G.R. No.

144740 August 31, 2005

SECURITY PACIFIC ASSURANCE CORPORATION, Petitioners,

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

DECISION

CHICO-NAZARIO, J.:

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

THE FACTS

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

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

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

On 03 July 1989, the trial court issued an Order4 for the issuance of a writ of preliminary attachment "upon complainant’s posting of a bond which is hereby
fixed at ₱2,123,400.00 and the Court’s approval of the same under the condition prescribed by Sec. 4 of Rule 57 of the Rules of Court…."

An attachment bond5 was thereafter posted by Reynaldo Anzures and approved by the court. Thereafter, the sheriff attached certain properties of Villaluz,
which were duly annotated on the corresponding certificates of title.

On 25 May 1990, the trial court rendered a Decision6 on the case acquitting Villaluz of the crime charged, but held her civilly liable. The dispositive portion
of the said decision is reproduced hereunder:

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

Villaluz interposed an appeal with the Court of Appeals, and on 30 April 1992, the latter rendered its Decision,8 the dispositive portion of which partly reads:
WHEREFORE, in CA-G.R. CV No. 28780, the Decision of the Regional Trial Court of Manila, Branch 9, dated May 25, 1990, as to the civil aspect of
Criminal Case No. 89-69257, is hereby AFFIRMED, in all respects….

The case was elevated to the Supreme Court (G.R. No. 106214), and during its pendency, Villaluz posted a counter-bond in the amount of ₱2,500,000.00
issued by petitioner Security Pacific Assurance Corporation.9 Villaluz, on the same date10 of the counter-bond, filed an Urgent Motion to Discharge
Attachment.11

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

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

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

Sheriff Reynaldo R. Buazon tried to serve the writ of execution upon Villaluz, but the latter no longer resided in her given address. This being the case, the
sheriff sent a Notice of Garnishment upon petitioner at its office in Makati City, by virtue of the counter-bond posted by Villaluz with said insurance
corporation in the amount of ₱2,500,000.00. As reported by the sheriff, petitioner refused to assume its obligation on the counter-bond it posted for the
discharge of the attachment made by Villaluz.14

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

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

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

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

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

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

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

On 13 December 2000, this Court issued a Resolution25 requiring the private respondents to file their Comment to the Petition, which they did. Petitioner
was required to file its Reply26 thereafter.
Meanwhile, on 17 January 2001, petitioner and the spouses Reynaldo and Zenaida Anzures executed a Memorandum of Understanding (MOU).27 In it, it
was stipulated that as of said date, the total amount garnished from petitioner had amounted to ₱1,541,063.85, and so the remaining amount still sought to
be executed was ₱958,936.15.28 Petitioner tendered and paid the amount of ₱300,000.00 upon signing of the MOU, and the balance of ₱658,936.15 was to
be paid in installment at ₱100,000.00 at the end of each month from February 2001 up to July 2001. At the end of August 2001, the amount of ₱58,936.00
would have to be paid. This would make the aggregate amount paid to the private respondents ₱2,500,000.00.29 There was, however, a proviso in the MOU
which states that "this contract shall not be construed as a waiver or abandonment of the appellate review pending before the Supreme Court and that it
will be subject to all such interim orders and final outcome of said case."

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

ISSUES

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

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

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

THE COURT’S RULING

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

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

In their Comment,33 the private respondents assert that the filing of the counter-bond by Villaluz had already ipso facto discharged the attachment on the
properties and made the petitioner liable on the bond. Upon acceptance of the premium, there was already an express contract for surety between Villaluz
and petitioner in the amount of ₱2,500,000.00 to answer for any adverse judgment/decision against Villaluz.

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

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

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

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

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

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

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

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

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

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

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

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

Petitioner’s argument that the mere filing of a counter-bond in this case cannot automatically discharge the attachment without first an order of discharge
and approval of the bond, is lame.
Under the Rules, there are two (2) ways to secure the discharge of an attachment. First, the party whose property has been attached or a person
appearing on his behalf may post a security. Second, said party may show that the order of attachment was improperly or irregularly issued.42 The first
applies in the instant case. Section 12, Rule 57,43 provides:

SEC. 12. Discharge of attachment upon giving counter-bond. – After a writ of attachment has been enforced, the party whose property has been attached,
or the person appearing on his behalf, may move for the discharge of the attachment wholly or in part on the security given. The court shall, after due
notice and hearing, order the discharge of the attachment if the movant makes a cash deposit, or files a counter-bond executed to the attaching party with
the clerk of the court where the application is made, in an amount equal to that fixed by the court in the order of attachment, exclusive of costs. But if the
attachment is sought to be discharged with respect to a particular property, the counter-bond shall be equal to the value of that property as determined by
the court. In either case, the cash deposit or the counter-bond shall secure the payment of any judgment that the attaching party may recover in the action.
A notice of the deposit shall forthwith be served on the attaching party. Upon the discharge of an attachment in accordance with the provisions of this
section, the property attached, or the proceeds of any sale thereof, shall be delivered to the party making the deposit or giving the counter-bond, or to the
person appearing on his behalf, the deposit or counter-bond aforesaid standing in place of the property so released. Should such counter-bond for any
reason be found to be or become insufficient, and the party furnishing the same fail to file an additional counter-bond, the attaching party may apply for a
new order of attachment.

It should be noted that in G.R. No. 106214, per our Resolution dated 15 January 1997,44 we permitted Villaluz to file a counter-attachment bond. On 17
February 1997,45 we required the private respondents to comment on the sufficiency of the counter-bond posted by Villaluz.

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

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

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

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

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

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

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

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

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

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

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

SO ORDERED.

G.R. No. 158997 October 6, 2008

FORT BONIFACIO DEVELOPMENT CORPORATION petitioner,

vs.
YLLAS LENDING CORPORATION and JOSE S. LAURAYA, in his official capacity as President, respondents.

DECISION

CARPIO, J.:

The Case

This is a petition for review on certiorari1 of the Orders issued on 7 March 20032 and 3 July 20033 by Branch 59 of the Regional Trial Court of Makati City
(trial court) in Civil Case No. 01-1452. The trial court's orders dismissed Fort Bonifacio Development Corporation's (FBDC) third party claim and denied
FBDC's Motion to Intervene and Admit Complaint in Intervention.

