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ProvRem (PreAttachment) Full text 062318 1

G.R. No. L-48955 July 27, 1943 charged, is now permitted to issue all the auxiliary writs
necessary to carry such jurisdiction into effect. A similar legal
GERVASIO ERAÑA, et al., petitioners, principle was recognized before in scattered provisions of law
vs. or decisions (see Act No. 136, section 19; Revised
JOSE O. VERA, Judge of First Instance of Manila, and Administrative Code, section 145-G; Act No. 190, section 610;
MARIE JOSEPHINE PANZANI, respondents. Shioji vs. Harvey, 43 Phil., 333, 344), applicable only in some
courts and in certain cases, and does not seem to cover the
Vicente J. Francisco for petitioners. question now before us. Now, it is made general and applicable
Mariano H. de Joya for respondents. in all cases and in all courts provided the requirements therein
specified are present.
MORAN, J.:
At the hearing of this case, it has been suggested that as the
Respondent Marie Josephine Panzani was charged in the Court respondent Judge merely followed former decisions of this
of First Instance of Manila with the crime of murder committed Court, he should not be blamed therefor and that accordingly
against Dr. Francisco Erana and with the crime of frustrated the writ does not lie against him. This suggestion confuses the
murder committed against Bienvenido P. Erana. In these two basic ground for the writ. The personal motives of the
criminal cases, the offended parties reserved their right to respondent Judge as well as his good or bad faith are in no way
institute a separate civil action for the civil liability arising from material for the grant or denial of the writ. The only issue
the two crimes charged. The same respondent was charged in before us is whether the action taken by him constitutes a
the same court in another criminal case with estafa wherein the mistake of law. We hold it be such according to our
right to institute a separate civil action was not waived nor construction of the law as it is. The fact that he has followed
reserved by the offended persons. previous rulings of this Court may exempt him from blame but
it can in no wise wipe out his mistake. And such mistake,
In these three criminal cases — for murder, frustrated murder however well-grounded it may be, is a sufficient basis for
and estafa — a petition was filed by the offended parties granting the writ.
wherein a preliminary attachment of the properties belonging to
respondent was applied for upon some of the grounds specified In the criminal cases for murder and frustrated murder, since
in Rule 59, section 1, of the new Rules of Court. The Court the offended persons reserved their right to institute their civil
issued an order declaring itself to be without authority to issue action separately, preliminary attachment is not proper. As the
writs of preliminary attachment in criminal cases. Hence, this court in said criminal cases has no jurisdiction of the civil
petition for combined writs of certiorari and mandamus to annul actions arising from the offenses charged, there is nothing
such order and to compel the respondent court to consider the before the court to which the preliminary attachment may be
merits of the motion for preliminary attachment. considered as an auxiliary writ and, therefore, the court has no
jurisdiction to issue such writ.
The question here raised is, therefore, whether or not a court,
acting on a criminal case, has authority to grant preliminary Judgment is, therefore, rendered declaring the respondent Court
attachment. According to Rule 107, section 1, of the new Rules with authority to grant preliminary writ of attachment in the
of Court, "when a criminal action is instituted, the civil action estafa case wherein the civil action arising from the offense
for recovery of civil liability arising from the offense charged is charged is deemed instituted, and the respondent Court is
impliedly instituted with the criminal action, unless the hereby ordered to act upon the merits of the motion for
offended party expressly waives the civil action or reserves his preliminary attachment filed therein by the offended parties.
right to institute it separately." In the estafa case, since the With respect, however, to the criminal cases for murder and
offended persons did not either waive or reserve their right to frustrated murder, the respondent is declared to be without
institute their civil action separately, the same is deemed authority to issue preliminary writs of attachment therein, and,
instituted with the criminal action. There were therefore, in the accordingly, its order to that effects is valid. Without costs.
estafa case two actions before the court: the criminal action for
the punishment of the accused, and the civil action for recovery Yulo, C.J., concurs.
of the money fraudulently taken by her. If the Court had
jurisdiction over the civil action, it must necessarily have
jurisdiction of all its necessary incidents. Indeed, it is expressly PARAS, J.:
provided in Rule 124, section 6, that "when by law jurisdiction
is conferred on a court or judicial officer, all auxilliary writs, I vote for a complete abandonment of the old doctrine because,
processes and other means necessary to carry it into effect may in my humble opinion, the new interpretation or application of
be employed by such court or officer; and if the procedure to be the law or rule is sound and correct.
followed in the exercise of such jurisdiction is not specifically
pointed out by these rules, any suitable process or mode of
proceeding may be adopted which appears most conformable to Separate Opinions
the spirit of said rules." One of the auxiliary writs to carry into
effect the jurisdiction of the court over the civil action is the BOCOBO, J., concurring:
preliminary writ of attachment without which the judgment of
the court awarding civil indemnity may be nugatory. Other I concur in the judgment which declares the respondent Court
processes which the court may issue are those which refer to the with authority to grant a preliminary writ of attachment in the
execution of such judgment where the rules applicable in civil estafa case, wherein the civil action arising from the offense
cases should be followed. charged is deemed instituted. But my reasons are different from
those set forth in the opinion penned by Mr. Justice Moran.
Respondents, however, invoke the decisions of this Court in
U.S. vs. Namit, 38 Phil., 926 and People vs. Moreno, 60 Phil., In this jurisdiction, criminal responsibility carries with it civil
674, wherein it was held that preliminary attachment is not liability, the latter consisting of restitution, reparation of the
proper in criminal cases. But this ruling is predicated damaged caused and indemnification for consequential
fundamentally upon the theory that preliminary attachment is a damages. (Arts. 17 and 119, old Penal Code; and Arts. 100 and
purely statutory remedy and there was then no clear legal 104, Revised Penal Code.) Under the Spanish Code of Criminal
provision making it applicable in criminal proceedings. All Procedure, the criminal and the civil actions could be brought
doubts on this question have, however, disappeared upon the either jointly or separately (Art. 111). If the criminal action
promulgation of the new Rules of Court wherein, by clear alone was filed, the civil action was understood to have been
authority of Rule 124, section 6, above quoted, a criminal court likewise utilized ("se entendera tambien utilizada la civil",)
having jurisdiction over the civil action arising from the offense unless the civil action was waived or the right to file it
ProvRem (PreAttachment) Full text 062318 2
separately was expressly reserved. (Art 112, Spanish Code of double jeopardy, but this Court held that the remanding of the
Criminal Procedure.) When General Orders No. 58 took effect, case for the determination of the civil damages did not subject
no change was made, for Section 107 of said General Orders the accused to double jeopardy. This Court said in part:
provided:
Does the fact that in this country civil liability is, as a rule,
Sec. 107. The privileges now secured by law to the person determined in the criminal action transform it into criminal
claiming to be injured by the commission of an offense to take liability and thus make it a part of the punishment for the
part in the prosecution of the offense and to recover damages crime? Certainly the mere form of a remedy should not affect
for the injury sustained by reason of the same shall not be held its substance. And there are many indications in the Penal Code
to be abridged by the provisions of this order; but such person that the civil liability therein imposed for the commission of
may appear and shall be heard either individually or by attorney crimes was not intended to be merged into the punishment for
at all stages of the case, and the court upon conviction of the the crime. Articles 17, 119-126, which provide for civil liability
accused may enter judgment against him for the damages of offenders, are confined strictly to that subject. Article 23
occasioned by his wrongful act. It shall, however, be the duty of sharply defines one distinction between the criminal and civil
the promotor fiscal to direct the prosecution, subject to the right liability, in that the former cannot be waived by a pardon of the
of the person injured to appeal from any decision of the court party injured, while the latter may be waived. The chapters of
denying him a legal right. (Emphasis supplied.) the Penal Code dealing with the classification and duration of
penalties (articles 25 to 62 inclusive), nowhere list the civil
The Code of Civil Procedure (Act 190) authorized the liability attached to a crime. And article 133 provides that
preliminary attachment of defendant's property under Section "Civil liability arising out of crimes or misdemeanors shall be
424 which reads thus: extinguished in the same manner as other obligations, in
accordance with the rules of civil law.
Sec. 424. Attachment. — A plaintiff may, at the
commencement of his action, or at any time afterwards, have In commenting upon this article, Groizard (vol. 2, p. 717), says:
the property of the defendant attached as security for the
satisfaction of any judgment that may be recovered, unless the From crimes arise, as we know, two liabilities: criminal and
defendant gives security to pay such judgment, in the manner civil. The first is extinguished by the methods to which we have
hereinafter provided, in the following cases: just adverted. The method of terminating the second is not a
subject of criminal law, but of civil law.
1. In all cases mentioned in section four hundred and twelve,
providing for the arrest of a defendant. But the plaintiff must The character of this work does not permit us to tarry for further
make an election as to whether he will ask for an order of arrest explanations. We would not be commenting upon subjects
or an order of attachment; he shall not be entitled to both included with the Penal Code but laws of a purely civil
orders; character.

2. In an action against a defendant not residing in the Philippine And, as a complement of this article, article 1813 of the Civil
Islands. Code provides that civil liability attached to crimes may be
compromised but that the criminal liability is not thereby
One of the grounds stated in section 412 of Act 190 was the extinguished. Other distinctions might be noticed which show
following: that there is no merger of the two kinds of liability from the
mere fact that they are tried together. But these are, we think,
5. When the defendant has removed or disposed of his property, sufficient to sustain the point. (Emphasis supplied.)
or is about to do so, with intent to defraud his creditors.
2. The aggrieved party could take part in the prosecution of the
In U.S. vs. Namit, 38 Phil., 926 and People vs. Moreno, 60 offense. (Articles 109 and 110, Spanish Code of Civil
Phil., 674, this Court held that preliminary attachment being a Procedure). This privilege has been preserved by Section 107,
statutory remedy, and there being no statute authorizing General Orders No. 58, and by Sections 15 and 4, Rule 106 of
preliminary attachment in criminal cases, this process was not the new Rules of Court.
available in criminal proceedings.
3. The extinction of the criminal action did not carry with it that
With all due respect to those Justices who held this view in the of the civil action, unless the extinction proceeded from a
two cases mentioned, I am of the opinion that at the time these declaration in a final judgment that the fact from which the civil
two decisions were rendered there was already a clear statutory action might arise did not exist. (Art. 116, Spanish Code of
authorization for a preliminary attachment to enforce the civil Criminal Procedure). This principle is reiterated in the new
responsibility for damages arising from a crime. Unless there Rules of Court (Rule 107, Sec. 1-d).
was a waiver or a reservation of the civil action, two suits were
initiated at the same time, namely, the criminal prosecution and Inasmuch as each of the two actions kept its own separate
the civil action. What happened when both the criminal and the existence and individuality, although both were tried at the
civil actions were thus brought and tried together? Each same time, it would seem to follow that each action also
retained (as it now retains) its own nature and individuality, as retained its own incidents. And one of the incidents of a civil
shown by the following: suit was the preliminary attachment provided for in Sections
424 and 412 of the Code of Civil Procedure. If the aggrieved
1. In U.S. v. Heery, 25 Phil. 600, this Court held that there is no party brought his civil action separately, a preliminary
merger of the two kinds of liability (criminal and civil) from the attachment was unquestionably proper. But in the Namit and
mere fact that they are tried together. In that case, this Court Moreno cases, this Court in effect held that if the civil suit was
upon the first appeal affirmed the sentence of the lower court filed together with the criminal prosecution, no such attachment
condemning the defendant appellant to one year and three could be allowed because there was no specific authority
months of prision correcional, but the appeal of the injured therefor. In the one case, the civil damages could be
party against the ruling of the trial court which refused to allow safeguarded, but in the other, they were precarious and
him to submit evidence on the damages suffered by him was uncertain. I am not inclined to indulge in such a hairsplitting
sustained and the case was returned with the following nicely. It is hard for me to believe that the lawmakers
instructions: "It is therefore ordered that the record be returned contemplated such a distinction, which made the vitality of a
to the court whence it came for the execution of the criminal judgment for civil liability depend upon the course taken:
judgment herein affirmed, and for the further purpose of whether a separation or a joining of the criminal and civil
completing the civil branch of the case." (Emphasis supplied.) actions. If the choice was for the former, the judgment for
Upon the second appeal, the defendant raised the question of damages was real, efficacious and commanding, but if the
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choice was for the latter, then such judgment might become an with the criminal action. Consequently, today as before, the
egregious delusion and a solemn mockery, because the new Rules of Court became operative, there is clear statutory
defendant could dispose of all his property with intent to evade authority is the preliminary attachment in question. The
and defeat his civil liability. Unless the statute is clearly worded foregoing construction is supported by precedent. Thus:
to that effect. I cannot bring myself to adhere to an
interpretation and simple, a court judgment might become While the remedy of attachment or garnishment is statutory and
illusory, the civil redress justly due an aggrieved person might in derogation of the common law, strict construction should not
be rendered nugatory and meaningless, and the accused upon be pushed, to the extent of nullifying the beneficial intent of the
conviction might easily escape his obligation to repair the statute or depriving the creditor of recourse thereto in a proper
injury he has caused through his wrongful deed. A situation so case, for it is an indisputable fact that the policy of the law is
deplorable and so extraordinary, which defies and contravenes that a man's property shall be amenable to legal process for the
every primary concept of right and is gravely destructive of the satisfaction of his pecuniary indebtedness. Indeed, in view of
administration of justice, should never be countenanced unless the abolition of the copies and of imprisonment for debt, and in
the law interpreter is constrained to do so by the explicit and view of the enlarged and liberal provisions in more recent
unequivocal terms of the statutes. And in the instant case, as statutes on the subject of attachments and garnishments, it has
already indicated, the Philippine statutes authorized a been said that a more favorable and liberal construction of these
preliminary attachment, whether the civil action was brought laws should be adopted. In some states the statutes expressly
separately from, or jointly with the criminal prosecution. require that a liberal construction be put upon their provisions.
In any event, such construction ought to be given to a law, if it
The fact that in neither the General Orders No. 58, nor the Code will reasonably admit of it, as will not suffer it to be defeated,
of Civil Procedure, was there any specific authority for and technically should not be allowed to override justice. (4
preliminary attachment in case a civil action was brought and A.J., 567-568.)
tried together with a criminal action does not in the least effect
my conclusion just formulated, for these reasons: The view which I take of the instant case makes it unnecessary,
I believe, to amend Rule 107 of the Rules of Court, as
1. Such explicit provision for the specific case mentioned was suggested by the dissenting opinion herein.
not necessary, because when the law said that the civil action
was understood to have been likewise utilized, all the incidents The next inquiry which I wish to take up is this: Can certiorari
of the civil action were retained, as already explained. and mandamus be ordered when the trial court simply followed
the previous decisions of this the highest court of the land? The
2. Section 107 of General Orders No. 58 when read in negative answer would seem, at first sight, to be warranted,
connection with Section 112 of the Spanish Code of Criminal because the interpretations of the law rendered by this Court
Procedure clearly intended that the right to recover and become part and parcel of the Philippine legal system, and are
damages should be undiminished and should conserve its invested with compelling authority that binds all the lower
original vigor and efficacy. Such right to damages was later courts in the country, so a trial court that merely yields to them
implemented and strengthened in Sections 424 and 412 of the incurs in no mistake of law, and does not commit any abuse of
Code of Civil Procedure. The creation of the auxiliary remedy discretion.
of the preliminary attachment in the Code of Civil Procedure
rendered it superfluous to provide in an amendment to General The point urged is that the respondent court cannot be held to
Orders No. 58, or in any other subsequent legislation, for have incurred in any error of law when it only applied the law
specific authority for preliminary attachment in case a civil as interpreted by this Court in previous cases. Such a theory
action was instituted together with a criminal action. implies the argument that the adoption of this Court of a new
and different interpretation of the same law cannot logically
The above was, I believe, the law when the cases of U.S. v. covert the trial court's order, which was correct at the time it
Namit and People v. Moreno were decided by this Court. Has was signed — according to the highest court's previous
the law been altered or modified? I do not think so, because pronouncements — into a mistaken one. I believe, however,
Rule 107, Section 1 (a) of the new Rules of Court which reads: that this mode of reasoning would prevent this Court from
revising or abandoning its previous rulings, a power which this
(a) When a criminal action is instituted, the civil action for Court exercises in the interest of justice. There is nothing
recovery of civil liability arising from the offense charged is inviolably sacrosanct in the doctrine of stare decisis, for an
impliedly instituted with the criminal action, unless the orderly and wholesome development of jurisprudence demands
offended party expressly waives the civil action or reserves his that there should be no undue reluctance to reexamine previous
right to institute it separately. interpretations of the law.

is a mere reiteration of the old principle that if the criminal This is especially true when the former view of the law was not
action alone was filed, the civil action was understood to have unanimously held. In U.S. v. Namit, five Justices were on the
been likewise utilized. Neither does Rule 124, Sec. 6, announce majority, while one Justice dissented. In People v. Moreno,
a new principle, inasmuch as before said Rule came into being, seven Justices constituted the majority, while four Justices
every court already had an inherent power to issue any auxiliary formed the minority. The existence of a forceful dissenting
writ or process to carry out is judgments. (14 A. J., 371 and opinion — and dissenting opinions are often of that character
373; 7 R.C.L., 1033). Today, as before the promulgation of the — dulls the edge of the majority decision. It would seem that an
new Rules of Court, though the two actions are brought and opinion whose power is thus impaired, while technically it may
tried together, each however, retains its own character and be cited as a precedent — because it is presumed to be the
individuality; as stated by Mr. Justice Moran, there were in the correct view until the contrary is maintained by the court in a
estafa case herein" two sections before the court: the criminal subsequent decision — nevertheless practically leaves the legal
action for the punishment of the accused, and the civil action question open for further examination in future cases. If the
for the recovery of the money fraudulently taken by her." original interpretation is intrinsically sound, it can stand the
Today, as before the new Rules of Court took effect, a pressure of additional discussion and inquiry in subsequent
preliminary attachment under Section 1 of Rule 59, is an cases, and instead of being weakened, it will gather greater
incident in a civil action instituted and tried simultaneously strength and momentum. But if on the other hand, the original
with the criminal prosecution. Today, as before the new Rules view of the minority bears within itself the pursuant urge of
of Court became binding, the existence of authority for a reason and the driving impetus of justice, it will eventually,
preliminary attachment under Section 1 of Rule 59, of the Rules after one or more searching re-examinations of the issue
of Court, renders it unnecessary that Part III (Rules 103-122) of involved, gain ascendancy, thus replacing the old proposition. It
the same Rules should again specifically provided for such is this possibility, among other considerations, that justifies the
process in case a civil suit is brought and tried at the same time writing of dissenting opinions, and makes it particularly
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desirable and necessary that the original majority ruling be re- predicated upon a supposed change in the law effected by
studied. section 6 of Rule 124. But I think the mere restatement in
section 6, Rule 124, of a general principle of law previously
The stability of judicial decisions, which is earnestly to be recognized in scattered provisions of different statutes and in
sought, requires that a legal interpretation which is still on the adjudicated cases furnishes no justification for a different
way toward final crystallization, as it has yet to gain general interpretation or application of Rule 107, which is the basic
acceptance (a majority opinion questioned by a strong dissent statutory provisions involved.
being of such type) should not be looked upon with awesome
reverence as a primitive taboo. On the contrary, it should be In his concurring opinion, Justice Bocobo admits that the law
openly subjected to the most thorough discussion in order to now is the same as it was when this Court decided the cases of
find out whether it is sufficiently solid and enduring to be U.S. vs. Namit and People vs. Moreno; but he dissents from the
incorporated into the legal structure. Without such a rigid and opinion of this Court in said cases and maintains that the
severe test, the rule of law announced by a majority of the court statutory authorization for preliminary attachment in civil
will continue to languish in the penumbra of doubt, whereas the actions may be availed of by the offended party in a criminal
doctrine of stare decisis can thrive only in the life-giving action even in the absence of an express provision to that effect
sunshine of reason and justice, and in the clear atmosphere of in the rules of criminal procedure and in spite of the undisputed
widespread concord in the legal profession. principle that attachment is a purely statutory remedy. If we
were to interpret the law for the first time, we might adopt the
In view of the foregoing, my vote is that the respondent court liberal view sustained by the concurring opinion instead of
had authority to grant the preliminary attachment prayed for in amending the rule. But inasmuch as this Court, after mature and
the civil action impliedly instituted with the criminal action for conscientious deliberation, has repeatedly and consistently
estafa. maintained the view that express statutory warrant for the
issuance of a preliminary attachment in a criminal action is
necessary — which view is not without support in reason and
OZAETA, J., dissenting: authority; inasmuch as the legislature acquiesced in that
interpretation ever since it was handed down for the first time in
I find no innovation in the new Rules of Court insofar as the the Namit case in 1918 and reiterated in the Moreno case in
issuance of preliminary attachment in a criminal case is 1934, until this Court promulgated the new Rules of Court in
concerned. Section 1 of Rule 107 is but a re-enactment of 1940 in lieu of the codes of civil and criminal procedure; and
article 112 of the Spanish Code of Criminal Procedure, which inasmuch as it is within the power of this Court to amend said
had been carried over under General Orders No. 58. (Almeida Rules, I am persuaded that we should amend Rule 107 instead
vs. Abaroa, 218 U.S., 476, 40 Phil., 1056; Alba vs. Acuña, 53 of giving it now a new interpretation. The same end would be
Phil., 380; Orbeta vs. Soto, 58 Phil., 505.) And section 6 of achieved regularly and without violence to our own
Rule 124 is but a restatement of a general principle of law jurisprudence. The fact is that the jurisprudence in question has
theretofore recognized in our statutes and jurisprudence, as stood its ground for a quarter of a century notwithstanding
indicated in the majority opinion itself. So it is to me clear that repeated attempts to overthrow it, and that even now the
the law now is the same as it was when this Court handed down majority of the Court are not persuaded that the opinion is
its decisions in the cases of United States vs. Namit (1918), 38 untenable.
Phil., 926; and People vs. Moreno (1934), 60 Phil., 674, in both
of which it was declared in effect that there was no law I think the respondent judge acted with commendable propriety
authorizing the issuance of preliminary attachment in a criminal in following the previous decisions of this Court, saying that it
case to secure the payment of the civil liability of the accused to is up to us either to reverse them or to amend the Rules of
the offended party. With these decisions in mind, if this Court Court. I believe the last inquiry in the concurring opinion to be
had intended to change the law on the subject by allowing the a superfluity. If the previous opinion of this Court were clearly
preliminary attachment in a criminal case when it promulgated erroneous or untenable, no argument is needed to demonstrate
the new Rules of Court in virtue of the rule-making power that we would be justified — indeed we would be in duty
conferred upon it by the Constitution, it could and would have bound — to reverse it, regardless of whether or not it was
done so by inserting in Rule 107 an express provision to that followed by the lower court. And the fact that such previous
effect. opinion "was not unanimously held" is of no consequence.
Stare decisis recognizes no distinction between a unanimous
I am in full accord with my associates in the Court that such and a dissented opinion. Every opinion of a collegiate court,
provision is desirable to secure full remedy to the offended whether unanimous or not, derives its persuasive force as
parties in criminal cases. But this desideratum should, in my precedent from the cogency and intrinsic validity of its
opinion, be satisfied by amending Rule 107 and not by giving it reasoning and not from the number of Justices who subscribe to
a new interpretation or application different from that in the it.
previous cases aforecited. In other words, this Court should
exercise its rule-making power and not its judicial power to My vote is to deny the petition in toto, without prejudice to
achieve the desired result. The judicial power cannot be used to amending Rule 107 by inserting another section therein
change the rule but only to apply it. On the other hand, the rule- expressly providing for the issuance of a preliminary
making power may be availed of to amend the rule attachment in criminal cases.
prospectively. The change or amendment effected by the
majority through judicial interpretation is the more
objectionable because it is necessarily retroactive in operation. G.R. No. L-1329 May 15, 1947

Another reason why I cannot give my assent to the majority RAMCAR, INCORPORATED, Petitioner, vs. DIONISIO
opinion, is that it brushes aside the important and well- DE LEON, Judge of First Instance of Manila, ET AL.,
recognized rule of stare decisis without justification, and tends Respondents.
to undermine the stability of the jurisprudence established and
followed in virtue of the rule. We should carefully avoid the Roman A. Cruz for petitioner.
impression that a change in the membership of this Court Ferdinand E. Marcos for respondents.
creates an open season against its previous decisions. These
should be abandoned only when clearly shown to be erroneous PERFECTO, J.:
or untenable. No attempt is made in the majority opinion to
demonstrate that the decisions of this Court in the cases of On December 26, 1946, petitioner initiated a civil action against
United States vs. Namit and People vs. Moreno, supra, are Daniel Francisco, Ulysses S. Tread, Jr., and Antonio Lloret, by
clearly erroneous. The refusal to follow them in this case is filing a complaint for damages with the Court of First Instance
ProvRem (PreAttachment) Full text 062318 5
of Manila, praying that defendants be sentenced to pay the sum expressly, criminal action always carries the civil action for
of P5,000, value of a stolen taxicab, P500, a price offered recovery of liability arising from the offense charged; that when
through the newspaper to anyone who could point the criminal action has been commenced before the civil action, the
whereabouts of said taxicab, plus P50 per day as the average latter cannot be instituted until final judgment has been
minimum daily income of the car and the costs of the suit, and rendered in the former; that when the civil action has been
that, pending all proceedings attachment of the properties of commenced before the criminal action, the former shall be
defendants be ordered, upon such bond and in the amount that suspended upon the institution of the latter and until final
the court may deem proper to fix.chanroblesvirtualawlibrary judgment is rendered in the same; that, generally, extinction of
chanrobles virtual law library the criminal action does not carry with it extinction of the civil;
and that final judgment rendered in a civil action in absolving
Plaintiff alleged that he owns, among other taxicabs, a Renault defendant from the civil liability is no bar to a criminal
car with motor No. 36428, painted black and white and action.chanroblesvirtualawlibrary chanrobles virtual law library
provided with a taximeter, the total value of which is P5,000,
and that about December 2, 1946, it was stolen from the The above-quoted subsection (c) is the one directly applicable
parking place in front of the premises of plaintiff at 1049 R. to the facts in this case, although it should not be interpreted as
Hidalgo, Manila, and after many days of fruitless search, an an isolate provision, but in conjunction with the rest of Rule
offer of P500 through the newspapers was made to anyone who 107. Said subsection enjoins that the civil action arising from
could point to its whereabouts, and that said car, already in the same offense can be prosecuted after a criminal action has
dismantled condition, was found in and recovered from the been commenced, and if the civil action has been instituted
possession of defendants, who confessed to the representative before the criminal, it "shall be suspended, in whatever stage it
of plaintiff and the police authorities as being the authors of the may be found, until final judgment in the criminal proceeding
theft of said car and of dismantling it to pieces, making it has been rendered." The question is whether, under such
completely unserviceable and a total loss. In support of the injunctions, the lower court was, after the filing of the
petition for the issuance of a writ of attachment, plaintiff information in the criminal case, ipso facto deprived of the
alleged that defendants were concealing their properties and power to issue preliminary and auxiliary writs, such as
were about to dispose of them with intent of defrauding their preliminary injunction, attachment, appointment of receiver,
creditos, including plaintiff.chanroblesvirtualawlibrary fixing amounts of bonds to be filed, and other processes of
chanrobles virtual law library similar nature, none of which goes into the merits of the
case.chanroblesvirtualawlibrary chanrobles virtual law library
Two days later, on December 28, an information for the theft of
the above-described taxicab and based on the same facts alleged Under the subsection in question, the civil action undergoes a
in the complaint, was filed with the court of first instance procedural freezing. But, in the same way that in physical
against the said three defendants.chanroblesvirtualawlibrary congelation not all manifestations of life are wiped out, the
chanrobles virtual law library procedural freezing in question does not have the effect of
wiping out all manifestations of the existence of the suspended
On January 2, 1947, after petitioner had filed a bond in the civil action. Marmots and certain species of bats, including
amount of P5,000, a writ of attachment was issued against the pipistrels, when hibernating in burrows and caves during
properties of defendants. On January 14, 1947, defendant winter, offer the appearance of immobile corpses or simple
Daniel Francisco filed a petition praying for the dismissal of the lumps of ice. But within the lifeless appearance that deceives
complaint and for the setting aside of the writ of attachment. On human perception, because metabolism, heart-beat rate,
January 27, 1947, defendant Ulysses S. Tread, Jr., moved for breathing and body temperature drop so low, there lies the
the suspension of the time within which to file a responsive mysteriously latent vitality that, when hibernation is over, will
pleading to the complaint and to dissolve the writ of permit those animals to run with surprising agility and to soar
attachment. On January 30, 1947 respondent judge issued an high in cross-country flying. Suspension is not termination.
order denying the dismissal of the complaint prayed for by Suspension is not final ending, is not destruction, is not death.
Daniel Francisco, but granted its petition to set aside the writ of The suspended civil action continues to be alive. Only its
attachment against him. On February 3, the same judge granted evolution to maturity is temporarily stopped. Only it has to bide
the petition of defendant Ulysses S, Tread, Jr., dated January time. In meantime, while it is waiting to be tried and decided on
27, 1947. On February 20, 1947, respondent judge denied the the merits, it may avail itself of the ancillary processes which,
motion for reconsideration filed by plaintiff who, consequently, expressly authorized by law, will permit it to accomplish its
filed with this Supreme Court the petition which is now under purposes efficaciously, and may defend itself against bad faith,
our consideration, praying that the orders of respondent judge fraud and other evil practices, intended to make nugatory the
of January 30 and February 3 and 20, 1947, be declared null relief sought by it and to defeat the ends of the administration of
and void and that the writ of attachment of January 2, 1947, be justice. If those ancillary processes cannot be resorted to during
declared valid and in force.chanroblesvirtualawlibrary the suspension, there is no sense in the rule providing only for
chanrobles virtual law library suspension, when its effect is to kill the action. We cannot
subscribe to the idea that the authors of the subsection in
Respondent judge set aside the writ of attachment of January 2, question, in providing for the suspension of the civil action
1947, upon the theory that it was improperly issued because at during the life of the criminal action, had the purpose of
the time of its issuance the information in the criminal case had crippling to death the civil action, but lacked the honesty of
already been filed, the theory being based on the lower court's saying so in an outright manner, seeking rather the hypocritical
interpretation of section 1 of Rule 107 in which it is read: method of concealing their purpose under a deceitful
word.chanroblesvirtualawlibrary chanrobles virtual law library
(b) Criminal and civil actions arising from the same offense
may be instituted separately, but after the criminal action has No one should forget that civil action for recovery of civil
been commenced the civil action cannot be instituted until final liability arising from an offense has always deserved the
judgment has been rendered in the criminal action;chanrobles concern of the law. The Revised Penal Code, although it is
virtual law library supposed to deal only on criminal offenses, contains an express
provision reserving to offended parties such civil action. To
(c) After a criminal action has been commenced, no civil action make effective that right of recovery of civil liability, section 2
arising from the same offense can be prosecuted; and the same of Rule 106 grants to the offended party the right to commence
shall be suspended, in whatever stage it may be found, until a criminal action through a complaint, and section 16 of the
final judgment in the criminal proceeding has been rendered. same rule guarantees to the offended party the right of
intervention in criminal action, either personally or by attorney.
From the provisions of Rule 107 it is clear that, unless there is a Rule 107 has been drafted to further guarantee to the offended
waiver of civil action or reserve of the right to initiate it party the right of recovery
ProvRem (PreAttachment) Full text 062318 6
abovementioned.chanroblesvirtualawlibrary chanrobles virtual
law library Fundandose en el articulo 1. de la Regla 107, la mayoria revoca
las ordenes del Juez recurrido de 30 de enero y de 3 de febrero
When no civil action is expressly instituted, according to y declara valida la orden de 2 de enero 1947 (la de embargo
subsection (a) of section 1 of Rule 107, it shall be impliedly preventivo contra los bienes demandados en la causa civil y
jointly "instituted with the criminal action." That means as if acusados en la causa criminal).chanroblesvirtualawlibrary
two actions are joined in one as twins, each one complete with chanrobles virtual law library
the same completeness as any of the two normal persons
composing a twin. It means that the civil action may be tried No puedo concurrir con esta opinion.chanroblesvirtualawlibrary
and prosecuted, with all the ancillary processes provided by chanrobles virtual law library
law. Such was the idea of the Supreme Court in United States
vs. Heery (25 Phil., 600) where, besides affirming the criminal El articulo citado dice lo siguiente:chanrobles virtual law
judgment rendered therein, it ordered the record returned to the library
lower court "for the further purpose of completing the civil
branch of the case." Therefore, within the criminal action, with (c) After a criminal action has been commenced, no civil action
which the civil action is "impliedly instituted," the offended arising from the same offense can be prosecuted; and the same
party may obtain the preliminary writ of attachment. There is shall be suspended, in whatever stage it may be found, until
no logic in denying that right to the plaintiff, when the civil final judgment in the criminal proceeding has been
action is separately instituted.chanroblesvirtualawlibrary rendered;chanrobles virtual law library
chanrobles virtual law library
La disposicion del parafo (c) es clara. No permite la
The orders of the respondent judge dated January 30 and presentacion de una causa civil despues de presentada ya la
February 3, 1947, having been issued upon a wrong causa criminal, disposicion parecida a la del articulo 114 de la
interpretation of subsection (c) of section 1 of Rule 107, and no Ley de Enjuiciamiento Criminal Española. (Orbeta contra
intimation to the contrary having been made, we should assume Sotto, 58 Jur. Fil., 548.) Pero si, como en el caso presente, se ha
that, without said wrong interpretation, the writ of attachment presentado ya con anterioridad una causa civil, tal causa debe
was issued because the plaintiff was, under the facts and the ser suspendida en el estado en que se encontraba al presentarse
law, entitled to its issuance, and that there was the duty of the la causa criminal y no se actuara sobre ella hasta que recaiga
lower court to issue it.chanroblesvirtualawlibrary chanrobles sentencia final en la causa criminal. De acuerdo con esta
virtual law library disposicion, el Juzgado no debio haber dictado la orden de
embargo preventivo contra las propiedades de los demandados
For all the foregoing, the orders of the respondent judge of en 2 de enero: ya no podia actuar en la causa civil despues de
January 30 and February 3, 1947, are set aside, and the writ of presentada la querella en 28 de diciembre de 1946. Tal
attachment of January 2, 1947, is maintained, unless and until actuacion, que es contraria a la disposicion expresa del
lifted through a proper counter-bond that the defendants may Reglamento, carece de fuerza y efecto. Si el Juez recurrido,
file or for any other reason recognized by law. Costs shall be reconociendo el error en que incurrio, revoco su orden de 2 de
taxed against respondents.chanroblesvirtualawlibrary enero, no ha hecho mas que restablecer la causa civil en el
chanrobles virtual law library estado en que se encontraba al presentarse la accion criminal.
No abuso de su discrecion, ni obro en exceso de su
Paras, and Bengzon, JJ., concur. jurisdiccion.chanroblesvirtualawlibrary chanrobles virtual law
Tuason, J., concurs in the result. library

En el asunto de Eraña contra Vera y Josephine Panzani (74


PARAS, J.: Phil., 272), este Tribunal ha declarado ya que ha abandonado la
doctrina sentada en los asuntos de Estados Unidos contra Namit
I certify that Mr. Justice Padilla voted with the majority. (38 Jur. Fil., 984), y Pueblo contra Moreno (60 Jur. Fil., 729) -
que en causa criminales no es procedente expedir embargo
preventivo, - y categoricamente concluyo: "But this ruling is
Separate Opinions chanrobles virtual law library predicated fundamentally upon the theory that preliminary
attachment is a purely statutory remedy and there was then no
PABLO, M., disidente:chanrobles virtual law library clear legal provision making it applicable in criminal
proceedings. All doubts on this question have, however,
El recurrente en esta causa original de certiorari y mandamus disappeared upon the promulgation of the new Rules of Court
presento dosacciones en el Juzgado de Primera Instancia de wherein, by clear authority of Rule 124, section 6, above
Manila: Primera, la accion civil No. 1429, reclamando de los quoted, a criminal court having jurisdiction over the civil action
demandados Daniel Francisco, Ulysses S. Tread, Jr. y Antonio arising from the offense charged, is now permitted to issue all
Lloret el pago del importe del taxicab Renault hurtado, segun la the auxiliary writs necessary to carry such jurisdiction into
demanda, por ellos, y la presento en 26 de diciembre de 1946. effect. A similar legal principle was recognized before in
Segunda, una quarella por hurto (causa criminal No. 1846) scattered provisions of law or decisions (see Act No. 136,
contra los mismos individuos el 28 del mismo mes. El 2 de section 19; Revised Administrative Code, section 145-G; Act
enero de 1947 el Honorable Juez recurrido, a peticion del No. 190, section 610; Shioji vs. Harvey, 42 Phil., 333, 344),
recurrente, expidio una orden de embargo preventivo contra los applicable only in some courts and in certain cases, and does
bienes de los demandados; el 30 de enero de 1947 denego la not seem to cover the question now before us. Now, it is made
mocion de sobreseimiento presentada por Daniel Francisco y general and applicable in all cases and in all courts provided the
revoco la orden de embargopreventivo contra sus bienes; en 3 requirements therein specified are present." Lo que hubiera
de febrero revoco la orden de embargo preventivo expedida hecho el recurrente fue pedir que el Fiscal presentase una
contralos bienes de Ulysses S. Tread, Jr. y el 20 de febrero mocion en la causa criminal pidiendo la expedicion del
denego la mocion de reconsideracion presentada por el embargo preventivo correspondiente.chanroblesvirtualawlibrary
demandante. Por tales motivos, el recurrente (que es es chanrobles virtual law library
demandante en la causa civil y ofendido en la causa criminal)
acudio a este Tribunal pidiendo que las ordenes del Hon. Juez Si la causa civil estaba suspendida por disposicion expresa del
recurrido, dictadas en la causa civil el 30 de enero y de 3 y 20 Reglamento de los Tribunales, como podia el Juzgado dictar en
de febrero de 1947, sean declaradas nulas y de ningun valor y ella una orden de embargo preventivo? Expedir tal orden es
que la orden de embargo preventivo de 2 de enero de 1947 sea actuar: no es suspender, no es dajar el expediente en el estado
declarada valida y en vigor.chanroblesvirtualawlibrary en que se encontraba al presentarse la querella. Es infringir
chanrobles virtual law library abiertamente la letra y el espiritu de la disposicion
ProvRem (PreAttachment) Full text 062318 7
procesal.chanroblesvirtualawlibrary chanrobles virtual law
library Subsequently, the case was raffled to Branch 11 of the Court of
First Instance of Cebu, which issued a writ of attachment
El articulo 1. de la Regla 107 dispone que "(a) when a criminal addressed to the Provincial Sheriffs of Cebu and the City
action is instituted, the civil action for recovery of civil liability Sheriff of Davao City. It was the Sheriff of Davao City who
arising from the offense charged is impliedly instituted with the enforced the writ of attachment, resulting in the seizure of
criminal action, unless the offended party expressly waives the heavy construction equipment, motor vehicle spare parts, and
civil action or reserves his right to institute it separately." El other personal property with the aggregate value of
recurrente no pidio el sobreseimiento de la causa civil; se puede P15,000,000.00. The said court also granted the motion of
suponer que reservo el derecho de continuar con la causa civil, respondent Aboitiz to take possession and custody of the
en cuanto se haya dictado sentencia final en el expediente attached property of petitioners and ordered the Provincial
criminal de acuerdo con el reglamento. Sin embargo, en vez de Sheriff of Davao to deliver the property to respondent Aboitiz.
respetar el status quo del expediente civil al tiempo de
presentarse la querella urgio, al prestar la fianza Petitioners moved for a bill of particulars and to set aside the ex
correspondiente, la expedicion del mandamiento de embargo parte writ of attachment. Finding merit in the motion to set
preventivo. Este Tribunal no puede dar fuerza y vigor a la orden aside the writ, Branch 11 ordered on July 6, 1982 the lifting of
de embargo preventivo, expedida en contravencion de la the writ and, consequently, the discharge of the property levied
expresa disposicion del articulo 1.,0 parrafo (c) de la Regla 107, upon.
que era per se nula y de ningun valor. En Orbeta contra Sotto,
supra, este Tribunal dijo: ". . . las actuaciones civiles incoadas Respondent Aboitiz filed an urgent ex parte motion, praying for
en contravencion de las disposiciones de la Ley de the stay of the July 6, 1982 Order for a period of 15 days for it
Enjuiciamiento Criminal Española antes citadas carecen de to be able to appeal the order. The motion was favorably acted
fuerza y efecto."chanrobles virtual law library upon.

