file or for any other reason recognized by law.
Costs shall be taxed against respondents.chanroblesvirtualawlibrary chanrobles virtual law library

Paras, and Bengzon, JJ., concur.


Tuason, J., concurs in the result.

G.R. Nos. 65957-58 July 5, 1994

ELEAZAR V. ADLAWAN and ELENA S. ADLAWAN, petitioners,


vs.
Hon. Judge RAMON AM. TORRES, as Presiding Judge of Branch 6, Regional Trial Court Cebu City, ABOITIZ & COMPANY, INC. and THE
PROVINCIAL SHERIFFS OF CEBU, DAVAO, RIZAL and METRO MANILA, Respectively, respondents.

Pablo P. Garcia for petitioners.

Isaias P. Dicdican and Sylva G. Aguirre-Paderanga for Aboitiz & Co., Inc.

QUIASON, J.:

This is a petitioner for certiorari and mandamus with preliminary injunction or restraining order to nullify: (1) the Order dated September 14, 1983 of
respondent Judge Ramon Am. Torres of the Regional Trial Court, Branch 6, Cebu City, in Civil Case No. CEB-1185 and the Order dated September
26, 1983 of Judge Emilio A. Jacinto of Branch 23 of the same court in Civil Case No. CEB-1186, which granted the motion for the issuance of writs of
preliminary attachment for the seizure of the property of petitioners by respondent Provincial Sheriffs; and (2) the Order dated December 12, 1983 of
respondent Judge Ramon Am. Torres in the consolidated cases, Civil Case No. CEB-1185 and Civil Case No. CEB-1186.

In a complaint dated April 24, 1982 filed with the Court of First Instance of Cebu, now Regional Trial Court, (Civil Case No. R-21761), respondent
Aboitiz and Company, Inc. (Aboitiz) sought to collect from petitioners a sum of money representing payments for: (1) the unpaid amortizations of a
loan; (2) technical and managerial services rendered; and (3) the unpaid installments of the equipment provided by respondent Aboitiz to petitioners
(Rollo, p. 37).
Acting on the ex parte application for attachment, the Executive Judge of the Court of First Instance of Cebu, issued on May 14, 1982, an order
directing the issuance of the writ of preliminary attachment against the property of petitioners upon the filing by respondent Aboitiz of an attachment
bond.

Subsequently, the case was raffled to Branch 11 of the Court of First Instance of Cebu, which issued a writ of attachment addressed to the Provincial
Sheriffs of Cebu and the City Sheriff of Davao City. It was the Sheriff of Davao City who enforced the writ of attachment, resulting in the seizure of
heavy construction equipment, motor vehicle spare parts, and other personal property with the aggregate value of P15,000,000.00. The said court
also granted the motion of respondent Aboitiz to take possession and custody of the attached property of petitioners and ordered the Provincial
Sheriff of Davao to deliver the property to respondent Aboitiz.

Petitioners moved for a bill of particulars and to set aside the ex parte writ of attachment. Finding merit in the motion to set aside the writ, Branch 11
ordered on July 6, 1982 the lifting of the writ and, consequently, the discharge of the property levied upon.

Respondent Aboitiz filed an urgent ex parte motion, praying for the stay of the July 6, 1982 Order for a period of 15 days for it to be able to appeal the
order. The motion was favorably acted upon.

However, on July 13, 1982, respondent Aboitiz filed a notice of dismissal of its complaint in accordance with Section 1, Rule 17 of the Revised Rules
of Court. Consequently, Branch 11 issued an order confirming the notice of dismissal, emphasizing that all orders of the court issued prior to the filing
of said notice of dismissal had been rendered functus oficio, and considering all pending incidents in the case as moot and academic.

Petitioner Eleazar Adlawan filed a motion praying that the July 6, 1982 Order be implemented and enforced. On December 20, however, Branch 11
denied the motion on account of the filing by respondent Aboitiz before Branch 16 of the Court of First Instance of Cebu in Lapu-lapu City of an action
for delivery of personal property (Civil Case No. 619-L), and the filing by petitioner Eleazar Adlawan before Branch 10 of the same court of an action
for damages in connection with the seizure of his property under the writ of attachment.

In the replevin suit, Branch 16 ordered the seizure and delivery of the property described in the complaint. Said property were later delivered by the
provincial sheriff to respondent Aboitiz. Alleging that while his office was situated in Cebu City, Adlawan was a resident of Minglanilla, and therefore,
the Lapu-lapu City court should not entertain the action for replevin. Petitioner Eleazar Adlawan filed an omnibus motion praying for the
reconsideration and dissolution of the writ of seizure, the retrieval of the property seized, and the dismissal of the complaint. He also averred that the
property seized were in custodia legis by virtue of the writ of attachment issued by Branch 11. His omnibus motion was denied. Subsequently, he filed
a motion for reconsideration which was not granted.

The denial of his omnibus motion led petitioner Eleazar Adlawan to file a petition for certiorari and mandamus in the Supreme Court (G.R. No. 63225).
The Third Division of this Court ruled on April 3, 1990 that since attachment is an ancillary remedy, the withdrawal of the complaint left it with no leg to
stand on. Thus, the Court disposed of the case as follows:
WHEREFORE, in view of the foregoing, this Court rules that the attached properties left in the custody of private respondent Aboitiz and Company,
Inc. be returned to petitioner Eleazar V. Adlawan without prejudice to the outcome of the cases filed by both parties (Rollo, p. 324).

Respondent Aboitiz filed a motion for reconsideration of the decision, contending that the replevin case was distinct and separate from the case
where the writ of attachment was issued. It argued that the writ of replevin, therefore, remained in force as the Third Division of the Supreme Court
had not found it illegal. The motion was, however, denied with finality in the Resolution of July 11, 1990.

Undaunted, respondent Aboitiz filed a second motion for reconsideration with a prayer that the dispositive portion of the decision be clarified. It
asserted that because the writ of preliminary attachment was different from the writ of replevin, we should rule that the property subject of the latter
writ should remain in custodia legis of the court issuing the said writ.

In the Resolution dated September 10, 1990, the Third Division stated that "the properties to be returned to petitioner are only those held by private
respondent (Aboitiz) by virtue of the writ of attachment which has been declared non-existent." Accordingly, the dispositive portion of the April 3, 1990
decision of the Third Division of this Court was modified to read as follows:

WHEREFORE, in view of the foregoing, this Court rules that the properties in the custody of the private respondent Aboitiz & Company by virtue of
the writ of attachment issued in Civil Case No. R-21761 be returned to the petitioner, but properties in the custody of the private respondent by virtue
of the writ of replevin issued in Civil Case No. 619-L be continued in custodia legis of said court pending litigation therein.

The Decision in G.R. No. 63225 having become final and executory, entry of judgment was made on November 15, 1990. This should have
terminated the controversy between petitioners and respondent Aboitiz insofar as the Supreme Court was concerned, but that was not to be. On
September 9, 1983 respondent Aboitiz filed against petitioners two complaints for collection of sums of money with prayers for the issuance of writs of
attachment in the Regional Trail Court, Branch 23, Cebu City, docketed as Civil Cases Nos. CEB-1185 and CEB-1186. The complaint in Civil Case
No. CEB-1185 alleged that petitioner Eleazar Adlawan (defendant therein) was awarded a contract for the construction of the Tago Diversion Works
for the Tago River Irrigation Project by the National Irrigation Administration and that respondent Aboitiz (plaintiff therein) loaned him money and
equipment, which indebtedness as of June 30, 1983 totaled P13,430,259.14. Paragraph 16 of the complaint states:

16. That, in view of the enormous liabilities which the defendants have with the plaintiff, defendants executed a real estate mortgage covering
eleven (11) parcels of land in favor of Philippine Commercial and Industrial Bank (PCIB) to secure a P1,000,000.00 loan with said bank and was able
to remove, conceal and dispose of their properties, obviously to defraud the plaintiff, . . . (Rollo, pp. 65-66).

The complaint in Civil Case No. CEB-1186 alleged that petitioner Eleazar Adlawan (defendant therein) was awarded a contract for the construction of
the Lasang River Irrigation Project by the National Irrigation Administration and that respondent Aboitiz (plaintiff therein) loaned him money and
equipment, which indebtedness as of June 30, 1983 totalled P5,370,672.08. Paragraph 15 of the complaint is similarly worded as paragraph 16 of the
complaint in Civil Case No. CEB-1185.
Civil Case No. CEB-1185 was raffled to the Regional Trial Court, Branch 6, presided by respondent Judge Ramon Am. Torres. On September 14,
1983, respondent Judge ordered the issuance of a writ of attachment upon respondent Aboitiz' filing of a bond of P5,000,000.00. Similarly, in Civil
Case No. CEB-1186, which was raffled to Branch 23, presiding Judge Emilio A. Jacinto ordered the issuance of a writ of attachment upon the filing of
a bond of P2,500,000.00. Accordingly, in Civil Case No. CEB-1185, the Acting Provincial Sheriff of Cebu issued separate writs dated September 26,
1983 addressed to the Sheriffs of Cebu, Davao and Metro Manila. No writ of preliminary attachment was, however, issued in Civil Case No.
CEB-1186.

Petitioners then filed in Civil Cases Nos. CEB-1185 and CEB-1186 urgent motions to hold in abeyance the enforcement of the writs of attachments.
They alleged in the main that since their property had been previously attached and said attachment was being questioned before the Supreme Court
in G.R. No. 63225, the filing of the two cases, as well as the issuance of the writs of attachment, constituted undue interference with the processes of
this court in the then pending petition involving the same property.

Upon motion of respondent Aboitiz, Branch 23 issued on October 13, 1983, an order directing the transfer to Branch 6 of Civil Case No. CEB-1186 for
consolidation with Civil Case No. CEB-1185.

Meanwhile, in its comment on petitioners' motion to withhold the enforcement of the writs of attachment, respondent Aboitiz alleged that the voluntary
dismissal of Civil Case No. R-21761 under Section 1, Rule 17 of the Revised Rules of Court was without prejudice to the institution of another action
based on the same subject matter. It averred that the issuance of the writ of attachment was justified because petitioners were intending to defraud
respondent Aboitiz by mortgaging 11 parcels of land to the Philippine Commercial and Industrial Bank (PCIB) in consideration of the loan of
P1,100,000.00, thereby making PCIB a preferred creditor to the prejudice of respondent Aboitiz, which had an exposure amounting to
P13,430,259.14.

Petitioners then filed a rejoinder to said comment, contending that since the property subject of the writ of attachment have earlier been attached or
replevied, the same property were under custodia legis and therefore could not be the subject of other writs of attachment.

On December 12, 1983, respondent Judge issued an order finding no merit in petitioners' motion for reconsideration and directing the sheriffs of
Cebu, Davao and Metro Manila "to proceed with the enforcement and implementation of the writs of preliminary attachment." Respondent Judge ruled
that the writs of attachment were issued on the basis of the supporting affidavits alleging that petitioner had removed or disposed of their property with
intent to defraud respondent Aboitiz (Rollo, pp. 109-113).

On December 15, petitioners filed an ex parte motion praying: (1) that the December 12, 1983 Order be set for hearing; (2) that they be given 15 days
within which to either file a motion for reconsideration or elevate the matter to this Court or the then Intermediate Appellate Court; and (3) that within
the same 15-day period the implementation or enforcement of the writs of attachment be held in abeyance.

On the same day, respondent Judge issued an order holding in abeyance the enforcement of the writs of preliminary attachment in order to afford
petitioners an opportunity to seek their other remedies (Rollo, p. 116).
On December 27, petitioners filed the instant petition for certiorari and mandamus. They alleged that respondent Judge gravely abused his discretion
in ordering the issuance of the writs of preliminary attachment inasmuch as the real estate mortgage executed by them in favor of PCIB did not
constitute fraudulent removal, concealment or disposition of property. They argued that granting the mortgage constituted removal or disposition of
property, it was not per se a ground for attachment lacking proof of intent to defraud the creditors of the defendant.

Petitioners contended that in Civil Case No. 21761, Branch 11 had ruled that the loan for which the mortgage was executed was contracted in good
faith, as it was necessary for them to continue their business operations even after respondent Aboitiz had stopped giving them financial aid.

Petitioners also contended that respondent Judge exceeded his jurisdiction when he issued the Order of December 12, 1983, without first hearing the
parties on the motion for attachment and the motion to dissolve the attachment. Moreover, they argued that respondent Judge gravely abused his
discretion in proceeding with the case, notwithstanding that his attention had been called with regard to the pendency of G.R. No. 63225 in this Court.

As prayed for by petitioners, we issued a temporary restraining order on January 6, 1984 "enjoining the respondents from enforcing or implementing
the writs of preliminary attachment against the property of petitioners, all dated September 26, 1983 and issued in Civil Cases Nos. CEB 1185 and
1186" (Rollo, p. 118).

II

The resolution of this case centers on the issue of the legality of the writ of attachment issued by respondent Judge in the consolidated cases for
collection of sums of money.

The affidavit submitted by respondent Aboitiz in support of its prayer for the writ of attachment does not meet the requirements of Rule 57 of the
Revised Rules of Court regarding the allegations on impending fraudulent removal, concealment and disposition of defendant's property. As held in
Carpio v. Macadaeg, 9 SCRA 552 (1963), to justify a preliminary attachment, the removal or disposal must have been made with intent to defraud
defendant's creditors. Proof of fraud is mandated by paragraphs (d) and (e) of Section 1, Rule 57 of the Revised Rules of Court on the grounds upon
which attachment may issue. Thus, the factual basis on defendant's intent to defraud must be clearly alleged in the affidavit in support of the prayer
for the writ of attachment if not so specifically alleged in the verified complaint. The affidavit submitted by respondent Aboitiz states:

REPUBLIC OF THE PHILIPPINES


CITY OF CEBU ...............) S.S.

I, ROMAN S. RONQUILLO, of legal age, married and a resident of Cebu City, after being sworn in accordance with law, hereby depose and say:

That I am the Vice-President of the plaintiff corporation in the above-entitled case;

That a sufficient cause of action exists against the defendants named therein because the said defendants are indebted to the plaintiffs in the amount
of P13,430,259.14 exclusive of interests thereon and damages claimed;
That the defendants have removed or disposed of their properties with intent to defraud the plaintiff, their creditor, because on May 27, 1982 they
executed a real estate mortgage in favor of Philippine Commercial and Industrial Bank (PCIB) covering eleven (11) of their fifteen (15) parcels of land
in Cebu to secure a P1,000,000.00 loan with the same bank;

That this action is one of those specifically mentioned in Section 1, Rule 57 of the Rules of Court, whereby a writ preliminary attachment may lawfully
issue because the action therein is one against parties who have removed or disposed of their properties with intent to defraud their creditor, plaintiff
herein;

That there is no sufficient security for the claims sought to be enforced by the present action;

That the total amount due to the plaintiff in the above-entitled case is P13,430,259.14, excluding interests and claim for damages and is as much the
sum for which an order of attachment is herein sought to be granted; above all legal counter-claims on the part of the defendants.

IN VIEW WHEREOF, I hereunto set my hand this 24th day of August 1983 at Cebu City, Philippines.

(Sgd.)
RAMON S. RONQUILLO
Affiant

(Rollo, pp. 171-172)

It is evident from said affidavit that the prayer for attachment rests on the mortgage by petitioners of 11 parcels of land in Cebu, which encumbrance
respondent Aboitiz considered as fraudulent concealment of property to its prejudice. We find, however, that there is no factual allegation which may
constitute as a valid basis for the contention that the mortgage was in fraud of respondent Aboitiz. As this Court said in Jardine-Manila Finance, Inc. v.
Court of Appeals, 171 SCRA 636 (1989), "[T]he general rule is that the affidavit is the foundation of the writ, and if none be filed or one be filed which
wholly fails to set out some facts required by law to be stated therein, there is no jurisdiction and the proceedings are null and void."

Bare allegation that an encumbrance of a property is in fraud of the creditor does not suffice. Factual bases for such conclusion must be clearly
averred.

The execution of a mortgage in favor of another creditor is not conceived by the Rules as one of the means of fraudulently disposing of one's
property. By mortgaging a piece of property, a debtor merely subjects it to a lien but ownership thereof is not parted with.

Furthermore, the inability to pay one's creditors is not necessarily synonymous with fraudulent intent not to honor an obligation (Insular Bank of Asia &
America, Inc. v. Court of Appeals, 190 SCRA 629 [1990]).
Consequently, when petitioners filed a motion for the reconsideration of the order directing the issuance of the writ of attachment, respondent Judge
should have considered it as a motion for the discharge of the attachment and should have conducted a hearing or required submission of counter-
affidavits from the petitioners, if only to gather facts in support of the allegation of fraud (Jopillo, Jr. v. Court of Appeals, 167 SCRA 247 [1988]). This is
what Section 13 of Rule 57 mandates.

This procedure should be followed because, as the Court has time and again said, attachment is a harsh, extraordinary and summary remedy and the
rules governing its issuance must be construed strictly against the applicant. Verily, a writ of attachment can only be granted on concrete and specific
grounds and not on general averments quoting perfunctorily the words of the Rules (D.P. Lub Oil Marketing Center, Inc. v. Nicolas, 191 SCRA 423
[1990]).

The judge before whom the application is made exercises full discretion in considering the supporting evidence proffered by the applicant. One
overriding consideration is that a writ of attachment is substantially a writ of execution except that it emanates at the beginning, instead of at the
termination of the suit (Santos v. Aquino, Jr., 205 SCRA 127 [1992]; Tay Chun Suy v. Court of Appeals, 212 SCRA 713 [1992]).

We need not discuss the issue of whether or not Civil Cases Nos. CEB-1185 and CEB-1186 constituted undue interference with the proceedings in
G.R. No. 63225 in view of the entry of judgment in the latter case.

WHEREFORE, the petition is GRANTED and the Temporary Restraining Order issued on January 6, 1984 is made PERMANENT. Respondent Judge
or whoever is the presiding judge of the Regional Trial Court, Branch 6, Cebu City, is DIRECTED to PROCEED with the resolution of Civil Cases Nos.
CEB-1185 and CEB-1186 with deliberate dispatch.

SO ORDERED.

G.R. No. L-17797 November 29, 1963

ISABELO CARPIO, petitioner,


vs.
HON. HIGINIO MACADAEG, as presiding Judge of Branch X, Court of First Instance of Manila; OSCAR C. ABAYA, Provincial Sheriff of Rizal and City
Sheriff of Manila, respondents.

W. S. Fajardo and J. P. Cortez for petitioner.


O.C. Baria and F. Manalo for respondents.

MAKALINTAL, J.:

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

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

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

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

Upon motion of respondent Abaya (Annex R), respondent Judge, on October 24, 1960, ordered the increase of the bond to P10,000, and ordered
respondent Sheriff of Rizal to proceed with the sale of the horses should petitioner failed to file the additional bond of P6,000 (Annex S). Motions filed
by petitioner seeking reconsideration of the said order of October 24 were denied by respondent Judge on November 25, 1960 (Annex X). So,
respondent Sheriff of Rizal advertised the sale at public auction of the five racing horses. Upon motion of respondent Abaya (Annex T), and despite
the opposition of petitioner(Annex U), respondent Judge, on the same day November 25 issued an order authorizing the sale of the garnished
goods (Annex Z).

Petitioner seeks annulment of the order of October 24, 1960 ordering him to file an additional bond of P6,000; the order of November 25, 1960
denying his motion for reconsideration of the order of October 24; and the order of the same date authorizing the sale of the garnished goods, on the
ground that in issuing them respondent Judge acted without jurisdiction and/or with grave abuse of discretion.

Respondent Judge should not have issued the two writs of preliminary attachment (Annexes C and C-1) on Abaya's simple allegation that the
petitioner was about to dispose of his property, thereby leaving no security for the satisfaction of any judgment.1 Mere removal or disposal of property,
by itself, is not ground for issuance of preliminary attachment, notwithstanding absence of any security for the satisfaction of any judgment against the
defendant. The removal or disposal, to justify preliminary attachment, must have been made with intent to defraud defendant's creditors.2

Respondent Judge in fact corrected himself. Acting on petitioner's motion to discharge attachment and apparently believing the correctness of the
grounds alleged therein,3 he set aside the orders of attachment (Order of March 11, 1960, Annex F).
But reversing himself again, he set aside his order of March 11, 1960 (Annex K, dated March 29, 1960.4 This he did apparently on Abaya's contention
that petitioner was about to remove or dispose of his property in order to defraud his creditors, as examples of which disposals he pointed to the
alleged sale of the horses and of petitioner's office furniture (Abaya's motion for reconsideration dated March 15, 1960, Annex H). These averments of
fraudulent disposals were controverted by petitioner who, in his opposition to Abaya's motions for reconsideration (Annex J), reiterated the defenses
against preliminary attachment which he had previously enumerated in his petition to discharge the two orders of attachment. Thus the question of
fraudulent disposal was put in issue; and respondent Judge, before issuing the preliminary attachment anew, should have given the parties
opportunity to prove their respective claims or, at the very least, should have provided petitioner with the chance to show that he had not been
disposing of his property in fraud of creditors.5

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

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

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

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

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

Bengzon, C.J., Padilla, Bautista Angelo, Concepcion, Barrera, Paredes, Dizon and Regala, JJ., concur.

G.R. No. 95550 November 23, 1992

MAXIMO UY and SYLVIA VASQUEZ-UY, petitioners,


vs.
THE HON. COURT OF APPEALS, and ROSALINDA MORENO-ANLAP, respondents.

NOCON, J.:

Petitioners, spouses Maximo Uy and Sylvia Vasquez, are before Us praying for the review of the decision of respondent Court of Appeals, dated April
24, 1990, and its resolution dated September 26, 1990, denying their motion for reconsideration. The questioned decision dismissed the petition for
certiorari and upheld the order of attachment against petitioner's properties, issued by Judge Jesus Tabilon, Branch 40 of the 7th Judicial Region,
Dumaguete City.

Records show that private respondents Enrique Anlap and Rosalinda Moreno-Anlap are the owners of a fishing vessel known as "cub-cub" valued at
P350,000.00. On September 20, 1985, they rented said vessel and its accessories to petitioners for a period of sixty (60) days commencing
September 20, 1985 until November 19, 1985, at the rental of P8,000.00 per 30-days or for a total sum of P16,000.000, which petitioners fully paid.
The agreement was that should petitioners continue using the vessel after the expiration of the lease, the same shall be considered renewed for
another period of one hundred twenty (120) days, provided petitioners pay the amount of P16,000.00 as advance payment for the first sixty (60) days
and another P16,000.00 after the expiration of the first sixty (60) days. However, despite the expiration of the original 60-day period petitioners failed
to return the fishing vessel and instead continued using the vessel without paying rentals in spite of repeated demands.

Hence, respondent filed a complaint against petitioners for recovery of a sum of money, return of the fishing vessel and damages before the Regional
Trial Court of Negros Oriental, Dumaguete City, Branch 40. After trial on the merits, a judgment, dated November 29, 1989, was rendered against
petitioners ordering them to:

1. Return the fishing vessel which they leased from respondents, together with its accessories or to pay its value of P350,000.00 if delivery
cannot be made;

2. To pay respondents the following sums:

a) P32,000.00 for unpaid rentals plus legal rate of interest from the filing of the civil case until paid;

b) P400/day representing the daily income of the fishing vessel or its value paid;

c) P3,000.00 as expenses for litigation;

d) P5,000.00 as moral damages;


and 20% of all the aforementioned amount as attorneys fees and to pay cost.

The judgment was predicted on the following findings of the trial court, to wit:

Defendants, however, failed to deliver to plaintiffs at Basay, Negros Oriental, the fishing vessel and its accessories in question up to the present nor
pay the rentals thereof, in violation of the contract of lease . . . which is the law between plaintiffs and defendants. Obligations arising from contracts
had (sic) the force of law between the contracting parties and should be complied with in good faith (Art. 1159, New Civil Code). Those who in the
performance of their obligations are guilty of fraud, negligence, or delay and those who in any manner contravene the tenor thereof, are liable for
damages (Art. 1170, New Civil Code). Defendants (sic) allegation that on December 21, 1985, plaintiffs went to their house and informed them that
they (plaintiffs) were terminating the lease of the fishing vessel in question and had already informed Edson Celle the boat engineer to bring the
fishing vessel in question from Zamboanga to Basay do not absolve defendants from complying with their obligations mandated in the contract of
lease, for aside from the fact that those allegations were not supported with clear and convincing evidence and therefore, lacks the ring of truth, they
were denied by plaintiffs. That even granting that those allegations were true, the same cannot be considered delivery of the fishing vessel . . . as
contemplated in . . . the lease contract . . .

xxx xxx xxx

Defendants cannot also claimed (sic) exemption from any liability regarding the non-delivery of the fishing boat . . . on the ground that the same got
lost due to fortuitous event because in the contract of lease . . . defendants are bound to pay plaintiffs the value of the fishing boat . . . in the event of
total loss or destruction by fortuitous events. When the law or stipulation, the obligor is liable even for fortuitous events, the loss of the thing does not
extinguish the obligation and he shall be responsible for damages. 1

On December 15, 1989, petitioners filed a notice of appeal from the aforesaid decision, while respondent filed an ex-parte motion for writ of
attachment dated December 18, 1989, which was granted, and the same issued on December 19, 1989. Petitioners' ex-parte motion to discharge
said writ failed. Likewise, their attempt at securing a reversal with the Court of Appeals was a failure with the dismissal of their petition for certiorari.

Elevating the matter to this Court, petitioners specifically challenge the propriety of the order of preliminary attachment issued by the trial court, which
read as follows:

It appearing that the appeal taken by the defendants by filing a Notice of Appeal had not been perfected on account of the fact that the last day for
taking an appeal has not yet expired and finding the Ex-parte Motion for writ of attachment to be meritorious, the same is hereby
granted. 2

Petitioners contend that the above-quoted Order does not measure up to the rigid standard set by this Court in the issuance of preliminary attachment
orders since it does not contain any findings of fact or of law. The lower court in denying the motion of the petitioners to discharge the writ of
attachment admitted that "there was no hearing in the granting of the question (sic) writ for this case was decided by this court and its factual findings
supporting the decision supports the issuance of the question (sic) writ pursuant to paragraphs (c) and (d) of Sec. 1, Rule 57 of the Rules of court.
That to conduct a hearing of said motion will just be a repetition in the presentation of evidence already on record. 3

Petitioners argue that there is nothing in the trial court's decision which would support any kind of fraud or concealment which could serve as basis for
attachment. At any rate, petitioners do not agree that a writ of attachment may be issued upon a ground established from the evidence in the main
case. Petitioners went further to say that during the entire hearing of the main case, no petition for attachment was filed by the respondents, and it
was only after the appeal was perfected that an ex-parte motion for attachment was filed.

Attachment is a provisional remedy by which the property of an adverse party is taken into legal custody as a security for the satisfaction of any
judgment that may be recovered by the plaintiff or any proper party. 4 It is an auxiliary remedy the granting of which lies within the sound discretion of
the judge taking cognizance of the principal case upon existence it depends. Its purpose is to secure a contingent lien on defendant's property until
plaintiff can obtain a judgment and have such property applied to its satisfaction or to make provision for unsecured debts in cases where the means
of satisfaction thereof are liable to be removed beyond the jurisdiction or improperly disposed of or concealed or placed beyond reach of creditors. 5

We find nothing in the Rules of Court which makes notice and hearing indispensible and mandatory for the issuance of a writ of attachment. It is
simply the duty of the court to ensure that the writ is issued on concrete and specific grounds and not on general averments. Such being the rule,
there is no reason why the evidence in the main case cannot be used as basis for issuance of a writ of attachment, more so if it was proved that the
defendants unjustly detained, improperly disposed of or concealed or placed the personal property beyond the reach of their creditors.

In the case before Us the writ of attachment sought for was granted only after trial on the merits and a finding on petitioners' liability for the return of
the boat leased or its value in case delivery cannot be effected. Nevertheless, We agree with the petitioners that We find nothing in the judgment that
would justify the issuance of a writ of attachment.

The statement in respondent's motion for a writ of attachment that they are incorporating "by way of reference the allegations of plaintiffs' complaint
and all the evidence already adduced in this case insofar as they are
applicable;" 6 and in which complaint, respondents alleged that petitioners refused and/or denied them information as to the whereabouts of their
fishing vessel, 7 are not grounds justifying the issuance of a writ of attachment. Moreover, such allegations was not proved in the main case.
Petitioners' liability, if any is predicted on their non-fulfillment of their obligation under the lease contract.

Be that as it may, petitioners' impression that the trial court loses jurisdiction to issue a writ of attachment upon perfection of the appeal is misplaced.
The rules specifically state that a motion for a writ of attachment may be filed at the commencement of an action or at anytime thereafter. 8 The trial
court may even issue orders for the protection and preservation of the rights of the parties which do not involve any matter litigated by the appeal. 9

In the case of Galang v. Endencia 10 this Court upheld the issuance of a writ of attachment even though appeal had been perfected. Relying on Sec.
9, Rule 41 of the then Rules of Court, the Court said that "[t]he levy in attachment of the properties of the defendant upon the allegation that he is
about to dispose of the same to defraud his creditors is one which is intended for the protection and preservation of the rights of the plaintiff and which
in no way involves any matter litigated by defendant's appeal."
In the same case, the Court said that errors committed by the trial in the appreciation of the probative value of the facts stated in the petition for the
writ do not affect its jurisdiction, but merely the exercise of such jurisdiction. In such cases, appeal together with the main case, not certiorari, is the
proper remedy.

PREMISES CONSIDERED, the Petition for Review is hereby GRANTED, the decision of the Court of Appeals dated April 24, 1990 is hereby
REVERSED and the trial court's order of preliminary attachment against the properties of the petitioners is hereby LIFTED and CANCELLED. It is
further ordered that properties attached be restituted to the petitioners or if this is not possible, to allow petitioners to claim on the bond.

SO ORDERED.

G.R. No. 81120 August 20, 1990

Sps. OLIB and ROBERTA R. OLIB, petitioners,


vs.
Hon. EDELWINA C, PASTORAL, Judge of the Regional Trial Court of Agusan del Norte and Butuan City, Branch III and CORAZON M, NAVIA,
respondents.

Carlito B. Yebes for petitioners.

Wenceslao B. Resales for respondents.

CRUZ, J.:

This case could have been remanded to the Court of Appeals, which has concurrent jurisdiction with this Court in petitions for certiorari against the
regional trial courts under Rule 65 of the Rules of Court. We have decided to retain and rule on it directly, however, so we can emphasize the
important doctrines we shall here affirm.

On November 13, 1981, Corazon M. Navia sued the spouses Oscar and Roberta Olib, petitioner herein, for dissolution of their partnership and other
reliefs, with a prayer for the issuance of a writ of a preliminary attachment. 1 The it was granted on November 10, 1983, resulting in the attachment of
six parcels of land belonging to the petitioners, along with stocks of merchandise in their bodega. 2 The writ was amended on December 14, 1983, to
release the merchandise. Two years later, on May 16, 1985, the petitioners filed a motion to discharge the preliminary attachment on the ground that
the attachment bond executed for one year from November 1983 had already lapsed. 3 This was accompanied by a certification from the bonding
company that the bond had not been renewed and the corresponding payment for extension had not been made . 4
On February 25,1986, Judge Miguel S. Rallos of the Regional Trial Court of Agusan del Norte and Butuan City rendered judgment for the petitioners
and sentenced the private respondent to pay them actual, moral and exemplary damages, plus attorney's fees and litigation expenses. 5 On April 16,
1986, Navia perfected her appeal from the challenged judgment, and the records of the case were elevated to the Court of Appeals on January 25,
1988. 6

Although the trial court found in the text of the decision that the private respondent was not entitled to the issuance of the writ of preliminary
attachment, no mention was made of the said writ in the dispositive portion. As a result, the annotation of the preliminary attachment on the
certificates/titles of the attached lands was maintained and could not be canceled.