The Facts

On 24 April 1998, FBDC executed a lease contract in favor of Tirreno, Inc. (Tirreno) over a unit at the Entertainment Center - Phase 1 of the Bonifacio
Global City in Taguig, Metro Manila. The parties had the lease contract notarized on the day of its execution. Tirreno used the leased premises for Savoia
Ristorante and La Strega Bar.
Two provisions in the lease contract are pertinent to the present case: Section 20, which is about the consequences in case of default of the lessee, and
Section 22, which is about the lien on the properties of the lease. The pertinent portion of Section 20 reads:

Section 20. Default of the Lessee

20.1 The LESSEE shall be deemed to be in default within the meaning of this Contract in case:

(i) The LESSEE fails to fully pay on time any rental, utility and service charge or other financial obligation of the LESSEE under this Contract;

xxx

20.2 Without prejudice to any of the rights of the LESSOR under this Contract, in case of default of the LESSEE, the lessor shall have the right to:

(i) Terminate this Contract immediately upon written notice to the LESSEE, without need of any judicial action or declaration;

xxx

Section 22, on the other hand, reads:

Section 22. Lien on the Properties of the Lessee

Upon the termination of this Contract or the expiration of the Lease Period without the rentals, charges and/or damages, if any, being fully paid or
settled, the LESSOR shall have the right to retain possession of the properties of the LESSEE used or situated in the Leased Premises and the
LESSEE hereby authorizes the LESSOR to offset the prevailing value thereof as appraised by the LESSOR against any unpaid rentals, charges
and/or damages. If the LESSOR does not want to use said properties, it may instead sell the same to third parties and apply the proceeds thereof
against any unpaid rentals, charges and/or damages.

Tirreno began to default in its lease payments in 1999. By July 2000, Tirreno was already in arrears by P5,027,337.91. FBDC and Tirreno entered into a
settlement agreement on 8 August 2000. Despite the execution of the settlement agreement, FBDC found need to send Tirreno a written notice of
termination dated 19 September 2000 due to Tirreno's alleged failure to settle its outstanding obligations. On 29 September 2000, FBDC entered and
occupied the leased premises. FBDC also appropriated the equipment and properties left by Tirreno pursuant to Section 22 of their Contract of Lease as
partial payment for Tirreno's outstanding obligations. Tirreno filed an action for forcible entry against FBDC before the Municipal Trial Court of Taguig.
Tirreno also filed a complaint for specific performance with a prayer for the issuance of a temporary restraining order and/or a writ of preliminary injunction
against FBDC before the Regional Trial Court (RTC) of Pasig City. The RTC of Pasig City dismissed Tirreno's complaint for forum-shopping.

On 4 March 2002, Yllas Lending Corporation and Jose S. Lauraya, in his official capacity as President, (respondents) caused the sheriff of Branch 59 of
the trial court to serve an alias writ of seizure against FBDC. On the same day, FBDC served on the sheriff an affidavit of title and third party claim. FBDC
found out that on 27 September 2001, respondents filed a complaint for Foreclosure of Chattel Mortgage with Replevin, docketed as Civil Case No. 01-
1452, against Tirreno, Eloisa Poblete Todaro (Eloisa), and Antonio D. Todaro (Antonio), in their personal and individual capacities, and in Eloisa's official
capacity as President. In their complaint, respondents alleged that they lent a total of P1.5 million to Tirreno, Eloisa, and Antonio. On 9 November 2000,
Tirreno, Eloisa and Antonio executed a Deed of Chattel Mortgage in favor of respondents as security for the loan. The following properties are covered by
the Chattel Mortgage:
 a. Furniture, Fixtures and Equipment of Savoia Ristorante and La Strega Bar, a restaurant owned and managed by [Tirreno], inclusive of the
leasehold right of [Tirreno] over its rented building where [the] same is presently located.

b. Goodwill over the aforesaid restaurant, including its business name, business sign, logo, and any and all interest therein.

c. Eighteen (18) items of paintings made by Florentine Master, Gino Tili, which are fixtures in the above-named restaurant.

The details and descriptions of the above items are specified in Annex "A" which is hereto attached and forms as an integral part of this Chattel
Mortgage instrument.4

In the Deed of Chattel Mortgage, Tirreno, Eloisa, and Antonio made the following warranties to respondents:

1. WARRANTIES: The MORTGAGOR hereby declares and warrants that:

a. The MORTGAGOR is the absolute owner of the above named properties subject of this mortgage, free from all liens and encumbrances.

b. There exist no transaction or documents affecting the same previously presented for, and/or pending transaction.5

Despite FBDC's service upon him of an affidavit of title and third party claim, the sheriff proceeded with the seizure of certain items from FBDC's premises.
The sheriff's partial return indicated the seizure of the following items from FBDC:

A. FIXTURES

(2) - Smaller Murano Chandeliers

(1) - Main Murano Chandelier

B. EQUIPMENT

(13) - Uni-Air Split Type 2HP Air Cond.

(2) - Uni-Air Split Type 1HP Air Cond.

(3) - Uni-Air Window Type 2HP Air Cond.

(56) - Chairs

(1) - Table

(2) - boxes - Kitchen equipments [sic]6

The sheriff delivered the seized properties to respondents. FBDC questioned the propriety of the seizure and delivery of the properties to respondents
without an indemnity bond before the trial court. FBDC argued that when respondents and Tirreno entered into the chattel mortgage agreement on 9
November 2000, Tirreno no longer owned the mortgaged properties as FBDC already enforced its lien on 29 September 2000.

In ruling on FBDC's motion for leave to intervene and to admit complaint in intervention, the trial court stated the facts as follows:

Before this Court are two pending incidents, to wit: 1) [FBDC's] Third-Party Claim over the properties of [Tirreno] which were seized and delivered
by the sheriff of this Court to [respondents]; and 2) FBDC's Motion to Intervene and to Admit Complaint in Intervention.

Third party claimant, FBDC, anchors its claim over the subject properties on Sections 20.2(i) and 22 of the Contract of Lease executed by [FBDC]
with Tirreno. Pursuant to said Contract of Lease, FBDC took possession of the leased premises and proceeded to sell to third parties the properties
found therein and appropriated the proceeds thereof to pay the unpaid lease rentals of [Tirreno].

FBDC, likewise filed a Motion to Admit its Complaint-in-Intervention.

