THIRD DIVISION

G.R. No. 197802, November 11, 2015

ZUNECA PHARMACEUTICAL, AKRAM ARAIN AND/OR VENUS ARAIN, M.D. DBA ZUNECA
PHARMACEUTICAL, Petitioners, v. NATRAPHARM, INC., Respondent.

RESOLUTION

VILLARAMA, JR., J.:

This is a petition for review1 under Rule 45 of the 1997 Rules of Civil Procedure, as amended, assailing the April 18, 2011 Decision2 and
July 21, 2011 Resolution3 of the Court of Appeals (CA) in the petition for certiorari docketed as CA-G.R. SP No. 103333 granting a
permanent injunction in favor of respondent Natrapharm, Inc. and against petitioner Zuneca Pharmaceutical.

The facts follow:

Respondent is an all-Filipino pharmaceutical company which manufactures and sells a medicine bearing the generic name
"CITICOLINE," which is indicated for heart and stroke patients. The said medicine is marketed by respondent under its registered
trademark "ZYNAPSE," which respondent obtained from the Intellectual Property Office (IPO) on September 24, 2007 under Certificate
of Trademark Registration No. 4-2007-005596. With its registration, the trademark "ZYNAPSE" enjoys protection for a term of 10 years
from September 24, 2007.4

In addition, respondent obtained from the Bureau of Food and Drugs (BFAD) all necessary permits and licenses to register, list and sell
its "ZYNAPSE" medicine in its various forms and dosages. 5

Allegedly unknown to respondent, since 2003 or even as early as 2001, petitioners have been selling a medicine imported from Lahore,
Pakistan bearing the generic name "CARBAMAZEPINE," an anti-convulsant indicated for epilepsy, under the brand name "ZYNAPS,"
which trademark is however not registered with the IPO. "ZYNAPS" is pronounced exactly like "ZYNAPSE." 6

Respondent further alleged that petitioners are selling their product "ZYNAPS" CARBAMAZEPINE in numerous drugstores in the
country where its own product "ZYNAPSE" CITICOLINE is also being sold. 7

Moreover, respondent claimed that the drug CARBAMAZEPINE has one documented serious and disfiguring side-effect called
"Stevens-Johnson Syndrome," and that the sale of the medicines "ZYNAPSE" and "ZYNAPS" in the same drugstores will give rise to
medicine switching.8

On October 30, 2007, respondent sent petitioners a cease-and-desist demand letter, pointing out that:

a. "ZYNAPSE" is the registered trademark of [respondent], and that as such owner, it has exclusive trademark right under the
law to the use thereof and prevent others from using identical or confusingly similar marks, and that [petitioners] must stop
the use of "ZYNAPS" for being nearly identical to "ZYNAPSE"; and

b. Because there is confusing similarity between "ZYNAPSE" and "ZYNAPS," there is a danger of medicine switching, with the
patient on "ZYNAPSE" medication placed in a more injurious situation given the Steven-Johnson Syndrome side effect of the
"ZYNAPS" CARBAMAZEPINE.9

Petitioners refused to heed the above demand, claiming that they had prior use of the name "ZYNAPS" since year 2003, having been
issued by the BFAD a Certificate of Product Registration (CPR) on April 15, 2003, which allowed them to sell CARBAMAZEPINE under
the brand name "ZYNAPS."10

On November 29, 2007, respondent filed a complaint against petitioners for trademark infringement for violation of Republic Act (R.A.)
No. 8293, or the Intellectual Property Code of the Philippines (IPC), with prayer for a temporary restraining order (TRO) and/or writ of
preliminary injunction. To justify the TRO/writ of preliminary injunction, respondent cited Section 122 11 of R.A. No. 8293, under which
the registration of "ZYNAPSE" gives it the exclusive right to use the said name as well as to exclude others from using the same. 12 In
addition, respondent argued that under Sections 13813 and 147.114of the IPC, certificates of registration are prima facie evidence of
the registrant's ownership of the mark and of the registrant's exclusive right to use the same. 15 Respondent also invoked the case
of Conrad and Company, Inc. v. Court of Appeals 16 where it was ruled that an invasion of a registered mark entitles the holder of a
certificate of registration thereof to injunctive relief.17
In their answer, petitioners argued that they enjoyed prior use in good faith of the brand name "ZYNAPS," having submitted their
application for CPR with the BFAD on October 2, 2001, with the name "ZYNAPS" expressly indicated thereon. The CPR was issued to
them on April 15, 2003.18Moreover, petitioners averred that under Section 15919 of the IPC their right to use the said mark is
protected.20

In its December 21, 2007 Order,21 the Regional Trial Court (RTC) denied respondent's application for a TRO, ruling that even if
respondent was able to first register its mark "ZYNAPSE" with the IPO in 2007, it is nevertheless defeated by the prior actual use by
petitioners of "ZYNAPS" in 2003.

In its March 12, 2008 Order,22 the RTC denied the application for a writ of preliminary injunction, reiterating the reasons stated in the
order denying the application for a TRO:

In this Court's objective evaluation, neither party is, at this point, entitled to any injunctive solace. Plaintiff, while admittedly the holder
of a registered trademark under the IPC, may not invoke ascendancy or superiority of its CTR [certificate of trademark registration]
over the CPR [certificate of product registration of the BFAD] of the defendants, as the latter certificate is, in the Court's opinion,
evidence of its "prior use". Parenthetically, the plaintiff would have been entitled to an injunction as against any or all third persons
in respect of its registered mark under normal conditions, that is, in the event wherein Section 159.1 would not be invoked by such
third person. Such is the case however in this litigation. Section 159 of the IPC explicitly curtails the registrant's rights by providing for
limitations on those rights as against a "prior user" under Section 159.1 xxx.23

Via a petition for certiorari with an application for a TRO and/or a writ of preliminary injunction, respondent questioned before the
CA the RTC's denial of the application for a writ of preliminary injunction.

On June 17, 2008, the CA issued a Resolution24 denying respondent's application for TRO and/or preliminary injunction for lack of
merit. The CA found no compelling reason to grant the application for TRO and/or preliminary injunction because there was no
showing that respondent had a clear and existing right that will be violated by petitioners. Respondent moved for reconsideration but
was denied by the CA in its July 31, 2008 Resolution.25

However, contrary to its earlier resolutions denying the application for a TRO/preliminary injunction, the CA, in its April 18, 2011
Decision, upheld the allegations of respondent that it is entitled to injunctive relief on the basis of its IPO registration and permanently
enjoined petitioners from the commercial use of "ZYNAPS." The fallo of the CA Decision reads:

WHEREFORE, premises considered, the Petition for Certiorari is GRANTED. The assailed Omnibus Order dated 12 March 2008 of the
Regional Trial Court, Branch 93 of Quezon City in Civil Case No. Q-07-61561 is REVERSED and SET ASIDE, and a new one is
entered permanently ENJOINING defendants-respondents, their employees, agents, representatives, dealers, retailers, and/or
assigns, and any and all persons acting in their behalf, from manufacturing, importing, distributing, selling and/or advertising for sale,
or otherwise using in commerce, the anti-convulsant drug CARBAMAZEPINE under the brand name and mark "ZYNAPS," or using any
other name which is similar or confusingly similar to petitioner's registered trademark "ZYNAPSE," including filing of application for
permits, license, or certificate of product registration with the Food and Drug Administration and other government agencies.

SO ORDERED.26 (Underscoring and additional emphasis supplied)

Petitioners' motion for reconsideration was denied by the CA in its Resolution dated July 21, 2011.

Hence, this petition for review.

On December 2, 2011, the RTC rendered a Decision27 on the merits of the case. It found petitioners liable to respondent for damages.
Moreover, it enjoined the petitioners from using "ZYNAPS" and ordered all materials related to it be disposed outside the channel of
commerce or destroyed without compensation.28

Respondent moved to dismiss the present petition in view of the December 2, 2011 RTC Decision which functions as a full adjudication
on the merits of the main issue of trademark infringement. Respondent contended that the present petition is moot and academic, it
only involving an ancillary writ.29

Petitioners, on the other hand, opposed the motion to dismiss arguing that the December 2, 2011 RTC Decision had not yet attained
finality, thus, the present petition had not yet been rendered moot.

The two issues which need to be addressed are:

1) Whether the decision on the merits rendered the issues in this case moot and academic? And
 2) Whether the CA may order a permanent injunction in deciding a petition for certiorari against the denial of an application
for a preliminary injunction issued by the RTC?

We hold that the issues raised in the instant petition have been rendered moot and academic given the RTC's December 2, 2011
Decision on the merits of the case.

Rule 58 of the Rules of Court provides for both preliminary and permanent injunction. Section 1, Rule 58 provides for the definition of
preliminary injunction:

SECTION 1. Preliminary injunction defined; classes. A preliminary injunction is an order granted at any stage of an action or
proceeding prior to the judgment or final order, requiring a party or a court, agency or a person to refrain from a particular act or
acts. It may also require the performance of a particular act or acts, in which case it shall be known as a preliminary mandatory
injunction. (Emphasis supplied)

On the other hand, Section 9 of the same Rule defines a permanent injunction in this wise:

SEC. 9. When final injunction granted. If after the trial of the action it appears that the applicant is entitled to have the act or acts
complained of permanently enjoined, the court shall grant a final injunction perpetually restraining the party or person enjoined from
the commission or continuance of the act or acts or confirming the preliminary mandatory injunction. (Emphasis supplied)

A writ of preliminary injunction is generally based solely on initial and incomplete evidence. 30 The evidence submitted during the
hearing on an application for a writ of preliminary injunction is not conclusive or complete for only a sampling is needed to give the
trial court an idea of the justification for the preliminary injunction pending the decision of the case on the merits. 31 As such, the
findings of fact and opinion of a court when issuing the writ of preliminary injunction are interlocutory in nature and made even before
the trial on the merits is commenced or terminated. 32

By contrast a permanent injunction, based on Section 9, Rule 58 of the Rules of Court, forms part of the judgment on the merits and
it can only be properly ordered only on final judgment. A permanent injunction may thus be granted after a trial or hearing on the
merits of the case and a decree granting or refusing an injunction should not be entered until after a hearing on the merits where a
verified answer containing denials is filed or where no answer is required, or a rule to show cause is equivalent to an answer.33

As such a preliminary injunction, like any preliminary writ and any interlocutory order, cannot survive the main case of which it is an
incident; because an ancillary writ of preliminary injunction loses its force and effect after the decision in the main petition.34

In Casilan v. Ybaez,35 this Court stated:

As things stand now, this Court can no longer interfere with the preliminary injunctions issued by the Leyte court in its cases Nos. 2985
and 2990, because such preliminary writs have already been vacated, being superseded and replaced by the permanent injunction
ordered in the decision on the merits rendered on 21 March 1962. And as to the permanent injunction, no action can be taken
thereon without reviewing the judgment on the merits, such injunction being but a consequence of the pronouncement that the
credits of Tiongson and Montilla are entitled to priority over that of Casilan. Since the court below had the power and right to
determine such question of preference, its judgment is not without, nor in excess of, jurisdiction; and even assuming that its findings
are not correct, they would, at most, constitute errors of law, and not abuses of discretion, correctible by certiorari . The obvious
remedy for petitioner Casilan was a timely appeal from the judgment on the merits to the Court of Appeals, the amount involved
being less than P200,000. But the judgment has become final and unappealable and can not be set aside
through certiorari proceedings. (Emphasis supplied)

Here, this Court is being asked to determine whether the CA erred by issuing a permanent injunction in a case which questioned the
propriety of the denial of an ancillary writ. But with the RTC's December 2, 2011 Decision on the case for "Injunction, Trademark
Infringement, Damages and Destruction," the issues raised in the instant petition have been rendered moot and academic. We note
that the case brought to the CA on a petition for certiorari merely involved the RTC's denial of respondent's application for a writ of
preliminary injunction, a mere ancillary writ. Since a decision on the merits has already been rendered and which includes in its
disposition a permanent injunction, the proper remedy is an appeal36 from the decision in the main case.