Se debe denegar la peticion. However, on July 13, 1982, respondent Aboitiz filed a notice of
dismissal of its complaint in accordance with Section 1, Rule 17
of the Revised Rules of Court. Consequently, Branch 11 issued
an order confirming the notice of dismissal, emphasizing that
G.R. Nos. 65957-58 July 5, 1994 all orders of the court issued prior to the filing of said notice of
dismissal had been rendered functus oficio, and considering all
ELEAZAR V. ADLAWAN and ELENA S. ADLAWAN, pending incidents in the case as moot and academic.
petitioners,
vs. Petitioner Eleazar Adlawan filed a motion praying that the July
Hon. Judge RAMON AM. TORRES, as Presiding Judge of 6, 1982 Order be implemented and enforced. On December 20,
Branch 6, Regional Trial Court Cebu City, ABOITIZ & however, Branch 11 denied the motion on account of the filing
COMPANY, INC. and THE PROVINCIAL SHERIFFS OF by respondent Aboitiz before Branch 16 of the Court of First
CEBU, DAVAO, RIZAL and METRO MANILA, Instance of Cebu in Lapu-lapu City of an action for delivery of
Respectively, respondents. personal property (Civil Case No. 619-L), and the filing by
petitioner Eleazar Adlawan before Branch 10 of the same court
Pablo P. Garcia for petitioners. of an action for damages in connection with the seizure of his
property under the writ of attachment.
Isaias P. Dicdican and Sylva G. Aguirre-Paderanga for
Aboitiz & Co., Inc. In the replevin suit, Branch 16 ordered the seizure and delivery
of the property described in the complaint. Said property were
later delivered by the provincial sheriff to respondent Aboitiz.
QUIASON, J.: Alleging that while his office was situated in Cebu City,
Adlawan was a resident of Minglanilla, and therefore, the Lapu-
This is a petitioner for certiorari and mandamus with lapu City court should not entertain the action for replevin.
preliminary injunction or restraining order to nullify: (1) the Petitioner Eleazar Adlawan filed an omnibus motion praying
Order dated September 14, 1983 of respondent Judge Ramon for the reconsideration and dissolution of the writ of seizure, the
Am. Torres of the Regional Trial Court, Branch 6, Cebu City, retrieval of the property seized, and the dismissal of the
in Civil Case No. CEB-1185 and the Order dated September 26, complaint. He also averred that the property seized were in
1983 of Judge Emilio A. Jacinto of Branch 23 of the same court custodia legis by virtue of the writ of attachment issued by
in Civil Case No. CEB-1186, which granted the motion for the Branch 11. His omnibus motion was denied. Subsequently, he
issuance of writs of preliminary attachment for the seizure of filed a motion for reconsideration which was not granted.
the property of petitioners by respondent Provincial Sheriffs;
and (2) the Order dated December 12, 1983 of respondent The denial of his omnibus motion led petitioner Eleazar
Judge Ramon Am. Torres in the consolidated cases, Civil Case Adlawan to file a petition for certiorari and mandamus in the
No. CEB-1185 and Civil Case No. CEB-1186. Supreme Court (G.R. No. 63225). The Third Division of this
Court ruled on April 3, 1990 that since attachment is an
I ancillary remedy, the withdrawal of the complaint left it with no
leg to stand on. Thus, the Court disposed of the case as follows:
In a complaint dated April 24, 1982 filed with the Court of First
Instance of Cebu, now Regional Trial Court, (Civil Case No. R- WHEREFORE, in view of the foregoing, this Court rules that
21761), respondent Aboitiz and Company, Inc. (Aboitiz) sought the attached properties left in the custody of private respondent
to collect from petitioners a sum of money representing Aboitiz and Company, Inc. be returned to petitioner Eleazar V.
payments for: (1) the unpaid amortizations of a loan; (2) Adlawan without prejudice to the outcome of the cases filed by
technical and managerial services rendered; and (3) the unpaid both parties (Rollo, p. 324).
installments of the equipment provided by respondent Aboitiz
to petitioners (Rollo, p. 37). Respondent Aboitiz filed a motion for reconsideration of the
decision, contending that the replevin case was distinct and
Acting on the ex parte application for attachment, the Executive separate from the case where the writ of attachment was issued.
Judge of the Court of First Instance of Cebu, issued on May 14, It argued that the writ of replevin, therefore, remained in force
1982, an order directing the issuance of the writ of preliminary as the Third Division of the Supreme Court had not found it
attachment against the property of petitioners upon the filing by illegal. The motion was, however, denied with finality in the
respondent Aboitiz of an attachment bond. Resolution of July 11, 1990.
ProvRem (PreAttachment) Full text 062318 8
writs of attachments. They alleged in the main that since their
Undaunted, respondent Aboitiz filed a second motion for property had been previously attached and said attachment was
reconsideration with a prayer that the dispositive portion of the being questioned before the Supreme Court in G.R. No. 63225,
decision be clarified. It asserted that because the writ of the filing of the two cases, as well as the issuance of the writs of
preliminary attachment was different from the writ of replevin, attachment, constituted undue interference with the processes of
we should rule that the property subject of the latter writ should this court in the then pending petition involving the same
remain in custodia legis of the court issuing the said writ. property.

In the Resolution dated September 10, 1990, the Third Division Upon motion of respondent Aboitiz, Branch 23 issued on
stated that "the properties to be returned to petitioner are only October 13, 1983, an order directing the transfer to Branch 6 of
those held by private respondent (Aboitiz) by virtue of the writ Civil Case No. CEB-1186 for consolidation with Civil Case No.
of attachment which has been declared non-existent." CEB-1185.
Accordingly, the dispositive portion of the April 3, 1990
decision of the Third Division of this Court was modified to Meanwhile, in its comment on petitioners' motion to withhold
read as follows: the enforcement of the writs of attachment, respondent Aboitiz
alleged that the voluntary dismissal of Civil Case No. R-21761
WHEREFORE, in view of the foregoing, this Court rules that under Section 1, Rule 17 of the Revised Rules of Court was
the properties in the custody of the private respondent Aboitiz without prejudice to the institution of another action based on
& Company by virtue of the writ of attachment issued in Civil the same subject matter. It averred that the issuance of the writ
Case No. R-21761 be returned to the petitioner, but properties of attachment was justified because petitioners were intending
in the custody of the private respondent by virtue of the writ of to defraud respondent Aboitiz by mortgaging 11 parcels of land
replevin issued in Civil Case No. 619-L be continued in to the Philippine Commercial and Industrial Bank (PCIB) in
custodia legis of said court pending litigation therein. consideration of the loan of P1,100,000.00, thereby making
PCIB a preferred creditor to the prejudice of respondent
The Decision in G.R. No. 63225 having become final and Aboitiz, which had an exposure amounting to P13,430,259.14.
executory, entry of judgment was made on November 15, 1990.
This should have terminated the controversy between Petitioners then filed a rejoinder to said comment, contending
petitioners and respondent Aboitiz insofar as the Supreme Court that since the property subject of the writ of attachment have
was concerned, but that was not to be. On September 9, 1983 earlier been attached or replevied, the same property were under
respondent Aboitiz filed against petitioners two complaints for custodia legis and therefore could not be the subject of other
collection of sums of money with prayers for the issuance of writs of attachment.
writs of attachment in the Regional Trail Court, Branch 23,
Cebu City, docketed as Civil Cases Nos. CEB-1185 and CEB- On December 12, 1983, respondent Judge issued an order
1186. The complaint in Civil Case No. CEB-1185 alleged that finding no merit in petitioners' motion for reconsideration and
petitioner Eleazar Adlawan (defendant therein) was awarded a directing the sheriffs of Cebu, Davao and Metro Manila "to
contract for the construction of the Tago Diversion Works for proceed with the enforcement and implementation of the writs
the Tago River Irrigation Project by the National Irrigation of preliminary attachment." Respondent Judge ruled that the
Administration and that respondent Aboitiz (plaintiff therein) writs of attachment were issued on the basis of the supporting
loaned him money and equipment, which indebtedness as of affidavits alleging that petitioner had removed or disposed of
June 30, 1983 totaled P13,430,259.14. Paragraph 16 of the their property with intent to defraud respondent Aboitiz (Rollo,
complaint states: pp. 109-113).

16. That, in view of the enormous liabilities which the On December 15, petitioners filed an ex parte motion praying:
defendants have with the plaintiff, defendants executed a real (1) that the December 12, 1983 Order be set for hearing; (2)
estate mortgage covering eleven (11) parcels of land in favor of that they be given 15 days within which to either file a motion
Philippine Commercial and Industrial Bank (PCIB) to secure a for reconsideration or elevate the matter to this Court or the
P1,000,000.00 loan with said bank and was able to remove, then Intermediate Appellate Court; and (3) that within the same
conceal and dispose of their properties, obviously to defraud the 15-day period the implementation or enforcement of the writs
plaintiff, . . . (Rollo, pp. 65-66). of attachment be held in abeyance.

The complaint in Civil Case No. CEB-1186 alleged that On the same day, respondent Judge issued an order holding in
petitioner Eleazar Adlawan (defendant therein) was awarded a abeyance the enforcement of the writs of preliminary
contract for the construction of the Lasang River Irrigation attachment in order to afford petitioners an opportunity to seek
Project by the National Irrigation Administration and that their other remedies (Rollo, p. 116).
respondent Aboitiz (plaintiff therein) loaned him money and
equipment, which indebtedness as of June 30, 1983 totalled On December 27, petitioners filed the instant petition for
P5,370,672.08. Paragraph 15 of the complaint is similarly certiorari and mandamus. They alleged that respondent Judge
worded as paragraph 16 of the complaint in Civil Case No. gravely abused his discretion in ordering the issuance of the
CEB-1185. writs of preliminary attachment inasmuch as the real estate
mortgage executed by them in favor of PCIB did not constitute
Civil Case No. CEB-1185 was raffled to the Regional Trial fraudulent removal, concealment or disposition of property.
Court, Branch 6, presided by respondent Judge Ramon Am. They argued that granting the mortgage constituted removal or
Torres. On September 14, 1983, respondent Judge ordered the disposition of property, it was not per se a ground for
issuance of a writ of attachment upon respondent Aboitiz' filing attachment lacking proof of intent to defraud the creditors of the
of a bond of P5,000,000.00. Similarly, in Civil Case No. CEB- defendant.
1186, which was raffled to Branch 23, presiding Judge Emilio
A. Jacinto ordered the issuance of a writ of attachment upon the Petitioners contended that in Civil Case No. 21761, Branch 11
filing of a bond of P2,500,000.00. Accordingly, in Civil Case had ruled that the loan for which the mortgage was executed
No. CEB-1185, the Acting Provincial Sheriff of Cebu issued was contracted in good faith, as it was necessary for them to
separate writs dated September 26, 1983 addressed to the continue their business operations even after respondent Aboitiz
Sheriffs of Cebu, Davao and Metro Manila. No writ of had stopped giving them financial aid.
preliminary attachment was, however, issued in Civil Case No.
CEB-1186. Petitioners also contended that respondent Judge exceeded his
jurisdiction when he issued the Order of December 12, 1983,
Petitioners then filed in Civil Cases Nos. CEB-1185 and CEB- without first hearing the parties on the motion for attachment
1186 urgent motions to hold in abeyance the enforcement of the and the motion to dissolve the attachment. Moreover, they
ProvRem (PreAttachment) Full text 062318 9
argued that respondent Judge gravely abused his discretion in RAMON S. RONQUILLO
proceeding with the case, notwithstanding that his attention had Affiant
been called with regard to the pendency of G.R. No. 63225 in
this Court. (Rollo, pp. 171-172)

As prayed for by petitioners, we issued a temporary restraining It is evident from said affidavit that the prayer for attachment
order on January 6, 1984 "enjoining the respondents from rests on the mortgage by petitioners of 11 parcels of land in
enforcing or implementing the writs of preliminary attachment Cebu, which encumbrance respondent Aboitiz considered as
against the property of petitioners, all dated September 26, 1983 fraudulent concealment of property to its prejudice. We find,
and issued in Civil Cases Nos. CEB 1185 and 1186" (Rollo, p. however, that there is no factual allegation which may
118). constitute as a valid basis for the contention that the mortgage
was in fraud of respondent Aboitiz. As this Court said in
II Jardine-Manila Finance, Inc. v. Court of Appeals, 171 SCRA
636 (1989), "[T]he general rule is that the affidavit is the
The resolution of this case centers on the issue of the legality of foundation of the writ, and if none be filed or one be filed
the writ of attachment issued by respondent Judge in the which wholly fails to set out some facts required by law to be
consolidated cases for collection of sums of money. stated therein, there is no jurisdiction and the proceedings are
null and void."
The affidavit submitted by respondent Aboitiz in support of its
prayer for the writ of attachment does not meet the Bare allegation that an encumbrance of a property is in fraud of
requirements of Rule 57 of the Revised Rules of Court the creditor does not suffice. Factual bases for such conclusion
regarding the allegations on impending fraudulent removal, must be clearly averred.
concealment and disposition of defendant's property. As held in
Carpio v. Macadaeg, 9 SCRA 552 (1963), to justify a The execution of a mortgage in favor of another creditor is not
preliminary attachment, the removal or disposal must have been conceived by the Rules as one of the means of fraudulently
made with intent to defraud defendant's creditors. Proof of disposing of one's property. By mortgaging a piece of property,
fraud is mandated by paragraphs (d) and (e) of Section 1, Rule a debtor merely subjects it to a lien but ownership thereof is not
57 of the Revised Rules of Court on the grounds upon which parted with.
attachment may issue. Thus, the factual basis on defendant's
intent to defraud must be clearly alleged in the affidavit in Furthermore, the inability to pay one's creditors is not
support of the prayer for the writ of attachment if not so necessarily synonymous with fraudulent intent not to honor an
specifically alleged in the verified complaint. The affidavit obligation (Insular Bank of Asia & America, Inc. v. Court of
submitted by respondent Aboitiz states: Appeals, 190 SCRA 629 [1990]).

REPUBLIC OF THE PHILIPPINES Consequently, when petitioners filed a motion for the
CITY OF CEBU ...............) S.S. reconsideration of the order directing the issuance of the writ of
attachment, respondent Judge should have considered it as a
I, ROMAN S. RONQUILLO, of legal age, married and a motion for the discharge of the attachment and should have
resident of Cebu City, after being sworn in accordance with conducted a hearing or required submission of counter-
law, hereby depose and say: affidavits from the petitioners, if only to gather facts in support
of the allegation of fraud (Jopillo, Jr. v. Court of Appeals, 167
That I am the Vice-President of the plaintiff corporation in the SCRA 247 [1988]). This is what Section 13 of Rule 57
above-entitled case; mandates.

That a sufficient cause of action exists against the defendants This procedure should be followed because, as the Court has
named therein because the said defendants are indebted to the time and again said, attachment is a harsh, extraordinary and
plaintiffs in the amount of P13,430,259.14 exclusive of interests summary remedy and the rules governing its issuance must be
thereon and damages claimed; construed strictly against the applicant. Verily, a writ of
attachment can only be granted on concrete and specific
That the defendants have removed or disposed of their grounds and not on general averments quoting perfunctorily the
properties with intent to defraud the plaintiff, their creditor, words of the Rules (D.P. Lub Oil Marketing Center, Inc. v.
because on May 27, 1982 they executed a real estate mortgage Nicolas, 191 SCRA 423 [1990]).
in favor of Philippine Commercial and Industrial Bank (PCIB)
covering eleven (11) of their fifteen (15) parcels of land in The judge before whom the application is made exercises full
Cebu to secure a P1,000,000.00 loan with the same bank; discretion in considering the supporting evidence proffered by
the applicant. One overriding consideration is that a writ of
That this action is one of those specifically mentioned in attachment is substantially a writ of execution except that it
Section 1, Rule 57 of the Rules of Court, whereby a writ emanates at the beginning, instead of at the termination of the
preliminary attachment may lawfully issue because the action suit (Santos v. Aquino, Jr., 205 SCRA 127 [1992]; Tay Chun
therein is one against parties who have removed or disposed of Suy v. Court of Appeals, 212 SCRA 713 [1992]).
their properties with intent to defraud their creditor, plaintiff
herein; We need not discuss the issue of whether or not Civil Cases
Nos. CEB-1185 and CEB-1186 constituted undue interference
That there is no sufficient security for the claims sought to be with the proceedings in G.R. No. 63225 in view of the entry of
enforced by the present action; judgment in the latter case.

That the total amount due to the plaintiff in the above-entitled WHEREFORE, the petition is GRANTED and the Temporary
case is P13,430,259.14, excluding interests and claim for Restraining Order issued on January 6, 1984 is made
damages and is as much the sum for which an order of PERMANENT. Respondent Judge or whoever is the presiding
attachment is herein sought to be granted; above all legal judge of the Regional Trial Court, Branch 6, Cebu City, is
counter-claims on the part of the defendants. DIRECTED to PROCEED with the resolution of Civil Cases
Nos. CEB-1185 and CEB-1186 with deliberate dispatch.
IN VIEW WHEREOF, I hereunto set my hand this 24th day of
August 1983 at Cebu City, Philippines. SO ORDERED.

(Sgd.)
ProvRem (PreAttachment) Full text 062318 10
Respondent Judge should not have issued the two writs of
G.R. No. L-17797 November 29, 1963 preliminary attachment (Annexes C and C-1) on Abaya's simple
allegation that the petitioner was about to dispose of his
ISABELO CARPIO, petitioner, property, thereby leaving no security for the satisfaction of any
vs. judgment.1 Mere removal or disposal of property, by itself, is
HON. HIGINIO MACADAEG, as presiding Judge of not ground for issuance of preliminary attachment,
Branch X, Court of First Instance of Manila; OSCAR C. notwithstanding absence of any security for the satisfaction of
ABAYA, Provincial Sheriff of Rizal and City Sheriff of any judgment against the defendant. The removal or disposal, to
Manila, respondents. justify preliminary attachment, must have been made with
intent to defraud defendant's creditors.2
W. S. Fajardo and J. P. Cortez for petitioner.
O.C. Baria and F. Manalo for respondents. Respondent Judge in fact corrected himself. Acting on
petitioner's motion to discharge attachment and apparently
MAKALINTAL, J.: believing the correctness of the grounds alleged therein,3 he set
aside the orders of attachment (Order of March 11, 1960,
Isabelo Carpio filed this petition for certiorari and prohibition to Annex F).
annul and stop implementation of respondent Judge's orders of
October 24 and November 25, 1960, directing the sale of five But reversing himself again, he set aside his order of March 11,
race horses and goods previously attached upon motion of 1960 (Annex K, dated March 29, 1960.4 This he did apparently
respondent Oscar Abaya. We issued a writ of preliminary on Abaya's contention that petitioner was about to remove or
injunction to restrain the sale, with instructions to respondent dispose of his property in order to defraud his creditors, as
Sheriff of Rizal to allow the daily training of the said horses and examples of which disposals he pointed to the alleged sale of
their participation in races whenever they were included in the the horses and of petitioner's office furniture (Abaya's motion
racing programs. for reconsideration dated March 15, 1960, Annex H). These
averments of fraudulent disposals were controverted by
On January 17, 1960 respondent Oscar Abaya filed a complaint petitioner who, in his opposition to Abaya's motions for
against petitioner for the recovery of various sums aggregating reconsideration (Annex J), reiterated the defenses against
P25,000 (Civil Case No. 42450, C.F.I. Manila). Before preliminary attachment which he had previously enumerated in
summons was served, and upon ex parte motion of respondent his petition to discharge the two orders of attachment. Thus the
Abaya (Annex B), respondent Judge issued two orders of question of fraudulent disposal was put in issue; and respondent
attachment dated February 8 (Annex C-1) and February 10, Judge, before issuing the preliminary attachment anew, should
1960 (Annex C), pursuant to which the Sheriff of Manila have given the parties opportunity to prove their respective
garnished goods consisting of hardware imported by petitioner, claims or, at the very least, should have provided petitioner with
and the Sheriff of Rizal seized petitioner's five racing horses the chance to show that he had not been disposing of his
named Mohamad, Mohamad's Pride, Magic Spell, Nashua and property in fraud of creditors.5
Sirius. On February 12, 1960 petitioner filed an urgent petition
to discharge the orders of attachment (Annex 1). Acting But for much more than the above reason, respondent Judge
thereon, respondent Judge, on March 11, 1960, set aside the two should not have again ordered the issuance of the writ of
orders of February 8 and 10, 1960 (Annex F). preliminary attachment since Abaya never made any affidavit
as required by Rule 59, Rules of Court, which states that:
Upon two motions of respondent Abaya (Annexes H and 1),
respondent Judge, on March 29, 1960, set aside his order of SEC. 3. Order issued only when affidavit and bond filed — An
March 11, 1960 (Annex K). Though no new petition was filed order of attachment shall be granted when it is made to appear
for issuance of a writ of attachment and no new order or alias by the affidavit of the plaintiff, or of some other person who
writ of attachment was issued, respondent Sheriff of Manila personally knows the facts, that a sufficient cause of action
garnished the aforementioned goods and respondent Sheriff of exists, that the case is one of those mentioned in section 1
Rizal attached the five racing horses. hereof, that there is no other sufficient security for the claim
sought to be enforced by the action, and that the amount due to
Upon petition of respondent Abaya (Annex L), respondent the plaintiff, or the value of the property which he is entitled to
Judge issued an order directing the sale at public auction of the recover the possession of, is as much as the sum for which the
five racing horses (Annex M). However, the sale was halted by order is granted above all legal counterclaims; which affidavit,
petitioner's putting up a bond of P4,000 and the horses were and the bond required by the next succeeding section, must be
released to him by respondent Sheriff of Rizal. duly filed with the clerk or judge of the court before the order
issues.
Upon motion of respondent Abaya (Annex R), respondent
Judge, on October 24, 1960, ordered the increase of the bond to For the purposes of issuance of preliminary attachment, the
P10,000, and ordered respondent Sheriff of Rizal to proceed affidavit (Annex B-1) attached to Abaya's motion therefor
with the sale of the horses should petitioner failed to file the (Annex B), as we have said, is not sufficient, and it does not
additional bond of P6,000 (Annex S). Motions filed by appear that he ever executed another affidavit that complies
petitioner seeking reconsideration of the said order of October with the above section. None appears attached either to his
24 were denied by respondent Judge on November 25, 1960 motion for reconsideration dated March 15, 1960 (Annex H) or
(Annex X). So, respondent Sheriff of Rizal advertised the sale to his motion for reconsideration dated March 16, 1960 (Annex
at public auction of the five racing horses. Upon motion of I), upon which the order of attachment (Annex K) was based.
respondent Abaya (Annex T), and despite the opposition of
petitioner(Annex U), respondent Judge, on the same day — Having construed that the preliminary attachment should not
November 25 issued an order authorizing the sale of the have been ordered, we believe it is no longer necessary to
garnished goods (Annex Z). discuss the subsequent actuations of respondent Judge which
were all based on the erroneous assumption that his order of
Petitioner seeks annulment of the order of October 24, 1960 March 29, 1960 was valid (Annex K).
ordering him to file an additional bond of P6,000; the order of
November 25, 1960 denying his motion for reconsideration of WHEREFORE, the order of March 29, 1960 and all succeeding
the order of October 24; and the order of the same date orders of respondent Judge with respect to said preliminary
authorizing the sale of the garnished goods, on the ground that attachment, are hereby declared null and void; the attached
in issuing them respondent Judge acted without jurisdiction properties are ordered released; and the preliminary injunction
and/or with grave abuse of discretion. issued by this Court is made permanent. Costs against
respondent Abaya.
ProvRem (PreAttachment) Full text 062318 11
Code). Those who in the performance of their obligations are
guilty of fraud, negligence, or delay and those who in any
manner contravene the tenor thereof, are liable for damages
G.R. No. 95550 November 23, 1992 (Art. 1170, New Civil Code). Defendants (sic) allegation that
on December 21, 1985, plaintiffs went to their house and
MAXIMO UY and SYLVIA VASQUEZ-UY, petitioners, informed them that they (plaintiffs) were terminating the lease
vs. of the fishing vessel in question and had already informed
THE HON. COURT OF APPEALS, and ROSALINDA Edson Celle the boat engineer to bring the fishing vessel in
MORENO-ANLAP, respondents. question from Zamboanga to Basay do not absolve defendants
from complying with their obligations mandated in the contract
of lease, for aside from the fact that those allegations were not
NOCON, J.: supported with clear and convincing evidence and therefore,
lacks the ring of truth, they were denied by plaintiffs. That even
Petitioners, spouses Maximo Uy and Sylvia Vasquez, are before granting that those allegations were true, the same cannot be
Us praying for the review of the decision of respondent Court considered delivery of the fishing vessel . . . as contemplated in
of Appeals, dated April 24, 1990, and its resolution dated . . . the lease contract . . .
September 26, 1990, denying their motion for reconsideration.
The questioned decision dismissed the petition for certiorari and xxx xxx xxx
upheld the order of attachment against petitioner's properties,
issued by Judge Jesus Tabilon, Branch 40 of the 7th Judicial Defendants cannot also claimed (sic) exemption from any
Region, Dumaguete City. liability regarding the non-delivery of the fishing boat . . . on
the ground that the same got lost due to fortuitous event
Records show that private respondents Enrique Anlap and because in the contract of lease . . . defendants are bound to pay
Rosalinda Moreno-Anlap are the owners of a fishing vessel plaintiffs the value of the fishing boat . . . in the event of total
known as "cub-cub" valued at P350,000.00. On September 20, loss or destruction by fortuitous events. When the law or
1985, they rented said vessel and its accessories to petitioners stipulation, the obligor is liable even for fortuitous events, the
for a period of sixty (60) days commencing September 20, 1985 loss of the thing does not extinguish the obligation and he shall
until November 19, 1985, at the rental of P8,000.00 per 30-days be responsible for damages. 1
or for a total sum of P16,000.000, which petitioners fully paid.
The agreement was that should petitioners continue using the On December 15, 1989, petitioners filed a notice of appeal from
vessel after the expiration of the lease, the same shall be the aforesaid decision, while respondent filed an ex-parte
considered renewed for another period of one hundred twenty motion for writ of attachment dated December 18, 1989, which
(120) days, provided petitioners pay the amount of P16,000.00 was granted, and the same issued on December 19, 1989.
as advance payment for the first sixty (60) days and another Petitioners' ex-parte motion to discharge said writ failed.
P16,000.00 after the expiration of the first sixty (60) days. Likewise, their attempt at securing a reversal with the Court of
However, despite the expiration of the original 60-day period Appeals was a failure with the dismissal of their petition for
petitioners failed to return the fishing vessel and instead certiorari.
continued using the vessel without paying rentals in spite of
repeated demands. Elevating the matter to this Court, petitioners specifically
challenge the propriety of the order of preliminary attachment
Hence, respondent filed a complaint against petitioners for issued by the trial court, which read as follows:
recovery of a sum of money, return of the fishing vessel and
damages before the Regional Trial Court of Negros Oriental, It appearing that the appeal taken by the defendants by filing a
Dumaguete City, Branch 40. After trial on the merits, a Notice of Appeal had not been perfected on account of the fact
judgment, dated November 29, 1989, was rendered against that the last day for taking an appeal has not yet expired and
petitioners ordering them to: finding the Ex-parte Motion for writ of attachment to be
meritorious, the same is hereby
1. Return the fishing vessel which they leased from granted. 2
respondents, together with its accessories or to pay its value of
P350,000.00 if delivery cannot be made; Petitioners contend that the above-quoted Order does not
measure up to the rigid standard set by this Court in the
2. To pay respondents the following sums: issuance of preliminary attachment orders since it does not
contain any findings of fact or of law. The lower court in
a) P32,000.00 for unpaid rentals plus legal rate of interest denying the motion of the petitioners to discharge the writ of
from the filing of the civil case until paid; attachment admitted that "there was no hearing in the granting
of the question (sic) writ for this case was decided by this court
b) P400/day representing the daily income of the fishing and its factual findings supporting the decision supports the
vessel or its value paid; issuance of the question (sic) writ pursuant to paragraphs (c)
and (d) of Sec. 1, Rule 57 of the Rules of court. That to conduct
c) P3,000.00 as expenses for litigation; a hearing of said motion will just be a repetition in the
presentation of evidence already on record. 3
d) P5,000.00 as moral damages;
Petitioners argue that there is nothing in the trial court's
and 20% of all the aforementioned amount as attorneys fees and decision which would support any kind of fraud or concealment
to pay cost. which could serve as basis for attachment. At any rate,
petitioners do not agree that a writ of attachment may be issued
The judgment was predicted on the following findings of the upon a ground established from the evidence in the main case.
trial court, to wit: Petitioners went further to say that during the entire hearing of
the main case, no petition for attachment was filed by the
Defendants, however, failed to deliver to plaintiffs at Basay, respondents, and it was only after the appeal was perfected that
Negros Oriental, the fishing vessel and its accessories in an ex-parte motion for attachment was filed.
question up to the present nor pay the rentals thereof, in
violation of the contract of lease . . . which is the law between Attachment is a provisional remedy by which the property of an
plaintiffs and defendants. Obligations arising from contracts adverse party is taken into legal custody as a security for the
had (sic) the force of law between the contracting parties and satisfaction of any judgment that may be recovered by the
should be complied with in good faith (Art. 1159, New Civil plaintiff or any proper party. 4 It is an auxiliary remedy the
ProvRem (PreAttachment) Full text 062318 12
granting of which lies within the sound discretion of the judge
taking cognizance of the principal case upon existence it G.R. No. 81120 August 20, 1990
depends. Its purpose is to secure a contingent lien on
defendant's property until plaintiff can obtain a judgment and Sps. OLIB and ROBERTA R. OLIB, petitioners,
have such property applied to its satisfaction or to make vs.
provision for unsecured debts in cases where the means of Hon. EDELWINA C, PASTORAL, Judge of the Regional
satisfaction thereof are liable to be removed beyond the Trial Court of Agusan del Norte and Butuan City, Branch
jurisdiction or improperly disposed of or concealed or placed III and CORAZON M, NAVIA, respondents.
beyond reach of creditors. 5
Carlito B. Yebes for petitioners.
We find nothing in the Rules of Court which makes notice and
hearing indispensible and mandatory for the issuance of a writ Wenceslao B. Resales for respondents.
of attachment. It is simply the duty of the court to ensure that
the writ is issued on concrete and specific grounds and not on
general averments. Such being the rule, there is no reason why CRUZ, J.:
the evidence in the main case cannot be used as basis for
issuance of a writ of attachment, more so if it was proved that This case could have been remanded to the Court of Appeals,
the defendants unjustly detained, improperly disposed of or which has concurrent jurisdiction with this Court in petitions
concealed or placed the personal property beyond the reach of for certiorari against the regional trial courts under Rule 65 of
their creditors. the Rules of Court. We have decided to retain and rule on it
directly, however, so we can emphasize the important doctrines
In the case before Us the writ of attachment sought for was we shall here affirm.
granted only after trial on the merits and a finding on
petitioners' liability for the return of the boat leased or its value On November 13, 1981, Corazon M. Navia sued the spouses
in case delivery cannot be effected. Nevertheless, We agree Oscar and Roberta Olib, petitioner herein, for dissolution of
with the petitioners that We find nothing in the judgment that their partnership and other reliefs, with a prayer for the issuance
would justify the issuance of a writ of attachment. of a writ of a preliminary attachment.1 The it was granted on
November 10, 1983, resulting in the attachment of six parcels
The statement in respondent's motion for a writ of attachment of land belonging to the petitioners, along with stocks of
that they are incorporating "by way of reference the allegations merchandise in their bodega.2 The writ was amended on
of plaintiffs' complaint and all the evidence already adduced in December 14, 1983, to release the merchandise. Two years
this case insofar as they are later, on May 16, 1985, the petitioners filed a motion to
applicable;" 6 and in which complaint, respondents alleged that discharge the preliminary attachment on the ground that the
petitioners refused and/or denied them information as to the attachment bond executed for one year from November 1983
whereabouts of their fishing vessel, 7 are not grounds justifying had already lapsed. 3 This was accompanied by a certification
the issuance of a writ of attachment. Moreover, such allegations from the bonding company that the bond had not been renewed
was not proved in the main case. Petitioners' liability, if any is and the corresponding payment for extension had not been
predicted on their non-fulfillment of their obligation under the made . 4
lease contract.
On February 25,1986, Judge Miguel S. Rallos of the Regional
Be that as it may, petitioners' impression that the trial court Trial Court of Agusan del Norte and Butuan City rendered
loses jurisdiction to issue a writ of attachment upon perfection judgment for the petitioners and sentenced the private
of the appeal is misplaced. The rules specifically state that a respondent to pay them actual, moral and exemplary damages,
motion for a writ of attachment may be filed at the plus attorney's fees and litigation expenses. 5 On April 16,
commencement of an action or at anytime thereafter. 8 The trial 1986, Navia perfected her appeal from the challenged
court may even issue orders for the protection and preservation judgment, and the records of the case were elevated to the Court
of the rights of the parties which do not involve any matter of Appeals on January 25, 1988.6
litigated by the appeal. 9
Although the trial court found in the text of the decision that the
In the case of Galang v. Endencia 10 this Court upheld the private respondent was not entitled to the issuance of the writ of
issuance of a writ of attachment even though appeal had been preliminary attachment, no mention was made of the said writ
perfected. Relying on Sec. 9, Rule 41 of the then Rules of in the dispositive portion. As a result, the annotation of the
Court, the Court said that "[t]he levy in attachment of the preliminary attachment on the certificates/titles of the attached
properties of the defendant upon the allegation that he is about lands was maintained and could not be canceled.
to dispose of the same to defraud his creditors is one which is
intended for the protection and preservation of the rights of the On July 20, 1987, the petitioners moved for the discharge of the
plaintiff and which in no way involves any matter litigated by writ of preliminary attachment by the respondent court on the
defendant's appeal." basis of the judgment in their favor. Navia filed an opposition,
contending that as she had perfected her appeal to the Court of
In the same case, the Court said that errors committed by the Appeals, the trial court no longer had any jurisdiction over the
trial in the appreciation of the probative value of the facts stated case. The private respondent cited Rule 41, Section 9, of the
in the petition for the writ do not affect its jurisdiction, but Rules of Court, reading as follows:
merely the exercise of such jurisdiction. In such cases, appeal
together with the main case, not certiorari, is the proper remedy. When appeal deemed perfected; effect thereof. — If the notice
of appeal, the appeal bond and the record on appeal have been
PREMISES CONSIDERED, the Petition for Review is hereby filed in due time, the appeal is deemed perfected upon the
GRANTED, the decision of the Court of Appeals dated April approval of the record on appeal and of the appeal bond other
24, 1990 is hereby REVERSED and the trial court's order of than a cash bond, and thereafter the trial court loses its
preliminary attachment against the properties of the petitioners jurisdiction over the case, except to issue orders for the
is hereby LIFTED and CANCELLED. It is further ordered that protection and preservation of the rights of the parties which do
properties attached be restituted to the petitioners or if this is not involve any matter litigated by the appeal, to approve
not possible, to allow petitioners to claim on the bond. compromises offered by the parties prior to the transmittal of
the record on appeal to the appellate court, and to permit the
SO ORDERED. prosecution of pauper's appeals.
ProvRem (PreAttachment) Full text 062318 13
On August 24, 1987, Judge Edelwina C. Pastoral, who had
succeeded Judge Rallos denied the motion on the ground It is an auxiliary remedy and cannot have an independent
invoked in the opposition and declared: existence apart from the main suit or claim instituted by the
plaintiff against the defendant. 9 Being merely ancillary to a
Settled is the rule that the trial court loses its jurisdiction over principal proceeding, the attachment must fail if the suit itself
the record and over the subject of the case once an appeal in the cannot be maintained as the purpose of the writ can no longer
case has been perfected. The exception to this rule refers to the be justified.
orders of the Court to protect and preserve the rights of the
parties which do not involve any matter litigated by appeal The consequence is that where the main action is appealed, the
(Section 9, Rule 41 of the Rules of Court). The writ of attachment which may hive been issued as an incident of that
preliminary attachment was earlier granted as a security for the action, is also considered appealed and so also removed from
satisfaction of the judgment, the latter being now the subject of the jurisdiction of the court a quo. The attachment itself cannot
the appeal. To grant defendant's motion at this juncture is to be the subject of a separate case independent of the principal
disturb and not to preserve the rights of the parties. It is the action because the attachment was only an incident of such
stand of this Court that the status quo of the parties shall be action.
maintained for it cannot predetermine the posture which the
appellate court will adopt, either to affirm, modify or reverse We held in Olsen v. Olsen: 10
the questioned decision of this Court.
The preliminary attachment is an auxiliary remedy the granting
The petitioners moved for reconsideration, invoking the case of of which lies within the sound discretion of the judge taking
Galang v. Endencia, 7 where this Court held: cognizance of the principal case upon whose existence it
depends. The order of the judge denying a motion for the
The levy in attachment of the properties of the defendant upon annulment of a writ of preliminary attachment, being of an
the allegation that he is about to dispose of the same to defraud incIdental or interlocutory and auxiliary character, cannot be
his creditors is one which is intended for the protection and the subject of an appeal independently from the principal case,
preservation of the rights of the plaintiff and which in no way because our procedural law now in force authorizes an appeal
involves any matter litigated by the defendant's appeal. And as only from a final judgement which gives an end to the
the respondent court had jurisdiction to issue the writ of litigation. (Section 143, Act 190; 3 C.J., 549. par. 389.)
attachment, its errors, if any, committed in the appreciation of
the probative value of the facts stated in the petition for the writ xxx xxx xxx
do not affect its jurisdiction but merely the exercise of such
jurisdiction. We need not belabor here the rule that what makes While it is true that an order denying a motion for the
up jurisdiction is the authority to act in a particular case and not annulment of a preliminary attachment is not subject to review
the correctness of the action taken thereon. Without such through an appeal independently from the principal case, it is
authority, as determined by law, the court cannot act, or if it not constituting a final order, yet when the writ of preliminary
does, its actuations are null and voId; but where the authority attachment becomes final by virtue of a final judgment rendered
exists, all orders and decisions of the court rendered in the in the principal case, saId writ is subject to review jointly with
exercise thereof and within its limits are valId even if they were the judgment rendered in the principal case through an ordinary
erroneous. appeal.