In Opposition to the third-party claim and the motion to intervene, [respondents] posit that the basis of [FBDC's] third party claim being anchored on
the aforesaid Contract [of] Lease is baseless. [Respondents] contend that the stipulation of the contract of lease partakes of a pledge which is void
under Article 2088 of the Civil Code for being pactum commissorium.

xxx

By reason of the failure of [Tirreno] to pay its lease rental and fees due in the amount of P5,027,337.91, after having notified [Tirreno] of the
termination of the lease, x x x FBDC took possession of [Tirreno.'s] properties found in the premises and sold those which were not of use to it.
Meanwhile, [respondents], as mortgagee of said properties, filed an action for foreclosure of the chattel mortgage with replevin and caused the
seizure of the same properties which [FBDC] took and appropriated in payment of [Tirreno's] unpaid lease rentals.7

The Ruling of the Trial Court

In its order dated 7 March 2003, the trial court stated that the present case raises the questions of who has a better right over the properties of Tirreno and
whether FBDC has a right to intervene in respondents' complaint for foreclosure of chattel mortgage.

In deciding against FBDC, the trial court declared that Section 22 of the lease contract between FBDC and Tirreno is void under Article 2088 of the Civil
Code.8 The trial court stated that Section 22 of the lease contract pledges the properties found in the leased premises as security for the payment of the
unpaid rentals. Moreover, Section 22 provides for the automatic appropriation of the properties owned by Tirreno in the event of its default in the payment
of monthly rentals to FBDC. Since Section 22 is void, it cannot vest title of ownership over the seized properties. Therefore, FBDC cannot assert that its
right is superior to respondents, who are the mortgagees of the disputed properties.

The trial court quoted from Bayer Phils. v. Agana9 to justify its ruling that FBDC should have filed a separate complaint against respondents instead of filing
a motion to intervene. The trial court quoted from Bayer as follows:
 In other words, construing Section 17 of Rule 39 of the Revised Rules of Court (now Section 16 of the 1997 Rules on Civil Procedure), the rights of
third-party claimants over certain properties levied upon by the sheriff to satisfy the judgment may not be taken up in the case where such claims
are presented but in a separate and independent action instituted by the claimants.10

The dispositive portion of the trial court's decision reads:

WHEREFORE, premises considered, [FBDC's] Third Party Claim is hereby DISMISSED. Likewise, the Motion to Intervene and Admit Complaint in
Intervention is DENIED.11

FBDC filed a motion for reconsideration on 9 May 2003. The trial court denied FBDC's motion for reconsideration in an order dated 3 July 2003. FBDC filed
the present petition before this Court to review pure questions of law.

The Issues

FBDC alleges that the trial court erred in the following:

1. Dismissing FBDC's third party claim upon the trial court's erroneous interpretation that FBDC has no right of ownership over the subject
properties because Section 22 of the contract of lease is void for being a pledge and a pactum commissorium;

2. Denying FBDC intervention on the ground that its proper remedy as third party claimant over the subject properties is to file a separate action;
and

3. Depriving FBDC of its properties without due process of law when the trial court erroneously dismissed FBDC's third party claim, denied FBDC's
intervention, and did not require the posting of an indemnity bond for FBDC's protection.12

The Ruling of the Court

The petition has merit.

Taking of Lessee's Properties

without Judicial Intervention

We reproduce Section 22 of the Lease Contract below for easy reference:

Section 22. Lien on the Properties of the Lessee

Upon the termination of this Contract or the expiration of the Lease Period without the rentals, charges and/or damages, if any, being fully paid or
settled, the LESSOR shall have the right to retain possession of the properties of the LESSEE used or situated in the Leased Premises and the
LESSEE hereby authorizes the LESSOR to offset the prevailing value thereof as appraised by the LESSOR against any unpaid rentals, charges
and/or damages. If the LESSOR does not want to use said properties, it may instead sell the same to third parties and apply the proceeds thereof
against any unpaid rentals, charges and/or damages.
Respondents, as well as the trial court, contend that Section 22 constitutes a pactum commissorium, a void stipulation in a pledge contract. FBDC, on the
other hand, states that Section 22 is merely a dacion en pago.

Articles 2085 and 2093 of the Civil Code enumerate the requisites essential to a contract of pledge: (1) the pledge is constituted to secure the fulfillment of
a principal obligation; (2) the pledgor is the absolute owner of the thing pledged; (3) the persons constituting the pledge have the free disposal of their
property or have legal authorization for the purpose; and (4) the thing pledged is placed in the possession of the creditor, or of a third person by common
agreement. Article 2088 of the Civil Code prohibits the creditor from appropriating or disposing the things pledged, and any contrary stipulation is void.

On the other hand, Article 1245 of the Civil Code defines dacion en pago, or dation in payment, as the alienation of property to the creditor in satisfaction of
a debt in money. Dacion en pago is governed by the law on sales. Philippine National Bank v. Pineda13 held that dation in payment requires delivery and
transmission of ownership of a thing owned by the debtor to the creditor as an accepted equivalent of the performance of the obligation. There is no dation
in payment when there is no transfer of ownership in the creditor's favor, as when the possession of the thing is merely given to the creditor by way of
security.

Section 22, as worded, gives FBDC a means to collect payment from Tirreno in case of termination of the lease contract or the expiration of the lease
period and there are unpaid rentals, charges, or damages. The existence of a contract of pledge, however, does not arise just because FBDC has means
of collecting past due rent from Tirreno other than direct payment. The trial court concluded that Section 22 constitutes a pledge because of the presence
of the first three requisites of a pledge: Tirreno's properties in the leased premises secure Tirreno's lease payments; Tirreno is the absolute owner of the
said properties; and the persons representing Tirreno have legal authority to constitute the pledge. However, the fourth requisite, that the thing pledged
is placed in the possession of the creditor, is absent. There is non-compliance with the fourth requisite even if Tirreno's personal properties are found
in FBDC's real property. Tirreno's personal properties are in FBDC's real property because of the Contract of Lease, which gives Tirreno possession of the
personal properties. Since Section 22 is not a contract of pledge, there is no pactum commissorium.

FBDC admits that it took Tirreno's properties from the leased premises without judicial intervention after terminating the Contract of Lease in accordance
with Section 20.2. FBDC further justifies its action by stating that Section 22 is a forfeiture clause in the Contract of Lease and that Section 22 gives FBDC
a remedy against Tirreno's failure to comply with its obligations. FBDC claims that Section 22 authorizes FBDC to take whatever properties that Tirreno left
to pay off Tirreno's obligations.

We agree with FBDC.