WHEREFORE, in light of all the foregoing, the petition is hereby DENIED for being moot and academic.

SO ORDERED.
FIRST DIVISION

G.R. No. 171624 December 6, 2010

BF HOMES, INC. and the PHILIPPINE WATERWORKS AND CONSTRUCTION CORP., Petitioners,
vs.
MANILA ELECTRIC COMPANY, Respondent.

DECISION

LEONARDO-DE CASTRO, J.:

This Petition for Review on Certiorari under Rule 45 of the Rules of Court assails the Decision 1 dated October 27, 2005 of the Court of
Appeals in CA-G.R. SP No. 82826, nullifying and setting aside (1) the Order2 dated November 21, 2003 of the Regional Trial Court (RTC),
Branch 202 of Las Pias City, in Civil Case No. 03-0151, thereby dissolving the writ of injunction against respondent Manila Electric
Company (MERALCO); and (2) the Resolution3 dated February 7, 2006 of the Court of Appeals denying the Motion for Reconsideration
of petitioners BF Homes, Inc. (BF Homes) and Philippine Waterworks and Construction Corporation (PWCC).

MERALCO is a corporation duly organized and existing under Philippine laws engaged in the distribution and sale of electric power in
Metro Manila. On the other hand, BF Homes and PWCC are owners and operators of waterworks systems delivering water to over
12,000 households and commercial buildings in BF Homes subdivisions in Paraaque City, Las Pias City, Caloocan City, and Quezon
City. The water distributed in the waterworks systems owned and operated by BF Homes and PWCC is drawn from deep wells using
pumps run by electricity supplied by MERALCO.

On June 23, 2003, BF Homes and PWCC filed a Petition [With Prayer for the Issuance of Writ of Preliminary Injunction and for the
Immediate Issuance of Restraining Order] against MERALCO before the RTC, docketed as Civil Case No. 03-0151.

In their Petition before the RTC, BF Homes and PWCC invoked their right to refund based on the ruling of this Court in Republic v.
Manila Electric Company4:

7. It is of judicial notice that on November 15, 2002, in G.R. No. 141314, entitled Republic of the Philippines vs. Manila Electric
Company, and G.R. No. 141369, entitled Lawyers Against Monopoly and Poverty (LAMP) et al. vs. Manila Electric Compnay (MERALCO),
(both cases shall hereafter be referred to as "MERALCO Refund cases," for brevity), the Supreme Court ordered MERALCO to refund
its customers, which shall be credited against the customers future consumption, the excess average amount of P0.167 per kilowatt
hour starting with the customers billing cycles beginning February 1998. The dispositive portion of the Supreme Court Decision in the
MERALCO Refund cases reads:

WHEREFORE, in view of the foregoing, the instant petitions are GRANTED and the decision of the Court of Appeals in C.A. G.R. SP No.
46888 is REVERSED. Respondent MERALCO is authorized to adopt a rate adjustment in the amount of P0.017 kilowatthour, effective
with respect to MERALCOs billing cycles beginning February 1994. Further, in accordance with the decision of the ERB dated February
16, 1998, the excess average amount of P0.167 per kilowatt hour starting with the applicants billing cycles beginning February 1998
is ordered to be refunded to MERALCOs customers or correspondingly credited in their favor for future consumption.

x x x x.

8. The Motion for Reconsideration filed by MERALCO in the MERALCO Refund cases was DENIED WITH FINALITY (the uppercase letters
were used by the Supreme Court) in the Resolution of the Supreme Court dated April 9, 2003.

9. The amount that MERALCO was mandated to refund to [BF Homes and PWCC] pursuant to the MERALCO Refund cases is in the
amount of P11,834,570.91.5

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

10. On May 20, 2003, without giving any notice whatsoever, MERALCO disconnected electric supply to [BF Homes and PWCCs] sixteen
(16) water pumps located in BF Homes in Paraaque, Caloocan, and Quezon City, which thus disrupted water supply in those areas.

11. On June 4, 2003, [BF Homes and PWCC] received by facsimile transmission a letter from MERALCO, x x x, in which MERALCO
demanded to [BF Homes and PWCC] the payment of electric bills amounting to P4,717,768.15.

12. [MERALCO] replied in a letter dated June 11, 2003, x x x, requesting MERALCO to apply the P4,717,768.15 electric bill against
the P11,834,570.91 that MERALCO was ordered to refund to [BF Homes and PWCC] pursuant to the MERALCO Refund cases. x x x
13. Displaying the arrogance that has become its distinction, MERALCO, in its letter dated June 16, 2003, x x x, denied [BF Homes and
PWCCs] request alleging that it has not yet come up with the schedule for the refund of large amounts, such as those of [BF Homes
and PWCC].

14. Even while MERALCO was serving its reply-letter to [BF Homes and PWCC], MERALCO, again, without giving any notice, cut off
power supply to [BF Homes and PWCCs] five (5) water pumps located in BF Homes Paraaque and BF Resort Village, in Pamplona, Las
Pias City.

15. In its letter dated June 4, 2003 (Annex A), MERALCO threatened to cut off electric power connections to all of [BF Homes and
PWCCs] water pumps if [BF Homes and PWCC] failed to pay their bills demanded by MERALCO by June 20, 2003. 6

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

16. In refusing to apply [MERALCOs] electric bills against the amounts that it was ordered to refund to [BF Homes and PWCC] pursuant
to the MERALCO Refund cases and in making the implementation of the refund ordered by the Supreme Court dependent upon its
own will and caprice, MERALCO acted with utmost bad faith.

17. [BF Homes and PWCC] are clearly entitled to the remedies under the law to compel MERALCO to consider [BF Homes and PWCCs]
electric bills fully paid by the amounts which MERALCO was ordered to refund to [BF Homes and PWCC] pursuant to the MERALCO
Refund cases, to enjoin MERALCO to reconnect electric power to all of [BF Homes and PWCCs] water pumps, and to order MERALCO
to desist from further cutting off power connection to [BF Homes and PWCCs] water pumps.

18. MERALCOs unjust and oppressive acts have cast dishonor upon [BF Homes and PWCCs] good name and besmirched their
reputation for which [BF Homes and PWCC] should be indemnified by way of moral damages in the amount of not less
than P1,000,000.00.

19. As an example for the public good, to dissuade others from emulating MERALCOs unjust, oppressive and mercenary conduct,
MERALCO should be directed to pay [BF Homes and PWCC] exemplary damages of at least P1,000,000.00.

20. MERALCOs oppressive and inequitable conduct forced [BF Homes and PWCC] to engage the services of counsel to defend their
rights and thereby incur litigation expenses in the amount of at least P500,000.00 for which [BF Homes and PWCC] should be
indemnified.7

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

21. As indicated in its letter dated June 4, 2003 (Annex A), unless seasonably restrained, MERALCO will cut off electric power
connections to all of [BF Homes and PWCCs] water pumps on June 20, 2003.

22. Part of the reliefs herein prayed for is to restrain MERALCO from cutting off electric power connections to [BF Homes and PWCCs]
water pumps.

23. Unless MERALCOS announced intention to cut off electric power connections to [BF Homes and PWCCs] water pumps is
restrained, [BF Homes and PWCC] will suffer great and irreparable injury because they would not [be] able to supply water to their
customers.

24. [BF Homes and PWCC] therefore pray that a writ for preliminary injunction be issued upon posting of a bond in an amount as will
be determined by this Honorable Court.

25. [BF Homes and PWCC] further pray that, in the meantime and immediately upon the filing of the above captioned Petition, a
restraining order be issued before the matter of preliminary injunction can be heard. 8

On August 15, 2003, MERALCO filed before the RTC its Answer with Counterclaims and Opposition to the Application for Writ of
Preliminary Injunction9 of BF Homes and PWCC.

According to MERALCO:

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

2.4. The service contracts as well as the terms and conditions of [MERALCOs] service as approved by BOE [Board of Energy], now ERC
[Energy Regulatory Commission], provide in relevant parts, that [BF Homes and PWCC] agree as follows:

DISCONTINUANCE OF SERVICE:

The Company reserves the right to discontinue service in case the customer is in arrears in the payment of bills or for failure to pay
the adjusted bills in those cases where the meter stopped or failed to register the correct amount of energy consumed, or for failure
to comply with any of these terms and conditions, or in case of or to prevent fraud upon the Company. Before disconnection is made
in the case of, or to prevent fraud, the Company may adjust the bill of said customer accordingly and if the adjusted bill is not paid,
the Company may disconnect the same." (Emphasis supplied)

2.5. This contractual right of [MERALCO] to discontinue electric service for default in the payment of its regular bills is sanctioned and
approved by the rules and regulations of ERB (now the ERC). This right is necessary and reasonable means to properly protect and
enable [MERALCO] to perform and discharge its legal and contractual obligation under its legislative franchise and the law. Cutting off
service for non-payment by the customers of the regular monthly electric bills is the only practical way a public utility, such as
[MERALCO], can ensure and maintain efficient service in accordance with the terms and conditions of its legislative franchise and the
law.

xxxx

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

2.15. [BF Homes and PWCCs] unpaid regular bills totaled P6,551,969.55 covering the May and June 2003 electric bills. x x x

xxxx

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

Hence, MERALCO sought the dismissal of the RTC Petition of BF Homes and PWCC on the following grounds:

3.1 The Honorable Court has no jurisdiction to award the relief prayed for by [BF Homes and PWCC] because:

a) The petition is in effect preempting or defeating the power of the ERC to implement the decision of the Supreme Court.

b) [MERALCO] is a utility company whose business activity is wholly regulated by the ERC. The latter, being the regulatory agency of
the government having the authority over the respondent, is the one tasked to approve the guidelines, schedules and details of the
refund.

c) The decision of the Supreme Court, dated November 15, 2002, clearly states that respondent is directed to make the refund to its
customers in accordance with the decision of the ERC (formerly ERB) dated February 16, 1998. Hence, [MERALCO] has to wait for the
schedule and details of the refund to be approved by the ERC before it can comply with the Supreme Court decision.

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

a) The service contracts between [MERALCO] and [BF Homes and PWCC] expressly authorize the former to discontinue and disconnect
electric services of the latter for their failure to pay the regular electric bills rendered.

b) It is [MERALCOs] legal duty as a public utility to furnish its service to the general public without arbitrary discrimination and,
consequently, [MERALCO] is obligated to discontinue and disconnect electric services to [BF Homes and PWCC] for their refusal or
failure to pay the electric energy actually used by them.11

For its compulsory counterclaims, MERALCO prayed that the RTC orders BF Homes and PWCC to pay MERALCO P6,551,969.55 as actual
damages (representing the unpaid electric bills of BF Homes and PWCC for May and June 2003), P1,500,000.00 as exemplary
damages, P1,500,000.00 as moral damages, and P1,000,000.00 as attorneys fees.