They argued that if the court a quo could issue a writ of It is also worth noting, as an appropriate observation on the
attachment after the appeal had been perfected, then it could a impropriety of the remedy employed by the petitioners in this
fortiori discharge such a writ, especially where, as in the case at case, that, in Jopillo v. Court of Appeals, 11 this Court
bar, the movants were the prevailing parties. observed:

Later, somewhat inconsistently, the petitioners also contended ... even assuming that the trial court committed an error in
that there was really no more need for an order discharging the denying the motion to discharge the writ of attachment the error
attachment as this followed by operation of Rule 57, Section 19, (if it is an error at all) is an error in judgment which cannot be
of the Rules of Court. Such discharge was the immediate and corrected through the extraordinary remedy of certiorari but by
automatic effect of any judgment in favor of the party whose an ordinary appeal at the proper time.
property had been attached, thus:
Coming now to the argument that the attachment was
SEC. 19. Disposition of attached property where judgment is automatically lifted because of the non-payment of the premium
for party against whom attachment is issued. — If judgment be on the attachment bond, the Court feels it is time again to
rendered against the attaching creditor, all the proceeds of sales correct a common misimpression. The rule is that the bond is
and money collected or received by the sheriff, clerk, or other not deemed extinguished by reason alone of such non-payment.
proper officer under the order of attachment, and all property The Court made this clear in Luzon Surety Co. v. Quebrar, 12
attached remaining in any such officer's hands, shall be where it declared:
delivered to the party against whom attachment was issued, and
the order of attachment discharged. To allow the defendants-appellants to evade their liability under
the Indemnity Agreements by non-payment of the premiums
The motion having been denied, the petitioners sought would ultimately lead to giving the administrator the power to
reconsideration a second time, insisting that (a) the attachment diminish or reduce and altogether nullify his liability under the
had been automatically discharged under Rule 57, Section 19; Administrator's Bonds. As already stated, this is contrary to the
and (b) the attachment bond had already lapsed for non- intent and purpose of the law in provIding for the
payment of the premiums. They were rebuffed again. They then administrator's bonds for the protection of the creditors, heirs,
came before this Court, contending that the respondent court legatees, and the estate.
committed grave abuse of discretion in denying their motion.
xxx xxx xxx
We hold that it did not.
Lastly, in Manila Surety and FIdelity Co., Inc. v. Villarama
Attachment is defined as a provisional remedy by which the (107 Phil. 891), it was held that "the one-year period mentioned
property of an adverse party is taken into legal custody, either at therein refers not to the duration or lifetime of the bond, but
the commencement of an action or at any time thereafter, as a merely to the payment of premiums, and, consequently, does
security for the satisfaction of any judgment that may be not affect at all the effectivity or efficacy of such bond. But
recovered by the plaintiff or any proper party.8 such non-payment alone of the premiums for the succeeding
ProvRem (PreAttachment) Full text 062318 14
years ... does not necessarily extinguish or terminate the 3. On May 11, 1989 the attachment bond having been
effectivity of the counter-bond in the absence of an express submitted by Davao Light, the writ of attachment issued.
stipulation in the contract making such non- payment of
premiums a cause for the extinguishment or termination of the 4. On May 12, 1989, the summons and a copy of the
undertaking. complaint, as well as the writ of attachment and a copy of the
attachment bond, were served on defendants Queensland and
These principles are applicable to other kinds of bonds, Adarna; and pursuant to the writ, the sheriff seized properties
including the attachment bond in the case at bar. On this bond, belonging to the latter.
the respondent court correctly observed:
5. On September 6, 1989, defendants Queensland and
... a cursory examination of the bond for levy on attachment Adarna filed a motion to discharge the attachment for lack of
executed between herein plaintiff Corazon M. Navia and the jurisdiction to issue the same because at the time the order of
branch manager of the First Continental Assurance ' Co., Inc. attachment was promulgated (May 3, 1989) and the attachment
(Rollo, pp. 347-348) discloses no stipulation that the surety writ issued (May 11, 1989), the Trial Court had not yet acquired
company will terminate the bond for non-payment of the jurisdiction over the cause and over the persons of the
premium. This minor matter on non-payment of premiums of defendants.
the bond pertains to the contracting parties to resolve. 13
6. On September 14, 1989, Davao Light filed an
Finally, on the correct interpretation of Rule 57, Section 19, of opposition to the motion to discharge attachment.
the Rules of Court, we hold that the order of attachment is
considered discharged only where the judgment has already 7. On September 19, 1989, the Trial Court issued an
become final and executory and not when it is still on appeal. Order denying the motion to discharge.
The obvious reason is that, except in a few specified cases,
execution pending appeal is not allowed. 14 This Order of September 19, 1989 was successfully challenged
by Queensland and Adarna in a special civil action of certiorari
WHEREFORE, the petition is DISMISSED, with costs against instituted by them in the Court of Appeals. The Order was, as
the petitioners. The petitioners may, if they see fit, move for the aforestated, annulled by the Court of Appeals in its Decision of
lifting of the writ of preliminary attachment in the Court of May 4, 1990. The Appellate Court's decision closed with the
Appeals, to which that ancillary remedy is deemed elevated following disposition:
along with the principal action.
. . . the Orders dated May 3, 1989 granting the issuance of a
SO ORDERED. 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
G.R. No. 93262 December 29, 1991 Attachment dated May 11, 1989 and Notice of Levy on
Preliminary Attachment dated May 11, 1989, are hereby
DAVAO LIGHT & POWER CO., INC., petitioner, declared null and void and the attachment hereby ordered
vs. DISCHARGED.
THE COURT OF APPEALS, QUEENSLAND HOTEL or
MOTEL or QUEENSLAND TOURIST INN, and The Appellate Tribunal declared that —
TEODORICO ADARNA, respondents.
. . . While it is true that a prayer for the issuance of a writ of
Breva & Breva Law Offices for petitioner. preliminary attachment may be included m the complaint, as is
usually done, it is likewise true that the Court does not acquire
Goc-Ong & Associates for private respondents. 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
NARVASA, J.: actual summons had been made, nor retroact jurisdiction upon
summons being made. . . .
Subject of the appellate proceedings at bar is the decision of the
Court of Appeals in CA-G.R. Sp. No. 1967 entitled It went on to say, citing Sievert v. Court of Appeals, 3 that "in a
"Queensland Hotel, Inc., etc. and Adarna v. Davao Light & proceedings in attachment," the "critical time which must be
Power Co., Inc.," promulgated on May 4, 1990. 1 That decision identified is . . . when the trial court acquires authority under
nullified and set aside the writ of preliminary attachment issued law to act coercively against the defendant or his property . . .;"
by the Regional Trial Court of Davao City 2 in Civil Case No. and that "the critical time is the of the vesting of jurisdiction in
19513-89 on application of the plaintiff (Davao Light & Power the court over the person of the defendant in the main case."
Co.), before the service of summons on the defendants (herein
respondents Queensland Co., Inc. and Adarna). Reversal of this Decision of the Court of Appeals of May 4,
1990 is what Davao Light seeks in the present appellate
Following is the chronology of the undisputed material facts proceedings.
culled from the Appellate Tribunal's judgment of May 4, 1990.
The question is whether or not a writ of preliminary attachment
1. On May 2, 1989 Davao Light & Power Co., Inc. may issue ex parte against a defendant before acquisition of
(hereafter, simply Davao Light) filed a verified complaint for jurisdiction of the latter's person by service of summons or his
recovery of a sum of money and damages against Queensland voluntary submission to the Court's authority.
Hotel, etc. and Teodorico Adarna (docketed as Civil Case No.
19513-89). The complaint contained an ex parte application for The Court rules that the question must be answered in the
a writ of preliminary attachment. affirmative and that consequently, the petition for review will
have to be granted.
2. On May 3, 1989 Judge Nartatez, to whose branch the
case was assigned by raffle, issued an Order granting the ex It is incorrect to theorize that after an action or proceeding has
parte application and fixing the attachment bond at been commenced and jurisdiction over the person of the
P4,600,513.37. 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
ProvRem (PreAttachment) Full text 062318 15
authority), nothing can be validly done by the plaintiff or the for attachment in the complaint or other appropriate pleading
court. It is wrong to assume that the validity of acts done during (counter-claim, cross-claim, third-party claim) and for the Trial
this period should be defendant on, or held in suspension until, Court to issue the writ ex-parte at the commencement of the
the actual obtention of jurisdiction over the defendant's person. action if it finds the application otherwise sufficient in form and
The obtention by the court of jurisdiction over the person of the substance.
defendant is one thing; quite another is the acquisition of
jurisdiction over the person of the plaintiff or over the subject- In Toledo v. Burgos, 19 this Court ruled that a hearing on a
matter or nature of the action, or the res or object hereof. motion or application for preliminary attachment is not
generally necessary unless otherwise directed by the Trial Court
An action or proceeding is commenced by the filing of the in its discretion. 20 And in Filinvest Credit Corporation v.
complaint or other initiatory pleading. 4 By that act, the Relova, 21 the Court declared that "(n)othing in the Rules of
jurisdiction of the court over the subject matter or nature of the Court makes notice and hearing indispensable and mandatory
action or proceeding is invoked or called into activity; 5 and it requisites for the issuance of a writ of attachment." The only
is thus that the court acquires jurisdiction over said subject pre-requisite is that the Court be satisfied, upon consideration of
matter or nature of the action. 6 And it is by that self-same act "the affidavit of the applicant or of some other person who
of the plaintiff (or petitioner) of filing the complaint (or other personally knows the facts, that a sufficient cause of action
appropriate pleading) — by which he signifies his submission exists, that the case is one of those mentioned in Section 1 . . .
to the court's power and authority — that jurisdiction is (Rule 57), that there is no other sufficient security for the claim
acquired by the court over his person. 7 On the other hand, sought to be enforced by the action, and that the amount due to
jurisdiction over the person of the defendant is obtained, as the applicant, or the value of the property the possession of
above stated, by the service of summons or other coercive which he is entitled to recover, is as much as the sum for which
process upon him or by his voluntary submission to the the order (of attachment) is granted above all legal
authority of the court. 8 counterclaims." 22 If the court be so satisfied, the "order of
attachment shall be granted," 23 and the writ shall issue upon
The events that follow the filing of the complaint as a matter of the applicant's posting of "a bond executed to the adverse party
routine are well known. After the complaint is filed, summons in an amount to be fixed by the judge, not exceeding the
issues to the defendant, the summons is then transmitted to the plaintiffs claim, conditioned that the latter will pay all the costs
sheriff, and finally, service of the summons is effected on the which may be adjudged to the adverse party and all damages
defendant in any of the ways authorized by the Rules of Court. which he may sustain by reason of the attachment, if the court
There is thus ordinarily some appreciable interval of time shall finally adjudge that the applicant was not entitled thereto."
between the day of the filing of the complaint and the day of 24
service of summons of the defendant. During this period,
different acts may be done by the plaintiff or by the Court, In Mindanao Savings & Loan Association, Inc. v. Court of
which are unquestionable validity and propriety. Among these, Appeals, decided on April 18, 1989, 25 this Court had occasion
for example, are the appointment of a guardian ad litem, 9 the to emphasize the postulate that no hearing is required on an
grant of authority to the plaintiff to prosecute the suit as a application for preliminary attachment, with notice to the
pauper litigant, 10 the amendment of the complaint by the defendant, for the reason that this "would defeat the objective of
plaintiff as a matter of right without leave of court, 11 the remedy . . . (since the) time which such a hearing would
authorization by the Court of service of summons by take, could be enough to enable the defendant to abscond or
publication, 12 the dismissal of the action by the plaintiff on dispose of his property before a writ of attachment issues." As
mere notice. 13 observed by a former member of this Court, 26 such a
procedure would warn absconding debtors-defendants of the
This, too, is true with regard to the provisional remedies of commencement of the suit against them and the probable
preliminary attachment, preliminary injunction, receivership or seizure of their properties, and thus give them the advantage of
replevin. 14 They may be validly and properly applied for and time to hide their assets, leaving the creditor-plaintiff holding
granted even before the defendant is summoned or is heard the proverbial empty bag; it would place the creditor-applicant
from. in danger of losing any security for a favorable judgment and
thus give him only an illusory victory.
A preliminary attachment may be defined, paraphrasing the
Rules of Court, as the provisional remedy in virtue of which a Withal, ample modes of recourse against a preliminary
plaintiff or other party may, at the commencement of the action attachment are secured by law to the defendant. The relative
or at any time thereafter, have the property of the adverse party ease with which a preliminary attachment may be obtained is
taken into the custody of the court as security for the matched and paralleled by the relative facility with which the
satisfaction of any judgment that may be recovered. 15 It is a attachment may legitimately be prevented or frustrated. These
remedy which is purely statutory in respect of which the law modes of recourse against preliminary attachments granted by
requires a strict construction of the provisions granting it. 16 Rule 57 were discussed at some length by the separate opinion
Withal no principle, statutory or jurisprudential, prohibits its in Mindanao Savings & Loans Asso. Inc. v. CA., supra.
issuance by any court before acquisition of jurisdiction over the
person of the defendant. That separate opinion stressed that there are two (2) ways of
discharging an attachment: first, by the posting of a
Rule 57 in fact speaks of the grant of the remedy "at the counterbond; and second, by a showing of its improper or
commencement of the action or at any time thereafter." 17 The irregular issuance.
phase, "at the commencement of the action," obviously refers to
the date of the filing of the complaint — which, as above 1.0. The submission of a counterbond is an efficacious
pointed out, is the date that marks "the commencement of the mode of lifting an attachment already enforced against
action;" 18 and the reference plainly is to a time before property, or even of preventing its enforcement altogether.
summons is served on the defendant, or even before summons
issues. What the rule is saying quite clearly is that after an 1.1. When property has already been seized under
action is properly commenced — by the filing of the complaint attachment, the attachment may be discharged upon
and the payment of all requisite docket and other fees — the counterbond in accordance with Section 12 of Rule 57.
plaintiff may apply for and obtain a writ of preliminary
attachment upon fulfillment of the pertinent requisites laid Sec. 12. Discharge of attachment upon giving counterbond. —
down by law, and that he may do so at any time, either before At any time after an order of attachment has been granted, the
or after service of summons on the defendant. And this indeed, party whose property has been attached or the person appearing
has been the immemorial practice sanctioned by the courts: for in his behalf, may, upon reasonable notice to the applicant,
the plaintiff or other proper party to incorporate the application apply to the judge who granted the order, or to the judge of the
ProvRem (PreAttachment) Full text 062318 16
court in which the action is pending, for an order discharging 57), the defendant is not allowed to file a motion to dissolve the
the attachment wholly or in part on the security given . . . in an attachment under Section 13 of Rule 57 by offering to show the
amount equal to the value of the property attached as falsity of the factual averments in the plaintiff's application and
determined by the judge to secure the payment of any judgment affidavits on which the writ was based — and consequently that
that the attaching creditor may recover in the action. . . . the writ based thereon had been improperly or irregularly issued
(SEE Benitez v. I.A.C., 154 SCRA 41) — the reason being that
1.2. But even before actual levy on property, seizure under the hearing on such a motion for dissolution of the writ would
attachment may be prevented also upon counterbond. The be tantamount to a trial of the merits of the action. In other
defendant need not wait until his property is seized before words, the merits of the action would be ventilated at a mere
seeking the discharge of the attachment by a counterbond. This hearing of a motion, instead of at the regular trial. Therefore,
is made possible by Section 5 of Rule 57. 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
Sec. 5. Manner of attaching property. — The officer executing Phil. 886).
the order shall without delay attach, to await judgment and
execution in the action, all the properties of the party against (b) Effect of the dissolution of a preliminary attachment on
whom the order is issued in the province, not exempt from the plaintiffs attachment bond:
execution, or so much thereof as may be sufficient to satisfy the
applicant's demand, unless the former makes a deposit with the . . . The dissolution of the preliminary attachment upon security
clerk or judge of the court from which the order issued, or gives given, or a showing of its irregular or improper issuance, does
a counter-bond executed to the applicant, in an amount not of course operate to discharge the sureties on plaintiff's own
sufficient to satisfy such demand besides costs, or in an amount attachment bond. The reason is simple. That bond is "executed
equal to the value of the property which is about to be attached, to the adverse party, . . . conditioned that the . . . (applicant) will
to secure payment to the applicant of any judgment which he pay all the costs which may be adjudged to the adverse party
may recover in the action. . . . (Emphasis supplied) and all damages which he may sustain by reason of the
attachment, if the court shall finally adjudge that the applicant
2.0. Aside from the filing of a counterbond, a preliminary was not entitled thereto" (SEC. 4, Rule 57). Hence, until that
attachment may also be lifted or discharged on the ground that determination is made, as to the applicant's entitlement to the
it has been irregularly or improperly issued, in accordance with attachment, his bond must stand and cannot be with-drawn.
Section 13 of Rule 57. Like the first, this second mode of lifting
an attachment may be resorted to even before any property has With respect to the other provisional remedies, i.e., preliminary
been levied on. Indeed, it may be availed of after property has injunction (Rule 58), receivership (Rule 59), replevin or
been released from a levy on attachment, as is made clear by delivery of personal property (Rule 60), the rule is the same:
said Section 13, viz.: they may also issue ex parte. 29

Sec. 13. Discharge of attachment for improper or irregular It goes without saying that whatever be the acts done by the
issuance. — The party whose property has been attached may Court prior to the acquisition of jurisdiction over the person of
also, at any time either BEFORE or AFTER the release of the defendant, as above indicated — issuance of summons, order of
attached property, or before any attachment shall have been attachment and writ of attachment (and/or appointments of
actually levied, upon reasonable notice to the attaching creditor, guardian ad litem, or grant of authority to the plaintiff to
apply to the judge who granted the order, or to the judge of the prosecute the suit as a pauper litigant, or amendment of the
court in which the action is pending, for an order to discharge complaint by the plaintiff as a matter of right without leave of
the attachment on the ground that the same was improperly or court 30 — and however valid and proper they might otherwise
irregularly issued. If the motion be made on affidavits on the be, these do not and cannot bind and affect the defendant until
part of the party whose property has been attached, but not and unless jurisdiction over his person is eventually obtained by
otherwise, the attaching creditor may oppose the same by the court, either by service on him of summons or other
counter-affidavits or other evidence in addition to that on which coercive process or his voluntary submission to the court's
the attachment was made. . . . (Emphasis supplied) authority. Hence, when the sheriff or other proper officer
commences implementation of the writ of attachment, it is
This is so because "(a)s pointed out in Calderon v. I.A.C., 155 essential that he serve on the defendant not only a copy of the
SCRA 531 (1987), The attachment debtor cannot be deemed to applicant's affidavit and attachment bond, and of the order of
have waived any defect in the issuance of the attachment writ attachment, as explicity required by Section 5 of Rule 57, but
by simply availing himself of one way of discharging the also the summons addressed to said defendant as well as a copy
attachment writ, instead of the other. Moreover, the filing of a of the complaint and order for appointment of guardian ad
counterbond is a speedier way of discharging the attachment litem, if any, as also explicity directed by Section 3, Rule 14 of
writ maliciously sought out by the attaching creditor instead of the Rules of Court. Service of all such documents is
the other way, which, in most instances . . . would require indispensable not only for the acquisition of jurisdiction over
presentation of evidence in a fullblown trial on the merits, and the person of the defendant, but also upon considerations of
cannot easily be settled in a pending incident of the case." 27 fairness, to apprise the defendant of the complaint against him,
of the issuance of a writ of preliminary attachment and the
It may not be amiss to here reiterate other related principles grounds therefor and thus accord him the opportunity to prevent
dealt with in Mindanao Savings & Loans Asso. Inc. v. C.A., attachment of his property by the posting of a counterbond in an
supra., 28 to wit: amount equal to the plaintiff's claim in the complaint pursuant
to Section 5 (or Section 12), Rule 57, or dissolving it by
(a) When an attachment may not be dissolved by a causing dismissal of the complaint itself on any of the grounds
showing of its irregular or improper issuance: set forth in Rule 16, or demonstrating the insufficiency of the
applicant's affidavit or bond in accordance with Section 13,
. . . (W)hen the preliminary attachment is issued upon a ground Rule 57.
which is at the same time the applicant's cause of action; e.g.,
"an action for money or property embezzled or fraudulently It was on account of the failure to comply with this fundamental
misapplied or converted to his own use by a public officer, or requirement of service of summons and the other documents
an officer of a corporation, or an attorney, factor, broker, agent, above indicated that writs of attachment issued by the Trial
or clerk, in the course of his employment as such, or by any Court ex parte were struck down by this Court's Third Division
other person in a fiduciary capacity, or for a willful violation of in two (2) cases, namely: Sievert v. Court of Appeals, 31 and
duty." (Sec. 1 [b], Rule 57), or "an action against a party who BAC Manufacturing and Sales Corporation v. Court of
has been guilty of fraud m contracting the debt or incurring the Appeals, et al. 32 In contrast to the case at bar — where the
obligation upon which the action is brought" (Sec. 1 [d], Rule summons and a copy of the complaint, as well as the order and
ProvRem (PreAttachment) Full text 062318 17
writ of attachment and the attachment bond were served on the for the immediate issuance of a writ of attachment against
defendant — in Sievert, levy on attachment was attempted petitioners, and Noel L. Diño, which was docketed as Civil
notwithstanding that only the petition for issuance of the writ of Case No. 91-3506 and raffled to Branch 150 of the RTC
preliminary attachment was served on the defendant, without Makati, presided over by respondent Judge. The following day,
any prior or accompanying summons and copy of the December 24, 1991, respondent Judge issued an order granting
complaint; and in BAC Manufacturing and Sales Corporation, the issuance of a writ of attachment, and the writ was actually
neither the summons nor the order granting the preliminary issued on December 27, 1991.
attachment or the writ of attachment itself was served on the
defendant "before or at the time the levy was made." On January 3, 1992, upon Sun Life's ex-parte motion, the trial
court amended the writ of attachment to reflect the alleged
For the guidance of all concerned, the Court reiterates and amount of the indebtedness. That same day, Deputy Sheriff
reaffirms the proposition that writs of attachment may properly Arturo C. Flores, accompanied by a representative of Sun Life,
issue ex parte provided that the Court is satisfied that the attempted to serve summons and a copy of the amended writ of
relevant requisites therefor have been fulfilled by the applicant, attachment upon petitioners at their known office address at 108
although it may, in its discretion, require prior hearing on the Aguirre St., Makati but was not able to do so since there was no
application with notice to the defendant; but that levy on responsible officer to receive the same.1 Nonetheless, Sheriff
property pursuant to the writ thus issued may not be validly Flores proceeded, over a period of several days, to serve notices
effected unless preceded, or contemporaneously accompanied, of garnishment upon several commercial banks and financial
by service on the defendant of summons, a copy of the institutions, and levied on attachment a condominium unit and a
complaint (and of the appointment of guardian ad litem, if any), real property belonging to petitioner Oñate.
the application for attachment (if not incorporated in but
submitted separately from the complaint), the order of Summons was eventually served upon petitioners on January 9,
attachment, and the plaintiff's attachment bond. 1992, while defendant Diño was served with summons on
January 16, 1992.
WHEREFORE, the petition is GRANTED; the challenged
decision of the Court of Appeals is hereby REVERSED, and On January 21, 1992, petitioners filed an "Urgent Motion to
the order and writ of attachment issued by Hon. Milagros C. Discharge/Dissolve Writ of Attachment." That same day, Sun
Nartatez, Presiding Judge of Branch 8, Regional Trial Court of Life filed an ex-parte motion to examine the books of accounts
Davao City in Civil Case No. 19513-89 against Queensland and ledgers of petitioner Brunner Development Corporation
Hotel or Motel or Queensland Tourist Inn and Teodorico (Brunner, for brevity) at the Urban Bank, Legaspi Village
Adarna are hereby REINSTATED. Costs against private Branch, and to obtain copies thereof, which motion was granted
respondents. by respondent Judge. The examination of said account took
place on January 23, 1992. Petitioners filed a motion to nullify
SO ORDERED. the proceedings taken thereat since they were not present.

On January 30, 1992, petitioners and their co-defendants filed a


memorandum in support of the motion to discharge attachment.
G.R. No. 107303 February 21, 1994 Also on that same day, Sun Life filed another motion for
examination of bank accounts, this time seeking the
EMMANUEL C. OÑATE and ECON HOLDINGS examination of Account No. 0041-0277-03 with the Bank of
CORPORATION, petitioners, Philippine Islands (BPI) — which, incidentally, petitioners
vs. claim not to be owned by them — and the records of Philippine
HON. ZUES C. ABROGAR, as Presiding Judge of Branch National Bank (PNB) with regard to checks payable to Brunner.
150 of the Regional Trial Court of Makati, and SUN LIFE Sun Life asked the court to order both banks to comply with the
ASSURANCE COMPANY OF CANADA, respondents. notice of garnishment.

G.R. No. 107491 February 21, 1994 On February 6, 1992, respondent Judge issued an order (1)
denying petitioners' and the co-defendants' motion to discharge
BRUNNER DEVELOPMENT CORPORATION, the amended writ of attachment, (2) approving Sun Life's
petitioner, additional attachment, (3) granting Sun Life's motion to
vs. examine the BPI account, and (4) denying petitioners' motion to
HON. ZUES C. ABROGAR, as Presiding Judge of Branch nullify the proceedings of January 23, 1992.
150 of the Regional Trial Court of Makati, and SUN LIFE
ASSURANCE COMPANY OF CANADA, respondents. On March 12, 1992, petitioners filed a motion for
reconsideration of the February 6, 1992 order. On September 6,
Florante A. Bautista for petitioner in G.R. No. 107303. 1992, respondent Judge denied the motion for reconsideration.

Andin & Andin Law Offices for Brunner Development Hence, the instant petitions. Petitioners' basic argument is that
Corporation. respondent Judge had acted with grave abuse of discretion
amounting to lack or in excess of jurisdiction in (1) issuing ex
Quasha, Asperilla, Ancheta, Pena & Nolasco for Sun Life parte the original and amended writs of preliminary attachment
Assurance Company of Canada. and the corresponding notices of garnishment and levy on
attachment since the trial court had not yet acquired jurisdiction
over them; and (2) allowing the examination of the bank
NOCON, J.: records though no notice was given to them.

These are separate petitions for certiorari with a prayer for We find both petitions unmeritorious.
temporary restraining order filed by Emmanuel C. Oñate and
Econ Holdings Corporation (in G.R. No. 107303), and Brunner Petitioners initially argue that respondent Judge erred in
Development Corporation (in G.R. No. 107491), both of which granting Sun Life's prayer for a writ of preliminary attachment
assail several orders issued by respondent Judge Zues C. on the ground that the trial court had not acquired jurisdiction
Abrogar in Civil Case No. 91-3506. over them. This argument is clearly unavailing since it is well-
settled that a writ of preliminary attachment may be validly
The pertinent facts are as follows: On December 23, 1991, applied for and granted even before the defendant is summoned
respondent Sun Life Assurance Company of Canada (Sun Life, or is heard from.2 The rationale behind this rule was stated by
for brevity) filed a complaint for a sum of money with a prayer the Court in this wise:
ProvRem (PreAttachment) Full text 062318 18
acquire jurisdiction over the defendant through either summons
A preliminary attachment may be defined, paraphrasing the or his voluntary appearance.
Rules of Court, as the provisional remedy in virtue of which a
plaintiff or other proper party may, at the commencement of the We do not agree entirely with petitioners. True, this Court had
action or any time thereafter, have the property of the adverse held in a recent decision that the enforcement of writ of
party taken into the custody of the court as security for the attachment may not validly be effected until and unless
satisfaction of any judgment that may be recovered. It is a proceeded or contemporaneously accompanied by service of
remedy which is purely statutory in respect of which the law summons.8
requires a strict construction of the provisions granting it.
Withal no principle, statutory or jurisprudential, prohibits its But we must distinguish the case at bar from the Sievert and
issuance by any court before acquisition of jurisdiction over the BAC Manufacturing cases. In those two cases, summons was
person of the defendant. never served upon the defendants. The plaintiffs therein did not
even attempt to cause service of summons upon the defendants,
Rule 57 in fact speaks of the grant of the remedy "at the right up to the time the cases went up to this Court. This is not
commencement of the action or at any time thereafter." The true in the case at bar. The records reveal that Sheriff Flores and
phrase "at the commencement of the action," obviously refers to Sun Life did attempt a contemporaneous service of both
the date of the filing of the complaint — which, as summons and the writ of attachment on January 3, 1992, but we
abovepointed out, its the date that marks "the commencement stymied by the absence of a responsible officer in petitioners'
of the action;" and the reference plainly is to a time before offices. Note is taken of the fact that petitioners Oñate and Econ
summons is served on the defendant or even before summons Holdings admitted in their answer9 that the offices of both
issues. What the rule is saying quite clearly is that after an Brunner Development Corporation and Econ Holdings were
action is properly located at the same address and that petitioner Oñate is the
commenced — by the filing of the complaint and the payment President of Econ Holdings while petitioner Diño is the
of all requisite docket and other fees — the plaintiff may apply President of Brunner Development Corporation as well as a
for and obtain a writ of preliminary attachment upon fulfillment stockholder and director of Econ Holdings.
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 Thus, an exception to the established rule on the enforcement of
defendant. And this indeed, has been the immemorial practice the writ of attachment can be made where a previous attempt to
sanctioned by the courts: for the plaintiff or other proper party serve the summons and the writ of attachment failed due to
to incorporate the application for attachment in the complaint or factors beyond the control of either the plaintiff or the process
other appropriate pleading (counterclaim, cross-claim, third- server, provided that such service is effected within a
party claim) and for the Trial Court to issue the writ ex-parte at reasonable period thereafter.
the commencement of the action if it finds the application
otherwise sufficient in form and substance.3 Several reasons can be given for the exception. First, there is a
possibility that a defendant, having been alerted of plaintiffs
Petitioners then contended that the writ should have been action by the attempted service of summons and the writ of
discharged since the ground on which it was issued — fraud in attachment, would put his properties beyond the reach of the
contracting the obligation — was not present. This cannot be plaintiff while the latter is trying to serve the summons and the
considered a ground for lifting the writ since this delves into the writ anew. By the time the plaintiff may have caused the service
very complaint of the Sun Life. As this Court stated in Cuatro of summons and the writ, there might not be any property of the
v. Court of Appeals:4 defendant left to attach.

Moreover, an attachment may not be dissolved by a showing of Second, the court eventually acquired jurisdiction over the
its irregular or improper issuance if it is upon a ground which is petitioners six days later. To nullify the notices of garnishment
at the same time the applicant's cause of action in the main case issued prior thereto would again open the possibility that
since an anomalous situation would result if the issues of the petitioners would transfer the garnished monies while Sun Life
main case would be ventilated and resolved in a mere hearing applied for new notices of garnishment.
of the motion (Davao Light and Power Co., Inc. vs. Court of
Appeals, supra, The Consolidated Bank and Trust Corp. Third, the ease by which a writ of attachment can be obtained is
(Solidbank) vs. Court of Appeals, 197 SCRA 663 [1991]). counter-balanced by the ease by which the same can be
discharged: the defendant can either make a cash deposit or post
In the present case, one of the allegation in petitioner's a counter-bond equivalent to the value of the property attached.
complaint below is that the defendant spouses induced the 10 The petitioners herein tried to have the writ of attachment
plaintiff to grant the loan by issuing postdated checks to cover discharged by posting a counter-bond, the same was denied by
the installment payments and a separate set of postdated checks respondent Judge on the ground that the amount of the counter-
for payment of the stipulated interest (Annex "B"). The issue of bond was less than that of Sun Life's bond.
fraud, then, is clearly within the competence of the lower court
in the main action.5 II.

The fact that a criminal complaint for estafa filed by Sun Life Petitioners' second ground assail the acts of respondent Judge in
against the petitioners was dismissed by the Provincial allowing the examination of Urban Banks' records and in
Prosecutor of Rizal for Makati on April 21, 1992 and was ordering that the examination of the bank records of BPI and
upheld by the Provincial Prosecutor on July 13, 1992 is of no PNB as invalid since no notice of said examinations were ever
moment since the same can be indicative only of the absence of given them. Sun Life grounded its requests for the examination
criminal liability, but not of civil liability. Besides, Sun Life of the bank accounts on Section 10, Rule 57 of the Rules of
had elevated the case for review to the Department of Justice, Court, which provided, to wit:
where the case is presently pending.
Sec. 10. Examination of party whose property is attached and
Finally, petitioners argue that the enforcement of the writ was persons indebted to him or controlling his property; delivery of
invalid since it undisputedly preceded the actual service of property to officer. — Any person owing debts to the party
summons by six days at most. Petitioners cite the decisions in whose property is attached or having in his possession or under
Sievert vs. Court of Appeals, et al.6 and BAC Manufacturing his control any credit or other personal property belonging to
and Sales Corp. vs. Court of Appeals, et al.,7 wherein this such party, may be required to attend before the court in which
Court held that enforcement of the writ of attachment can not the action is pending, or before a commissioner appointed by
bind the defendant in view of the failure of the trial court to the court and be examined on oath respecting the same. The
party whose property is attached may also be required to attend
ProvRem (PreAttachment) Full text 062318 19
for the purpose of giving information respecting his property, On 25 June 1976, private respondents Primitiva Palmes (widow
and may be examined on oath. The court may, after such of Calixto Palmes) and Honorato Borbon, Sr. (father of minor
examination, order personal property capable of manual Adeudatus Borbon) filed a complaint 5 against Cosme Casas
delivery belonging to him, in the possession of the person so and Nelia Enriquez (assisted by her husband Leonardo
required to attend before the court, to be delivered to the clerk Enriquez) before the then Court of First Instance of Cebu,
or court, sheriff, or other proper officer on such terms as may be Branch 3, claiming actual, moral, nominal and exemplary
just, having reference to any lien thereon or claim against the damages as a result of the accident.
same, to await the judgment in the action.
The claim of private respondent Honorato Borbon, Sr., being
It is clear from the foregoing provision that notice need only be distinct and separate from that of co-plaintiff Primitiva Palmes,
given to the garnishee, but the person who is holding property and the amount thereof falling properly within the jurisdiction
or credits belonging to the defendant. The provision does not of the inferior court, respondent Judge Jose R. Ramolete
require that notice be furnished the defendant himself, except ordered the Borbon claim excluded from the complaint, without
when there is a need to examine said defendant "for the purpose prejudice to its being filed with the proper inferior court.
of giving information respecting his property.
On 4 April 1977, the Court of First Instance rendered a
Furthermore, Section 10 Rule 57 is not incompatible with Decision 6 in favor of private respondent Primitiva Palmes,
Republic Act No. 1405, as amended, "An Act Prohibiting ordering common carrier Nelia Enriquez to pay her P10,000.00
Disclosure or Inquiry Into, Deposits With Any Banking as moral damages, P12,000.00 as compensatory damages for
Institution and Providing Penalty Therefore," for Section 2 the death of Calixto Palmes, P3,000.00 as exemplary damages,
therefore provides an exception "in cases where the money P5,000.00 as actual damages, and P1,000.00 as attorney's fees.
deposited or invested is the subject matter of the litigation."
The judgment of the trial court became final and executory and
The examination of the bank records is not a fishing expedition, a writ of execution was thereafter issued. The writ of execution
but rather a method by which Sun Life could trace the proceeds was, however, returned unsatisfied. Consequently, the judgment
of the check it paid to petitioners. debtor Nelia Enriquez was summoned before the trial court for
examination on 23 July 1979. She declared under oath that the
WHEREFORE, the instant petitions are hereby DISMISSED. Cimarron PUJ registered in her name was covered by a third-
The temporary restraining order issued on June 28, 1993 is party liability insurance policy issued by petitioner Perla.
hereby lifted.
Thus, on 31 July 1979, private respondent Palmes filed a
SO ORDERED. motion for garnishment 7 praying that an order of garnishment
be issued against the insurance policy issued by petitioner in
favor of the judgment debtor. On 6 August 1979, respondent
Judge issued an Order 8 directing the Provincial Sheriff or his
G.R. No. L-60887 November 13, 1991 deputy to garnish the third-party liability insurance policy.

PERLA COMPANIA DE SEGUROS, INC., petitioner, Petitioner then appeared before the trial court and moved for
vs. reconsideration of the 6 August 1979 Order and for quashal of
HON. JOSE R. RAMOLETE, PRIMITIVA Y. PALMES, the writ of garnishment, 9 alleging that the writ was void on the
HONORATO BORBON, SR., OFFICE OF THE ground that it (Perla) was not a party to the case and that
PROVINCIAL SHERIFF, PROVINCE OF CEBU, jurisdiction over its person had never been acquired by the trial
respondents. court by service of summons or by any process. The trial court
denied petitioner's motion. 10 An Order for issuance of an alias
Hector L. Fernandez for petitioner. writ of garnishment was subsequently issued on 8 April 1980.
11
Domingo Quibranza and Vicente A. Quibranza for private
respondents. More than two (2) years later, the present Petition for Certiorari
and Prohibition was filed with this Court on 25 June 1982
alleging grave abuse of discretion on the part of respondent
FELICIANO, J.: Judge Ramolete in ordering garnishment of the third-party
liability insurance contract issued by petitioner Perla in favor of
The present Petition for Certiorari seeks to annul: (a) the Order the judgment debtor, Nelia Enriquez. The Petition should have
dated 6 August 1979 1 which ordered the Provincial Sheriff to been dismissed forthwith for having been filed way out of time
garnish the third-party liability insurance policy issued by but, for reasons which do not appear on the record, was
petitioner Perla Compania de Seguros, Inc. ("Perla") in favor of nonetheless entertained.
Nelia Enriquez, judgment debtor in Civil Case No. R-15391;
(b) the Order dated 24 October 1979 2 which denied the motion In this Petition, petitioner Perla reiterates its contention that its
for reconsideration of the 6 August 1979 Order; and (c) the insurance contract cannot be subjected to garnishment or
Order dated 8 April 1980 3 which ordered the issuance of an execution to satisfy the judgment in Civil Case No. R-15391
alias writ of garnishment against petitioner. because petitioner was not a party to the case and the trial court
did not acquire jurisdiction over petitioner's person. Perla
In the afternoon of 1 June 1976, a Cimarron PUJ owned and further argues that the writ of garnishment had been issued
registered in the name of Nelia Enriquez, and driven by Cosme solely on the basis of the testimony of the judgment debtor
Casas, was travelling from Cebu City to Danao City. While during the examination on 23 July 1979 to the effect that the
passing through Liloan, Cebu, the Cimarron PUJ collided with Cimarron PUJ was covered by a third-party liability insurance
a private jeep owned by the late Calixto Palmes (husband of issued by Perla, without granting it the opportunity to set up
private respondent Primitiva Palmes) who was then driving the any defenses which it may have under the insurance contract;
private jeep. The impact of the collision was such that the and that the proceedings taken against petitioner are contrary to
private jeep was flung away to a distance of about thirty (30) the procedure laid down in Economic Insurance Company, Inc.
feet and then fell on its right side pinning down Calixto Palmes. v. Torres, et al., 12 which held that under Rule 39, Section 45,
He died as a result of cardio-respiratory arrest due to a crushed the Court "may only authorize" the judgment creditor to
chest. 4 The accident also caused physical injuries on the part of institute an action against a third person who holds property
Adeudatus Borbon who was then only two (2) years old. belonging to the judgment debtor.
ProvRem (PreAttachment) Full text 062318 20
We find no grave abuse of discretion or act in excess of or was rendered in said case against the company, the sheriff
without jurisdiction on the part of respondent Judge Ramolete served upon him a writ of garnishment in behalf of appellant.
in ordering the garnishment of the judgment debtor's third-party Thus, as held by this Court in the case of Tayabas Land
liability insurance. Company vs. Sharruf, 41 Phil. 382, the proceeding by
garnishment is a species of attachment for reaching credits
Garnishment has been defined as a species of attachment for belonging to the judgment debtor and owing to him from a
reaching any property or credits pertaining or payable to a stranger to the litigation. By means of the citation, the stranger
judgment debtor. 13 In legal contemplation, it is a forced becomes a forced intervenor; and the court, having acquired
novation by the substitution of creditors: 14 the judgment jurisdiction over him by means of the citation, requires him to
debtor, who is the original creditor of the garnishee is, through pay his debt, not to his former creditor, but to the new creditor,
service of the writ of garnishment, substituted by the judgment who is creditor in the main litigation. (Emphasis supplied).
creditor who thereby becomes creditor of the garnishee.
Garnishment has also been described as a warning to a person In Rizal Commercial Banking Corporation v. De Castro, 17 the
having in his possession property or credits of the judgment Court stressed that the asset or credit garnished is thereupon
debtor, not to pay the money or deliver the property to the subjected to a specific lien:
latter, but rather to appear and answer the plaintiff's suit. 15
The garnishment of property to satisfy a writ of execution
In order that the trial court may validly acquire jurisdiction to operates as an attachment and fastens upon the property a lien
bind the person of the garnishee, it is not necessary that by which the property is brought under the jurisdiction of the
summons be served upon him. The garnishee need not be court issuing the writ. It is brought into custodia legis, under the
impleaded as a party to the case. All that is necessary for the sole control of such
trial court lawfully to bind the person of the garnishee or any court. 18 (Emphasis supplied)
person who has in his possession credits belonging to the
judgment debtor is service upon him of the writ of garnishment. In the present case, there can be no doubt, therefore, that the
trial court actually acquired jurisdiction over petitioner Perla
The Rules of Court themselves do not require that the garnishee when it was served with the writ of garnishment of the third-
be served with summons or impleaded in the case in order to party liability insurance policy it had issued in favor of
make him liable. judgment debtor Nelia Enriquez. Perla cannot successfully
evade liability thereon by such a contention.
Rule 39, Section 15 provides:
Every interest which the judgment debtor may have in property
Sec. 15. Execution of money judgments. — The officer must may be subjected to execution. 19 In the instant case, the
enforce an execution of a money judgment by levying on all the judgment debtor Nelia Enriquez clearly had an interest in the
property, real or personal of every name and nature whatsoever, proceeds of the third-party liability insurance contract. In a
and which may be disposed of for value, of the judgment debtor third-party liability insurance contract, the insurer assumes the
not exempt from execution . . . obligation of paying the injured third party to whom the insured
is liable. 20 The insurer becomes liable as soon as the liability
Real property, stocks, shares, debts, credits, and other personal of the insured to the injured third person attaches. Prior
property, or any interest in either real or personal property, may payment by the insured to the injured third person is not
be levied on in like manner and with like effect as under a writ necessary in order that the obligation of the insurer may arise.
of attachment. (Emphasis supplied). From the moment that the insured became liable to the third
person, the insured acquired an interest in the insurance
Rule 57, Section 7(e) in turn reads: contract, which interest may be garnished like any other credit.
21
Sec. 7. Attachment of real and personal property; recording
thereof. — Properties shall be attached by the officer executing Petitioner also contends that in order that it may be held liable
the order in the following manner: under the third-party liability insurance, a separate action
should have been commenced by private respondents to
xxx xxx xxx establish petitioner's liability. Petitioner invokes Economic
Insurance Company, Inc. vs. Torres, 22 which stated:
(e) Debts and credits, and other personal property not
capable of manual delivery, by leaving with the person owing It is clear from Section 45, Rule 39 that if a persons alleged to
such debts, or having his possession or under his control such have property of the judgment debtor or to be indebted to him
credits or other personal property, or with his agent, a copy of claims an interest in the property adverse to him or denies the
the order, and notice that the debts owing by him to the party debt, the court may only authorize the judgment creditor to
against whom attachment is issued, and the credits and other institute an action against such person for the recovery of such
personal property in his possession, or under his control, interest or debt. Said section does not authorize the court to
belonging to said party, are attached in pursuance of such order; make a finding that the third person has in his possession
property belonging to the judgment debtor or is indebted to him
xxx xxx xxx and to order said third person to pay the amount to the judgment
creditor.
(Emphasis supplied)
It has been held that the only power of the court in proceedings
Through service of the writ of garnishment, the garnishee supplemental to execution is to niake an order authorizing the
becomes a "virtual party" to, or a "forced intervenor" in, the creditor to sue in the proper court to recover an indebtedness
case and the trial court thereby acquires jurisdiction to bind him due to the judgment debtor. The court has no jurisdiction to try
to compliance with all orders and processes of the trial court summarily the question whether the third party served with
with a view to the complete satisfaction of the judgment of the notice of execution and levy is indebted to defendant when such
court. In Bautista v. Barredo, 16 the Court, through Mr. Justice indebtedness is denied. To make an order in relation to property
Bautista Angelo, held: which the garnishee claimed to own in his own right, requiring
its application in satisfaction of judgment of another, would be
While it is true that defendant Jose M. Barredo was not a party to deprive the garnishee of property upon summary proceeding
in Civil Case No. 1636 when it was instituted by appellant and without due process of law. (Emphasis supplied)
against the Philippine Ready Mix Concrete Company, Inc.,
however, jurisdiction was acquired over him by the court and But reliance by petitioner on the case of Economic Insurance
he became a virtual party to the case when, after final judgment Company, Inc. v. Torres (supra) is misplaced. The Court there
ProvRem (PreAttachment) Full text 062318 21
held that a separate action needs to be commenced when the motions were denied by the Court, D.S. Homes, Inc., et al.
garnishee "claims an interest in the property adverse to him offered a counterbond in the amount of Pl,752,861.41 per
(judgment debtor) or denies the debt." In the instant case, certificate issued by the Land Bank of the Philippines, a
petitioner Perla did not deny before the trial court that it had banking partner of petitioner MSLA The lower court accepted
indeed issued a third-party liability insurance policy in favor of the Land Bank Certificate of . Deposit for Pl,752,861.41 as
the judgment debtor. Petitioner moreover refrained from setting counterbond and lifted the writ of preliminary attachment on
up any substantive defense which it might have against the June 5, 1987 (Annex V)
insured-judgment debtor. The only ground asserted by
petitioner in its "Motion for Reconsideration of the Order dated On July 29, 1987, MSLA and Villamor filed in the Court of
August 6, 1979 and to Quash Notice of Garnishment" was lack Appeals a petition for certiorari (Annex A) to annul the order of
of jurisdiction of the trial court for failure to implead it in the attachment and the denial of their motion to quash the same
case by serving it with summons. Accordingly, Rule 39, (CA-G.R. SP No. 12467). The petitioners alleged that the trial
Section 45 of the Rules of Court is not applicable in the instant court acted in excess of its jurisdiction in issuing the ex parte
case, and we see no need to require a separate action against orders of preliminary attachment and in denying their motion to
Perla: a writ of garnishment suffices to hold petitioner quash the writ of attachment, D.S. Homes, Inc., et al. did not
answerable to the judgment creditor. If Perla had any join them.
substantive defenses against the judgment debtor, it is properly
deemed to have waived them by laches. On May 5, 1988, the Court of Appeals dismissed the petition
for certiorari and remanded the records of Civil Case No. 18263
WHEREFORE, the Petition for Certiorari and Prohibition is to the Regional Trial Court of Davao City, Branch 13, for
hereby DISMISSED for having been filed out of time and for expeditious proceedings. It held:
lack of merit. The assailed Orders of the trial court are hereby
AFFIRMED. Costs against petitioner. This Decision is Objections against the writ may no longer be invoked once a
immediately executory. counterbond is filed for its lifting or dissolution.