On July 20, 1987, the petitioners moved for the discharge of the writ of preliminary attachment by the respondent court on the basis of the judgment in
their favor. Navia filed an opposition, contending that as she had perfected her appeal to the Court of Appeals, the trial court no longer had any
jurisdiction over the case. The private respondent cited Rule 41, Section 9, of the Rules of Court, reading as follows:

When appeal deemed perfected; effect thereof. If the notice of appeal, the appeal bond and the record on appeal have been filed in due time, the
appeal is deemed perfected upon the approval of the record on appeal and of the appeal bond other than a cash bond, and thereafter the trial court
loses its jurisdiction over the case, except to issue orders for the protection and preservation of the rights of the parties which do not involve any
matter litigated by the appeal, to approve compromises offered by the parties prior to the transmittal of the record on appeal to the appellate court,
and to permit the prosecution of pauper's appeals.

On August 24, 1987, Judge Edelwina C. Pastoral, who had succeeded Judge Rallos denied the motion on the ground invoked in the opposition and
declared:

Settled is the rule that the trial court loses its jurisdiction over the record and over the subject of the case once an appeal in the case has been
perfected. The exception to this rule refers to the orders of the Court to protect and preserve the rights of the parties which do not involve any matter
litigated by appeal (Section 9, Rule 41 of the Rules of Court). The writ of preliminary attachment was earlier granted as a security for the satisfaction
of the judgment, the latter being now the subject of the appeal. To grant defendant's motion at this juncture is to disturb and not to preserve the rights
of the parties. It is the stand of this Court that the status quo of the parties shall be maintained for it cannot predetermine the posture which the
appellate court will adopt, either to affirm, modify or reverse the questioned decision of this Court.

The petitioners moved for reconsideration, invoking the case of Galang v. Endencia, 7 where this Court held:

The levy in attachment of the properties of the defendant upon the allegation that he is about to dispose of the same to defraud his creditors is one
which is intended for the protection and preservation of the rights of the plaintiff and which in no way involves any matter litigated by the defendant's
appeal. 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 do not affect its jurisdiction but merely the exercise of such jurisdiction. We need not belabor here
the rule that what makes up jurisdiction is the authority to act in a particular case and not the correctness of the action taken thereon. Without such
authority, as determined by law, the court cannot act, or if it does, its actuations are null and voId; but where the authority exists, all orders and
decisions of the court rendered in the exercise thereof and within its limits are valId even if they were erroneous.

They argued that if the court a quo could issue a writ of attachment after the appeal had been perfected, then it could a fortiori discharge such a writ,
especially where, as in the case at bar, the movants were the prevailing parties.

Later, somewhat inconsistently, the petitioners also contended that there was really no more need for an order discharging the attachment as this
followed by operation of Rule 57, Section 19, of the Rules of Court. Such discharge was the immediate and automatic effect of any judgment in favor
of the party whose property had been attached, thus:

SEC. 19. Disposition of attached property where judgment is for party against whom attachment is issued. If judgment be rendered against the
attaching creditor, all the proceeds of sales and money collected or received by the sheriff, clerk, or other proper officer under the order of attachment,
and all property attached remaining in any such officer's hands, shall be delivered to the party against whom attachment was issued, and the order of
attachment discharged.

The motion having been denied, the petitioners sought reconsideration a second time, insisting that (a) the attachment had been automatically
discharged under Rule 57, Section 19; and (b) the attachment bond had already lapsed for non-payment of the premiums. They were rebuffed again.
They then came before this Court, contending that the respondent court committed grave abuse of discretion in denying their motion.

We hold that it did not.

Attachment is defined as a provisional remedy by which the property of an adverse party is taken into legal custody, either at the commencement of
an action or at any time thereafter, as a security for the satisfaction of any judgment that may be recovered by the plaintiff or any proper party. 8

It is an auxiliary remedy and cannot have an independent existence apart from the main suit or claim instituted by the plaintiff against the defendant. 9
Being merely ancillary to a principal proceeding, the attachment must fail if the suit itself cannot be maintained as the purpose of the writ can no
longer be justified.

The consequence is that where the main action is appealed, the attachment which may hive been issued as an incident of that action, is also
considered appealed and so also removed from the jurisdiction of the court a quo. The attachment itself cannot be the subject of a separate case
independent of the principal action because the attachment was only an incident of such action.

We held in Olsen v. Olsen: 10

The preliminary attachment is an auxiliary remedy the granting of which lies within the sound discretion of the judge taking cognizance of the principal
case upon whose existence it depends. The order of the judge denying a motion for the annulment of a writ of preliminary attachment, being of an
incIdental or interlocutory and auxiliary character, cannot be the subject of an appeal independently from the principal case, because our procedural
law now in force authorizes an appeal only from a final judgement which gives an end to the litigation. (Section 143, Act 190; 3 C.J., 549. par. 389.)

xxx xxx xxx

While it is true that an order denying a motion for the annulment of a preliminary attachment is not subject to review through an appeal independently
from the principal case, it is not constituting a final order, yet when the writ of preliminary attachment becomes final by virtue of a final judgment
rendered in the principal case, saId writ is subject to review jointly with the judgment rendered in the principal case through an ordinary appeal.

It is also worth noting, as an appropriate observation on the impropriety of the remedy employed by the petitioners in this case, that, in Jopillo v. Court
of Appeals, 11 this Court observed:

... 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.

Coming now to the argument that the attachment was automatically lifted because of the non-payment of the premium on the attachment bond, the
Court feels it is time again to correct a common misimpression. The rule is that the bond is not deemed extinguished by reason alone of such non-
payment. The Court made this clear in Luzon Surety Co. v. Quebrar, 12 where it declared:

To allow the defendants-appellants to evade their liability under the Indemnity Agreements by non-payment of the premiums would ultimately lead to
giving the administrator the power to diminish or reduce and altogether nullify his liability under the Administrator's Bonds. As already stated, this is
contrary to the intent and purpose of the law in provIding for the administrator's bonds for the protection of the creditors, heirs, legatees, and the
estate.

xxx xxx xxx

Lastly, in Manila Surety and FIdelity Co., Inc. v. Villarama (107 Phil. 891), it was held that "the one-year period mentioned therein refers not to the
duration or lifetime of the bond, but merely to the payment of premiums, and, consequently, does not affect at all the effectivity or efficacy of such
bond. But such non-payment alone of the premiums for the succeeding years ... does not necessarily extinguish or terminate the effectivity of the
counter-bond in the absence of an express stipulation in the contract making such non- payment of premiums a cause for the extinguishment or
termination of the undertaking.

These principles are applicable to other kinds of bonds, including the attachment bond in the case at bar. On this bond, the respondent court correctly
observed:
... a cursory examination of the bond for levy on attachment executed between herein plaintiff Corazon M. Navia and the branch manager of the First
Continental Assurance ' Co., Inc. (Rollo, pp. 347-348) discloses no stipulation that the surety company will terminate the bond for non-payment of the
premium. This minor matter on non-payment of premiums of the bond pertains to the contracting parties to resolve. 13

Finally, on the correct interpretation of Rule 57, Section 19, of the Rules of Court, we hold that the order of attachment is considered discharged only
where the judgment has already become final and executory and not when it is still on appeal. The obvious reason is that, except in a few specified
cases, execution pending appeal is not allowed. 14

WHEREFORE, the petition is DISMISSED, with costs against the petitioners. The petitioners may, if they see fit, move for the lifting of the writ of
preliminary attachment in the Court of Appeals, to which that ancillary remedy is deemed elevated along with the principal action.

SO ORDERED.

G.R. No. 93262 December 29, 1991

DAVAO LIGHT & POWER CO., INC., petitioner,


vs.
THE COURT OF APPEALS, QUEENSLAND HOTEL or MOTEL or QUEENSLAND TOURIST INN, and TEODORICO ADARNA, respondents.

Breva & Breva Law Offices for petitioner.

Goc-Ong & Associates for private respondents.

NARVASA, J.:p

Subject of the appellate proceedings at bar is the decision of the Court of Appeals in CA-G.R. Sp. No. 1967 entitled "Queensland Hotel, Inc., etc. and
Adarna v. Davao Light & Power Co., Inc.," promulgated on May 4, 1990. 1 That decision nullified and set aside the writ of preliminary attachment
issued by the Regional Trial Court of Davao City 2 in Civil Case No. 19513-89 on application of the plaintiff (Davao Light & Power Co.), before the
service of summons on the defendants (herein respondents Queensland Co., Inc. and Adarna).

Following is the chronology of the undisputed material facts culled from the Appellate Tribunal's judgment of May 4, 1990.

1. On May 2, 1989 Davao Light & Power Co., Inc. (hereafter, simply Davao Light) filed a verified complaint for recovery of a sum of money and
damages against Queensland Hotel, etc. and Teodorico Adarna (docketed as Civil Case No. 19513-89). The complaint contained an ex parte
application for a writ of preliminary attachment.
2. On May 3, 1989 Judge Nartatez, to whose branch the case was assigned by raffle, issued an Order granting the ex parte application and
fixing the attachment bond at P4,600,513.37.

3. On May 11, 1989 the attachment bond having been submitted by Davao Light, the writ of attachment issued.

4. On May 12, 1989, the summons and a copy of the complaint, as well as the writ of attachment and a copy of the attachment bond, were
served on defendants Queensland and Adarna; and pursuant to the writ, the sheriff seized properties belonging to the latter.

5. On September 6, 1989, defendants Queensland and Adarna filed a motion to discharge the attachment for lack of jurisdiction to issue the
same because at the time the order of attachment was promulgated (May 3, 1989) and the attachment writ issued (May 11, 1989), the Trial Court had
not yet acquired jurisdiction over the cause and over the persons of the defendants.

6. On September 14, 1989, Davao Light filed an opposition to the motion to discharge attachment.

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

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

. . . the Orders dated May 3, 1989 granting the issuance of a writ of preliminary attachment, dated September 19, 1989 denying the motion to
discharge attachment; dated November 7, 1989 denying petitioner's motion for reconsideration; as well as all other orders emanating therefrom,
specially the Writ of Attachment dated May 11, 1989 and Notice of Levy on Preliminary Attachment dated May 11, 1989, are hereby declared null and
void and the attachment hereby ordered DISCHARGED.

The Appellate Tribunal declared that

. . . While it is true that a prayer for the issuance of a writ of preliminary attachment may be included m the complaint, as is usually done, it is likewise
true that the Court does not acquire jurisdiction over the person of the defendant until he is duly summoned or voluntarily appears, and adding the
phrase that it be issued "ex parte" does not confer said jurisdiction before actual summons had been made, nor retroact jurisdiction upon summons
being made. . . .

It went on to say, citing Sievert v. Court of Appeals, 3 that "in a proceedings in attachment," the "critical time which must be identified is . . . when the
trial court acquires authority under law to act coercively against the defendant or his property . . .;" and that "the critical time is the of the vesting of
jurisdiction in the court over the person of the defendant in the main case."
Reversal of this Decision of the Court of Appeals of May 4, 1990 is what Davao Light seeks in the present appellate proceedings.

The question is whether or not a writ of preliminary attachment may issue ex parte against a defendant before acquisition of jurisdiction of the latter's
person by service of summons or his voluntary submission to the Court's authority.

The Court rules that the question must be answered in the affirmative and that consequently, the petition for review will have to be granted.

It is incorrect to theorize that after an action or proceeding has been commenced and jurisdiction over the person of the plaintiff has been vested in
the court, but before the acquisition of jurisdiction over the person of the defendant (either by service of summons or his voluntary submission to the
court's authority), nothing can be validly done by the plaintiff or the court. It is wrong to assume that the validity of acts done during this period should
be defendant on, or held in suspension until, the actual obtention of jurisdiction over the defendant's person. The obtention by the court of jurisdiction
over the person of the defendant is one thing; quite another is the acquisition of jurisdiction over the person of the plaintiff or over the subject-matter
or nature of the action, or the res or object hereof.

An action or proceeding is commenced by the filing of the complaint or other initiatory pleading. 4 By that act, the jurisdiction of the court over the
subject matter or nature of the action or proceeding is invoked or called into activity; 5 and it is thus that the court acquires jurisdiction over said
subject matter or nature of the action. 6 And it is by that self-same act of the plaintiff (or petitioner) of filing the complaint (or other appropriate
pleading) by which he signifies his submission to the court's power and authority that jurisdiction is acquired by the court over his person. 7 On
the other hand, jurisdiction over the person of the defendant is obtained, as above stated, by the service of summons or other coercive process upon
him or by his voluntary submission to the authority of the court. 8

The events that follow the filing of the complaint as a matter of routine are well known. After the complaint is filed, summons issues to the defendant,
the summons is then transmitted to the sheriff, and finally, service of the summons is effected on the defendant in any of the ways authorized by the
Rules of Court. There is thus ordinarily some appreciable interval of time between the day of the filing of the complaint and the day of service of
summons of the defendant. During this period, different acts may be done by the plaintiff or by the Court, which are unquestionable validity and
propriety. Among these, for example, are the appointment of a guardian ad litem, 9 the grant of authority to the plaintiff to prosecute the suit as a
pauper litigant, 10 the amendment of the complaint by the plaintiff as a matter of right without leave of court, 11 authorization by the Court of service
of summons by publication, 12 the dismissal of the action by the plaintiff on mere notice. 13

This, too, is true with regard to the provisional remedies of preliminary attachment, preliminary injunction, receivership or replevin. 14 They may be
validly and properly applied for and granted even before the defendant is summoned or is heard from.

A preliminary attachment may be defined, paraphrasing the Rules of Court, as the provisional remedy in virtue of which a plaintiff or other party may,
at the commencement of the action or at any time thereafter, have the property of the adverse party taken into the custody of the court as security for
the satisfaction of any judgment that may be recovered. 15 It is a remedy which is purely statutory in respect of which the law requires a strict
construction of the provisions granting it. 16 Withal no principle, statutory or jurisprudential, prohibits its issuance by any court before acquisition of
jurisdiction over the person of the defendant.
Rule 57 in fact speaks of the grant of the remedy "at the commencement of the action or at any time thereafter." 17 The phase, "at the
commencement of the action," obviously refers to the date of the filing of the complaint which, as above pointed out, is the date that marks "the
commencement of the action;" 18 and the reference plainly is to a time before summons is served on the defendant, or even before summons issues.
What the rule is saying quite clearly is that after an action is properly commenced by the filing of the complaint and the payment of all requisite
docket and other fees the plaintiff may apply for and obtain a writ of preliminary attachment upon fulfillment of the pertinent requisites laid down by
law, and that he may do so at any time, either before or after service of summons on the defendant. And this indeed, has been the immemorial
practice sanctioned by the courts: for the plaintiff or other proper party to incorporate the application for attachment in the complaint or other
appropriate pleading (counter-claim, cross-claim, third-party claim) and for the Trial Court to issue the writ ex-parte at the commencement of the
action if it finds the application otherwise sufficient in form and substance.

In Toledo v. Burgos, 19 this Court ruled that a hearing on a motion or application for preliminary attachment is not generally necessary unless
otherwise directed by the Trial Court in its discretion. 20 And in Filinvest Credit Corporation v. Relova, 21 the Court declared that "(n)othing in the
Rules of Court makes notice and hearing indispensable and mandatory requisites for the issuance of a writ of attachment." The only pre-requisite is
that the Court be satisfied, upon consideration of "the affidavit of the applicant or of some other person who personally knows the facts, that a
sufficient cause of action exists, that the case is one of those mentioned in Section 1 . . . (Rule 57), that there is no other sufficient security for the
claim sought to be enforced by the action, and that the amount due to the applicant, or the value of the property the possession of which he is entitled
to recover, is as much as the sum for which the order (of attachment) is granted above all legal counterclaims." 22 If the court be so satisfied, the
"order of attachment shall be granted," 23 and the writ shall issue upon the applicant's posting of "a bond executed to the adverse party in an amount
to be fixed by the judge, not exceeding the plaintiffs claim, conditioned that the latter will pay all the costs which may be adjudged to the adverse party
and all damages which he may sustain by reason of the attachment, if the court shall finally adjudge that the applicant was not entitled thereto." 24

In Mindanao Savings & Loan Association, Inc. v. Court of Appeals, decided on April 18, 1989, 25 this Court had occasion to emphasize the postulate
that no hearing is required on an application for preliminary attachment, with notice to the defendant, for the reason that this "would defeat the
objective of the remedy . . . (since the) time which such a hearing would take, could be enough to enable the defendant to abscond or dispose of his
property before a writ of attachment issues." As observed by a former member of this Court, 26 such a procedure would warn absconding debtors-
defendants of the commencement of the suit against them and the probable seizure of their properties, and thus give them the advantage of time to
hide their assets, leaving the creditor-plaintiff holding the proverbial empty bag; it would place the creditor-applicant in danger of losing any security
for a favorable judgment and thus give him only an illusory victory.

Withal, ample modes of recourse against a preliminary attachment are secured by law to the defendant. The relative ease with which a preliminary
attachment may be obtained is matched and paralleled by the relative facility with which the attachment may legitimately be prevented or frustrated.
These modes of recourse against preliminary attachments granted by Rule 57 were discussed at some length by the separate opinion in Mindanao
Savings & Loans Asso. Inc. v. CA., supra.

That separate opinion stressed that there are two (2) ways of discharging an attachment: first, by the posting of a counterbond; and second, by a
showing of its improper or irregular issuance.
1.0. The submission of a counterbond is an efficacious mode of lifting an attachment already enforced against property, or even of preventing its
enforcement altogether.

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

Sec. 12. Discharge of attachment upon giving counterbond. At any time after an order of attachment has been granted, the party whose
property has been attached or the person appearing in his behalf, may, upon reasonable notice to the applicant, apply to the judge who granted the
order, or to the judge of the court in which the action is pending, for an order discharging the attachment wholly or in part on the security given . . . in
an amount equal to the value of the property attached as determined by the judge to secure the payment of any judgment that the attaching creditor
may recover in the action. . . .

1.2. But even before actual levy on property, seizure under attachment may be prevented also upon counterbond. The defendant need not wait
until his property is seized before seeking the discharge of the attachment by a counterbond. This is made possible by Section 5 of Rule 57.

Sec. 5. Manner of attaching property. The officer executing the order shall without delay attach, to await judgment and execution in the action, all
the properties of the party against whom the order is issued in the province, not exempt from execution, or so much thereof as may be sufficient to
satisfy the applicant's demand, unless the former makes a deposit with the clerk or judge of the court from which the order issued, or gives a counter-
bond executed to the applicant, in an amount sufficient to satisfy such demand besides costs, or in an amount equal to the value of the property
which is about to be attached, to secure payment to the applicant of any judgment which he may recover in the action. . . . (Emphasis supplied)

2.0. Aside from the filing of a counterbond, a preliminary attachment may also be lifted or discharged on the ground that it has been irregularly or
improperly issued, in accordance with Section 13 of Rule 57. Like the first, this second mode of lifting an attachment may be resorted to even before
any property has been levied on. Indeed, it may be availed of after property has been released from a levy on attachment, as is made clear by said
Section 13, viz.:

Sec. 13. Discharge of attachment for improper or irregular issuance. The party whose property has been attached may also, at any time
either BEFORE or AFTER the release of the attached property, or before any attachment shall have been actually levied, upon reasonable notice to
the attaching creditor, apply to the judge who granted the order, or to the judge of the court in which the action is pending, for an order to discharge
the attachment on the ground that the same was improperly or irregularly issued. If the motion be made on affidavits on the part of the party whose
property has been attached, but not otherwise, the attaching creditor may oppose the same by counter-affidavits or other evidence in addition to that
on which the attachment was made. . . . (Emphasis supplied)

This is so because "(a)s pointed out in Calderon v. I.A.C., 155 SCRA 531 (1987), The attachment debtor cannot be deemed to have waived any
defect in the issuance of the attachment writ by simply availing himself of one way of discharging the attachment writ, instead of the other. Moreover,
the filing of a counterbond is a speedier way of discharging the attachment writ maliciously sought out by the attaching creditor instead of the other
way, which, in most instances . . . would require presentation of evidence in a fullblown trial on the merits, and cannot easily be settled in a pending
incident of the case." 27

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

(a) When an attachment may not be dissolved by a showing of its irregular or improper issuance:

. . . (W)hen the preliminary attachment is issued upon a ground which is at the same time the applicant's cause of action; e.g., "an action for money or
property embezzled or fraudulently misapplied or converted to his own use by a public officer, or an officer of a corporation, or an attorney, factor,
broker, agent, or clerk, in the course of his employment as such, or by any other person in a fiduciary capacity, or for a willful violation of duty." (Sec. 1
[b], Rule 57), or "an action against a party who has been guilty of fraud m contracting the debt or incurring the obligation upon which the action is
brought" (Sec. 1 [d], Rule 57), the defendant is not allowed to file a motion to dissolve the attachment under Section 13 of Rule 57 by offering to show
the falsity of the factual averments in the plaintiff's application and affidavits on which the writ was based and consequently that the writ based
thereon had been improperly or irregularly issued (SEE Benitez v. I.A.C., 154 SCRA 41) the reason being that the hearing on such a motion for
dissolution of the writ would be tantamount to a trial of the merits of the action. In other words, the merits of the action would be ventilated at a mere
hearing of a motion, instead of at the regular trial. Therefore, when the writ of attachment is of this nature, the only way it can be dissolved is by a
counterbond (G.B. Inc. v. Sanchez, 98 Phil. 886).

(b) Effect of the dissolution of a preliminary attachment on the plaintiffs attachment bond:

. . . The dissolution of the preliminary attachment upon security given, or a showing of its irregular or improper issuance, does not of course operate to
discharge the sureties on plaintiff's own attachment bond. The reason is simple. That bond is "executed to the adverse party, . . . conditioned that the .
. . (applicant) will pay all the costs which may be adjudged to the adverse party and all damages which he may sustain by reason of the attachment, if
the court shall finally adjudge that the applicant was not entitled thereto" (SEC. 4, Rule 57). Hence, until that determination is made, as to the
applicant's entitlement to the attachment, his bond must stand and cannot be with-drawn.

With respect to the other provisional remedies, i.e., preliminary injunction (Rule 58), receivership (Rule 59), replevin or delivery of personal property
(Rule 60), the rule is the same: they may also issue ex parte. 29

It goes without saying that whatever be the acts done by the Court prior to the acquisition of jurisdiction over the person of defendant, as above
indicated issuance of summons, order of attachment and writ of attachment (and/or appointments of guardian ad litem, or grant of authority to the
plaintiff to prosecute the suit as a pauper litigant, or amendment of the complaint by the plaintiff as a matter of right without leave of court 30 and
however valid and proper they might otherwise be, these do not and cannot bind and affect the defendant until and unless jurisdiction over his person
is eventually obtained by the court, either by service on him of summons or other coercive process or his voluntary submission to the court's authority.
Hence, when the sheriff or other proper officer commences implementation of the writ of attachment, it is essential that he serve on the defendant not
only a copy of the applicant's affidavit and attachment bond, and of the order of attachment, as explicity required by Section 5 of Rule 57, but also the
summons addressed to said defendant as well as a copy of the complaint and order for appointment of guardian ad litem, if any, as also explicity
directed by Section 3, Rule 14 of the Rules of Court. Service of all such documents is indispensable not only for the acquisition of jurisdiction over the
person of the defendant, but also upon considerations of fairness, to apprise the defendant of the complaint against him, of the issuance of a writ of
preliminary attachment and the grounds therefor and thus accord him the opportunity to prevent attachment of his property by the posting of a
counterbond in an amount equal to the plaintiff's claim in the complaint pursuant to Section 5 (or Section 12), Rule 57, or dissolving it by causing
dismissal of the complaint itself on any of the grounds set forth in Rule 16, or demonstrating the insufficiency of the applicant's affidavit or bond in
accordance with Section 13, Rule 57.

It was on account of the failure to comply with this fundamental requirement of service of summons and the other documents above indicated that
writs of attachment issued by the Trial Court ex parte were struck down by this Court's Third Division in two (2) cases, namely: Sievert v. Court of
Appeals, 31 and BAC Manufacturing and Sales Corporation v. Court of Appeals, et al. 32 In contrast to the case at bar where the summons and a
copy of the complaint, as well as the order and writ of attachment and the attachment bond were served on the defendant in Sievert, levy on
attachment was attempted notwithstanding that only the petition for issuance of the writ of preliminary attachment was served on the defendant,
without any prior or accompanying summons and copy of the complaint; and in BAC Manufacturing and Sales Corporation, neither the summons nor
the order granting the preliminary attachment or the writ of attachment itself was served on the defendant "before or at the time the levy was made."

For the guidance of all concerned, the Court reiterates and reaffirms the proposition that writs of attachment may properly issue ex parte provided that
the Court is satisfied that the relevant requisites therefor have been fulfilled by the applicant, although it may, in its discretion, require prior hearing on
the application with notice to the defendant; but that levy on property pursuant to the writ thus issued may not be validly effected unless preceded, or
contemporaneously accompanied, by service on the defendant of summons, a copy of the complaint (and of the appointment of guardian ad litem, if
any), the application for attachment (if not incorporated in but submitted separately from the complaint), the order of attachment, and the plaintiff's
attachment bond.

WHEREFORE, the petition is GRANTED; the challenged decision of the Court of Appeals is hereby REVERSED, and the order and writ of
attachment issued by Hon. Milagros C. Nartatez, Presiding Judge of Branch 8, Regional Trial Court of Davao City in Civil Case No. 19513-89 against
Queensland Hotel or Motel or Queensland Tourist Inn and Teodorico Adarna are hereby REINSTATED. Costs against private respondents.

SO ORDERED.

G.R. No. 107303 February 21, 1994

EMMANUEL C. OATE and ECON HOLDINGS CORPORATION, petitioners,


vs.
HON. ZUES C. ABROGAR, as Presiding Judge of Branch 150 of the Regional Trial Court of Makati, and SUN LIFE ASSURANCE COMPANY OF
CANADA, respondents.

G.R. No. 107491 February 21, 1994


BRUNNER DEVELOPMENT CORPORATION, petitioner,
vs.
HON. ZUES C. ABROGAR, as Presiding Judge of Branch 150 of the Regional Trial Court of Makati, and SUN LIFE ASSURANCE COMPANY OF
CANADA, respondents.

Florante A. Bautista for petitioner in G.R. No. 107303.

Andin & Andin Law Offices for Brunner Development Corporation.

Quasha, Asperilla, Ancheta, Pena & Nolasco for Sun Life Assurance Company of Canada.

NOCON, J.:

These are separate petitions for certiorari with a prayer for temporary restraining order filed by Emmanuel C. Oate and Econ Holdings Corporation
(in G.R. No. 107303), and Brunner Development Corporation (in G.R. No. 107491), both of which assail several orders issued by respondent Judge
Zues C. Abrogar in Civil Case No. 91-3506.

The pertinent facts are as follows: On December 23, 1991, respondent Sun Life Assurance Company of Canada (Sun Life, for brevity) filed a
complaint for a sum of money with a prayer for the immediate issuance of a writ of attachment against petitioners, and Noel L. Dio, which was
docketed as Civil Case No. 91-3506 and raffled to Branch 150 of the RTC Makati, presided over by respondent Judge. The following day, December
24, 1991, respondent Judge issued an order granting the issuance of a writ of attachment, and the writ was actually issued on December 27, 1991.

On January 3, 1992, upon Sun Life's ex-parte motion, the trial court amended the writ of attachment to reflect the alleged amount of the indebtedness.
That same day, Deputy Sheriff Arturo C. Flores, accompanied by a representative of Sun Life, attempted to serve summons and a copy of the
amended writ of attachment upon petitioners at their known office address at 108 Aguirre St., Makati but was not able to do so since there was no
responsible officer to receive the same. 1 Nonetheless, Sheriff Flores proceeded, over a period of several days, to serve notices of garnishment upon
several commercial banks and financial institutions, and levied on attachment a condominium unit and a real property belonging to petitioner Oate.

Summons was eventually served upon petitioners on January 9, 1992, while defendant Dio was served with summons on January 16, 1992.

On January 21, 1992, petitioners filed an "Urgent Motion to Discharge/Dissolve Writ of Attachment." That same day, Sun Life filed an ex-parte motion
to examine the books of accounts and ledgers of petitioner Brunner Development Corporation (Brunner, for brevity) at the Urban Bank, Legaspi
Village Branch, and to obtain copies thereof, which motion was granted by respondent Judge. The examination of said account took place on January
23, 1992. Petitioners filed a motion to nullify the proceedings taken thereat since they were not present.
On January 30, 1992, petitioners and their co-defendants filed a memorandum in support of the motion to discharge attachment. Also on that same
day, Sun Life filed another motion for examination of bank accounts, this time seeking the examination of Account No. 0041-0277-03 with the Bank of
Philippine Islands (BPI) which, incidentally, petitioners claim not to be owned by them and the records of Philippine National Bank (PNB) with
regard to checks payable to Brunner. Sun Life asked the court to order both banks to comply with the notice of garnishment.

On February 6, 1992, respondent Judge issued an order (1) denying petitioners' and the co-defendants' motion to discharge the amended writ of
attachment, (2) approving Sun Life's additional attachment, (3) granting Sun Life's motion to examine the BPI account, and (4) denying petitioners'
motion to nullify the proceedings of January 23, 1992.

On March 12, 1992, petitioners filed a motion for reconsideration of the February 6, 1992 order. On September 6, 1992, respondent Judge denied the
motion for reconsideration.

Hence, the instant petitions. Petitioners' basic argument is that respondent Judge had acted with grave abuse of discretion amounting to lack or in
excess of jurisdiction in (1) issuing ex parte the original and amended writs of preliminary attachment and the corresponding notices of garnishment
and levy on attachment since the trial court had not yet acquired jurisdiction over them; and (2) allowing the examination of the bank records though
no notice was given to them.

We find both petitions unmeritorious.

Petitioners initially argue that respondent Judge erred in granting Sun Life's prayer for a writ of preliminary attachment on the ground that the trial
court had not acquired jurisdiction over them. This argument is clearly unavailing since it is well-settled that a writ of preliminary attachment may be
validly applied for and granted even before the defendant is summoned or is heard from. 2 The rationale behind this rule was stated by the Court in
this wise:

A preliminary attachment may be defined, paraphrasing the Rules of Court, as the provisional remedy in virtue of which a plaintiff or other proper party
may, at the commencement of the action or any time thereafter, have the property of the adverse party taken into the custody of the court as security
for the satisfaction of any judgment that may be recovered. It is a remedy which is purely statutory in respect of which the law requires a strict
construction of the provisions granting it. Withal no principle, statutory or jurisprudential, prohibits its issuance by any court before acquisition of
jurisdiction over the person of the defendant.

Rule 57 in fact speaks of the grant of the remedy "at the commencement of the action or at any time thereafter." The phrase "at the commencement
of the action," obviously refers to the date of the filing of the complaint which, as abovepointed out, its the date that marks "the commencement of
the action;" and the reference plainly is to a time before summons is served on the defendant or even before summons issues. What the rule is saying
quite clearly is that after an action is properly
commenced by the filing of the complaint and the payment of all requisite docket and other fees the plaintiff may apply for and obtain a writ of
preliminary attachment upon fulfillment of the pertinent requisites laid down by law, and that he may do so at any time, either before or after service of
summons on the defendant. And this indeed, has been the immemorial practice sanctioned by the courts: for the plaintiff or other proper party to
incorporate the application for attachment in the complaint or other appropriate pleading (counterclaim, cross-claim, third-party claim) and for the Trial
Court to issue the writ ex-parte at the commencement of the action if it finds the application otherwise sufficient in form and substance. 3

Petitioners then contended that the writ should have been discharged since the ground on which it was issued fraud in contracting the obligation
was not present. This cannot be considered a ground for lifting the writ since this delves into the very complaint of the Sun Life. As this Court stated in
Cuatro v. Court of Appeals: 4

Moreover, an attachment may not be dissolved by a showing of its irregular or improper issuance if it is upon a ground which is at the same time the
applicant's cause of action in the main case since an anomalous situation would result if the issues of the main case would be ventilated and resolved
in a mere hearing of the motion (Davao Light and Power Co., Inc. vs. Court of Appeals, supra, The Consolidated Bank and Trust Corp. (Solidbank) vs.
Court of Appeals, 197 SCRA 663 [1991]).