Lastly, MERALCO opposed the application for writ of preliminary injunction of BF Homes and PWCC because:
I

[MERALCO] HAS THE LEGAL AND CONTRACTUAL RIGHT TO DEMAND PAYMENT OF THE ELECTRIC BILLS AND, IN CASE OF NON-
PAYMENT, TO DISCONTINUE THE ELECTRIC SERVICES OF [BF HOMES and PWCC]

II

[BF HOMES and PWCC] HAVE NO CLEAR RIGHT WHICH WARRANTS PROTECTION BY INJUNCTIVE PROCESS

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

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

The RTC decreed in the end:

WHEREFORE, in the light of the foregoing, [BF Homes and PWCCs] prayer for the issuance of a writ of preliminary injunction is hereby
GRANTED. Respondent Manila Electric Company is permanently restrained from proceeding with its announced intention to cut-off
electric power connection to [BF Homes and PWCCs] water pumps unless otherwise ordered by this Court. Further, [BF Homes and
PWCC] are hereby ordered to post a bond in the amount of P500,000 to answer for whatever injury or damage that may be caused by
reason of the preliminary injunction.14

The Motion for Reconsideration of MERALCO of the aforementioned Order was denied by the RTC in another Order issued on January
9, 2004.15 The RTC reiterated its earlier finding that all the requisites for the proper issuance of an injunction had been fully complied
with by BF Homes and PWCC, thus:

Records indubitably show that all the requisites for the proper issuance of an injunction have been fully complied with in the instant
case.

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

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

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

Aggrieved, MERALCO filed with the Court of Appeals a Petition for Certiorari under Rule 65 of the Rules of Court, docketed as CA-G.R.
SP No. 82826. MERALCO sought the reversal of the RTC Orders dated November 21, 2003 and January 9, 2004 granting a writ of
preliminary injunction in favor of BF Homes and PWCC. MERALCO asserted that the RTC had no jurisdiction over the application of BF
Homes and PWCC for issuance of such a writ.

In its Decision dated October 27, 2005, the Court of Appeals agreed with MERALCO that the RTC had no jurisdiction to issue a writ of
preliminary injunction in Civil Case No. 03-0151, as said trial court had no jurisdiction over the subject matter of the case to begin with.
It ratiocinated in this wise:
For one, it cannot be gainsaid that the ERC has original and exclusive jurisdiction over the case. Explicitly, Section 43(u) of Republic Act
No. 9136, otherwise known as the "Electric Power Industry Reform Act," (RA 9136), states that the ERC shall have the original and
exclusive jurisdiction over all cases contesting rates, fees, fines and penalties imposed by the ERC in the exercise of its powers,
functions and responsibilities and over all cases involving disputes between and among participants or players in the energy sector.
Section 4(o) of Rule 3 of the Implementing Rules and Regulations of RA 9136 likewise provides that the ERC shall also be empowered
to issue such other rules that are essential in the discharge of its functions as an independent quasi-judicial body.

For another, the respondent judge, instead of presiding over the case, should have dismissed the same and yielded jurisdiction to the
ERC pursuant to the doctrine of primary jurisdiction. It is plain error on the part of the respondent judge to determine, preliminary or
otherwise, a controversy involving a question which is within the jurisdiction of an administrative tribunal, especially so where the
question demands the exercise of sound administrative discretion.

Needless to state, the doctrine of primary jurisdiction applies where the administrative agency, as in the case of ERC, exercises its
quasi-judicial and adjudicatory function. Thus, in cases involving specialized disputes, the practice has been to refer the same to an
administrative agency of special competence pursuant to the doctrine of primary jurisdiction. The courts will not determine a
controversy involving a question which is within the jurisdiction of the administrative tribunal prior to the resolution of that question
by the administrative tribunal, where the question demands the exercise of sound administrative discretion requiring the special
knowledge, experience and services of the administrative tribunal to determine technical and intricate matters of fact, and a
uniformity of ruling is essential to comply with the premises of the regulatory statute administered.

Verily, the cause of action of [BF Homes and PWCC] against [MERALCO] originates from the Meralco Refund Decision as it involves the
perceived right of the former to compel the latter to set-off or apply their refund to their present electric bill. The issue delves into
the right of the private respondents to collect their refund without submitting to the approved schedule of the ERC, and in effect give
unto themselves preferential right over other equally situated consumers of [MERALCO]. Perforce, the ERC, as can be gleaned from
the afore-stated legal provisions, has primary, original and exclusive jurisdiction over the said controversy.

Indeed, the respondent judge glaringly erred in enjoining the right of [MERALCO] to disconnect its services to [BF Homes and PWCC]
on the premise that the court has jurisdiction to apply the provisions on compensation or set-off in this case. Although [MERALCO]
recognizes the right of [BF Homes and PWCC] to the refund as provided in the Meralco Refund Decision, it is the ERC which has the
authority to implement the same according to its approved schedule, it being a dispute arising from the exercise of its jurisdiction.

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

The dispositive portion of the judgment of the appellate court reads:

WHEREFORE, the foregoing considered, the instant petition is hereby GRANTED and the assailed Orders REVERSED and SET ASIDE.
Accordingly, the writ of injunction against [MERALCO] is hereby DISSOLVED. No costs. 19

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

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

1. The Court of Appeals ERRED in saying that the respondent judge committed grave abuse of discretion by issuing the disputed writ
of injunction pending the merits of the case including the issue of subject matter jurisdiction.

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

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

4. The Court of Appeals ERRED in not resolving the issue as to the violation of MERALCO of a standing injunction order while the case
remains undecided.20

At the core of the Petition is the issue of whether jurisdiction over the subject matter of Civil Case No. 03-0151 lies with the RTC or
the Energy Regulatory Commission (ERC). If it is with the RTC, then the said trial court also has jurisdiction to issue the writ of
preliminary injunction against MERALCO. If it is with the ERC, then the RTC also has no jurisdiction to act on any incidents in Civil Case
No. 03-0151, including the application for issuance of a writ of preliminary injunction of BF Homes and PWCC therein.

BF Homes and PWCC argued that due to the threat of MERALCO to disconnect electric services, BF Homes and PWCC had no other
recourse but to seek an injunctive remedy from the RTC under its general jurisdiction. The merits of Civil Case No. 03-0151 was not
yet in issue, only the propriety of issuing a writ of preliminary injunction to prevent an irreparable injury. Even granting that the RTC
has no jurisdiction over the subject matter of Civil Case No. 03-0151, the ERC by enabling law has no injunctive power to prevent the
disconnection by MERALCO of electric services to BF Homes and PWCC.

The Petition has no merit.

Settled is the rule that jurisdiction is conferred only by the Constitution or the law. 21 Republic v. Court of Appeals22 also enunciated
that only a statute can confer jurisdiction on courts and administrative agencies.

Related to the foregoing and equally well-settled is the rule that the nature of an action and the subject matter thereof, as well as
which court or agency of the government has jurisdiction over the same, are determined by the material allegations of the complaint
in relation to the law involved and the character of the reliefs prayed for, whether or not the complainant/plaintiff is entitled to any
or all of such reliefs. A prayer or demand for relief is not part of the petition of the cause of action; nor does it enlarge the cause of
action stated or change the legal effect of what is alleged. In determining which body has jurisdiction over a case, the better policy is
to consider not only the status or relationship of the parties but also the nature of the action that is the subject of their controversy. 23

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

1. The first regulatory body, the Board of Rate Regulation (BRR), was created by virtue of Act No. 1779. Its regulatory mandate under
Section 5 of the law was limited to fixing or regulating rates of every public service corporation.

2. In 1913, Act No. 2307 created the Board of Public Utility Commissioners (BPUC) to take over the functions of the BRR. By express
provision of Act No. 2307, the BPUC was vested with jurisdiction, supervision and control over all public utilities and their properties
and franchises.

3. On November 7, 1936, Commonwealth Act (C.A.) No. 146, or the Public Service Act (PSA), was passed creating the Public Service
Commission (PSC) to replace the BPUC. Like the BPUC, the PSC was expressly granted jurisdiction, supervision and control over public
services, with the concomitant authority of calling on the public force to exercise its power, to wit:

"SEC. 13. Except as otherwise provided herein, the Commission shall have general supervision and regulation of, jurisdiction and
control over, all public utilities, and also over their property, property rights, equipment, facilities and franchises so far as may be
necessary for the purpose of carrying out the provisions of this Act, and in the exercise of its authority it shall have the necessary
powers and the aid of the public force x x x."

Section 14 of C.A. No. 146 defines the term "public service" or "public utility" as including "every individual, copartnership, association,
corporation or joint-stock company, . . . that now or hereafter may own, operate, manage or control within the Philippines, for hire or
compensation, any common carrier, x x x, electric light, heat, power, x x x, when owned, operated and managed for public use or
service within the Philippines x x x." Under the succeeding Section 17(a), the PSC has the power even without prior hearing

(a) To investigate, upon its own initiative, or upon complaint in writing, any matter concerning any public service as regards matters
under its jurisdiction; to require any public service to furnish safe, adequate and proper service as the public interest may require and
warrant, to enforce compliance with any standard, rule, regulation, order or other requirement of this Act or of the Commission, x x
x.

4. Then came Presidential Decree (P.D.) No. 1, reorganizing the national government and implementing the Integrated Reorganization
Plan. Under the reorganization plan, jurisdiction, supervision and control over public services related to electric light, and power
heretofore vested in the PSC were transferred to the Board of Power and Waterworks (BOPW).

Later, P.D. No. 1206 abolished the BOPW. Its powers and function relative to power utilities, including its authority to grant provisional
relief, were transferred to the newly-created Board of Energy (BOE).

5. On May 8, 1987, then President Corazon C. Aquino issued E.O. No. 172 reconstituting the BOE into the ERB, transferring the formers
functions and powers under P.D. No. 1206 to the latter and consolidating in and entrusting on the ERB "all the regulatory and
adjudicatory functions covering the energy sector." Section 14 of E.O. No. 172 states that "(T)he applicable provisions of [C.A.] No.
146, as amended, otherwise known as the Public Service Act; x x x and [P.D.] No. 1206, as amended, creating the Department of
Energy, shall continue to have full force and effect, except insofar as inconsistent with this Order." 25

Thereafter, on June 8, 2001, Republic Act No. 9136, known as the Electric Power Industry Reform Act of 2001 (EPIRA), was enacted,
providing a framework for restructuring the electric power industry. One of the avowed purposes of the EPIRA is to establish a strong
and purely independent regulatory body. The Energy Regulatory Board (ERB) was abolished and its powers and functions not
inconsistent with the provision of the EPIRA were expressly transferred to the ERC.26

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

Sec. 44. Transfer of Powers and Functions. The powers and functions of the Energy Regulatory Board not inconsistent with the
provisions of this Act are hereby transferred to the ERC. The foregoing transfer of powers and functions shall include all applicable
funds and appropriations, records, equipment, property and personnel as may be necessary.

Sec. 80. Applicability and Repealing Clause. The applicability provisions of Commonwealth Act No. 146, as amended, otherwise
known as the "Public Service Act." Republic Act 6395, as amended, revising the charter of NPC; Presidential Decree 269, as amended,
referred to as the National Electrification Decree; Republic Act 7638, otherwise known as the "Department of Energy Act of 1992";
Executive Order 172, as amended, creating the ERB; Republic Act 7832 otherwise known as the "Anti-Electricity and Electric
Transmission Lines/Materials Pilferage Act of 1994"; shall continue to have full force and effect except insofar as they are inconsistent
with this Act.

The provisions with respect to electric power of Section 11(c) of Republic Act 7916, as amended, and Section 5(f) of Republic Act 7227,
are hereby repealed or modified accordingly.

Presidential Decree No. 40 and all laws, decrees, rules and regulations, or portions thereof, inconsistent with this Act are hereby
repealed or modified accordingly.