SO ORDERED. The grounds invoked for the issuance of the writ form the core
of the complaint and it is right away obvious that a trial on the
merits was necessary. The merits of a main action are not
triable in a motion to discharge an attachment otherwise an
G.R. No. 84481 April 18, 1989 applicant for dissolution could force a trial on the merits on his
motion (4 Am. Jur., Sec. 635, 934, cited in G.G. Inc. vs.
MINDANAO SAVINGS & LOAN ASSOCIATION, INC. Sanchez, et al., 98 Phil. 886, 890, 891). (Annex B, p. 185,
(formerly Davao Savings & Loan Association) & Rollo.)
FRANCISCO VILLAMOR, petitioners,
vs. Dissatisfied, the petitioners appealed to this Court.
HON. COURT OF APPEALS, POLY R. MERCADO, and
JUAN P. MERCADO, respondents. A careful consideration of the petition for review fails to yield
any novel legal questions for this Court to resolve.
Villarica, Tiongco & Caboverde Law Office for petitioners.
The only requisites for the issuance of a writ of preliminary
A B C Law Offices for private respondents. attachment under Section 3, Rule 57 of the Rules of Court are
the affidavit and bond of the applicant.

GRIÑO-AQUINO, J.: SEC. 3. Affidavit and bond required .— An order of attachment


shall be granted only when it is made to appear by the affidavit
On September 10, 1986, private respondents filed in the of the applicant, or of some other person who personally knows
Regional Trial Court of Davao City, a complaint against the facts, that a sufficient cause of action exists that the case is
defendants D.S. Homes, Inc., and its directors, Laurentino G. one of those mentioned in section 1 hereof, that there is no
Cuevas, Saturnino R. Petalcorin, Engr. Uldarico D. Dumdum, other sufficient security for the claim sought to be enforced by
Aurora P. De Leon, Ramon D. Basa, Francisco D. Villamor, the action, and that the amount due to the applicant, or the value
Richard F. Magallanes, Geronimo S. Palermo Felicisima V. of the. property the possession of which he is entitled to
Ramos and Eugenio M. De los Santos (hereinafter referred to as recover, is as much as the sum for which the order is granted
D.S. Homes, et al.) for "Rescission of Contract and Damages" above all legal counterclaims. The affidavit, and the bond
with a prayer for the issuance of a writ of preliminary required by the next succeeding section must be duly filed with
attachment, docketed as Civil Case No. 18263. the clerk or judge of the court before the order issues.

On September 28, 1986, Judge Dinopol issued an order No notice to the adverse party or hearing of the application is
granting ex parte the application for a writ of preliminary required. As a matter of fact a hearing would defeat the purpose
attachment. of this provisional remedy. The time which such a hearing
would take, could be enough to enable the defendant to abscond
On September 22, 1986, the private respondents amended their or dispose of his property before a writ of attachment issues.
complaint and on October 10, 1986, filed a second amended Nevertheless, while no hearing is required by the Rules of
complaint impleading as additional defendants herein Court for the issuance of an attachment (Belisle Investment &
petitioners Davao Savings & Loan Association, Inc. and its Finance Co., Inc. vs. State Investment House, Inc., 72927, June
president, Francisco Villamor, but dropping Eugenio M. De los 30, 1987; Filinvest Credit Corp. vs. Relova, 11 7 SCRA 420), a
Santos. motion to quash the writ may not be granted without
"reasonable notice to the applicant" and only "after hearing"
On November 5, 1986, Judge Dinopol issued ex parte an (Secs. 12 and 13, Rule 57, Rules of Court).
amended order of attachment against all the defendants named
in the second amended complaint, including the petitioners but The Court of Appeals did not err in holding that objections to
excluding Eugenio C. de los Santos. the impropriety or irregularity of the writ of attachment "may
no longer be invoked once a counterbond is filed," when the
D. S. Homes. Inc., et al. and the Davao Savings & Loan ground for the issuance of the writ forms the core of the
Association (later renamed Mindanao Savings & Loan complaint.
Association, Inc. or "MSLA") and Francisco Villamor filed
separate motions to quash the writ of attachment. When their
ProvRem (PreAttachment) Full text 062318 22
Indeed, after the defendant has obtained the discharge of the person appearing in his behalf, may, upon reasonable notice to
writ of attachment by filing a counterbond under Section 12, the applicant, apply to the judge who granted the order, or to the
Rule 57 of the Rules of Court, he may not file another motion judge of the court in which the action is pending, for an order
under Section 13, Rule 57 to quash the writ for impropriety or discharging the attachment wholly or in part on the security
irregularity in issuing it. given .. in an amount equal to the value of the property attached
as determined by the judge to secure the payment of any
The reason is simple. The writ had already been quashed by judgment that the attaching creditor may recover in the action. ..
filing a counterbond, hence, another motion to quash it would .
be pointless. Moreover, as the Court of Appeals correctly
observed, when the ground for the issuance of the writ is also This mode of dissolution presents no apparent difficulty. It
the core of the complaint, the question of whether the plaintiff applies when there has already been a seizure of property by the
was entitled to the writ can only be determined after, not before, sheriff. All that is entailed is the presentation of a motion to the
a full-blown trial on the merits of the case. This accords with proper court, seeking approval of a cash or surety bond in an
our ruling G.B. Inc. vs. Sanchez, 98 Phil. 886 that: "The merits amount equivalent to the value of the property seized and the
of a main action are not triable in a motion to discharge an lifting of the attachment on the basis thereof. The counter-bond
attachment, otherwise an applicant for the dissolution could stands, according to the cited section, "in place of the property
force a trial on the merits of the case on this motion." so released."

May the defendant, after procuring the dissolution of the 1.1. But a party need not wait until his property has been
attachment by filing a counterbond, ask for the cancellation of seized before seeking its dissolution upon security. In fact he
the counterbond on the ground that the order of attachment was may prevent the seizure of his property under attachment by
improperly issued? That question was answered by this Court giving security in an amount sufficient to satisfy the claims
when it ruled in Uy Kimpang vs. Javier, 65 Phil. 170, that "the against him. The relevant provision of the Rule is Section 5.1
obligors in the bond are absolutely liable for the amount of any
judgment that the plaintiff may recover in the action without SEC. 5. Manner of attaching property .— The officer executing
reference to the question of whether the attachment was the order shall without delay attach, to await judgment and
rightfully or wrongfully issued." execution in the action, all the properties of the party against
whom the order is issued in the province, not exempt from
The liability of the surety on the counterbond subsists until the execution, or so much thereof as may be sufficient to satisfy the
Court shall have finally absolved the defendant from the applicant's demand, unless the former makes a deposit with the
plaintiff s claims. Only then may the counterbond be released. clerk or judge of the court from which the order issued, or gives
The same rule applies to the plaintiffs attachment bond. "The a counter-bond executed to the applicant, in an amount
liability of the surety on the bond subsists because the final sufficient to satisfy such demand besides costs or in an amount
reckoning is when the Court shall finally adjudge that the equal to the value of the property which is about to be attached,
attaching creditor was not entitled to the issuance of the to secure payment to the applicant of any judgment which he
attachment writ," (Calderon vs. Intermediate Appellate Court, may recover in the action. .. .
155 SCRA 531.)
2.0. The second way of lifting a preliminary attachment is
WHEREFORE, finding no reversible error in the decision of by proving its irregular or improper issuance, under Section 13
the Court of Appeals in CA-G.R. SP No. 12467, the petition for of Rule 57. Like the first, this second mode may be availed of
review is denied for lack of merit with costs against the even before any property has been actually attached. It may
petitioners. even be resorted to after the property has already been released
from the levy on attachment, as the pertinent provision makes
SO ORDERED. clear. 2

Cruz, Gancayco and Medialdea, JJ., concur. SEC. 13. Discharge of attachment for improper or irregular
issuance. — The party whose property has been attached may
Separate Opinions also, at any time either before or after the release of the attached
properly, or before any attachment shall have been actually
NARVASA, J.: Concurring And Dissenting Opinion levied, upon reasonable notice to the attaching creditor, apply to
the judge who granted the order, or to the judge of the court in
I agree that the decision of the Court of Appeals subject of the which the action is pending, for an order to discharge the
appeal in this case should be affirmed. I write this separate attachment on the ground that the same was improperly or
opinion simply to stress certain principles relative to the irregularly issued. If the motion be made on affidavits on the
discharge of preliminary attachments so that our own decision part of the party whose property has been attached, but not
or that thereby affirmed be not applied to juridical situations otherwise, the attaching creditor may oppose the same by
beyond their intendment, which may well result from the counter-affidavits or other evidence in addition to that on which
statement that "after the defendant has obtained the discharge of the attachment was made. .. .
the writ of attachment by filing a counterbond under Section 12,
Rule 57 of the Rules of Court, he may not file another motion As pointed out in Calderon v. I.A.C. 155 SCRA 531 (1987),
under Section 13, Rule 57 to quash the writ for impropriety or "The attachment debtor cannot be deemed to have waived any
irregularity in issuing it." defect in the issuance of the attachment writ by simply availing
himself of one way of discharging the attachment writ, instead
Rule 57 specifies in clear terms the modes by which a of the other. Moreover, the filing of a counterbond is a speedier
preliminary attachment may be discharged at the instance of the way of discharging the attachment writ maliciously sought out
party against whom it has been issued. The first is by the by the attaching creditor instead of the other way, which, in
submission of a counterbond or security. The second is by a most instances .. would require presentation of evidence in a
demonstration of the attachment's improper or irregular fullblown trial on the merits and cannot easily be settled in a
issuance. pending incident of the case."

1.0. The discharge of an attachment on security given is 3.0. However, when the preliminary attachment is issued
governed by Section 12 of the Rule. 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
SEC 12. Discharge of attachment upon giving fraudulently misapplied or converted to his own use by a public
counterbond. — At any time after an order of attachment has officer, or an officer of a corporation, or an attorney, factor,
been granted, the party whose property has been attached, or the broker, agent, or clerk, in the course of his employment as such,
ProvRem (PreAttachment) Full text 062318 23
or by any other person in a fiduciary capacity, or for a willful Calderon paid the sum of P606,430.00 to the Bureau of
violation of duty," 3 or "an action against a party who has been Customs.
guilty of fraud in contracting the debt or incurring the
obligation upon which the action is brought, 4 the defendant is On October 27, 1977, Calderon filed a complaint against
not allowed to file a motion to dissolve the attachment under private respondents to recover said amount of P1,475,840.00,
Section 13 of Rule 57 by offering to show the falsity of the with damages by reason of breach of warranty. In the same
factual averments in the plaintiffs application and affidavits on complaint, the petitioner prayed for a preliminary attachment,
which the writ was based — and consequently that the writ alleging: that private respondents had deliberately and willfully
based thereon had been improperly or irregularly issued 5 — concealed from his knowledge such staggering liability of the
the reason being that the hearing on such a motion for LBC for the purpose of misleading him into buying the six
dissolution of the writ would be tantamount to a trial of the aforesaid companies; and that private respondent Schulze is
merits of the action. In other words, the merits of the action about to depart from the Philippines in order to defraud his
would be ventilated at a mere hearing of a motion, instead of at creditors.
the regular trial. Therefore, when the writ of attachment is of
this nature, the only way it can be dissolved is by a counter- To support the petition for preliminary attachment, the
bond. 6 petitioner posted a surety bond of P1,475,840.00. On October
28, 1977, the trial court issued a writ of preliminary attachment,
4.0. The dissolution of the preliminary attachment upon whereupon properties of the private respondents were attached
security given, or a showing of its irregular or improper and their bank deposits were garnished.
issuance, does not of course operate to discharge the sureties on
plaintiffs own attachment bond. The reason is simple. That On November 10, 1977, petitioner Calderon filed an amended
bond is 'executed to the adverse party, .. conditioned that the .. complaint, alleging that while the liabilities of LBC are
(applicant) will pay all the costs which may be adjudged to the reflected in its books, the aforesaid amount was fraudulently
adverse party and all damages which he may sustain by reason withdrawn and misappropriated by private respondent Schulze.
of the attachment, if the court shall finally adjudge that the (pp. 7-18, Rollo)
applicant was not entitled thereto." 7 Hence, until that
determination is made, as to the applicant's entitlement to the On the other hand, private respondents claimed: that the amount
attachment, his bond must stand and cannot be withdrawn. of P1,475,840.00 due to the Bureau of Customs represents the
duties and taxes payable out of the advanced payments made by
LBC's client, Philippine Refining Company (PRC, for brevity)
in August, September and October, 1976, and in the first and
G.R. No. 74696 November 11, 1987 second weeks of November 1976, after Calderon himself had
taken control of the management of LBC (Exhibit A); that these
JOSE D. CALDERON, petitioner, deposit payments were properly recorded in the books of the
vs. corporation and existing as part of the corporate funds; that
THE INTERMEDIATE APPELLATE COURT, GEORGE from the first week of June, 1976 up to October 30, 1976,
SCHULZE, GEORGE SCHULZE, JR., ANTONIO C. private respondent Schulze fully disclose and explained to
AMOR, MANUEL A. MOZO, and VICTOR M. NALUZ, Calderon that these customer's advanced deposit payments
respondents. (including those of the PRC) are to be paid to the Bureau of
Customs when their corresponding customs taxes and duties
G. R. No. 73916 November 11, 1987 become due; that during this phase of the negotiation, Calderon
and his representatives inspected and studied the corporate
FIRST INTEGRATED BONDING AND INSURANCE books and records at will and learned the daily operations and
COMPANY, INC., petitioner, management of LBC; that the petitioner did not pay out of his
vs. own pocket but out of the LBC funds the said amount of
THE INTERMEDIATE APPELLATE COURT, GEORGE P606,430,30 demanded by the Bureau of Customs, as
SCHULZE, ANTONIO C. AMOR, MANUEL A. MOZO evidenced by a manager's check No. FEBTC 25092 (Exhibits 9,
and VICTOR M. NALUZ, respondents. 10, 11 & 38) and another facility negotiated with the Insular
Bank of Asia and America (Exhibit K-2); and that private
respondents are setting up a counterclaim for actual, moral and
PARAS, J.: exemplary damages as well as attorney's fees, as a consequence
of the filing of the baseless suit and the wrongful and malicious
For review on certiorari is respondent appellate Court's decision attachment of their properties, (pp. 217-221, Rollo)
1 in AC-G.R. No. 01420, which affirmed the Regional Trial
Court's decision 2 appealed from holding the plaintiff Jose D. On November 17, 1977, private respondents filed a
Calderon (petitioner herein) and his bondsman the Integrated counterbond, whereupon the trial court issued an order directing
Bonding and Insurance Company, Inc., jointly and severally the sheriff to return all real and personal properties already
liable to pay defendants (private respondents herein), damages levied upon and to lift the notices of garnishment issued in
caused by the filing by Calderon of the allegedly unwarranted connection with the said attachment (Annex B, p. 42, Rollo).
suit and the wrongful and malicious attachment of private
respondents' properties. After trial, the trial court dismissed the complaint, holding
Calderon and his surety First integrated Bonding and Insurance
The facts of the case are briefly as follows: Co., Inc., jointly and severally liable to pay the damages prayed
for by the private respondents.
On November 2, 1976, petitioner Calderon purchased from the
private respondents the following: the Luzon Brokerage Said decision was affirmed on appeal, although slightly
Corporation (LBC for brevity) and its five (5) affiliate modified in the sense that the award of moral and exemplary
companies, namely, Luzon Air Freight, Inc., Luzon Port damages in favor of private respondents Schulze and Amor was
Terminals Services, Inc., Luzon (GS) Warehousing reduced. The dispositive portion of the judgment of affirmance
Corporation, GS Industrial Management Corporation, and GS and modification reads:
Luzon Trucking Corporation. Twenty one (21) days thereafter
or on November 23, 1976, the Bureau of Customs suspended WHEREFORE, the judgment of the lower court is modified as
the operations of LBC for failure to pay the amount of follows:
P1,475,840.00 representing customs taxes and duties incurred
prior to the execution of the sale. In order to lift the suspension To defendant-appellee George Schulze:
P650,000.00 as moral damages and
ProvRem (PreAttachment) Full text 062318 24
P200,000.00 as exemplary damages.
... The record shows that appellant Calderon failed to produce
To defendant-appellee Antonio C. Amor: any evidence in support of his sworn charge that appellee
P150,000.00 as moral damages and Schulze had deliberately and willfully concealed the liabilities
P30,000.00 as exemplary damages, of Luzon Brokerage Corporation. Neither did appellant
Calderon prove his sworn charges that appellee Schulze had
An other dispositions in the judgment appealed from, including maliciously and fraudulently withdrawn and misappropriated
the dismissal of the amended complainant are hereby affirmed the amount of Pl,475,840.00 and that an the defendants had
in toto. maliciously and fraudulently concealed and withheld from him
this alleged liability of Luzon Brokerage Corporation in breach
SO ORDERED. of the contract-warranty that said corporation had no
obligations or liabilities except those appearing in the books
In his petition, petitioner Calderon asserts, among other things, and records of the said corporation. Indeed, appellant Calderon
that the court below erred: never appeared in the trial court to substantiate the charges in
his verified complaints and in his affidavit to support his
I petition for the issuance of a writ of attachment. He distanced
himself from the appellees and avoided cross-examination
IN HOLDING THAT THE PETITIONER FAILED TO regarding his sworn allegations. ...
ESTABLISH HIS CLAIMS.
... But even though appellant Calderon failed to prove his
II serious charges of fraud, malice and bad faith, the appellees
took it upon themselves to show that they did not conceal or
IN HOLDING THAT THE PRELIMINARY ATTACHMENT withhold from appellant's knowledge the deposits made by
HAD BEEN WRONGFULLY AND MALICIOUSLY SUED Philippine Refining Co., Inc. with Luzon Brokerage
OUT. Corporation and that they did not withdraw and misappropriate
the deposits made by Philippine Refining Co., Inc. with Luzon
III Brokerage Corporation.

IN HOLDING THAT THE PETITIONER IS LIABLE NOT The books and records of Luzon Brokerage Corporation on
ONLY FOR ACTUAL DAMAGES BUT MORAL AND EX- which the Financial Statement of Luzon Brokerage
EXEMPLARY DAMAGES AS WELL. Corporation, as of October 31, 1976 was prepared by the
auditing firm retained by appellant Calderon himself (Exhibit
On the other hand, petitioner Insurance Company raises the 1), disclose that the liabilities of Luzon Brokerage Corporation
following issues: in the total amount of P4,574,498.32 appear under the heading
'Customers Deposit' (Exhibit 1-A) this amount includes the
I deposit of Philippine Refining Co., Inc. in the sum of
Pl,475,840.00.
WHETHER OR NOT THE PETITIONER SURETY IS
LIABLE FOR DAMAGES ON ITS CONTRACTED But appellant Calderon contends that this financial statement
SURETYSHIP NOTWITHSTANDING THE DISSOLUTION was dated February 4, 1977 (see Exhibit 1-C). There is nothing
OF THE WRIT OF PRELIMINARY ATTACHMENT, AS A commendable in this argument because the bases of the
CON. SEQUENCE OF THE FILING OF THE financial statement were the books, records and documents of
DEFENDANT'S COUNTER- BOND, WHEREBY LEVIED Luzon Brokerage Corporation for the period ending October 31,
PROPERTIES WERE ORDERED BY THE COURT 1976, which were all turned over to and examined by appellant
RETURNED TO PRIVATE RESPONDENTS AND THE Calderon and his executive, legal and financial staffs. There is
NOTICES OF GARNISHMENT ISSUED IN CONNECTION also no merit in the contention of appellant Calderon that the
THEREWITH ORDERED LIFTED. appellees have tampered the books of Luzon Brokerage
Corporation because there is no proof to back this charge, let
II alone the fact that appellant Calderon did not even present the
said books to support his charge.
WHETHER OR NOT THE SUBSEQUENT FILING BY
PRIVATE RESPONDENTS OF A COUNTER-BOND TO As stated above, the amount of customers' deposits in the sum
DISCHARGE THE WRIT OF PRELIMINARY of P4,574,498.32 includes the deposits of Philippine Refining
ATTACHMENT CONSTITUTE A WAIVER ON ANY Co., Inc. (Exhibits 46-A, 46-B, 46-C, 46-D, 46-E, 46-F, 46-G,
DEFECT IN THE ISSUANCE OF THE ATTACHMENT 46-H, 46-1, 46-J, t.s.n. July 23, 1980, pp. 12-13, 14-15). The
WRIT. amounts deposited by Philippine Refining Co., Inc. on various
dates with Luzon Brokerage Corporation made before the
III execution of the sale were all entered in three other corporate
books of Luzon Brokerage Corporation namely, the Cash
WHETHER OR NOT A SURETY IS A GUARANTOR OF Receipts Register (Exhibits 39-A-1 to 39-K-1 and 39-A-1-B to
THE EXISTENCE OF A GOOD CAUSE OF ACTION IN 39-K-1-B), the Journal Vouchers (Exhibits 42 to 46 and 42-A to
THE COMPLAINT. 43- A), and the Customer's Deposit Ledger (Exhibit 46-A to 46-
J) ... .
The petition is devoid of merit.
Thus, the claim of appellant Calderon that the deposits made by
Whether or not the amount of P1,475,840.00 was duly Philippine Refining Co., Inc. with Luzon Brokerage
disclosed as an outstanding liability of LBC or was Corporation of P406,430.00 on August 24, 1976 (Exhibit N
misappropriated by private respondent Schulze is purely a P53,640.00 on October 13, 1976 (Exhibit 0), P406,430.00 on
factual issue. That Calderon was clearly in bad faith when he September 8, 1976 (Exhibit P P199,508.00 on September 24,
asked for the attachment is indicated by the fact that he failed to 1976 (Exhibit Q P52,738.00 on October 22, 1976 (Exhibit R
appear in court to support his charge of misappropriation by and P264,436.00 on October 7, 1976 (Exhibit S) were not
Schulze, and in effect, preventing his being cross-examined, no entered in the books of Luzon Brokerage Corporation, is
document on the charges was presented by him. completely without merit. ... (pp. 85-87, Rollo)

What the Appellate Court found in this regard need not be


further elaborated upon. The Appellate Court ruled:
ProvRem (PreAttachment) Full text 062318 25
It is evident from the foregoing that the attachment was bond subsists because the final reckoning is when "the Court
maliciously sued out and that as already pointed out Schulze shall finally adjudge that the attaching creditor was not entitled"
was not in bad faith. to the issuance of the attachment writ in the first place.

While as a general rule, the liability on the attachment bond is The attachment debtor cannot be deemed to have waived any
limited to actual damages, moral and exemplary damages may defect in the issuance of the attachment writ by simply availing
be recovered where the attachment was alleged to be himself of one way of discharging the attachment writ, instead
maliciously sued out and established to be so. (Lazatin vs. of the other. Moreover, the filing of a counterbond is a speedier
Twano et al, way of discharging the attachment writ maliciously sought out
L-12736, July 31, 1961). by the attaching creditor instead of the other way, which, in
most instances like in the present case, would require
In the instant case, the issues of wrongful and malicious suing presentation of evidence in a full-blown trial on the merits and
out of the writ of preliminary attachment were joined not only cannot easily be settled in a pending incident of the case.
in private respondents' motion to discharge the attachment but
also in their answer to the amended complaint (p. 38, Rollo). We believe, however, that in the light of the factual situation in
The trial court observed that the books and records of Luzon this case, the damages awarded by the Intermediate Appellate
Brokerage Corporation disclose that the liabilities of the said Court are rather excessive. They must be reduced.
corporation in the total amount of P4,574,498.32 appear under
the heading "Customs Deposit" (Exhibit 1-A) and this amount WHEREFORE, the judgment of said Appellate Court is hereby
includes the deposit of Philippine Refining Co., Inc. in the sum modified as follows: Both petitioner Calderon and petitioner
of P1,475,840.00 (p. 26, Rollo). On the other hand, plaintiff First Integrated Bonding and Insurance Company, Inc. are
never appeared in court, and failed to produce any evidence to hereby ordered to give jointly and severally:
substantiate his charges (p. 26, Rollo).
1. Respondent George Schulze, P250,000.00 as moral
Well settled is the rule that the factual findings of the trial court damages and P50,000.00 as exemplary damages; and
are entitled to great weight and respect on appeal, especially
when established by unrebutted testimonial and documentary 2. Respondent Antonio C. Amor, P50,000.00 as moral
evidence, as in this case. damages and P10,000.00 as exemplary damages.

Anent the petition of the surety, We say the following: The rest of the judgment of the Intermediate Appellate Court is
hereby AFFIRMED.
Specifically, petitioner surety contends that the dissolution of
the attachment extinguishes its obligation under the bond, for SO ORDERED.
the basis of its liability, which is wrongful attachment, no
longer exists, the attachment bond having been rendered void
and ineffective, by virtue of Section 12, Rule 57 of the Rules of
Court. (p. 5, Petition) G.R. No. 83897 November 9, 1990

While Section 12, Rule 57 of the Rules of Court provides that ESTEBAN B. UY JR. and NILO S. CABANG, petitioners,
upon the filing of a counterbond, the attachment is discharged vs.
or dissolved, nowhere is it provided that the attachment bond is THE HONORABLE COURT OF APPEALS, WILSON
rendered void and ineffective upon the filing of counterbond. TING, and YU HON. respondents.

The liability of the attachment bond is defined in Section 4, E.P. Mallari & Associates for petitioners.
Rule 57 of the Rules of Court, as follows:
Elpidio G. Navarro for private respondents.
Sec. 4. Condition of applicant's bond. The party applying for
the order must give a bond executed to the adverse party in an
amount to be fixed by the judge, not exceeding the applicant's PARAS, J.:
claim, conditioned that the latter will pay all the costs which
may be adjudged to the adverse party and all damages which he This is a petition for review on certiorari seeking to reverse the
may sustain by reason of the attachment, if the court shall decision ** which dismissed CA-G.R. No. SP-05659 for
finally adjudge that the applicant was not entitled thereto. certiorari and Prohibition with Preliminary Injunction and/or
Restraining Order filed by petitioner seeking to annul and set
It is clear from the above provision that the responsibility of the aside the two Orders dated August 24, 1982 and October 10,
surety arises "if the court shall finally adjudge that the plaintiff 1983 issued by the then Court of First Instance of Rizal Branch
was not entitled thereto." In Rocco vs. Meads, 96 Phil. Reports LII *** (now Regional Trial Court of Quezon City Branch
884, we held that the liability attaches if the plaintiff is not XCLVll ****) in Civil Case No. Q-35128, granting a writ of
entitled to the attachment because the requirements entitling preliminary attachment and directing the sheriff assigned
him to the writ are wanting, or if the plaintiff has no right to the therein to attach the properties of defendants Uy and Cabang
attachment because the facts stated in his affidavit, or some of (herein petitioners); and denying defendants' motion to dismiss.
them, are untrue. It is, therefore, evident that upon the dismissal
of an attachment wrongfully issued, the surety is liable for The antecedent facts of the case as found by the Court of
damages as a direct result of said attachment. Appeals are as follows:

Equally untenable is the Surety's contention that by filing a On March 24, 1982, Esteban B. Uy, Jr. (herein petitioner) filed
counterbond, private respondents waived any defect or flaw in a complaint against Sy Yuk Tat for sum of money, damages,
the issuance of the attachment writ, for they could have sought, with preliminary attachment, docketed as Civil Case No. Q-
without need of filing any counterbond, the discharge of the 34782 ("the first case" for short) in the then Court of First
attachment if the same was improperly or irregularly issued, as Instance of Rizal, Branch LII, Quezon City (the case was later
provided in Section 13, Rule 57 of the Rules of Court. assigned to the Regional Trial Court of Quezon City, Branch
XCVII now presided over by respondent Judge). On the same
Whether the attachment was discharged by either of the two (2) day, upon plaintiff filing a bond of P232,780.00 said court
ways indicated in the law, i.e., by filing a counterbond or by issued a writ of preliminary attachment and appointed Deputy
showing that the order of attachment was improperly or Sheriff Nilo S. Cabang (co-petitioner herein) as Special Sheriff
irregularly issued, the liability of the surety on the attachment
ProvRem (PreAttachment) Full text 062318 26
to implement the writ. On April 6, 1982, the same court issued Meanwhile, in the first case, where a judgment by default had
a break-open order upon motion filed by petitioner Uy. been rendered, the first court issued an order striking off from
the records all pleadings filed by the third party claimants.
On the following day, April 7, 1982, petitioner Cabang began to
implement the writ of preliminary attachment as the Special With respect to the case in the court a quo, defendants Uy and
Sheriff on the case. Cabang filed their answer with counterclaim.

On April 19, 1982, petitioner Cabang filed a Partial Sheriffs Meanwhile, in the first case, plaintiff Uy on June 7, 1982, filed
Return, stating, inter alia: an ex-parte motion for writ of execution which was granted the
following day, June 8, 1982.
xxx xxx xxx
On the same day (June 7, 1982) that plaintiff Uy filed his
That in the afternoon of April 12, 1982, the undersigned exparte motion for writ of execution he and Cabang filed a
together with Atty. Lupino Lazaro, plaintiff's counsel and the motion to quash or dissolve status quo order in the case a quo as
members of the same team proceeded to No. 65 Speaker Perez defendants therein on the ground that the court "has no
St., Quezon City, and effected a physical and actual count of the jurisdiction to interfere with properties under custodia legis on
items and merchandise pointed to by the Ting family as having orders of a court of co-equal and co-ordinate jurisdiction" and
been taken from the Mansion Emporium and nearby bodega that plaintiffs' complaint is not for recovery of properties in
which are as follows: question.

a) 329 boxes of "GE" Flat Iron, each box containing 6 pcs. On June 24, 1982, plaintiff Uy in the first case filed his ex parte
each; motion to authorize Sheriff to sell the attached properties
enumerated in Sheriff Cabang's partial return filed on April 19,
b) 229 boxes of Magnetic Blank Tapes with 48 pcs. each; 1982, on the ground that the properties under custodia legis
were perishable especially those taken from No. 65 Speaker
c) 239 boxes of floor polishers marked "Sanyo" Perez, Quezon City.

d) 54 boxes of floor polishers marked "Ronson" Subsequently, on July 2, 1982, in the case a quo the court
denied defendants', Uy and Cabang, motion to quash or dissolve
xxx xxx xxx the status quo order.

On April 12, 1982, a third party claim was filed by Wilson Ting Meanwhile, the first case on July 12, 1982, Cabang filed
and Yu Hon (private respondents herein) in the same Civil Case another partial sheriffs return this time stating among others
No. Q-34782, addressed to petitioner Cabang asserting that the judgment in that case had been partially satisfied, and
ownership over the properties attached at No. 65 Speaker Perez that in the public auction sale held on July 6, 1982, certain
St., Quezon City (other than those attached at No. 296 Palanca personal properties had been sold to plaintiff Esteban Uy, Jr.,
St., Manila). The third party claim specifically enumerated the the winning bidder for P15,000.00 while the other properties
properties, as reflected in the Partial Sheriffs Return dated April were sold in the amount of P200,000.00 in cash with Bernabe
1 3, 1 982, belonging to the plaintiffs (private respondents Ortiz of No. 97 Industrial Avenue, Northern Hill, Malabon
herein). Manila as the highest bidder.

On the same day that petitioner Cabang filed his Partial Sheriffs Back to the case a quo, on August 23, 1982, plaintiffs Ting and
Return (April 19, 1982) the third party claimants and Yu filed a Yu Hon filed a motion for preliminary attachment alleging this
motion to dissolve the aforementioned writ of preliminary ground: "In the case at bar, which, is one 'to recover possession
attachment in the same Civil Case No. Q-34782; alleging of personal properties unjustly detained, ... the property... has
among others, that being the absolute owners of the personal been ... removed ... (and) disposed of to prevent its being found
properties listed in their third party claim which were illegally or taken by the applicant or an officer" and/or said defendants
seized from them they were willing to file a counterbond for the are guilty of fraud in disposing of the property for the taking,
return thereof; which motion was opposed by plaintiff Uy. (or) detention ... of which the action is brought (Sec. 1(c) and
(d), Rule 57, Rules of Court)
On April 29, 1982, then CFI Judge Jose P. Castro rendered
judgment by default in said Civil Case No. Q-34782 in favor of Acting on such motion the court a quo, on August 24, 1 982,
plaintiff Uy. issued the disputed order granting the writ of preliminary
attachment prayed for by the plaintiffs (Wilson Ting and Yu
Meanwhile, on May 5, 1982, third party claimants Wilson Ting Hon), stating that:
and Yu Hon filed a complaint for Damages with application for
preliminary injunction against Esteban Uy and Nilo Cabang Let a writ of preliminary attachment issue upon the plaintiffs
(co-petitioners herein) in the then Court of First Instance of putting up a bond in the amount of P1,430,070.00, which shall
Rizal, Branch 52, Quezon City ('the court a quo' for short) be furnished to each of the defendants with copies of the
which case was docketed as Civil Case No. Q-35128 ('the verified application therewith, and the sheriff assigned to this
second case' for short). The complaint alleged inter alia that the court, Danilo Del Mundo, shall forthwith attach such properties
plaintiffs are the owners of the personal properties reflected in of the defendants not exempt from execution, sufficient to
the Partial Sheriffs Return dated April 13, 1983 which have satisfy the applicants' demand. (Rollo, p. 247)
been attached and seized by defendant Cabang. In this second
civil case, the court a quo (then presided over by CFI Judge On August 31, 1982, in the same case a quo, defendant Uy filed
Concepcion B. Buencamino) issued an order on May 5, 1982, an urgent motion to quash and/or dissolve preliminary
stating among other things, the following: attachment which motion was opposed by plaintiffs Ting and
Yu Hon.
Considering that it will take time before this Court could act
upon said prayers for the issuance of a Writ of Preliminary About half a year later, on February 21, 1982, in the case a quo,
Injunction, the parties are hereby ordered to maintain the defendant Uy filed a motion for preliminary hearing on
STATUS QUO in this case with respect to the properties affirmative defenses as motion to dismiss. Following an
attached and subject of this action alleged to belong to the exchange of subsequent papers between the parties, the court a
plaintiffs" (Rollo, p. 133) quo issued the other disputed order which denied defendant
Uy's motion to dismiss on October 10, 1983. The motion to
quash was also denied by the court a quo on December 9, 1983.
ProvRem (PreAttachment) Full text 062318 27
Defendant Uy filed a motion for reconsideration on both defendant, he acts beyond the limits of this authority. The court
Orders. Finally, on February 15, 1985, respondent Judge issued issuing a writ of execution is supposed to enforce its authority
two Orders denying both motions for reconsideration. (CA only over properties of the judgment debtor. Should a third
decision, Rollo, p. 109-122) party appear to claim the property levied upon by the sheriff,
the procedure laid down by the Rules is that such claim should
Thereafter, petitioners Esteban Uy, Jr. and Nilo Cabang filed be the subject of a separate and independent action.
with the Court of Appeals a petition for Certiorari and
Prohibition with prayer for a Writ of Preliminary Injunction or a Neither can petitioner complain that they were denied their day
Restraining Order to annul and set aside the two orders issued in court when the Regional Trial Court issued a writ of
by the then CFI of Rizal Branch 52. preliminary attachment without hearing as it is well settled that
its issuance may be made by the court ex parte. As clearly
In its decision, the Court of Appeals dismissed the petition, the explained by this Court, no grave abuse of discretion can be
dispositive portion of which reads: ascribed to respondent Judge in the issuance of a writ of
attachment without notice to petitioners as there is nothing in
WHEREFORE, finding respondent Judge not to have the Rules of Court which makes notice and hearing
committed a grave abuse of discretion amounting to lack or indispensable and mandatory requisites in its issuance.
excess of jurisdiction in issuing the order dated August 24, (Filinvest Credit Corp. v. Relova, 117 SCRA 420 [1982];
1982, denying petitioners' motion to quash the writ of Belisle Investment & Finance Co. Inc. v. State Investment
preliminary attachment, and the order dated October 10, 1983, House, Inc. 151 SCRA 631 [1987]; Toledo v. Burgos, 168
denying petitioners' motion to dismiss the complaint a quo, we SCRA 513 [1988]).
hereby deny the instant petition, and therefore dismiss the same.
No pronouncement as to cost. (Rollo, pp. 132-133) In addition, petitioner's motion to quash or discharge the
questioned attachment in the court a quo is in effect a motion
Hence, the instant petition. for reconsideration which cured any defect of absence of notice.
(Dormitorio v. Fernandez, 72 SCRA 388 [1976]).
In the resolution of October 16, 1989, the Court gave due
course to the petition and required both parties to submit Estoppel is likewise unavailing in the case at bar by the mere
simultaneous memoranda within thirty days from notice (Rollo, fact that private respondent Ting (complainant in the court a
p. 190). Private respondents filed their memorandum on quo) pointed the items and merchandise taken from the
December 6, 1989 (Ibid., p. 192) while petitioners filed their Mansion House and nearby Bodega which were levied and
memorandum on January 5, 1990 (Ibid., p. 208) hauled by Special Sheriff Cabang, where in the report of said
Sheriff made earlier on April 6, 1982, he stated that on the same
The main issue in this case is whether or not properties levied occasion referred to in his Partial Return, private respondents
and seized by virtue of a writ of attachment and later by a writ denied Sy Yuk Tat's ownership over the goods in question.
of execution, were under custodia legis and therefore not (Rollo, pp. 203-204).
subject to the jurisdiction of another co-equal court where a
third party claimant claimed ownership of the same properties. In like manner, the sale of the disputed properties at the public
auction, in satisfaction of a judgment of a co-equal court does
The issue has long been laid to rest in the case of Manila Herald not render the case moot and academic. The undeviating ruling
Publishing Co. Inc. v. Ramos (88 Phil. 94 [1951]) where the of this Court in such cases is that attachment and sale of
Court filed that while it is true that property in custody of the properties belonging to a third person is void because such
law may not be interfered with, without the permission of the properties cannot be attached and sold at public auction for the
proper court, this rule is confined to cases where the property purpose of enforcing a judgment against the judgment debtor.
belongs to the defendant or one in which the defendant has (Orosco v. Nepomuceno, 57 Phil. 1007 [1932-33]).
proprietary interests. But when the Sheriff, acting beyond the
bounds of his office seizes a stranger's property, the rule does The other issues in this case deserve scant consideration.
not apply and interference with his custody is not interference
with another court's order of attachment. On the issue of the expiration of the restraining order, there is
no argument that the life span of the status quo order
Under the circumstances, this Court categorically stated: automatically expires on the 20th day and no judicial
declaration to that effect is necessary (Paras v. Roura, 163
It has been seen that a separate action by the third party who SCRA 1 [1988]). But such fact is of no consequence in so far as
claims to be the owner of the property attached is appropriate. If the propriety of the questioned attachment is concerned. As
this is so, it must be admitted that the judge trying such action found by the Court of Appeals, the grounds invoked by
may render judgment ordering the sheriff or whoever has in respondents for said attachment did not depend at all upon the
possession of the attached property to deliver it to the plaintiff continuing efficacy of the restraining order.
claimant or desist from seizing it. It follows further that the
court may make an interlocutory order, upon the filing of such As to petitioner's contention that the complaint filed by private
bond as may be necessary, to release the property pending final respondent in the lower court is merely seeking an ancillary
adjudication of the title. Jurisdiction over an action includes remedy of injunction which is not a cause of action itself, the
jurisdiction on interlocutory matter incidental to the cause and Court of Appeals correctly observed that the object of private
deemed necessary to preserve the subject matter of the suit or respondents' complaint is injunction although the ancillary
protect the parties' interests. This is self-evident. (Manila remedy of preliminary injunction was also prayed for during the
Herald Publishing Co. Inc. v. Ramos, supra). pendency of the proceeding.