In the present case, one of the allegation in petitioner's complaint below is that the defendant spouses induced the plaintiff to grant the loan by issuing
postdated checks to cover the installment payments and a separate set of postdated checks for payment of the stipulated interest (Annex "B"). The
issue of fraud, then, is clearly within the competence of the lower court in the main action. 5

The fact that a criminal complaint for estafa filed by Sun Life against the petitioners was dismissed by the Provincial Prosecutor of Rizal for Makati on
April 21, 1992 and was upheld by the Provincial Prosecutor on July 13, 1992 is of no moment since the same can be indicative only of the absence of
criminal liability, but not of civil liability. Besides, Sun Life had elevated the case for review to the Department of Justice, where the case is presently
pending.

Finally, petitioners argue that the enforcement of the writ was invalid since it undisputedly preceded the actual service of summons by six days at
most. Petitioners cite the decisions in Sievert vs. Court of Appeals, et al. 6 and BAC Manufacturing and Sales Corp. vs. Court of Appeals, et al., 7
wherein this Court held that enforcement of the writ of attachment can not bind the defendant in view of the failure of the trial court to acquire
jurisdiction over the defendant through either summons or his voluntary appearance.

We do not agree entirely with petitioners. True, this Court had held in a recent decision that the enforcement of writ of attachment may not validly be
effected until and unless proceeded or contemporaneously accompanied by service of summons. 8

But we must distinguish the case at bar from the Sievert and BAC Manufacturing cases. In those two cases, summons was never served upon the
defendants. The plaintiffs therein did not even attempt to cause service of summons upon the defendants, right up to the time the cases went up to
this Court. This is not true in the case at bar. The records reveal that Sheriff Flores and Sun Life did attempt a contemporaneous service of both
summons and the writ of attachment on January 3, 1992, but we stymied by the absence of a responsible officer in petitioners' offices. Note is taken
of the fact that petitioners Oate and Econ Holdings admitted in their answer 9 that the offices of both Brunner Development Corporation and Econ
Holdings were located at the same address and that petitioner Oate is the President of Econ Holdings while petitioner Dio is the President of
Brunner Development Corporation as well as a stockholder and director of Econ Holdings.
Thus, an exception to the established rule on the enforcement of the writ of attachment can be made where a previous attempt to serve the summons
and the writ of attachment failed due to factors beyond the control of either the plaintiff or the process server, provided that such service is effected
within a reasonable period thereafter.

Several reasons can be given for the exception. First, there is a possibility that a defendant, having been alerted of plaintiffs action by the attempted
service of summons and the writ of attachment, would put his properties beyond the reach of the plaintiff while the latter is trying to serve the
summons and the writ anew. By the time the plaintiff may have caused the service of summons and the writ, there might not be any property of the
defendant left to attach.

Second, the court eventually acquired jurisdiction over the petitioners six days later. To nullify the notices of garnishment issued prior thereto would
again open the possibility that petitioners would transfer the garnished monies while Sun Life applied for new notices of garnishment.

Third, the ease by which a writ of attachment can be obtained is counter-balanced by the ease by which the same can be discharged: the defendant
can either make a cash deposit or post a counter-bond equivalent to the value of the property attached. 10 The petitioners herein tried to have the writ
of attachment discharged by posting a counter-bond, the same was denied by respondent Judge on the ground that the amount of the counter-bond
was less than that of Sun Life's bond.

II.

Petitioners' second ground assail the acts of respondent Judge in allowing the examination of Urban Banks' records and in ordering that the
examination of the bank records of BPI and PNB as invalid since no notice of said examinations were ever given them. Sun Life grounded its
requests for the examination of the bank accounts on Section 10, Rule 57 of the Rules of Court, which provided, to wit:

Sec. 10. Examination of party whose property is attached and persons indebted to him or controlling his property; delivery of property to officer.
Any person owing debts to the party whose property is attached or having in his possession or under his control any credit or other personal
property belonging to such party, may be required to attend before the court in which the action is pending, or before a commissioner appointed by
the court and be examined on oath respecting the same. The party whose property is attached may also be required to attend for the purpose of
giving information respecting his property, and may be examined on oath. The court may, after such examination, order personal property capable of
manual delivery belonging to him, in the possession of the person so required to attend before the court, to be delivered to the clerk or court, sheriff,
or other proper officer on such terms as may be just, having reference to any lien thereon or claim against the same, to await the judgment in the
action.

It is clear from the foregoing provision that notice need only be given to the garnishee, but the person who is holding property or credits belonging to
the defendant. The provision does not require that notice be furnished the defendant himself, except when there is a need to examine said defendant
"for the purpose of giving information respecting his property.
Furthermore, Section 10 Rule 57 is not incompatible with Republic Act No. 1405, as amended, "An Act Prohibiting Disclosure or Inquiry Into, Deposits
With Any Banking Institution and Providing Penalty Therefore," for Section 2 therefore provides an exception "in cases where the money deposited or
invested is the subject matter of the litigation."

The examination of the bank records is not a fishing expedition, but rather a method by which Sun Life could trace the proceeds of the check it paid to
petitioners.

WHEREFORE, the instant petitions are hereby DISMISSED. The temporary restraining order issued on June 28, 1993 is hereby lifted.

SO ORDERED.

G.R. No. L-60887 November 13, 1991

PERLA COMPANIA DE SEGUROS, INC., petitioner,


vs.
HON. JOSE R. RAMOLETE, PRIMITIVA Y. PALMES, HONORATO BORBON, SR., OFFICE OF THE PROVINCIAL SHERIFF, PROVINCE OF CEBU,
respondents.

Hector L. Fernandez for petitioner.

Domingo Quibranza and Vicente A. Quibranza for private respondents.

FELICIANO, J.:p

The present Petition for Certiorari seeks to annul: (a) the Order dated 6 August 1979 1 which ordered the Provincial Sheriff to garnish the third-party
liability insurance policy issued by petitioner Perla Compania de Seguros, Inc. ("Perla") in favor of Nelia Enriquez, judgment debtor in Civil Case No.
R-15391; (b) the Order dated 24 October 1979 2 which denied the motion for reconsideration of the 6 August 1979 Order; and (c) the Order dated 8
April 1980 3 which ordered the issuance of an alias writ of garnishment against petitioner.

In the afternoon of 1 June 1976, a Cimarron PUJ owned and registered in the name of Nelia Enriquez, and driven by Cosme Casas, was travelling
from Cebu City to Danao City. While passing through Liloan, Cebu, the Cimarron PUJ collided with a private jeep owned by the late Calixto Palmes
(husband of private respondent Primitiva Palmes) who was then driving the private jeep. The impact of the collision was such that the private jeep
was flung away to a distance of about thirty (30) feet and then fell on its right side pinning down Calixto Palmes. He died as a result of cardio-
respiratory arrest due to a crushed chest. 4 The accident also caused physical injuries on the part of Adeudatus Borbon who was then only two (2)
years old.
On 25 June 1976, private respondents Primitiva Palmes (widow of Calixto Palmes) and Honorato Borbon, Sr. (father of minor Adeudatus Borbon) filed
a complaint 5 against Cosme Casas and Nelia Enriquez (assisted by her husband Leonardo Enriquez) before the then Court of First Instance of
Cebu, Branch 3, claiming actual, moral, nominal and exemplary damages as a result of the accident.

The claim of private respondent Honorato Borbon, Sr., being distinct and separate from that of co-plaintiff Primitiva Palmes, and the amount thereof
falling properly within the jurisdiction of the inferior court, respondent Judge Jose R. Ramolete ordered the Borbon claim excluded from the complaint,
without prejudice to its being filed with the proper inferior court.

On 4 April 1977, the Court of First Instance rendered a Decision 6 in favor of private respondent Primitiva Palmes, ordering common carrier Nelia
Enriquez to pay her P10,000.00 as moral damages, P12,000.00 as compensatory damages for the death of Calixto Palmes, P3,000.00 as exemplary
damages, P5,000.00 as actual damages, and P1,000.00 as attorney's fees.

The judgment of the trial court became final and executory and a writ of execution was thereafter issued. The writ of execution was, however,
returned unsatisfied. Consequently, the judgment debtor Nelia Enriquez was summoned before the trial court for examination on 23 July 1979. She
declared under oath that the Cimarron PUJ registered in her name was covered by a third-party liability insurance policy issued by petitioner Perla.

Thus, on 31 July 1979, private respondent Palmes filed a motion for garnishment 7 praying that an order of garnishment be issued against the
insurance policy issued by petitioner in favor of the judgment debtor. On 6 August 1979, respondent Judge issued an Order 8 directing the Provincial
Sheriff or his deputy to garnish the third-party liability insurance policy.

Petitioner then appeared before the trial court and moved for reconsideration of the 6 August 1979 Order and for quashal of the writ of garnishment, 9
alleging that the writ was void on the ground that it (Perla) was not a party to the case and that jurisdiction over its person had never been acquired by
the trial court by service of summons or by any process. The trial court denied petitioner's motion.10 An Order for issuance of an alias writ of
garnishment was subsequently issued on 8 April 1980. 11

More than two (2) years later, the present Petition for Certiorari and Prohibition was filed with this Court on 25 June 1982 alleging grave abuse of
discretion on the part of respondent Judge Ramolete in ordering garnishment of the third-party liability insurance contract issued by petitioner Perla in
favor of the judgment debtor, Nelia Enriquez. The Petition should have been dismissed forthwith for having been filed way out of time but, for reasons
which do not appear on the record, was nonetheless entertained.

In this Petition, petitioner Perla reiterates its contention that its insurance contract cannot be subjected to garnishment or execution to satisfy the
judgment in Civil Case No. R-15391 because petitioner was not a party to the case and the trial court did not acquire jurisdiction over petitioner's
person. Perla further argues that the writ of garnishment had been issued solely on the basis of the testimony of the judgment debtor during the
examination on 23 July 1979 to the effect that the Cimarron PUJ was covered by a third-party liability insurance issued by Perla, without granting it
the opportunity to set up any defenses which it may have under the insurance contract; and that the proceedings taken against petitioner are contrary
to the procedure laid down in Economic Insurance Company, Inc. v. Torres, et al., 12 which held that under Rule 39, Section 45, the Court "may only
authorize" the judgment creditor to institute an action against a third person who holds property belonging to the judgment debtor.

We find no grave abuse of discretion or act in excess of or without jurisdiction on the part of respondent Judge Ramolete in ordering the garnishment
of the judgment debtor's third-party liability insurance.

Garnishment has been defined as a species of attachment for reaching any property or credits pertaining or payable to a judgment debtor. 13 In legal
contemplation, it is a forced novation by the substitution of creditors: 14 the judgment debtor, who is the original creditor of the garnishee is, through
service of the writ of garnishment, substituted by the judgment creditor who thereby becomes creditor of the garnishee. Garnishment has also been
described as a warning to a person having in his possession property or credits of the judgment debtor, not to pay the money or deliver the property
to the latter, but rather to appear and answer the plaintiff's suit. 15

In order that the trial court may validly acquire jurisdiction to bind the person of the garnishee, it is not necessary that summons be served upon him.
The garnishee need not be impleaded as a party to the case. All that is necessary for the trial court lawfully to bind the person of the garnishee or any
person who has in his possession credits belonging to the judgment debtor is service upon him of the writ of garnishment.

The Rules of Court themselves do not require that the garnishee be served with summons or impleaded in the case in order to make him liable.

Rule 39, Section 15 provides:

Sec. 15. Execution of money judgments. The officer must enforce an execution of a money judgment by levying on all the property, real or
personal of every name and nature whatsoever, and which may be disposed of for value, of the judgment debtor not exempt from execution . . .

Real property, stocks, shares, debts, credits, and other personal property, or any interest in either real or personal property, may be levied on in like
manner and with like effect as under a writ of attachment. (Emphasis supplied).

Rule 57, Section 7(e) in turn reads:

Sec. 7. Attachment of real and personal property; recording thereof. Properties shall be attached by the officer executing the order in the following
manner:

xxx xxx xxx

(e) Debts and credits, and other personal property not capable of manual delivery, by leaving with the person owing such debts, or having his
possession or under his control such credits or other personal property, or with his agent, a copy of the order, and notice that the debts owing by him
to the party against whom attachment is issued, and the credits and other personal property in his possession, or under his control, belonging to said
party, are attached in pursuance of such order;
xxx xxx xxx

(Emphasis supplied)

Through service of the writ of garnishment, the garnishee becomes a "virtual party" to, or a "forced intervenor" in, the case and the trial court thereby
acquires jurisdiction to bind him to compliance with all orders and processes of the trial court with a view to the complete satisfaction of the judgment
of the court. In Bautista v. Barredo, 16 the Court, through Mr. Justice Bautista Angelo, held:

While it is true that defendant Jose M. Barredo was not a party in Civil Case No. 1636 when it was instituted by appellant against the Philippine Ready
Mix Concrete Company, Inc., however, jurisdiction was acquired over him by the court and he became a virtual party to the case when, after final
judgment was rendered in said case against the company, the sheriff served upon him a writ of garnishment in behalf of appellant. Thus, as held by
this Court in the case of Tayabas Land Company vs. Sharruf, 41 Phil. 382, the proceeding by garnishment is a species of attachment for reaching
credits belonging to the judgment debtor and owing to him from a stranger to the litigation. By means of the citation, the stranger becomes a forced
intervenor; and the court, having acquired jurisdiction over him by means of the citation, requires him to pay his debt, not to his former creditor, but to
the new creditor, who is creditor in the main litigation. (Emphasis supplied).

In Rizal Commercial Banking Corporation v. De Castro, 17 the Court stressed that the asset or credit garnished is thereupon subjected to a specific
lien:

The garnishment of property to satisfy a writ of execution operates as an attachment and fastens upon the property a lien by which the property is
brought under the jurisdiction of the court issuing the writ. It is brought into custodia legis, under the sole control of such
court. 18 (Emphasis supplied)

In the present case, there can be no doubt, therefore, that the trial court actually acquired jurisdiction over petitioner Perla when it was served with the
writ of garnishment of the third-party liability insurance policy it had issued in favor of judgment debtor Nelia Enriquez. Perla cannot successfully
evade liability thereon by such a contention.

Every interest which the judgment debtor may have in property may be subjected to execution.19 In the instant case, the judgment debtor Nelia
Enriquez clearly had an interest in the proceeds of the third-party liability insurance contract. In a third-party liability insurance contract, the insurer
assumes the obligation of paying the injured third party to whom the insured is liable. 20 The insurer becomes liable as soon as the liability of the
insured to the injured third person attaches. Prior payment by the insured to the injured third person is not necessary in order that the obligation of the
insurer may arise. From the moment that the insured became liable to the third person, the insured acquired an interest in the insurance contract,
which interest may be garnished like any other credit. 21
Petitioner also contends that in order that it may be held liable under the third-party liability insurance, a separate action should have been
commenced by private respondents to establish petitioner's liability. Petitioner invokes Economic Insurance Company, Inc. vs. Torres, 22 which
stated:

It is clear from Section 45, Rule 39 that if a persons alleged to have property of the judgment debtor or to be indebted to him claims an interest in the
property adverse to him or denies the debt, the court may only authorize the judgment creditor to institute an action against such person for the
recovery of such interest or debt. Said section does not authorize the court to make a finding that the third person has in his possession property
belonging to the judgment debtor or is indebted to him and to order said third person to pay the amount to the judgment creditor.

It has been held that the only power of the court in proceedings supplemental to execution is to niake an order authorizing the creditor to sue in the
proper court to recover an indebtedness due to the judgment debtor. The court has no jurisdiction to try summarily the question whether the third
party served with notice of execution and levy is indebted to defendant when such indebtedness is denied. To make an order in relation to property
which the garnishee claimed to own in his own right, requiring its application in satisfaction of judgment of another, would be to deprive the garnishee
of property upon summary proceeding and without due process of law. (Emphasis supplied)

But reliance by petitioner on the case of Economic Insurance Company, Inc. v. Torres (supra) is misplaced. The Court there held that a separate
action needs to be commenced when the garnishee "claims an interest in the property adverse to him (judgment debtor) or denies the debt." In the
instant case, petitioner Perla did not deny before the trial court that it had indeed issued a third-party liability insurance policy in favor of the judgment
debtor. Petitioner moreover refrained from setting up any substantive defense which it might have against the insured-judgment debtor. The only
ground asserted by petitioner in its "Motion for Reconsideration of the Order dated August 6, 1979 and to Quash Notice of Garnishment" was lack of
jurisdiction of the trial court for failure to implead it in the case by serving it with summons. Accordingly, Rule 39, Section 45 of the Rules of Court is
not applicable in the instant case, and we see no need to require a separate action against Perla: a writ of garnishment suffices to hold petitioner
answerable to the judgment creditor. If Perla had any substantive defenses against the judgment debtor, it is properly deemed to have waived them
by laches.

WHEREFORE, the Petition for Certiorari and Prohibition is hereby DISMISSED for having been filed out of time and for lack of merit. The assailed
Orders of the trial court are hereby AFFIRMED. Costs against petitioner. This Decision is immediately executory.

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.

Villarica, Tiongco & Caboverde Law Office for petitioners.


A B C Law Offices for private 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 finally adjudge 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. 74696 November 11, 1987

JOSE D. CALDERON, petitioner,


vs.
THE INTERMEDIATE APPELLATE COURT, GEORGE SCHULZE, GEORGE SCHULZE, JR., ANTONIO C. AMOR, MANUEL A. MOZO, and VICTOR
M. NALUZ, respondents.

G. R. No. 73916 November 11, 1987

FIRST INTEGRATED BONDING AND INSURANCE COMPANY, INC., petitioner,


vs.
THE INTERMEDIATE APPELLATE COURT, GEORGE SCHULZE, ANTONIO C. AMOR, MANUEL A. MOZO and VICTOR M. NALUZ, respondents.

PARAS, J.:

For review on certiorari is respondent appellate Court's decision 1 in AC-G.R. No. 01420, which affirmed the Regional Trial Court's decision 2
appealed from holding the plaintiff Jose D. Calderon (petitioner herein) and his bondsman the Integrated Bonding and Insurance Company, Inc.,
jointly and severally liable to pay defendants (private respondents herein), damages caused by the filing by Calderon of the allegedly unwarranted suit
and the wrongful and malicious attachment of private respondents' properties.
The facts of the case are briefly as follows:

On November 2, 1976, petitioner Calderon purchased from the private respondents the following: the Luzon Brokerage Corporation (LBC for brevity)
and its five (5) affiliate companies, namely, Luzon Air Freight, Inc., Luzon Port Terminals Services, Inc., Luzon (GS) Warehousing Corporation, GS
Industrial Management Corporation, and GS Luzon Trucking Corporation. Twenty one (21) days thereafter or on November 23, 1976, the Bureau of
Customs suspended the operations of LBC for failure to pay the amount of P1,475,840.00 representing customs taxes and duties incurred prior to the
execution of the sale. In order to lift the suspension Calderon paid the sum of P606,430.00 to the Bureau of Customs.

On October 27, 1977, Calderon filed a complaint against private respondents to recover said amount of P1,475,840.00, with damages by reason of
breach of warranty. In the same complaint, the petitioner prayed for a preliminary attachment, alleging: that private respondents had deliberately and
willfully concealed from his knowledge such staggering liability of the LBC for the purpose of misleading him into buying the six aforesaid companies;
and that private respondent Schulze is about to depart from the Philippines in order to defraud his creditors.

To support the petition for preliminary attachment, the petitioner posted a surety bond of P1,475,840.00. On October 28, 1977, the trial court issued a
writ of preliminary attachment, whereupon properties of the private respondents were attached and their bank deposits were garnished.

On November 10, 1977, petitioner Calderon filed an amended complaint, alleging that while the liabilities of LBC are reflected in its books, the
aforesaid amount was fraudulently withdrawn and misappropriated by private respondent Schulze. (pp. 7-18, Rollo)

On the other hand, private respondents claimed: that the amount of P1,475,840.00 due to the Bureau of Customs represents the duties and taxes
payable out of the advanced payments made by LBC's client, Philippine Refining Company (PRC, for brevity) in August, September and October,
1976, and in the first and second weeks of November 1976, after Calderon himself had taken control of the management of LBC (Exhibit A); that
these deposit payments were properly recorded in the books of the corporation and existing as part of the corporate funds; that from the first week of
June, 1976 up to October 30, 1976, private respondent Schulze fully disclose and explained to Calderon that these customer's advanced deposit
payments (including those of the PRC) are to be paid to the Bureau of Customs when their corresponding customs taxes and duties become due; that
during this phase of the negotiation, Calderon and his representatives inspected and studied the corporate books and records at will and learned the
daily operations and management of LBC; that the petitioner did not pay out of his own pocket but out of the LBC funds the said amount of
P606,430,30 demanded by the Bureau of Customs, as evidenced by a manager's check No. FEBTC 25092 (Exhibits 9, 10, 11 & 38) and another
facility negotiated with the Insular Bank of Asia and America (Exhibit K-2); and that private respondents are setting up a counterclaim for actual, moral
and exemplary damages as well as attorney's fees, as a consequence of the filing of the baseless suit and the wrongful and malicious attachment of
their properties, (pp. 217-221, Rollo)

On November 17, 1977, private respondents filed a counterbond, whereupon the trial court issued an order directing the sheriff to return all real and
personal properties already levied upon and to lift the notices of garnishment issued in connection with the said attachment (Annex B, p. 42, Rollo).

After trial, the trial court dismissed the complaint, holding Calderon and his surety First integrated Bonding and Insurance Co., Inc., jointly and
severally liable to pay the damages prayed for by the private respondents.
Said decision was affirmed on appeal, although slightly modified in the sense that the award of moral and exemplary damages in favor of private
respondents Schulze and Amor was reduced. The dispositive portion of the judgment of affirmance and modification reads:

WHEREFORE, the judgment of the lower court is modified as follows:

To defendant-appellee George Schulze:


P650,000.00 as moral damages and
P200,000.00 as exemplary damages.

To defendant-appellee Antonio C. Amor:


P150,000.00 as moral damages and
P30,000.00 as exemplary damages,

An other dispositions in the judgment appealed from, including the dismissal of the amended complainant are hereby affirmed in toto.

SO ORDERED.

In his petition, petitioner Calderon asserts, among other things, that the court below erred:

IN HOLDING THAT THE PETITIONER FAILED TO ESTABLISH HIS CLAIMS.

II

IN HOLDING THAT THE PRELIMINARY ATTACHMENT HAD BEEN WRONGFULLY AND MALICIOUSLY SUED OUT.

III

IN HOLDING THAT THE PETITIONER IS LIABLE NOT ONLY FOR ACTUAL DAMAGES BUT MORAL AND EX-EXEMPLARY DAMAGES AS WELL.

On the other hand, petitioner Insurance Company raises the following issues:

I
WHETHER OR NOT THE PETITIONER SURETY IS LIABLE FOR DAMAGES ON ITS CONTRACTED SURETYSHIP NOTWITHSTANDING THE
DISSOLUTION OF THE WRIT OF PRELIMINARY ATTACHMENT, AS A CON. SEQUENCE OF THE FILING OF THE DEFENDANT'S COUNTER-
BOND, WHEREBY LEVIED PROPERTIES WERE ORDERED BY THE COURT RETURNED TO PRIVATE RESPONDENTS AND THE NOTICES OF
GARNISHMENT ISSUED IN CONNECTION THEREWITH ORDERED LIFTED.

II

WHETHER OR NOT THE SUBSEQUENT FILING BY PRIVATE RESPONDENTS OF A COUNTER-BOND TO DISCHARGE THE WRIT OF
PRELIMINARY ATTACHMENT CONSTITUTE A WAIVER ON ANY DEFECT IN THE ISSUANCE OF THE ATTACHMENT WRIT.

III

WHETHER OR NOT A SURETY IS A GUARANTOR OF THE EXISTENCE OF A GOOD CAUSE OF ACTION IN THE COMPLAINT.

The petition is devoid of merit.

Whether or not the amount of P1,475,840.00 was duly disclosed as an outstanding liability of LBC or was misappropriated by private respondent
Schulze is purely a factual issue. That Calderon was clearly in bad faith when he asked for the attachment is indicated by the fact that he failed to
appear in court to support his charge of misappropriation by Schulze, and in effect, preventing his being cross-examined, no document on the
charges was presented by him.

What the Appellate Court found in this regard need not be further elaborated upon. The Appellate Court ruled:

... The record shows that appellant Calderon failed to produce any evidence in support of his sworn charge that appellee Schulze had deliberately
and willfully concealed the liabilities of Luzon Brokerage Corporation. Neither did appellant Calderon prove his sworn charges that appellee Schulze
had maliciously and fraudulently withdrawn and misappropriated the amount of Pl,475,840.00 and that an the defendants had maliciously and
fraudulently concealed and withheld from him this alleged liability of Luzon Brokerage Corporation in breach of the contract-warranty that said
corporation had no obligations or liabilities except those appearing in the books and records of the said corporation. Indeed, appellant Calderon never
appeared in the trial court to substantiate the charges in his verified complaints and in his affidavit to support his petition for the issuance of a writ of
attachment. He distanced himself from the appellees and avoided cross-examination regarding his sworn allegations. ...

... But even though appellant Calderon failed to prove his serious charges of fraud, malice and bad faith, the appellees took it upon themselves to
show that they did not conceal or withhold from appellant's knowledge the deposits made by Philippine Refining Co., Inc. with Luzon Brokerage
Corporation and that they did not withdraw and misappropriate the deposits made by Philippine Refining Co., Inc. with Luzon Brokerage Corporation.

The books and records of Luzon Brokerage Corporation on which the Financial Statement of Luzon Brokerage Corporation, as of October 31, 1976
was prepared by the auditing firm retained by appellant Calderon himself (Exhibit 1), disclose that the liabilities of Luzon Brokerage Corporation in the
total amount of P4,574,498.32 appear under the heading 'Customers Deposit' (Exhibit 1-A) this amount includes the deposit of Philippine Refining
Co., Inc. in the sum of Pl,475,840.00.

But appellant Calderon contends that this financial statement was dated February 4, 1977 (see Exhibit 1-C). There is nothing commendable in this
argument because the bases of the financial statement were the books, records and documents of Luzon Brokerage Corporation for the period
ending October 31, 1976, which were all turned over to and examined by appellant Calderon and his executive, legal and financial staffs. There is
also no merit in the contention of appellant Calderon that the appellees have tampered the books of Luzon Brokerage Corporation because there is
no proof to back this charge, let alone the fact that appellant Calderon did not even present the said books to support his charge.

As stated above, the amount of customers' deposits in the sum of P4,574,498.32 includes the deposits of Philippine Refining Co., Inc. (Exhibits 46-A,
46-B, 46-C, 46-D, 46-E, 46-F, 46-G, 46-H, 46-1, 46-J, t.s.n. July 23, 1980, pp. 12-13, 14-15). The amounts deposited by Philippine Refining Co., Inc.
on various dates with Luzon Brokerage Corporation made before the execution of the sale were all entered in three other corporate books of Luzon
Brokerage Corporation namely, the Cash Receipts Register (Exhibits 39-A-1 to 39-K-1 and 39-A-1-B to 39-K-1-B), the Journal Vouchers (Exhibits 42
to 46 and 42-A to 43- A), and the Customer's Deposit Ledger (Exhibit 46-A to 46-J) ... .

Thus, the claim of appellant Calderon that the deposits made by Philippine Refining Co., Inc. with Luzon Brokerage Corporation of P406,430.00 on
August 24, 1976 (Exhibit N P53,640.00 on October 13, 1976 (Exhibit 0), P406,430.00 on September 8, 1976 (Exhibit P P199,508.00 on September
24, 1976 (Exhibit Q P52,738.00 on October 22, 1976 (Exhibit R and P264,436.00 on October 7, 1976 (Exhibit S) were not entered in the books of
Luzon Brokerage Corporation, is completely without merit. ... (pp. 85-87, Rollo)

It is evident from the foregoing that the attachment was maliciously sued out and that as already pointed out Schulze was not in bad faith.

While as a general rule, the liability on the attachment bond is limited to actual damages, moral and exemplary damages may be recovered where the
attachment was alleged to be maliciously sued out and established to be so. (Lazatin vs. Twano et al,
L-12736, July 31, 1961).

In the instant case, the issues of wrongful and malicious suing out of the writ of preliminary attachment were joined not only in private respondents'
motion to discharge the attachment but also in their answer to the amended complaint (p. 38, Rollo). The trial court observed that the books and
records of Luzon Brokerage Corporation disclose that the liabilities of the said corporation in the total amount of P4,574,498.32 appear under the
heading "Customs Deposit" (Exhibit 1-A) and this amount includes the deposit of Philippine Refining Co., Inc. in the sum of P1,475,840.00 (p. 26,
Rollo). On the other hand, plaintiff never appeared in court, and failed to produce any evidence to substantiate his charges (p. 26, Rollo).

Well settled is the rule that the factual findings of the trial court are entitled to great weight and respect on appeal, especially when established by
unrebutted testimonial and documentary evidence, as in this case.

Anent the petition of the surety, We say the following:


Specifically, petitioner surety contends that the dissolution of the attachment extinguishes its obligation under the bond, for the basis of its liability,
which is wrongful attachment, no longer exists, the attachment bond having been rendered void and ineffective, by virtue of Section 12, Rule 57 of the
Rules of Court. (p. 5, Petition)

While Section 12, Rule 57 of the Rules of Court provides that upon the filing of a counterbond, the attachment is discharged or dissolved, nowhere is
it provided that the attachment bond is rendered void and ineffective upon the filing of counterbond.

The liability of the attachment bond is defined in Section 4, Rule 57 of the Rules of Court, as follows:

Sec. 4. Condition of applicant's bond. The party applying for the order must give a bond executed to the adverse party in an amount to be fixed by the
judge, not exceeding the applicant's claim, conditioned that the latter will pay all the costs which may be adjudged to the adverse party and all
damages which he may sustain by reason of the attachment, if the court shall finally adjudge that the applicant was not entitled thereto.

It is clear from the above provision that the responsibility of the surety arises "if the court shall finally adjudge that the plaintiff was not entitled thereto."
In Rocco vs. Meads, 96 Phil. Reports 884, we held that the liability attaches if the plaintiff is not entitled to the attachment because the requirements
entitling him to the writ are wanting, or if the plaintiff has no right to the attachment because the facts stated in his affidavit, or some of them, are
untrue. It is, therefore, evident that upon the dismissal of an attachment wrongfully issued, the surety is liable for damages as a direct result of said
attachment.

Equally untenable is the Surety's contention that by filing a counterbond, private respondents waived any defect or flaw in the issuance of the
attachment writ, for they could have sought, without need of filing any counterbond, the discharge of the attachment if the same was improperly or
irregularly issued, as provided in Section 13, Rule 57 of the Rules of Court.

Whether the attachment was discharged by either of the two (2) ways indicated in the law, i.e., by filing a counterbond or by showing that the order of
attachment was improperly or irregularly issued, the liability of the surety on the attachment bond subsists because the final reckoning is when "the
Court shall finally adjudge that the attaching creditor was not entitled" to the issuance of the attachment writ in the first place.