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

SEC. 43. Functions of the ERC. The ERC shall promote competition, encourage market development, ensure customer choice and
penalize abuse of market power in the restructured electricity industry. In appropriate cases, the ERC is authorized to issue cease and
desist order after due notice and hearing. Towards this end, it shall be responsible for the following key functions in the restructured
industry:

xxxx

(f) In the public interest, establish and enforce a methodology for setting transmission and distribution wheeling rates and retail rates
for the captive market of a distribution utility, taking into account all relevant considerations, including the efficiency or inefficiency
of the regulated entities. The rates must be such as to allow the recovery of just and reasonable costs and a reasonable return on rate
base (RORB) to enable the entity to operate viably. The ERC may adopt alternative forms of internationally-accepted rate-setting
methodology as it may deem appropriate. The rate-setting methodology so adopted and applied must ensure a reasonable price of
electricity. The rates prescribed shall be non-discriminatory. To achieve this objective and to ensure the complete removal of cross
subsidies, the cap on the recoverable rate of system losses prescribed in Section 10 of Republic Act No. 7832, is hereby amended and
shall be replaced by caps which shall be determined by the ERC based on load density, sales mix, cost of service, delivery voltage and
other technical considerations it may promulgate. The ERC shall determine such form of rate-setting methodology, which shall
promote efficiency. x x x.

xxxx

(u) The ERC shall have the original and exclusive jurisdiction over all cases contesting rates, fees, fines and penalties imposed by the
ERC in the exercise of the abovementioned powers, functions and responsibilities and over all cases involving disputes between and
among participants or players in the energy sector.

All notices of hearings to be conducted by the ERC for the purpose of fixing rates or fees shall be published at least twice for two
successive weeks in two (2) newspapers of nationwide circulation.
A careful review of the material allegations of BF Homes and PWCC in their Petition before the RTC reveals that the very subject matter
thereof is the off-setting of the amount of refund they are supposed to receive from MERALCO against the electric bills they are to
pay to the same company. This is squarely within the primary jurisdiction of the ERC.

The right of BF Homes and PWCC to refund, on which their claim for off-setting depends, originated from the MERALCO Refund cases.
In said cases, the Court (1) authorized MERALCO to adopt a rate adjustment in the amount of P0.017 per kilowatthour, effective with
respect to its billing cycles beginning February 1994; and (2) ordered MERALCO to refund to its customers or credit in said customers
favor for future consumption P0.167 per kilowatthour, starting with the customers billing cycles that begin February 1998, in
accordance with the ERB Decision dated February 16, 1998.

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

Presently, the ERC has original and exclusive jurisdiction under Rule 43(u) of the EPIRA over all cases contesting rates, fees, fines, and
penalties imposed by the ERC in the exercise of its powers, functions and responsibilities, and over all cases involving disputes between
and among participants or players in the energy sector. Section 4(o) of the EPIRA Implementing Rules and Regulation provides that
the ERC "shall also be empowered to issue such other rules that are essential in the discharge of its functions as in independent quasi-
judicial body."

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

Administrative agencies, like the ERC, are tribunals of limited jurisdiction and, as such, could wield only such as are specifically granted
to them by the enabling statutes. In relation thereto is the doctrine of primary jurisdiction involving matters that demand the special
competence of administrative agencies even if the question involved is also judicial in nature. Courts cannot and will not resolve a
controversy involving a question within the jurisdiction of an administrative tribunal, especially when the question demands the sound
exercise of administrative discretion requiring special knowledge, experience and services of the administrative tribunal to determine
technical and intricate matters of fact. The court cannot arrogate into itself the authority to resolve a controversy, the jurisdiction of
which is initially lodged with the administrative body of special competence. 27

Since the RTC had no jurisdiction over the Petition of BF Homes and PWCC in Civil Case No. 03-0151, then it was also devoid of any
authority to act on the application of BF Homes and PWCC for the issuance of a writ of preliminary injunction contained in the same
Petition. The ancillary and provisional remedy of preliminary injunction cannot exist except only as an incident of an independent
action or proceeding.28

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

Section 8. Authority to Grant Provisional Relief. The Board may, upon the filing of an application, petition or complaint or at any
stage thereafter and without prior hearing, on the basis of supporting papers duly verified or authenticated, grant provisional relief
on motion of a party in the case or on its own initiative, without prejudice to a final decision after hearing, should the Board find that
the pleadings, together with such affidavits, documents and other evidence which may be submitted in support of the motion,
substantially support the provisional order: Provided, That the Board shall immediately schedule and conduct a hearing thereon within
thirty (30) days thereafter, upon publication and notice to all affected parties.

The aforequoted provision is still applicable to the ERC as it succeeded the ERB, by virtue of Section 80 of the EPIRA. A writ of
preliminary injunction is one such provisional relief which a party in a case before the ERC may move for.

Lastly, the Court herein already declared that the RTC not only lacked the jurisdiction to issue the writ of preliminary injunction against
MERALCO, but that the RTC actually had no jurisdiction at all over the subject matter of the Petition of BF Homes and PWCC in Civil
Case No. 03-0151. Therefore, in addition to the dissolution of the writ of preliminary injunction issued by the RTC, the Court also
deems it appropriate to already order the dismissal of the Petition of BF Homes and PWCC in Civil Case No. 03-0151 for lack of
jurisdiction of the RTC over the subject matter of the same. Although only the matter of the writ of preliminary injunction was brought
before this Court in the instant Petition, the Court is already taking cognizance of the issue on the jurisdiction of the RTC over the
subject matter of the Petition. The Court may motu proprio consider the issue of jurisdiction. The Court has discretion to determine
whether the RTC validly acquired jurisdiction over Civil Case No. 03-0151 since, to reiterate, jurisdiction over the subject matter is
conferred only by law. Jurisdiction over the subject matter cannot be acquired through, or waived by, any act or omission of the
parties. Neither would the active participation of the parties nor estoppel operate to confer jurisdiction on the RTC where the latter
has none over a cause of action.29Indeed, when a court has no jurisdiction over the subject matter, the only power it has is to dismiss
the action.30

WHEREFORE, the instant Petition for Review is DENIED. The Decision dated October 27, 2005 of the Court of Appeals in CA-G.R. SP
No. 82826 is AFFIRMED with the MODIFICATION that the Regional Trial Court, Branch 202 of Las Pias City, is ORDERED to dismiss the
Petition [With Prayer for the Issuance of Writ of Preliminary Injunction and for the Immediate Issuance of Restraining Order] of BF
Homes, Inc. and Philippine Waterworks and Construction Corporation in Civil Case No. 03-0151. Costs against BF Homes, Inc. and
Philippine Waterworks and Construction Corporation.

SO ORDERED.

FIRST DIVISION

March 18, 2015

G.R. No. 203240

NORTHERN ISLANDS, CO., INC., Petitioner,

vs.
SPOUSES DENNIS and CHERYLIN* GARCIA, doing business under the name and style "Ecolamp Multi Resources,", Respondents.

DECISION

PERLAS-BERNABE, J.:

Assailed in this petition for review on certiorari1 are the Decision2 dated January 19, 2012 and the Resolution3dated August 24, 2012
of the Court of Appeals (CA) in CA-G.R. SP No. 97448, ordering the Regional Trial Court of Quezon City, Branch 215 (RTC) to appoint a
commissioner to determine the value of the attached properties of respondents Spouses Dennis and Cherylin Garcia (respondents),
and to discharge any excessive attachment found thereby.

The Facts

On September 23, 2005, petitioner Northern Islands Co., Inc. (petitioner) filed a Complaint4 with application for a writ of preliminary
attachment, before the RTC against respondents, docketed as Civil Case No. Q-05-53699 (Main Case), which was subsequently
amended5 on October 25, 2005.6 It alleged that: (a) from March to July 2004, petitioner caused the delivery to respondents of various
appliances in the aggregate amount of P8,040,825.l 7;7 (b) the goods were transported, shipped, and delivered by Sulpicio Lines, Inc.,
and were accepted in good order and condition by respondents' representatives; 8 (c) the parties agreed that the goods delivered were
payable within 120 days, and that the unpaid amounts would earn interest at a rate of eighteen percent (18%) per annum; 9 (d)
however, the value of the goods were not paid by respondents despite repeated demands; 10 and (e) respondents fraudulently asserted
that petitioner had no proof that they had indeed received the quantity of the subject goods. 11

In connection with the application for a writ of preliminary attachment, petitioner posted a bond, through Visayan Surety and
Insurance Corporation, in the amount of P8,040,825.l 7. On November 7, 2005, the RTC issued the writ sought for. 12

Instead of filing an answer, respondents filed on November 11, 2001, an Urgent Motion for Extension of Time to File Proper Pleading
and Motion for Discovery (Production and Inspection)13 (November 11, 2001 Motion), asking the RTC to allow them to photocopy and
personally examine the original invoices, delivery cargo receipts, and bills of lading attached to the Amended Complaint, claiming that
they could not "come up with an intelligent answer" without being presented with the originals of such documents. 14

Thereafter, or on January 11, 2006, respondents filed a Motion to Discharge Excess Attachment,15 alleging that the attachment
previously ordered by the RTC exceeded by P9,232,564.56 given that the estimated value of the attached properties, including the
garnished bank accounts, as assessed by their appraiser, Gaudioso W. Lapaz (Lapaz), amounted to Pl 7,273,409.73, while the
attachment bond is only in the amount of P8,040,825.17. 16
In an Order17 dated February 28, 2006, the RTC denied the November 11, 2001 Motion, and, instead, directed respondents to file their
answer, which the latter complied with through the filing of their Answer Ad Cautelam Ex Abudante with Compulsory
Counterclaim18 on April 3, 2006. Despite this, respondents again filed a Motion for Leave of Court to File Motion for Discovery
(Production and Inspection)19 (Motion for Discovery) on April 7, 2006.20

The RTC Ruling

In an Order21 dated June 21, 2006, the RTC, among others, denied the Motion to Discharge Excess Attachment, finding that the
appraisal made by Lapaz was not reflective of the true valuation of the properties, adding too that the bond posted by petitioner
stands as sufficient security for whatever damages respondents may sustain by reason of the attachment. 22

On the other hand, the RTC granted the Motion for Discovery in accordance with Rule 27 of the Rules of Court, despite petitioner's
claim that it did not have the originals of the documents being sought. 23

However, no production or inspection was conducted on July 10, 2006 as the RTC directed since respondents received the copy of the
above order only on July 11, 2006.24

On July 25, 2006, respondents filed a Motion for Partial Reconsideration of the Order dated June 21, 2006, specifically assailing the
denial of their Motion to Discharge Excess Attachment. In this relation, they prayed that the RTC refer to a commissioner, pursuant to
Rule 32 of the Rules of Court, the factual determination of the total aggregate amount of respondents' attached properties so as to
ascertain if the attachment was excessive. Also, they prayed that the order for production and inspection be modified and that
petitioner be ordered to produce the original documents anew for their inspection and copying. 25

The foregoing motion was, however, denied by the RTC in an Order 26 dated August 23, 2006 for lack of merit. Thus, respondents
elevated the matter to the CA via petition for certiorari and mandamus,27 docketed as CA-G.R. SP No. 97448 (Certiorari Case).

In the interim, the RTC rendered a Decision28 dated September 21, 2011 in the Main Case. Essentially, it dismissed petitioner's
Amended Complaint due to the absence of any evidence to prove that respondents had agreed to the pricing of the subject goods. 29

The RTC's September 21, 2011 Decision was later appealed 30 by petitioner before the CA on October 27, 2011. Finding that the Notice
of Appeal was seasonably filed, with the payment of the appropriate docket fees, the RTC, in an Order31 dated January 25, 2012,
ordered the elevation of the entire records of the Main Case to the CA. The appeal was then raffled to the CA's Eighth Division, and
docketed as CA-GR. CV No. 98237. On the other hand, records do not show that respondents filed any appeal. 32

The CA Ruling in the Certiorari Case

Meanwhile, the CA, in a Decision33 dated January 19, 2012, partly granted the certiorari petition of respondents, ordering the RTC to
appoint a commissioner as provided under Rule 32 of the Rules of Court as well as the subsequent discharge of any excess attachment
if so found therein, and, on the other hand, denying respondents' Motion for Discovery. 34

It held that: (a) on the issue of attachment, trial by commissioners under Rule 32 of the Rules of Court was proper so that the parties
may finally settle their conflicting valuations;35 and (b) on the matter of discovery, petitioner could not be compelled to produce the
originals sought by respondents for inspection since they were not in the former's possession. 36

Aggrieved, petitioner filed a Motion for Partial Reconsideration 37 on February 13, 2012 but was, however, denied in a
Resolution38 dated August 24, 2012, hence, the present petition.