A lease contract may be terminated without judicial intervention. Consing v. Jamandre upheld the validity of a contractually-stipulated termination clause:

This stipulation is in the nature of a resolutory condition, for upon the exercise by the [lessor] of his right to take possession of the leased property,
the contract is deemed terminated. This kind of contractual stipulation is not illegal, there being nothing in the law proscribing such kind of
agreement.

xxx

Judicial permission to cancel the agreement was not, therefore necessary because of the express stipulation in the contract of [lease] that the
[lessor], in case of failure of the [lessee] to comply with the terms and conditions thereof, can take-over the possession of the leased premises,
thereby cancelling the contract of sub-lease. Resort to judicial action is necessary only in the absence of a special provision granting the power of
cancellation.14
A lease contract may contain a forfeiture clause. Country Bankers Insurance Corp. v. Court of Appeals upheld the validity of a forfeiture clause as follows:

A provision which calls for the forfeiture of the remaining deposit still in the possession of the lessor, without prejudice to any other obligation still
owing, in the event of the termination or cancellation of the agreement by reason of the lessee's violation of any of the terms and conditions of the
agreement is a penal clause that may be validly entered into. A penal clause is an accessory obligation which the parties attach to a principal
obligation for the purpose of insuring the performance thereof by imposing on the debtor a special prestation (generally consisting in the payment
of a sum of money) in case the obligation is not fulfilled or is irregularly or inadequately fulfilled.15

In Country Bankers, we allowed the forfeiture of the lessee's advance deposit of lease payment. Such a deposit may also be construed as a guarantee of
payment, and thus answerable for any unpaid rent or charges still outstanding at any termination of the lease.

In the same manner, we allow FBDC's forfeiture of Tirreno's properties in the leased premises. By agreement between FBDC and Tirreno, the properties
are answerable for any unpaid rent or charges at any termination of the lease. Such agreement is not contrary to law, morals, good customs, or public
policy. Forfeiture of the properties is the only security that FBDC may apply in case of Tirreno's default in its obligations.

Intervention versus Separate Action

Respondents posit that the right to intervene, although permissible, is not an absolute right. Respondents agree with the trial court's ruling that FBDC's
proper remedy is not intervention but the filing of a separate action. Moreover, respondents allege that FBDC was accorded by the trial court of the
opportunity to defend its claim of ownership in court through pleadings and hearings set for the purpose. FBDC, on the other hand, insists that a third party
claimant may vindicate his rights over properties taken in an action for replevin by intervening in the replevin action itself.

We agree with FBDC.

Both the trial court and respondents relied on our ruling in Bayer Phils. v. Agana16 to justify their opposition to FBDC's intervention and to insist on FBDC's
filing of a separate action. In Bayer, we declared that the rights of third party claimants over certain properties levied upon by the sheriff to satisfy the
judgment may not be taken up in the case where such claims are presented, but in a separate and independent action instituted by the claimants.
However, both respondents and the trial court overlooked the circumstances behind the ruling in Bayer, which makes the Bayer ruling inapplicable to the
present case. The third party in Bayer filed his claim during execution; in the present case, FBDC filed for intervention during the trial.

The timing of the filing of the third party claim is important because the timing determines the remedies that a third party is allowed to file. A third party
claimant under Section 16 of Rule 39 (Execution, Satisfaction and Effect of Judgments)17 of the 1997 Rules of Civil Procedure may vindicate his claim to
the property in a separate action, because intervention is no longer allowed as judgment has already been rendered. A third party claimant under Section
14 of Rule 57 (Preliminary Attachment)18 of the 1997 Rules of Civil Procedure, on the other hand, may vindicate his claim to the property by intervention
because he has a legal interest in the matter in litigation.19

We allow FBDC's intervention in the present case because FBDC satisfied the requirements of Section 1, Rule 19 (Intervention) of the 1997 Rules of Civil
Procedure, which reads as follows:

Section 1. Who may intervene. - A person who has a legal interest in the matter in litigation, or in the success of either of the parties, or an interest
against both, or is so situated as to be adversely affected by a distribution or other disposition of property in the custody of the court or of an officer
thereof may, with leave of court, be allowed to intervene in the action. The court shall consider whether or not the intervention will unduly delay or
 prejudice the adjudication of the rights of the original parties, and whether or not the intervenor's rights may be fully protected in a separate
proceeding.

Although intervention is not mandatory, nothing in the Rules proscribes intervention. The trial court's objection against FBDC's intervention has been set
aside by our ruling that Section 22 of the lease contract is not pactum commissorium.

Indeed, contrary to respondents' contentions, we ruled in BA Finance Corporation v. Court of Appeals that where the mortgagee's right to the possession
of the specific property is evident, the action need only be maintained against the possessor of the property. However, where the mortgagee's right to
possession is put to great doubt, as when a contending party might contest the legal bases for mortgagee's cause of action or an adverse and independent
claim of ownership or right of possession is raised by the contending party, it could become essential to have other persons involved and accordingly
impleaded for a complete determination and resolution of the controversy. Thus:

A chattel mortgagee, unlike a pledgee, need not be in, nor entitled to, the possession of the property, unless and until the mortgagor defaults and
the mortgagee thereupon seeks to foreclose thereon. Since the mortgagee's right of possession is conditioned upon the actual default which itself
may be controverted, the inclusion of other parties, like the debtor or the mortgagor himself, may be required in order to allow a full and conclusive
determination of the case. When the mortgagee seeks a replevin in order to effect the eventual foreclosure of the mortgage, it is not only the
existence of, but also the mortgagor's default on, the chattel mortgage that, among other things, can properly uphold the right to replevy the
property. The burden to establish a valid justification for that action lies with the plaintiff [-mortgagee]. An adverse possessor, who is not the
mortgagor, cannot just be deprived of his possession, let alone be bound by the terms of the chattel mortgage contract, simply because
the mortgagee brings up an action for replevin.20(Emphasis added)

FBDC exercised its lien to Tirreno's properties even before respondents and Tirreno executed their Deed of Chattel Mortgage. FBDC is adversely affected
by the disposition of the properties seized by the sheriff. Moreover, FBDC's intervention in the present case will result in a complete adjudication of the
issues brought about by Tirreno's creation of multiple liens on the same properties and subsequent default in its obligations.

Sheriff's Indemnity Bond

FBDC laments the failure of the trial court to require respondents to file an indemnity bond for FBDC's protection. The trial court, on the other hand, did not
mention the indemnity bond in its Orders dated 7 March 2003 and 3 July 2003.

Pursuant to Section 14 of Rule 57, the sheriff is not obligated to turn over to respondents the properties subject of this case in view of respondents' failure
to file a bond. The bond in Section 14 of Rule 57 (proceedings where property is claimed by third person) is different from the bond in Section 3 of the
same rule (affidavit and bond). Under Section 14 of Rule 57, the purpose of the bond is to indemnify the sheriff against any claim by the intervenor to the
property seized or for damages arising from such seizure, which the sheriff was making and for which the sheriff was directly responsible to the third party.
Section 3, Rule 57, on the other hand, refers to the attachment bond to assure the return of defendant's personal property or the payment of damages to
the defendant if the plaintiff's action to recover possession of the same property fails, in order to protect the plaintiff's right of possession of said property,
or prevent the defendant from destroying the same during the pendency of the suit.