The attachment debtor cannot be deemed to have waived any defect in the issuance of the attachment writ by simply availing himself of one way of
discharging the attachment writ, instead of the other. Moreover, the filing of a counterbond is a speedier way of discharging the attachment writ
maliciously sought out by the attaching creditor instead of the other way, which, in most instances like in the present case, would require presentation
of evidence in a full-blown trial on the merits and cannot easily be settled in a pending incident of the case.

We believe, however, that in the light of the factual situation in this case, the damages awarded by the Intermediate Appellate Court are rather
excessive. They must be reduced.

WHEREFORE, the judgment of said Appellate Court is hereby modified as follows: Both petitioner Calderon and petitioner First Integrated Bonding
and Insurance Company, Inc. are hereby ordered to give jointly and severally:
1. Respondent George Schulze, P250,000.00 as moral damages and P50,000.00 as exemplary damages; and

2. Respondent Antonio C. Amor, P50,000.00 as moral damages and P10,000.00 as exemplary damages.

The rest of the judgment of the Intermediate Appellate Court is hereby AFFIRMED.

SO ORDERED.

G.R. No. 83897 November 9, 1990

ESTEBAN B. UY JR. and NILO S. CABANG, petitioners,


vs.
THE HONORABLE COURT OF APPEALS, WILSON TING, and YU HON. respondents.

E.P. Mallari & Associates for petitioners.

Elpidio G. Navarro for private respondents.

PARAS, J.:

This is a petition for review on certiorari seeking to reverse the decision ** which dismissed CA-G.R. No. SP-05659 for certiorari and Prohibition with
Preliminary Injunction and/or Restraining Order filed by petitioner seeking to annul and set aside the two Orders dated August 24, 1982 and October
10, 1983 issued by the then Court of First Instance of Rizal Branch LII *** (now Regional Trial Court of Quezon City Branch XCLVll ****) in Civil Case
No. Q-35128, granting a writ of preliminary attachment and directing the sheriff assigned therein to attach the properties of defendants Uy and
Cabang (herein petitioners); and denying defendants' motion to dismiss.

The antecedent facts of the case as found by the Court of Appeals are as follows:

On March 24, 1982, Esteban B. Uy, Jr. (herein petitioner) filed a complaint against Sy Yuk Tat for sum of money, damages, with preliminary
attachment, docketed as Civil Case No. Q-34782 ("the first case" for short) in the then Court of First Instance of Rizal, Branch LII, Quezon City (the
case was later assigned to the Regional Trial Court of Quezon City, Branch XCVII now presided over by respondent Judge). On the same day, upon
plaintiff filing a bond of P232,780.00 said court issued a writ of preliminary attachment and appointed Deputy Sheriff Nilo S. Cabang (co-petitioner
herein) as Special Sheriff to implement the writ. On April 6, 1982, the same court issued a break-open order upon motion filed by petitioner Uy.
On the following day, April 7, 1982, petitioner Cabang began to implement the writ of preliminary attachment as the Special Sheriff on the case.

On April 19, 1982, petitioner Cabang filed a Partial Sheriffs Return, stating, inter alia:

xxx xxx xxx

That in the afternoon of April 12, 1982, the undersigned together with Atty. Lupino Lazaro, plaintiff's counsel and the members of the same team
proceeded to No. 65 Speaker Perez St., Quezon City, and effected a physical and actual count of the items and merchandise pointed to by the Ting
family as having been taken from the Mansion Emporium and nearby bodega which are as follows:

a) 329 boxes of "GE" Flat Iron, each box containing 6 pcs. each;

b) 229 boxes of Magnetic Blank Tapes with 48 pcs. each;

c) 239 boxes of floor polishers marked "Sanyo"

d) 54 boxes of floor polishers marked "Ronson"

xxx xxx xxx

On April 12, 1982, a third party claim was filed by Wilson Ting and Yu Hon (private respondents herein) in the same Civil Case No. Q-34782,
addressed to petitioner Cabang asserting ownership over the properties attached at No. 65 Speaker Perez St., Quezon City (other than those
attached at No. 296 Palanca St., Manila). The third party claim specifically enumerated the properties, as reflected in the Partial Sheriffs Return dated
April 1 3, 1 982, belonging to the plaintiffs (private respondents herein).

On the same day that petitioner Cabang filed his Partial Sheriffs Return (April 19, 1982) the third party claimants and Yu filed a motion to dissolve the
aforementioned writ of preliminary attachment in the same Civil Case No. Q-34782; alleging among others, that being the absolute owners of the
personal properties listed in their third party claim which were illegally seized from them they were willing to file a counterbond for the return thereof;
which motion was opposed by plaintiff Uy.

On April 29, 1982, then CFI Judge Jose P. Castro rendered judgment by default in said Civil Case No. Q-34782 in favor of plaintiff Uy.

Meanwhile, on May 5, 1982, third party claimants Wilson Ting and Yu Hon filed a complaint for Damages with application for preliminary injunction
against Esteban Uy and Nilo Cabang (co-petitioners herein) in the then Court of First Instance of Rizal, Branch 52, Quezon City ('the court a quo' for
short) which case was docketed as Civil Case No. Q-35128 ('the second case' for short). The complaint alleged inter alia that the plaintiffs are the
owners of the personal properties reflected in the Partial Sheriffs Return dated April 13, 1983 which have been attached and seized by defendant
Cabang. In this second civil case, the court a quo (then presided over by CFI Judge Concepcion B. Buencamino) issued an order on May 5, 1982,
stating among other things, the following:

Considering that it will take time before this Court could act upon said prayers for the issuance of a Writ of Preliminary Injunction, the parties are
hereby ordered to maintain the STATUS QUO in this case with respect to the properties attached and subject of this action alleged to belong to the
plaintiffs" (Rollo, p. 133)

Meanwhile, in the first case, where a judgment by default had been rendered, the first court issued an order striking off from the records all pleadings
filed by the third party claimants.

With respect to the case in the court a quo, defendants Uy and Cabang filed their answer with counterclaim.

Meanwhile, in the first case, plaintiff Uy on June 7, 1982, filed an ex-parte motion for writ of execution which was granted the following day, June 8,
1982.

On the same day (June 7, 1982) that plaintiff Uy filed his exparte motion for writ of execution he and Cabang filed a motion to quash or dissolve status
quo order in the case a quo as defendants therein on the ground that the court "has no jurisdiction to interfere with properties under custodia legis on
orders of a court of co-equal and co-ordinate jurisdiction" and that plaintiffs' complaint is not for recovery of properties in question.

On June 24, 1982, plaintiff Uy in the first case filed his ex parte motion to authorize Sheriff to sell the attached properties enumerated in Sheriff
Cabang's partial return filed on April 19, 1982, on the ground that the properties under custodia legis were perishable especially those taken from No.
65 Speaker Perez, Quezon City.

Subsequently, on July 2, 1982, in the case a quo the court denied defendants', Uy and Cabang, motion to quash or dissolve the status quo order.

Meanwhile, the first case on July 12, 1982, Cabang filed another partial sheriffs return this time stating among others that the judgment in that case
had been partially satisfied, and that in the public auction sale held on July 6, 1982, certain personal properties had been sold to plaintiff Esteban Uy,
Jr., the winning bidder for P15,000.00 while the other properties were sold in the amount of P200,000.00 in cash with Bernabe Ortiz of No. 97
Industrial Avenue, Northern Hill, Malabon Manila as the highest bidder.

Back to the case a quo, on August 23, 1982, plaintiffs Ting and Yu Hon filed a motion for preliminary attachment alleging this ground: "In the case at
bar, which, is one 'to recover possession of personal properties unjustly detained, ... the property... has been ... removed ... (and) disposed of to
prevent its being found or taken by the applicant or an officer" and/or said defendants are guilty of fraud in disposing of the property for the taking, (or)
detention ... of which the action is brought (Sec. 1(c) and (d), Rule 57, Rules of Court)

Acting on such motion the court a quo, on August 24, 1 982, issued the disputed order granting the writ of preliminary attachment prayed for by the
plaintiffs (Wilson Ting and Yu Hon), stating that:
Let a writ of preliminary attachment issue upon the plaintiffs putting up a bond in the amount of P1,430,070.00, which shall be furnished to each of the
defendants with copies of the verified application therewith, and the sheriff assigned to this court, Danilo Del Mundo, shall forthwith attach such
properties of the defendants not exempt from execution, sufficient to satisfy the applicants' demand. (Rollo, p. 247)

On August 31, 1982, in the same case a quo, defendant Uy filed an urgent motion to quash and/or dissolve preliminary attachment which motion was
opposed by plaintiffs Ting and Yu Hon.

About half a year later, on February 21, 1982, in the case a quo, defendant Uy filed a motion for preliminary hearing on affirmative defenses as motion
to dismiss. Following an exchange of subsequent papers between the parties, the court a quo issued the other disputed order which denied
defendant Uy's motion to dismiss on October 10, 1983. The motion to quash was also denied by the court a quo on December 9, 1983. Defendant Uy
filed a motion for reconsideration on both Orders. Finally, on February 15, 1985, respondent Judge issued two Orders denying both motions for
reconsideration. (CA decision, Rollo, p. 109-122)

Thereafter, petitioners Esteban Uy, Jr. and Nilo Cabang filed with the Court of Appeals a petition for Certiorari and Prohibition with prayer for a Writ of
Preliminary Injunction or a Restraining Order to annul and set aside the two orders issued by the then CFI of Rizal Branch 52.

In its decision, the Court of Appeals dismissed the petition, the dispositive portion of which reads:

WHEREFORE, finding respondent Judge not to have committed a grave abuse of discretion amounting to lack or excess of jurisdiction in issuing the
order dated August 24, 1982, denying petitioners' motion to quash the writ of preliminary attachment, and the order dated October 10, 1983, denying
petitioners' motion to dismiss the complaint a quo, we hereby deny the instant petition, and therefore dismiss the same. No pronouncement as to cost.
(Rollo, pp. 132-133)

Hence, the instant petition.

In the resolution of October 16, 1989, the Court gave due course to the petition and required both parties to submit simultaneous memoranda within
thirty days from notice (Rollo, p. 190). Private respondents filed their memorandum on December 6, 1989 (Ibid., p. 192) while petitioners filed their
memorandum on January 5, 1990 (Ibid., p. 208)

The main issue in this case is whether or not properties levied and seized by virtue of a writ of attachment and later by a writ of execution, were under
custodia legis and therefore not subject to the jurisdiction of another co-equal court where a third party claimant claimed ownership of the same
properties.

The issue has long been laid to rest in the case of Manila Herald Publishing Co. Inc. v. Ramos (88 Phil. 94 [1951]) where the Court filed that while it is
true that property in custody of the law may not be interfered with, without the permission of the proper court, this rule is confined to cases where the
property belongs to the defendant or one in which the defendant has proprietary interests. But when the Sheriff, acting beyond the bounds of his
office seizes a stranger's property, the rule does not apply and interference with his custody is not interference with another court's order of
attachment.

Under the circumstances, this Court categorically stated:

It has been seen that a separate action by the third party who claims to be the owner of the property attached is appropriate. If this is so, it must be
admitted that the judge trying such action may render judgment ordering the sheriff or whoever has in possession of the attached property to deliver it
to the plaintiff claimant or desist from seizing it. It follows further that the court may make an interlocutory order, upon the filing of such bond as may
be necessary, to release the property pending final adjudication of the title. Jurisdiction over an action includes jurisdiction on interlocutory matter
incidental to the cause and deemed necessary to preserve the subject matter of the suit or protect the parties' interests. This is self-evident. (Manila
Herald Publishing Co. Inc. v. Ramos, supra).

The foregoing ruling was reiterated in the later case of Traders Royal Bank v. IAC (133 SCRA 141 [1984]) and even more recently in the case of
Escovilla v. C.A. G.R. No. 84497, November 6, 1989, where this Court stressed:

The power of the court in the execution of judgments extends only over properties unquestionably belonging to the judgment debtor. The levy by the
sheriff of a property by virtue of a writ of attachment may be considered as made under the authority of the court only when the property levied upon
belongs to the defendant. If he attaches properties other than those of the defendant, he acts beyond the limits of this authority. The court issuing a
writ of execution is supposed to enforce its authority only over properties of the judgment debtor. Should a third party appear to claim the property
levied upon by the sheriff, the procedure laid down by the Rules is that such claim should be the subject of a separate and independent action.

Neither can petitioner complain that they were denied their day in court when the Regional Trial Court issued a writ of preliminary attachment without
hearing as it is well settled that its issuance may be made by the court ex parte. As clearly explained by this Court, no grave abuse of discretion can
be ascribed to respondent Judge in the issuance of a writ of attachment without notice to petitioners as there is nothing in the Rules of Court which
makes notice and hearing indispensable and mandatory requisites in its issuance. (Filinvest Credit Corp. v. Relova, 117 SCRA 420 [1982]; Belisle
Investment & Finance Co. Inc. v. State Investment House, Inc. 151 SCRA 631 [1987]; Toledo v. Burgos, 168 SCRA 513 [1988]).

In addition, petitioner's motion to quash or discharge the questioned attachment in the court a quo is in effect a motion for reconsideration which
cured any defect of absence of notice. (Dormitorio v. Fernandez, 72 SCRA 388 [1976]).

Estoppel is likewise unavailing in the case at bar by the mere fact that private respondent Ting (complainant in the court a quo) pointed the items and
merchandise taken from the Mansion House and nearby Bodega which were levied and hauled by Special Sheriff Cabang, where in the report of said
Sheriff made earlier on April 6, 1982, he stated that on the same occasion referred to in his Partial Return, private respondents denied Sy Yuk Tat's
ownership over the goods in question. (Rollo, pp. 203-204).

In like manner, the sale of the disputed properties at the public auction, in satisfaction of a judgment of a co-equal court does not render the case
moot and academic. The undeviating ruling of this Court in such cases is that attachment and sale of properties belonging to a third person is void
because such properties cannot be attached and sold at public auction for the purpose of enforcing a judgment against the judgment debtor. (Orosco
v. Nepomuceno, 57 Phil. 1007 [1932-33]).

The other issues in this case deserve scant consideration.

On the issue of the expiration of the restraining order, there is no argument that the life span of the status quo order automatically expires on the 20th
day and no judicial declaration to that effect is necessary (Paras v. Roura, 163 SCRA 1 [1988]). But such fact is of no consequence in so far as the
propriety of the questioned attachment is concerned. As found by the Court of Appeals, the grounds invoked by respondents for said attachment did
not depend at all upon the continuing efficacy of the restraining order.

As to petitioner's contention that the complaint filed by private respondent in the lower court is merely seeking an ancillary remedy of injunction which
is not a cause of action itself, the Court of Appeals correctly observed that the object of private respondents' complaint is injunction although the
ancillary remedy of preliminary injunction was also prayed for during the pendency of the proceeding.

Finally, the non-joinder of the husband of private respondent, Yu Hon as well as her failure to verify the complaint does not warrant dismissal of the
complaint for they are mere formal requirements which could be immediately cured without prejudice to the rights of the petitioners. This Court frowns
on the resort to technicalities to defeat substantial justice. Thus, the Court states that the rules of procedure are intended to promote not to defeat
substantial justice, and therefore, they should not be applied in a very rigid and technical sense. (Angel v. Inopiquez, G.R. 66712, January 13, 1989).
Again on another occasion where an appeal should have been dismissed for non-compliance with the Rules, the Court relaxed the rigid interpretation
of the Rules holding that a straight-jacket application will do more injustice. (Pan-Am Airways v. Espiritu, 69 SCRA 45 [1976]).

PREMISES CONSIDERED, the petition is hereby DENIED and the assailed decision of the Court of Appeals is hereby AFFIRMED.

SO ORDERED.
Rule 58

G.R. No. L-14598 October 31, 1960

MARIANO ACOSTA, ET AL. Petitioners, vs. HON, CARMELINO G. ALVENDIA, as presiding Judge of Branch XVI, Court of First Instance of Manila
and DE SANTOS AGRICULTURAL DEVELOPMENT, INC., Respondents.

Teodulo Cruz for petitioners.


Federico Agrava for respondent.

GUTIERREZ, DAVID, J.:

This is a petition for a writ of prohibition to restrain respondents Judge of the Court of First Instance of Manila and De Santos Agricultural
Development, Inc., from further proceeding in Civil Case No. 36377, entitled "De Dantos Agricultural Development, Inc., plaintiff, vs. Ricardo L.
Castelo, etc. et al., defendants."chanrobles virtual law library

It appears that in Testimony Case No. 4791-R of the Court of Agrarian Relations, Mariano Acosta, et al., filed a petition praying for a readjustment of
the sharing ratio governing their tenancy relationship with Hacienda de Santos No. 5 situated in several municipalities of the province of Nueva Ecija
and for other sundry readjustment in connection with said relationship. The petition made as party respondents the hacienda itself and one Alberto de
Santos as manager of the hacienda.chanroblesvirtualawlibrarychanrobles virtual law library

The case was not tried on the merits but was submitted to arbitration upon direction of the President of the Philippines. On August 5, 1954, Judge
Roldan, presiding judge of the Court of Industrial Relations, who was designated as arbiter, rendered his award ordering that a reliquidation be made
in accordance with certain conditions and findings he made therein. On the basis of reliquidation made, the Agrarian Court on January 10, 1958
issued an order awarding in favor of the tenants whose names appear listed therein, certain amounts of palay that were bound to be payable to them,
and ordering respondents to make delivery of the palay in accordance with the award. This order not having been complied with, the Agrarian Court
directed that a writ of execution be issued and, on March 12, 1958, the clerk of court acted accordingly by requiring the provincial sheriff to collect
from respondents the amounts of palay adjudicated to the tenants, or the money equivalent thereof, and to "levy upon the properties of the above-
named respondents, both movable and real and cause to be collected therefrom the total amount due to the petitioners under the aforementioned
order dated January 10, 1958." Protesting the enforcement of the writ of execution against him personally, Alberto de Santos filed a motion with the
agrarian court praying that the writ be quashed insofar as it requires that a levy be made upon his own personal properties since he is not involved in
the case in his personal capacity, however, was denied, whereupon Alberto de Santos brought the case to this Court through a petition for review on
certiorari. (G.R. No. L-13785.) * Speaking thru Justice Bautista Angelo, we sustained the petitioner's claim in a decision promulgated on October 20,
1959, and there said, among other things, that "enough properties that may be levied upon belonging to the hacienda can be ascertained and
determined with little diligence and discernment without implicating properties of a person who is a foreign to the case."chanrobles virtual law library
In the meantime, herein respondent De Santos Agricultural Development, Inc., a domestic corporation organized sometime in 1955, filed a third party
claim against the provincial sheriff of Nueva Ecija claiming ownership of the palay which the latter had levied upon. Alleging that the sheriff, despite
the third party claim, threatened to proceed with the sale of the palay, respondent corporation instituted the present proceedings for injunction before
the Court of First Instance of Manila (Civil Case No. 363677) against the sheriff and the petitioners Manuel Acosta, et al. As prayed for, a preliminary
writ was issued restraining the provincial sheriff of Nueva Ecija from further proceeding with the execution of the judgment in the tenancy case
pending determination of the ownership of the palay levied upon.chanroblesvirtualawlibrarychanrobles virtual law library

In due time, the defendants, herein petitioners, filed their answer with a counterclaim and also moved for the dissolution of the writ of preliminary
injunction on the grounds of lack of jurisdiction and lack of cause of action. Acting upon the motion, the respondent Judge promulgated an order
providing for the dissolution of the writ of preliminary injunction upon the filling by petitioners of a bond in favor of the respondent corporation in the
sum of P20,000.00. Or this order both parties asked for reconsideration, the respondent corporation maintaining that Felipe de Santos, who died long
before the filing of tenancy Case No. 4971-A, /was named therein as the owner of hacienda de Santos No. 5 so that the judgment rendered in said
case was a judgment against him which cannot be enforced against his heirs.chanroblesvirtualawlibrarychanrobles virtual law library

In an order promulgated after hearing on July 19, 1958, corespondent Judge found that "the heirs of Felipe de Santos should have be in the
respondents in the C.A.R. case" inasmuch as when petition in the tenancy case was filed on December 22, 1953, they were the true owner of the
family hacienda (Hacienda de Santos No. 5) the same having been inherited by them from Felipe de Santos upon the latter's death on September 4,
1945; that the said heirs "are to be the sole stockholders of the plaintiff corporation"; and that "their only contribution to the capital of the corporation is
the land involved on the C.A.R. case which they inherited form Felipe de Santos". The respondent Judge, therefore, held that "this is one instance
where the corporate fiction should be set aside and the corporation and its stockholders should be considered one and the same person. The
corporation may not be used as an instrument to prevent the execution of the judgment of the C.A.R. case." However, said respondent Judge refused
to reconsider its order or to grant petitioners' prayer that the preliminary writ be dissolved without requiring them to post a bond. Hence, the present
petition for a writ a prohibition.chanroblesvirtualawlibrarychanrobles virtual law library

We find the petition to be meritorious.chanroblesvirtualawlibrarychanrobles virtual law library

Considering the findings of the respondent Judge, from the evidence already presented, that the heirs of the deceased Felipe de Santos are the sole
stockholders of the respondent corporation and their only contribution involved in the tenancy case which they inherited from of the opinion "that this
is an instance where the corporate action should be set aside and the corporation and its stockholders should be considered one and the used as an
instrument to prevent the execution of the judgment of the C.A.R. case," it is difficult to understand why the petition for injunction was ever entertained
at all.chanroblesvirtualawlibrarychanrobles virtual law library

Counsel for the respondent corporation maintains that the judgment "obtained against Felipe de Santos," a deceased person, is not enforceable
against his heirs who are not made parties thereto. It will be recalled, however, that the petition in the tenancy case made as party respondents the
hacienda itself and Alberto de Santos, one of the heirs of the deceased, in his capacity as general manager of the hacienda. Needless to say, the
judgment rendered against said general manager would be valid and binding as against whoever are the owners of the hacienda. In this connection, it
should be stated that the award sought to be executed was made as early as August 5, 1954, whereas the respondent corporation was organized and
registered by the heirs of Felipe de Santos as sole stockholders therein only on May 17, 1955.chanroblesvirtualawlibrarychanrobles virtual law library

Without mentioning the fact that there appears to be a tenancy relationship between the respondent corporation and herein petitioners who are
working in Hacienda de Santos No. 5 as tenants, it would also appear that the respondent Judge has acted outside of his
jurisdiction.chanroblesvirtualawlibrarychanrobles virtual law library

The jurisdiction of courts of first instance to issue writs of injunction of courts of first instance to issue writs of injunction is defined and limited in the
Judiciary Act of 1948 (Republic Act No. 296, as amended), which provides in its section 44 (n) as follows:

SEC. 44. Original Jurisdiction. - Courts of First Instance shall have original jurisdiction:chanrobles virtual law library

(n) Said courts and their judges, or any of them, shall have power to issue writs of injunction, mandamus, certiorari, prohibition, quo warranto and
habeas corpus in their respective provinces and districts, in the manner provided in the Rules of Court.

Under section 2, Rule 60 of the Rules of Court, a preliminary injunction may be granted by the Judge of the Court of First Instance 'in any action
pending in his district", These provisions clearly show that the jurisdiction or authority of courts of first instance to control or restrain acts by means of
the writ of injunction is limited to acts which are being committed or about to be committed within the territorial boundaries of their respective
provinces and districts.chanroblesvirtualawlibrarychanrobles virtual law library

Wherefore, the writ of prohibition prayed for is granted. Cost against the respondent corporation.

G.R. No. L-30070 August 29, 1980

FEDERICO DECANO, petitioner-appellee,


vs.
ROMEO F. EDU, as Acting Commissioner of Land Transportation and CIPRIANO POSADAS, as Acting Registrar, Land Transportation Commission,
Dagupan City Agency, respondents-appellants.

TEEHANKEE, J.:

In this appeal, the Court upholds the jurisdiction of the Court of First Instance of Pangasinan over the petition for "Mandamus and Injunction" filed by
herein petitioner-appellee against respondents-appellants, although the official station of the first named respondent, whose official actuation is
assailed, is in Quezon City which is outside the jurisdictional district of the said court. The main issue raised is the correctness and legality of said
national official's order dismissing petitioner from the service of the Land Transportation Commission, and the power of judicial review of the
administrative decisions of national officials is not confined to the courts of first instance of Metropolitan Manila where their offices are maintained to
the exclusion of the courts of first instance in those localities where the aggrieved parties reside and the questioned decisions are sought to be
enforced. The Court further affirms the decision of said court adjudging the order of removal from office as null and void for having been issued by
said respondent who was not the appointing authority and had no authority to remove, since under the applicable law, the power to remove petitioner
was vested in the department head as the appointing authority.

The facts are undisputed.

On September 12, 1962, the then Undersecretary of Public Works and Communications issued to Federico Decano, herein petitioner-appellee, a
temporary appointment to the position of janitor in the Motor Vehicles Office, 1 Dagupan City Agency, with compensation at the rate of P1,440.00 per
annum. The appointment having been approved by the Commissioner of Civil Service, the said appointee assumed office on September 10, 1962
and he served therein for almost four years, or until April 29, 1966 when herein respondent-appellant Cipriano Posadas, as Acting Registrar, Land
Transportation Commission, Dagupan City, received a telegram from respondent-appellant Romeo F. Edu, in his then capacity as Acting
Commissioner of Land Transportation Commission (LTC), terminating his (Decano's) services effective as of the close of business on that day.

Shortly thereafter, the aggrieved petitioner-appellee filed before the Court of First Instance of Pangasinan a petition for "Mandamus and Injunction"
claiming that the aforementioned officials of the LTC acted without power and in excess of authority in removing him from the service, and therefore
praying of the court to declare as null and void the order for his removal, to declare him entitled to the position, to compel his reinstatement and
payment of his regular salary, and to enjoin, preliminary, and then permanently, respondents from disturbing, molesting or otherwise ousting him from
his position as janitor.

As prayed for, a writ of preliminary injunction was issued by the trial court at the commencement of the proceedings commanding respondents "to
desist and refrain from disturbing, molesting or otherwise ousting the petitioner from his position as janitor in the Land Transportation Commission,
Dagupan City Agency, and to pay the petitioner his corresponding salary from the date of notice of said preliminary injunction, until further orders from
the Court."

After trial, while agreeing with respondent Edu that petitioner's appointment as janitor was temporary and therefore the latter could be ousted from his
position at any time with or without cause, the lower court nevertheless declared in its judgment of October 29, 1968 that petitioner's removal was null
and void upon the ground that under the law, respondent Commissioner of Land Transportation was not the appointing authority insofar as the
position of petitioner and an other minor positions in his office were concerned; and thus lacking the power of appointment, said respondent had
neither the power of removal.

Hence, this appeal interposed by respondents-appellants which we find to be not well taken.

There is no question that petitioner could be removed from office at any time, for it has been held repeatedly 2 that the acceptance of a temporary
appointment divests an appointee of the right to security of tenure against removal without cause. it is readily apparent from petitioner's appointment
papers that the character of his term of office was "Temporary" and signed by the then Undersecretary of Public Works and Communications. 3 He
could therefore be removed at the pleasure of the appointing official.

But this is not to say that petitioner could be removed by the respondent Commissioner of Land Transportation since the latter was not the official who
appointed him but the Undersecretary acting for the Secretary of Public Works and Communications nor had said respondent been granted by law
the power of removal.

Per section 79(d) of the Revised Administrative Code, the provision then in force, it is the department head, upon the recommendation of the chief of
the bureau or office concerned, who has the power to "appoint all subordinate officers and employees whose appointment is not expressly vested by
the law in the President of the Philippines; 4 and it is also the department head who may remove or punish such employees, except as especially
provided otherwise in the Civil Service Law." 5 It appears that this provision has been precisely applied in the appointment of petitioner, for upon the
recommendation of the then Administrator of the defunct Motor Vehicles Office, it was signed and issued by the Undersecretary of Public Works and
Communications.

It should be further noted that after petitioner's aforementioned appointment as janitor in the then Motor Vehicles Office, Republic Act No. 4136 known
as the Transportation and Traffic Code created the Land Transportation Commission from which law respondent Edu is supposed to have derived his
powers as Commissioner. Perusal of this law however shows nothing that vests in the said commissioner any power to appoint or to remove
employees in that new office. On the contrary, the placement of said commission under the Department of Public Works and Communications is
specifically provided. 6 Hence, the power to appoint, and the corollary power to remove, employees in the Land Transportation Commission thus
remained with the Secretary of Public Works and Communications. As generally the power to remove is inherent in the power to appoint 7, it follows
that the termination of petitioner's services by respondent Edu, who then had no power to appoint, was without authority and therefore null and void.

In seeking reversal of the trial court's decision, respondents make capital of the fact that the petition for mandamus with injunction was filed in the
Court of First Instance of Pangasinan while respondent Edu holds office in Quezon City which, they claim, is beyond the territorial jurisdiction of the
said court. Respondents cite the long line of cases from the 1960 case of Acosta vs. Alvendia 8 where this Court, pursuant to sec. 44 (h) of the
Judiciary Act, jointly or alternatively with sec. 4, Rule 65 of the Rules of Court and/or section 2 of Rule 58, ruled that a court of first instance has no
jurisdiction to require or control the execution of an act committed beyond the limits of its territorial jurisdiction. These cases invariably involved
petitions for writs of injunction seeking to control the actions of courts or officers outside the territorial jurisdiction of the respondent courts of first
instance where said petitions had been filed. The Acosta ruling of non-jurisdiction does not apply, however, to the facts and circumstances at bar.

Here, petitioner seeks primarily the annulment of the dismissal order issued by respondent Edu, mandamus and injunction being then merely
coronary remedies to the main relief sought, and what is prayed to be enjoined, as in fact the trial court did enjoin by preliminary injunction, is the
implementation of the termination order against the petitioner. It is true that the order of dismissal was issued by respondent Edu, but it was to be
implemented in Dagupan City by his subordinate officer, respondent Acting Registrar of the LTC stationed at Dagupan City. Insofar, therefore, as
respondent Edu is concerned, the order terminating the services of respondent was a fait accompli and this he had done without authority, as earlier
discussed. The injunction is question, consequently, must be taken only to restrain the implementation of respondent Edu's order by his co-
respondent whose official station at Dagupan City is within the territorial boundaries of the trial court's jurisdictional district.
Thus, in Director of the Bureau of Telecommunications vs. Aligaen, et al., 9 in which the acts sought to be controlled by "Injunction with Preliminary
Injunction" were relative to the establishment of a local telephone system being done within the territorial boundaries of the judicial district of the Court
of First Instance of Roxas, the Court similarly upheld the jurisdiction of the Court of First Instance of Roxas over the petition, although two of the
respondents named therein the Director of the Bureau of Telecommunications, and the Regional Superintendent of Region IV of the Bureau of
Telecommunications had their official stations at Manila and Iloilo City, respectively, as follows:

... In the instant case, the acts relative to the establishment of a local telephone system by petitioners were being done within the territorial boundaries
of the province or district of respondent Court, and so said Court had jurisdiction to restrain them by injunction. It does not matter that some of the
respondents in the trial court, at whom the injunction order was issued, had their official 'residence outside the territorial jurisdiction of the trial court. In
the case of Gonzales vs. Secretary of Public Works, et al., (G.R. No. L-21988, September 30, 1966, 18 SCRA 296), wherein the only question raised
was whether the Court of First Instance of Davao had jurisdiction to entertain a case the main purpose of which was to prevent the enforcement of a
decision of the Secretary of Public Works who was in Manila this Court held that, inasmuch as the acts sought to be restrained were to be performed
within the territorial boundaries of the province of Davao, the Court of First Instance of Davao had jurisdiction to hear and decide the case, and to
issue the necessary injunction order. This Gonzales case was an action for certiorari and prohibition with preliminary injunction and/or preliminary
mandatory injunction to prevent the demolition of Gonzales' dam in Davao in compliance with the order of the Secretary of Public Works.