The foregoing ruling was reiterated in the later case of Traders Finally, the non-joinder of the husband of private respondent,
Royal Bank v. IAC (133 SCRA 141 [1984]) and even more Yu Hon as well as her failure to verify the complaint does not
recently in the case of Escovilla v. C.A. G.R. No. 84497, warrant dismissal of the complaint for they are mere formal
November 6, 1989, where this Court stressed: requirements which could be immediately cured without
prejudice to the rights of the petitioners. This Court frowns on
The power of the court in the execution of judgments extends the resort to technicalities to defeat substantial justice. Thus, the
only over properties unquestionably belonging to the judgment Court states that the rules of procedure are intended to promote
debtor. The levy by the sheriff of a property by virtue of a writ not to defeat substantial justice, and therefore, they should not
of attachment may be considered as made under the authority of be applied in a very rigid and technical sense. (Angel v.
the court only when the property levied upon belongs to the Inopiquez, G.R. 66712, January 13, 1989). Again on another
defendant. If he attaches properties other than those of the occasion where an appeal should have been dismissed for non-
ProvRem (PreAttachment) Full text 062318 28
compliance with the Rules, the Court relaxed the rigid Consequently, on October 25, 2002, petitioners filed before the
interpretation of the Rules holding that a straight-jacket regional trial court (RTC) a Complaint[7] for sum of money and
application will do more injustice. (Pan-Am Airways v. damages, against Nicanor, Ermilinda Satsatin, Nikki Normel
Espiritu, 69 SCRA 45 [1976]). Satsatin, and Nikki Norlin Satsatin. The case was docketed as
Civil Case No. 2694-02, and raffled to RTC, Branch 90,
PREMISES CONSIDERED, the petition is hereby DENIED Dasmarias, Cavite.
and the assailed decision of the Court of Appeals is hereby
AFFIRMED. On October 30, 2002, petitioners filed an Ex-Parte Motion for
the Issuance of a Writ of Attachment,[8] alleging among other
SO ORDERED. things: that respondents are about to depart the Philippines; that
they have properties, real and personal in Metro Manila and in
the nearby provinces; that the amount due them is
P19,000,000.00 above all other claims; that there is no other
G.R. No. 166759 November 25, 2009 sufficient security for the claim sought to be enforced; and that
they are willing to post a bond fixed by the court to answer for
SOFIA TORRES, FRUCTOSA TORRES, HEIRS OF all costs which may be adjudged to the respondents and all
MARIO TORRES and SOLAR RESOURCES, INC., damages which respondents may sustain by reason of the
Petitioners, attachment prayed for, if it shall be finally adjudged that
petitioners are not entitled thereto.
- versus -
On October 30, 2002, the trial court issued an Order[9]
NICANOR SATSATIN, EMILINDA AUSTRIA directing the petitioners to post a bond in the amount of
SATSATIN, NIKKI NORMEL SATSATIN and NIKKI P7,000,000.00 before the court issues the writ of attachment,
NORLIN SATSATIN, Respondents. the dispositive portion of which reads as follows:

DECISION WHEREFORE, premises considered, and finding the present


complaint and motion sufficient in form and substance, this
PERALTA, J.: Court hereby directs the herein plaintiffs to post a bond,
pursuant to Section 3, Rule 57 of the 1997 Rules of Civil
This is a petition for review on certiorari assailing the Procedure, in the amount of Seven Million Pesos
Decision[1] dated November 23, 2004 of the Court of Appeals (P7,000,000.00), before the Writ of Attachment issues.[10]
(CA) in CA-G.R. SP No. 83595, and its Resolution[2] dated
January 18, 2005, denying petitioners motion for On November 15, 2002, petitioners filed a Motion for
reconsideration. Deputation of Sheriff,[11] informing the court that they have
already filed an attachment bond. They also prayed that a
The factual and procedural antecedents are as follows: sheriff be deputized to serve the writ of attachment that would
be issued by the court.
The siblings Sofia Torres (Sofia), Fructosa Torres (Fructosa),
and Mario Torres (Mario) each own adjacent 20,000 square In the Order[12] dated November 15, 2002, the RTC granted
meters track of land situated at Barrio Lankaan, Dasmarias, the above motion and deputized the sheriff, together with police
Cavite, covered by Transfer Certificate of Title (TCT) Nos. security assistance, to serve the writ of attachment.
251267,[3] 251266,[4] and 251265,[5] respectively.
Thereafter, the RTC issued a Writ of Attachment[13] dated
Sometime in 1997, Nicanor Satsatin (Nicanor) asked petitioners November 15, 2002, directing the sheriff to attach the estate,
mother, Agripina Aledia, if she wanted to sell their lands. After real or personal, of the respondents, the decretal portion of
consultation with her daughters, daughter-in-law, and which reads:
grandchildren, Agripina agreed to sell the properties.
Petitioners, thus, authorized Nicanor, through a Special Power WE, THEREFORE, command you to attach the estate, real or
of Attorney, to negotiate for the sale of the properties.[6] personal, not exempt from execution, of the said defendants, in
your province, to the value of said demands, and that you safely
keep the same according to the said Rule, unless the defendants
give security to pay such judgment as may be recovered on the
Sometime in 1999, Nicanor offered to sell the properties to said action, in the manner provided by the said Rule, provided
Solar Resources, Inc. (Solar). Solar allegedly agreed to that your legal fees and all necessary expenses are fully paid.
purchase the three parcels of land, together with the 10,000-
square-meter property owned by a certain Rustica Aledia, for You shall return this writ with your proceedings indorsed
P35,000,000.00. Petitioners alleged that Nicanor was supposed hereon within twenty (20) days from the date of receipt hereof.
to remit to them the total amount of P28,000,000.00 or
P9,333,333.00 each to Sofia, Fructosa, and the heirs of Mario. GIVEN UNDER MY HAND AND SEAL of this Court, this
15th day of November, 2002, at Imus for Dasmarias, Cavite,
Petitioners claimed that Solar has already paid the entire Philippines.[14]
purchase price of P35,000,000.00 to Nicanor in Thirty-Two
(32) post-dated checks which the latter encashed/deposited on On November 19, 2002, a copy of the writ of attachment was
their respective due dates. Petitioners added that they also served upon the respondents. On the same date, the sheriff
learned that during the period from January 2000 to April 2002, levied the real and personal properties of the respondent,
Nicanor allegedly acquired a house and lot at Vista Grande BF including household appliances, cars, and a parcel of land
Resort Village, Las Pias City and a car, which he registered in located at Las Pias, Manila.[15]
the names of his unemployed children, Nikki Normel Satsatin
and Nikki Norlin Satsatin. However, notwithstanding the On November 21, 2002, summons, together with a copy of the
receipt of the entire payment for the subject property, Nicanor complaint, was served upon the respondents.[16]
only remitted the total amount of P9,000,000.00, leaving an
unremitted balance of P19,000,000.00. Despite repeated verbal On November 29, 2002, respondents filed their Answer.[17]
and written demands, Nicanor failed to remit to them the
balance of P19,000,000.00.
ProvRem (PreAttachment) Full text 062318 29
On the same day respondents filed their answer, they also filed issuance of the Writ of Attachment despite non-compliance
a Motion to Discharge Writ of Attachment[18] anchored on the with the formal requisites for the issuance of the bond and the
following grounds: the bond was issued before the issuance of Writ of Attachment.[28]
the writ of attachment; the writ of attachment was issued before
the summons was received by the respondents; the sheriff did Respondents argued that the subject writ was improper and
not serve copies of the application for attachment, order of irregular having been issued and enforced without the lower
attachment, plaintiffs affidavit, and attachment bond, to the court acquiring jurisdiction over the persons of the respondents.
respondents; the sheriff did not submit a sheriffs return in They maintained that the writ of attachment was implemented
violation of the Rules; and the grounds cited for the issuance of without serving upon them the summons together with the
the writ are baseless and devoid of merit. In the alternative, complaint. They also argued that the bond issued in favor of the
respondents offered to post a counter-bond for the lifting of the petitioners was defective, because the bonding company failed
writ of attachment.[19] to obtain the proper clearance that it can transact business with
the RTC of Dasmarias, Cavite. They added that the various
On March 11, 2003, after the parties filed their respective clearances which were issued in favor of the bonding company
pleadings, the RTC issued an Order[20] denying the motion, were applicable only in the courts of the cities of Pasay, Pasig,
but at the same time, directing the respondents to file a counter- Manila, and Makati, but not in the RTC, Imus, Cavite.[29]
bond, to wit:
On November 23, 2003, the CA rendered the assailed Decision
WHEREFORE, premises considered, after the pertinent in favor of the respondents, finding grave abuse of discretion
pleadings of the parties have been taken into account, the herein amounting to lack of or in excess of jurisdiction on the part of
defendants are hereby directed to file a counter-bond executed the RTC in issuing the Orders dated December 15, 2003 and
to the attaching party, in the amount of Seven Million Pesos March 3, 2004. The decretal portion of the Decision reads:
(P7,000,000.00), to secure the payment of any judgment that
the attaching party may recover in the action, with notice on the WHEREFORE, the instant petition is hereby GRANTED.
attaching party, whereas, the Motion to Discharge Writ of Accordingly, the assailed Orders are hereby nullified and set
Attachment is DENIED. aside. The levy on the properties of the petitioners pursuant to
the Writ of Attachment issued by the lower court is hereby
SO ORDERED.[21] LIFTED.

Thereafter, respondents filed a motion for reconsideration SO ORDERED.[30]


and/or motion for clarification of the above order. On April 3,
2003, the RTC issued another Order[22] which reads: Petitioners filed a Motion for Reconsideration,[31] but it was
denied in the Resolution[32] dated January 18, 2005.
In view of the Urgent Motion For Reconsideration And/Or
Motion For Clarification of the Order of this Court dated March Hence, this petition assigning the following errors:
11, 2003, denying their Motion to Discharge Writ of
Attachment filed by the defendants through counsel Atty. I. THE HONORABLE COURT OF APPEALS ERRED IN
Franco L. Loyola, the Motion to Discharge Writ of Attachment ORDERING THE LIFTING OF THE WRIT OF
is denied until after the defendants have posted the counter- ATTACHMENT PURSUANT TO SECTION 13, RULE 57 OF
bond in the amount of Seven Million Pesos (P7,000,000.00). THE REVISED RULES OF CIVIL PROCEDURE.

The defendants, once again, is directed to file their counter-


bond of Seven Million Pesos (P7,000,000.00), if it so desires, in II. THE HONORABLE COURT OF APPEALS ERRED IN
order to discharge the Writ of Attachment. HOLDING THAT PUBLIC RESPONDENT COMMITTED
GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK
SO ORDERED. OF OR IN EXCESS OF JURISDICTION IN GRANTING
THE WRIT OF ATTACHMENT DESPITE THE BOND
On December 15, 2003, respondents filed an Urgent Motion to BEING INSUFFICIENT AND HAVING BEEN
Lift/Set Aside Order Dated March [11], 2003,[23] which the IMPROPERLY ISSUED.
RTC denied in an Order[24] of even date, the dispositive
portion of which reads: III. THE HONORABLE COURT OF APPEALS ERRED IN
NOT DISMISSING THE PETITION BY REASON OF
WHEREFORE, premises considered, defendants Urgent ESTOPPEL, LACHES AND PRESCRIPTION AND IN
Motion to Lift/Set Aside Order Dated March 23, 2003 (With HOLDING THAT THE WRIT OF ATTACHMENT WAS
Manifestation to Dissolve Writ of Attachment) is hereby IMPROPERLY AND IRREGULARLY ENFORCED IN
DENIED for lack of Merit. VIOLATION OF SECTION 5, RULE 57 OF THE REVISED
RULES OF COURT.
SO ORDERED.
IV. THE HONORABLE COURT OF APPEALS ERRED IN
Respondents filed an Urgent Motion for Reconsideration,[25] HOLDING THAT THE PRINCIPLE OF ESTOPPEL WILL
but it was denied in the Order[26] dated March 3, 2004. NOT LIE AGAINST RESPONDENTS.

Aggrieved, respondents filed before the CA a Petition for Petitioners maintain that in the case at bar, as in the case of
Certiorari, Mandamus and Prohibition with Preliminary FCY Construction Group, Inc. v. Court of Appeals,[33] the
Injunction and Temporary Restraining Order[27] under Rule 65 only way the subject writ of attachment can be dissolved is by a
of the Rules of Court, docketed as CA-G.R. SP No. 83595, counter-bond. They claim that the respondents are not allowed
anchored on the following grounds: to file a motion to dissolve the attachment under Section 13,
Rule 57 of the Rules of Court. Otherwise, the hearing on the
(1) public respondents committed grave abuse of discretion motion for the dissolution of the writ would be tantamount to a
amounting to lack of or in excess of jurisdiction in failing to trial on the merits, considering that the writ of preliminary
notice that the lower court has no jurisdiction over the person attachment was issued upon a ground which is, at the same
and subject matter of the complaint when the subject Writ of time, the applicants cause of action.
Attachment was issued;
Petitioners insist that the determination of the existence of
(2) public respondents committed grave abuse of discretion grounds to discharge a writ of attachment rests in the sound
amounting to lack of or in excess of jurisdiction in granting the discretion of the lower court. They argue that the
ProvRem (PreAttachment) Full text 062318 30
Certification[34] issued by the Office of the Administrator and
the Certifications[35] issued by the clerks of court of the RTCs In Davao Light & Power Co., Inc. v. Court of Appeals,[42] this
of Dasmarias and Imus, Cavite, would show that the bonds Court clarified the actual time when jurisdiction should be had:
offered by Western Guaranty Corporation, the bonding
company which issued the bond, may be accepted by the RTCs It goes without saying that whatever be the acts done by the
of Dasmarias and Imus, Cavite, and that the said bonding Court prior to the acquisition of jurisdiction over the person of
company has no pending liability with the government. defendant x x x issuance of summons, order of attachment and
writ of attachment x x x these do not and cannot bind and affect
Petitioners contend that respondents are barred by estoppel, the defendant until and unless jurisdiction over his person is
laches, and prescription from questioning the orders of the RTC eventually obtained by the court, either by service on him of
issuing the writ of attachment. They also maintain that the issue summons or other coercive process or his voluntary submission
whether there was impropriety or irregularity in the issuance of to the courts authority. Hence, when the sheriff or other proper
the orders is moot and academic, considering that the officer commences implementation of the writ of attachment, it
attachment bond questioned by the respondent had already is essential that he serve on the defendant not only a copy of the
expired on November 14, 2003 and petitioners have renewed applicants affidavit and attachment bond, and of the order of
the attachment bond covering the period from November 14, attachment, as explicitly required by Section 5 of Rule 57, but
2003 to November 14, 2004, and further renewed to cover the also the summons addressed to said defendant as well as a copy
period of November 14, 2004 to November 14, 2005. of the complaint x x x. (Emphasis supplied.

The petition is bereft of merit. In Cuartero v. Court of Appeals,[43] this Court held that the
grant of the provisional remedy of attachment involves three
A writ of preliminary attachment is defined as a provisional stages: first, the court issues the order granting the application;
remedy issued upon order of the court where an action is second, the writ of attachment issues pursuant to the order
pending to be levied upon the property or properties of the granting the writ; and third, the writ is implemented. For the
defendant therein, the same to be held thereafter by the sheriff initial two stages, it is not necessary that jurisdiction over the
as security for the satisfaction of whatever judgment that might person of the defendant be first obtained. However, once the
be secured in the said action by the attaching creditor against implementation of the writ commences, the court must have
the defendant.[36] acquired jurisdiction over the defendant, for without such
jurisdiction, the court has no power and authority to act in any
In the case at bar, the CA correctly found that there was grave manner against the defendant. Any order issuing from the Court
abuse of discretion amounting to lack of or in excess of will not bind the defendant.[44]
jurisdiction on the part of the trial court in approving the bond
posted by petitioners despite the fact that not all the requisites Thus, it is indispensable not only for the acquisition of
for its approval were complied with. In accepting a surety bond, jurisdiction over the person of the defendant, but also upon
it is necessary that all the requisites for its approval are met; consideration of fairness, to apprise the defendant of the
otherwise, the bond should be rejected.[37] complaint against him and the issuance of a writ of preliminary
attachment and the grounds therefor that prior or
Every bond should be accompanied by a clearance from the contemporaneously to the serving of the writ of attachment,
Supreme Court showing that the company concerned is service of summons, together with a copy of the complaint, the
qualified to transact business which is valid only for thirty (30) application for attachment, the applicants affidavit and bond,
days from the date of its issuance.[38] However, it is apparent and the order must be served upon him.
that the Certification[39] issued by the Office of the Court
Administrator (OCA) at the time the bond was issued would In the instant case, assuming arguendo that the trial court
clearly show that the bonds offered by Western Guaranty validly issued the writ of attachment on November 15, 2002,
Corporation may be accepted only in the RTCs of the cities of which was implemented on November 19, 2002, it is to be
Makati, Pasay, and Pasig. Therefore, the surety bond issued by noted that the summons, together with a copy of the complaint,
the bonding company should not have been accepted by the was served only on November 21, 2002.
RTC of Dasmarias, Branch 90, since the certification secured
by the bonding company from the OCA at the time of the At the time the trial court issued the writ of attachment on
issuance of the bond certified that it may only be accepted in November 15, 2002, it can validly to do so since the motion for
the above-mentioned cities. Thus, the trial court acted with its issuance can be filed at the commencement of the action or
grave abuse of discretion amounting to lack of or in excess of at any time before entry of judgment. However, at the time the
jurisdiction when it issued the writ of attachment founded on writ was implemented, the trial court has not acquired
the said bond. jurisdiction over the persons of the respondent since no
summons was yet served upon them. The proper officer should
have previously or simultaneously with the implementation of
Moreover, in provisional remedies, particularly that of the writ of attachment, served a copy of the summons upon the
preliminary attachment, the distinction between the issuance respondents in order for the trial court to have acquired
and the implementation of the writ of attachment is of utmost jurisdiction upon them and for the writ to have binding effect.
importance to the validity of the writ. The distinction is Consequently, even if the writ of attachment was validly issued,
indispensably necessary to determine when jurisdiction over the it was improperly or irregularly enforced and, therefore, cannot
person of the defendant should be acquired in order to validly bind and affect the respondents.
implement the writ of attachment upon his person.
Moreover, although there is truth in the petitioners contention
This Court has long put to rest the issue of when jurisdiction that an attachment may not be dissolved by a showing of its
over the person of the defendant should be acquired in cases irregular or improper issuance if it is upon a ground which is at
where a party resorts to provisional remedies. A party to a suit the same time the applicants cause of action in the main case,
may, at any time after filing the complaint, avail of the since an anomalous situation would result if the issues of the
provisional remedies under the Rules of Court. Specifically, main case would be ventilated and resolved in a mere hearing
Rule 57 on preliminary attachment speaks of the grant of the of a motion. However, the same is not applicable in the case
remedy at the commencement of the action or at any time bar. It is clear from the respondents pleadings that the grounds
before entry of judgment.[40] This phrase refers to the date of on which they base the lifting of the writ of attachment are the
the filing of the complaint, which is the moment that marks the irregularities in its issuance and in the service of the writ; not
commencement of the action. The reference plainly is to a time petitioners cause of action.
before summons is served on the defendant, or even before
summons issues.[41]
ProvRem (PreAttachment) Full text 062318 31
Further, petitioners contention that respondents are barred by president of LGD respectively. Frederick Juan and Liza Juan
estoppel, laches, and prescription from questioning the orders of are the principal officers of Metro, Inc.
the RTC issuing the writ of attachment and that the issue has
become moot and academic by the renewal of the attachment Sometime in 2001, petitioners and respondents agreed that
bond covering after its expiration, is devoid of merit. As respondents would endorse to petitioners purchase orders
correctly held by the CA received by respondents from their buyers in the United States
of America in exchange for a 15% commission, to be shared
There are two ways of discharging the attachment. First, to file equally by respondents and James R. Paddon (JRP), LGD’s
a counter-bond in accordance with Section 12 of Rule 57. agent. The terms of the agreement were later embodied in an e-
Second[,] [t]o quash the attachment on the ground that it was mail labeled as the "2001 Agreement."4
irregularly or improvidently issued, as provided for in Section
13 of the same rule. Whether the attachment was discharged by In May 2003, respondents filed with the Regional Trial Court,
either of the two ways indicated in the law, the attachment Branch 197, Las Piñas City (trial court) a complaint against
debtor cannot be deemed to have waived any defect in the petitioners for sum of money and damages with a prayer for the
issuance of the attachment writ by simply availing himself of issuance of a writ of preliminary attachment. Subsequently,
one way of discharging the attachment writ, instead of the respondents filed an amended complaint5 and alleged that, as of
other. The filing of a counter-bond is merely a speedier way of July 2002, petitioners defrauded them in the amount of
discharging the attachment writ instead of the other way.[45] $521,841.62. Respondents also prayed for ₱1,000,000 as moral
damages, ₱1,000,000 as exemplary damages and 10% of the
Moreover, again assuming arguendo that the writ of attachment judgment award as attorney’s fees. Respondents also prayed for
was validly issued, although the trial court later acquired the issuance of a writ of preliminary attachment.
jurisdiction over the respondents by service of the summons
upon them, such belated service of summons on respondents In its 23 June 2003 Order,6 the trial court granted respondents’
cannot be deemed to have cured the fatal defect in the prayer and issued the writ of attachment against the properties
enforcement of the writ. The trial court cannot enforce such a and assets of petitioners. The 23 June 2003 Order provides:
coercive process on respondents without first obtaining
jurisdiction over their person. The preliminary writ of WHEREFORE, let a Writ of Preliminary Attachment issue
attachment must be served after or simultaneous with the against the properties and assets of Defendant METRO, INC.
service of summons on the defendant whether by personal and against the properties and assets of Defendant SPOUSES
service, substituted service or by publication as warranted by FREDERICK AND LIZA JUAN not exempt from execution, as
the circumstances of the case. The subsequent service of may be sufficient to satisfy the applicants’ demand of
summons does not confer a retroactive acquisition of US$521,841.62 US Dollars or its equivalent in Pesos upon
jurisdiction over her person because the law does not allow for actual attachment, which is about ₱27 Million, unless such
retroactivity of a belated service.[46] Defendants make a deposit or give a bond in an amount equal to
₱27 Million to satisfy the applicants’ demand exclusive of
WHEREFORE, premises considered, the petition is DENIED. costs, upon posting by the Plaintiffs of a Bond for Preliminary
The Decision and Resolution of the Court of Appeals dated Attachment in the amount of twenty five million pesos
November 23, 2004 and January 18, 2005, respectively, in CA- (₱25,000,000.00), subject to the approval of this Court.
G.R. SP No. 83595 are AFFIRMED.
SO ORDERED.7
SO ORDERED.
On 26 June 2003, petitioners filed a motion to discharge the
writ of attachment. Petitioners argued that the writ of
attachment should be discharged on the following grounds: (1)
G.R. No. 171741 November 27, 2009 that the 2001 agreement was not a valid contract because it did
not show that there was a meeting of the minds between the
METRO, INC. and SPOUSES FREDERICK JUAN and parties; (2) assuming that the 2001 agreement was a valid
LIZA JUAN, Petitioners, contract, the same was inadmissible because respondents failed
vs. to authenticate it in accordance with the Rules on Electronic
LARA'S GIFTS AND DECORS, INC., LUIS Evidence; (3) that respondents failed to substantiate their
VILLAFUERTE, JR. and LARA MARIA R. allegations of fraud with specific acts or deeds showing how
VILLAFUERTE, Respondents. petitioners defrauded them; and (4) that respondents failed to
establish that the unpaid commissions were already due and
DECISION demandable.

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

This is a petition for review1 of the 29 September 2004 Premises considered, after having taken a second hard look at
Decision2 and 2 March 2006 Resolution3 of the Court of the Order dated June 23, 2003 granting plaintiff’s application
Appeals in CA-G.R. SP No. 79475. In its 29 September 2004 for the issuance of a writ of preliminary attachment, the Court
Decision, the Court of Appeals granted the petition for holds that the issuance of a writ of preliminary attachment in
certiorari of respondents Lara’s Gifts and Decors, Inc., Luis this case is not justified.
Villafuerte, Jr., and Lara Maria R. Villafuerte (respondents). In
its 2 March 2006 Resolution, the Court of Appeals denied the WHEREFORE, the writ of preliminary attachment issued in the
motion for reconsideration of petitioners Metro, Inc., Frederick instant case is hereby ordered immediately discharged and/or
Juan and Liza Juan (petitioners). lifted.

The Facts SO ORDERED.9

Lara’s Gifts and Decors Inc. (LGD) and Metro, Inc. are Respondents filed a motion for reconsideration. In its 10
corporations engaged in the business of manufacturing, September 2003 Order, the trial court denied the motion.
producing, selling and exporting handicrafts. Luis Villafuerte,
Jr. and Lara Maria R. Villafuerte are the president and vice- Respondents filed a petition for certiorari before the Court of
Appeals. Respondents alleged that the trial court gravely abused
ProvRem (PreAttachment) Full text 062318 32
its discretion when it ordered the discharge of the writ of On the other hand, respondents argue that the Court of Appeals
attachment without requiring petitioners to post a counter-bond. did not err in ruling that the writ of attachment can only be
discharged by filing a counter-bond. According to respondents,
In its 29 September 2004 Decision, the Court of Appeals petitioners cannot avail of Section 13,13 Rule 57 of the Rules of
granted respondents’ petition. The 29 September 2004 Decision Court to have the attachment set aside because the ground for
provides: the issuance of the writ of attachment is also the basis of
respondents’ amended complaint. Respondents assert that the
WHEREFORE, finding merit in the petition, We GRANT the amended complaint is a complaint for damages for the breach
same. The assailed Orders are hereby ANNULLED and SET of obligation and acts of fraud committed by petitioners.1 a vv
ASIDE. However, the issued Writ of Preliminary Attachment p h i 1
may be ordered discharged upon the filing by the private
respondents of the proper counter-bond pursuant to Section 12, In this case, the basis of respondents’ application for the
Rule 57 of the Rules of Civil Procedure. issuance of a writ of preliminary attachment is Section 1(d),
Rule 57 of the Rules of Court which provides:
SO ORDERED.10
SEC. 1. Grounds upon which attachment may issue. — At the
Petitioners filed a motion for reconsideration. In its 2 March commencement of the action or at any time before entry of
2006 Resolution, the Court of Appeals denied the motion. judgment, a plaintiff or any proper party may have the property
of the adverse party attached as security for the satisfaction of
Hence, this petition. any judgment that maybe recovered in the following cases: x x
x
The 12 August 2003 Order of the Trial Court
(d) In an action against a party who has been guilty of fraud in
According to the trial court, respondents failed to sufficiently contracting the debt or incurring the obligation upon which the
show that petitioners were guilty of fraud either in incurring the action is brought, or in the performance thereof; x x x
obligation upon which the action was brought, or in the
performance thereof. The trial court found no proof that In Liberty Insurance Corporation v. Court of Appeals,14 we
petitioners were motivated by malice in entering into the 2001 explained:
agreement. The trial court also declared that petitioners’ failure
to fully comply with their obligation, absent other facts or To sustain an attachment on this ground, it must be shown that
circumstances to indicate evil intent, does not automatically the debtor in contracting the debt or incurring the obligation
amount to fraud. Consequently, the trial court ordered the intended to defraud the creditor. The fraud must relate to the
discharge of the writ of attachment for lack of evidence of execution of the agreement and must have been the reason
fraud. which induced the other party into giving consent which he
would not have otherwise given. To constitute a ground for
The 29 September 2004 Decision of the Court of Appeals attachment in Section 1(d), Rule 57 of the Rules of Court, fraud
should be committed upon contracting the obligation sued
According to the Court Appeals, the trial court gravely abused upon. A debt is fraudulently contracted if at the time of
its discretion when it ordered the discharge of the writ of contracting it the debtor has a preconceived plan or intention
attachment without requiring petitioners to post a counter-bond. not to pay, as it is in this case.15
The Court of Appeals said that when the writ of attachment is
issued upon a ground which is at the same time also the The applicant for a writ of preliminary attachment must
applicant’s cause of action, courts are precluded from hearing sufficiently show the factual circumstances of the alleged fraud
the motion for dissolution of the writ when such hearing would because fraudulent intent cannot be inferred from the debtor’s
necessarily force a trial on the merits of a case on a mere mere non-payment of the debt or failure to comply with his
motion.11 The Court of Appeals pointed out that, in this case, obligation.16
fraud was not only alleged as the ground for the issuance of the
writ of attachment, but was actually the core of respondents’ In their amended complaint, respondents alleged the following
complaint. The Court of Appeals declared that the only way in support of their prayer for a writ of preliminary attachment:
that the writ of attachment can be discharged is by posting a
counter-bond in accordance with Section 12,12 Rule 57 of the 5. Sometime in early 2001, defendant Frederick Juan
Rules of Court. approached plaintiff spouses and asked them to help
defendants’ export business. Defendants enticed plaintiffs to
The Issue enter into a business deal. He proposed to plaintiff spouses the
following:
Petitioners raise the question of whether the writ of attachment
issued by the trial court was improperly issued such that it may a. That plaintiffs transfer and endorse to defendant Metro some
be discharged without the filing of a counter-bond. of the Purchase Orders (PO’s) they will receive from their US
buyers;
The Ruling of the Court
b. That defendants will sell exclusively and "only thru"
The petition has no merit. plaintiffs for their US buyer;

Petitioners contend that the writ of attachment was improperly xxx


issued because respondents’ amended complaint failed to allege
specific acts or circumstances constitutive of fraud. Petitioners 6. After several discussions on the matter and further
insist that the improperly issued writ of attachment may be inducement on the part of defendant spouses, plaintiff spouses
discharged without the necessity of filing a counter-bond. agreed. Thus, on April 21, 2001, defendant spouses confirmed
Petitioners also argue that respondents failed to show that the and finalized the agreement in a letter-document entitled "2001
writ of attachment was issued upon a ground which is at the Agreement" they emailed to plaintiff spouses, a copy of which
same time also respondents’ cause of action. Petitioners is hereto attached as Annex "A".
maintain that respondents’ amended complaint was not an
action based on fraud but was a simple case for collection of xxx
sum of money plus damages.
20. Defendants are guilty of fraud committed both at the
inception of the agreement and in the performance of the
ProvRem (PreAttachment) Full text 062318 33
obligation. Through machinations and schemes, defendants The Facts
successfully enticed plaintiffs to enter into the 2001 Agreement.
In order to secure plaintiffs’ full trust in them and lure plaintiffs On August 22, 2005, Lim, Jr. filed a complaint5 for sum of
to endorse more POs and increase the volume of the orders, money with prayer for the issuance of a writ of preliminary
defendants during the early part, remitted to plaintiffs shares attachment before the RTC, seeking to recover from
under the Agreement. respondents-spouses Tito S. Lazaro and Carmen T. Lazaro
(Sps. Lazaro) the sum of ₱2,160,000.00, which represented the
21. However, soon thereafter, just when the orders increased amounts stated in several dishonored checks issued by the latter
and the amount involved likewise increased, defendants to the former, as well as interests, attorney’s fees, and costs.
suddenly, without any justifiable reasons and in pure bad faith The RTC granted the writ of preliminary attachment
and fraud, abandoned their contractual obligations to remit to application6 and upon the posting of the required
plaintiffs their shares. And worse, defendants transacted ₱2,160,000.00 bond,7 issued the corresponding writ on October
directly with plaintiffs’ foreign buyer to the latter’s exclusion 14, 2005.8 In this accord, three (3) parcels of land situated in
and damage. Clearly, defendants planned everything from the Bulacan, covered by Transfer Certificates of Title (TCT) Nos.
beginning, employed ploy and machinations to defraud T-64940, T-64939, and T-86369 (subject TCTs), registered in
plaintiffs, and consequently take from them a valuable client. the names of Sps. Lazaro, were levied upon.9

22. Defendants are likewise guilty of fraud by violating the trust In their Answer with Counterclaim,10 Sps. Lazaro averred,
and confidence reposed upon them by plaintiffs. Defendants among others, that Lim, Jr. had no cause of action against them
received the proceeds of plaintiffs’ LCs with the clear since: (a) Colim Merchandise (Colim), and not Lim, Jr., was the
obligation of remitting 15% thereof to the plaintiffs. Their payee of the fifteen (15) Metrobank checks; and (b) the PNB
refusal and failure to remit the said amount despite demand and Real Bank checks were not drawn by them, but by Virgilio
constitutes a breach of trust amounting to malice and fraud.17 Arcinas and Elizabeth Ramos, respectively. While they admit
(Emphasis and underscoring in the original) (Boldfacing and their indebtedness to Colim, Sps. Lazaro alleged that the same
italicization supplied) had already been substantially reduced on account of previous
payments which were apparently misapplied. In this regard,
We rule that respondents’ allegation that petitioners undertook they sought for an accounting and reconciliation of records to
to sell exclusively and only through JRP/LGD for Target Stores determine the actual amount due. They likewise argued that no
Corporation but that petitioners transacted directly with fraud should be imputed against them as the aforesaid checks
respondents’ foreign buyer is sufficient allegation of fraud to issued to Colim were merely intended as a form of collateral.11
support their application for a writ of preliminary attachment. Hinged on the same grounds, Sps. Lazaro equally opposed the
Since the writ of preliminary attachment was properly issued, issuance of a writ of preliminary attachment.12
the only way it can be dissolved is by filing a counter-bond in
accordance with Section 12, Rule 57 of the Rules of Court. Nonetheless, on September 22, 2006, the parties entered into a
Compromise Agreement13 whereby Sps. Lazaro agreed to pay
Moreover, the reliance of the Court of Appeals in the cases of Lim, Jr. the amount of ₱2,351,064.80 on an installment basis,
Chuidian v. Sandiganbayan,18 FCY Construction Group, Inc. following a schedule of payments covering the period from
v. Court of Appeals,19 and Liberty Insurance Corporation v. September 2006 until October 2013, under the following terms,
Court of Appeals20 is proper. The rule that "when the writ of among others: (a) that should the financial condition of Sps.
attachment is issued upon a ground which is at the same time Lazaro improve, the monthly installments shall be increased in
the applicant’s cause of action, the only other way the writ can order to hasten the full payment of the entire obligation;14 and
be lifted or dissolved is by a counter-bond"21 is applicable in (b) that Sps. Lazaro’s failure to pay any installment due or the
this case. It is clear that in respondents’ amended complaint of dishonor of any of the postdated checks delivered in payment
fraud is not only alleged as a ground for the issuance of the writ thereof shall make the whole obligation immediately due and
of preliminary attachment, but it is also the core of respondents’ demandable.
complaint. The fear of the Court of Appeals that petitioners
could force a trial on the merits of the case on the strength of a The aforesaid compromise agreement was approved by the
mere motion to dissolve the attachment has a basis. RTC in its October 31, 2006 Decision15 and January 5, 2007
Amended Decision.16
WHEREFORE, we DENY the petition. We AFFIRM the 29
September 2004 Decision and 2 March 2006 Resolution of the Subsequently, Sps. Lazaro filed an Omnibus Motion,17 seeking
Court of Appeals in CA-G.R. SP No. 79475. to lift the writ of preliminary attachment annotated on the
subject TCTs, which the RTC granted on March 29, 2007.18 It
SO ORDERED. ruled that a writ of preliminary attachment is a mere provisional
or ancillary remedy, resorted to by a litigant to protect and
preserve certain rights and interests pending final judgment.
Considering that the case had already been considered closed
G.R. No. 185734 July 3, 2013 and terminated by the rendition of the January 5, 2007
Amended Decision on the basis of the September 22, 2006
ALFREDO C. LIM, JR., PETITIONER, compromise agreement, the writ of preliminary attachment
vs. should be lifted and quashed. Consequently, it ordered the
SPOUSES TITO S. LAZARO AND CARMEN T. Registry of Deeds of Bulacan to cancel the writ’s annotation on
LAZARO, RESPONDENTS. the subject TCTs.

RESOLUTION Lim, Jr. filed a motion for reconsideration19 which was,


however, denied on July 26, 2007,20 prompting him to file a
PERLAS-BERNABE, J.: petition for certiorari21 before the CA.

Assailed in this petition for review on certiorari1 are the July The CA Ruling
10, 2008 Decision2 and December 18, 2008 Resolution3 of the
Court of Appeals (CA) in CA-G.R. SP No. 100270, affirming On July 10, 2008, the CA rendered the assailed decision,22
the March 29, 2007 Order4 of the Regional Trial Court of finding no grave abuse of discretion on the RTC’s part. It
Quezon City, Branch 223 (RTC), which lifted the writ of observed that a writ of preliminary attachment may only be
preliminary attachment issued in favor of petitioner Alfredo C. issued at the commencement of the action or at any time before
Lim, Jr. (Lim, Jr.). entry of judgment. Thus, since the principal cause of action had
already been declared closed and terminated by the RTC, the
ProvRem (PreAttachment) Full text 062318 34
provisional or ancillary remedy of preliminary attachment the protection provided by an attachment lien especially in an
would have no leg to stand on, necessitating its discharge.23 instance where one reneges on his obligations under the
agreement, as in the case at bench, where Antonio Garcia failed
Aggrieved, Lim, Jr. moved for reconsideration24 which was to hold up his own end of the deal, so to speak.
likewise denied by the CA in its December 18, 2008
Resolution.25 xxxx

Hence, the instant petition. If we were to rule otherwise, we would in effect create a back
door by which a debtor can easily escape his creditors.
The Issue Before the Court Consequently, we would be faced with an anomalous situation
where a debtor, in order to buy time to dispose of his properties,
The sole issue in this case is whether or not the writ of would enter into a compromise agreement he has no intention
preliminary attachment was properly lifted. of honoring in the first place. The purpose of the provisional
remedy of attachment would thus be lost. It would become, in
The Court’s Ruling analogy, a declawed and toothless tiger. (Emphasis and
underscoring supplied; citations omitted)
The petition is meritorious.
In fine, the Court holds that the writ of preliminary attachment
By its nature, preliminary attachment, under Rule 57 of the subject of this case should be restored and its annotation
Rules of Court (Rule 57), is an ancillary remedy applied for not revived in the subject TCTs, re-vesting unto Lim, Jr. his
for its own sake but to enable the attaching party to realize upon preferential lien over the properties covered by the same as it
the relief sought and expected to be granted in the main or were before the cancellation of the said writ. Lest it be
principal action; it is a measure auxiliary or incidental to the misunderstood, the lien or security obtained by an attachment
main action. As such, it is available during its pendency which even before judgment, is in the nature of a vested interest which
may be resorted to by a litigant to preserve and protect certain affords specific security for the satisfaction of the debt put in
rights and interests during the interim, awaiting the ultimate suit.30 Verily, the lifting of the attachment lien would be
effects of a final judgment in the case.26 In addition, tantamount to an abdication of Lim, Jr.’s rights over Sps.
attachment is also availed of in order to acquire jurisdiction Lazaro’s properties which the Court, absent any justifiable
over the action by actual or constructive seizure of the property ground therefor, cannot allow.
in those instances where personal or substituted service of
summons on the defendant cannot be effected.27 WHEREFORE, the petition is GRANTED. The July 10, 2008
Decision and the December 18, 2008 Resolution of the Court of
In this relation, while the provisions of Rule 57 are silent on the Appeals in CA-G.R. SP No. 100270 are REVERSED and SET
length of time within which an attachment lien shall continue to ASIDE, and the March 29, 2007 Order of the Regional Trial
subsist after the rendition of a final judgment, jurisprudence Court of Quezon City, Branch 223 is NULLIFIED.
dictates that the said lien continues until the debt is paid, or the Accordingly, the trial court is directed to RESTORE the
sale is had under execution issued on the judgment or until the attachment lien over Transfer Certificates of Title Nos. T-
judgment is satisfied, or the attachment discharged or vacated in 64940, T-64939, and T-86369, in favor of petitioner Alfredo C.
the same manner provided by law.28 Lim, Jr.

Applying these principles, the Court finds that the discharge of SO ORDERED.
the writ of preliminary attachment against the properties of Sps.
Lazaro was improper.

Records indicate that while the parties have entered into a G.R. No. 163692 February 4, 2008
compromise agreement which had already been approved by
the RTC in its January 5, 2007 Amended Decision, the ALLIED BANKING CORPORATION, petitioner,
obligations thereunder have yet to be fully complied with – vs.
particularly, the payment of the total compromise amount of SOUTH PACIFIC SUGAR CORPORATION,
₱2,351,064.80. Hence, given that the foregoing debt remains MARGARITA CHUA SIA, AGOSTO SIA, LIN FAR
unpaid, the attachment of Sps. Lazaro’s properties should have CHUA, GERRY CHUA, SIU DY CHUA, and ANTONIO
continued to subsist. CHUA, respondents.