Because of the absence of the indemnity bond in the present case, FBDC may also hold the sheriff for damages for the taking or keeping of the properties
seized from FBDC.

WHEREFORE, we GRANT the petition. We SET ASIDE the Orders dated 7 March 2003 and 3 July 2003 of Branch 59 of the Regional Trial Court of
Makati City in Civil Case No. 01-1452 dismissing Fort Bonifacio Development Corporation's Third Party Claim and denying Fort Bonifacio Development
Corporation's Motion to Intervene and Admit Complaint in Intervention. We REINSTATE Fort Bonifacio Development Corporation's Third Party Claim
and GRANT its Motion to Intervene and Admit Complaint in Intervention. Fort Bonifacio Development Corporation may hold the Sheriff liable for the seizure
and delivery of the properties subject of this case because of the lack of an indemnity bond.

SO ORDERED.

G.R. No. 124642 February 23, 2004

ALFREDO CHING and ENCARNACION CHING, petitioners

vs.
THE HON. COURT OF APPEALS and ALLIED BANKING CORPORATION, respondents.

DECISION

CALLEJO, SR., J.:

This petition for review, under Rule 45 of the Revised Rules of Court, assails the Decision1 of the Court of Appeals (CA) dated November 27, 1995 in CA-
G.R. SP No. 33585, as well as the Resolution2 on April 2, 1996 denying the petitioners’ motion for reconsideration. The impugned decision granted the
private respondent’s petition for certiorariand set aside the Orders of the trial court dated December 15, 19933 and February 17, 19944 nullifying the
attachment of 100,000 shares of stocks of the Citycorp Investment Philippines under the name of petitioner Alfredo Ching.

The following facts are undisputed:

On September 26, 1978, the Philippine Blooming Mills Company, Inc. (PBMCI) obtained a loan of ₱9,000,000.00 from the Allied Banking Corporation
(ABC). By virtue of this loan, the PBMCI, through its Executive Vice-President Alfredo Ching, executed a promissory note for the said amount promising to
pay on December 22, 1978 at an interest rate of 14% per annum.5 As added security for the said loan, on September 28, 1978, Alfredo Ching, together
with Emilio Tañedo and Chung Kiat Hua, executed a continuing guaranty with the ABC binding themselves to jointly and severally guarantee the payment
of all the PBMCI obligations owing the ABC to the extent of ₱38,000,000.00.6 The loan was subsequently renewed on various dates, the last renewal
having been made on December 4, 1980.7

Earlier, on December 28, 1979, the ABC extended another loan to the PBMCI in the amount of ₱13,000,000.00 payable in eighteen months at 16%
interest per annum. As in the previous loan, the PBMCI, through Alfredo Ching, executed a promissory note to evidence the loan maturing on June 29,
1981.8 This was renewed once for a period of one month.9

The PBMCI defaulted in the payment of all its loans. Hence, on August 21, 1981, the ABC filed a complaint for sum of money with prayer for a writ of
preliminary attachment against the PBMCI to collect the ₱12,612,972.88 exclusive of interests, penalties and other bank charges. Impleaded as co-
defendants in the complaint were Alfredo Ching, Emilio Tañedo and Chung Kiat Hua in their capacity as sureties of the PBMCI.

The case was docketed as Civil Case No. 142729 in the Regional Trial Court of Manila, Branch XVIII.10 In its application for a writ of preliminary
attachment, the ABC averred that the "defendants are guilty of fraud in incurring the obligations upon which the present action is brought11 in that they
falsely represented themselves to be in a financial position to pay their obligation upon maturity thereof."12 Its supporting affidavit stated, inter alia, that the
"[d]efendants have removed or disposed of their properties, or [are] ABOUT to do so, with intent to defraud their creditors."13
On August 26, 1981, after an ex-parte hearing, the trial court issued an Order denying the ABC’s application for a writ of preliminary attachment. The trial
court decreed that the grounds alleged in the application and that of its supporting affidavit "are all conclusions of fact and of law" which do not warrant the
issuance of the writ prayed for.14On motion for reconsideration, however, the trial court, in an Order dated September 14, 1981, reconsidered its previous
order and granted the ABC’s application for a writ of preliminary attachment on a bond of ₱12,700,000. The order, in relevant part, stated:

With respect to the second ground relied upon for the grant of the writ of preliminary attachment ex-parte, which is the alleged disposal of properties by the
defendants with intent to defraud creditors as provided in Sec. 1(e) of Rule 57 of the Rules of Court, the affidavits can only barely justify the issuance of
said writ as against the defendant Alfredo Ching who has allegedly bound himself jointly and severally to pay plaintiff the defendant corporation’s obligation
to the plaintiff as a surety thereof.

WHEREFORE, let a writ of preliminary attachment issue as against the defendant Alfredo Ching requiring the sheriff of this Court to attach all the
properties of said Alfredo Ching not exceeding ₱12,612,972.82 in value, which are within the jurisdiction of this Court and not exempt from execution upon,
the filing by plaintiff of a bond duly approved by this Court in the sum of Twelve Million Seven Hundred Thousand Pesos (₱12,700,000.00) executed in
favor of the defendant Alfredo Ching to secure the payment by plaintiff to him of all the costs which may be adjudged in his favor and all damages he may
sustain by reason of the attachment if the court shall finally adjudge that the plaintiff was not entitled thereto.

SO ORDERED.15

Upon the ABC’s posting of the requisite bond, the trial court issued a writ of preliminary attachment. Subsequently, summonses were served on the
defendants,16 save Chung Kiat Hua who could not be found.

Meanwhile, on April 1, 1982, the PBMCI and Alfredo Ching jointly filed a petition for suspension of payments with the Securities and Exchange
Commission (SEC), docketed as SEC Case No. 2250, at the same time seeking the PBMCI’s rehabilitation.17

On July 9, 1982, the SEC issued an Order placing the PBMCI’s business, including its assets and liabilities, under rehabilitation receivership, and ordered
that "all actions for claims listed in Schedule "A" of the petition pending before any court or tribunal are hereby suspended in whatever stage the same may
be until further orders from the Commission."18 The ABC was among the PBMCI’s creditors named in the said schedule.