It follows, therefore, that since the acts to be restrained were being done in Roxas City, or within the territorial jurisdiction of respondent court, the
latter had jurisdiction to restrain said acts even if the office of respondent Director of the Bureau of Telecommunications is in Manila, and that of
respondent Regional Superintendent of Region IV is in Iloilo City.

As in the above-cited case of Aligaen, the national official stationed at Quezon City, namely, respondent Commissioner Edu, was impleaded as
respondent in the Pangasinan court for a complete determination of the issues involved, the legality of Edu's order of dismissal being the pivotal issue
to determine the merits of the mandamus and injunction aspects of the petition. In other words, Mr. Edu was joined as respondent not for injunction
purposes but mainly for testing the legality of his dismissal order and his transmittal thereof to his corespondent registrar at Dagupan City to
implement the same and terminate the services of the petitioner in Dagupan City.

As held by the Court in the 1965 case of Gayacao vs. The Honorable Executive Secretary, etc, et al., 10 where the issue is the correctness of a
national official's decision, the provincial courts of first instance have equal jurisdiction with the Manila courts to review decisions of national officials,
as otherwise litigants of ted means would practically be denied access to the courts of the localities where the reside and where the questioned acts
are sought to be enforced. Thus, Justice J.B.L. Reyes stressed on behalf of the Court that

A careful analysis of the allegations made in the petition wig show that the petitioner's principal complaint was that the decision of the Director of
Lands, as affirmed by the Secretary of Agriculture and the Executive Secretary, was contrary to law in giving retroactive application to Lands
Administrative Order No. 7-1. In other words, the remedy sought was the judicial review of the administrative decision in question and its annulment
on account of errors of law allegedly committed. ...
The doctrines invoked in support of the theory of non-jurisdiction (Castano vs. Lobingier, 7 Phil. 91; Acosta vs. Alvendia, L-14958, Oct. 31, 1960;
Samar Mining Co. vs. Arnado, L-17109, June 30, 1961) are inapplicable, in that those cases involved petitions for writs of injunction seeking to control
the actions of courts or officers outside the territorial jurisdiction of the respondent courts involved. Here the sole point in issue is whether the decision
of the respondent public officers was legally correct or not and without going into the merits of the case, we see no cogent reason why this power of
judicial review should be confined to the courts of first instance of the locality where the offices of respondents are maintained, to the exclusion of the
courts of first instance in those localities where the plaintiffs reside, and where the questioned decisions are being enforced.

It is easy to see that if the contested ruling of the court below is sustained, the same would result not only in hardship to litigants of limited means,
practically amounting to denial of access to the courts, but would also unnecessarily encumber the Manila courts whose dockets are already over
burdened. Actually, since Ortua vs. Singson, 59 Phil. 440, the power of provincial courts of first instance to review administrative decisions of national
officials has been consistently recognized.

While the petitioner herein also prayed that the land authorities be ordered to reinstate her original application, such remedy is purely a corollary to
the main relief sought; for, as the allegations now stand, reversal' of the questioned administrative decision would necessarily lead to the same result.

Respondents finally raise a technical point referring to the allegedly defective verification of the petition filed in the trial court, contending that the
clause in the verification statement "that I have read the contents of the said petition; and that [to] the best of my knowledge are true and correct" is
insufficient since under section 6 of Rule 7, 11 it is required that the person verifying must have read the pleading and that the allegations thereof are
true of his own knowledge. We do not see any reason for rendering the said verification void. The statement "to the best of my knowledge are true
and correct" referring to the allegations in the petition does not mean mere "knowledge, information and belief." It constitutes substantial compliance
with the requirement of section 6 of Rule 7, as held in Madrigal vs. Rodas. 12 At any rate, this petty technicality deserves scant consideration where
the question at issue is one purely of law and there is no need of delving into the veracity of the allegations in the petition, which are not disputed at
all by respondents. As we have held time and again, imperfections of form and technicalities of procedure are to be disregarded except where
substantial rights would otherwise be prejudiced.

ACCORDINGLY, the decision appealed from is hereby affirmed.

G.R. No. 94452 July 16, 1991

ALLURE MANUFACTURING, INC., EDGAR KROHN, JR., and HON. JOSE P. COSCOLLUELA, JR., as Presiding Judge of Regional Trial Court,
Branch 146, Makati, petitioners,
vs.
HON. COURT OF APPEALS, and SERVICEWIDE SPECIALISTS, INCORPORATED, respondents.

Guevarra Law Office for petitioners.

Labaguis, Loyola, Angara & Associates for private respondent.


RESOLUTION

DAVIDE, JR., J.:p

This is an appeal by certiorari under Rule 45 of the Rules of Court to review and set aside the decision 1 of 28 May 1990 of the Court of Appeals in
C.A.-G.R. SP Case No. 09971 2 the dispositive portion of which reads:

WHEREFORE, the writ of certiorari is hereby GRANTED nullifying the orders of May 27 and September 1, 1986 which authorized the writ of
preliminary mandatory injunction in question; meanwhile, the action a quo (Civil Case No. 8993) is ordered to proceed until its final termination. Costs
against private respondents Allure Manufacturing, Inc. and Edgar Krohn, Jr.

It must at once be stated that Hon. Jose P. Coscolluela is erroneously included as co-petitioner. He was the Presiding Judge of Branch 146 of the
Regional Trial Court of Makati who issued the orders challenged in C.A.-G.R. SP Case No. 09971, is only a formal party therein and, as a Judge, can
be represented in this case only by the Office of the Solicitor General 3 subject however to the exception laid down in Orbos vs. Civil Service
Commission, et al., G. R. No. 92561, 12 September 1990.

The facts which gave rise to the institution of C.A.-G.R. SP Case No. 09971 are summarized therein as follows:

Sometime in 1983, Bank of the Philippine Islands filed a collection suit against spouses Jaime and Ana Marie Miguel, and Filmerco Commercial Co.,
Inc. Docketed as Civil Case No. 2807, the complaint was raffled to the Regional Trial Court, Branch 147, at Makati, Metro Manila. Since the
defendants failed to file their answer, the trial court declared them in default and, accordingly, rendered a judgment by default. The decision became
final and executory. So a writ of execution was issued and the notice of levy served on the defendants. On December 3, 1984 the levied properties
were sold at public auction. BPI, being the highest bidder, bought the properties; and Sheriff Pioquinto Villapana issued the corresponding certificate
of sale.

Shortly before the execution sale, i.e., November 13, 1984, herein private respondents Allure Manufacturing, Inc. and Edgar Krohn, Jr., filed the case
a quo. It impleaded BPI, Alfonso Verzosa and Sheriff Villapana as defendants. It was an action for "recovery of personal properties, annulment of writ
of attachment and damages." Docketed as Civil Case No. 8993, it was raffled to the Regional Trial Court, Branch 146, also at Makati, presided over
by respondent Judge.

On May 21, 1985 Allure Inc. and Krohn filed a supplemental complaint in the same action. It included allegations to support a writ of preliminary
mandatory injunction, and prayed that the defendants, and another party in the person of Deputy Sheriff Armando de Guzman, be commanded to
return to them the properties sold at public auction, particularly the 12 sewing machines over which they claim ownership.
Meanwhile, BPI sold some of those levied properties to herein petitioner Servicewide Specialists, Inc. This private sale was executed on July 12,
1985 and consisted of the sewing machines in question.

On March 11, 1986 respondent Judge issued an order denying the prayer of Allure Inc. and Krohn for a writ of preliminary mandatory injunction
(Record, pp. 257-260). The pertinent portions of that order read as follows:

This Court, after a careful and thorough review of the pleadings arguments and authorities invoked on the complicated issue which had cropped up in
this case because of the transfer of ownership and possession of the sewing machines which are the subject matter of the original complaint to
Servicewide Specialists, Inc., resolves to:

xxx xxx xxx

5) GRANT the Motion to Dismiss the Application for Writ of Preliminary Mandatory Injunction incorporated in the Supplemental Complaint of May
21, 1985, filed on September 13, 1985 by defendants on the ground that the possession of the sewing machines had already passed to third persons,
and that injunction is not the proper remedy to take the property out of the possession of Servicewide Specialists, Inc. and to place the same in the
possession of plaintiffs whose right of ownership thereto is still being litigated, but to GRANT the prayer in the Omnibus Motion to allow plaintiffs to file
a Supplemental Complaint impleading Servicewide Specialists, Inc. and/or Manuel de Leon as additional defendants in this case and, for this
purpose, admits the Supplemental Complaint dated September 23, 1985. To enable this Court to acquire jurisdiction over the new defendants, let
summons with a copy of the Supplemental Complaint be served upon said new defendants, who are given fifteen (15) days from service of summons
to file their responsive pleading to the Supplemental Complaint.

In the meantime, to preserve the status quo between the parties and so as not to multiply, complicate and aggravate the issues raised in this case
before the application for the issuance of a writ of preliminary mandatory injunction against the new defendant, the said Servicewide Specialists, Inc.
and/or Manuel de Leon are hereby temporarily restrained from transferring or otherwise encumbering the said sewing machines which they bought
from defendant Bank of P.I. for a period of twenty (20) days from the date of this Order, or until further orders from this Court.

Set the hearing of the application for a writ of preliminary mandatory injunction as against additional defendants Servicewide Specialists, Inc. and/or
Manuel de Leon on March 18, 1986 at 2:00 o'clock in the afternoon. Deputy Sheriff Cristobal Jabson is hereby ordered to personally serve a copy of
the summons and the complaint and a copy of this Order to said additional defendants and to make return thereof as soon as possible. Furnish
copies of this Order to plaintiffs and the other defendants in this case, through counsel, by registered mail.

On April 3, 1986 Servicewide Inc. filed its "answer to supplemental complaint." And, on April 22, 1986, having been granted five days for the purpose,
Servicewide Inc. filed its opposition to Allure Inc. and Krohn's application for a preliminary mandatory injunction.

On May 27, 1986 respondent Judge issued an order granting the writ of preliminary mandatory injunction prayed for by Allure Inc. and Krohn, the
decretal portion thereof reading as follows:
WHEREFORE, upon the posting by plaintiffs of a bond of P80,000.00, which is double the amount paid for by defendant-bank, to be put up by good
and sufficient sureties and to be approved by this Court, conditioned that plaintiffs will pay defendant Servicewide Specialist, Inc. whatever damages it
may suffer by the issuance of this Order, should it turn out that plaintiffs were not entitled thereto, defendant Servicewide Specialist, Inc. is hereby
ordered to turn over the possession of the twelve (12) sewing machines to plaintiffs, to remain therein until further orders from this Court.

On June 6, 1986 Servicewide Inc. filed an urgent motion for reconsideration grounding it on two propositions: "1. That the said Order is a direct
contradiction of the Honorable Court's Order, dated March 11, 1986; and 2. That the Order, dated May 27, 1986 is without any basis in fact and law."
To this, Allure Inc. and Krohn filed their opposition. 4

The aforesaid urgent motion for reconsideration was denied by the trial court in the Order of 1 September 1986. 5

Servicewide Incorporated then filed with the Court of Appeals a petition for certiorari which was docketed as C.A.-G.R. SP Case No. 09971.

It appears, however, that Filmerco Commercial Co. Inc. and the Spouses Jaime and Ana Maria Miguel filed, on 25 September 1984 in Civil Case No.
2807, a motion to set aside the decision, writ of execution, notice of levy/attachment and to restrain the holding of the auction sale, which was denied
by the court in its Order of 26 November 1984. A motion for the reconsideration thereof was filed on 3 December 1984, but before it could be resolved
said defendants filed with the then Intermediate Appellate Court a petition for certiorari and prohibition, injunction and temporary restraining order. The
Intermediate Appellate Court dismissed the petition and defendants filed with this Court a petition for certiorari which was docketed as G.R. No.
70661. 6

In the decision (Second Division) of 9 April 1987 in G.R. No. 70661, 7 this Court ruled that there was no valid service of summons on the defendants
in the aforesaid Civil Case No. 2807 and accordingly decreed:

WHEREFORE, the instant petition is hereby GRANTED. The lower court's decision in Civil Case No. 2807 is SET ASIDE. The case is remanded to
the trial court for proper service of summons and trial

On 19 May 1987, the respondent in C.A.-G.R. SP Case No. 09971 filed with the respondent Court of Appeals a Manifestation And Motion informing
said court of the decision in G.R. No. 70661, to which was attached a copy of the decision. 8

On 28 May 1990, respondent Court of Appeals rendered the challenged decision, the dispositive portion of which is quoted in the introductory portion
of this Decision.

In nullifying the questioned orders of the trial court granting the issuance of a writ of preliminary mandatory injunction, the respondent Court of
Appeals was of the opinion, and so held, that private respondents are not entitled to the writ because (a) they do not have a clear right to the sewing
machines in question, for as a matter of fact the trial court even ruled that herein petitioner "appears to be a buyer in good faith" and that "plaintiff and
defendant stand on equal footing"; (b) there was no transaction whatsoever between petitioners and private respondents; hence, the former could not
have invaded the rights of others; and (c) the effect of the writ is to re-establish and maintain a pre-existing, continuing relationship between the
parties; considering that no such relationship existed between them, there was nothing to be re-established. 9 Accordingly, the conditions for issuance
thereof per Manila Electric Railroad and Light Company vs. Del Rosario, 10 have not been fully met. In said case, this Court held:

It may be admitted that since an injunction mandatory in its nature usually tends to do more than to maintain the status quo, it is generally improper to
issue such an injunction prior to the final hearing: but on the other hand, in cases of extreme urgency; where the right is very clear; where
considerations of relative inconvenience bear strongly in complainant's favor; where there is a wilful and unlawful invasion of plaintiffs right against his
protest and remonstrance, the injury being a continuing one; and where the effect of the mandatory injunction is rather to reestablish and maintain a
pre-existing continuing relation between the parties, recently and arbitrarily interrupted by the defendant, than to establish a new relation, we hold that
the jurisdiction to grant such injunctions undoubtedly exists; and while caution must be exercised in their issuance, the writ should not be denied the
complainant when he makes out a clear case, free from doubt and dispute.

Moreover, since title to the property in question is already in petitioner's name, having bought said property from BPI, it follows then, per Pelejo vs.
Court of Appeals, 11 that the former has a better right to possess the sewing machines than the private respondents. 12 Finally, the invocation of
equity by the trial court is unwarranted as adequate remedies under specific legal provisions and settled jurisprudence exist to protect private
respondents' right over the sewing
machines. 13

Unable to accept said decision, private respondents, as petitioners herein, filed the instant petition on 6 September 1990 alleging, as reason for a
review thereof, that the respondent Court of Appeals "committed a grave error of law in finding that Coscolluela abused this discretion, considering
that Coscolluela, in his pertinent orders, made it abundantly clear that he was acting as a court of equity" and stating the following as its assigned
error:

The Appellate Court erred when it failed to comprehend that Coscolluela acting as a court of equity, acted judicially in granting a preliminary
mandatory injunction, in favor of Allure and against Servicewide. 14

Petitioners openly admit that Judge Coscolluela did not apply the doctrine laid down in Manila Electric Railroad and Light Co. vs. Del Rosario but
claim, however, that the equitable grounds enunciated by him in the questioned orders bring this case outside thereof. They end their arguments by
adverting to the above decision of this Court in G.R. No. 70661 which nullified the decision in Civil Case No. 2807 and conclude that such being the
fact, the auction sale of the sewing machines conducted pursuant to the writ of execution in said case was also null and void since no valid writ could
have been issued; accordingly, respondent can no longer claim any right on the sewing machines as purchaser thereof from the highest bidder at the
auction sale, the BPI.

We required the respondents to comment on the petition. 15 Private respondent filed its Comment on 20 November 1990 16 sustaining, by
extensively quoting, the challenged decision of the Court of Appeals. As regards the decision in G.R. No, 70661, and the conclusions petitioners had
shown therefrom, private respondent claims that petitioner "evades the finding of the Honorable RTC (sustained by the Honorable Court of Appeals)
that Servicewide is a purchaser in good faith." 17
In Our resolution of 16 March 1991, 18 We gave due course to the petition and required the parties to submit their respective memoranda which
petitioners complied with on 30 April 1991 and private respondent on 23 April 1991.

We shall first dispose of the issue which arises out of the decision of this Court of 9 April 1987 in G.R. No. 70661. Petitioners fault the respondent
Court of Appeals for its failure to consider the same. They postulate that since the decision in Civil Case No. 2807 was nullified by this Court,
everything that proceeded therefrom, such as the writ of execution, the levy on execution of the sewing machines, its sale on public auction and its
sale by the highest bidder to private respondent, was null and void; consequently, private respondent has no right over the sewing machines. This is
not entirely correct. The validity of the orders of the trial court on the issuance of the writ of preliminary injunction should be decided on the basis of
the facts existing at the time they were issued, and not on the basis of the subsequent vicissitudes of Civil Case No. 2807. There can be no dispute
that at the time the orders were issued, private respondent had in its favor a contract of sale over the sewing machines executed by BPI which
acquired them as the highest bidder in the auction sale. What petitioners should have done upon receipt of the decision in G.R. No. 70661 was to file
an appropriate pleading for adequate relief on the basis thereof with the trial court either in Civil Case No. 8993 or in Civil Case No. 2807.

We shall now address the principal issue.

Guided by relevant facts as gathered from the disquisitions of the trial court in its questioned orders of 27 May 1986 and 1 September 1986, the
challenged decision of the Court of Appeals, and from the pleadings of the parties, We find that no reversible error was committed by the trial court in
granting the issuance of a writ of preliminary injunction. There was sufficient basis for its issuance. To Our mind, and solely for the purpose of the
application for a writ of preliminary injunction, petitioner Allure Manufacturing Inc. was able to preliminarily establish a clear legal right to the sewing
machines in question and to have a better right to its possession than private respondent. As found by the trial court, against which nothing to the
contrary was presented, said petitioner purchased three (3) of the sewing machines from Garmer Industrial Sewing Machines while the rest belong to
it per Inventory of its property submitted by the accountant. Per the testimony of Jaime Miguel, it appears that the rest were capital contributions of
one of Allure's incorporators, Mrs. Maria Adelaida Gonzales Iguaras, a sister of Ana Marie Miguel. 19 The latter is one of the defendants in Civil Case
No. 2807. Its claim that the machines were in its possession and used in connection with its business has not been rebutted. Upon the other hand,
private respondent purchased the property from BPI, in a private sale, only on 12 July 1985, during the pendency of Civil Case No. 8993, thereby
prompting petitioner Allure to file a supplemental complaint in said case on 23 September 1985 to implead private respondent as party defendant
therein. Private respondent unquestionably acquired a property in litigation. Exercise of due diligence would have easily disclosed that its seller
acquired the same in an auction sale conducted by the sheriff. In execution sales, the sheriff does not warrant the title to the property sold by him and
it is not incumbent on him to place the purchaser in possession of such property. The rule of caveat emptor applies to execution sales. 20

It is of course well-settled in this jurisdiction that, as a general rule, the writ of injunction is not proper where its purpose is to take property out of the
possession or control of one person and place the same in the hands of another where title has not been clearly established by law. 21

In Buayan Cattle Co. Inc. vs. Hon. Quintillan, etc. et al., 22 We ruled:
. . . Injunctions are not available to take property out of the possession or control of one party and place it into that of another whose title has not
clearly been established (Emilia vs. Bado, L-23685, April 25, 1968, 23 SCRA 183; Pio vs. Marcos, L-27849, April 30, 1974, 56 SCRA 726). The office
of the writ of injunction is to restrain the wrongdoer (Calo vs. Roldan, L-252, March 30, 1946, 76 Phil. 445, 451-452), not to protect him.

There is no power the exercise of which is more delicate which requires greater caution, deliberation and sound discretion, or (which is) more
dangerous in a doubtful case than the issuing of an injunction; it is the strong arm of equity that never ought to be extended unless to cases of great
injury, where courts of law cannot afford an adequate or commensurate remedy in damages. The right must be clear, the injury impending or
threatened, so as to be averted only by the protecting preventive process of injunction (28 Am. Jur. 201; Francisco, supra., p. 179).

The reason for this doctrine is that before the issue of ownership is determined in the light of the evidence presented, justice and equity demand that
the parties be maintained in their status quo so that no advantage may be given to one to the prejudice of the other. 23

In the instant case, if status quo is to be maintained, in the interest of justice and equity, it is the status quo before the commencement of Civil Case
No. 8993, under which possession of the sewing machines was with petitioner Allure. Accordingly, the trial court committed no error in granting the
writ.

The arguments of the Court of Appeals vis-a-vis the requirements for the issuance of the writ as laid down in the Meralco case are strained and
belabored. Firstly, the trial court did not hold that private respondent (petitioner therein) is a "buyer in good faith"; what it said was that it "appears to
be a buyer in good faith", which is of course based on the legal presumption of good faith. But that did not concede to private respondent a better right
than Allure. Secondly, the absence of transaction between Allure and private respondent does not negate "wilfull (sic) and lawful (sic) invasion of the
right" of Allure by private respondent because invasion does not always presuppose a transactional or contractual relationship between the parties.
The existence of a right in favor of one imposes upon others the duty and responsibility to respect it.

WHEREFORE, judgment is hereby rendered GRANTING the petition, SETTING ASIDE the decision of the Court of Appeals of 28 May 1990 in C.A.-
G.R. SP Case No. 09971, REINSTATING the Order of the trial court of 27 May 1986 and 1 September 1986 in Civil Case No. 8993, and DIRECTING
that the latter be consolidated with Civil Case No. 2807 of Branch 147 of the Regional Trial Court of Makati, Metro Manila, unless the trial in said case
has already been concluded. Costs against private respondent.

SO ORDERED.

[G.R. No. 106043. March 4, 1996]

CAGAYAN DE ORO CITY LANDLESS RESIDENTS ASSOCIATION INC. (COCLAI), Macabalan, Cagayan de Oro City, petitioner, vs. COURT OF
APPEALS and the NATIONAL HOUSING AUTHORITY (NHA), respondents.
DECISION
HERMOSISIMA, JR., J.:
This is a petition to set aside the decision of the Court of Appeals, dated February 28, 1991, in C.A. G.R. SP No. 23080, which reversed the decision
of the Regional Trial Court of Cagayan de Oro City, Branch 25, dated November 17, 1988.

The antecedent facts as found by the Court of Appeals are as follows:

The land subject of the dispute is Lot No. 1982 of Cad. 237 consisting of about 12.82 hectares located at Cagayan de Oro City. Said parcel of land
was formerly a timberland identified as Block No. F, L.C. Project No. 8 of the Bureau of Forestry. On September 4, 1956, the Bureau of Forestry
released the said land as alienable and disposable public land.

Subsequently, on January 29, 1964, the Bureau of Lands issued Survey Authority No. 16-64 granting authority to the COCLAI to survey the land in
question for purposes of subdivision into residential lots. By virtue of said authority, the COCLAI engaged the services of a geodetic engineer to
prepare the subdivision survey which was submitted to the Bureau of Lands. On March 31, 1964, the Bureau of Lands, after conducting an ocular
survey, required the COCLAI, in behalf of its members, to file a miscellaneous Sales Application over the land in question which the latter did on
August 13, 1970. The said sales application was however held in abeyance by the Bureau of Lands pending the final outcome of the civil case filed by
the Republic of the Philippines and the City of Cagayan de Oro against Benedicta Macabebe Salcedo, et al. for the annulment of Original Certificate
of Title No. 0-257 covering the land in question then pending before the Supreme Court docketed as G.R. No. L-41115. In said case, the COCLAI was
a party-intervenor.

Meanwhile, on August 22, 1979, the NHA filed an expropriation proceeding before the former Court of First Instance of Misamis Oriental at Cagayan
de Oro City docketed as Civil Case No. 6806 to acquire Cadastral Lot No. 1982, including the land involved in this case, located at Macabalan,
Cagayan de Oro City with an area of 224,554 square meters which was then covered by OCT No. 0-257. In said case, the COCLAI intervened
claiming that instead of being paid the amount of P300,000.00, they prefer to acquire residential lots in any housing area of NHA. Upon learning of the
pending suit before the Supreme Court (G.R. No. L-41115) involving the annulment of the title over the same land, the NHA sought the suspension of
the expropriation proceedings.

On September 11, 1982, the Supreme Court finally resolved G.R. No. L-41115 annulling OCT No. 0-257 and declaring the land covered thereby as
public land.

On October 8, 1982, the Solicitor General furnished the Bureau of Lands, Manila, with a copy of the Supreme Court decision prompting the Director of
the Bureau of Lands to order the District Land Officer in Cagayan de Oro City to take appropriate action for inventory of each and every portion of
Cadastral Lot No. 1982. In response thereto, the Regional Land Director of Region 10 informed the Director of Lands that the members of COCLAI
were occupying portions of the said lot by virtue of the Survey Authority issued on March 19, 1964 and the COCLAIs subdivision survey had already
been submitted to the Central Office for verification and approval but was held in abeyance.

On May 10, 1983, the President of the Philippines issued Proclamation No. 2292 reserving the entire area of Cadastral Lot No. 1982 for the Slum
Improvement and Resettlement (SIR) Project to be implemented by the NHA. Under the said proclamation, the NHA was granted the authority to
develop, administer and dispose of Lot No. 1982 located at Macabalan, Cagayan de Oro City, in accordance with the guidelines of the Slum
Improvement and Resettlement Program and the approved development plan of the area.

On May 19, 1983, the Bureau of Lands, through its Regional Director, issued an order rejecting the subdivision survey previously submitted by the
COCLAI.

Sometime in November, 1986, the NHA, through its agents, Virgilio Dacalos and Engr. Vicente Generalao, the area manager and project engineer,
respectively with the help of the policemen and claiming authority under P.D. 1472, demolished the structures erected by the COCLAI members. This
action prompted the COCLAI to file a forcible entry and damages case against the NHA employees and police officers with the Municipal Trial Court in
Cities, Branch 3, Cagayan de Oro City docketed as Civil Case No. 11204.

After due hearing, the MTCC on November 17, 1988 rendered judgment ordering the defendants in Civil Case No. 11204 to restore the COCLAI
members to their respective actual possession of the portions of Lot No. 1982 but the court dismissed plaintiffs claim for damages. On appeal, the
Regional Trial Court in Cagayan de Oro City affirmed the decision of the lower court. Thereafter, the prevailing party, the COCLAI members, moved
for the issuance of a writ of execution before the MTCC on July 23,1990.

While Civil Case No. 11204 was pending before the courts, the President of the Philippines issued on July 1, 1988 Special Patent No. 3551 covering
the entire area of Cadastral Lot No. 1982, and by virtue thereof, the Register of Deeds of Cagayan de Oro City issued on January 3, 1990 an Original
Certificate of Title No. P-3324 in the name of NHA.

Thus, on July 24, 1990, a day after the COCLAI moved for the execution of the judgment in Civil Case No. 11204, the NHA filed a complaint for
Quieting of Title with Application for a Writ of Preliminary Injunction against the COCLAI and its president, Pablo Solomon, as well as the City Sheriff,
which was docketed as Civil Case No. 90-337. Said case was assigned to Branch 25 of the Regional Trial Court in Cagayan de Oro City, presided
over by Hon. Noli T. Catli. In its complaint, plaintiff NHA alleged:

4) That defendant landless association laid claim of a portion of Lot No. 1982 aforestated alleging that they are entitled to possession thereof and, in
fact, filed a complaint for Forcible Entry against certain Virgilio Decalos, Vicente Generalao, and four (4) others, plaintiff herein not being made a party
thereto, which case is docketed as Civil Case No. 11204 assigned to Branch 3 of the Municipal Trial Court of Cagayan de Oro City;

5) That on November 18, 1988 defendant landless association obtained a favorable decision from MTCC Branch 3;

6) That pursuant to the ruling of the Supreme Court in City of Bacolod et al. vs. Hon. Enriquez et al., G.R. No L-9773, May 29, 1957 the said decision
could not be enforced against plaintiff herein as it was not a party to the said case;

7) That the claim of defendant landless association for possession of a portion of said Lot No. 1982, subject-matter hereof, is predicated or anchored
upon the fact that said lot was declared a public land;
8) That on January 3, 1990, however, plaintiff National Housing Authority became the absolute owner of said Lot No. 1982, now the site of the Slum
Improvement and Resettlement Project, by virtue of Special Patent No. 3551 issued by Her Excellency, the President of the Philippines, for which
Original Certificate of Title No. P-3324 was issued in its name; x x x

9) That the claim of defendant landless association has created a cloud on plaintiffs title to Lot No. 1982 aforementioned, which claim is apparently
valid or effective but is in truth and in fact invalid, ineffective and unenforceable and prejudicial to plaintiffs title, the land, subject-matter hereof, having
ceased to be a public land;

10) That defendants Solomon, et al. threatened or are about to enforce the decision in said Civil Case No. 11204 in violation of plaintiffs rights
respecting the subject of the action, and tending to render the judgment herein ineffectual, unless restrained or enjoined by this Honorable Court;

11) That the plaintiff is entitled to the relief demanded, and the whole or part of such relief consists in restraining the commission of the act herein
complained of;

12) That the commission of the act herein complained of during the litigation would probably work injustice to the plaintiff;

13) That the plaintiff is willing and ready to file a bond executed to the defendants in an amount to be fixed by this Honorable Court, to the effect that
the plaintiff will pay to said defendants all damages which they may sustain by reason of the injunction if the Court should finally decide that the
plaintiff was not entitled thereto.

Acting on the plaintiffs prayer for the issuance of a restraining order and/or preliminary injunction, the Regional Trial Court issued an Order on July 24,
1990 stating thus:

x x x let a RESTRAINING ORDER be issued to Defendants Pablo Salomon and Cagayan de Oro Landless Association, Inc. and the City Sheriff or
Deputy Sheriff of MTCC, Branch 3, or anybody acting in their behalf or acting as their agent or representative. And until further orders from this court,
they are enjoined to refrain or desist from enforcing the decision of Civil Case No. 11204 until this court resolves this complaint.

Subsequently, the defendants moved to dismiss the complaint stating, among others, as a ground therefor that the cause of action is barred by a prior
judgment in another case. (Apparently, the NHA has filed an action for Injunction with Damages against COCLAI and its President before the
Regional Trial Court, Branch 17, Cagayan de Oro City docketed as Civil Case No. 89-399 to prevent the MTCC from executing its decision in Civil
Case No. 11204, but this was dismissed by the Regional Trial Court in its Order dated July 19, 1990 on the ground that the decision of the MTCC in
Civil Case No. 11204, had been upheld by the Supreme Court when it denied NHAs petition for certiorari. The RTC, Branch 17, further stated that x x
x (I)f plaintiff believes that it is the owner of the property subject of that civil case (No. 11204), then it should ventilate its claim in some other case but
not in a simple case of injunction.)
On August 10, 1990, the Regional Trial Court in Civil Case No. 90-337 issued an Order denying the motion to dismiss as well as plaintiff NHAs prayer
for the issuance of a preliminary injunction to restrain the enforcement of the decision in Civil Case No. 11204. The motion for reconsideration filed by
plaintiff NHA was likewise denied by the Regional Trial Court in its Order dated August 17, 1990.[1]

Aggrieved by the decision of the Regional Trial Court, the NHA appealed to the Court of Appeals which reversed the decision of the lower court. The
decretal portion of the said decision, reads:

WHEREFORE, the instant petition for certiorari is GRANTED the questioned Orders of respondent judge are hereby declared null and void and
respondent judge is ordered to issue a writ of preliminary injunction to respect the possession of the petitioner over the land subject of the dispute x x
x[2]

Hence, this petition.