In Chemphil Export & Import Corporation v. CA,29 the Court D E C I S I O N


pronounced that a writ of attachment is not extinguished by the
execution of a compromise agreement between the parties, viz: QUISUMBING, J.:

Did the compromise agreement between Antonio Garcia and The instant petition assails the Decision1 dated February 3,
the consortium discharge the latter’s attachment lien over the 2004 and the Resolution2 dated May 13, 2004 of the Court of
disputed shares? Appeals in CA-G.R. SP No. 68619. The appellate court had
found no grave abuse of discretion on the part of the Regional
CEIC argues that a writ of attachment is a mere auxiliary Trial Court (RTC) of Makati City, Branch 148, in discharging
remedy which, upon the dismissal of the case, dies a natural the writ of preliminary attachment it previously granted, and
death. Thus, when the consortium entered into a compromise dismissed the petition for certiorari. The motion for
agreement, which resulted in the termination of their case, the reconsideration was denied.
disputed shares were released from garnishment.
The factual antecedents of this case are as follows:
We disagree. To subscribe to CEIC’s contentions would be to
totally disregard the concept and purpose of a preliminary South Pacific Sugar Corporation (South Pacific), on March 23,
attachment. 1999, issued three promissory notes totaling P96,000,0003 to
the petitioner, Allied Banking Corporation (hereafter Allied
xxxx Bank), to secure payment of loans contracted during the same
period. Respondents Margarita Chua Sia, Agosto Sia, Lin Far
The case at bench admits of peculiar character in the sense that Chua, Gerry Chua, Siu Dy Chua, and Antonio Chua
it involves a compromise agreement. Nonetheless, x x x. The (guarantors) executed continuing guaranty/comprehensive
parties to the compromise agreement should not be deprived of surety agreements binding themselves solidarily with the
ProvRem (PreAttachment) Full text 062318 35
corporation. On maturity, South Pacific and its guarantors failed may be granted under Section 1,9 Rule 57 of the 1997 Rules of
to honor their respective covenants. Civil Procedure. It found that "the core of the prayer for the
attachment was the failure of the respondents to pay their
On January 26, 2001, Allied Bank filed a complaint for obligations on maturity date," not fraudulent intent to evade
collection of a sum of money with a prayer for the issuance of a their commitments; and that the "inability to pay one’s creditors
writ of preliminary attachment against respondents. Allied Bank is not necessarily synonymous with fraudulent intent not to
prayed in its complaint (1) that upon its filing, a writ of honor an obligation."10 The appellate court added that Allied
preliminary attachment be issued ex parte against all leviable Bank was aware of the corporation’s financial standing and
properties of the respondents as may be sufficient to satisfy capacity to pay its loans when Allied Bank granted credit
petitioner’s claim; and (2) that the respondents be ordered to facilities to it. The appellate court noted that respondents had
pay petitioner P90,000,000 plus interest and charges, as well as disclosed their financial standing through the Information
attorney’s fees and costs of suit. Memorandum they submitted. The trial court, therefore,
committed no grave error, said the appellate court.
During the ex parte hearing for the issuance of a writ of
preliminary attachment, Allied Bank’s lone witness, Account Having failed to obtain a reversal by its motion for
Officer Marilou T. Go, testified that Allied Bank approved the reconsideration before the appellate court, Allied Bank now
corporation’s application for credit facilities on the latter’s interposes this appeal through a petition for review, raising the
representation that (1) it was in good fiscal condition and had following issues:
positive business projections as stated in a voluminous
Information Memorandum, and that (2) it would use the loan to I.
fund the operations of the sugar refinery. Go further testified
that Allied Bank discovered soon after that these THE HONORABLE COURT OF APPEALS ERRED IN
representations were false; that the loans were allegedly FINDING THAT THERE WAS NO INTENTION ON [THE]
"diverted to illegitimate purposes;" that as of January 2001, the PART OF RESPONDENTS TO DEFRAUD THE
loan amounted to P90 million; that based on a project study by PETITIONER.
a consulting company, Seed Capital Ventures, Inc., South
Pacific was suffering losses and incurring debts in the millions; II.
that there had been no credit investigation to appraise the
corporation’s business operations; and that Allied Bank relied THE HONORABLE COURT OF APPEALS ERRED IN NOT
on the financial statements of the corporation.4 FINDING THAT A COUNTER-BOND WAS NECESSARY
FOR THE DISCHARGE OF THE WRIT OF PRELIMINARY
Thereafter, the trial court granted the attachment and Allied ATTACHMENT.
Bank posted the requisite bond.
III.
The respondents filed a motion to discharge the attachment with
an urgent motion to defer further the implementation of the THE HONORABLE COURT OF APPEALS ERRED IN NOT
writ, grounded upon the arguments that (1) the evidence of FINDING THAT THE COURT A QUO COMMITTED
fraud was insufficient and self-serving; and (2) there was no GRAVE ABUSE OF DISCRETION IN DISCHARGING THE
evidence that South Pacific used the loan for other purposes. WRIT OF PRELIMINARY ATTACHMENT WITHOUT
The respondents pointed out that they have been dealing with AFFORDING THE PETITIONER THE REQUISITE DUE
Allied Bank since 1995, and had paid a total of P210 million PROCESS OF LAW.11
out of a maximum exposure of about P300 million, and that the
P90 million subject of the pending suit constitutes merely the The ultimate issue raised in this petition is whether there was
balance of their loan.5 fraud committed by respondents against petitioner bank such
that a writ of attachment may be issued against respondents.
The trial court granted the respondents’ motion to defer the
implementation of the writ of attachment. Allied Bank opposed Allied Bank contends that respondents were guilty of fraud in
the motion. After hearing, the court granted the motion to contracting for their loan amounting to about P90 million and in
discharge6 and denied the motion for reconsideration.7 performing their obligations under said loan, as sufficiently
testified to by its lone witness. Respondents counter that they
On certiorari, Allied Bank averred that the trial court acted with had no fraudulent intent in such contract for loan nor in the
precipitate haste in deciding the motion to discharge the performance of obligations thereunder.
attachment without its written opposition, and with grave abuse
of discretion in dissolving the writ without requiring the A thorough examination of witness Marilou Go’s testimony,
guarantors to post a counter-bond. Finally, it asserted that the however, reveals that her testimony did not detail how
trial court failed to appreciate evidence of respondents’ fraud. respondents induced or deceived Allied Bank into granting the
loans. She mentioned an Information Memorandum which
The Court of Appeals, however, affirmed the trial court’s order. allegedly misled Allied Bank to grant the loan. She claimed that
It ruled that Allied Bank was not denied its day in court since it promising financial projections in said Memorandum
was allowed to argue its position during the hearing on the guaranteeing South Pacific’s present and future capacity to pay
motion and was given ample opportunity to file its opposition. convinced Allied Bank to approve the loan. Yet, the
However, Allied Bank failed to take advantage of the period Information Memorandum was never presented in evidence.
given to it. Instead of filing its opposition within the time Neither was its existence proved, nor its authorship
allowed by the Court, Allied Bank filed a motion for extension authenticated, much less its contents shown to explain how the
of time by registered mail. Then, it filed its opposition also only information could have enticed, misinformed or deceived Allied
by registered mail notwithstanding that it was forewarned that Bank. The alleged content of the document, which was not
the motion to discharge the attachment would be considered identified nor formally offered in evidence, is technically pure
submitted for resolution with or without the parties’ respective hearsay. It cannot be admitted or considered as the proof of
position papers.8 petitioner’s contention.12

On the issue of discharge of the writ notwithstanding fraud, the Next, the witness of petitioner, Marilou Go, cited a project
Court of Appeals held that the inability of respondents to pay study prepared by a certain consulting firm, Seed Capital
does not amount to a fraudulent intent. The Court of Appeals Ventures, Inc.. According to petitioner, the project study
stated that Allied Bank failed to justify the grant of a writ of suggested that only about 60% of South Pacific’s mill and
attachment. Essentially, it found wanting such evidence as refinery was being utilized to capacity, leading Allied Bank to
would establish fraud as required before a writ of attachment suspect that the loan was being diverted to other purposes. Yet,
ProvRem (PreAttachment) Full text 062318 36
again, the project study was neither presented nor offered in appears that South Pacific had availed of a total of P300 million
evidence, hence testimony on it is just hearsay. in credit accommodations from Allied Bank, P210 million of
which has already been paid – a fact Allied Bank did not deny
The same witness also testified that South Pacific was indebted nor object to.17 Allied Bank even admitted that of the
in millions of pesos to several other banks, but then again, no outstanding loan of P96 million, P6 million had been paid.
documentary evidence or other proof was presented to establish These facts hardly point to the direction of fraud. Allied Bank
such fact. Hence, the witness’ testimony remains claims repeatedly that the fact that P210 million out of P300
uncorroborated. million has been paid does not discount the possibility that
respondents indeed committed fraud in their assumption and/or
In our considered view, without presenting the documents the performance of their obligations. Yet, it never denied such
adverted to by petitioner’s lone witness, Allied Bank’s fact of payment of the P210 million. As the Court of Appeals
allegations of fraud amount to no more than mere conjectures. pointedly held,
Yet there is no showing why Allied Bank, being in the business
of loans, could not obtain and present the necessary documents …The inability to pay one’s creditors is not necessarily
in support of its allegations. Thus, we are in agreement that the synonymous with fraudulent intent not to honor an obligation.
Court of Appeals was correct in finding that the testimony of There must be factual allegations as to how fraud was
Allied Bank’s witness failed to show that respondents’ committed. Fraud may be gleaned from a preconceived plan or
indebtedness was incurred fraudulently. intention not to pay. Unfortunately, this does not appear to be
so in the case at bench. In fact, in its complaint the petitioner
Moreover, even a cursory examination of the bank’s complaint alleged that the private respondents had a total obligation of
will reveal that it cited no factual circumstance to show fraud P96,000,000.00 covered by three (3) separate promissory notes,
on the part of respondents. The complaint only had a general out of which, they paid only P6,000,000.00 leaving an unpaid
statement in the Prayer for the Issuance of a Writ of Preliminary outstanding obligation in the sum of P90,000,000.00. There was
Attachment, reproduced in the attached affidavit of petitioner’s no mention at all that the indebtedness was incurred in
witness Go who stated as follows: consequence of fraud; neither does it show in the testimony of
petitioner’s witness, Marilou T. Go, as summarized by the
xxxx public respondent in the order dated February 20, 2001, that
there exists a preconceived plan or intention not to pay their
4. Defendants committed fraud in contracting the obligations obligation in defraudation of the petitioner….18 (Emphasis
upon which the present action is based and in the performance supplied.)
thereof. Among others, defendants induced plaintiff to grant the
subject loans to defendant corporation by wilfully and We take this opportunity to reiterate that an application for a
deliberately misrepresenting that, one, the proceeds of the loans writ of attachment, being a harsh remedy, is to be construed
would be used as additional working capital and, two, they strictly in favor of the defendant.19 For by it, the reputation of
would be in a financial position to pay, and would most the debtor may be seriously prejudiced. Thus, caution must be
certainly pay, the loan obligations on their maturity dates. In exercised in granting the writ. There must be more compelling
truth, defendants had no intention of honoring their reasons to justify attachment beyond a mere general assertion of
commitments as shown by the fact that upon their receipt of the fraud. This must be so lest we, as Garcia v. Reyes20 puts it, be
proceeds of the loans, they diverted the same to illegitimate "spinning tight webs on gossamer filigrees."21
purposes and then brazenly ignored and resisted plaintiff’s
lawful demands for them to settle their past due loan We need not tarry further to discuss the other issues raised in
obligations;13 the petition for being moot on account of the foregoing
pronouncement.
xxxx
Again, we stress that this Court gives credence to the factual
Such general averment will not suffice to support the issuance findings of the trial court when supported by the evidence and
of the writ of preliminary attachment. It is necessary to recite in gives them more weight still when the same are affirmed by the
what particular manner an applicant for the writ of attachment Court of Appeals.22
was defrauded. In a prayer for a writ of attachment, as already
held by this Court: WHEREFORE, the instant petition is DENIED for lack of
merit. The Decision dated February 3, 2004 and the Resolution
… It is not enough for the complaint to ritualistically cite, as dated May 13, 2004 of the Court of Appeals in CA-G.R. SP No.
here, that the defendants are "guilty of fraud in contracting an 68619 are AFFIRMED. The Order23 dated May 23, 2001 of the
obligation." An order of attachment cannot be issued on a Regional Trial Court of Makati City, Branch 148, discharging
general averment, such as one ceremoniously quoting from a the writ of preliminary attachment in Civil Case No. 01-121 is
pertinent rule. The need for a recitation of factual circumstances UPHELD. No pronouncement as to costs.
that support the application becomes more compelling here
considering that the ground relied upon is "fraud in contracting SO ORDERED.
an obligation." The complaint utterly failed to even give a hint
about what constituted the fraud and how it was perpetrated.
Fraud cannot be presumed.14 (Emphasis supplied.)
G.R. No. 115678 February 23, 2001
Likewise, written contracts are presumed to have been entered
into voluntarily and for a sufficient consideration. Section 1,15 PHILIPPINES BANK OF COMMUNICATIONS,
Rule 131 of the Rules of Court instructs that each party must petitioner,
prove his own affirmative allegations. To repeat, in this vs.
jurisdiction, fraud is never presumed. Moreover, written HON. COURT OF APPEALS and BERNARDINO
contracts such as the documents executed by the parties in the VILLANUEVA, respondents.
present case, are presumed to have been entered into for a
sufficient consideration.16 x ---------------------------------------- x

In this instance, the transaction between the bank and its client G.R. No. 119723 February 23, 2001
appears to have commenced rather regularly and aboveboard.
The parties have been transacting business with each other PHILIPPINE BANK OF COMMUNICATIONS, petitioner,
since 1995. Up until the present case, it appears Allied Bank vs.
had not complained of any wrongdoing by this client. It also
ProvRem (PreAttachment) Full text 062318 37
HON. COURT OF APPEALS and FILIPINAS TEXTILE of private respondents' fiduciary duty as entrustee, constitute
MILLS, INC., respondents. embezzlement or misappropriation which is a valid ground for
the issuance of a writ of preliminary attachment."6
YNARES-SANTIAGO, J.:
We find no merit in the instant petitions.
Before us are consolidated petitions for review both filed by
Philippine Bank of Communications; one against the May 24, To begin with, we are in accord with respondent Court of
1994 Decision of respondent Court of Appeals in CA-G.R. SP Appeals in CA-G.R. SP No. 32863 that the Motion for
No. 328631 and the other against its March 31, 1995 Decision Attachment filed by petitioner and its supporting affidavit did
in CA-G.R. SP No. 32762.2 Both Decisions set aside and not sufficiently establish the grounds relied upon in applying
nullified the August 11, 1993 Order3 of the Regional Trial for the writ of preliminary attachment.
Court of Manila, Branch 7, granting the issuance of a writ of
preliminary attachment in Civil Case No. 91-56711. The Motion for Attachment of petitioner states that –

The case commenced with the filing by petitioner, on April 8, 1. The instant case is based on the failure of defendants as
1991, of a Complaint against private respondent Bernardino entrustee to pay or remit the proceeds of the goods entrusted by
Villanueva, private respondent Filipinas Textile Mills and one plaintiff to defendant as evidenced by the trust receipts
Sochi Villanueva (now deceased) before the Regional Trial (Annexes "B", "C" and "D" of the complaint), nor to return the
Court of Manila. In the said Complaint, petitioner sought the goods entrusted thereto, in violation of their fiduciary duty as
payment of P2,244,926.30 representing the proceeds or value of agent or entrustee;
various textile goods, the purchase of which was covered by
irrevocable letters of credit and trust receipts executed by 2. Under Section 13 of P.D. 115, as amended, violation of the
petitioner with private respondent Filipinas Textile Mills as trust receipt law constitute(s) estafa (fraud and/or deceit)
obligor; which, in turn, were covered by surety agreements punishable under Article 315 par. 1[b] of the Revised Penal
executed by private respondent Bernardino Villanueva and Code;
Sochi Villanueva. In their Answer, private respondents
admitted the existence of the surety agreements and trust 3. On account of the foregoing, there exist(s) valid ground for
receipts but countered that they had already made payments on the issuance of a writ of preliminary attachment under Section 1
the amount demanded and that the interest and other charges of Rule 57 of the Revised Rules of Court particularly under
imposed by petitioner were onerous. sub-paragraphs "b" and "d", i.e. for embezzlement or fraudulent
misapplication or conversion of money (proceeds) or property
On May 31, 1993, petitioner filed a Motion for Attachment,4 (goods entrusted) by an agent (entrustee) in violation of his
contending that violation of the trust receipts law constitutes fiduciary duty as such, and against a party who has been guilty
estafa, thus providing ground for the issuance of a writ of of fraud in contracting or incurring the debt or obligation;
preliminary attachment; specifically under paragraphs "b" and
"d," Section 1, Rule 57 of the Revised Rules of Court. 4. The issuance of a writ of preliminary attachment is likewise
Petitioner further claimed that attachment was necessary since urgently necessary as there exist(s) no sufficient security for the
private respondents were disposing of their properties to its satisfaction of any judgment that may be rendered against the
detriment as a creditor. Finally, petitioner offered to post a bond defendants as the latter appears to have disposed of their
for the issuance of such writ of attachment. properties to the detriment of the creditors like the herein
plaintiff;
The Motion was duly opposed by private respondents and, after
the filing of a Reply thereto by petitioner, the lower court issued 5. Herein plaintiff is willing to post a bond in the amount fixed
its August 11, 1993 Order for the issuance of a writ of by this Honorable Court as a condition to the issuance of a writ
preliminary attachment, conditioned upon the filing of an of preliminary attachment against the properties of the
attachment bond. Following the denial of the Motion for defendants.
Reconsideration filed by private respondent Filipinas Textile
Mills, both private respondents filed separate petitions for Section 1 (b) and (d), Rule 57 of the then controlling Revised
certiorari before respondent Court assailing the order granting Rules of Court, provides, to wit –
the writ of preliminary attachment.1âwphi1.nêt
SECTION 1. Grounds upon which attachment may issue. – A
Both petitions were granted, albeit on different grounds. In CA- plaintiff or any proper party may, at the commencement of the
G.R. SP No. 32762, respondent Court of Appeals ruled that the action or at any time thereafter, have the property of the adverse
lower court was guilty of grave abuse of discretion in not party attached as security for the satisfaction of any judgment
conducting a hearing on the application for a writ of that may be recovered in the following cases:
preliminary attachment and not requiring petitioner to
substantiate its allegations of fraud, embezzlement or x x x xxx xxx
misappropriation. On the other hand, in CA-G.R. SP No.
32863, respondent Court of Appeals found that the grounds (b) In an action for money or property embezzled or
cited by petitioner in its Motion do not provide sufficient basis fraudulently misapplied or converted to his us by a public
for the issuance of a writ of preliminary attachment, they being officer, or an officer of a corporation, or an attorney, factor,
mere general averments. Respondent Court of appeals held that broker, agent or clerk, in the course of his employment as such,
neither embezzlement, misappropriation nor incipient fraud or by any other person in a fiduciary capacity, or for a willful
may be presumed; they must be established in order for a writ violation of duty;
of preliminary attachment to issue.
xxx xxx xxx
Hence, the instant consolidated5 petitions charging that
respondent Court of Appeals erred in – (d) In an action against a party who has been guilty of fraud in
contracting the debt or incurring the obligation upon which the
"1. Holding that there was no sufficient basis for the issuance of action is brought, or in concealing or disposing of the property
the writ of preliminary attachment in spite of the allegations of for the taking, detention or conversion of which the action is
fraud, embezzlement and misappropriation of the proceeds or brought;
goods entrusted to the private respondents;
xxx xxx xxx
2. Disregarding the fact that the failure of FTMI and Villanueva
to remit the proceeds or return the goods entrusted, in violation
ProvRem (PreAttachment) Full text 062318 38
While the Motion refers to the transaction complained of as respondents that out of the total P419,613.96 covered by the
involving trust receipts, the violation of the terms of which is subject trust receipts, the amount of P400,000.00 had already
qualified by law as constituting estafa, it does not follow that a been paid, leaving only P19,613.96 as balance. Hence,
writ of attachment can and should automatically issue. regardless of the arguments regarding penalty and interest, it
Petitioner cannot merely cite Section 1(b) and (d), Rule 57, of can hardly be said that private respondents harbored a
the Revised Rules of Court, as mere reproduction of the rules, preconceived plan or intention not to pay petitioner.
without more, cannot serve as good ground for issuing a writ of
attachment. An order of attachment cannot be issued on a The Court of Appeals was correct, therefore, in its finding in
general averment, such as one ceremoniously quoting from a CA-G.R. SP No. 32863 that neither petitioner's Motion or its
pertinent rule.7 supporting Affidavit provides sufficient basis for the issuance
of the writ of attachment prayed for.
The supporting Affidavit is even less instructive. It merely
states, as follows – We also agree with respondent Court of Appeals in CA-G.R. SP
No. 32762 that the lower court should have conducted a hearing
I, DOMINGO S. AURE, of legal age, married, with address at and required private petitioner to substantiate its allegations of
No. 214-216 Juan Luna Street, Binondo, Manila, after having fraud, embezzlement and misappropriation.
been sworn in accordance with law, do hereby depose and say,
THAT: To reiterate, petitioner's Motion for Attachment fails to meet
the standard set in D.P. Lub Oil Marketing Center, Inc. v.
1. I am the Assistant Manager for Central Collection Units Nicolas,10 in applications for attachment. In the said case, this
Acquired Assets Section of the plaintiff, Philippine Bank of Court cautioned –
Communications, and as such I have caused the preparation of
the above motion for issuance of a writ of preliminary The petitioner's prayer for a writ of preliminary attachment
attachment; hinges on the allegations in paragraph 16 of the complaint and
paragraph 4 of the affidavit of Daniel Pe which are couched in
2. I have read and understood its contents which are true general terms devoid of particulars of time, persons and places
and correct of my own knowledge; to support support such a serious assertion that "defendants are
disposing of their properties in fraud of creditors." There is thus
3. There exist(s) sufficient cause of action against the the necessity of giving to the private respondents an opportunity
defendants in the instant case; to ventilate their side in a hearing, in accordance with due
process, in order to determine the truthfulness of the
4. The instant case is one of those mentioned in Section 1 of allegations. But no hearing was afforded to the private
Rule 57 of the Revised Rules of Court wherein a writ of respondents the writ having been issued ex parte. A writ of
preliminary attachment may be issued against the defendants, attachment can only be granted on concrete and specific
particularly subparagraphs "b" and "d" of said section; grounds and not on general averments merely quoting the
words of the rules.
5. There is no other sufficient security for the claim sought
to be enforced by the instant case and the amount due to herein As was frowned upon in D.P. Lub Oil Marketing Center,
plaintiff or the value of the property sought to be recovered is as Inc.,11 not only was petitioner's application defective for
much as the sum for which the order for attachment is granted, having merely given general averments; what is worse, there
above all legal counterclaims. was no hearing to afford private respondents an opportunity to
ventilate their side, in accordance with due process, in order to
Again, it lacks particulars upon which the court can discern determine the truthfulness of the allegations of petitioner. As
whether or not a writ of attachment should issue. already mentioned, private respondents claimed that substantial
payments were made on the proceeds of the trust receipts sued
Petitioner cannot insist that its allegation that private upon. They also refuted the allegations of fraud, embezzlement
respondents failed to remit the proceeds of the sale of the and misappropriation by averring that private respondent
entrusted goods nor to return the same is sufficient for Filipinas Textile Mills could not have done these as it had
attachment to issue. We note that petitioner anchors its ceased its operations starting in June of 1984 due to workers'
application upon Section 1(d), Rule 57. This particular strike. These are matters which should have been addressed in a
provision was adequately explained in Liberty Insurance preliminary hearing to guide the lower court to a judicious
Corporation v. Court of Appeals,8 as follows – exercise of its discretion regarding the attachment prayed for.
On this score, respondent Court of Appeals was correct in
To sustain an attachment on this ground, it must be shown that setting aside the issued writ of preliminary attachment.
the debtor in contracting the debt or incurring the obligation
intended to defraud the creditor. The fraud must relate to the Time and again, we have held that the rules on the issuance of a
execution of the agreement and must have been the reason writ of attachment must be construed strictly against the
which induced the other party into giving consent which he applicants. This stringency is required because the remedy of
would not have otherwise given. To constitute a ground for attachment is harsh, extraordinary and summary in nature. If all
attachment in Section 1 (d), Rule 57 of the Rules of Court, the requisites for the granting of the writ are not present, then
fraud should be committed upon contracting the obligation sued the court which issues it acts in excess of its jurisdiction.12
upon. A debt is fraudulently contracted if at the time of
contracting it the debtor has a preconceived plan or intention WHEREFORE, for the foregoing reasons, the instant petitions
not to pay, as it is in this case. Fraud is a state of mind and need are DENIED. The decision of the Court of Appeals in CA-G.R.
not be proved by direct evidence but may be inferred from the SP No. 32863 and CA-G.R. SP No. 32762 are AFFIRMED. No
circumstances attendant in each case (Republic v. Gonzales, 13 pronouncement as to costs.1âwphi1.nêt
SCRA 633). (Emphasis ours)
SO ORDERED.
We find an absence of factual allegations as to how the fraud
alleged by petitioner was committed. As correctly held by
respondent Court of Appeals, such fraudulent intent not to
honor the admitted obligation cannot be inferred from the G.R. No. 164510 November 25, 2005
debtor's inability to pay or to comply with the obligations.9 On
the other hand, as stressed, above, fraud may be gleaned from a SPOUSES SANTIAGO and RUFINA TANCHAN,
preconceived plan or intention not to pay. This does not appear petitioners
to be so in the case at bar. In fact, it is alleged by private vs.
ProvRem (PreAttachment) Full text 062318 39
ALLIED BANKING CORPORATION, respondent. In a letter dated April 6, 1998, Foremost offered to cede to
respondent, by way of dacion en pago, the mortgaged real
DECISION properties in full payment of its loan obligations.16

AUSTRIA-MARTINEZ, J.: On August 3, 1998, respondent instituted the extra-judicial


foreclosure of the real estate mortgage to satisfy its claim
By way of Petition for Review under Rule 45 of the Rules of against Foremost in the aggregate "amount of
Court, spouses Santiago and Rufina Tanchan (petitioners) seek Php55,578,826.77, inclusive of interest, other charges and
the modification of the June 15, 2004 Decision1of the Court of attorney's fees, equivalent to 10% of the total amount due as of
Appeals (CA) which affirmed the August 3, 2001 Decision2 May 3, 1998, plus the costs and expenses of foreclosure."17At
and August 8, 2002 Order3 of Branch 137, Regional Trial Court the public auction sale, respondent's bid of only
(RTC), Makati in Civil Case No. 98-2468.4 Php37,745,283.67 for all the mortgaged properties, including
the buildings and improvements thereon,18 was adjudged the
The relevant facts are of record. sole and highest bid.

For value received, Cebu Foremost Construction, Inc. On October 13, 1998, respondent filed with the RTC a
(Foremost), through its Chairman and President Henry Tanchan Complaint for Collection of Sum of Money with Petition for
(Henry) and his spouse, Vice-President and Treasurer Ma. Julie Issuance of Writ of Preliminary Injunction against Foremost,
Ann Tanchan (Ma. Julie Ann) executed and delivered to Allied Spouses Tanchan and herein petitioners (collectively referred to
Banking Corporation (respondent) seven US$ promissory as Foremost, et al.), praying that they be ordered to pay, jointly
notes,5 including Promissory Note No. 0051-97-036966 and severally, the following amounts:19
(Exhibit "G") for US$379,000.00, at 9.50% interest rate per
annum, due on February 9, 1998. Promissory Note

Foremost also issued to respondent several Philippine peso Amount


promissory notes7 covering various loans in the aggregate
amount of Php28,900,000.00, including Promissory Note No. 0051-96-09495
0051-97-03688 (Exhibit "H") for PhpP16,500,000.00, at an
interest rate of 14.5% per annum, due on February 9, 1998.8 US$ 80,000.00 plus interest at the rate of 11.4% per annum
from December 29, 1997 until fully paid and a penalty charge
All the foregoing promissory notes are secured by two on the unpaid interest at the rate of 1% per month reckoned
Continuing Guaranty/ Comprehensive Surety Agreements from December 29, 1997 until fully paid and a penalty charge
(CG/CSA) executed in the personal capacities of spouses Henry on the unpaid principal reckoned from May 28, 1998 until fully
and Ma. Julie Ann (Spouses Tanchan) and Henry's brother, paid.
herein petitioner Santiago Tanchan (Santiago),9for himself and
as attorney-in-fact of his wife and co-petitioner Rufina Tanchan 0051-96-17617
(Rufina) under a Special Power of Attorney, dated April 30,
1993, which grants Santiago authority to: US$110,000.00 plus interest at the rate of 11.4% per annum and
a penalty charge at the rate of 1% per month, all reckoned from
x x x borrow and/or contract debts and obligations involving, December 29, 1997 until fully paid.
affecting or creating a charge or liability on, or which may
involve, affect or create a liability on the Property and/or my 0051-96-19008
interest therein, whether or not such debt/s or obligation/s
contracted or to be contracted will benefit me or the family, and US$250,000.00 plus interest at the rate of 11.4% per annum and
to sign, execute and deliver in my name to or in favor of any a penalty charge at the rate of 1% per month all reckoned from
party, under such terms and conditions as my attorney-in-fact November 30, 1997 until fully paid.
may deem necessary, appropriate or convenient, any and all
documents instruments or contract/s (including without 0051-96-24801
limitations, promissory notes, loan agreements, assignments,
surety or guaranty undertakings, security agreements) US$115,000.00 plus interest at the rate of 11.4% per annum and
involving, affecting or creating a charge or liability on the a penalty charge at the rate of 1% per month all reckoned from
Property."10 December 29, 1997 until fully paid.

The liability of the sureties under both CG/CSAs is limited to 0051-96-00603


Php150,000,000.00.11
US$75,000.00 plus interest at the rate of 11.4% per annum and
Exhibit "G" and all the Philippine peso promissory notes, a penalty charge at the rate of 1% per month all reckoned from
including Exhibit "H", are secured not only by the two December 29, 1997 until fully paid.
CG/CSAs but also by a Real Estate Mortgage executed on
February 14, 1997 by Henry, for himself and as the legal 0051-97-02444
guardian of the minors Henry Paul L. Tanchan and Don Henry
L. Tanchan; his wife Ma. Julie Ann; and Spouses Pablo and US$45,000.00 plus interest at the rate of 11.4% per annum and
Milagros Lim, over real properties registered in their names a penalty charge at the rate of 1% per month all reckoned from
under Transfer Certificates of Title No. 115804, No. 111149, December 29, 1997 until fully paid.
No. 110672 and No. 3815, all located in Cebu City.12
0051-97-03696
In separate final demand letters, both dated May 14, 1998, (Exhibit "G")
respondent sought from Foremost payment of
US$1,054,000.00, as the outstanding principal balance, US$379,000.00 plus interest at the rate of 11.4% per annum
exclusive of interest and charges, of its obligations under the reckoned from January 8, 1998 until fully paid and a penalty
seven US$ promissory notes,and PhP28,900,000.00 under its charge at the rate of 1% per month from February 9, 1998 until
Philippine peso promissory notes.13 Separate demands for fully paid.
payment were also made upon Spouses Tanchan14 and the
petitioners15 as sureties. 0051-97-03688
(Exhibit "H")
ProvRem (PreAttachment) Full text 062318 40
PhpP7,466,795.67 plus interest at the rate of 20% per annum The issuance of the writ of preliminary attachment was likewise
and a penalty charge at the rate of 3% per month from August objected to by Foremost on the ground that it contracted the
10, 1998. (Emphasis supplied) loans in good faith but was prevented from paying the same
only because of the economic crisis that beset the country. On
Respondent also prayed for payment of attorney's fees the part of Spouses Tanchan and herein petitioners, they claim
equivalent to 25% of the total amount due, expenses and costs that they had no personal participation or influence in the loan
of suit, transactions except to ensure its payment; hence, they could not
have practiced fraud upon respondent because they did not
In support of its application for issuance of a writ of personally contract the loans with it.27 Thus, each sought
preliminary attachment, respondent submitted an Affidavit payment of Php100,000,000.00 as moral damages for the
executed by Elmer Elumbaring (Elumbaring), Branch emotional and mental vexation visited upon them by respondent
Cashier/Loans Supervisor, Cebu, Jakosalem Branch, stating in causing the unwarranted preliminary attachment of their
that: properties.28

4. Defendants [Foremost, et al.] committed fraud in contracting At the pre-trial, respondent submitted an Amended Pre-trial
the obligations upon which the action is brought in that: a) to Brief where it admitted that Foremost's Exhibit "G" and Exhibit
induce plaintiff [respondent] to grant the credit accommodation "H" were among those secured by the real estate
they represented to the plaintiff [respondent] that they were in a mortgage29that it earlierforeclosed, but the proceeds of the
financial position to pay their obligations on maturity date in foreclosure sale satisfied only part of the amounts due on said
consideration of which plaintiff [respondent] granted the credit promissory notes and left a deficiency which is now the subject
accommodations. It turned out, however, that they were not in of their complaint.30
such financial position when they failed to pay their obligations
on maturity date; b) they falsely represented that the proceeds The RTC issued a Pre-trial Order which limited the issues to be
of the Loan would be used as additional working capital in resolved to the following:
consideration of which, plaintiff [respondent] granted the loans
but when defendants [Foremost, et al.] received the said 1. Does the [respondent] have a cause of action with respect to
proceeds, they diverted the same to a purpose other than that for the promissory notes marked as [Exhibits] G31 and H32?
which they were intended as shown by the fact that defendants
[Foremost, et al.] were not able to fully pay the obligations at its
2. Is [petitioner] Rufina C. Tanchan liable on the basis of the
maturity date; Continuing Guaranty/Comprehensive Surety Agreements
because of her authority from [sic] Santiago Tanchan, Jr. was
5. There is no security whatsoever for the claim plaintiff limited to borrow money only for the benefit of the family?
[respondent] seeks to enforce by this action, and only by the
issuance of a writ of preliminary attachment can its interest be 3. Is the unilateral increase of the interest rate of [respondent]
protected.20 valid?

The application for writ of preliminary attachment was granted 4. What is the amount and nature of the damages that should be
by the RTC in an Order dated November 3, 1998, to wit: adjudged against the losing party in favor of the prevailing
party?33
WHEREFORE, finding plaintiff's [respondent's] application for
the issuance of a writ of preliminary attachment sufficient in As directed by the RTC in its Pre-trial Order, both parties
form and substance, and the ground set forth therein being presented affidavits in lieu of direct examination of their
among those allowed by the Rules (Rule 57, Sec. 1 [e]), let a witnesses.
Writ of Preliminary Attachment issue against the properties of
defendants Cebu Foremost Construction, Incorporated, For respondent, Fresnido Bandilla (Bandilla), Manager, Legal
Santiago Tanchan, Jr., Rufina C. Tanchan, Henry Tanchan and Department, testified that the obligations of Foremost which
Ma. Julie Ann T. Tanchan, upon plaintiff's [respondent's] filing were secured by the real estate mortgage had amounted to
of a bond in the amount of FIFTY-FOUR MILLION Php61,155,339.36 as of the date of the foreclosure sale, and that
(P54,000,000.00) PESOS, conditioned to answer for whatever with respondent's bid of only Php37,745,283.67 being adjudged
damage that the said defendants [Foremost, et al.] may suffer by the lone and highest bid, there remained an unpaid balance of
reason of the issuance of said writ should the Court finally Php23,415,115.69.34 Elumbaring corroborated Bandilla's
adjudge that plaintiff [respondent] was not entitled thereto. testimony.35

SO ORDERED.21 On the other hand, Henry averred that even in the wake of the
Asian financial crisis, Foremost struggled to meet interest
Thus, armed with a writ of attachment,22 the sheriff levied payments on its loan obligations with respondent, but the point
several parcels of land registered in the name of Foremost, et came when there were no more construction jobs to be had, and
al.23 Foremost was constrained to default on its obligations.36

In their Amended Answer with Counterclaim,24 Foremost, et Santiago testified that he and his spouse could not have
al. acknowledged the authenticity and due execution of the defrauded respondent because they did not directly contract the
promissory notes but denied liability for the amounts alleged in loans with it but merely acted as sureties. Thus, the issuance of
the Complaint, the computation of which they dispute due to the writ of attachment against their properties was arbitrary, and
the arbitrariness of the imposition of new interest rates. They brought upon them social humiliation and emotional torment.37
impugned the cause of action of respondent to collect the
amount due under Exhibit "G" and Exhibit "H" in view of the After the parties submitted their respective memoranda,38the
bank's prior extra-judicial foreclosure of the securities thereon, RTC rendered its August 31, 2001 Decision, the dispositive
which recourse bars collection of the amounts due on the same portion of which reads:
promissory notes.25
WHEREFORE, judgment is hereby rendered ordering
Foremost, et al. questioned the inclusion of Rufina as a party- defendants Cebu Foremost Construction, Inc., Santiago
defendant even when she was not bound by the CG/CSAs Tanchan, Jr., Rufina C. Tanchan, Henry Tanchan and Ma. Julie
which her husband Santiago signed in excess of his authority Ann Tanchan, solidarily, [to] pay plaintiff Allied Banking
under the special power of attorney to contract loans for the Corporation the following amounts: (1) US $80,000.00, plus
family but not to guarantee loans obtained by third persons.26 8.75 % interest per annum from 7 June 1996 to 6 May 1997,
9.5% interest per annum from 7 May 1997 until fully paid, and
ProvRem (PreAttachment) Full text 062318 41
1% penalty per month on the amount due from maturity date
and until fully paid; (2) US $110,00.00, plus 8.75% interest per Only petitioners took the present recourse to raise the following
annum from 24 September to 29 May 1997, 9.5% interest per issues:
annum from 30 May 1997 until fully paid, and 1% penalty per
month on the amount due from maturity date until fully paid; I. Whether or not the petitioners as mere sureties of the loans
(3) US $570,000.00, plus 8.75% interest per annum from 8 obtained by Cebu Foremost Construction, Inc. were guilty of
October 1996 to 29 May 1997, 9.5% interest per annum from fraud in incurring the obligations so that a writ of preliminary
30 May 1997 until fully paid, and 1% penalty per month on the attachment may be issued against them?
amount due from maturity date until fully paid; (4) US
$115,000.00 plus 9.5% interest per month from 12 December II. Whether or not the respondent may claim for deficiency
1996 until fully paid, and 1% penalty per month on the amount judgment on its seventh and eight causes of action, not having
due from maturity date until fully paid; (5) US $75,000.00, plus alleged in its complaint that said loans were secured by a real
9.5% interest per annum from 7 January 1997 until fully paid, estate mortgage and after the foreclosure there was a deficiency
and 1% penalty per month on the amount due from maturity as in fact in its complaint, the respondent sought full recovery
date until fully paid; (7) US $379,000.00, plus 9.5% interest per of the promissory notes subject of its seventh and eighth cause
annum from 12 February 1997 to 8 December 1997, 11.4% of action?
interest per annum from 9 December 1997 until fully paid, and
1% penalty per month on the amount due from maturity date III. Whether or not the lower court and the Court of Appeals
until fully paid; (8) P7,582,945.85, plus 28.5% interest per erred in not awarding petitioners damages for the wrongful
annum, and 3% penalty per month, from the foreclosure sale on issuance of a writ of preliminary attachment against them?45
10 August 1998 until fully paid; (9) attorney's fees equivalent to
10% of the amount due plaintiff. However, the liability of Being interrelated, the first and third issues will be resolved
defendants' Santiago Tanchan, Jr., Rufina C. Tanchan, Henry jointly.
Tanchan and Ma. Julie Ann T. Tanchan is limited to
P150,00,000.00 only. The issues involve the validity of the writ of preliminary
attachment as against the properties of petitioners only, but not
Defendants' counterclaims are dismissed for lack of sufficient as against the properties of Foremost and Spouses Tanchan,
merit. neither of whom appealed before the Court. The discussion that
follows, therefore, shall pertain only to the effect of the writ on
SO ORDERED.39 petitioners.