Subsequently, on January 31, 1983, the PBMCI and Alfredo Ching jointly filed a Motion to Dismiss and/or motion to suspend the proceedings in Civil Case
No. 142729 invoking the PBMCI’s pending application for suspension of payments (which Ching co-signed) and over which the SEC had already assumed
jurisdiction.19 On February 4, 1983, the ABC filed its Opposition thereto.20

In the meantime, on July 26, 1983, the deputy sheriff of the trial court levied on attachment the 100,000 common shares of Citycorp stocks in the name of
Alfredo Ching.21

Thereafter, in an Order dated September 16, 1983, the trial court partially granted the aforementioned motion by suspending the proceedings only with
respect to the PBMCI. It denied Ching’s motion to dismiss the complaint/or suspend the proceedings and pointed out that P.D. No. 1758 only concerns the
activities of corporations, partnerships and associations and was never intended to regulate and/or control activities of individuals. Thus, it directed the
individual defendants to file their answers.22

Instead of filing an answer, Ching filed on January 14, 1984 a Motion to Suspend Proceedings on the same ground of the pendency of SEC Case No.
2250. This motion met the opposition from the ABC.23
On January 20, 1984, Tañedo filed his Answer with counterclaim and cross-claim.24 Ching eventually filed his Answer on July 12, 1984.25

On October 25, 1984, long after submitting their answers, Ching filed an Omnibus Motion,26 again praying for the dismissal of the complaint or suspension
of the proceedings on the ground of the July 9, 1982 Injunctive Order issued in SEC Case No. 2250. He averred that as a surety of the PBMCI, he must
also necessarily benefit from the defenses of his principal. The ABC opposed Ching’s omnibus motion.

Emilio Y. Tañedo, thereafter, filed his own Omnibus Motion27 praying for the dismissal of the complaint, arguing that the ABC had "abandoned and waived"
its right to proceed against the continuing guaranty by its act of resorting to preliminary attachment.

On December 17, 1986, the ABC filed a Motion to Reduce the amount of his preliminary attachment bond from ₱12,700,000 to ₱6,350,000.28 Alfredo Ching
opposed the motion,29 but on April 2, 1987, the court issued an Order setting the incident for further hearing on May 28, 1987 at 8:30 a.m. for the parties to
adduce evidence on the actual value of the properties of Alfredo Ching levied on by the sheriff.30

On March 2, 1988, the trial court issued an Order granting the motion of the ABC and rendered the attachment bond of ₱6,350,000.31

On November 16, 1993, Encarnacion T. Ching, assisted by her husband Alfredo Ching, filed a Motion to Set Aside the levy on attachment. She alleged
inter alia that the 100,000 shares of stocks levied on by the sheriff were acquired by her and her husband during their marriage out of conjugal funds after
the Citycorp Investment Philippines was established in 1974. Furthermore, the indebtedness covered by the continuing guaranty/comprehensive suretyship
contract executed by petitioner Alfredo Ching for the account of PBMCI did not redound to the benefit of the conjugal partnership. She, likewise, alleged
that being the wife of Alfredo Ching, she was a third-party claimant entitled to file a motion for the release of the properties.32 She attached therewith a copy
of her marriage contract with Alfredo Ching.33

The ABC filed a comment on the motion to quash preliminary attachment and/or motion to expunge records, contending that:

2.1 The supposed movant, Encarnacion T. Ching, is not a party to this present case; thus, she has no personality to file any motion before this
Honorable Court;

2.2 Said supposed movant did not file any Motion for Intervention pursuant to Section 2, Rule 12 of the Rules of Court;

2.3 Said Motion cannot even be construed to be in the nature of a Third-Party Claim conformably with Sec. 14, Rule 57 of the Rules of Court.

3. Furthermore, assuming in gracia argumenti that the supposed movant has the required personality, her Motion cannot be acted upon by this Honorable
Court as the above-entitled case is still in the archives and the proceedings thereon still remains suspended. And there is no previous Motion to revive the
same.34

The ABC also alleged that the motion was barred by prescription or by laches because the shares of stocks were in custodia legis.

During the hearing of the motion, Encarnacion T. Ching adduced in evidence her marriage contract to Alfredo Ching to prove that they were married on
January 8, 1960;35 the articles of incorporation of Citycorp Investment Philippines dated May 14, 1979;36 and, the General Information Sheet of the
corporation showing that petitioner Alfredo Ching was a member of the Board of Directors of the said corporation and was one of its top twenty
stockholders.
On December 10, 1993, the Spouses Ching filed their Reply/Opposition to the motion to expunge records.

Acting on the aforementioned motion, the trial court issued on December 15, 1993 an Order37 lifting the writ of preliminary attachment on the shares of
stocks and ordering the sheriff to return the said stocks to the petitioners. The dispositive portion reads:

WHEREFORE, the instant Motion to Quash Preliminary Attachment, dated November 9, 1993, is hereby granted. Let the writ of preliminary attachment
subject matter of said motion, be quashed and lifted with respect to the attached 100,000 common shares of stock of Citycorp Investment Philippines in the
name of the defendant Alfredo Ching, the said shares of stock to be returned to him and his movant-spouse by Deputy Sheriff Apolonio A. Golfo who
effected the levy thereon on July 26, 1983, or by whoever may be presently in possession thereof.

SO ORDERED.38

The plaintiff Allied Banking Corporation filed a motion for the reconsideration of the order but denied the same on February 17, 1994. The petitioner bank
forthwith filed a petition for certiorari with the CA, docketed as CA-G.R. SP No. 33585, for the nullification of the said order of the court, contending that:

1. The respondent Judge exceeded his authority thereby acted without jurisdiction in taking cognizance of, and granting a "Motion" filed by a
complete stranger to the case.

2. The respondent Judge committed a grave abuse of discretion in lifting the writ of preliminary attachment without any basis in fact and in law, and
contrary to established jurisprudence on the matter.39

On November 27, 1995, the CA rendered judgment granting the petition and setting aside the assailed orders of the trial court, thus:

WHEREFORE, premises considered, the petition is GRANTED, hereby setting aside the questioned orders (dated December 15, 1993 and February 17,
1994) for being null and void.

SO ORDERED.40

The CA sustained the contention of the private respondent and set aside the assailed orders. According to the CA, the RTC deprived the private
respondent of its right to file a bond under Section 14, Rule 57 of the Rules of Court. The petitioner Encarnacion T. Ching was not a party in the trial court;
hence, she had no right of action to have the levy annulled with a motion for that purpose. Her remedy in such case was to file a separate action against
the private respondent to nullify the levy on the 100,000 Citycorp shares of stocks. The court stated that even assuming that Encarnacion T. Ching had the
right to file the said motion, the same was barred by laches.