The issues raised by petitioner are: whether or not the Court of Appeals erred in ruling (a) that the National Housing Authority (NHA) is entitled to the
injunction prayed for; and (b) that NHA has a better right to the possession of Lot No. 1982, as a necessary consequence of ownership.

As an extraordinary remedy, injunction is calculated to preserve or maintain the status quo of things and is generally availed of to prevent actual or
threatened acts, until the merits of the case can be heard.[3] As such, injunction is accepted as the strong arm of equity or a transcendent remedy to
be used cautiously, as it affects the respective rights of the parties, and only upon full conviction on the part of the court of its extreme necessity.[4] Its
issuance rests entirely within the discretion of the court taking cognizance of the case and is generally not interfered with except in cases of manifest
abuse.[5] Moreover, it may only be resorted to by a litigant for the preservation or protection of his rights or interests and for no other purpose during
the pendency of the principal action.[6]

Before an injunction can be issued, it is essential that the following requisites be present: 1) there must be a right in esse or the existence of a right to
be protected; and 2) the act against which the injunction is to be directed is a violation of such right.[7] Hence, it should only be granted if the party
asking for it is clearly entitled thereto.[8]

In the case at bench, the Court of Appeals was justified in ruling that NHA was entitled to the writ of injunction. The reason is that, while Civil Case No.
11204 for forcible entry was pending on appeal before the Regional Trial Court, Special Patent No. 3551 was issued by then President Corazon
Aquino which covered the lot subject of the dispute and by virtue thereof, an Original Certificate of Title in the name of NHA was issued by the
Register of Deeds of Cagayan de Oro City on January 3, 1990. So, when petitioner moved for the issuance of a writ of execution before the MTCC on
July 23, 1990, a certificate of title had already been issued to NHA. In view of this intervening development, NHA filed a complaint for quieting of title
before the Regional Trial Court of Cagayan de Oro City. Thus, it was only proper for the Court of Appeals to direct the Regional Trial Court,[9] where
Civil Case No. 90-337 was pending, to grant the writ of preliminary injunction to restrain the enforcement of the decision of the MTCC in Civil Case
No. 11204 as there was a material change in the status of the parties with regard to the said land. Clearly, the government, through the NHA will be
prejudiced by the impending enforcement of the decision in Civil Case No. 11204 which directs the said agency to restore the members of petitioner
to their respective possession on portions of Lot No. 1982.
Petitioner claims that Special Patent No. 3351 issued by then President Corazon Aquino on July 1, 1988 and the corresponding issuance by the
Register of Deeds of Original Certificate of Title No P-3324 in the name of NHA had entrusted only the administration of the disputed lot to the said
agency but not the ownership thereof It also alleges that, by virtue of Proclamation No. 2290, issued on May 10, 1985, declaring the land situated at
Barrio Macabalan, Cagayan de Oro City, as Slum Improvement Settlement (SIR) area, it is illegal for NHA to claim ownership over the said land.
Furthermore, petitioner also claims that respondent Court overlooked the fact that the issues on ownership and possession are sub-judice before
RTC, Branch 25, Cagayan de Oro City in Civil Case ;No. 90-337 x x x[10] Hence, it concludes that the appellate court cannot pass upon these issues
as there is still no final judgment on said civil case.

Petitioners contentions are bereft of merit.

The Original Certificate of Title (No. P-3324) issued to respondent NHA serves as a concrete and conclusive evidence of an indefeasible title to the
property. Accordingly, once a decree of registration is issued under the Torrens systems and the one year period from the issuance of the decree of
registration has lapsed, without said decree being controverted by any adverse party, the title becomes perfect and cannot later on be questioned.[11]

Furthermore, in the case at bench, the original certificate of title was issued by the Register of Deeds, under an administrative proceeding pursuant to
Special Patent No. 3551. Thus, it is as indefeasible as a certificate of title issued under a judicial registration proceeding as the land covered by said
certificate is a disposable public land within the contemplation of the Public Land Law.[12] Moreover, the said certificate of title was not controverted
by petitioner in a proper proceeding nor did it show that the issuance of the Original Certificate of Title by the register of deeds to NHA was tainted
with bad faith or fraud. Hence, said certificate of title enjoys the presumption of having been issued by the register of deeds in the regular
performance of its official duty.[13]

Also, OCT No. P-3324 issued in the name of respondent NHA, clearly states:

TO HAVE AND TO HOLD, the said parcel of land with all the appurtenances thereunto of right of belonging unto the NATIONAL HOUSING
AUTHORITY and to its successors-in-interest or assigns forever, subject to private rights, if any there be.[14]

Clearly the certificate of title vested not only ownership over the lot but also the right of possession as a necessary consequence of the right of
ownership.

Respondent is not merely the administrator of the said lot. It cannot be denied that Proclamation No. 2290 gave authority to the NHA to dispose of Lot
No. 1982. In the said Proclamation the President of the Philippines granted to NHA the authority to develop, administer and dispose of Lot No. 1982,
located at Macabalan, Cagayan de Oro City, in accordance with the guidelines of the Slum Improvement and Resettlement Program and the
approved development plan of the area.

On the other hand, petitioners only basis for claiming the disputed lot is lawful entry and possession for an extended period of time and, as a matter of
fact, there is a final judgment in its favor in the case for forcible entry before the MTCC. As to this, settled is the rule that, in an action for forcible entry,
the only issue involved is mere physical possession (possession de facto) and not juridical possession (possession de jure) nor ownership[15] As the
case filed before the lower court is only one for forcible entry, it is indicative that the legal title over the said property is not disputed by the petitioner.
There has been no assertion of ownership over the land, only that of prior possession. At any rate, the judgment rendered in the ejectment case is
effective only with respect to possession and in no wise bind the title or affect the ownership of the land.[16]

Indeed, petitioner has no legal leg to stand as regards ownership because its Miscellaneous Sales Application was not acted upon nor favorably
considered by the Bureau of Lands. The Bureau, through its Regional Director, rejected the subdivision survey previously submitted by COCLAI, in an
Order, dated May 19, 1983.

In effect, petitioners occupation of the land in question, after the denial of its application for Miscellaneous Sales Patent, became subsequently illegal.
Petitioners members have, as a consequence, become squatters whose continuous possession of the land may now be considered to be in bad faith.
This is unfortunate because squatters acquire no legal right over the land they are occupying.[17]

Although as a general rule, a court should not, by means of a preliminary injunction, transfer property in litigation from the possession of one party to
another, this rule admits of some exceptions. For example, when there is a clear finding of ownership and possession of the land or unless the subject
property is covered by a torrens title pointing to one of the parties as the undisputed owner.[18] In the case at bench, the land subject of the suit is
covered by a torrens title under the name of NHA.

A writ of injunction should issue so as not to render moot and academic any decision which the Regional Trial Court in Civil Case No. 90-337 will
render and in order to prevent any irreparable injury which respondent may sustain by virtue of the enforcement of the decision of the MTCC.

WHEREFORE, the petition is DISMISSED. The decision of the Court of Appeals in C.A. G.R. SP No. 23080 is AFFIRMED.

SO ORDERED.

Padilla, Bellosillo and Vitug, JJ., concur.


Kapunan, J., took no part. Participated in the C.A. decision appealed from.

G.R. No. 106982. March 11, 1993.

SYNDICATED MEDIA ACCESS CORPORATION and WILLIAM M. ESPOSO, petitioners, vs. COURT OF APPEALS, BOARD OF ADMINISTRATORS
OF RADIO PHILIPPINES NETWORK, INC., RONALDO V. PUNO, QUINTIN PASTRANA, MELVIN MENDOZA, BENITO PADILLA, GERMAN
GONZALES, SR., and BENITO CATINDIG, respondents.

Atienza, Tabora, Del Rosario & Castillo for petitioners.


Sumulong, Sumulong, Paras and Abano for private-respondents.

SYLLABUS

1. REMEDIAL LAW; PROVISIONAL REMEDIES; PRELIMINARY INJUNCTION; REQUISITES FOR GRANT OF INJUNCTIVE RELIEF; CASE AT
BAR. It is well-settled that to be entitled to an injunctive writ, a party must show that: (1) the invasion of right sought to be protected is material and
substantial; (2) the right of complainant is clear and unmistakable; and, (3) there is an urgent and paramount necessity for the writ to prevent serious
damage. Unfortunately, petitioners have failed to show that there is an urgent and paramount necessity for the issuance of a Writ of Preliminary
Injunction. The action for damages and injunction was founded on newspaper accounts whereby respondent Puno reportedly announced that he
would "personally replace the incumbent President of RPN-9, plaintiff William M. Esposo, a nominee of SMAC to the position." However, a perusal of
the newspaper accounts attached to the petition as Annexes "D" and "E" shows that respondent Puno was merely named as Chairman and Acting
President of the RPN-9 Task Force which is totally distinct and separate from the position of President of RPN-9. In fact, petitioner Esposo remains to
this date the President of RPN-9. He was never replaced, hence, there was then no basis for the grant of injunctive relief.

2. ID.; ID.; ID.; EVIDENCE REQUIRED FOR GRANT OF INJUNCTIVE RELIEF. Thus, while the evidence to be submitted during the hearing
on the motion for preliminary injunction need not be conclusive or complete, the evidence needed being only a "sampling" and intended merely to
give the court an idea of the justification for the preliminary injunction pending the decision of the case on the merits, still, said evidence must rest on
solid grounds and not on mere hearsay or unfounded fears.

3. ID.; CIVIL PROCEDURE; CONSOLIDATION OF ACTIONS; CASES INVOLVING SAME PARTIES AND CLOSELY RELATED SUBJECT
MATTERS CONSOLIDATED AND JOINTLY TRIED TO AVOID VARYING CONCLUSIONS. There are actually two (2) cases filed involving the
same parties and affecting closely related subject matters, i.e., one in Makati which is the instant case, and the other, in Quezon City. The Makati
case pertains to the complaint for damages and injunction filed by petitioners SMAC and Esposo wherein they claim that respondent Board is
preventing them from exercising the functions delegated to them under the "Agreement." The case in Quezon City questions the validity of that very
"Agreement." Consequently, to avoid varying conclusions, these cases must be consolidated and jointly tried in Makati where the earlier case was
filed, conformably with established procedure.

DECISION

BELLOSILLO, J p:

This Petition for Certiorari with prayer for the issuance of a temporary restraining order assails the Order of 8 September 1992 of respondent Court of
Appeals which enjoined herein petitioners and all persons acting in their behalf from enforcing the Order of 10 August 1992 of Branch 138 of the
Regional Trial Court of Makati. 1
On 8 April 1986, then President Aquino issued E.O. No. 11 creating the Board of Administrators of Radio Philippines Network, Inc. (RPN-9), to
manage and operate the business concerns, functions and affairs of RPN-9, have custody of its funds and assets subject to the control and
supervision of the PCGG, and preserve, maintain and operate its assets. 2

On 7 November 1992, petitioner Syndicated Media Access Corporation (SMAC), represented by its President and Chairman of the Board, herein
petitioner William M. Esposo, entered into a management agreement with respondent Board for a period of 27 months commencing from 1 October
1990 to 31 December 1992. This period was subsequently extended up to 31 December 1993. 3

On 14 July 1992, herein private respondents Ronaldo V. Puno, Quintin Pastrana, Melvin Mendoza, Benito Padilla, German Gonzales, Sr., and Benito
Catindig were appointed as new members of respondent Board. 4

On 21 July 1992, petitioners SMAC and Esposo instituted an action for damages and injunction against private respondents before the Regional Trial
Court of Makati, docketed as Civil Case No. 92-2022. In their Complaint, SMAC and Esposo averred that private respondents "threaten(ed) and as a
matter of fact (have) taken definite steps to commit a breach of the agreement particularly by replacing plaintiff William Esposo (herein petitioner) as
President of RPN-9 in total disregard and violation" of the management contract. 5 Petitioners therefore asked the court to enjoin respondent Board
from replacing Esposo as President of RPN-9.

The trial court issued a temporary restraining order and set for hearing the prayer for preliminary injunction.

On 29 July 1992, private respondents were restrained by the Regional Trial Court of Quezon City, Branch 102, in Civil Case No. Q-92-12878 from
"further enforcing and implementing the Management Agreement entered into by the . . . BOA with . . . SMAC until further orders from the Court." 6

On 10 August 1992, the Makati Court issued a Writ of Preliminary Injunction prohibiting private respondents from "further taking steps to replace
William Esposo as President of RPN-9 and other officers who are nominees of plaintiff SMAC as provided for in the Management Agreement and
from taking over the management of RPN-9 from plaintiffs, or otherwise interfering in the exercise by the plaintiffs of the functions delegated to them
under the Agreement." 7 This, despite knowledge that the Quezon City Court had enjoined private respondents from implementing the management
contract.

On 14 August 1992, private respondents elevated the aforesaid order granting preliminary injunction to the Court of Appeals by way of a Petition for
Certiorari. They questioned the right of petitioners to the injunctive relief.

On 19 August 1992, respondent Court of Appeals issued a temporary restraining order enjoining the Makati Court from enforcing its Order of 10
August 1992. On 25 August 1992, oral arguments by the parties were heard.

On 8 September 1992, the appellate court enjoined petitioners and all other persons acting in their behalf from "executing and enforcing the assailed
order dated August 10, 1992". 8 Hence, the filing of the instant petition.
The only issue for consideration is whether or not petitioners are entitled to the injunctive relief prayed for.

It is well-settled that to be entitled to an injunctive writ, a party must show that: (1) the invasion of right sought to be protected is material and
substantial; (2) the right of complainant is clear and unmistakable; and, (3) there is an urgent and paramount necessity for the writ to prevent serious
damage. 9

Unfortunately, petitioners have failed to show that there is an urgent and paramount necessity for the issuance of a Writ of Preliminary Injunction.

The action for damages and injunction was founded on newspaper accounts whereby respondent Puno reportedly announced that he would
"personally replace the incumbent President of RPN-9, plaintiff William M. Esposo, a nominee of SMAC to the position." 10 However, a perusal of the
newspaper accounts attached to the petition as Annexes "D" and "E" shows that respondent Puno was merely named as Chairman and Acting
President of the RPN-9 Task Force which is totally distinct and separate from the position of President of RPN-9. 11 In fact, petitioner Esposo remains
to this date the President of RPN-9. He was never replaced, hence, there was then no basis for the grant of injunctive relief.

Thus, while the evidence to be submitted during the hearing on the motion for preliminary injunction need not be conclusive or complete, the evidence
needed being only a "sampling" and intended merely to give the court an idea of the justification for the preliminary injunction pending the decision of
the case on the merits, 12 still, said evidence must rest on solid grounds and not on mere hearsay or unfounded fears.

Petitioners further question the new set of guidelines for the management of RPN-9 issued by respondent Board on 22 July 1992. They claim that this
violates the terms of the management contract. Their contention is anchored on the provision in the Agreement which limits the power of respondent
Board to "(f)ormulate, review, modify, amend or supersede corporate policies, guidelines, rules and regulations" only to those which are "not
inconsistent with Executive Order No. 11 or existing agreements." 13

It is the view of petitioners that the management contract entered into by the parties herein is one of the "existing agreements" contemplated by them,
and that since the parties agreed that SMAC shall "take charge of the day to day operations of all aspects of the radio and television business
operations of RPN," 14 the new guidelines issued by respondent Board prevented them from fully exercising the functions which were delegated to
them under the management contract.

The interpretation of petitioners is strained. If the parties intended to limit the power of respondent Board to issue policies and guidelines to those
which are not inconsistent with E.O. No. 11 and "existing agreements," including the instant management agreement, such limitation should have
been specifically provided in the agreement. But no such express limitation was drafted into the contract. Instead, the general phrase "existing
agreements," was used. And rightly so, for the parties intended that respondent Board should honor all existing agreements entered into by SMAC
with other parties in behalf of RPN-9.

Indeed, the scope of management services of petitioner SMAC was, and is, "subject to the policies, guidelines, rules and regulations now and
hereafter promulgated" by respondent Board. The new guidelines of respondent Board received by petitioner Esposo on 22 July 1992 were simply
policies "hereafter promulgated," thus, of legal force and effect. It was not an encroachment on petitioners' prerogative to manage the day to day
operations of RPN-9. After all, Section 1.1 of the Agreement reads

"1.1. Subject to the policies, guidelines, rules and regulations now and hereafter promulgated by the Board of Administrators of RPN, SMAC shall
take charge of the day to day operations of all aspects of the radio and television business operations of RPN and perform the following powers and
functions, subject to the control and supervision of the Board of Administrators of RPN " (emphasis supplied).

A word more. There are actually two (2) cases filed involving the same parties and affecting closely related subject matters, i.e., one in Makati which
is the instant case, and the other, in Quezon City. The Makati case pertains to the complaint for damages and injunction filed by petitioners SMAC and
Esposo wherein they claim that respondent Board is preventing them from exercising the functions delegated to them under the "Agreement." The
case in Quezon City questions the validity of that very "Agreement." Consequently, to avoid varying conclusions, these cases must be consolidated
and jointly tried in Makati where the earlier case was filed, conformably with established procedure.

ACCORDINGLY, the court RESOLVES to DENY DUE COURSE to the Petition for Review on Certiorari. The Writ of Preliminary Injunction heretofore
issued by the Court of Appeals in its Order of 8 September 1992 is made PERMANENT.

Let this case be remanded to the Regional Trial Court of Makati for further proceedings.

Cost against petitioners.

SO ORDERED.

G.R. No. 88384 July 14, 1994

FEDERATION OF LAND REFORM FARMERS OF THE PHILIPPINES and VIC TAGLE, petitioners,
vs.
THE COURT OF APPEALS (FIFTEENTH DIVISION), HON. PATRICIO M. PATAJO, in his capacity as Presiding Judge, Regional Trial Court of Rizal,
Branch 71, and JAIME T. TORRES, respondents.

QUIASON, J.:

This is a petition for review on certiorari of the Decision dated May 16, 1989 of the Court of Appeals in CA-G.R. SP No. 17243. The Decision
dismissed for lack of merit the petition for certiorari questioning the orders of the trial court, which allegedly violated the rule that a temporary
restraining order issued by a court shall have a lifespan of only 20 days.
I

On May 10, 1988, respondent Jaime T. Torres was ordered by then Secretary Fulgencio S. Factoran of the Department of Environment and Natural
Resources (DENR) to vacate a parcel of land located in Boso-Boso, Antipolo, Rizal. He refused to leave the premises, claiming that he had been in
actual possession thereof for more than 30 years. Thus, his case was referred to the Secretary of Justice, who rendered Opinion No. 137, Series of
1988, holding that since private respondent had not shown any proof that the land had been validly transferred to him or that his predecessor-in-
interest, Carmen Garcia, had a title to it, he could be ejected therefrom as a squatter and be prosecuted for unlawful occupation of forest lands under
Section 69 of P.D. No. 705, Revised Forestry Code of the Philippines.

On the strength of said opinion, the DENR formally demanded that private respondent vacate the land. Again, he refused to heed the demand.
Instead, he filed a complaint for injunction before the Regional Trial Court, Antipolo, Rizal to enjoin the DENR from ejecting him, wherein he alleged
that he had a pending application for registration of title of the property (Civil Case No. 1223-A).

In its answer, DENR alleged that private respondent was squatting on a watershed and forest reservation. It further alleged that Proclamation No.
1283, which was issued on June 21, 1974 and which excluded a portion of the watershed and forest reservation in Antipolo, Rizal for townsite
purposes, inadvertently included in the intended townsite the area being claimed by private respondent. It added, however, that the error had been
rectified by Proclamation No. 1637 dated April 18, 1977, which designated certain portions of the municipalities of San Mateo, Antipolo and Montalban
in Rizal as reserved for the Lungsod Silangan Townsite Reservation. The said area was increased to 180,000 hectares by presidential Decree No.
1396 dated June 2, 1978, thereby embracing the areas both claimed by private respondent and petitioner Federation of Land Reform Farmers of the
Philippines (FLRFP). Since the said areas had not been included in PFD LC Map No. 639 as alienable and disposable, they should be protected from
all kinds of entry, occupation and destruction

The DENR also alleged that private respondent had not exhausted all administrative remedies and that the trial court had no jurisdiction to issue a
writ of preliminary injunction as such issuance was proscribed by Section 1 of P.D. No. 605. This decree banned the issuance by courts of preliminary
injunctions in cases involving concessions, licenses and other permits issued by administrative officials or agencies for the exploitation of natural
resources.

On August 8, 1988, the trial court issued an order setting the hearing of the application for a writ of preliminary injunction for August 19, 1988. On
August 10, 1988, the trial court, taking into account the length of time to resolve the application for a writ of preliminary injunction and to prevent the
same from becoming moot and academic, issued an order for the maintenance of the status quo and restrained the defendants from ejecting private
respondent.

On August 23, 1988, upon the agreement of the parties, the trial court ordered that the status quo be maintained and created a committee, composed
of representatives of the court, the DENR and private respondent, to conduct a survey and ocular inspection for the purpose of pinpointing the areas
allegedly titled in private respondent's name, the Marikina Watershed Reservation, the untitled disposable and alienable lands and the areas for
townsite reservation under Proclamation No. 1283.
Before the issuance of said order, petitioner FLRFP, through its president, petitioner Vic Tagle, had filed a motion for intervention on the ground that it
had entered into a Memorandum of Agreement with DENR for the lease of 500 hectares of the Marikina Watershed Reservation. The motion also
averred that the land being claimed by private respondent was inalienable.

After private respondent failed to comment on the motion for intervention, the trial court allowed petitioner FLRFP's intervention and admitted the
answer-in-intervention. However, on November 10, 1988, the trial court, noting that petitioner FLRFP's interest as a lessee was not direct but merely
collateral and that such interest may be protected in a separate proceeding, denied the motion to intervene.

On November 12, 1988, petitioner FLRFP filed a motion to declare without force and effect the restraining order earlier issued by the trial court
arguing that said order had long become functus officio because under Section 5, Rule 58 of the Revised Rules of Court a temporary restraining order
has a lifespan of only 20 days and that by its failure to decide whether to grant the writ of preliminary injunction within said period, the trial court could
no longer grant the said writ.

On November 28, 1988, the trial court set aside its November 10, 1988 Order on the ground that it had been issued "thru inadvertence." The Court,
however, denied petitioner FLRFP's motion to declare the restraining order without force and effect, stating thus:

. . . While it is true that a restraining order is good for twenty days, however, since the parties agreed to maintain the status quo before the incident on
preliminary injunction could be resolved by the Court, the maintenance of status quo is likewise necessary since the Court has still to wait for the
result of the relocation survey and ocular inspection which was directed by the Court in its order dated August 23, 1988 (Rollo, p. 26).

Hence, petitioners filed a petition for certiorari before this Court seeking to annul the Orders of August 23, 1988 and November 28, 1988 (G.R. No.
86259). The petition was referred by this Court to the Court of Appeals as there was no "special and important reason" to justify the Court's taking
cognizance thereof in the first instance.

On May 16, 1989, the Court of Appeals dismissed the petition for lack of merit. The appellate court underscored the fact that it was upon the
agreement of the parties that the status quo was maintained.

II

Aggrieved by said decision, petitioners filed the instant petition raising as the main issue the question whether the trial court could extend the
temporary restraining order beyond the 20-day period.

III

The "20-day Rule" is found in Section 5, Rule 58 of the Revised Rules of Court, which provides:
Preliminary injunction not granted without notice; issuance of restraining order. No preliminary injunction shall be granted without notice to the
defendant. If it shall appear from the facts shown by affidavits or by the verified complaint that great or irreparable injury would result to the applicant
before the matter can be heard on notice, the judge to whom the application for preliminary injunction was made, may issue a restraining order to be
effective only for a period of twenty days from date of its issuance. Within the said twenty-day period, the judge must cause an order to be served on
the defendant, requiring him to show cause, at a specified time and place, why the injunction should not be granted, and determine within the same
period whether or not the preliminary injunction shall be granted, and shall accordingly issue the corresponding order. In the event that the application
for preliminary injunction is denied, the restraining order is deemed automatically vacated.

Nothing herein contained shall be construed to impair, affect or modify in any way any rights granted by, or rules pertaining to injunctions contained in,
existing agrarian, labor or social legislation.

The August 8, 1988 Order explained:

In the instant case, plaintiff seeks for the issuance of Preliminary Injunction with prayer for a restraining order to restrain defendants, their agents,
representatives, employees or any person or persons acting in their behalf to eject the plaintiff; to demolish the several houses constructed thereon
and the removal of the fences which kept the cattle and carabaos in the area.

It appearing from the facts shown by the verified complaint that great irreparable injury would resort (sic) to the plaintiff before the matter can be heard
on notice, let the said application for preliminary injunction be set for hearing on August 19, 1988 at 8:30 o'clock (sic) in the morning, at which time
and date, defendants are directed to appear in Court to show cause if any why the injunction should not be granted.

To ensure receipt of a copy of this Order, the Process Server, Isaias Leyva, is directed to serve the same personally to the defendants. Meanwhile, let
summons and copy of the complaint be likewise served to the defendants (Rollo, p. 21, Emphasis supplied).

Apparently, because this Order does not clearly show what acts were being restrained, the trial court issued the August 10, 1988 Order as a
supplement. Thus, the said Order states in pertinent part:

. . . . Considering that it will take time before the incident on the prayer for injunction could be resolved by the Court and in order not to make the
incident moot and academic, let a status quo be ordered, and to restrain the defendants, their agents, representatives, employees or any person or
persons acting in their behalf to eject the plaintiff, to demolish the several houses constructed thereon and the removal of the fences which kept the
cattle and the carabaos (Rollo, p. 22).

Counted from August 8, 1988, the temporary restraining order automatically expired on August 28, 1988, the end of the twentieth day from its
issuance (Johannesburg Packaging Corporation v. Court of Appeals, 216 SCRA 439 [1992]). Thus, when the trial court issued the Order of August 23,
1988 directing the maintenance of the status quo upon agreement of the parties, the temporary restraining order was still in full force and effect.
Before the intervention of petitioner FLRFP was allowed, the original parties were private respondent and DENR. Be it noted that the intervention was
first disallowed on the ground that the interest of petitioner FLRFP as a lessee from DENR of a portion of the land in dispute was merely collateral.
That the intervention was eventually allowed on reconsideration did not alter the fact that the interest of petitioner FLRFP is collateral.

The Memorandum of Agreement between petitioner FLRFP and DENR, as well as FLRFP's tree-planting activity, may only be implemented in the
event that private respondent should fail to obtain the writ of preliminary injunction for only then may DENR eject private respondent. Under the
circumstances, therefore, petitioner FLRFP's interest in Civil Case No. 1223-A is not merely contingent and expectant but also inchoate and
subordinate to that of DENR's. It is not actual, direct and immediate. In Pardo v. Veridiano II, 204 SCRA 654 (1991), we held that sublessees cannot
invoke any right superior to that of their sublessor, as they do not have a clear and positive right to the protection of the ancillary relief of preliminary
injunction against a third party (See also Sipin v. CFI of Manila, 74 Phil. 649 [1944]). By the same token, a lessee cannot have a right superior to that
of his lessor over the premises in a dispute between the lessor and a third party regarding the ownership or possession of the said premises.

Ordinarily, the efficacy of a temporary restraining order is non-extendible and the courts have no discretion to extend the same considering the
mandatory tenor of the Rule.

However, there is no reason to prevent a court from extending the 20-day period when the parties themselves ask for such extension or for the
maintenance of the status quo.

The questioned Order of August 23, 1988 was necessary for an orderly resolution of the application for a writ of preliminary injunction. It states:

Upon agreement of parties, the status quo is hereby maintained. As further agreed by the parties in connection with the verification, relocation or
ocular inspection the Court hereby appoints a Committee which is composed of the Court Interpreter and Legal Researcher representing the Court,
Geodetic Engineer Romulo Unciano representing the defendants and Junco Surveying Office representing the plaintiffs and the parties are directed to
be present in the premises starting August 29, 1988 at 1:00 o'clock (sic) in the afternoon and every afternoon until it is finished.

Said Survey and ocular inspection is for the purpose of pinpointing the area allegedly titled in the name of Plaintiff Jaime Torres, the area of Marikina
Watershed Reservation, the disposable and alienable area not yet titled in favor of any other person and the area for the townsite reservation
pursuant to Proclamation No. 1283 now being claimed by the Federation of Land Reform Farmers and earmarked by the government for them (Rollo,
p. 23, Emphasis supplied).

Clearly then, this Order was issued to maintain the status quo while the committee ascertained facts necessary in resolving whether or not the writ of
preliminary injunction should be issued. By issuing said Order, the trial court should be deemed as merely exercising its inherent power under Section
5 (b), Rule 135 of the Revised Rules of Court "to enforce order in proceedings before it" in the absence of any showing that it has gravely abused its
discretion in so doing (Johannesburg Packaging Corporation v. Court of Appeals, supra).
The resolution of the application for writ of preliminary injunction in Civil Case No. 1223-A has not been rendered moot and academic by the issuance
of a preliminary injunction by the same court in Civil Case No. 1300-A. Civil Case No. 1300-A was filed by Jaime Torres and Myrna M. Torres for the
cancellation of the Memorandum of Agreement between the Bureau of Forest Development (BFD), now the Forest Management Bureau (FMB) and
petitioner FLRFP, and for quieting of title with restraining order and preliminary injunction. The causes of action in the two cases being distinct from
each other, the issuance of the preliminary injunction in Civil Case No. 1300-A did not necessarily mean that the enforcement of the ejectment order
sought to be enjoined in Civil Case No. 1223-A had also been halted. The court has still to determine the propriety of issuing a writ of preliminary
injunction in the latter case, the proceedings of which had been suspended by the institution of the instant petition. The trial court shall determine in
Civil Case No. 1223-A: (1) the existence of private respondent's alleged right to the property which needed protection by an injunction; and (2) the
particular acts against which the injunction is to be directed as violative of said right (Director of Forest Administration v. Fernandez, 192 SCRA 121,
139 [1990]). However, for an orderly administration of justice, the two cases should be consolidated.

WHEREFORE, the instant petition for review on certiorari is DENIED and the trial court is DIRECTED to consolidate Civil Case Nos. 1223-A and
1300-A and to proceed with dispatch in resolving them.

SO ORDERED.

[A.C. No. 3180. June 29, 1988.]

RICARDO L. PARAS, Complainant, v. JUDGE REYNALDO ROURA, REGIONAL TRIAL COURT, BRANCH 55, MACABEBE, PAMPANGA, ATTY.
FRUMENCIO C. PULGAR, and MR. DIOSDADO CARREON, DEPUTY SHERIFF, REGIONAL TRIAL COURT, BRANCH 55, MACABEBE,
PAMPANGA, Respondents.

Bautista, Picazo, Cruz, Buyco & Tan for petitioner.

RESOLUTION

FELICIANO, J.:

This is an administrative case against: (1) Judge Reynaldo Roura, Regional Trial Court, Branch 55, Macabebe, Pampanga; (2) Atty. Frumencio C.
Pulgar, Makati, Manila and (3) Mr. Diosdado Carreon, Deputy Sheriff, Regional Trial Court, Branch 55, Macabebe, Pampanga - for disregarding and
violating a Resolution of the Court of Appeals dated 3 March 1987 issued in CA-G.R. No. 11443 entitled "Philippine Rabbit Bus Lines, Inc. v. Hon.
Reynaldo V. Roura, etc. Et. Al." The complainant is Mr. Ricardo L. Paras, who apparently filed this Complaint in his capacity as General Manager of
Philippine Rabbit Bus Lines, Inc. ("Philippine Rabbit")
This administrative case arose from the following undisputed facts.