Foremost, et al. filed a Motion for Partial Reconsideration of One of the grounds cited by the CA in refusing to discharge the
Decision on the ground that respondent failed to state a cause of writ of attachment is that "it is now too late for [petitioners] to
action for the payment of any deficiency account under Exhibit question the validity of the writ" because they waited three long
"G" and Exhibit "H". Its Complaint does not contain any years to have it lifted or discharged.46
allegation regarding a deficiency account; nor even an allusion
to the foreclosure sale conducted in partial satisfaction of said Under Section 13, Rule 57 of the Rules of Court, a party whose
promissory notes. Although in its Amended Pre-trial Brief, property has been ordered attached may file a motion "with the
respondent mentioned that a deficiency account remained after court in which the action is pending" for the discharge of the
the foreclosure of the real estate mortgage, such statement did attachment on the ground that it has been improperly issued or
not have the effect of amending the Complaint itself. Neither enforced. In addition, said party may file, under Section 20,
did the testimonies of Bandilla and Elumbaring about a Rule 57, a claim for damages on account of improper
deficiency account take the place of a specific allegation of attachment within the following periods:
such cause of action in the Complaint. Thus, in the absence of
an allegation in the Complaint of a cause of action for the Sec. 20. Claim for damages on account of improper, irregular or
payment of a deficiency account, the RTC had no factual or excessive attachment. - An application for damages on account
legal basis to grant such claim.40 of improper, irregular or excessive attachment must be filed
before the trial or before appeal is perfected or before the
Spouses Tanchan and herein petitioners also filed a Motion to judgment becomes executory, with due notice to the attaching
Lift the Writ of Preliminary Attachment.41 obligee or his surety or sureties, setting forth the facts showing
his right to damages and the amount thereof. Such damages
The RTC denied the Motion to Lift the Writ of Attachment in may be awarded only after proper hearing and shall be included
an Order42 dated September 25, 2001, and the Motion for in the judgment on the main case.
Partial Reconsideration, in an Order43dated August 8, 2002.
If the judgment of the appellate court be favorable to the party
Foremost, et al. appealedto the CA under the following against whom the attachment was issued, he must claim
assignment of errors: damages sustained during the pendency of the appeal by filing
an application in the appellate court with notice to the party in
1. The lower court erred in not holding that having opted to whose favor the attachment was issued or his surety or sureties,
extra-judicially foreclose the real estate mortgage which was before the judgment of the appellate court becomes executory.
executed to secure the promissory notes marked as Exhibits "G" The appellate court may allow the application to be heard and
and "H", the [respondent] is barred from filing an action for decided by the trial court.47 (Emphasis supplied)
collection of the same;
Records reveal that the RTC issued the writ of preliminary
2. The lower court erred in not holding that Rufina Tanchan did attachment on November 3, 1998,48 and as early as March 23,
not authorize her husband, Santiago J. Tanchan, Jr. to sign the 1999, in their Amended Answer with Counterclaim, petitioners
Continuing Guaranty/ Comprehensive Surety Agreement already sought the discharge of the writ.49 Moreover, after the
marked as Exhibit "I"; and RTC rendered its Decision on August 3, 2001 but before appeal
therefrom was perfected, petitioners filed on August 23, 2001 a
3. The lower court erred in not lifting the writ of preliminary Motion to Lift the Writ of Preliminary Attachment, reiterating
attachment and granting the claim for damages of the individual their objection to the writ and seeking payment of damages for
defendants by virtue of the wrongful issuance of the writ of its wrongful issuance.50
preliminary attachment.44
Clearly, petitioners' opposition to the writ was timely.
The CA dismissed the appeal in the June 15, 2004 Decision
assailed herein.
ProvRem (PreAttachment) Full text 062318 42
The question now is whether petitioner has a valid reason to proceeds of the loans, they diverted the same to illegitimate
have the writ discharged and to claim damages. purposes and then brazenly ignored and resisted plaintiff's
lawful demands for them to settle their past due loan obligations
It should be borne in mind that the questioned writ of
preliminary attachment was issued by the RTC under Section x x x x
1(d), Rule 57 of the Rules of Court, to wit -
Such general averment will not suffice to support the issuance
Sec. 1. Grounds upon which attachment may issue. - A plaintiff of the writ of preliminary attachment. It is necessary to recite in
or any proper party may, at the commencement of the action or what particular manner an applicant for the writ of attachment
at any time thereafter, have the property of the adverse party was defrauded x x x.
attached as security for the satisfaction of any judgment that
may be recovered in the following cases: Likewise, written contracts are presumed to have been entered
into voluntarily and for a sufficient consideration. Section 1,
xxxx Rule 131 of the Rules of Court instructs that each party must
prove his own affirmative allegations. To repeat, in this
(d) In an action against a party who has been guilty of a fraud in jurisdiction, fraud is never presumed. Moreover, written
contracting the debt or incurring the obligation upon which the contracts such as the documents executed by the parties in the
action is brought, or in concealing or disposing of the property present case, are presumed to have been entered into for a
for the taking, detention or conversion of which the action is sufficient consideration. (Citations omitted)
brought;
In the aforecited case -- as in the present case -- the bank
x x x x. presented the testimony of its account officer who processed the
loan application, but the Court discarded her testimony for it
and on the basis solely of respondent's allegations in its did not detail how the corporation induced or deceived the bank
Complaint "that defendants [Foremost, et al.] failed to pay their into granting the loans.56
obligations on maturity dates, with the amount of
US$1,054,000.00 and Php7,466795.69 remaining unpaid; that Also apropos is Ng Wee v. Tankiansee57 where the appellate
defendants are disposing/concealing their properties with intent court was questioned for discharging a writ of preliminary
to defraud the plaintiff and/or are guilty of fraud in the attachment to the extent that it affected the properties of
performance of their obligations; and that there is no security respondent Tankiansee, a corporate officer of Wincorp, both
whatsoever for the claim sought to be enforced."51 defendants in the complaint for damages which petitioner Ng
Wee had filed with the trial court. In holding that the appellate
Petitioners argue that the foregoing allegations are not sufficient court correctly spared respondent Tankiansee from the writ of
to justify issuance of the writ, especially in the absence of preliminary attachment, the Court cited the following basis:
findings that they, as sureties, participated in specific fraudulent
acts in the execution and performance of the loan agreements In the instant case, petitioner's October 12, 2000 Affidavit is
with respondent. 52 bereft of any factual statement that respondent committed a
fraud. The affidavit narrated only the alleged fraudulent
In refusing to lift the writ, the RTC held that the lack of a transaction between Wincorp and Virata and/or Power Merge,
specific factual finding of fraud in its decision is not among the which, by the way, explains why this Court, in G.R. No.
grounds provided under Sections 12 and 13, Rule 57 of the 162928, affirmed the writ of attachment issued against the
Rules of Court for the discharge of the writ.53 The CA agreed latter. As to the participation of respondent in the said
for the reason that the RTC's affirmative action on the transaction, the affidavit merely states that respondent, an
complaint filed by respondent signifies its agreement with the officer and director of Wincorp, connived with the other
allegations found therein that Foremost, et al., including herein defendants in the civil case to defraud petitioner of his money
petitioners, committed fraudulent acts in procuring loans from placements. No other factual averment or circumstance details
respondent.54 how respondent committed a fraud or how he connived with the
other defendants to commit a fraud in the transaction sued
Both courts are in error. upon. In other words, petitioner has not shown any specific act
or deed to support the allegation that respondent is guilty of
The present case fits perfectly into the mold of Allied Banking fraud.
Corporation v. South Pacific Sugar Corporation,55where a writ
of preliminary attachment issued in favor of Allied Banking The affidavit, being the foundation of the writ, must contain
Corporation was discharged by the lower courts for lack of such particulars as to how the fraud imputed to respondent was
evidence of fraud. In sustaining the discharge of the writ, the committed for the court to decide whether or not to issue the
Court held: writ. Absent any statement of other factual circumstances to
show that respondent, at the time of contracting the obligation,
Moreover, even a cursory examination of the bank's complaint had a preconceived plan or intention not to pay, or without any
will reveal that it cited no factual circumstance to show fraud showing of how respondent committed the alleged fraud, the
on the part of respondents. The complaint only had a general general averment in the affidavit that respondent is an officer
statement in the Prayer for the Issuance of a Writ of Preliminary and director of Wincorp who allegedly connived with the other
Attachment, reproduced in the attached affidavit of petitioner's defendants to commit a fraud, is insufficient to support the
witness Go who stated as follows: issuance of a writ of preliminary attachment x x x. Verily, the
mere fact that respondent is an officer and director of the
xxxx company does not necessarily give rise to the inference that he
committed a fraud or that he connived with the other defendants
4. Defendants committed fraud in contracting the obligations to commit a fraud. While under certain circumstances, courts
upon which the present action is based and in the performance may treat a corporation as a mere aggroupment of persons, to
thereof. Among others, defendants induced plaintiff to grant the whom liability will directly attach, this is only done when the
subject loans to defendant corporation by willfully and wrongdoing has been clearly and convincingly established.
deliberately misrepresenting that, one, the proceeds of the loans (Emphasis supplied)
would be used as additional working capital and, two, they
would be in a financial position to pay, and would most Indeed, a writ of preliminary attachment is too harsh a
certainly pay, the loan obligations on their maturity dates. In provisional remedy to
truth, defendants had no intention of honoring their
commitments as shown by the fact that upon their receipt of the
ProvRem (PreAttachment) Full text 062318 43
be issued based on mere abstractions of fraud.58 Rather, the respondent acted with malice in causing the wrongful issuance
rules require that for the writ to issue, there must be a recitation of the writ.
of clear and concrete factual circumstances manifesting that the
debtor practiced fraud upon the creditor at the time of the The second issue involves that portion of the August 3, 2001
execution of their agreement in that said debtor had a pre- RTC Decision awarding respondent "(7) US $379,000.00, plus
conceived plan or intention not to pay the creditor.59Being a 9.5% interest per annum from 12 February 1997 to 8 December
state of mind, fraud cannot be merely inferred from a bare 1997, 11.4% interest per annum from 9 December 1997 until
allegation of non-payment of debt or non-performance of fully paid, and 1% penalty per month on the amount due from
obligation.60 maturity date until fully paid" under Promissory Note No.
0051-97-03696, and "(8) P7,582,945.85, plus 28.5% interest per
As shown in Ng Wee, the requirement becomes all the more annum, and 3% penalty per month, from the foreclosure sale on
stringent when the application for preliminary attachment is 10 August 1998 until fully paid" under Promissory Note No.
directed against a defendant officer of a defendant corporation, 0051-97-03688.
for it will not be inferred from the affiliation of one to the other
that the officer participated in or facilitated in any fraudulent Petitioners argue that respondent is barred from claiming any
practice attributed to the corporation. There must be evidence amount under the Promissory Notes, Exhibits "G" and "H",
clear and convincing that the officer committed a fraud or because it had already elected to foreclose on the mortgage
connived with the corporation to commit a fraud; only then may security, and it failed to allege in its pleadings that a deficiency
the properties of said officer, along with those of the remained after the public auction sale of the securities and that
corporation, be held under a writ of preliminary attachment. what it is seeking is the payment of such deficiency.67

There is every reason to extend the foregoing rule, by analogy, There is no question that a mortgage creditor has a single cause
to a mere surety of the defendant. A surety's involvement is of action against a mortgagor debtor, which is to recover the
marginal to the principal agreement between the defendant and debt; but it has the option of either filing a personal action for
the plaintiff; hence, in order for the surety to be subject to a collection of sum of money or instituting a real action to
proceeding for issuance of a writ of preliminary attachment, it foreclose on the mortgage security.68An election of the first
must be shown that said surety participated in or facilitated the bars recourse to the second; otherwise, there would be
fraudulent practice of the defendant, such as by offering a multiplicity of suits in which the debtor would be tossed from
security solely to induce the plaintiff to enter into the agreement one venue to another, depending on the location of the
with the defendant. mortgaged properties and the residence of the parties.69On the
other hand, a creditor who elects to foreclose on the mortgage
There is neither allegation nor innuendo in the Complaint of may yet file an independent civil action for recovery of
respondent or the Affidavit of Elumbaring that petitioners as whatever deficiency may remain in the outstanding obligation
sureties or officers of Foremost participated in or facilitated the of the debtor, after deducting the price obtained in the sale of
commission of fraud by Foremost, et al. against respondent. In the mortgaged properties at public auction.70 The complaint,
fact, there is no mention of petitioners, much less a recital of though, must specifically allege that what is being sought is the
their role or influence in the execution of the loan agreements. recovery of the deficiency,71 or that in the pre-trial, such claim
The RTC cited an allegation that petitioners are be raised as an issue.72
disposing/concealing their properties with intent to defraud
respondent, but there is no hint of such scheme in the five Contrary to petitioners' argument, it is clear from the allegations
paragraphs of the Complaint61 or in the four corners of the in the Complaint that what respondent sought was the payment
Affidavit of Elumbaring.62 All that is alleged is that Foremost of the deficiency amount under the subject promissory notes. In
obtained loans from respondent but failed to pay the same, but particular, while the Promissory Note, Exhibit "H", is for the
as the Court has repeatedly held, no fraud can be inferred from amount of Php16,500,000.00, what respondent sought to
a mere failure to pay a loan.63 recover was only Php7,582,945.85, consistent with the fact that
part of said promissory note has been satisfied from the
In fine, there was no factual basis for the issuance of a writ of proceeds of the extra-judicial foreclosure. While the exact
preliminary attachment against the properties of petitioners. The phrase "deficiency account" is not employed in the Complaint,
immediate dissolution of the writ is called for. the intention of respondent to recover the same is borne out by
its allegations.
In so ruling, however, the Court does not go so far as to grant
petitioners' claim for moral damages. A wrongful attachment More importantly, in the Pre-trial Order issued by the RTC, the
may give rise to liability for moral damages but evidence must right of respondent to recover the deficiency account under the
be adduced not only of the torment and humiliation brought subject promissory notes was raised as a specific issue.
upon the defendant by the attaching party but also of the latter's
bad faith or malice in causing the wrongful attachment,64 such WHEREFORE, the petition is PARTLY GRANTED. The June
as evidence that the latter deliberately made false statements in 15, 2004 Decisionof the Court of Appeals is MODIFIED to the
its application for attachment.65Absent such evidence of effect that the November 3, 1998 Writ of Preliminary
malice, the attaching party cannot be held liable for moral Attachment is LIFTED and DISSOLVED insofar as it affects
damages.66 the properties of petitioners Spouses Santiago and Rufina
Tanchan.
In the present case, petitioners cite the allegations made by
respondent in its application for attachment as evidence of bad No costs.
faith. However, the allegations in question contain nothing but
the stark truth that Foremost obtained loans and that it failed to SO ORDERED.
pay. The Court fails to see any malice in such bare allegations
as would make respondent liable to petitioners for moral
damages.
G.R. No. 167741 July 12, 2007
To recapitulate, the Court partly dissolves the writ of
preliminary attachment for having wrongfully issued against the REPUBLIC OF THE PHILIPPINES, Petitioner,
properties of petitioners who were not shown to have vs.
committed fraud in the execution of the loan agreements MAJ. GEN. CARLOS FLORES GARCIA, CLARITA
between Foremost and respondent, but declines to award moral DEPAKAKIBO GARCIA, IAN CARL DEPAKAKIBO
damages to petitioners in the absence of evidence that GARCIA, JUAN PAULO DEPAKAKIBO GARCIA,
ProvRem (PreAttachment) Full text 062318 44
TIMOTHY DEPAKAKIBO GARCIA and THE the court shall finally adjudge that the applicant was not entitled
SANDIGANBAYAN (FOURTH DIVISION), Respondents. thereto. (emphasis supplied)

DECISION Under these provisions, before a writ of attachment may issue, a


bond must first be filed to answer for all costs which may be
CORONA, J.: adjudged to the adverse party and for the damages he may
sustain by reason of the attachment. However, this rule does not
This petition for certiorari1 assails the January 14, 2005 and cover the State. In Tolentino,7 this Court declared that the State
March 2, 2005 resolutions2 of the Fourth Division of the as represented by the government is exempt from filing an
Sandiganbayan in Civil Case No. 0193 entitled Republic of the attachment bond on the theory that it is always solvent.
Philippines v. Maj. Gen. Carlos Flores Garcia, Clarita
Depakakibo Garcia, Ian Carl Depakakibo Garcia, Juan Paulo 2. Section 427 of the Code of Civil Procedure provides that
Depakakibo Garcia and Timothy Mark Depakakibo Garcia. before the issuance of a writ of attachment, the applicant
therefor or any person in his name, should file a bond in favor
Civil Case No. 0193 was a petition for forfeiture of unlawfully of the defendant for an amount not less than ₱400 nor more
acquired properties, with a verified urgent ex-parte application than the amount of the claim, answerable for damages in case it
for the issuance of a writ of preliminary attachment, filed by the is shown that the attachment was obtained illegally or without
Republic of the Philippines against Maj. Gen. Carlos F. Garcia, sufficient cause; but in the case at bar the one who applied for
his wife3 and children4 in the Sandiganbayan on October 27, and obtained the attachment is the Commonwealth of the
2004. In praying for the issuance of a writ of preliminary Philippines, as plaintiff, and under the theory that the State is
attachment, the Republic maintained that, as a sovereign always solvent it was not bound to post the required bond and
political entity, it was exempt from filing the required the respondent judge did not exceed his jurisdiction in
attachment bond. exempting it from such requirement. x x x8 (emphasis supplied)

On October 29, 2004, the Sandiganbayan issued a resolution In other words, the issuance of a writ of preliminary attachment
ordering the issuance of a writ of preliminary attachment is conditioned on the filing of a bond unless the applicant is the
against the properties of the Garcias upon the filing by the State. Where the State is the applicant, the filing of the
Republic of a ₱1 million attachment bond.5 On November 2, attachment bond is excused.9
2004, the Republic posted the required attachment bond to
avoid any delay in the issuance of the writ as well as to The attachment bond is contingent on and answerable for all
promptly protect and secure its claim. costs which may be adjudged to the adverse party and all
damages which he may sustain by reason of the attachment
On December 7, 2004, the Republic filed a motion for partial should the court finally rule that the applicant is not entitled to
reconsideration of the October 29, 2004 resolution claiming that the writ of attachment. Thus, it is a security for the payment of
it was exempt from filing an attachment bond and praying for the costs and damages to which the adverse party may be
the release thereof. entitled in case there is a subsequent finding that the applicant
is not entitled to the writ. The Republic of the Philippines need
In a resolution dated January 14, 2005, the Sandiganbayan ruled not give this security as it is presumed to be always solvent and
that there was nothing in the Rules of Court that exempted the able to meet its obligations.
Republic from filing an attachment bond. It reexamined
Tolentino v. Carlos6 which was invoked by the Republic to The Sandiganbayan thus erred when it disregarded the
justify its claimed exemption. That case was decided under the foregoing presumption and instead ruled that the Republic
old Code of Civil Procedure enacted more than a century ago. should file an attachment bond. The error was not simply an
error of judgment but grave abuse of discretion.
The Sandiganbayan denied the Republic’s motion.
Reconsideration was also denied in a resolution dated March 2, There is grave abuse of discretion when an act is done contrary
2005. to the Constitution, the law or jurisprudence.10 Here, the
Sandiganbayan’s January 14, 2005 resolution was clearly
As already stated, these two resolutions (January 14, 2005 and contrary to Tolentino.
March 2, 2005) are the subject of the present petition.
Worse, the Sandiganbayan transgressed the Constitution and
Did the Sandiganbayan commit grave abuse of discretion when arrogated upon itself a power that it did not by law possess. All
it rejected the Republic’s claim of exemption from the filing of courts must take their bearings from the decisions and rulings of
an attachment bond? Yes. this Court. Tolentino has not been superseded or reversed.
Thus, it is existing jurisprudence and continues to form an
Sections 3 and 4, Rule 57 of the Rules of Court provide: important part of our legal system.11 Surprisingly, the
Sandiganbayan declared that Tolentino "need(ed) to be
Sec. 3. Affidavit and bond required. – An order of attachment carefully reexamined in the light of the changes that the rule on
shall be granted only when it appears by the affidavit of the attachment ha(d) undergone through the years."12 According to
applicant, or of some other person who personally knows the the court a quo:
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 [Tolentino] was decided by the Supreme Court employing the
sufficient security for the claim sought to be enforced by the old Code of Civil Procedure (Act No. 190) which was enacted
action, and that the amount due to applicant, or the value of the by the Philippine Commission on August 7, 1901 or more than
property the possession of which he is entitled to recover, is as a century ago.
much as the sum for which the order is granted above all legal
counterclaims. The affidavit, and the bond required by the next That was then, this is now. The provisions of the old Code of
succeeding section, must be duly filed with the court before the Civil Procedure governing attachment have been substantially
order issues. modified in the subsequent Rules of Court. In fact, Rule 57 of
the present 1997 Rules of Civil Procedure is an expanded
Sec. 4. Condition of applicant’s bond. – The party applying for modification of the provisions of the old Code of Civil
the order must thereafter give a bond executed to the adverse Procedure governing attachment. Unlike the old Code of Civil
party in the amount fixed by the court in its order granting the Procedure, the present 1997 Rules of Civil Procedure is
issuance of the writ, conditioned that the latter will pay all the noticeably explicit in its requirement that the party applying for
costs which may be adjudged to the adverse party and all an order of attachment should file a bond.
damages which he may sustain by reason of the attachment, if
ProvRem (PreAttachment) Full text 062318 45
On this, Article VIII, Section 4(3) of the Constitution provides: Sec. 3. Affidavit and bond required. – An order of attachment
shall be granted only when it appears by the affidavit of the
(3) Cases or matters heard by a division shall be decided or applicant, or of some other person who personally knows the
resolved with the concurrence of majority of the Members who facts, that a sufficient cause of action exists, that the case is one
actually took part in the deliberations on the issues in the case of those mentioned in section 1 hereof, that there is no other
and voted thereon, and in no case without the concurrence of at sufficient security for the claim sought to be enforced by the
least three of such Members. When the required number is not action, and that the amount due to applicant, or the value of the
obtained, the case shall be decided en banc; Provided, that no property the possession of which he is entitled to recover, is as
doctrine or principle of law laid down by the court in a decision much as the sum for which the order is granted above all legal
rendered en banc or in division may be modified or reversed counterclaims. The affidavit, and the bond required by the next
except by the court sitting en banc. (emphasis supplied) succeeding section, must be duly filed with the clerk or judge of
the court before the order issues. (emphasis supplied)
The Constitution mandates that only this Court sitting en banc
may modify or reverse a doctrine or principle of law laid down Sec. 4. Condition of applicant’s bond. – The party applying for
by the Court in a decision rendered en banc or in division. Any the order must thereafter give a bond executed to the adverse
court, the Sandiganbayan included, which renders a decision in party in an amount to be fixed by the judge, not exceeding the
violation of this constitutional precept exceeds its jurisdiction. applicant’s claim, conditioned that the latter will pay all the
costs which may be adjudged to the adverse party and all
Therefore, the Sandiganbayan could not have validly damages which he may sustain by reason of the attachment, if
"reexamined," much less reversed, Tolentino. By doing the court shall finally adjudge that the applicant was not entitled
something it could not validly do, the Sandiganbayan acted thereto.
ultra vires and committed grave abuse of discretion.
Clearly, the filing of an attachment bond before the issuance of
The fact was, the revisions of the Rules of Court on attachment, a writ of preliminary attachment was expressly required under
particularly those pertaining to the filing of an attachment bond, the relevant provisions of both the 1940 and 1964 Rules of
did not quash Tolentino. Court.

Tolentino applied Sec. 247 of Act No. 190 which provided: Commentaries on Sections 3 and 4 of the 1964 Rules of Court
uniformly cited Tolentino. They stated that the government is
Sec. 247. Obligation for damages in case of attachment. – exempt from filing an attachment bond14 and that the State
Before the order is made, the party applying for it, or some need not file an attachment bond.15
person on his behalf, must execute to the defendant an
obligation in an amount to be fixed by the judge, or justice of Where the Republic of the Philippines as a party to an action
the peace, and with sufficient surety to be approved by him, asks for a writ of attachment against the properties of a
which obligation shall be for a sum not less than two hundred defendant, it need not furnish a bond. This is so because the
dollars, and not exceeding the amount claimed by the plaintiff, State is presumed to be solvent.16
that the plaintiff will pay all the costs which may be adjudged to
the defendant, and all damages which he may sustain by reason When plaintiff is the Republic of the Philippines, it need not file
of the attachment, if the same shall finally be adjudged to have a bond when it applies for a preliminary attachment. This is on
been wrongful or without sufficient cause. (emphasis supplied) the premise that the State is solvent.17

Contrary to the pronouncement of the Sandiganbayan, Section And then again, we note the significant fact that Sections 3 and
247 of Act No. 190 explicitly required the execution of an 4, Rule 57 of the 1964 Rules of Court were substantially
attachment bond before a writ of preliminary attachment could incorporated as Sections 3 and 4, Rule 57 of the present (1997)
be issued. Rules of Court.18 There is thus no reason why the Republic
should be made to file an attachment bond.1avvphi1
The relevant provisions of Act No. 190 on attachment were
later substantially adopted as Sections 313 and 4, Rule 59 of the In fact, in Spouses Badillo v. Hon. Tayag,19 a fairly recent
1940 Rules of Court. case, this Court declared that, when the State litigates, it is not
required to put up a bond for damages or even an appeal bond
Sec. 3. Order issued only when affidavit and bond filed. – An because it is presumed to be solvent. In other words, the State is
order of attachment shall be granted only when it is made to not required to file a bond because it is capable of paying its
appear by the affidavit of the plaintiff, or of some other person obligations.20
who personally knows the facts, that the case is one of those
mentioned in section 1 hereof, that there is no other sufficient The pronouncement in Spouses Badillo applies in this case even
security for the claim sought to be enforced by the action, and if Spouses Badillo involved the filing of a supersedeas bond.
that the amount due to the plaintiff, or the value of the property The pronouncement that the State "is not required to put up a
which he is entitled to recover possession of, is as much as the bond for damages or even an appeal bond" is general enough to
sum for which the order is granted above all legal encompass attachment bonds. Moreover, the purpose of an
counterclaims; which affidavit, and the bond required by the attachment bond (to answer for all costs and damages which the
next succeeding section, must be duly filed with the clerk or adverse party may sustain by reason of the attachment if the
judge of the court before the order issues. (emphasis supplied) court finally rules that the applicant is not entitled to the writ)
and a supersedeas bond (to answer for damages to the winning
Sec. 4. Bond required from plaintiff. – The party applying for party in case the appeal is found frivolous) is essentially the
the order must give a bond executed to the defendant in an same.1awphil.zw+
amount to be fixed by the judge, not exceeding the plaintiff’s
claim, that the plaintiff will pay all the costs which may be In filing forfeiture cases against erring public officials and
adjudged to the defendant and all damages which he may employees, the Office of the Ombudsman performs the State’s
sustain by reason of the attachment, if the court shall finally sovereign functions of enforcing laws, guarding and protecting
adjudge that the plaintiff was not entitled thereto. the integrity of the public service and addressing the problem of
corruption in the bureaucracy.
And with the promulgation of the 1964 Rules of Court, the
rules on attachment were renumbered as Rule 57, remaining The filing of an application for the issuance of a writ of
substantially the same: preliminary attachment is a necessary incident in forfeiture
cases. It is needed to protect the interest of the government and
to prevent the removal, concealment and disposition of
ProvRem (PreAttachment) Full text 062318 46
properties in the hands of unscrupulous public officers. damages they allegedly sustained as a consequence of the
Otherwise, even if the government subsequently wins the case, wrongful attachment of their properties.
it will be left holding an empty bag.
While the RTC did not resolve the Claim Against Surety Bond,
Accordingly, the petition is hereby GRANTED. The January it issued an Order17 dated May 3, 1993, discharging from
14, 2005 and March 2, 2005 resolutions of the Sandiganbayan attachment the Toyota Ford Fierra, jeep, and Canter delivery
are REVERSED and SET ASIDE. The Republic of the van on humanitarian grounds, but maintaining custody of Lot
Philippines is declared exempt from the payment or filing of an No. 11 and the passenger bus. Spouses Yu filed a Motion for
attachment bond for the issuance of a writ of preliminary Reconsideration18 which the RTC denied.19
attachment issued in Civil Case No. 0193. The Sandiganbayan
is hereby ordered to release the ₱1,000,000 bond posted by the Dissatisfied, they filed with the CA a Petition for Certiorari,20
Republic of the Philippines to the Office of the Ombudsman. docketed as CA-G.R. SP No. 31230, in which a Decision21 was
rendered on September 14, 1993, lifting the RTC Order of
SO ORDERED. Attachment on their remaining properties. It reads in part:

In the case before Us, the complaint and the accompanying


affidavit in support of the application for the writ only contains
G.R. No. 155868 February 6, 2007 general averments. Neither pleading states in particular how the
fraud was committed or the badges of fraud purportedly
SPOUSES GREGORIO and JOSEFA YU, Petitioners, committed by the petitioners to establish that the latter never
vs. had an intention to pay the obligation; neither is there a
NGO YET TE, doing business under the name and style, statement of the particular acts committed to show that the
ESSENTIAL MANUFACTURING, Respondent. petitioners are in fact disposing of their properties to defraud
creditors. x x x.
DECISION
xxxx
AUSTRIA-MARTINEZ, J.:
Moreover, at the hearing on the motion to discharge the order of
Before us is a Petition for Review on Certiorari under Rule 45 attachment x x x petitioners presented evidence showing that
of the Rules of Court assailing the March 21, 2001 Decision1 of private respondent has been extending multi-million peso credit
the Court of Appeals (CA) in CA-G.R. CV No. 522462 and its facilities to the petitioners for the past seven years and that the
October 14, 2002 Resolution.3 latter have consistently settled their obligations. This was not
denied by private respondent. Neither does the private
The antecedent facts are not disputed. respondent contest the petitioners’ allegations that they have
been recently robbed of properties of substantial value, hence
Spouses Gregorio and Josefa Yu (Spouses Yu) purchased from their inability to pay on time. By the respondent court’s own
Ngo Yet Te (Te) bars of detergent soap worth ₱594,240.00, and pronouncements, it appears that the order of attachment was
issued to the latter three postdated checks 4 as payment of the upheld because of the admitted financial reverses the petitioner
purchase price. When Te presented the checks at maturity for is undergoing.
encashment, said checks were returned dishonored and stamped
"ACCOUNT CLOSED".5 Te demanded6 payment from This is reversible error. Insolvency is not a ground for
Spouses Yu but the latter did not heed her demands. Acting attachment especially when defendant has not been shown to
through her son and attorney-in-fact, Charry Sy (Sy), Te filed have committed any act intended to defraud its creditors x x x.
with the Regional Trial Court (RTC), Branch 75, Valenzuela,
Metro Manila, a Complaint,7 docketed as Civil Case No. 4061- For lack of factual basis to justify its issuance, the writ of
V-93, for Collection of Sum of Money and Damages with preliminary attachment issued by the respondent court was
Prayer for Preliminary Attachment. improvidently issued and should be discharged.22

In support of her prayer for preliminary attachment, Te attached From said CA Decision, Te filed a Motion for Reconsideration
to her Complaint an Affidavit executed by Sy that Spouses Yu but to no avail.23
were guilty of fraud in entering into the purchase agreement for
they never intended to pay the contract price, and that, based on Te filed with us a Petition for Review on Certiorari24 but we
reliable information, they were about to move or dispose of denied the same in a Resolution dated June 8, 1994 for having
their properties to defraud their creditors.8 been filed late and for failure to show that a reversible error was
committed by the CA.25 Entry of Judgment of our June 8, 1994
Upon Te’s posting of an attachment bond,9 the RTC issued an Resolution was made on July 22, 1994.26 Thus, the finding of
Order of Attachment/Levy10 dated March 29, 1993 on the basis the CA in its September 14, 1993 Decision in CA-G.R. SP No.
of which Sheriff Constancio Alimurung (Sheriff Alimurung) of 31230 on the wrongfulness of the attachment/levy of the
RTC, Branch 19, Cebu City levied and attached Spouses Yu’s properties of Spouses Yu became conclusive and binding.
properties in Cebu City consisting of one parcel of land (known
as Lot No. 11)11 and four units of motor vehicle, specifically, a However, on July 20, 1994, the RTC, apparently not informed
Toyota Ford Fierra, a jeep, a Canter delivery van, and a of the SC Decision, rendered a Decision, the dispositive portion
passenger bus.12 of which reads:

On April 21, 1993, Spouses Yu filed an Answer13 with WHEREFORE, premises considered, the Court finds that the
counterclaim for damages arising from the wrongful attachment plaintiff has established a valid civil cause of action against the
of their properties, specifically, actual damages amounting to defendants, and therefore, renders this judgment in favor of the
₱1,500.00 per day; moral damages, ₱1,000,000.00; and plaintiff and against the defendants, and hereby orders the
exemplary damages, ₱50,000.00. They also sought payment of following:
₱120,000.00 as attorney’s fees and ₱80,000.00 as litigation
expenses.14 On the same date, Spouses Yu filed an Urgent 1) Defendants are hereby ordered or directed to pay the plaintiff
Motion to Dissolve Writ of Preliminary Attachment.15 They the sum of ₱549,404.00, with interest from the date of the filing
also filed a Claim Against Surety Bond16 in which they of this case (March 3, 1993);
demanded payment from Visayan Surety and Insurance
Corporation (Visayan Surety), the surety which issued the 2) The Court, for reasons aforestated, hereby denies the grant of
attachment bond, of the sum of ₱594,240.00, representing the damages to the plaintiff;
ProvRem (PreAttachment) Full text 062318 47

3) The Court hereby adjudicates a reasonable attorney’s fees Spouses Yu filed a Motion for Reconsideration42 but the CA
and litigation expenses of ₱10,000.00 in favor of the plaintiff; denied it in the herein assailed Resolution43 dated October 14,
2002.
4) On the counterclaim, this Court declines to rule on this,
considering that the question of the attachment which allegedly Spouses Yu filed the present Petition raising the following
gave rise to the damages incurred by the defendants is being issues:
determined by the Supreme Court.
I. Whether or not the appellate court erred in not holding that
SO ORDERED.27 (Emphasis ours) the writ of attachment was procured in bad faith, after it was
established by final judgment that there was no true ground
Spouses Yu filed with the RTC a Motion for Reconsideration28 therefor.
questioning the disposition of their counterclaim. They also
filed a Manifestation29 informing the RTC of our June 8, 1994 II. Whether or not the appellate court erred in refusing to award
Resolution in G.R. No. 114700. actual, moral and exemplary damages after it was established
by final judgment that the writ of attachment was procured with
The RTC issued an Order dated August 9, 1994, which read: no true ground for its issuance.44

xxxx There is one preliminary matter to set straight before we resolve


the foregoing issues.
(2) With regard the counter claim filed by the defendants
against the plaintiff for the alleged improvident issuance of this According to respondent Te,45 regardless of the evidence
Court thru its former Presiding Judge (Honorable Emilio presented by Spouses Yu, their counterclaim was correctly
Leachon, Jr.), the same has been ruled with definiteness by the dismissed for failure to comply with the procedure laid down in
Supreme Court that, indeed, the issuance by the Court of the Section 20 of Rule 57. Te contends that as Visayan Surety was
writ of preliminary attachment appears to have been not notified of the counterclaim, no judgment thereon could be
improvidently done, but nowhere in the decision of the validly rendered.
Supreme Court and for that matter, the Court of Appeal’s
decision which was in effect sustained by the High Court, Such argument is not only flawed, it is also specious.
contains any ruling or directive or imposition, of any damages
to be paid by the plaintiff to the defendants, in other words, As stated earlier, Spouses Yu filed a Claim Against Surety
both the High Court and the CA, merely declared the previous Bond on the same day they filed their Answer and Urgent
issuance of the writ of attachment by this Court thru its former Motion to Dissolve Writ of Preliminary Attachment.46 Further,
presiding judge to be improvidently issued, but it did not award the records reveal that on June 18, 1993, Spouses Yu filed with
any damages of any kind to the defendants, hence, unless the the RTC a Motion to Give Notice to Surety.47 The RTC
High Court or the CA rules on this, this Court coud not grant granted the Motion in an Order48 dated June 23, 1993.
any damages by virtue of the improvident attachment made by Accordingly, Visayan Surety was notified of the pre-trial
this Court thru its former presiding judge, which was claimed conference to apprise it of a pending claim against its
by the defendants in their counter claim. attachment bond. Visayan Surety received the notice on July
12, 1993 as shown by a registry return receipt attached to the
(3) This Court hereby reiterates in toto its Decision in this case records.49
dated July 20, 1994. 30 (Emphasis ours)
Moreover, even if it were true that Visayan Surety was left in
The RTC also issued an Order dated December 2, 1994,31 the proceedings a quo, such omission is not fatal to the cause of
denying the Motion for Reconsideration of Spouses Yu.32 Spouses Yu. In Malayan Insurance Company, Inc. v. Salas,50
we held that "x x x if the surety was not given notice when the
In the same December 2, 1994 Order, the RTC granted two claim for damages against the principal in the replevin bond
motions filed by Te, a Motion to Correct and to Include was heard, then as a matter of procedural due process the surety
Specific Amount for Interest and a Motion for Execution is entitled to be heard when the judgment for damages against
Pending Appeal.33 The RTC also denied Spouses Yu’s Notice the principal is sought to be enforced against the surety’s
of Appeal34 from the July 20, 1994 Decision and August 9, replevin bond."51 This remedy is applicable for the procedures
1994 Order of the RTC. governing claims for damages

From said December 2, 1994 RTC Order, Spouses Yu filed on an attachment bond and on a replevin bond are the same.52
another Notice of Appeal 35 which the RTC also denied in an
Order36 dated January 5, 1995. We now proceed to resolve the issues jointly.