Citing Wong v. Intermediate Appellate Court,41 the CA ruled that the presumption in Article 160 of the New Civil Code shall not apply where, as in this case,
the petitioner-spouses failed to prove the source of the money used to acquire the shares of stock. It held that the levied shares of stocks belonged to
Alfredo Ching, as evidenced by the fact that the said shares were registered in the corporate books of Citycorp solely under his name. Thus, according to
the appellate court, the RTC committed a grave abuse of its discretion amounting to excess or lack of jurisdiction in issuing the assailed orders. The
petitioners’ motion for reconsideration was denied by the CA in a Resolution dated April 2, 1996.

The petitioner-spouses filed the instant petition for review on certiorari, asserting that the RTC did not commit any grave abuse of discretion amounting to
excess or lack of jurisdiction in issuing the assailed orders in their favor; hence, the CA erred in reversing the same. They aver that the source of funds in
the acquisition of the levied shares of stocks is not the controlling factor when invoking the presumption of the conjugal nature of stocks under Art.
160,42 and that such presumption subsists even if the property is registered only in the name of one of the spouses, in this case, petitioner Alfredo
Ching.43 According to the petitioners, the suretyship obligation was not contracted in the pursuit of the petitioner-husband’s profession or business.44 And,
contrary to the ruling of the CA, where conjugal assets are attached in a collection suit on an obligation contracted by the husband, the wife should exhaust
her motion to quash in the main case and not file a separate suit.45 Furthermore, the petitioners contend that under Art. 125 of the Family Code, the
petitioner-husband’s gratuitous suretyship is null and void ab initio,46 and that the share of one of the spouses in the conjugal partnership remains inchoate
until the dissolution and liquidation of the partnership.47

In its comment on the petition, the private respondent asserts that the CA correctly granted its petition for certiorari nullifying the assailed order. It contends
that the CA correctly relied on the ruling of this Court in Wong v. Intermediate Appellate Court. Citing Cobb-Perez v. Lantin and G-Tractors, Inc. v. Court of
Appeals, the private respondent alleges that the continuing guaranty and suretyship executed by petitioner Alfredo Ching in pursuit of his profession or
business. Furthermore, according to the private respondent, the right of the petitioner-wife to a share in the conjugal partnership property is merely
inchoate before the dissolution of the partnership; as such, she had no right to file the said motion to quash the levy on attachment of the shares of stocks.

The issues for resolution are as follows: (a) whether the petitioner-wife has the right to file the motion to quash the levy on attachment on the 100,000
shares of stocks in the Citycorp Investment Philippines; (b) whether or not the RTC committed a grave abuse of its discretion amounting to excess or lack
of jurisdiction in issuing the assailed orders.

On the first issue, we agree with the petitioners that the petitioner-wife had the right to file the said motion, although she was not a party in Civil Case No.
142729.48

In Ong v. Tating,49 we held that the sheriff may attach only those properties of the defendant against whom a writ of attachment has been issued by the
court. When the sheriff erroneously levies on attachment and seizes the property of a third person in which the said defendant holds no right or interest, the
superior authority of the court which has authorized the execution may be invoked by the aggrieved third person in the same case. Upon application of the
third person, the court shall order a summary hearing for the purpose of determining whether the sheriff has acted rightly or wrongly in the performance of
his duties in the execution of the writ of attachment, more specifically if he has indeed levied on attachment and taken hold of property not belonging to the
plaintiff. If so, the court may then order the sheriff to release the property from the erroneous levy and to return the same to the third person. In resolving
the motion of the third party, the court does not and cannot pass upon the question of the title to the property with any character of finality. It can treat the
matter only insofar as may be necessary to decide if the sheriff has acted correctly or not. If the claimant’s proof does not persuade the court of the validity
of the title, or right of possession thereto, the claim will be denied by the court. The aggrieved third party may also avail himself of the remedy of "terceria"
by executing an affidavit of his title or right of possession over the property levied on attachment and serving the same to the office making the levy and the
adverse party. Such party may also file an action to nullify the levy with damages resulting from the unlawful levy and seizure, which should be a totally
separate and distinct action from the former case. The above-mentioned remedies are cumulative and any one of them may be resorted to by one third-
party claimant without availing of the other remedies.50

In this case, the petitioner-wife filed her motion to set aside the levy on attachment of the 100,000 shares of stocks in the name of petitioner-husband
claiming that the said shares of stocks were conjugal in nature; hence, not liable for the account of her husband under his continuing guaranty and
suretyship agreement with the PBMCI. The petitioner-wife had the right to file the motion for said relief.

On the second issue, we find and so hold that the CA erred in setting aside and reversing the orders of the RTC. The private respondent, the petitioner in
the CA, was burdened to prove that the RTC committed a grave abuse of its discretion amounting to excess or lack of jurisdiction. The tribunal acts without
jurisdiction if it does not have the legal purpose to determine the case; there is excess of jurisdiction where the tribunal, being clothed with the power to
determine the case, oversteps its authority as determined by law. There is grave abuse of discretion where the tribunal acts in a capricious, whimsical,
arbitrary or despotic manner in the exercise of its judgment and is equivalent to lack of jurisdiction.51

It was incumbent upon the private respondent to adduce a sufficiently strong demonstration that the RTC acted whimsically in total disregard of evidence
material to, and even decide of, the controversy before certiorari will lie. A special civil action for certiorari is a remedy designed for the correction of errors
of jurisdiction and not errors of judgment. When a court exercises its jurisdiction, an error committed while so engaged does not deprive it of its jurisdiction
being exercised when the error is committed.52

After a comprehensive review of the records of the RTC and of the CA, we find and so hold that the RTC did not commit any grave abuse of its discretion
amounting to excess or lack of jurisdiction in issuing the assailed orders.