On 8 August 1986, respondent Judge Roura rendered a Decision finding Oscar G. Tiglao, former driver of the Philippine Rabbit, guilty of the crime of
damage to property with multiple serious physical injuries through reckless imprudence. This Decision awarded complainant Rosanna Del Rosario the
following sums: P74,861.82 for actual damages: P54,000.00 for lost income; and P150,000.00 for moral damages. The Decision became final and
executory and a Writ of Execution was issued against Oscar G. Tiglao.

Because the Writ of Execution was returned unsatisfied, respondent Judge issued an Order dated 5 December 1986 directing issuance of a
Subsidiary Writ of Execution against the employer of Oscar G. Tiglao, that is, the Philippine Rabbit. Upon receipt of this Order, Philippine Rabbit filed
a Notice of Appeal which was denied by the respondent Judge in an Order dated 14 January 1987. Meantime, on 6 December 1986, a Subsidiary
Writ of Execution was issued to respondent Deputy Sheriff Carreon. Two months later, on 6 February 1987 respondent Sheriff Carreon levied upon an
Isuzu bus of Philippine Rabbit, with body No. 239. Respondent Sheriff Carreon issued a Notice of Sale of Philippine Rabbit Bus No. 239 and
scheduled the public auction sale thereof on 6 March 1987.

Philippine Rabbits Motion for Reconsideration of the 5 December 1986 Order of respondent Judge was denied in another order dated 27 February
1987.

On 2 March 1987, Philippine Rabbit went on a Petition for Certiorari and Prohibition, with prayer for a preliminary mandatory injunction, before the
Court of Appeals, seeking to enjoin the implementation of the Subsidiary Writ of Execution issued on 6 December 1986. Philippine Rabbit impleaded
respondents Judge Roura, Deputy Sheriff Carreon, and complainant Rosanna del Rosario "represented [therein] by Atty. Frumencio N. Pulgar."cralaw
virtua1aw library

On 3 March 1987, the Court of Appeals issued a Resolution, the relevant part of which read as follows:jgc:chanrobles.com.ph

"In the meantime, in order that the issues raised in this petition may not be considered moot and academic, let a temporary restraining order be
issued enjoining the herein respondents or any person or persons acting for and on their behalf from implementing the questioned Subsidiary Writ of
Execution dated December 6, 1986 and from proceeding with the scheduled Sheriff Sale to be held on March 6, 1987 at 9:30 A.M. until further Order
(sic) from this court.chanrobles.com.ph : virtual law library

SO ORDERED."cralaw virtua1aw library

Pursuant to the above Resolution, a Temporary Restraining Order addressed to all three (3) respondents herein was issued by the Court of Appeals
on the same date.

By Letter dated 30 March 1987, respondent Pulgar, acting as counsel for Rosanna del Rosario, reminded Deputy Sheriff Carreon that the Temporary
Restraining Order, dated 3 March 1987, issued by the Court of Appeals had expired on 24 March 1987. Respondent Pulgar cited B.P. 224 as well as
Dionisio v. Court of First Instance, South Cotabato, Branch II, 124 SCRA 222 (1983) and Ubarra v. Tecson, 134 SCRA 4 (1985) and requested the
Deputy Sheriff to proceed with the sale of Philippine Rabbit Bus No. 239 on 10 April 1987. Acting on this request, respondent Deputy Sheriff Carreon
issued a Sheriffs Notice of Sale on 7 April 1987 setting the date of the public auction sale of Bus Nos. 239 on 14 April 1987.

Philippine Rabbit reacted by filing, on 13 April 1987, with the Court of Appeals an Urgent Motion seeking the extension of the lifetime of the Temporary
Restraining Order on the same date and by filing with the respondent Judge an "Urgent Ex-Parte Motion to Hold in Abeyance the scheduled sale of
PRBL, Inc. property."cralaw virtua1aw library

In his Order dated 14 April 1987, respondent Judge denied Philippine Rabbits Ex-Parte Motion for having become moot and academic, the auction
sale of Philippine Rabbit Bus No. 239 having taken place as scheduled and Rosanna del Rosario, being the highest bidder, having already bought
Bus No. 239 for the amount of P250,000.00.

By Resolution dated 8 May 1987, the Court of Appeals, among other things, granted Philippine Rabbits application for a preliminary injunction, the
effectivity of which was conditioned upon Philippine Rabbits filing a bond covering the award of damages by the trial court. Upon subsequent motion
of Philippine Rabbit, the Court of Appeals by still another Resolution dated 30 June 1987, resolved to annul the 14 April 1987 auction sale conducted
by respondent Deputy Sheriff Carreon, as violative of its Resolutions dated 3 March 1987 and 8 May 1987. The Court of Appeals ordered respondent
Judge to release Bus No. 239 to Philippine Rabbit, the latter having posted the required bond.

In this administrative case, complainant contends that respondents Judge Roura, Deputy Sheriff Carreon and Atty. Pulgar are administratively liable
for implementing the Subsidiary Writ of Execution notwithstanding the presence of the Temporary Restraining Order of 3 March 1987 issued by the
Court of Appeals restraining the respondents from implementing that Subsidiary Writ of Execution "until further order (sic) from [the Court of Appeals]."
It appears to be complainants theory that the phrase "until further order from [the Court of Appeals]" had the effect of restraining respondents from
implementing the Subsidiary Writ indefinitely until the restraining order is lifted by the issuing court.

This administrative complaint has no legal basis.

Section 8 of the Interim Rules and Guidelines embodied in the en banc Resolution of the Supreme Court dated 11 January 1983, which section in
effect reproduces Section 5, Rule 58 of the Rules of Court, as amended by B.P. Blg. 224 dated 16 April 1982, set out a general rule concerning the
duration of effectivity of restraining orders issued by "all inferior courts" in the following terms:jgc:chanrobles.com.ph

"Section 8. Preliminary injunction not granted without notice; issuance of restraining order. No preliminary injunction shall be granted without
notice to the defendant. If it shall appear from the facts shown by affidavits or by the verified complaint that a great or irreparable injury would result to
the applicant before the matter can be heard on notice, the judge to whom the application for preliminary injunction was made, may issue a
restraining order to be effective only for a period of twenty-days from date of its issuance. Within said twenty day period, the court must cause an
order to be served on the defendant, requiring him to show cause, at a specified time and place, why the injunction should not be granted, and shall
accordingly issue the corresponding order. In the event that the application for preliminary injunction is denied, the restraining order is deemed
automatically vacated." (Italics supplied)
In Celso Defalobos v. Hon. Gregorio U. Aquilizan, etc., Et Al., 1 this Court dealt with the effect of lapse of the 20-day period upon restraining orders.
There, in ordering the release on habeas corpus of petitioner who had been imprisoned for contempt of court for disregarding a temporary restraining
order issued by the respondent court, the Supreme Court said:jgc:chanrobles.com.ph

"At the outset, the extension by the respondent judge of the restraining order issued on March 23, 1983 was already void for being violative of Batas
Pambansa Blg. 224. It is well-settled that the life span of a temporary restraining order automatically expires on the 20th day by the sheer force of law
and no judicial declaration to that effect is necessary. (See Ortigas & Company Limited Partnership v. Hon. Vivencio M. Ruiz Et. Al. G.R. No. 33952,
March 9, 1987). Therefore, as correctly contended by the Solicitor-General, there was no effective restraining order which the petitioner could have
disobeyed. . . . ." 2

More recently, on 12 April 1988, in Delbros Hotel Corporation v. the Intermediate Appellate Court etc. Et. Al. G.R. No. 72566, the Supreme Court in a
ten (10) to four (4) decision (with one abstention) held that the abovequoted Section 8 of the Interim Rules and Guidelines is applicable to temporary
restraining orders issued by the Court of Appeals. The majority, speaking through Mr. Justice Fernan, said:jgc:chanrobles.com.ph

"The applicability of the above-quoted provision to the then Intermediate Appellate Court now the Court of Appeals, can hardly be doubted. The
Interim Rules and Guidelines were promulgated to implement the Judiciary Reorganization Act of 1981 (B.P. Blg. 129) which included the
Intermediate Appellate Court among the Courts reorganized thereunder. This is emphasized in the preamble of the Interim Rules which states that the
same shall apply to all inferior courts according to the Constitution. The term inferior courts as used therein refers to all courts except the Supreme
Court, the Sandiganbayan and the Court of Tax Appeals. Thus, paragraphs 14 and 15 of the Interim Rules expressedly provide for Procedure in the
Intermediate Appellate Court.

Indeed, if paragraph 8 of the Interim Rules were not intended to apply to temporary restraining orders issued by the respondent Court, there would
have been absolutely no reason for the inclusion of said paragraph in the Interim Rules. The limited life-span of temporary restraining orders issued
by the regional trial courts and municipal trial courts is already provided for in B.P. Blg. 224. It was precisely to include the Intermediate Appellate
Court within the same limitation as to the effectivity of its temporary restraining orders that B.P. Blg. 224 was incorporated in the Interim Rules, with
the significant change of the word judge to court, so as to make it clear and unequivocal that the temporary restraining orders contemplated therein
are those issued not only by trial judges but also by justices of the appellate court.chanrobles virtualawlibrary chanrobles.com:chanrobles.com.ph

Private respondents argue that it is impractical to apply paragraph 8 of the Interim Rules to the respondent court because the latters processes are
enforceable throughout the country and there could be instances when the twenty-day period of the effectivity of a temporary restraining order would
lapse before it is served on the parties concerned. This allegation appears to be more illusory and imaginary than real. Private respondents have not
cited any single, actual instance when such eventuality had occurred. Its possibility is deemed remote and unlikely considering the present state of
fast and efficient modes of communication as well as the presumed eagerness of a party-litigant who has secured a temporary restraining order to
have the same immediately served on the parties concerned with the least waste of time."cralaw virtua1aw library
It follows, therefore, that respondent Judge Roura did not violate any legally effective act or order of the Court of Appeals when he dismissed
Philippine Rabbits ex parte Motion to Hold in Abeyance the scheduled sale of PRBL, Inc. property. Similarly, the Temporary Restraining Order of 3
March 1987 of the Court of Appeals had already lapsed when Deputy Sheriff Carreon implemented anew on 14 April 1987 the Subsidiary Writ of
Execution and Atty. Pulgars act of requesting in writing the Deputy Sheriff to proceed with the Notice of Sale upon expiration of the twenty-day period,
was strictly in accordance with law. There was no legal impediment to the acts of Atty. Pulgar and Deputy Sheriff Carreon. Finally, there is nothing in
the record to suggest that the respondents acted otherwise than in entire good faith.chanrobles.com : virtual law library

ACCORDINGLY, Administrative Case No. 3180 is hereby DISMISSED for lack of merit. Costs against complainant.

[G.R. No. 124130. June 29, 1998]

GOVERNOR PABLO P. GARCIA, THE PROVINCE OF CEBU; TOMAS R. OSMEA; MAYOR ALVIN B. GARCIA, THE CITY OF CEBU; ALLAN C.
GAVIOLA, City Administrator; JOSE A. GUISADIO, City Planning and Development Officer; METRO CEBU DEVELOPMENT PROJECT OFFICE;
BASHIR D. RASUMAN, Regional Director, Department of Public Works and Highways (DPWH), Region VII; ROMEO C. ESCANDOR, Regional
Director, National Economic and Development Board (NEDA), Region VII; and LANDBANK OF THE PHILIPPINES, petitioners, vs. HON. JOSE P.
BURGOS in his capacity as presiding judge of the Regional Trial Court, Branch 17, Cebu City; and MALAYAN INTEGRATED INDUSTRIES
CORPORATION, respondents.
DECISION
PANGANIBAN, J.:

Presidential Decree 1818 prohibits courts from issuing an injunction against any infrastructure project, such as the Cebu South Reclamation Project,
in order not to disrupt or hamper the pursuit of essential government projects or frustrate the economic development effort of the nation. This Court
will not tolerate a violation of this prohibition.

Statement of the Case

Petitioners, through Rule 65 of the Rules of Court, assail the validity of three Orders of Judge Jose P. Burgos of the Regional Trial Court of Cebu.[1]
The first assailed Order, dated February 22, 1996, denied herein Petitioner Tomas R. Osmeas Omnibus Motion with Opposition to the Application for
Writ of Preliminary Injunction, which prayed that said application be cancelled or its hearing deferred, and that the temporary restraining order already
issued in favor of herein private respondent be lifted.[2]

The respondent judges previous voluntary inhibition was set aside by the second assailed Order dated March 12, 1996, which reads as follows:

WHEREFORE, premises considered, the motion for reconsideration is granted and accordingly, the order of the Presiding Judge in voluntarily
inhibiting himself from further sitting in the case dated February 26, 1996 is reconsidered and set aside.
Set this case for another hearing on the application for preliminary injunction on March 15, 1996 at 10 oclock in the morning whereby defendants are
ordered to show cause if any they have why the injunction should not be granted.

SO ORDERED.[3]

Meanwhile, the preliminary injunction sought by herein private respondent was granted by respondent judge who, in his third assailed Order dated
March 18, 1996, ruled in this wise:

WHEREFORE, premises considered, and in order to preserve the status quo, upon the filing of an injunction bond with this Court in the amount of
Two Million (P2,000,000.00) Pesos, let a writ of preliminary injunction be issued, hereby enjoining all the defendants, their assigns, agents and
representatives or anyone acting for any or all of them or in their behalf from implementing the memorandum of agreement dated September 11,
1995, attached and marked as Annex V in the original complaint dated January 18, 1996, except the construction of the Cebu South Coastal Road,
and all other agreements/contracts of defendants concerning the Cebu South Reclamation Project tending to deprive plaintiff of its prior contractual
rights in the said Cebu South Reclamation Project until further orders from this Court.

The amount of the required bond shall answer for all damages that the defendants may sustain by reason of the injunction should the Court finally
decide that plaintiff was not entitled thereto.

SO ORDERED.[4]

The Facts

In their pleadings, the parties tried their best to give detailed accounts of the factual antecedents of this case. In fairness to them, the Court hereby
reproduces in toto their respective narrations.

Petitioners Version

A. The Project

1. The Cebu South Reclamation Project (hereinafter referred to as the PROJECT) is a FOUR BILLION PESO (P4,000,000,000.00) project of the
Government of the Republic of the Philippines (hereinafter referred to as the GOVERNMENT), funded out of a loan taken out by the government from
the Government of Japan, through its international financing institution, the Overseas Economic Cooperation Fund (hereinafter referred to as the
OECF).

2. The loan was made possible by virtue of an Exchange of Notes between the Governments of the Republic of the Philippines and Japan, whereby
the latter extended a total loan package of ONE HUNDRED BILLION NINE HUNDRED SIXTY-FOUR MILLION YEN (Y101,964,000,000.00) [sic] to
finance certain specified and listed projects of the former. Among these projects to be financed by the loan is the Cebu South Reclamation Project.
(Refer to Annex E- Petition)

3. The project is an integral part of the Third Phase of the Metro Cebu Development Projects (hereinafter referred to as MCDP III), which has been
favorably endorsed and approved by the President of the Republic of the Philippines, Fidel V. Ramos, as one of the projects of the national
government. (Refer to Annex F- Petition)

4. The project has likewise been approved by the National Economic and Development Board (the NEDA), of which the President is the Chairman, as
an ICC Project, by virtue of NEDA Resolution No. 1, Series of 1995. (Refer to Annex G- Petition)

5. The project is further certified as a project of the Government of the Republic of the Philippines, by the Department of Foreign [Affairs], through its
Secretary, Domingo E. Siazon. (Refer to Annex H- Petition)

6. In due course, loan agreements in implementation of the Exchange of Notes between the two governments were executed between the OECF and
[P]etitioner Land Bank of the Philippines (the LANDBANK). Under these agreements, the City of Cebu was designated as the projects implementing
agency. (Refer to Annex I- Petition)

7. In accordance with the Constitution, the loan package to finance, among others, the Cebu South Reclamation Project, was granted final approval
by the Monetary Board, by virtue of Resolution No. 1260 issued on 07 November 1995. (Refer to Annex J- Petition)

8. The loan arrangements having been entered into, and the funds ready for release to the City of Cebu, the implementing agency of the project, the
City of Cebu, the Department of Public Works and Highways (the DPWH) and the Metro Cebu Development Project Office (the MCDPO) executed,
on 11 September 1995, the Implementing Arrangement for Metro Cebu Development Project Phase III (MCDP III) (Refer to Annex K - Petition), under
which agreement is outlined the procedure for implementation of the project as well as the rights and obligations of the parties thereto.

B. The Suit Filed Below by Private Respondent

9. On 19 January 1996, [P]rivate [R]espondent Malayan Integrated Industries Corporation (hereinafter referred to as MALAYAN), filed a case for
Specific Performance, Declaration of Nullity, Damages and Injunction, with Writ of Preliminary Injunction and Temporary Restraining Order against
herein petitioners, docketed as Civil Case No. CEB-18292, before the Regional Trial Court of Cebu City. (Refer to Annex L - Petition) The case was
raffled to Branch 17 of the said court.

10. Pursuant to Supreme Court Administrative Circular No. 20-95, a summary hearing was conducted by respondent [j]udge to determine the
propriety of issuing the temporary restraining order (TRO) prayed for by [R]espondent Malayan in its complaint.

11. During the summary hearing to determine whether the temporary restraining order (TRO) should issue, defendants questioned the jurisdiction of
the court to issue the same, citing Section 1 of Presidential Decree No. 1818, which provides:
Section 1. No court in the Philippines shall have jurisdiction to issue any restraining order, preliminary injunction, or preliminary mandatory injunction
in any case, dispute,or controversy involving an infrastructure project, or a mining, fishery, forest, or other natural resource development project of the
government, or any public utility operated by the government, including among others public utilities for the transport of the goods or commodities,
stevedoring and arrastre contracts, to prohibit any person or persons, entity or government officials from proceeding with, or continuing the execution
or implementation of any such project, or the operation of such public utility, or pursuing any lawful activity necessary for such execution,
implementation or operation. (Sec. 1, P.D. 1818; emphasis supplied)

12. It was also pointed out to herein respondent [j]udge that the Supreme Court, in Administrative Circular 13-93, pursuant to P.D. 1818, and in
implementation of the policy behind the law, prohibited all judges of all courts from issuing TROs and/or writs of preliminary injunction against the
implementation of government infrastructure projects.

13. It was further manifested that the Supreme Court, observing non-compliance with the above-cited Circular by judges of trial courts was compelled
to reiterate its earlier prohibition, with a warning against further violation, for their strict compliance, under Administrative Circular No. 68-94, issued on
3 November 1994, which states:

There have been reports that despite Circular 13-93, dated March 5, 1993, some courts are still issuing temporary restraining orders and/or
preliminary injunctions even in cases, disputes, or controversies involving government infrastructure projects in violation of Section 1 of P.D. 1818 x x
x

xxxxxxxxx

In order to obviate complaints against the indiscriminate issuance of restraining orders and court injunctions against government public utilities and
infrastructure projects in gross violation of the aforesaid Presidential Decree, the provision of Circular No. 13-93 issued on March 5, 1993 is hereby
reiterated for your strict compliance.

x x x x x x x x x (Supreme Court Administrative Circular No. 68-94; emphasis supplied)

14. In gross violation of the law and the circulars of the Honorable Supreme Court, however, respondent [j]udge issued a temporary restraining order
on 5 February 1996, the dispositive portion of which reads as follows:

The verified complaint being sufficient in form and substance and in order to preserve the status quo, all the defendants and their agents, employees,
workers and all persons acting in their behalf are temporarily restrained from implementing the alleged memorandum of agreement dated September
11, 1995, and any and all such other agreements/contracts entered into by any and all of the defendants, covering the Cebu South Reclamation
Project consisting of 330 hectares more or less (Refer to Annex M - Petition)
15. The hearing on [R]espondent Malayans application for the writ of preliminary injunction was set for 14 February 1996. During the said hearing,
[P]etitioner Tomas R. Osmea filed an Omnibus Motion for: (a) the immediate lifting of the Temporary Restraining Order; (b) the cancellation of the
hearing on the application for the writ of preliminary injunction; and (c) the outright dismissal of the complaint. The Omnibus Motion was subsequently
adopted by the defendants below. (Refer to Annex N - Petition)

16. The thrust of the Omnibus Motion was that the court below had, under P.D. 1818, no jurisdiction and no compelling reason to issue any TRO and/
or writ of preliminary injunction against the implementation of a government infrastructure project. Since it had no jurisdiction to issue such TRO and/
or writ of preliminary injunction, much less does it have the jurisdiction to entertain any application for the injunctive writ.

17. The Omnibus Motion likewise refuted respondent [j]udges arguments in its Order dated 5 February 1996 granting the TRO, wherein he attempted
to remove the case from the ambit of P.D. 1818 thus:

(a) the ruling in Genaro R. Reyes Construction, Inc. v. Court of Appeals, 234 SCRA 116 applies to the case at bar;

(b) plaintiff is not asking for enjoining the infrastructure project x x x [but] the enjoining of the contract to be awarded to another entity;

(c) inclusion of reclamation of submerged lands as being covered under the term infrastructure project [is a] classification [that] has yet to be
determined in the light of existing Presidential Proclamations, Orders and/or Executive Memorandums.

18. Respondent Judge -- apparently to verify whether the project was an infrastructure project of the national government -- required defendants
below, petitioners herein, to show proof that the project had the approval of the President of the Republic of the Philippines.

19. In compliance with the order of respondent [j]udge, petitioners, during the continuation of the hearing on the Omnibus Motion, set on 16 February
1996, presented the documents mentioned above (Refer to Annexes D to J - Petition), proving that the project had the favorable recommendation and
approval, not only of the President, but likewise of the NEDA, and certified as a project of the Government of the Republic of the Philippines by the
Department of Foreign Affairs. Insofar as the loan agreements were concerned, the Exchange of Notes (Annex D) and the resolution of the Monetary
Board (annex J) approving the loan agreement were presented. All requirements for the implementation of a perfected contract are present and
submitted to the court.

20. Following the presentation of the foregoing documents, respondent [j]udge gave the parties five (5) days to submit their respective memoranda on
the Omnibus Motion, after which the incident would be deemed submitted for resolution.

21. On 21 February 1996, the parties filed their respective memoranda. As the memorandum for [R]espondent Malayan contained misstatements of
the facts of the case, petitioner Tomas R. Osmea filed a Reply to Plaintiffs Memorandum at 9:00 oclock in the morning of the following day, 22
February 1996.
22. With unusual dispatch in a time frame of only a few hours, however, and under suspicious circumstances, in the afternoon of the same day, 22
February 1996, respondent [j]udge had issued an Order (Refer to Annex A - Petition), a quite comprehensive five-page resolution denying petitioners
Omnibus Motion, received by petitioners on 23 February 1996.

23. Without having to consider the unusual haste with which the Order was issued -- considering that it was issued the day immediately after the last
day for the filing of the memoranda, and on the day, and just hours after petitioner Osmeas Reply to Plaintiffs Memorandum was filed, the Order dated
22 February 1996 was highly irregular for the most obvious reasons.

24. A cursory review of the Order dated 22 February 1996 would reveal that it has practically decided the case on the merits, on a mere resolution of
an incident in the main case. The Order denying the Omnibus Motion has practically ruled that: (a) [R]espondent Malayan has valid, existing and
enforceable contracts of reclamation approved by the President of the Philippines; (b) petitioners reclamation project did not have the approval of the
President; and (c) petitioners were violating [R]espondent Malayans contracts.

These were precisely the issue[s] in the main case for specific performance.

24.1 It would be relevant to mention that in so ruling, respondent Judge practically considered evidence which were non-existent in favor of
[R]espondent Malayan, and suppressed the evidence presented by petitioners.

25. [I]n view of the actions of respondent [j]udge, [P]etitioner Osmea filed, on 23 February 1996, an Omnibus Motion, praying, among other things, for
the voluntary inhibition of respondent [j]udge on the ground of partiality manifested by the Order of 22 February 1996, which practically decided the
case on the merits in favor of [R]espondent Malayan, in a resolution of a mere incident in the case.

26. In an Order dated 26 February 1996, respondent [j]udge voluntarily inhibited himself. (Refer to Annex O - Petition)

27. Respondent Malayan, however, filed a motion for reconsideration of the Order of voluntary inhibition, to which petitioner Osmea filed an
Opposition.

28. In the meantime, petitioner Osmea had filed a Motion for Reconsideration of the Order dated 22 February 1996 denying the Omnibus Motion, with
the cautionary notice that it was not to be deemed as a waiver of their opposition to the motion for reconsideration filed by [R]espondent Malayan of
respondent [j]udges Order of voluntary inhibition. Instead, the said Motion for Reconsideration with Cautionary Notice was to be heard by the court to
which the case was to be eventually re-raffled, and scheduled for hearing on 22 March 1996.

29. On 12 March 1996, however, respondent [j]udge reversed himself and reconsidered his Order of voluntary inhibition dated 26 February 1996, and
set the hearing on [R]espondent Malayans application for the writ of preliminary injunction for 15 March 1996. (Refer to Annex C - Petition)

30. Since the Motion for Reconsideration with Cautionary Notice was still pending resolution (and the hearing thereon yet to be conducted on 22
March 1996), petitioner filed an Urgent Motion for Resetting of the hearing, considering that the Motion for Reconsideration with Cautionary Notice --
which questioned the courts jurisdiction to entertain the application for the writ of preliminary injunction -- was prejudicial to the hearing set for 15
March 1996, since it would determine whether or not such proceedings should continue or not.

31. During the hearing on 15 March 1996, however, respondent [j]udge denied petitioner Osmeas Urgent Motion for Resetting.

32. Again, with unusual dispatch, on 18 March 1996, respondent [j]udge issued two (2) Orders, one granting the writ of preliminary injunction prayed
for by [R]espondent Malayan (Refer to Annex B - Petition), and another one denying petitioners Motion for Reconsideration with Cautionary Notice --
both issued even before the hearing on the Motion for Reconsideration with Cautionary Notice which was yet scheduled for 22 March 1996.

33. Hence, this petition for certiorari, questioning: (a) the validity of the Orders of respondent [j]udge dated 22 February 1996 claiming it had the
jurisdiction to entertain and to issue a writ of preliminary injunction against petitioners government infrastructure project, and the Order of 18 March
1996, granting the writ of preliminary injunction; and (b) the validity of the Order of respondent [j]udge dated 12 March 1996, reconsidering his earlier
Order of voluntary inhibition, there being no other plain, speedy and adequate remedy in the ordinary course of law.[5]

Private Respondents Version

On May 22, 1967, Proclamation No. 200-A was issued which reserved for national improvement purposes, a certain parcel of land of the [p]ublic
[d]omain situated in the foreshore of the District of San Nicolas, Pardo, Cebu City and Tangkey, Talisay, Cebu. This area was transferred and
relinquished by the President of the Philippines to the Province of Cebu in behalf of the [n]ational [g]overnment, subject to private rights, if any there
be. Copy of said proclamation was attached as Annex 4 to respondents Comment.

On January 11, 1973, Presidential Decree No. 3-A was issued which decreed that the reclamation of land under water, whether foreshore or inland,
throughout the Philippines belong to and are owned by and limited to the [n]ational [g]overnment or to any person authorized by it under a proper
contract.

On October 14, 1977, pursuant to and in accordance with the above-said Proclamation No. 200-A and Sec. 1 of P.D. No. 3-A, the Sangguniang
Panlalawigan of Cebu and the then Cebu Provincial Governor Eduardo R. Gullas granted, awarded and authorized private respondent to undertake
the actual and physical reclamation and development works of the foreshore, submerged and offshore areas of Three Hundred Fifty (350) hectares,
more or less, which is a portion of the approximate area of 5,386,800 square meters or 438.6800 hectares, as described in Proclamation No. 200-A.
Copy of said Award was attached as Annex 5 to the Comment of respondents.

On October 31, 1977, a Contract of Reclamation and Development was entered into, signed and executed by and between the Province of Cebu,
represented by then Governor Eduardo R. Gullas, and private respondent. Copy of said Contract was attached as Annex 6 to the Comment.

The said Contract of Reclamation and Development dated October 31, 1977 between Cebu Province and private respondent was authorized by
Resolution No. 475 dated October 4, 1977 of the Sangguniang Bayan [sic] Panlalawigan of Cebu.
On September 15, 1978, the Sangguniang Panlalawigan of Cebu and then Cebu Governor Eduardo R. Gullas considered and approved the request
of private respondent dated August 25, 1978 that the reclamation area of 350 hectares, more or less be increased from 350 hectares to 625 hectares,
more or less. Copy of said resolution was attached as Annex 7 to respondents Comment.

On October 7, 1978, the Second Supplemental Contract of Reclamation and Development between the Province of Cebu and private respondent was
entered into, signed and execu[t]ed by and between the Province of Cebu and private respondent. Copy of said contract was attached as Annex 8 to
the respondents Comment.

On January 15, 1979, a Contract of Reclamation and Port Development was entered into, executed and signed by and between private respondent
and Amsterdam Ballast Dredging Corporation (BALLAST) in connection with and regarding the reclamation area of 625 hectares of the foreshore,
submerged and offshore areas from Pasil, Cebu City, to Tangke, Talisay, Cebu to Kawit Island and then to Pasil, Cebu City. Copy of said contract was
attached as Annex 9 to respondents Comment.

On February 7, 1979, a Memorandum dated February 7, 1979 addressed to then President Marcos, was submitted by the Province of Cebu,
represented and signed by then Governor Eduardo R. Gullas, and the City of Mandaue, represented and signed by then City Mayor Demetrio M.
Cortes for final consideration and approval. Copy of said memorandum was attached as Annex 10 to respondents Comment.

When the Province of Cebu and the City of Mandaue submitted to the President the Cebu South Reclamation Project for approval per memorandum
dated February 7, 1979, attached as Annex 10 to respondents Comment, it was premised on the following consideration as stated in the first
paragraph of said memo:

In our earnest desire to contribute our share to the program of Your Excellency and of our government on industrialization, industrial dispersal and
regional development in the New Society, the Province of Cebu and the City of Mandaue have authorized, subject to your Excellencys reclamation of
625 and 360 hectares of foreshore and offshore lands in South Cebu from Pasil, Cebu City to Tangke, Talisay, Cebu by virtue of Presidential
Proclamation No. 200-A, promulgated on May 22, 1967 (ANNEX B), which gives the Province of Cebu the authority to administer these areas within
the City of Cebu, and, in Mandaue City, from Subangdaku to the Cabahug Coastways, by virtue of Sec. 94 of Republic Act No. 5519, which vests
ownership and possession of all foreshore lands and submerged lands of the public domain in the City of Mandaue (ANNEX C), respectively, under
contracts of Reclamation and Port Development with Malayan Integrated Industries Corporation, hereto attached as Annexes D and E, which we
believe offer the most advantageous terms for the Province of Cebu, and City of Mandaue and the [n]ational [g]overnment because not a single
centavo will be spent by the government in return for its share in the reclaimed areas and the operation of the international and domestic port facilities
thereof, not to mention the socio-economic impact that the projects will create in the Visayas and Mindanao. (Emphasis ours)

On August 13, 1979, the Cebu South Reclamation Project was presented by the Province of Cebu and Mandaue City, was considered and approved
in principle by then President E. Marcos, as per Presidential Memorandum directive dated August 13, 1979 and a copy thereof is attached as Annex
Q of the petition. Among the salient provisions of said presidential approval are:
a. That within twelve (12) months after the issuance of [p]residential directive authorizing the Project, a detailed and integrated development plan on
land use including technical, economic, marketing and financial feasibility studies be submitted to the President for approval, otherwise, project
approval may be deemed automatically revoked; to enable the PEA to exercise its responsibilities as the representative of the [n]ational [g]overnment
as landowner, the person or entity chosen by the contractor to undertake the detailed feasibility studies shall report directly to the PEA;

xxx

d. That Cebu City and Mandaue City shall enter into contract with Public Estates Authority for the reclamation project pursuant to E.O. 525. The PEA
is authorized to determine the terms and conditions necessary for the implementation of the aforecited conditions including specification of the
sharing scheme and other requirements of government entities on the reclaimed areas. Furthermore, the PEA is authorized to review, modify, and
approve all contracts entered into or arising out of the reclamation project consistent with existing government regulations and national interests
considerations. Finally, consideration of equity requires that option rights of first refusal for a period as may be determined by PEA, shall be granted to
private entities which have made initial investments on the project. (Emphasis ours)

In other words, herein private respondent was granted by said [p]residential directive option rights of first refusal to undertake the project because of
the initial investments it made on the project.