Spouses Yu filed with the CA a Petition37 for Certiorari, Spouses Yu contend that they are entitled to their counterclaim
Prohibition and Mandamus, docketed as CA-G.R. SP No. for damages as a matter of right in view of the finality of our
36205, questioning the denial of their Notices of Appeal; and June 8, 1994 Resolution in G.R. No. 114700 which affirmed the
seeking the modification of the July 20, 1994 Decision and the finding of the CA in its September 14, 1993 Decision in CA-
issuance of a Writ of Execution. The CA granted the Petition in G.R. SP No. 31230 that respondent Te had wrongfully caused
a Decision38 dated June 22, 1995. the attachment of their properties. Citing Javellana v. D.O.
Plaza Enterprises, Inc.,53 they argue that they should be
Hence, Spouses Yu filed with the CA an appeal39 docketed as awarded damages based solely on the CA finding that the
CA-G.R. CV No. 52246, questioning only that portion of the attachment was illegal for it already suggests that Te acted with
July 20, 1994 Decision where the RTC declined to rule on their malice when she applied for attachment. And even if we were
counterclaim for damages.40 However, Spouses Yu did not to assume that Te did not act with malice, still she should be
dispute the specific monetary awards granted to respondent Te; held liable for the aggravation she inflicted when she applied
and therefore, the same have become final and executory. for attachment even when she was clearly not entitled to it.54

Although in the herein assailed Decision41 dated March 21, That is a rather limited understanding of Javellana. The
2001, the CA affirmed in toto the RTC Decision, it nonetheless counterclaim disputed therein was not for moral damages and
made a ruling on the counterclaim of Spouses Yu by declaring therefore, there was no need to prove malice. As early as in
that the latter had failed to adduce sufficient evidence of their Lazatin v. Twaño,55 we laid down the rule that where there is
entitlement to damages. wrongful attachment, the attachment defendant may recover
ProvRem (PreAttachment) Full text 062318 48
actual damages even without proof that the attachment plaintiff exceptions. We are in full accord with the CA that Spouses Yu
acted in bad faith in obtaining the attachment. However, if it is failed to prove their counterclaim.
alleged and established that the attachment was not merely
wrongful but also malicious, the attachment defendant may Spouses Yu’s claim for unrealized income of ₱1,500.00 per day
recover moral damages and exemplary damages as well. 56 was based on their computation of their average daily income
Either way, the wrongfulness of the attachment does not for the year 1992. Said computation in turn is based on the
warrant the automatic award of damages to the attachment value of three ticket stubs sold over only five separate days in
defendant; the latter must first discharge the burden of proving 1992.67 By no stretch of the imagination can we consider ticket
the nature and extent of the loss or injury incurred by reason of sales for five days sufficient evidence of the average daily
the wrongful attachment.57 income of the passenger bus, much less its mean income. Not
even the unrebutted testimony of Josefa Yu can add credence to
In fine, the CA finding that the attachment of the properties of such evidence for the testimony itself lacks corroboration.68
Spouses Yu was wrongful did not relieve Spouses Yu of the
burden of proving the factual basis of their counterclaim for Besides, based on the August 29, 1994 Manifestation69 filed by
damages. Sheriff Alimurung, it would appear that long before the
passenger bus was placed under preliminary attachment in Civil
To merit an award of actual damages arising from a wrongful Case No. 4061-V-93, the same had been previously attached by
attachment, the attachment defendant must prove, with the best the Sheriff of Mandaue City in connection with another case
evidence obtainable, the fact of loss or injury suffered and the and that it was placed in the Cebu Bonded Warehousing
amount thereof.58 Such loss or injury must be of the kind Corporation, Cebu City. Thus, Spouses Yu cannot complain
which is not only capable of proof but must actually be proved that they were unreasonably deprived of the use of the
with a reasonable degree of certainty. As to its amount, the passenger bus by reason of the subsequent wrongful attachment
same must be measurable based on specific facts, and not on issued in Civil Case No. 4061-V-93. Nor can they also attribute
guesswork or speculation. 59 In particular, if the claim for to the wrongful attachment their failure to earn income or profit
actual damages covers unrealized profits, the amount of from the operation of the passenger bus.
unrealized profits must be estalished and supported by
independent evidence of the mean income of the business Moreover, petitioners did not present evidence as to the
undertaking interrupted by the illegal seizure. 60 damages they suffered by reason of the wrongful attachment of
Lot No. 11.
Spouses Yu insist that the evidence they presented met the
foregoing standards. They point to the lists of their daily net Nonetheless, we recognize that Spouses Yu suffered some form
income from the operation of said passenger bus based on used of pecuniary loss when their properties were wrongfully seized,
ticket stubs61 issued to their passengers. They also cite unused although the amount thereof cannot be definitively ascertained.
ticket stubs as proof of income foregone when the bus was Hence, an award of temperate or moderate damages in the
wrongfully seized.62 They further cite the unrebutted testimony amount of ₱50,000.00 is in order.70
of Josefa Yu that, in the day-to-day operation of their passenger
bus, they use up at least three ticket stubs and earn a minimum As to moral and exemplary damages, to merit an award thereof,
daily income of ₱1,500.00.63 it must be shown that the wrongful attachment was obtained by
the attachment plaintiff with malice or bad faith, such as by
In ruling that Spouses Yu failed to adduce sufficient evidence to appending a false affidavit to his application.71
support their counterclaim for actual damages, the CA stated,
thus: Spouses Yu argue that malice attended the issuance of the
attachment bond as shown by the fact that Te deliberately
In this case, the actual damages cannot be determined. appended to her application for preliminary attachment an
Defendant-appellant Josefa Yu testified on supposed lost profits Affidavit where Sy perjured himself by stating that they had no
without clear and appreciable explanation. Despite her intention to pay their obligations even when he knew this to be
submission of the used and unused ticket stubs, there was no untrue given that they had always paid their obligations; and by
evidence on the daily net income, the routes plied by the bus accusing them of disposing of their properties to defraud their
and the average fares for each route. The submitted basis is too creditors even when he knew this to be false, considering that
speculative and conjectural. No reports regarding the average the location of said properties was known to him.72
actual profits and other evidence of profitability necessary to
prove the amount of actual damages were presented. Thus, the The testimony of petitioner Josefa Yu herself negates their
Court a quo did not err in not awarding damages in favor of claim for moral and exemplary damages. On cross-examination
defendants-appellants.64 she testified, thus:

We usually defer to the expertise of the CA, especially when it Q: Did you ever deposit any amount at that time to fund the
concurs with the factual findings of the RTC.65 Indeed, check?
findings of fact may be passed upon and reviewed by the
Supreme Court in the following instances: (1) when the A: We requested that it be replaced and staggered into smaller
conclusion is a finding grounded entirely on speculations, amounts.
surmises, or conjectures; (2) when the inference made is
manifestly mistaken, absurd, or impossible; (3) where there is a COURT: Did you fund it or not?
grave abuse of discretion in the appreciation of facts; (4) when
judgment is based on a misapprehension of facts; (5) when the Atty. Ferrer: The three checks involved?
lower court, in making its findings, went beyond the issues of
the case and such findings are contrary to the admissions of Atty. Florido: Already answered. She said that they were not
both appellant and appellee; (6) when the factual findings of the able to fund it.
CA are contrary to those of the trial court; (7) when the findings
of fact are themselves conflicting; (8) when the findings of fact Atty. Ferrer: And as a matter of fact, you went to the bank to
are conclusions made without a citation of specific evidence on close your account?
which they are based; (9) when the facts set forth in the petition
as well as in the petitioner’s main and reply briefs are not A: We closed account with the bank because we transferred the
disputed by the respondents; (10) when the findings of fact of account to another bank.
the lower court are premised on the supposed absence of
evidence and are contradicted by the evidence on record.66 Q: How much money did you transfer from that bank to which
However, the present case does not fall under any of the the three checks were drawn to this new bank?
ProvRem (PreAttachment) Full text 062318 49
0239992 1-07-99 288,771.00
A: I don’t know how much was there but we transferred already 0239994 1-12-99 200,025.00
to the Solid Bank. 0239995 1-12-99 287,748.00
0296801 1-29-99 207,970.00
Q: Who transferred? 0296802 1-30-99 206,127.00
0296803 2-01-99 316,577.00
A: My daughter, sir.73 (Emphasis ours) TOTAL 2,370,405.003
When presented for payment, the foregoing postdated checks
Based on the foregoing testimony, it is not difficult to were dishonored for the reason, "Drawn Against Insufficient
understand why Te concluded that Spouses Yu never intended Fund" (DAIF). LSMI demanded from STMC the immediate
to pay their obligation for they had available funds in their bankpayment of the obligation.4 STMC failed and refused to heed
but chose to transfer said funds instead of cover the checks they the demand of LSMI; hence, the latter filed the Complaint
issued. Thus, we cannot attribute malice nor bad faith to Te in before the RTC.
applying for the attachment writ. We cannot hold her liable for
moral and exemplary damages. In accordance with the prayer of LSMI, and finding the same to
be sufficient in form and substance, the RTC issued a writ of
As a rule, attorney’s fees cannot be awarded when moral and preliminary attachment against STMC’s properties.5 In this
exemplary damages are not granted, the exception however is connection, a notice of attachment on the properties in the name
when a party incurred expenses to lift a wrongfully issued writ of STMC covered by Transfer Certificates of Title No. 202686
of attachment.1awphi1.net74 Without a doubt, Spouses Yu and No. 202685 was issued.6
waged a protracted legal battle to fight off the illegal attachment
of their properties and pursue their claims for damages. It is Apparently, LSMI had already previously instituted before the
only just and equitable that they be awarded reasonable Municipal Trial Court (MTC) of Lipa City, Branch 1, criminal
attorney’s fees in the amount of ₱30,000.00. cases against the Silangans for violation of Batas Pambansa
Blg. 22. Thus, STMC was prompted to file a Motion, praying to
In sum, we affirm the dismissal of the counterclaim of dismiss the civil Complaint before the RTC, to cite STMC’s
petitioners Spouses Yu for actual, moral, and exemplary lawyer for contempt for forum shopping, and to discharge the
damages. However, we grant them temperate damages and writ of preliminary attachment issued by the trial court.7 After
attorney’s fees. LSMI filed its Comment/Opposition to the motion of STMC,
the RTC resolved the said motion by denying it for lack of
WHEREFORE, the petition is partly GRANTED. The March merit.8
21, 2001 Decision of the Court of Appeals is AFFIRMED with
the MODIFICATION that petitioners’ counterclaim is The RTC held that:
PARTLY GRANTED. Gregorio Yu and Josefa Yu are awarded
₱50,000.00 temperate damages and ₱30,000.00 attorney’s fees. For forum-shopping to exist, both actions must involve the
same transactions and same essential facts and circumstances.
No costs. There must also be identical causes of action, subject matter
and issues (PRC vs. CA, 292 SCRA 155). Forum-shopping also
SO ORDERED. exists where the elements of litis pendencia are present or
where a final judgment in one case will amount to res judicata
in the other (Alejandro vs. CA, 295 SCRA 536).

G.R. No. 166719 March 12, 2007 In the case at bar, the two (2) cases, one for violation of BP 22
and the other for collection of sum of money although
SILANGAN TEXTILE MANUFACTURING concerning the same amount of money are distinct litigations,
CORPORATION, TRADEWORLD SYNERGY, neither involving exactly the same parties nor identical issues.
INCORPORATED, and CELLU INDUSTRIES,
INCORPORATED, Petitioners,* The accused in the criminal cases for violation of BP 22 are the
vs. persons who signed the worthless checks while the defendants
HON. AVELINO G. DEMETRIA, PRESIDING JUDGE, in the instant case are the corporations which have outstanding
REGIONAL TRIAL COURT, LIPA CITY, BRANCH 85, obligations to the plaintiff. Hence, there is no identity of parties
and LUZON SPINNING MILLS, INCORPORATED, in the aforesaid cases.
Respondents.
As to whether or not the requisites prescribed by law for the
DECISION issuance of a writ of preliminary attachment have been
complied with, record show (sic) that the contents of the
CHICO-NAZARIO, J.: affidavit required for the issuance of a writ of preliminary
attachment were incorporated in the complaint, verified and
Luzon Spinning Mills, Incorporated (LSMI) filed before the certified as correct by Mr. Vicente Africa, Jr. Thus, there was
Regional Trial Court (RTC) of Lipa City, Branch 85, a substantial compliance of Section 3, Rule 57 of the Rules of
Complaint dated 23 August 2000, for Collection of Sum of Court.9
Money1 against Silangan Textile Manufacturing Corporation
(STMC). In its Complaint, LSMI alleged that from 19 The Motion for Reconsideration and Motion to Discharge
November 1998 to 14 June 1999, Anita, Jimmy and Benito, all Attachment and Admit Counter-bond10 filed by STMC were
surnamed Silangan, in their capacity as stockholders and denied by the RTC in its Order dated 9 April 2001.11
officers of STMC ordered 111,161.60 kilograms of yarn, valued
in the total amount of ₱9,999,845.00. The yarns were delivered STMC elevated the case to the Court of Appeals via a Petition
at the office of STMC as evidenced by delivery receipts.2 In for Certiorari under Rule 65 of the Rules of Court12 which was
payment of the yarns, STMC issued 34 postdated checks in the dismissed by the appellate court in a Decision13 dated 25
total amount of ₱9,999,845.00. Among these postdated checks October 2004, holding that:
are the following:
But it is also true that when the bounced check involved is
Check No. Date Amount issued by a corporation, B.P. Blg. 22 imposes the criminal
0239973 5-12-99 P317,952.00 liability only on the individual/s who signed the check,
0239990 1-05-99 316,125.00 presumably in keeping with the principle that generally only
0239991 1-05-99 229,110.00 natural persons may commit a crime. Thus:
ProvRem (PreAttachment) Full text 062318 50
(c) 00-1246 Anita Silangan and Benito Silangan
"Where the check is drawn by a corporation, company or entity, (d) 99-2145 to 99-2154 99-2154 Anita Silangan and Benito
the person or persons who actually signed the check in behalf of Silangan
such drawer shall be liable under this Act." The criminal cases for violation of Batas Pambansa Blg. 22 and
the collection of sum of money have the same issues, i.e., the
We hold, at any rate, that with respect to the civil liability, the recovery of the subject checks. The subsequent filing of the
corporation concerned should bear the responsibility, the civil case for sum of money constitutes forum shopping.
drawing of the bum check being a corporate act. And a
corporation has a legal personality of its own different from that Forum shopping exists when the elements of litis pendentia are
of its stockholders/officers who signed the check/s. present, or when a final judgment in one case will amount to res
judicata in another. There is forum shopping when the
Accordingly, since the herein petitioners, as drawers of the following elements concur: (1) identity of the parties or, at
checks in question, are not parties to the criminal cases for least, of the parties who represent the same interest in both
violation of B.P. Blg. 22, the private respondent was and is not actions; (2) identity of the rights asserted and relief prayed for,
prohibited from filing an independent civil action against them. as the latter is founded on the same set of facts; and (3) identity
of the two preceding particulars, such that any judgment
Moreover, the civil liability of the accused Silangan(s), the rendered in the other action will amount to res judicata in the
signatories of the checks in the criminal cases, is based on action under consideration or will constitute litis pendentia.15
Article 20 of the Civil Code as declared in Banal vs. Tadeo, Jr.
We grant the petition.
On the other hand, the liability of petitioners corporations arose
from contract. Under Article 31 of the Civil Code and also The case of Hyatt Industrial Manufacturing Corporation v. Asia
Section 1(a), Rule 111 of the 2000 Revised Rules on Criminal Dynamic Electrix Corporation16 is instructive. In that case,
Procedure, the offended party has the right to institute a Hyatt Industrial Manufacturing Corporation (HIMC) instituted
separate civil action when its nexus is liability not arising from before the Regional Trial Court of Mandaluyong City a
the crime, like a liability arising from contract. complaint for recovery of sum of money against respondent
Asia Dynamic Electrix Corporation (ADEC). The complaint
In fine, there is no violation of SC Administrative Circular No. alleged that ADEC purchased from HIMC various electrical
57-97, now Section 1(b) of the 2000 Revised Rules of Criminal conduits and fittings amounting to ₱1,622,467.14. ADEC
Procedure. The civil actions for the liability of the Silangans as issued several checks in favor of HIMC as payment. The
the signatories to the subject checks are deemed included in the checks, however, were dishonored by the drawee bank on the
criminal actions filed against them. The separate action filed ground of insufficient funds/account closed. Before the filing of
against the petitioners corporations for the recovery of the the case for recovery of sum of money before the RTC of
purchase price of the yarn sold to them did not detract from it as Mandaluyong City, HIMC had already filed separate criminal
this is an entirely different suit. complaints for violation of Batas Pambansa Blg. 22 against the
officers of ADEC, Gil Santillan and Juanito Pamatmat. They
xxxx were docketed as I.S. No. 00-01-00304 and I.S. No. 01-00300,
respectively, and were both pending before the Metropolitan
WHEREFORE, for being deficient both in form and in Trial Court (MeTC) of Pasig City. These cases involved the
substance, the instant petition is DISMISSED, with costs same checks which were the subjects of Civil Case No. MC-01-
against the petitioners. 1493 before the RTC of Mandaluyong City.

STMC filed a Motion for Reconsideration thereon which was In holding that the civil case filed subsequent to the criminal
denied by the Court of Appeals in a Resolution dated 24 cases was deemed instituted in the criminal cases, this Court
January 2005.14 held:

Hence, the instant petition. It is clear from the records that the checks involved in I.S. No.
00-01-00304 and I.S. No. 00-01-00300 are the same checks
STMC submits the following issues for our resolution: cited by petitioner in Civil Case No. MC 01-1493. The Court
will certainly not allow petitioner to recover a sum of money
I. Whether or not the Honorable Court of Appeals erred in twice based on the same set of checks. Neither will the Court
affirming the conclusion of public respondent Judge Demetria allow it to proceed with two actions based on the same set of
that the certification against forum-shopping is inapplicable in checks to increase its chances of obtaining a favorable ruling.
this case? Such runs counter to the Court’s policy against forum shopping
which is a deplorable practice of litigants in resorting to two
II. Whether or not the Honorable Court of Appeals erred in different fora for the purpose of obtaining the same relief to
affirming the conclusion of the public respondent Judge increase his chances of obtaining a favorable judgment. It is a
Demetria when it failed to apply Section 1(b), Rule 111 of the practice that ridicules the judicial process, plays havoc with the
2000 Revised Rules of Criminal Procedure? rules on orderly procedure, and is vexatious and unfair to the
other parties of the case.17
III. Whether or not the Honorable Court of Appeals erred in
affirming the conclusion of the public respondent Judge In dismissing Civil Case No. MC-01-1493, this Court applied
Demetria when it issued the writ of preliminary attachment in and interpreted Supreme Court Circular No. 57-97 effective 16
favor of the private respondent. September 1997, which reads:

In its first assigned error, STMC argues that LSMI through its 1. The criminal action for violation of Batas Pambansa Blg. 22
Operation Manager, Mr. Vicente Africa, failed to certify under shall be deemed to necessarily include the corresponding civil
oath that he had earlier filed criminal cases for violation of action, and no reservation to file such action separately shall be
Batas Pambansa Blg. 22 against the Silangans before the MTC. allowed or recognized.
These cases are as follows:
From this Supreme Court Circular was adopted Rule 111(b) of
Case Number Name of Accused the 2000 Revised Rules of Criminal Procedure which reads:
(a) 00-0295 to 00- 0299 and 00-305 Anita Silangan and
Benito Silangan (b) The criminal action for violation of Batas Pambansa Blg. 22
(b) 00-0294, 0300-04 and 306-09 Anita Silangan and shall be deemed to include the corresponding civil action. No
Jimmy Silangan reservation to file such civil action separately shall be allowed.
ProvRem (PreAttachment) Full text 062318 51
or by the Court of Appeals or the Supreme Court, and must
In the Hyatt case, the Court further negated the claim that there require the sheriff of the court to attach so much of the property
are no identity of parties and causes of action in the criminal in the Philippines of the party against whom it is issued, not
and civil complaints for violation of Batas Pambansa Blg. 22 exempt from execution, as may be sufficient to satisfy the
where a criminal case against the corporate officers is filed applicant’s demand, unless such party makes deposit or gives a
ahead of the civil case against the corporation. The parties in bond as hereinafter provided in an amount equal to that fixed in
the civil case against the corporation represent the same interest the order, which may be the amount sufficient to satisfy the
as the parties in the criminal case. As to the issue of identity or applicant’s demand or the value of the property to be attached
non-identity of relief sought, this Court held that the criminal as stated by the applicant, exclusive of costs. Several writs may
case and the civil case seek to obtain the same relief. Thus: be issued at the same time to the sheriffs of the courts of
different judicial regions.
With the implied institution of the civil liability in the criminal
actions before the Metropolitan Trial Court of Pasig City, the SEC. 3. Affidavit and bond required. – An order of attachment
two actions are merged into one composite proceeding, with the shall be granted only when it appears by the affidavit of the
criminal action predominating the civil. The prime purpose of applicant, or of some other person who personally knows the
the criminal action is to punish the offender to deter him and facts, that a sufficient cause of action exists, that the case is one
others from committing the same or similar offense, to isolate of those mentioned in Section 1 hereof, that there is no other
him from society, reform or rehabilitate him or, in general, to sufficient security for the claim sought to be enforced by the
maintain social order. The purpose, meanwhile, of the civil action, and that the amount due to the applicant, or the value of
action is for the restitution, reparation or indemnification of the the property the possession of which he is entitled to recover, is
private offended party for the damage or injury he sustained by as much as the sum for which the order is granted above all
reason of the delictual or felonious act of the accused. Hence, legal counterclaims. The affidavit, and the bond required by the
the relief sought in the civil aspect of I.S. No. 00-01-00304 and next succeeding section, must be duly filed with the court
I.S. No. 00-01-00300 is the same as that sought in Civil Case before the order issues.
No. MC 01-1493, that is, the recovery of the amount of the
checks, which, according to [HIMC], represents the amount to Attachment is an ancillary remedy. It is not sought for its own
be paid by [ADEC] for its purchases. To allow [HIMC] to sake but rather to enable the attaching party to realize upon
proceed with Civil Case No. MC 01-1493 despite the filing of relief sought and expected to be granted in the main or principal
I.S. 00-01-00304 and I.S. No. 00-01-00300 might result to a action.20 Being an ancillary or auxiliary remedy, it is available
double payment of its claim.18 during the pendency of the action which may be resorted to by a
litigant to preserve and protect certain rights and interests
The purpose of Section 1(b) of Rule 111 is explained by Justice therein pending rendition, and for purposes of the ultimate
Florenz D. Regalado, former chairman of the Committee tasked effects, of a final judgment in the case. They are provisional
with the revision of the Rules of Criminal Procedure. He because they constitute temporary measures availed of during
clarified that the special rule on Batas Pambansa Blg. 22 cases the pendency of the action and they are ancillary because they
was added because the dockets of the courts were clogged with are mere incidents in and are dependent upon the result of the
such litigations and creditors were using the courts as main action.21
collectors. While ordinarily no filing fees are charged for actual
damages in criminal cases, the rule on the necessary inclusion A writ of preliminary attachment is a species of provisional
of a civil action with the payment of filing fees based on the remedy. As such, it is a collateral proceeding, permitted only in
face value of the check involved was laid down to prevent the connection with a regular action, and as one of its incidents; one
practice of creditors of using the threat of a criminal of which is provided for present need, or for the occasion; that
prosecution to collect on their credit free of charge.19 is, one adapted to meet a particular exigency.22 On the basis of
the preceding discussion and the fact that we find the dismissal
Applying the Hyatt case to the case before us, the dismissal of of Civil Case No. 00-00420 to be in order, the writ of
Civil Case No. 00-0420 before the RTC is warranted. It is not preliminary attachment issued by the trial court in the said case
denied that LSMI likewise filed several criminal complaints must perforce be lifted.23
against the officers of STMC before the MTC prior to the filing
of Civil Case No. 00-0420. As provided in Supreme Court Wherefore, premises considered, the petition is GRANTED.
Circular No. 57-97, as re-echoed in Rule 111, Section 1(b), of The Decision of the Court of Appeals dated 25 October 2004
the 2000 Rules of Criminal Procedure, the civil action now filed and Resolution dated 24 January 2005 affirming the Resolution
against STMC arising from its issuance of the bouncing checks dated 9 April 2001 of the Regional Trial Court of Lipa City,
is deemed instituted in the criminal cases filed against its Branch 85, are hereby reversed and set aside. Civil Case No.
officers pending before the MTC. 00-0420 before the Regional Trial Court of Lipa City, Branch
85, is ordered DISMISSED. The attachment over the properties
Finally, as to the prayer of STMC for the discharge of the Writ by the writ of preliminary attachment issued by the same trial
of Preliminary Attachment issued by the RTC, Rule 57 of the court is hereby ordered LIFTED.
Revised Rules of Court provides:
SO ORDERED.
SECTION 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 G.R. No. 147970 March 31, 2006
any judgment that may be recovered in the following cases:
PCL Industries Manufacturing Corporation, Petitioner,
(a) In an action for the recovery of a specified amount of money vs.
or damages, other than moral and exemplary, on a cause of The COURT OF APPEALS and ASA Color & Chemical
action arising from law, contract, quasi-contract, delict or quasi- Industries, Inc., Respondents.
delict against a party who is about to depart from the
Philippines with intent to defraud his creditors. DECISION

xxxx AUSTRIA-MARTINEZ, J.:

SEC. 2. Issuance and contents of order. – An order of This resolves the petition for certiorari seeking the reversal of
attachment may be issued either ex parte or upon motion with the Decision1 of the Court of Appeals (CA) promulgated on
notice and hearing by the court in which the action is pending, February 21, 2001, which affirmed the Decision of the Regional
ProvRem (PreAttachment) Full text 062318 52
Trial Court (RTC) of Quezon City, Branch 226; and the CA
Resolution dated May 9, 2001 denying petitioner’s motion for The RTC Decision was appealed by herein petitioner to the CA.
reconsideration. On February 21, 2001, the CA promulgated its Decision
affirming the RTC judgment. The CA held that there was
The antecedent facts are as follows: sufficient evidence to prove that herein petitioner had the
intention of defrauding private respondent when it contracted
On October 10, 1995, private respondent filed a complaint with the obligation because it agreed to pay within 30 days from the
the RTC for Sum of Money with Preliminary Attachment date of purchase but once the merchandise was in its
against herein petitioner. Private respondent claims that during possession, it refused to pay. Furthermore, the CA ruled that the
the period from January 18, 1994 to April 14, 1994, petitioner issue on the propriety of the issuance of the writ of preliminary
purchased and received from it various printing ink materials attachment should be laid to rest since petitioner no longer
with a total value of P504,906.00, payable within 30 days from questioned the trial court’s orders before the higher courts.
the respective dates of invoices; and that petitioner, in bad faith,
failed to comply with the terms of the sale and failed to pay its As to the alleged defect of the ink delivered by private
obligations despite repeated verbal and written demands. respondent, both the trial court and the CA found that the
evidence presented by petitioner was insufficient to prove that it
Petitioner was served with summons together with the Writ of was indeed the ink from private respondent which caused the
Preliminary Attachment on October 20, 1995. On October 23, unwanted smell in petitioner’s finished plastic products. The
1995, petitioner filed a Motion to Dissolve and/or Discharge trial court’s analysis of the evidence led it to the following
Writ of Preliminary Attachment. On November 20, 1995, the conclusions, to wit:
trial court issued an Order denying petitioner’s motion to
dissolve the writ of preliminary attachment. Petitioner’s motion [D]efendant presented transmittal receipts, which allegedly
for reconsideration of said order was also denied per Order represent the items returned by defendant [herein petitioner] to
dated January 2, 1996. Petitioner no longer elevated to the plaintiff [herein respondent].
higher courts the matter of the propriety of the issuance of the
writ of preliminary attachment. xxxx

In the meantime, on October 30, 1995, petitioner filed its A closer look at these three transmittal receipts would readily
Answer with Counterclaim. Petitioner claims that the various show that they are all for deliveries made in 1993, whereas the
printing ink materials delivered to it by private respondent were items admittedly received by defendant and listed in paragraph
defective and sometime in August, October, and November of 2 of the Complaint are all delivered and dated from January 18,
1993, they have returned ink materials to private respondent as 1994 to April 14, 1994.
shown by several Transmittal Slips. Nevertheless, petitioner
admits that it continued to buy ink materials from private The items, therefore, returned for being defective and
respondent in 1994 despite having rejected ink materials communicated by defendant to plaintiff are for those printing
delivered by private respondent in 1993. Petitioner, however, ink materials delivered in 1993 and these are not the items left
insists that the ink materials delivered by private respondent in unpaid and in issue in this present Complaint.
1994 were also defective and they made known their
complaints to Frankie, the authorized representative of private There is no other proof of demand made by defendant to
respondent. In a letter dated June 30, 1995, petitioner informed plaintiff corporation as to communicate to plaintiff any defect
private respondent that it had been complaining to its (private in the printing ink materials delivered in 1994 except the
respondent’s) representative about the quality of the ink demand letter (Exhibit "42") which is dated September 26,
materials but nothing was done to solve the matter. Private 1995.
respondent replied through a letter dated July 16, 1995, that it
was giving petitioner the option to return the products As admitted by defendant’s witness, Eleno Cayabyab, the
delivered, "sealed and unused" within one week from receipt of demands made by Mr. Jovencio Lim to plaintiff had been oral
said letter or pay the full amount of its obligation. Petitioner or verbal only and made only on two occasions. In fact said
answered in a letter dated September 26, 1995, that private witness cannot remember exactly when these oral demands
respondent should pick up at its plant the remaining unused were made by Mr. Jovencio Lim, x x x
defective ink materials, and requested to meet with private
respondent to thresh out the matter. No meeting was ever held. xxxx
Petitioner further claims that it suffered damages in the amount
of P1,592,794.50 because its customers rejected the finished As regards the testimony of defendant’s witness Jovencio Lim
plastic products it delivered, complaining of the bad smell, that defendant’s end-users returned the plastic packaging
which, according to petitioner, was caused by the defective ink materials to defendant and defendant had to reimburse its
materials supplied by private respondent. clients of the amount paid by them and defendant allegedly
suffered damages, defendant failed to present sufficient
After trial on the merits, the trial court rendered its Decision evidence of this allegation. x x x3
dated January 8, 1999, the dispositive portion of which reads
thus: Affirming the foregoing findings of the trial court, the CA
further noted that:
WHEREFORE, premises considered, judgment is hereby
rendered in favor of plaintiff. Defendant PCL Industries As may be observed, as early as January 31, 1994, the appellant
Manufacturing Corporation is hereby ordered to pay plaintiff: [herein petitioner] had received complaints from its customers
about the alleged unwanted smell of their plastic products.
1) P504,906.00 plus 20% interest per annum from April 1994 However, no steps were taken to investigate which of its several
until fully paid; suppliers delivered the defective ink and, if indeed, the
appellee’s ink materials were the cause of the smell, no
2) 25% of the above amount as and for attorney’s fees; and immediate communications were sent to the latter. On the
contrary, it (appellant) continued to place orders and receive
3) cost of suit. deliveries from the appellee. Worse, the appellant failed to
convincingly show that the appellant stopped using the subject
The counterclaim of defendant is hereby dismissed for ink materials upon notice of its customers of the alleged
insufficiency of evidence. unwanted smell of the products. Conversely, the appellant
continued using the same in their production of plastic materials
SO ORDERED.2 which would only show that the cause of the alleged stinking
ProvRem (PreAttachment) Full text 062318 53
smell cannot be attributed to the subject ink materials used. The 5) The defendant-appellant never made any written or formal
appellant tried to convince us that the subject ink materials were complaint about the alleged inferior quality ink and no steps
the same ink delivered by the appellee and used in the products were taken to demand restitution or rectification.
that were returned because of the unwanted smell. However, its
evidence fails to impress us. Its letter dated June 30, 1995 was the first time it made a
communication to the appellee about the alleged inferior quality
There is no indication that the plasticized pouches printed by of the ink delivered by the latter. This letter was its answer to
the defendant-appellant and returned by its customers were the appellee’s letter of demand for payment. Obviously, the
printed with the use of the paint delivered by the plaintiff- appellant’s letter was written to serve as an excuse for its failure
appellee. The former’s evidence on this point are either self- to pay for its contractual obligations. In any case, as a reaction
serving or unreliable, or totally unworthy of credence, as shown to such letter, the appellee dared the appellant to return the
by the following: materials within one week, through its letter of July 16, 1995.
Obviously, no such return was made.4 (Emphasis supplied)
1) The "work process" forms contain the names of two (2) or
three (3) suppliers, as shown by the following: Petitioner then filed the present petition for review on certiorari
on the following grounds:
Exh. "12" – STOCK/ASA
I.
"13" – SIMCOR/ASA
THE RESPONDENT COURT OF APPEALS ACTED WITH
"14" - SIMCOR/ASA GRAVE ABUSE OF DISCRETION IN ISSUING A WRIT OF
PRELIMINARY ATTACHMENT EX PARTE WITHOUT
"15" - SIMCOR/ASA ANY LEGAL BASIS AND ON GROUNDS NOT
AUTHORIZED UNDER RULE 57 OF THE RULES OF
"16" - SYNPAC/ASA COURT

"17" - SYNPAC/ASA II.

"18" - SYNPAC/ASA THE RESPONDENT COURT OF APPEALS ACTED WITH


GRAVE ABUSE OF DISCRETION AS ITS JUDGMENT
"19" - SYNPAC/ASA WAS BASED ON A MISAPPREHENSION OF FACTS AND
ITS FINDINGS ARE NOT SUPPORTED BY THE
"20" - SYNPAC/ASA/CDI EVIDENCE EXTANT IN THE RECORDS OF THIS CASE

"21" - SYNPAC/ASA III.

This is an indication that the supplier of the obnoxious paint THE HONORABLE COURT OF APPEALS COMMITTED
materials has not been properly identified or pinpointed. GRAVE ABUSE OF DISCRETION IN NOT REVERSING
THE RULING OF THE TRIAL COURT 5
2) The "Memorandum" to the appellant’s Production
Department from its Records/Receiving Section is an internal First of all, although the petition states that it is one for
memo that does not indicate which of their several suppliers certiorari under Rule 65 of the Rules of Court as it imputes
delivered the "inferior quality of ink". No witness from the grave abuse of discretion committed by the CA, the Court shall
appellant’s Production Department was presented to attest that treat the petition as one for review on certiorari under Rule 45,
the ink supplied by the appellee was found defective. Not even considering that it was filed within the reglementary period for
the person who prepared the said "Work Process" sheets was filing a petition for review on certiorari and the issues and
presented to explain the entries thereon. arguments raised basically seek the review of the CA judgment.

3) Exhibits "30", "31" and "32" are supposedly memos from Secondly, it should be pointed out that petitioner mistakenly
Frank F. Tanos of the Omega Manufacturing (one of the stated that it was the CA that issued the writ of preliminary
appellant’s customers), alleging that they have rejected certain attachment. Said writ was issued by the trial court. On appeal,
printed materials due to "unwanted smell". Again, these memos the CA merely upheld the trial court’s order, ruling that the
do not indicate the source of such unwanted smell. In any case, applicant’s (herein private respondent’s) affidavit was sufficient
the memos were respectively dated June 15, 1994, July 15, basis for the issuance of the writ because it stated that petitioner
1994 and March 30, 1995 - - which dates are too far away from had the intention of defrauding private respondent by agreeing
the deliveries made by the appellee. to pay its purchases within 30 days but then refused to pay the
same once in possession of the merchandise.
4) The defendant-appellant made returns of ink products to the
appellee much earlier on August 3, 1993, August 6, 1993, The Court, however, finds the issuance of the Writ of
October 13, 1993 and November 3, 1993 as shown by the Preliminary Attachment to be improper. In Philippine Bank of
delivery receipts/return slips of such dates. According to the Communications v. Court
appellee, these were samples that were really returnable if not
acceptable. This explanation appears to be plausible, since the of Appeals,6 the Court held thus:
quantity involved appears to be unusually low, compared to the
questioned and unpaid deliveries. At any rate, no similar Petitioner cannot insist that its allegation that private
delivery receipts or return slips were presented to show that the respondents failed to remit the proceeds of the sale of the
subject ink materials were indeed rejected and returned by the entrusted goods nor to return the same is sufficient for
appellant to the appellee. On the contrary, the appellant admits attachment to issue. We note that petitioner anchors its
that they still have them in their possession for the reason that application upon Section 1(d), Rule 57. This particular
they were not picked up by the appellee’s representative. Such provision was adequately explained in Liberty Insurance
reasoning appears to be shallow and unworthy of credence. For Corporation v. Court of Appeals, as follows –
if the materials were indeed not picked up within a reasonable
time by the appellee’s representative, the appellant should have To sustain an attachment on this ground, it must be shown that
taken steps to return them; otherwise they will be held liable for the debtor in contracting the debt or incurring the obligation
the value thereof. intended to defraud the creditor. The fraud must relate to the
execution of the agreement and must have been the reason
ProvRem (PreAttachment) Full text 062318 54
which induced the other party into giving consent which he inferred from a debtor’s inability to pay or comply with
would not have otherwise given. To constitute a ground for obligations. Also, the fact that PNCC has insufficient assets to
attachment in Section 1 (d), Rule 57 of the Rules of Court, cover its obligations is no indication of fraud even if PNCC
fraud should be committed upon contracting the obligation sued attempts to sell them because it is quite possible that PNCC was
upon. A debt is fraudulently contracted if at the time of entering into a bona fide good faith sale where at least fair
contracting it the debtor has a preconceived plan or intention market value for the assets will be received. In such a situation,
not to pay, as it is in this case. Fraud is a state of mind and need Marubeni would not be in a worse position than before as the
not be proved by direct evidence but may be inferred from the assets will still be there but just liquidated. Also, that the
circumstances attendant in each case (Republic v. Gonzales, 13 Financial Statements do not reflect the loan obligation cannot
SCRA 633). (Emphasis ours) be construed as a scheme to defraud creditors.

We find an absence of factual allegations as to how the fraud As to the last two paragraphs, these merely stated that while
alleged by petitioner was committed. As correctly held by PNCC continued to receive revenues from toll charges and
respondent Court of Appeals, such fraudulent intent not to other loan obligations the debt to Marubeni remained unpaid.
honor the admitted obligation cannot be inferred from the Again, no fraud can be deduced from these acts. While these
debtor’s inability to pay or to comply with the obligations.7 may be sufficient averments to be awarded damages once
(Emphasis supplied) substantiated by competent evidence and for which a writ of
execution will issue, they are not sufficient to obtain the harsh
More recently, in Philippine National Construction Corporation provisional remedy of preliminary attachment which requires
v. Dy,8 the Court ruled that the following allegations in an more than mere deliberate failure to pay a debt. (Emphasis
affidavit to support the application for a Writ of Preliminary supplied)
Attachment is insufficient, to wit:
Similarly, in this case, the bare allegations in the applicant’s
Radstock grounded its application for a Writ of Preliminary affidavit, to wit:
Attachment on Section 1 (d) and (e) of Rule 57 of the Rules of
Court which provides: 6. PCL Industries Manufacturing Corporation, after receiving
the above printing ink materials acted in bad faith when it failed
SECTION 1. Grounds upon which attachment may issue. – A to comply with the terms and conditions of the sale thereby
plaintiff or any proper party may, at the commencement of the prejudicing the interest of Asa Color & Chemical Industries,
action or at any time thereafter, have the property of the adverse Inc.
party attached as security for the satisfaction of any judgment
that may be recovered in the following cases: xxxx

... 10. Defendant [herein petitioner] was guilty of fraud in


contracting the obligation when he [sic] agreed to pay the
(d) In an action against a party who has been guilty of fraud in purchases within 30 days from date of purchases but once in
contracting the debt or incurring the obligation upon which the possession of the merchandise, refused to pay his just and valid
action is brought, or in the performance thereof; obligation thereby using the capital of plaintiff [herein private
respondent] to the latter’s prejudices [sic]. 9
(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 are insufficient to prove that petitioner was guilty of fraud in
creditors; contracting the debt or incurring the obligation. The affidavit
does not contain statements of other factual circumstances to
... show that petitioner, at the time of contracting the obligation,
had a preconceived plan or intention not to pay. Verily, in this
In support of these grounds, the affidavit of merit alleged the case, the mere fact that petitioner failed to pay its purchases
following: upon falling due and despite several demands made by private
respondent, is not enough to warrant the issuance of the harsh
3. Despite repeated demands and periodic statements of provisional remedy of preliminary attachment.
accounts sent to PNCC for the settlement of the credit
obligation Yen 5.46 Billion, its interests and penalties within However, with regard to the other issues raised in this petition,
three (3) days from demand in writing, and in the case of credit the Court finds the same unmeritorious.
obligation for P20,000,000 which PNCC had agreed to
punctually liquidate the said advances to its subsidiary, PNCC This Court reiterated in Child Learning Center, Inc. v.
failed to pay and honor its obligations herein stated. Tagario,10 the well-settled rule that:

xxxx Generally, factual findings of the trial court, affirmed by the


Court of Appeals, are final and conclusive and may not be
5. That PNCC knowing that it is bankrupt and that it does not reviewed on appeal. The established exceptions are: (1) when
have enough assets to meet its existing obligations is now the inference made is manifestly mistaken, absurd or
offering for sale its assets as shown in the reports published in impossible; (2) when there is grave abuse of discretion; (3)
newspapers of general circulation. when the findings are grounded entirely on speculations,
surmises or conjectures; (4) when the judgment of the Court of
6. That the above series of acts as enumerated in paragraphs 3, Appeals is based on misapprehension of facts; (5) when the
4 and 5[,] Marubeni believes, constitute fraud on the part of findings of fact are conflicting; (6) when the Court of Appeals,
PNCC in contracting the obligations mentioned herein and will in making its findings, went beyond the issues of the case and
surely prejudice its creditors. the same is contrary to the admissions of both appellant and
appellee; (7) when the findings of fact are conclusions without
xxxx citation of specific evidence on which they are based; (8) when
the Court of Appeals manifestly overlooked certain relevant
We do not see how the above allegations, even on the facts not disputed by the parties and which, if properly
assumption they are all true, can be considered as falling within considered, would justify a different conclusion; and (9) when
sub-paragraphs (d) and (e). The first three assert, in essence, the findings of fact of the Court of Appeals are premised on the
that PNCC has failed to pay its debt and is offering for sale its absence of evidence and are contradicted by the evidence on
assets knowing that it does not have enough to pay its record. (Emphasis supplied)
obligations. As previously held, fraudulent intent cannot be
ProvRem (PreAttachment) Full text 062318 55
Petitioner insists that the CA should have given weight to its the Court of Appeals dated February 21, 2001 and its
evidence, i.e., the work processes (Exhibits "12" to "21"), Resolution dated May 9, 2001 are AFFIRMED.
which supposedly proved that respondent ASA supplied the ink
that caused the unpleasant smell of petitioner’s finished SO ORDERED.
products. Petitioner argues that the CA erred in concluding that
the work processes failed to prove that the defective ink
definitely came from respondent because said documents
showed not only the name of respondent ASA Color as
supplier, but also the names of several other suppliers.
Petitioner now tries to explain that the other names of suppliers
appearing on the work processes were suppliers of plastic
materials, so the only supplier of ink appearing on said
documents is respondent ASA. It is further pointed out that, as
testified by Jovencio Lim (Lim), petitioner’s President, during
the period covered by the Work Processes, they had only two
suppliers of ink, CDI Sakada and respondent ASA Color.

The Court subjected the records of this case to close scrutiny,


but found that petitioner’s allegation that the CA judgment is
based on misapprehension of facts, is absolutely unfounded.

There is no testimonial evidence whatsoever to support


petitioner’s belated explanation that the other names of
suppliers appearing on the work processes are suppliers of
plastic materials and not ink. Moreover, petitioner’s witnesses
contradict each other. Lim claims that during the period covered
by the work processes, they had only 2 suppliers of ink, namely,
CDI Sakada and ASA Color.11 On the other hand, contrary to
Lim’s claim, Victor Montañez, petitioner’s Head of the
Accounting Department, testified that at that time, they had
three or four suppliers of ink materials.12 The work process
form dated April 29, 1994 marked as Exhibit "20" also listed
the suppliers as "SYNPAC/ASA/ CDI," and the colors used as
"Brown-ASA" and "Yellow-CDI." Hence, petitioner’s own
evidence reveals that there were at least two suppliers of ink for
that batch of production, as Lim has stated that both ASA and
CDI are suppliers of ink materials.13 Hence, the CA was
correct in ruling that petitioner’s evidence failed to prove that it
was indeed respondent ASA Color who supplied the defective
ink.

Having failed to prove that the ink materials delivered by


respondent were defective, petitioner does not have any basis
for claiming the right to return and not pay for the materials it
purchased from respondent. It is, therefore, no longer necessary
to discuss whether it was the obligation of respondent to pick-
up the ink from petitioner’s warehouse.

Petitioner is likewise wrong in assuming that the CA totally


disregarded the testimony of Frank Tanos (Tanos) who
withdrew his testimony on February 24, 1998, or almost a year
after testifying that petitioner’s plastic products were rejected
by customers due to the bad smell of paint. The CA made no
ruling on the admissibility of Tanos’ testimony. The appellate
court merely stated that the memos (Exhibits "30"-"32") from
said witness also do not prove the source of the unwanted smell.
Thus, the CA obviously considered Tanos’ testimony and the
documents he identified for whatever they were worth, but still
found them unconvincing to prove petitioner’s claim that it was
respondent who delivered defective ink materials.

Clearly, the findings of fact of both the trial court and the CA,
as quoted above, are strongly rooted on testimonial and
documentary evidence submitted by both parties. This case
evidently does not fall under any of the enumerated exceptions
to the general rule that factual findings of the trial court,
affirmed by the CA, are final and conclusive and may not be
reviewed on appeal.

IN VIEW OF THE FOREGOING, the petition is partly


GRANTED. Insofar as the issuance of the Writ of Attachment
is concerned, the Court finds the same improper, hence, the
attachment over any property of petitioner by the writ of
preliminary attachment is ordered LIFTED effective upon the
finality of this Decision. In all other respects, the Decision of