The Issues Before the Court

The issues presented for the Court's resolution are: (a) whether the RTC had lost jurisdiction over the matter of the preliminary
attachment after petitioner appealed the decision in the Main Case, and thereafter ordered the transmittal of the records to the CA;
and (b) whether the CA erred in ordering the appointment of a commissioner and the subsequent discharge of any excess attachment
found by said commissioner.

The Court's Ruling

The petition is meritorious.

Section 9, Rule 41 of the Rules of Court provides that in appeals by notice of appeal, the court loses jurisdiction over the case upon
the perfection of the appeals filed in due time and the expiration of the time to appeal of the other parties.
In this case, petitioner had duly perfected its appeal of the RTC's September 21, 2011 Decision resolving the Main Case through the
timely filing of its Notice of Appeal dated October 27, 2011, together with the payment of the appropriate docket fees. The RTC, in an
Order39 dated January 25, 2012, had actually confirmed this fact, and thereby ordered the elevation of the entire records to the CA.
Meanwhile, records do not show that.respondents filed any appeal, resulting in the lapse of its own period to appeal therefrom. Thus,
based on Section 9, Rule 41, it cannot be seriously doubted that the RTC had already lost jurisdiction over the Main Case.

With the RTC's loss of jurisdiction over the Main Case necessarily comes its loss of jurisdiction all over matters merely ancillary thereto.
Thus, the propriety of conducting a trial by commissioners in order to determine the excessiveness of the subject preliminary
attachment, being a mere ancillary matter to the Main Case, is now mooted by its supervening appeal in CA-G.R. CV No. 98237.

Note that in Sps. Olib v. Judge Pastoral,40 the Court, in view of the nature of a preliminary attachment, definitively ruled that the
attachment itself cannot be the subject of a separate action independent of the principal action because the attachment was only an
incident of such action, viz.:

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.

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.isi 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 have 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 action independent of the principal action because the attachment was only an incident of such action. 41 (Emphases
supplied)

That being said, it is now unnecessary to discuss the other issues raised herein. In fine, the petition is granted and the assailed CA
rulings are set aside.

WHEREFORE, the petition is GRANTED. The Decision dated January 19, 2012 and the Resolution dated August 24, 2012 of the Court
of Appeals in CA-G.R. SP No. 97448 are hereby SET ASIDE.

SO ORDERED.

SECOND DIVISION

G.R. No. 133303 February 17, 2005

BERNARDO VALDEVIESO, petitioner,

vs.
CANDELARIO DAMALERIO AND AUREA C. DAMALERIO, respondents.

DECISION

CHICO-NAZARIO, J.:

Before this Court is a Petition for Review under Rule 45 of the Rules of Court, seeking to set aside the 25 September 1997 Decision
and the 10 February 1998 Resolution of the Court of Appeals in CA-G.R. SP No. 43082 entitled, "Candelario Damalerio and Aurea
Damalerio v. Honorable Antonio S. Alano, et al."1

There is no dispute as to the following facts:

On 05 December 1995, Bernardo Valdevieso (petitioner) bought from spouses Lorenzo and Elenita Uy a parcel of land consisting of
10,000 square meters, more or less, located at Bo. Tambler, General Santos City, and covered by Transfer Certificate of Title (TCT) No.
T-30586.2

The deed of sale was not registered, nor was the title of the land transferred to petitioner. 3

On 07 December 1995, the said property was immediately declared by petitioner for taxation purposes as Tax Declaration No. l6205
with the City Assessors Office.4
It came to pass that on 19 April 1996, spouses Candelario and Aurea Damalerio (respondents) filed with the Regional Trial Court (RTC)
of General Santos City, a complaint for a sum of money against spouses Lorenzo and Elenita Uy docketed as Civil Case No. 5748 with
application for the issuance of a Writ of Preliminary Attachment. 5

On 23 April 1996, the trial court issued a Writ of Preliminary Attachment by virtue of which the property, then still in the name of
Lorenzo Uy but which had already been sold to petitioner, was levied. The levy was duly recorded in the Register of Deeds of General
Santos City and annotated upon TCT No. T-30586.6

On 06 June 1996, TCT No. T-30586 in the name of Lorenzo Uy was cancelled and, in lieu thereof, TCT No. T-74439 was issued in the
name of petitioner.7 This new TCT carried with it the attachment in favor of respondents.

On 14 August 1996, petitioner filed a third-party claim in Civil Case No. 5748 to discharge or annul the attachment levied on the
property covered by TCT No. T-74439 on the ground that the said property belongs to him and no longer to Lorenzo and Elenita Uy. 8

In a resolution dated 21 October 1996, the trial court ruled for the petitioner. 9 Citing Manliguez v. Court of Appeals10 and Santos v.
Bayhon,11 it held that the levy of the property by virtue of attachment is lawful only when the levied property indubitably belongs to
the defendant. Applying the rulings in the cited cases, it opined that although defendant Lorenzo Uy remained the registered owner
of the property attached, yet the fact was that he was no longer the owner thereof as it was already sold earlier to petitioner, hence,
the writ of attachment was unlawful.1awphi1.nt

Respondents sought reconsideration thereof which was denied by the trial court in a resolution dated 03 January 1997.12

From the unfavorable resolution of the trial court in the third-party claim, respondents appealed to the Court of Appeals. The appellate
court reversed the resolution and by judgment promulgated on 25 September 1997, it declared that an attachment or levy of
execution, though posterior to the sale, but if registered before the sale is registered, takes precedence over the sale.13 The writ of
attachment in favor of the respondents, being recorded ahead of the sale to petitioner, will therefore take precedence.

Petitioner moved for reconsideration but this was denied by the Court of Appeals in its Resolution of 10 February 1998. 14

Hence, this Petition for Review on Certiorari.

The sole issue in this case is whether or not a registered writ of attachment on the land is a superior lien over that of an earlier
unregistered deed of sale.

Petitioner maintains that he has a superior right over the questioned property because when the same was attached on 23 April 1996,
this property was no longer owned by spouses Uy against whom attachment was issued as it was already sold to petitioner on 05
December 1995. The ownership thereof was already transferred to petitioner pursuant to Article 147715 in relation to Article 149816 of
the Civil Code.

Dismissing the allegation that he slept on his rights by not immediately registering at least an adverse claim based on his deed of sale,
petitioner avers that he promptly worked out for the transfer of registration in his name. The slight delay in the registration, he claims
was not due to his fault but attributable to the process involved in the registration of property such as the issuance of the Department
of Agrarian Reform clearance which was effected only after compliance with several requirements.1awphi1.nt

Considering the peculiar facts and circumstances obtaining in this case, petitioner submits it would be in accord with justice and equity
to declare him as having a superior right to the disputed property than the respondents.

Respondents maintain the contrary view. They aver that registration of a deed of sale is the operative act which binds the land and
creates a lien thereon. Before the registration of the deed, the property is not bound insofar as third persons are concerned. Since the
writ of attachment in favor of respondents was registered earlier than the deed of sale to petitioner, respondents were of the belief
that their registered writ of attachment on the subject property enjoys preference and priority over petitioners earlier unregistered
deed of sale over the same property. They also contend that Articles 1477 and 1498 of the Civil Code as cited by petitioner are not
applicable to the case because said provisions apply only as between the parties to the deed of sale. These provisions do not apply to,
nor bind, third parties, like respondents, because what affects or binds third parties is the registration of the instrument in the Register
of Deeds. Furthermore, respondents argue that petitioner cannot invoke equity in his favor unless the following conditions are met:
(a) the absence of specific provision of a law on the matter; and (b) if the person who invokes it is not guilty of delay. Both conditions
have not been met, however, since there is a law on the subject matter, i.e., Section 51 of Presidential Decree No. 1529, and that
petitioner allegedly slept on his rights by not immediately registering an adverse claim based on his deed of sale.

We agree with the respondents.

The law applicable to the facts of this case is Section 51 of P.D. No. 1529. Said Section provides:

Sec. 51. Conveyance and other dealings by registered owner. - An owner of registered land may convey, mortgage, lease, charge, or
otherwise deal with the same in accordance with existing laws. He may use such forms of deeds, mortgages, leases or other voluntary
instruments as are sufficient in law. But no deed, mortgage, lease, or other voluntary instrument, except a will purporting to convey
or affect registered land, shall take effect as a conveyance or bind the land, but shall operate only as a contract between the parties
and as evidence of authority to the Register of Deeds to make registration.

The act of registration shall be the operative act to convey or affect the land insofar as third persons are concerned, and in all cases
under this Decree, the registration shall be made in the office of the Register of Deeds for the province or city where the land lies.

It is to be noted that though the subject land was deeded to petitioner as early as 05 December 1995, it was not until 06 June 1996
that the conveyance was registered, and, during that interregnum, the land was subjected to a levy on attachment. It should also be
observed that, at the time of the attachment of the property on 23 April 1996, the spouses Uy were still the registered owners of said
property. Under the cited law, the execution of the deed of sale in favor of petitioner was not enough as a succeeding step had to be
taken, which was the registration of the sale from the spouses Uy to him. Insofar as third persons are concerned, what validly transfers
or conveys a persons interest in real property is the registration of the deed. Thus, when petitioner bought the property on 05
December 1995, it was, at that point, no more than a private transaction between him and the spouses Uy. It needed to be registered
before it could bind third parties, including respondents. When the registration finally took place on 06 June 1996, it was already too
late because, by then, the levy in favor of respondents, pursuant to the preliminary attachment ordered by the General Santos City
RTC, had already been annotated on the title.

The settled rule is that levy on attachment, duly registered, takes preference over a prior unregistered sale. 17This result is a necessary
consequence of the fact that the property involved was duly covered by the Torrens system which works under the fundamental
principle that registration is the operative act which gives validity to the transfer or creates a lien upon the land. 18

The preference created by the levy on attachment is not diminished even by the subsequent registration of the prior sale. This is so
because an attachment is a proceeding in rem.19 It is against the particular property, enforceable against the whole world. The
attaching creditor acquires a specific lien on the attached property which nothing can subsequently destroy except the very dissolution
of the attachment or levy itself.20 Such a proceeding, in effect, means that the property attached is an indebted thing and a virtual
condemnation of it to pay the owners debt. 21 The lien continues until the debt is paid, or sale is had under execution issued on the
judgment, or until the judgment is satisfied, or the attachment discharged or vacated in some manner provided by law.

Thus, in the registry, the attachment in favor of respondents appeared in the nature of a real lien when petitioner had his purchase
recorded. The effect of the notation of said lien was to subject and subordinate the right of petitioner, as purchaser, to the lien.
Petitioner acquired ownership of the land only from the date of the recording of his title in the register, and the right of ownership
which he inscribed was not absolute but a limited right, subject to a prior registered lien of respondents, a right which is preferred and
superior to that of petitioner.22

Anent petitioners reliance on the rulings laid down in Manliguez v. Court of Appeals and Santos v. Bayhon, we find the same to be
misplaced. These cases did not deal at all with the dilemma at hand, i.e. the question of whether or not a registered writ of attachment
on land is superior to that of an earlier unregistered deed of sale. In Santos, what was involved were machinery and pieces of
equipment which were executed upon pursuant to the favorable ruling of the National Labor Relations Commission. A third party
claimed that the machinery were already sold to her, but it does not appear in the facts of the case if such sale was ever
registered.l^vvphi1.net Manliguez is similar to Santos, except that the former involved buildings and improvements on a piece of land.
To stress, in both cited cases, the registration of the sale, if any, of the subject properties was never in issue.1awphi1.nt

As to petitioners invocation of equity, we cannot, at this instance, yield to such principle in the presence of a law clearly applicable to
the case. We reiterate that this Court, while aware of its equity jurisdiction, is first and foremost, a court of law.23 While equity might
tilt on the side of one party, the same cannot be enforced so as to overrule positive provisions of law in favor of the other.24 Equity
cannot supplant or contravene the law.25 The rule must stand no matter how harsh it may seem. Dura lex sed lex.