On August 1, 1980, as provided in Presidential Memorandum directive dated August 13, 1979 to submit within twelve (12) months after the issuance
of the said Presidential Memorandum directive the detailed feasibility study for approval and to enable the PEA to exercise its responsibilities as the
representative of the [n]ational [g]overnment as land owner, the person or entity chosen by the contractor to undertake the detailed feasibility studies
shall report directly to the PEA, the Province of Cebu, the City of Mandaue, the City of Lapulapu and the Municipality of Cordova submitted said
feasibility study to the President for approval, copy of which was attached as Annex 12 to respondents Comment.

The Province of Cebu and private respondent entered into, signed and executed a Confirmatory Agreement dated November 1979, by virtue of which
the services of MALAYAN was contracted to undertake the preparation and making of the said Detailed and Integrated Development Plan on Land
use, etc., of the Cebu South Reclamation Project at no cost to the Province of Cebu. Copy of said Confirmatory Agreement was attached as Annex 13
to the respondents Comment.

The said Confirmatory Agreement acknowledged that it was the private respondent which made initial investments in the Cebu South Reclamation
Project and the entity granted the right of first refusal or option rights to undertake the project as follows:

WHEREAS, the Memorandum dated 13 August 1979 embodied the proviso that option rights of first refusal shall be granted to private entities who
have made initial investments in the reclamation projects;

WHEREAS, the MALAYAN INTEGRATED INDUSTRIES CORPORATION, which had made initial investments in the projects and had, as a matter of
fact, been previously bound by a contract with the PROVINCE OF CEBU to undertake the reclamation project in South Cebu evidenced by Document
No. 145; Page No. 30; Book No. VI; Series of 1977 before Notary Public Justino K. Hermosisima, by these presents have offered to undertake and
prepare, for and in behalf of the PROVINCE OF CEBU, the detailed feasibility study for the reclamation of the areas in the Municipalities of Talisay
and Cordova, Province of Cebu, in conjunction and coordination with the Cebu South and the Mandaue Reclamation Projects, and which offer had
been accepted by the PROVINCE OF CEBU as the consequence of the Reclamation contract by and between the two entities similarly reconfirmed
in a communication dated October 4, 1979;

On January 4, 1980, a Confirmatory Agreement was entered into, executed and signed by and between the City of Cebu, and private respondent in
which they confirmed, affirmed, approved and agreed that the Cebu South Reclamation Project dated January 15, 1979 between MALAYAN and
BALLAST which was approved by the Province of Cebu and City of Mandaue and were approved in principle by then President Ferdinand E. Marcos,
that its corresponding plan on land use, including technical, economic, marketing and financial feasibility studies of the Project be undertaken by the
aforesaid Local Goverment units concerned and to be submitted to the PEA and the President of the Philippines within twelve (12) months after the
issuance of the Presidential Memorandum directive dated August 13, 1979, and in compliance with the above-said requirements, the City of Cebu
hired, awarded, engaged and contracted the services of private respondent to undertake and prepare in behalf of the City of Cebu the detailed and
integrated development plan on land use, etc., of the Project covering the reclamation area of 400 to 625 hectares, more or less, without any single
expense, funding and at no cost whatsoever to the City of Cebu. Copy of said Confirmatory Agreemen[t] was attached as Annex 14 to the
respondents Comment.

Again, the City of Cebu recognized the option right or right of first refusal of private respondent to undertake the project as the entity [which] had
made initial investments in the project as follows:

WHEREAS, the President also directed that option rights of first refusal shall be granted to private entities which have made initial investments in the
reclamation projects;

WHEREAS, the MALAYAN INTEGRATED INDUSTRIES CORPORATION, which has made initial investments on the project, and in fact, was
previously contracted by the Province of Cebu by virtue of Proclamation No 200-A, P.D. No. 3-A and Executive Order No. 525 to undertake the
reclamation project for and in the City of Cebu and the Municipality of Talisay, Province of Cebu, and prior to which MALAYAN INTEGRATED had
already invested substantial sums of money, time and effort in preparatory activities on said reclamation projects, by these presents have offered to
undertake the detailed and integrated development plan on land use, [including] feasibility studies as required by the President, and the CITY OF
CEBU has accepted the said offer of MALAYAN INTEGRATED INDUSTRIES CORPORATION;

On January 24, 1980, the Public Estates Authority (PEA) and the City of Cebu entered into a Memorandum of Understanding which recognized the
pre-emptive right of plaintiff to undertake the project as recognized in the Presidential directive dated August 13, 1979.

6. Pursuant to the Presidential Directive dated August 13, 1979, to accord pre-emptive rights for the actual prosecution of the reclamation project to
private entities which have made initial investments on the project:

Copy of said Memorandum of Understanding was attached as Annex 15 to respondents Comment.


On August 1, 1980, on the basis of the Confirmatory Agreement dated November 1979 between the Province of Cebu and private respondent and the
Confirmatory Agreement dated January 4, 1980 between the City of Cebu and the City of Cebu have awarded, hired, engaged and contracted the
services of private respondent to undertake and prepare, in behalf of the Province of Cebu and the City of Cebu without any single expense, funding
and at no cost to said Province of Cebu and City of Cebu, the detailed and integrated development plan on land use, etc., of the Cebu South
Reclamation Project, the Province of Cebu thru then Eduardo R. Gullas, the City of Cebu thru then City Mayor Florentino S. S. Solon, the city of
Mandaue thru then City Mayor Demetrio M. Cortes, the City of Lapulapu thru then City Mayor Maximo V. Patalingjug, Jr., and the Municipality of
Cordova, Cebu thru Municipal Mayor Celedonio B. Sitoy, filed and submitted on August 1, 1980 the corresponding Detailed and Integrated
Development Plan on Land use, including technical, economic, marketing and financial feasibility studies of the Cebu South Reclamation Project for
the final consideration and approval by the Public Estates Authority and the Office of the President and the President of the Philippines. Copy of said
document was attached as Annex 12 to respondents Comment.

On August 12, 1980, private respondent, for and in behalf of the Province of Cebu, City of Cebu, City of Mandaue, City of Lapulapu, Municipality of
Talisay, Municipality of Cordova, in relation to the above-said Memorandum dated August 1, 1980 as required, also filed and submitted to the Office of
the President and the President of the Philippines thru the PEA the additional copies of the said complete Project Studies and the Detailed and
Integrated Development Plan on Land Use, etc., of the Metro Cebu Reclamation and Development Project which includes the Cebu South
Reclamation Project. Copy of said document was attached as Annex 16 to respondents Comment.

On September 29, 1980, on the basis of the aforesaid Memorandum dated August 1, 1980 the PEA, in its MEMO FOR THE PRESIDENT dated
September 29, 1980 indorsed and recommended to the President the final consideration and approval of the Detailed and Integrated Development
Plan on Land Use of the Cebu South Reclamation Project. Copy of said document was hereto attached as Annex 17 to the respondents Comment.

Since Septembe[r] 19, 1980, when the PEA approved the Metro Cebu Reclamation and Development Project covering the reclamation area of 4,910
hectares, which include the Cebu South Reclamation Project covering 625 hectares, and its corresponding detailed and integrated development plan
on land use, etc., as per MEMO FOR THE PRESIDENT dated September 29, 1980, the President of the Philippines has not yet approved the detailed
and integrated development plan on land use, including technical, economic, marketing and financial feasibility studies of the said project.

On December 29, 1995, the Office of the President thru President Staff Director Vicente A. Galang, issued 1st Indorsement to the effect that the
detailed and integrated development plan on land use of the project is still pending final consideration and approval by the [O]ffice of the President
until now or at the present date. Copy of said resolution was attached as Annex 18 to the respondents Comment.

On January 12, 1996, the Office of the President thru Presidential Staff Director Vicente A. Galang, issued an official certification that the Cebu South
Reclamation Proj[e]ct covering 360 hectares, has already long been considered and approved by the Office of the President and the President of the
Philippines as per Presidential Memorandum directive dated August 13, 1979 but its corresponding detailed and integrated development plan on land
use, including technical, economic, marketing and financial feasibility studies of the project which was filed and submitted by the Province of Cebu,
City of Cebu, City of Mandaue, City of Lapulapu and Municipality of Cordova with the PEA and the Office of the President on August 1, 1980 per
Memorandum dated August 1, 1980 and approved by the PEA in favor of the above-mentioned Local Government units concerned per MEMO FOR
THE PRESIDENT dated September 29, 1980, is still pending final consideration and approval by the Office of the President. Copy of said certification
was attached as Annex 19 to respondents Comment.

When the Province of Cebu and the City of Mandaue submitted to the President the Cebu South Reclamation Project for approval per memorandum
dated February 7, 1979, it was premised on the following consideration as stated in the first paragraph of said memo:

In our earnest desire to contribute our share to the program of Your Excellency and of our government on industrialization, industrial dispersal and
regional development in the New Society, the Province of Cebu and the City of Mandaue have authorized, subject to your Excellencys approval,
pursuant to PD 3-A (ANNEX A), the reclamation of 625 and 360 hectares of foreshore and offshore lands in South Cebu from Pasil, Cebu City to
Tangke, Talisay, Cebu by virtue of Presidential Proclamation No. 200-A, promulgated on May 22, 1967 (ANNEX B), which gives the province of Cebu
the authority to administer these areas within the City of Cebu, and, in Mandaue City, from Subangdaku to the Cabahug Coastways, by virtue of Sec.
94 of Republic Act No. 5519, which vests ownership and possession of all foreshore lands and submerged lands of the public domain in the City of
Mandaue (ANNEX C), respectively, under contracts of Reclamation and Port Development with Malayan Integrated Industries Corporation, hereto
attached as Annexes D and E, which we believe offer the most advantageous terms for the Province of Cebu, and City of Mandaue and the National
Government because not a single centavo will be spent by the government in return for its share in the reclaimed areas and the operation of the
international and domestic port facilities thereof, not to mention the socio-economic impact that the projects will create in the Visayas and Mindanao.
(Emphasis ours)

This was so because under Executive Order No. 525 dated February 14, 1979, all reclamation projects are subject to approval by the President. After
the reclamation project is approved by the President, the project shall be undertaken by the Public Estates Authority (PEA) or through a proper
contract executed by the PEA with any person or entity. This is so provided in Section 1 of said Executive Order which reads as follows:

SECTION 1 - The Public Estates Authority (PEA) shall be primarily responsible for integrating, directing, and coordinating all reclamation projects for
and on behalf of the National Government. All reclamation projects shall be approved by the President upon recommendation of the PEA, and shall
be undertaken by the PEA or through a proper contract executed by it with any person or entity; provided, that, reclamation projects of any National
Government agency or entity authorized under its Charter shall be undertaken in consultation with the PEA upon approval of the President.

In other words, the President does not approve reclamation contracts but approves only the reclamation project.

The President approved in principle the Cebu South Reclamation Project on August 13, 1979 as shown by Exhibit A-13. The approval was in principle
only pending submission and presidential approval of a detailed and integrated feasibility study on the land use of said project. What is unique in said
presidential approval was that it recognized the reclamation contracts earlier entered into by plaintiff with the Province of Cebu and the City of
Mandaue by giving plaintiff option rights of first refusal to undertake the project, when said presidential memorandum stated:

xxxx
Finally, considerations of equity requires that option rights of first refusal for a period as may be determined by PEA, shall be granted to private
entities which have made initial investments on the project.

The presidential memorandum also directed the PEA, City of Cebu and the City of Mandaue to enter into contracts with the PEA for the Cebu South
Reclamation Project and the Mandaue Reclamation project, respectively.

Conformably, with said presidential directive, the PEA and the City of Cebu entered into a memorandum of understanding with respect to the Cebu
South Reclamation project wherein paragraph 6 of its Section II, it [sic] provided that the City of Cebu was obliged to accord pre-emptive rights for the
actual prosecution of the reclamation project to private entities which have made initial investments on the project, which entity is no other than herein
plaintiff. This option of first refusal or pre-emptive rights of plaintiff to undertake the actual prosecution of the project has never been cancelled, or
rescinded.

The herein private respondent filed this case for injunction when the respondents issued an invitation to bidders, Exhibit A-21 particularly section 3.2
thereof which provides for the conduct of tenders and subsequent evaluation of bids for the Cebu South Reclamation Project. In other words, the
petitioners were going to entertain bids from private contractors for the undertaking of the Cebu South Reclamation Project in violation of the
preemptive rights or right of first refusal of private respondent to prosecute the project.[6]

In a Resolution dated March 27, 1997, the Court granted petitioners prayer and issued a temporary restraining order enjoining the trial judge from
enforcing the assailed orders and from conducting further proceedings in this case.[7]

The Issues

In their Memorandum dated July 30, 1997, petitioners summarized the issues as follows:[8]

Whether or not respondent judge gravely abused his discretion in issuing the orders dated 22 February 1996 and 18 March 1996, in contumacious
violation of Presidential Decree No. 1818, and Supreme Court Administrative Circulars Nos. 13-93 and 68-94.

II

Whether or not, in grave abuse of discretion, the order dated 22 February 1996 and the order granting the writ of preliminary injunction had the effect
of practically deciding the case on the merits.

III
Whether or not respondent judge acted with grave abuse of discretion amounting to lack or excess of jurisdiction in granting the writ of preliminary
injunction, as the applicant, [R]espondent Malayan, had no clear and unmistakable right to be protected by the injunctive writ.

IV

Respondent judge gravely abused his discretion in not dismissing the complaint outright, the alleged cause of action being admittedly premature, and
a mere expectancy, or having otherwise been barred by prescription and/or laches.

Whether respondent judge gravely abused his discretion in issuing the order dated 12 March 1996, reconsidering his earlier order of voluntary
inhibition, there being strong grounds -- as respondent judge himself admits -- for his voluntary inhibition.

VI

Whether or not, as claimed by private respondent, the omnibus motion to dismiss filed below by petitioners was a mere scrap of paper.

VII

Whether or not, as claimed by private respondent, a motion for reconsideration was necessary before the filing of the present petition.

The first, second, third and fourth issues are closely related and will be discussed together.

The Courts Ruling

The petition is meritorious.

First Issue:
Preliminary Injunction Void and Improper

Section 1 of PD 1818 distinctly provides that [n]o court in the Philippines shall have jurisdiction to issue any restraining order, preliminary injunction, or
preliminary mandatory injunction in any case, dispute, or controversy involving an infrastructure project x x x of the government, x x x to prohibit any
person or persons, entity or government official from proceeding with, or continuing the execution or implementation of any such project, x x x or
pursuing any lawful activity necessary for such execution, implementation or operation.[9] At the risk of being repetitious, we stress that the foregoing
statutory provision expressly deprives courts of jurisdiction to issue injunctive writs against the implementation or execution of an infrastructure
project.[10]
In the case at bar, the assailed March 18, 1996 Order of respondent judge specifically enjoined petitioners from implementing their Memorandum of
Agreement dated September 11, 1995[11] (except as to the Cebu South Coastal Road), which pertains to the implementation of the Metro Cebu
Development Project, Phase III, a major component of which is the Cebu South Reclamation Project. The petitioners were also enjoined from acting
on or implementing all other contracts involving the said reclamation project. The issuance of said writ of preliminary injunction evidently constitutes a
blatant violation of PD 1818. The assailed Order is therefore void for being issued with grave abuse of discretion and without jurisdiction. On this
ground alone, the Court may already grant the petition. Nonetheless, we will proceed to discuss the other issues raised.

Reclamation Is an
Infrastructure Project

Private respondent claims that the Cebu South Reclamation Project is not an infrastructure project.[12] This is erroneous and misleading. In Malayan
Integrated Industries Corporation vs. Court of Appeals,[13] the Court unequivocally held that the reclamation of foreshore and submerged lands along
the coast of Mandaue City up to the Cebu City boundary for the purpose of developing the reclaimed area into an industrial and trading center with a
modern harbor and port facilities for both domestic and international commerce is an infrastructure project as contemplated under PD 1818.[14]
Private respondent should know this not only because everyone is presumed to know the law, but also because it was a principal party in that case.

Cebu South Reclamation Project


Approved by the President

Private respondent further contends that, in spite of the prohibition in PD 1818, the questioned injunctive writ may still validly issue against petitioners,
because the latter have not sufficiently shown that (1) [t]he City of Cebu has a contract with the Public Estates Authority (PEA) to undertake the Cebu
South Reclamation Project under P.D. 3-A, (2) [t]he PEA has favorably endorsed the Cebu South Reclamation Project for approval by the President
pursuant to Executive Order No. 525, and (3) [t]he President has approved the Cebu South Reclamation Project pursuant to P.D. 525.[15] The Court
is not persuaded.

In the August 13, 1979[16] Memorandum on the Cebu South and Mandaue Reclamation Project, the President of the Philippines addressed this clear
statement to the city mayors of Cebu and Mandaue, the chairman of the PEA and others concerned: Pursuant to P.D. 3-A and E.O. 525, and upon
recommendation of the Public Estates Authority (PEA), the reclamation project covering 985 ha.[,] more or less, of Cebu South and Mandaue
foreshore areas is hereby approved in principle; and the City of Cebu and the City of Mandaue are hereby authorized to undertake the reclamation of
subject areas x x x.[17] Furthermore, even the certification from the Office of the President dated January 12, 1996,[18] presented in evidence by
respondent itself, certifies that the Cebu South (and Mandaue) Reclamation Project has been previously considered and approved by the Office of the
President and by the President of the Philippines, then His Excellency President Ferdinand E. Marcos, in favor of the Province of Cebu, City of Cebu,
City of Mandaue, the Public Estates Authority and others concerned as the proponents x x x.[19] The approved reclamation project is distinct from the
reclamation contract itself.

Private Respondent Has No Vested


Right Violated by a Public Bidding
Private respondent argues that PD 1818 cannot be invoked to stop the issuance of a preliminary injunction in this case, as the acts of petitioners are
tantamount to a violation of its vested rights. It claims x x x a right to seek judicial intervention and relief when petitioners violated its right of first
refusal by issuing invitations to bid the project to other contractors, without affording private respondent its right of first refusal.[20] We disagree.

Undisputed is the fact that the private respondent and the government have not entered into any validly approved and effective reclamation contract
covering the Cebu South Reclamation Project. The City of Cebu and private respondents Contract of Reclamation dated October 31, 1977[21] was
never approved by the President. Their Confirmatory Agreement dated January 4, 1980 merely shows that the City of Cebu engaged private
respondent to undertake and prepare the detailed and integrated development plan on land use, including technical, economic, marketing and
financial feasibility studies x x x of the Cebu South Reclamation Project.[22] Incidentally, the aforementioned certification, issued by the Office of the
President on January 12, 1996, manifests that private respondents development plan and feasibility studies, submitted pursuant to the said
Confirmatory Agreement, are the items pending final consideration and approval of the President.

Private respondent alleges that the injunctive writ merely protected its alleged right of first refusal which arose from the Presidents August 13, 1979
Memorandum addressed to the concerned public officials, stating that considerations of equity [require] that option rights of first refusal for a period as
may be determined by the PEA shall be granted to private entities which have made initial investments on the project.[23] This memorandum,
however, must be construed in harmony with the aforecited PD 1818 and PD 1594,[24] which prescribed the policies, guidelines, rules and
regulations for government infrastructure contracts. Said memorandum certainly could not be construed as a law authorizing a repeal of PD 1818 and
PD 1594. Indeed, laws are repealed only by subsequent ones,[25] whether expressly or impliedly. There is no express repeal of said laws, as they
were not even mentioned in the memorandum, either by number or by text. Neither can there be an implied repeal, since it was not convincingly and
unambiguously demonstrated that the mention in the memorandum of a right of first refusal was so repugnant and inconsistent with said laws as to
defy harmonization. Basic is the rule in statutory construction that implied repeals are not favored.[26] In addition, the memorandum was merely an
expression of an executive directive to subordinates, not a legislative enactment. Hence, it cannot obviate the operation of PD 1818 and PD 1594.
Section 4 of PD 1594 provides:

SEC. 4. Bidding. -- Construction projects shall generally be undertaken by contract after competitive public bidding. Projects may be undertaken by
administration or force account or by negotiated contract only in exceptional cases where time is of the essence, or where there is lack of qualified
bidders or contractors, or where there is a conclusive evidence that greater economy and efficiency would be achieved through this arrangement, and
in accordance with provision of laws and acts on the matter, subject to the approval of the Ministry of Public Works, Transportation and
Communications, the Minister of Public Highways, or the Minister of Energy, as the case may be, if the project cost is less than P1 Million, and of the
President of the Philippines, upon the recommendation of the Minister, if the project cost is P1 Million or more.

In the award of government contracts, the law requires a competitive public bidding. This is reasonable because [a] competitive public bidding aims to
protect the public interest by giving the public the best possible advantages thru open competition. It is a mechanism that enables the government
agency to avoid or preclude anomalies in the execution of public contracts.[27] Lawful and laudable, therefore, is the petitioners Memorandum of
Agreement mandating the City of Cebu to conduct a competitive public bidding in implementing the Cebu South Reclamation Project. The conduct of
such public bidding is not violative of private respondents alleged vested right. In the Courts viewpoint, the said right may be considered for the
purpose of awarding the contract of reclamation, only when the latters proposal are in all aspects equal to the bid of another proponent. In this kind of
situation, the private respondents claim to a right of first refusal indeed entitles it to priority in the award of the contract. But this claimed right of first
refusal cannot bar another proponent from submitting a bid or proposal.

Note, however, that under Section 4 of PD 1594, a negotiated contract may be allowed in exceptional circumstances enumerated therein, subject to
approval by the President. Executive Order No. 380,[28] which took effect November 27, 1989, also provided for the Presidents approval of
negotiated infrastructure contracts, the cost of which, for the Department of Transportation and Communications, amounts to P100 million and, for
other departments and government corporations, P50 million. Since the project cost of the Cebu South Reclamation Project is over 4 billion pesos,
[29] it is ineluctable that the Presidents approval is required. Consequently untenable is private respondents contention that its right of first refusal
ipso facto entitles it to a contract of reclamation, because it fails to take into consideration the legal requirement that negotiated infrastructure
contracts with costs beyond the specified ceiling must be approved by the President. Private respondent has no legal basis to claim that, because of
its initial expenses in preparing its proposed plans and feasibility studies, it could dispense with or, worse, arrogate unto itself the Presidents power to
ultimately decide or approve a contract of reclamation. In Malayan Integrated Industries Corporation vs. Court of Appeals,[30] the Court recognized
the Presidents authority to disapprove the reclamation contract proposed by private respondent despite the latters initial investments; in that case, the
President approved, instead, the contract between the City of Mandaue and F.F. Cruz, Inc. et al.[31]

Issuance of Writ of Preliminary


Injunction Unjustified

From the foregoing discussion, it is clear that the respondent judge gravely abused his discretion in issuing the Writ of Preliminary Injunction. Section
3, Rule 58 of the Rules of Court, enumerates the grounds for the issuance of a preliminary injunction. Although private respondent alleged these
grounds,[32] respondent judge had the duty to take judicial notice[33] of PD 1818 and PD 1594. These laws, based on the foregoing discussion,
ineludibly show that private respondent had no right to the relief it sought. It is well-settled that, before a writ of preliminary injunction may be issued,
there must be a clear showing by the complaint that there exists a right to be protected, and that the acts against which the writ is to be directed are
violative of the said right.[34] In hindsight, the respondent judges grant of the writ is truly regrettable, as it unnecessarily delayed the implementation
of an important infrastructure project, a delay which had far-reaching consequences on the economic development and interest of Cebu, as well as
the nation.

Second Issue:
Respondent Judges Voluntary Inhibition

Petitioners[35] contend that the respondent judge gravely abused his discretion, when he made a volte face on his previous Order dated February 26,
1996[36] inhibiting himself from hearing the case. In issuing said Order, Judge Burgos noted that Petitioner Tomas Osmeas Motion for Inhibition
raised the ground of prejudgment on the basis of statements made in his Order dated February 22, 1996. Judge Burgos disposed as follows:

WHEREFORE, premises considered, the motion is granted, and accordingly, in order to disabuse the mind of the movant and to further faithfully
serve the cause of justice, the Presiding Judge of this Court hereby voluntarily inhibits himself from further sitting in the present case with instruction
to the Branch Clerk of Court to send the records to the Office of the Clerk of Court for approval by the Honorable Executive Judge Priscila S. Agana
for final re-raffling.

The scheduled hearing for February 26, 1996 is cancelled.

SO ORDERED.[37]

However, respondent judge reversed his voluntary inhibition,[38] meekly stating in his Order dated March 12, 1996 that [t]he allegation of prejudgment
and partiality is so bare and empty as movant Osmea failed to present sufficient ground or proof for the Presiding Judge to disqualify himself. The
Judge realized the mistake in granting the motion for inhibition when defendant Osmea misled the Court in asserting that on the same day February
26, 1996, he would be filing an administrative case against the Judge for violation of PD 1818 and Supreme Court Circulars issued in relation to said
decree x x x. In that eventuality, Osmea said, the Judge would be bias[ed] and partial to him because he [was] the complainant in the pending
administrative case.[39]

We find merit in petitioners contention. Judge Burgos inhibited himself on the basis of Petitioner Osmeas allegation of prejudgment. In reversing his
voluntary inhibition, respondent judge nebulously branded Osmeas allegations as so bare and empty. Judge Burgos claim that he was misled by
Osmeas threat of an administrative case is obviously a mere afterthought that does not inspire belief. Although inhibition is truly discretionary[40] on
the part of the judge, the flimsy reasons proffered above are insufficient to justify reversal of his previous voluntary inhibition. As aptly pointed out by
petitioners in their Memorandum,

x x x a judge may not rescind his action and reassume jurisdiction where good cause exists for the disqualification. Furthermore, because a
presumption arises, by reason of the judges prior order of disqualification, of the existence of the factual reason for such disqualification, where the
regular judge who has been disqualified revokes the order of disqualification, and objection is made to such revocation, it is not sufficient for the judge
to enter an order merely saying that he or she is not disqualified; the record should clearly reveal the facts upon which the revocation is made. (46 Am
Jur 2d 234, p. 321)[41]

We deem it important to point out that a judge must preserve the trust and faith reposed in him by the parties as an impartial and objective
administrator of justice. When he exhibits actions that give rise, fairly or unfairly, to perceptions of bias, such faith and confidence are eroded, and he
has no choice but to inhibit himself voluntarily. It is basic that [a] judge may not be legally prohibited from sitting in a litigation, but when circumstances
appear that will induce doubt [on] his honest actuations and probity in favor of either party, or incite such state of mind, he should conduct a careful
self-examination. He should exercise his discretion in a way that the peoples faith in the courts of justice is not impaired. The better course for the
judge is to disqualify himself.[42]

Third Issue:
Omnibus Motion Ineffective?
Private respondent insists that the petitioners Omnibus Motion[43] dated February 14, 1996 is a mere scrap of paper, as it contained a notice of
hearing addressed only to the clerk of court with no proof of its service to the opposing counsel.[44] Private respondent is clutching at straws. The
petitioners Omnibus Motion was filed pursuant to the trial courts own order to show cause why the injunction should not issue. It actually partakes of a
brief or memorandum showing the trial courts lack of jurisdiction to issue the preliminary injunction. The Omnibus Motion raised a very important
matter which the court itself could have ruled on, even motu proprio, considering that a jurisdictional question may be raised at any time, even for the
first time on appeal.[45] Moreover, as expressed by petitioners, the issue is now moot, since the private respondent filed an Amended Complaint
giving petitioner another fifteen days to file a responsive pleading. Within the said period, petitioners filed a Manifestation and Motion dated 7 March
1996, adopting the Omnibus Motion of 14 February 1996 and the Motion for Reconsideration with Cautionary Notice against the Amended Complaint
and the application for writ of preliminary injunction therein contained.[46]

Fourth Issue: Motion for Reconsideration Actually Filed

Finally, private respondent alleges that the petition should be dismissed on the ground that petitioners did not file a motion for reconsideration.[47]
This allegation is negated by the simple fact that a Motion for Reconsideration with Cautionary Notice,[48] although denied by the trial court, was
actually filed by petitioners within the prescribed period.

Epilogue

Litigants, lawyers and judges sometimes forget that they share the responsibility of unclogging the dockets of the judiciary. As a lamentable
consequence, this Court is compelled to resolve cases which are utterly bereft of merit. This is one of those cases.

Private Respondent Malayan Integrated Industries Corporation (Malayan, for brevity) was the petitioner in Malayan Integrated Industries, Corp. vs.
Court of Appeals, et al.,[49] in which this Court, citing PD 1818, held that no writ of injunction may be issued to prevent the implementation of the
reclamation project along the coast of Mandaue City, which was deemed an infrastructure project. In the present case, Private Respondent Malayan,
nevertheless sought again the issuance of an injunctive writ to restrain the implementation of a similar reclamation project in adjacent Cebu City. In
initiating the present proceedings, private respondent evidently ignored our earlier pronouncement and unnecessarily clogged the dockets of our
courts.

The respondent trial judge, on the other hand, abetted Malayans brazen disregard of this Courts earlier ruling. Worse, he ruled that the earlier case
did not apply, because E.O. No. 380 was not presented by the parties for consideration by the High Court.[50] He maintained that EO 380, dated
November 27, 1989, did not include reclamation projects in the definition of infrastructure projects.

As earlier stated, the ruling of the trial court is lamentable. We note that, in the first place, EO 380 did not purport to be an exclusive enumeration of
infrastructure projects. Moreover, the Supreme Court itself held -- after the effectivity of EO 380 -- that reclamation projects are deemed infrastructure
projects, thereby resolving the present question with finality. It is unfortunate that the trial court cavalierly contravened a categorical ruling of the
Supreme Court. But even more deplorable, it insinuated that this Court did not take into account all applicable extant laws. To propound such view is
to undermine the peoples trust and confidence in the judiciary. This, we cannot countenance. It is opportune to remind judges of their sworn duty to
follow the doctrines and rulings of this Court.

In issuing writs of injunction, judges should observe the admonition of the Court in Olalia vs. Hizon:[51]

It has been consistently held that there is no power the exercise of which is more delicate, which requires greater caution, deliberation and sound
discretion, or more dangerous in a doubtful case, than the issuance of an injunction. It is the strong arm of equity that should never be extended
unless to cases of great injury, where courts of law cannot afford an adequate or commensurate remedy in damages.

Every court should remember that an injunction is a limitation upon the freedom of action of the defendant and should not be granted lightly or
precipitately. It should be granted only when the court is fully satisfied that the law permits it and the emergency demands it.

WHEREFORE, the petition is hereby GRANTED. The Orders of the Regional Trial Court in Civil Case No. CEB-18292, dated February 22, 1996,
March 12, 1996 and March 18, 1996, are REVERSED and SET ASIDE. The temporary restraining order earlier issued is MADE PERMANENT.
Respondent judge is ordered to INHIBIT himself from further hearing this case. Let Civil Case No. CEB-18292 be re-raffled and the proceedings
therein proceed with all deliberate dispatch.

SO ORDERED.