WHEREFORE, the appealed Decision of the Court of Appeals in CA-G.R. SP No. 43082 dated 25 September 1997, and its Resolution
dated 10 February 1998, are hereby AFFIRMED. No costs.

SO ORDERED.
SECOND DIVISION

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

K.O. GLASS CONSTRUCTION CO., INC., petitioner,

vs.
THE HONORABLE MANUEL VALENZUELA, Judge of the Court of First Instance of Rizal, and ANTONIO D. PINZON, respondents.

CONCEPCION, JR., J.:

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

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

Finding the petition to be sufficient in form and substance, the respondent Judge ordered the issuance of a writ of attachment against
the properties of the defendant upon the plaintiff's filing of a bond in the amount of P37,190.00. 2

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

By reason thereof, Pinzon amended his complaint to include K.O. Glass Construction Co., Inc. as co-defendant of Kenneth O. Glass. 4

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

On June 19, 1978, the defendants therein filed a bond in the amount of P37,190.00 and asked the court for the release of the same
amount deposited with the Clerk of Court, 7 but, the respondent Judge did not order the release of the money deposited. 8

Hence, the present recourse. As prayed for, the Court issued a temporary restraining order, restraining the respondent Judge from
further proceeding with the trial of the case. 9

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

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

Sec. 1. Grounds upon which attachment may issue. A plaintiff or any proper party may, at the commencement of the action or at
any time thereafter, have the property of the adverse party attached as security for the satisfaction of any judgment that may be
recovered in the following cases:
(a) In an action for the recovery of money or damages on a cause of action arising from contract, express or implied, against a party
who is about to depart from the Philippines with intent to defraud his creditor;

(b) In an action for money or property embezzled or fraudulently misapplied or converted to his own use by a public officer, or an
officer of a corporation, or an attorney, factor, broker, agent, or clerk, in the course of his employment as such, or by any other person
in a fiduciary capacity, or for a willful violation of duty;

(c) In an action to recover the possession of personal property unjustly detained, when the property, or any part thereof, has been
concealed, removed, or disposed of to prevent its being found or taken by the applicant or an officer;

(d) In an action against the party who has been guilty of a fraud in contracting the debt or incurring the obligation upon which the
action is brought, or in concealing or disposing of the property for the taking, detention or conversion of which the action is brought;

(e) In an action against a party who has removed or disposed of his property, or is about to do so, with intent to defraud his creditors;

(f) In an action against a party who resides out of the Philippines, or on whom summons may be served by publication.

In ordering the issuance of the controversial writ of preliminary attachment, the respondent Judge said and We quote:

The plaintiff filed a complaint for a sum of money with prayer for Writ of Preliminary Attachment dated September 14, 1977, alleging
that the defendant who is a foreigner may, at any time, depart from the Philippines with intent to defraud his creditors including the
plaintiff herein; that there is no sufficient security for the claim sought to be enforced by this action; that the amount due the plaintiff
is as much as the sum for which an order of attachment is sought to be granted; and that defendant has sufficient leviable assets in
the Philippines consisting of collectibles and payables due from Philippine Geothermal, Inc., which may be disposed of at any time, by
defendant if no Writ of Preliminary Attachment may be issued. Finding said motion and petition to be sufficient in form and
substance. 10

Pinzon however, did not allege that the defendant Kenneth O. Glass "is a foreigner (who) may, at any time, depart from the Philippines
with intent to defraud his creditors including the plaintiff." He merely stated that the defendant Kenneth O. Glass is a foreigner. The
pertinent portion of the complaint reads, as follows:

15. Plaintiff hereby avers under oath that defendant is a foreigner and that said defendant has a valid and just obligation to plaintiff
in the total sum of P32,290.00 arising out from his failure to pay (i) service charges for the hauling of construction materials; (ii) rentals
for the lease of plaintiff's Isuzu Cargo truck, and (iii) total cost of the missing/destroyed spare parts of said leased unit; hence, a
sufficient cause of action exists against said defendant. Plaintiff also avers under oath that there is no sufficient security for his claim
against the defendant in the event a judgment be rendered in favor of the plaintiff. however, defendant has sufficient assets in the
Philippines in the form of collectible and payables due from the Philippine Geothermal, Inc. with office address at Citibank Center,
Paseo de Roxas, Makati, Metro Manila, but which properties, if not timely attached, may be disposed of by defendants and would
render ineffectual the reliefs prayed for by plaintiff in this Complaint. 11

In his Amended Complaint, Pinzon alleged the following:

15. Plaintiff hereby avers under oath that defendant GLASS is an American citizen who controls most, if not all, the affairs of defendant
CORPORATION. Defendants CORPORATION and GLASS have a valid and just obligation to plaintiff in the total sum of P32,290.00 arising
out for their failure to pay (i) service charges for hauling of construction materials, (ii) rentals for the lease of plaintiff's Isuzu Cargo
truck, and (iii) total cost of the missing/destroyed spare parts of said leased unit: hence, a sufficient cause of action exist against
said defendants. Plaintiff also avers under oath that there is no sufficient security for his claim against the defendants in the event a
judgment be rendered in favor of the plaintiff. however, defendant CORPORATION has sufficient assets in the Philippines in the form
of collectibles and payables due from the Philippine Geothermal., Inc. with office address at Citibank Center, Paseo de Roxas, Makati,
Metro Manila, but which properties, if not timely attached, may be disposed of by defendants and would render ineffectual the reliefs
prayed for by plaintiff in this Complaint. 12

There being no showing, much less an allegation, that the defendants are about to depart from the Philippines with intent to defraud
their creditor, or that they are non-resident aliens, the attachment of their properties is not justified.

Second, the affidavit submitted by Pinzon does not comply with the Rules. Under the Rules, an affidavit for attachment must state
that (a) sufficient cause of action exists, (b) the case is one of those mentioned in Section I (a) of Rule 57; (c) there is no other sufficient
security 'or the claim sought to be enforced by the action, and (d) the amount due to the applicant for attachment or the value of the
property the possession of which he is entitled to recover, is as much as the sum for which the order is granted above all legal
counterclaims. Section 3, Rule 57 of the Revised Rules of Court reads. as follows:

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

In his affidavit, Pinzon stated the following:

I, ANTONIO D. PINZON Filipino, of legal age, married and with residence and postal address at 1422 A. Mabini Street, Ermita, Manila,
subscribing under oath, depose and states that.

1. On October 6,1977,I filed with the Court of First Instance of Rizal, Pasay City Branch, a case against Kenneth O. Glass entitled
'ANTONIO D. PINZON vs. KENNETH O. GLASS', docketed as Civil Case No. 5902-P;

2. My Complaint against Kenneth O. Glass is based on several causes of action, namely:

(i) On February 15, 1977, we mutually agreed that I undertake to haul his construction materials from Manila to his construction
project in Bulalo, Bay, Laguna and vice-versa, for a consideration of P50.00 per hour;

(ii) Also, on June 18, 1977, we entered into a separate agreement whereby my Isuzu cargo truck will be leased to him for a
consideration of P4,000.00 a month payable on the 15th day of each month;

(iii) On September 7, 1977, after making use of my Isuzu truck, he surrendered the same without paying the monthly rentals for the
leased Isuzu truck and the peso equivalent of the spare parts that were either destroyed or misappropriated by him;

3. As of today, October 11, 1977, Mr. Kenneth 0. Glass still owes me the total sum of P32,290.00 representing his obligation arising
from the hauling of his construction materials, monthly rentals for the lease Isuzu truck and the peso equivalent of the spare parts
that were either destroyed or misappropriated by him;

4. I am executing this Affidavit to attest to the truthfulness of the foregoing and in compliance with the provisions of Rule 57 of the
Revised Rules of Court. 13

While Pinzon may have stated in his affidavit that a sufficient cause of action exists against the defendant Kenneth O. Glass, he did not
state therein that "the case is one of those mentioned in Section 1 hereof; that there is no other sufficient security for the claim sought
to be enforced by the action; and that the amount due to the applicant is as much as the sum for which the order granted above all
legal counter-claims." It has been held that the failure to allege in the affidavit the requisites prescribed for the issuance of a writ of
preliminary attachment, renders the writ of preliminary attachment issued against the property of the defendant fatally defective,
and the judge issuing it is deemed to have acted in excess of his jurisdiction. 14

Finally, it appears that the petitioner has filed a counterbond in the amount of P37,190.00 to answer for any judgment that may be
rendered against the defendant. Upon receipt of the counter-bond the respondent Judge should have discharged the attachment
pursuant to Section 12, Rule 57 of the Revised Rules of Court which reads, as follows:

Section 12. Discharge of attachment upon giving counterbond.At any time after an order of attachment has been granted, the party
whose property has been attached, or the person appearing on his behalf, may upon reasonable notice to the applicant, apply to the
judge who granted the order, or to the judge of the court in which the action is pending, for an order discharging the attachment
wholly or in part on the security given. The judge shall, after hearing, order the discharge of the attachment if a cash deposit is made
or a counterbond executed to the attaching creditor is filed, on behalf of the adverse party, with the clerk or judge of the court where
the application is made, in an amount equal to the value of the property attached as determined by the judge, to secure the payment
of any judgment that the attaching creditor may recover in the action. Upon the filing of such counter-bond, copy thereof shall
forthwith be served on the attaching creditor or his lawyer. Upon the discharge of an attachment in accordance with the provisions of
this section the property attached, or the proceeds of any sale thereof, shall be delivered to the party making the deposit or giving the
counter-bond, or the person appearing on his behalf, the deposit or counter-bond aforesaid standing in the place of the property so
released. Should such counter-bond for any reason be found to be, or become, insufficient, and the party furnishing the same fail to
file an additional counter-bond the attaching creditor may apply for a new order of attachment.
The filing of the counter-bond will serve the purpose of preserving the defendant's property and at the same time give the plaintiff
security for any judgment that may be obtained against the defendant. 15

WHEREFORE, the petition is GRANTED and the writ prayed for is issued. The orders issued by the respondent Judge on October 11,
19719, January 26, 1978, and February 3, 1978 in Civil Case No. 5902-P of the Court of First Instance of Rizal, insofar as they relate to
the issuance of the writ of preliminary attachment, should be as they are hereby ANNULLED and SET ASIDE and the respondents are
hereby ordered to forthwith release the garnished amount of P37,190.00 to the petitioner. The temporary restraining order,
heretofore issued, is hereby lifted and set aside. Costs against the private respondent Antonio D. Pinzon.

SO ORDERED.

THIRD DIVISION

G.R. No. 175587 September 21, 2007

PHILIPPINE COMMERCIAL INTERNATIONAL BANK, Petitioner,

vs.
JOSEPH ANTHONY M. ALEJANDRO, Respondent.

DECISION

YNARES-SANTIAGO, J.:

This petition for review assails the May 31, 2006 Decision 1 of the Court of Appeals in CA-G.R. CV No. 78200 affirming the August 30,
2000 Decision2 of the Regional Trial Court of Makati, which granted respondent Joseph Anthony M. Alejandros claim for damages
arising from petitioner Philippine Commercial International Banks (PCIB) invalid garnishment of respondents deposits.

On October 23, 1997, petitioner filed against respondent a complaint3 for sum of money with prayer for the issuance of a writ of
preliminary attachment. Said complaint alleged that on September 10, 1997, respondent, a resident of Hong Kong, executed in favor
of petitioner a promissory note obligating himself to pay P249,828,588.90 plus interest. In view of the fluctuations in the foreign
exchange rates which resulted in the insufficiency of the deposits assigned by respondent as security for the loan, petitioner requested
the latter to put up additional security for the loan. Respondent, however, sought a reconsideration of said request pointing out
petitioners alleged mishandling of his account due to its failure to carry out his instruction to close his account as early as April 1997,
when the prevailing rate of exchange of the US Dollar to Japanese yen was US$1.00:JPY127.50. 4 It appears that the amount
of P249,828,588.90 was the consolidated amount of a series of yen loans granted by petitioner to respondent during the months of
February and April 1997.5

In praying for the issuance of a writ of preliminary attachment under Section 1 paragraphs (e) and (f) of Rule 57 of the Rules of Court,
petitioner alleged that (1) respondent fraudulently withdrew his unassigned deposits notwithstanding his verbal promise to PCIB
Assistant Vice President Corazon B. Nepomuceno not to withdraw the same prior to their assignment as security for the loan; and (2)
that respondent is not a resident of the Philippines. The application for the issuance of a writ was supported with the affidavit of
Nepomuceno.6

On October 24, 1997, the trial court granted the application and issued the writ ex parte7 after petitioner posted a bond in the amount
of P18,798,734.69, issued by Prudential Guarantee & Assurance Inc., under Bond No. HO-46764-97. On the same date, the bank
deposits of respondent with Rizal Commercial Banking Corporation (RCBC) were garnished. On October 27, 1997, respondent, through
counsel, filed a manifestation informing the court that he is voluntarily submitting to its jurisdiction.8

Subsequently, respondent filed a motion to quash 9 the writ contending that the withdrawal of his unassigned deposits was not
fraudulent as it was approved by petitioner. He also alleged that petitioner knew that he maintains a permanent residence at Calle
Victoria, Ciudad Regina, Batasan Hills, Quezon City, and an office address in Makati City at the Law Firm Romulo Mabanta
Buenaventura Sayoc & De los Angeles, 10 where he is a partner. In both addresses, petitioner regularly communicated with him through
its representatives. Respondent added that he is the managing partner of the Hong Kong branch of said Law Firm; that his stay in Hong
Kong is only temporary; and that he frequently travels back to the Philippines.

On December 24, 1997, the trial court issued an order quashing the writ and holding that the withdrawal of respondents unassigned
deposits was not intended to defraud petitioner. It also found that the representatives of petitioner personally transacted with
respondent through his home address in Quezon City and/or his office in Makati City. It thus concluded that petitioner misrepresented
and suppressed the facts regarding respondents residence considering that it has personal and official knowledge that for purposes
of service of summons, respondents residence and office addresses are located in the Philippines. The dispositive portion of the
courts decision is as follows:

WHEREFORE, the URGENT MOTION TO QUASH, being meritorious, is hereby GRANTED, and the ORDER of 24 October 1997 is hereby
RECONSIDERED and SET ASIDE and the WRIT OF attachment of the same is hereby DISCHARGED.

SO ORDERED.11

With the denial12 of petitioners motion for reconsideration, it elevated the case to the Court of Appeals (CA-G.R. SP No. 50748) via a
petition for certiorari. On May 10, 1999, the petition was dismissed for failure to prove that the trial court abused its discretion in
issuing the aforesaid order.13 Petitioner filed a motion for reconsideration but was denied on October 28, 1999. 14 On petition with this
Court, the case was dismissed for late filing in a minute resolution (G.R. No. 140605) dated January 19, 2000.15 Petitioner filed a motion
for reconsideration but was likewise denied with finality on March 6, 2000.16

Meanwhile, on May 20, 1998, respondent filed a claim for damages in the amount of P25 Million 17 on the attachment bond (posted
by Prudential Guarantee & Assurance, Inc., under JCL(4) No. 01081, Bond No. HO-46764-97) on account of the wrongful garnishment
of his deposits. He presented evidence showing that his P150,000.00 RCBC check payable to his counsel as attorneys fees, was
dishonored by reason of the garnishment of his deposits. He also testified that he is a graduate of the Ateneo de Manila University in
1982 with a double degree of Economics and Management Engineering and of the University of the Philippines in 1987 with the degree
of Bachelor of Laws. Respondent likewise presented witnesses to prove that he is a well known lawyer in the business community
both in the Philippines and in Hong Kong.18 For its part, the lone witness presented by petitioner was Nepomuceno who claimed that
she acted in good faith in alleging that respondent is a resident of Hong Kong. 19

On August 30, 2000, the trial court awarded damages to respondent in the amount of P25 Million without specifying the basis thereof,
thus:

WHEREFORE, premises above considered, and defendant having duly established his claim in the amount of P25,000,000.00, judgment
is hereby rendered ordering Prudential Guarantee & [Assurance] Co., which is solidarily liable with plaintiff to pay defendant the full
amount of bond under Prudential Guarantee & Assurance, Inc. JCL(4) No. 01081, [Bond No. HO-46764-97], dated 24 October 1997 in
the amount of P18,798,734.69. And, considering that the amount of the bond is insufficient to fully satisfy the award for damages,
plaintiff is hereby ordered to pay defendant the amount of P6,201,265.31.

SO ORDERED.20

The trial court denied petitioners motion for reconsideration on October 24, 2000. 21

Petitioner elevated the case to the Court of Appeals which affirmed the findings of the trial court. It held that in claiming that
respondent was not a resident of the Philippines, petitioner cannot be said to have been in good faith considering that its knowledge
of respondents Philippine residence and office address goes into the very issue of the trial courts jurisdiction which would have been
defective had respondent not voluntarily appeared before it.

The Court of Appeals, however, reduced the amount of damages awarded to petitioner and specified their basis. The dispositive
portion of the decision of the Court of Appeals states:

WHEREFORE, the appeal is PARTIALLY GRANTED and the decision appealed from is hereby MODIFIED. The award of damages in the
amount of P25,000,000.00 is deleted. In lieu thereof, Prudential Guarantee & [Assurance, Inc.], which is solidarily liable with appellant
[herein petitioner], is ORDERED to pay appellee [herein respondent] P2,000,000.00 as nominal damages; P5,000,000.00 as moral
damages; and P1,000,000.00 as attorneys fees, to be satisfied against the attachment bond under Prudential Guarantee & Assurance,
Inc. JCL (4) No. 01081.

SO ORDERED.22

Both parties moved for reconsideration. On November 21, 2006, the Court of Appeals denied petitioners motion for reconsideration
but granted that of respondents by ordering petitioner to pay additional P5Million as exemplary damages.23

Hence, the instant petition.

At the outset, it must be noted that the ruling of the trial court that petitioner is not entitled to a writ of attachment because
respondent is a resident of the Philippines and that his act of withdrawing his deposits with petitioner was without intent to defraud,
can no longer be passed upon by this Court. More importantly, the conclusions of the court that petitioner bank misrepresented that
respondent was residing out of the Philippines and suppressed the fact that respondent has a permanent residence in Metro Manila
where he may be served with summons, are now beyond the power of this Court to review having been the subject of a final and
executory order. Said findings were sustained by the Court of Appeals in CA-G.R. SP No. 50784 and by this Court in G.R. No. 140605.
The rule on conclusiveness of judgment, which obtains under the premises, precludes the relitigation of a particular fact or issue in
another action between the same parties even if based on a different claim or cause of action. The judgment in the prior action
operates as estoppel as to those matters in issue or points controverted, upon the determination of which the finding or judgment
was rendered. The previous judgment is conclusive in the second case, as to those matters actually and directly controverted and
determined.24 Hence, the issues of misrepresentation by petitioner and the residence of respondent for purposes of service of
summons can no longer be questioned by petitioner in this case.

The core issue for resolution is whether petitioner bank is liable for damages for the improper issuance of the writ of attachment
against respondent.

We rule in the affirmative.

Notwithstanding the final judgment that petitioner is guilty of misrepresentation and suppression of a material fact, the latter
contends that it acted in good faith. Petitioner also contends that even if respondent is considered a resident of the Philippines,
attachment is still proper under Section 1, paragraph (f), Rule 57 of the Rules of Court since he (respondent) is a resident who is
temporarily out of the Philippines upon whom service of summons may be effected by publication.

Petitioners contentions are without merit.

While the final order of the trial court which quashed the writ did not categorically use the word "bad faith" in characterizing the
representations of petitioner, the tenor of said order evidently considers the latter to have acted in bad faith by resorting to a
deliberate strategy to mislead the court. Thus

In the hearings of the motion, and oral arguments of counsels before the Court, it appears that plaintiff BANK through its contracting
officers Vice President Corazon B. Nepomuceno and Executive Vice President Jose Ramon F. Revilla, personally transacted with
defendant mainly through defendants permanent residence in METRO-MANILA, either in defendants home address in Quezon City
or his main business address at the Romulo Mabanta Buenaventura Sayoc & Delos Angeles in MAKATI and while at times follow ups
were made through defendants temporary home and business addresses in Hongkong. It is therefore clear that plaintiff could not
deny their personal and official knowledge that defendants permanent and official residence for purposes of service of summons is
in the Philippines. In fact, this finding is further confirmed by the letter of Mr. JOHN GOKONGWEI, JR. Chairman, Executive Committee
of plaintiff BANK, in his letter dated 6 October 1997 on the subject loan to defendant of the same law firm was addressed to the
ROMULO LAW FIRM in MAKATI.

[Anent the] second ground of attachment x x x [t]he Court finds that the amount withdrawn was not part of defendants peso deposits
assigned with the bank to secure the loan and as proof that the withdrawal was not intended to defraud plaintiff as creditor is that
plaintiff approved and allowed said withdrawals. It is even noted that when the Court granted the prayer for attachment it was mainly
on the first ground under Section 1(f) of Rule 57 of the 1997 Rules of Civil Procedure, that defendant resides out of the Philippines.

On the above findings, it is obvious that plaintiff already knew from the beginning the deficiency of its second ground for attachment
[i.e.,] disposing properties with intent to defraud his creditors, and therefore plaintiff had to resort to this misrepresentation that
defendant was residing out of the Philippines and suppressed the fact that defendants permanent residence is in METRO MANILA
where he could be served with summons.

On the above findings, and mainly on the misrepresentations made by plaintiff on the grounds for the issuance of the attachment in
the verified complaint, the Court concludes that defendant has duly proven its grounds in the MOTION and that plaintiff is not entitled
to the attachment.25

Petitioner is therefore barred by the principle of conclusiveness of judgment from again invoking good faith in the application for the
issuance of the writ. Similarly, in the case of Hanil Development Co., Ltd. v. Court of Appeals,26the Court debunked the claim of good
faith by a party who maliciously sought the issuance of a writ of attachment, the bad faith of said party having been previously
determined in a final decision which voided the assailed writ. Thus

Apropos the Application for Judgment on the Attachment Bond, Escobar claims in its petition that the award of attorneys fees and
injunction bond premium in favor of Hanil is [contrary] to law and jurisprudence. It contends that no malice or bad faith may be
imputed to it in procuring the writ.
Escobars protestation is now too late in the day. The question of the illegality of the attachment and Escobars bad faith in obtaining
it has long been settled in one of the earlier incidents of this case. The Court of Appeals, in its decision rendered on February 3, 1983
in C.A.-G.R. No. SP-14512, voided the challenged writ, having been issued with grave abuse of discretion. Escobars bad faith in
procuring the writ cannot be doubted. Its Petition for the Issuance of Preliminary Attachment made such damning allegations that:
Hanil was already able to secure a complete release of its final collection from the MPWH; it has moved out some of its heavy
equipments for unknown destination, and it may leave the country anytime. Worse, its Ex Parte Motion to Resolve Petition alleged
that "after personal verification by (Escobar) of (Hanils) equipment in Cagayan de Oro City, it appears that the equipments were no
longer existing from their compound." All these allegations of Escobar were found to be totally baseless and untrue.

Even assuming that the trial court did not make a categorical pronouncement of misrepresentation and suppression of material facts
on the part of petitioner, the factual backdrop of this case does not support petitioners claim of good faith. The facts and
circumstances omitted are highly material and relevant to the grant or denial of writ of attachment applied for.

Finally, there is no merit in petitioners contention that respondent can be considered a resident who is temporarily out of the
Philippines upon whom service of summons may be effected by publication, and therefore qualifies as among those against whom a
writ of attachment may be issued under Section 1, paragraph (f), Rule 57 of the Rules of Court which provides:

(f) In an action against a party x x x on whom summons may be served by publication.

In so arguing, petitioner attempts to give the impression that although it erroneously invoked the ground that respondent does not
reside in the Philippines, it should not be made to pay damages because it is in fact entitled to a writ of attachment had it invoked the
proper ground under Rule 57. However, even on this alternative ground, petitioner is still not entitled to the issuance of a writ of
attachment.

The circumstances under which a writ of preliminary attachment may be issued are set forth in Section 1, Rule 57 of the Rules of Court,
to wit:

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

(a) In an action for the recovery of a specified amount of money or damages, other than moral and exemplary, on a cause of action
arising from law, contract, quasi-contract, delict or quasi-delict against a party who is about to depart from the Philippines with intent
to defraud his creditors;

(b) In an action for money or property embezzled or fraudulently misapplied or converted to his own use by a public officer, or an
officer of a corporation or an attorney, factor, broker, agent, or clerk, in the course of his employment as such, or by any other person
in a fiduciary capacity, or for a willful violation of duty;

(c) In an action to recover the possession of personal property unjustly or fraudulently taken, detained, or converted, when the
property, or any part thereof, has been concealed, removed, or disposed of to prevent its being found or taken by the applicant or an
authorized person;

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

(e) In an action against a party who has removed or disposed of his property, or is about to do so, with intent to defraud his creditors;

(f) In an action against a party who resides out of the Philippines, or on whom summons may be served by publication.

The purposes of preliminary attachment are: (1) to seize the property of the debtor in advance of final judgment and to hold it for
purposes of satisfying said judgment, as in the grounds stated in paragraphs (a) to (e) of Section 1, Rule 57 of the Rules of Court; or (2)
to acquire jurisdiction over the action by actual or constructive seizure of the property in those instances where personal or substituted
service of summons on the defendant cannot be effected, as in paragraph (f) of the same provision. 27

Corollarily, in actions in personam, such as the instant case for collection of sum of money, 28 summons must be served by personal or
substituted service, otherwise the court will not acquire jurisdiction over the defendant. In case the defendant does not reside and is
not found in the Philippines (and hence personal and substituted service cannot be effected), the remedy of the plaintiff in order for
the court to acquire jurisdiction to try the case is to convert the action into a proceeding in rem or quasi in rem by attaching the
property of the defendant.29Thus, in order to acquire jurisdiction in actions in personam where defendant resides out of and is not
found in the Philippines, it becomes a matter of course for the court to convert the action into a proceeding in rem or quasi in rem by
attaching the defendants property. The service of summons in this case (which may be by publication coupled with the sending by
registered mail of the copy of the summons and the court order to the last known address of the defendant), is no longer for the
purpose of acquiring jurisdiction but for compliance with the requirements of due process. 30

However, where the defendant is a resident who is temporarily out of the Philippines, attachment of his/her property in an action in
personam, is not always necessary in order for the court to acquire jurisdiction to hear the case.

Section 16, Rule 14 of the Rules of Court reads:

Sec. 16. Residents temporarily out of the Philippines. When an action is commenced against a defendant who ordinarily resides
within the Philippines, but who is temporarily out of it, service may, by leave of court, be also effected out of the Philippines, as under
the preceding section.

The preceding section referred to in the above provision is Section 15 which provides for extraterritorial service (a) personal service
out of the Philippines, (b) publication coupled with the sending by registered mail of the copy of the summons and the court order to
the last known address of the defendant; or (c) in any other manner which the court may deem sufficient.

In Montalban v. Maximo,31 however, the Court held that substituted service of summons (under the present Section 7, Rule 14 of the
Rules of Court) is the normal mode of service of summons that will confer jurisdiction on the court over the person of residents
temporarily out of the Philippines. Meaning, service of summons may be effected by (a) leaving copies of the summons at the
defendants residence with some person of suitable discretion residing therein, or (b) by leaving copies at the defendants office or
regular place of business with some competent person in charge thereof. 32 Hence, the court may acquire jurisdiction over an action
in personam by mere substituted service without need of attaching the property of the defendant.

The rationale in providing for substituted service as the normal mode of service for residents temporarily out of the Philippines, was
expounded in Montalban v. Maximo,33 in this wise:

A man temporarily absent from this country leaves a definite place of residence, a dwelling where he lives, a local base, so to speak,
to which any inquiry about him may be directed and where he is bound to return. Where one temporarily absents himself, he leaves
his affairs in the hands of one who may be reasonably expected to act in his place and stead; to do all that is necessary to protect his
interests; and to communicate with him from time to time any incident of importance that may affect him or his business or his affairs.
It is usual for such a man to leave at his home or with his business associates information as to where he may be contacted in the
event a question that affects him crops up.

Thus, in actions in personam against residents temporarily out of the Philippines, the court need not always attach the defendants
property in order to have authority to try the case. Where the plaintiff seeks to attach the defendants property and to resort to the
concomitant service of summons by publication, the same must be with prior leave, precisely because, if the sole purpose of the
attachment is for the court to acquire jurisdiction, the latter must determine whether from the allegations in the complaint,
substituted service (to persons of suitable discretion at the defendants residence or to a competent person in charge of his office or
regular place of business) will suffice, or whether there is a need to attach the property of the defendant and resort to service of
summons by publication in order for the court to acquire jurisdiction over the case and to comply with the requirements of due
process.

In the instant case, it must be stressed that the writ was issued by the trial court mainly on the representation of petitioner that
respondent is not a resident of the Philippines.34 Obviously, the trial courts issuance of the writ was for the sole purpose of acquiring
jurisdiction to hear and decide the case. Had the allegations in the complaint disclosed that respondent has a residence in Quezon City
and an office in Makati City, the trial court, if only for the purpose of acquiring jurisdiction, could have served summons by substituted
service on the said addresses, instead of attaching the property of the defendant. The rules on the application of a writ of attachment
must be strictly construed in favor of the defendant. For attachment is harsh, extraordinary, and summary in nature; it is a rigorous
remedy which exposes the debtor to humiliation and annoyance. 35 It should be resorted to only when necessary and as a last remedy.

It is clear from the foregoing that even on the allegation that respondent is a resident temporarily out of the Philippines, petitioner is
still not entitled to a writ of attachment because the trial court could acquire jurisdiction over the case by substituted service instead
of attaching the property of the defendant. The misrepresentation of petitioner that respondent does not reside in the Philippines
and its omission of his local addresses was thus a deliberate move to ensure that the application for the writ will be granted.

In light of the foregoing, the Court of Appeals properly sustained the finding of the trial court that petitioner is liable for damages for
the wrongful issuance of a writ of attachment against respondent.
Anent the actual damages, the Court of Appeals is correct in not awarding the same inasmuch as the respondent failed to establish
the amount garnished by petitioner. It is a well settled rule that one who has been injured by a wrongful attachment can recover
damages for the actual loss resulting therefrom. But for such losses to be recoverable, they must constitute actual damages duly
established by competent proofs, which are, however, wanting in the present case.36

Nevertheless, nominal damages may be awarded to a plaintiff whose right has been violated or invaded by the defendant, for the
purpose of vindicating or recognizing that right, and not for indemnifying the plaintiff for any loss suffered by him. Its award is thus
not for the purpose of indemnification for a loss but for the recognition and vindication of a right. Indeed, nominal damages are
damages in name only and not in fact.37 They are recoverable where some injury has been done but the pecuniary value of the damage
is not shown by evidence and are thus subject to the discretion of the court according to the circumstances of the case. 38

In this case, the award of nominal damages is proper considering that the right of respondent to use his money has been violated by
its garnishment. The amount of nominal damages must, however, be reduced from P2 million to P50,000.00 considering the short
period of 2 months during which the writ was in effect as well as the lack of evidence as to the amount garnished.1wphi1

Likewise, the award of attorneys fees is proper when a party is compelled to incur expenses to lift a wrongfully issued writ of
attachment. The basis of the award thereof is also the amount of money garnished, and the length of time respondents have been
deprived of the use of their money by reason of the wrongful attachment. 39 It may also be based upon (1) the amount and the
character of the services rendered; (2) the labor, time and trouble involved; (3) the nature and importance of the litigation and business
in which the services were rendered; (4) the responsibility imposed; (5) the amount of money and the value of the property affected
by the controversy or involved in the employment; (6) the skill and the experience called for in the performance of the services; (7)
the professional character and the social standing of the attorney; (8) the results secured, it being a recognized rule that an attorney
may properly charge a much larger fee when it is contingent than when it is not. 40

All the aforementioned weighed, and considering the short period of time it took to have the writ lifted, the favorable decisions of the
courts below, the absence of evidence as to the professional character and the social standing of the attorney handling the case and
the amount garnished, the award of attorneys fees should be fixed not at P1 Million, but only at P200,000.00.

The courts below correctly awarded moral damages on account of petitioners misrepresentation and bad faith; however, we find the
award in the amount of P5 Million excessive. Moral damages are to be fixed upon the discretion of the court taking into consideration
the educational, social and financial standing of the parties.41Moral damages are not intended to enrich a complainant at the expense
of a defendant.42 They are awarded only to enable the injured party to obtain means, diversion or amusements that will serve to
obviate the moral suffering he has undergone, by reason of petitioners culpable action. Moral damages must be commensurate with
the loss or injury suffered. Hence, the award of moral damages is reduced to P500,000.00.

Considering petitioners bad faith in securing the writ of attachment, we sustain the award of exemplary damages by way of example
or correction for public good. This should deter parties in litigations from resorting to baseless and preposterous allegations to obtain
writs of attachments. While as a general rule, the liability on the attachment bond is limited to actual (or in some cases, temperate or
nominal) damages, exemplary damages may be recovered where the attachment was established to be maliciously sued
out.43 Nevertheless, the award of exemplary damages in this case should be reduced from P5M to P500,000.00.

Finally, contrary to the claim of petitioner, the instant case for damages by reason of the invalid issuance of the writ, survives the
dismissal of the main case for sum of money. Suffice it to state that the claim for damages arising from such wrongful attachment may
arise and be decided separately from the merits of the main action.44

WHEREFORE, the petition is PARTIALLY GRANTED. The May 31, 2006 Decision of the Court of Appeals in CA-G.R. CV No. 78200 is
AFFIRMED with MODIFICATIONS. As modified, petitioner Philippine Commercial International Bank is ordered to pay respondent
Joseph Anthony M. Alejandro the following amounts: P50,000.00 as nominal damages, P200,000.00 as attorneys fees;
and P500,000.00 as moral damages, and P500,000.00 as exemplary damages, to be satisfied against the attachment bond issued by
Prudential Guarantee & Assurance Inc.,45 under JCL (4) No. 01081, Bond No. HO-46764-97.

No pronouncement as to costs.

SO ORDERED.
EN BANC

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.

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.