Article 160 of the New Civil Code provides that all the properties acquired during the marriage are presumed to belong to the conjugal partnership, unless it
be proved that it pertains exclusively to the husband, or to the wife. In Tan v. Court of Appeals,53 we held that it is not even necessary to prove that the
properties were acquired with funds of the partnership. As long as the properties were acquired by the parties during the marriage, they are presumed to
be conjugal in nature. In fact, even when the manner in which the properties were acquired does not appear, the presumption will still apply, and the
properties will still be considered conjugal. The presumption of the conjugal nature of the properties acquired during the marriage subsists in the absence
of clear, satisfactory and convincing evidence to overcome the same.54

In this case, the evidence adduced by the petitioners in the RTC is that the 100,000 shares of stocks in the Citycorp Investment Philippines were issued to
and registered in its corporate books in the name of the petitioner-husband when the said corporation was incorporated on May 14, 1979. This was done
during the subsistence of the marriage of the petitioner-spouses. The shares of stocks are, thus, presumed to be the conjugal partnership property of the
petitioners. The private respondent failed to adduce evidence that the petitioner-husband acquired the stocks with his exclusive money.55 The barefaced
fact that the shares of stocks were registered in the corporate books of Citycorp Investment Philippines solely in the name of the petitioner-husband does
not constitute proof that the petitioner-husband, not the conjugal partnership, owned the same.56 The private respondent’s reliance on the rulings of this
Court in Maramba v. Lozano57 and Associated Insurance & Surety Co., Inc. v. Banzon58 is misplaced. In the Maramba case, we held that where there is no
showing as to when the property was acquired, the fact that the title is in the wife’s name alone is determinative of the ownership of the property. The
principle was reiterated in the Associated Insurance case where the uncontroverted evidence showed that the shares of stocks were acquired during the
marriage of the petitioners.

Instead of fortifying the contention of the respondents, the ruling of this Court in Wong v. Intermediate Appellate Court59 buttresses the case for the
petitioners. In that case, we ruled that he who claims that property acquired by the spouses during their marriage is not conjugal partnership property but
belongs to one of them as his personal property is burdened to prove the source of the money utilized to purchase the same. In this case, the private
respondent claimed that the petitioner-husband acquired the shares of stocks from the Citycorp Investment Philippines in his own name as the owner
thereof. It was, thus, the burden of the private respondent to prove that the source of the money utilized in the acquisition of the shares of stocks was that
of the petitioner-husband alone. As held by the trial court, the private respondent failed to adduce evidence to prove this assertion.

The CA, likewise, erred in holding that by executing a continuing guaranty and suretyship agreement with the private respondent for the payment of the
PBMCI loans, the petitioner-husband was in the exercise of his profession, pursuing a legitimate business. The appellate court erred in concluding that the
conjugal partnership is liable for the said account of PBMCI under Article 161(1) of the New Civil Code.

Article 161(1) of the New Civil Code (now Article 121[2 and 3]60 of the Family Code of the Philippines) provides:

Art. 161. The conjugal partnership shall be liable for:

(1) All debts and obligations contracted by the husband for the benefit of the conjugal partnership, and those contracted by the wife, also for the same
purpose, in the cases where she may legally bind the partnership.

The petitioner-husband signed the continuing guaranty and suretyship agreement as security for the payment of the loan obtained by the PBMCI from the
private respondent in the amount of ₱38,000,000. In Ayala Investment and Development Corp. v. Court of Appeals,61 this Court ruled "that the signing as
surety is certainly not an exercise of an industry or profession. It is not embarking in a business. No matter how often an executive acted on or was
persuaded to act as surety for his own employer, this should not be taken to mean that he thereby embarked in the business of suretyship or guaranty."

For the conjugal partnership to be liable for a liability that should appertain to the husband alone, there must be a showing that some advantages accrued
to the spouses. Certainly, to make a conjugal partnership responsible for a liability that should appertain alone to one of the spouses is to frustrate the
objective of the New Civil Code to show the utmost concern for the solidarity and well being of the family as a unit. The husband, therefore, is denied the
power to assume unnecessary and unwarranted risks to the financial stability of the conjugal partnership.62

In this case, the private respondent failed to prove that the conjugal partnership of the petitioners was benefited by the petitioner-husband’s act of
executing a continuing guaranty and suretyship agreement with the private respondent for and in behalf of PBMCI. The contract of loan was between the
private respondent and the PBMCI, solely for the benefit of the latter. No presumption can be inferred from the fact that when the petitioner-husband
entered into an accommodation agreement or a contract of surety, the conjugal partnership would thereby be benefited. The private respondent was
burdened to establish that such benefit redounded to the conjugal partnership.63

It could be argued that the petitioner-husband was a member of the Board of Directors of PBMCI and was one of its top twenty stockholders, and that the
shares of stocks of the petitioner-husband and his family would appreciate if the PBMCI could be rehabilitated through the loans obtained; that the
petitioner-husband’s career would be enhanced should PBMCI survive because of the infusion of fresh capital. However, these are not the benefits
contemplated by Article 161 of the New Civil Code. The benefits must be those directly resulting from the loan. They cannot merely be a by-product or a
spin-off of the loan itself.64

This is different from the situation where the husband borrows money or receives services to be used for his own business or profession. In the Ayala
case, we ruled that it is such a contract that is one within the term "obligation for the benefit of the conjugal partnership." Thus:

(A) If the husband himself is the principal obligor in the contract, i.e., he directly received the money and services to be used in or for his own business or
his own profession, that contract falls within the term "… obligations for the benefit of the conjugal partnership." Here, no actual benefit may be proved. It is
enough that the benefit to the family is apparent at the time of the signing of the contract. From the very nature of the contract of loan or services, the
family stands to benefit from the loan facility or services to be rendered to the business or profession of the husband. It is immaterial, if in the end, his
business or profession fails or does not succeed. Simply stated, where the husband contracts obligations on behalf of the family business, the law
presumes, and rightly so, that such obligation will redound to the benefit of the conjugal partnership.65

The Court held in the same case that the rulings of the Court in Cobb-Perez and G-Tractors, Inc. are not controlling because the husband, in those cases,
contracted the obligation for his own business. In this case, the petitioner-husband acted merely as a surety for the loan contracted by the PBMCI from the
private respondent.

IN LIGHT OF ALL THE FOREGOING, the petition is GRANTED. The Decision and Resolution of the Court of Appeals are SET ASIDE AND REVERSED.
The assailed orders of the RTC are AFFIRMED.

SO ORDERED.
G.R. No. 155868 February 6, 2007

SPOUSES GREGORIO and JOSEFA YU, Petitioners,

vs.
NGO YET TE, doing business under the name and style, ESSENTIAL MANUFACTURING, Respondent.

DECISION

AUSTRIA-MARTINEZ, J.:

Before us is a Petition for Review on Certiorari under Rule 45 of the Rules of Court assailing the March 21, 2001 Decision1 of the Court of Appeals (CA) in
CA-G.R. CV No. 522462 and its October 14, 2002 Resolution.3

The antecedent facts are not disputed.

Spouses Gregorio and Josefa Yu (Spouses Yu) purchased from Ngo Yet Te (Te) bars of detergent soap worth ₱594,240.00, and issued to the latter three
postdated checks 4 as payment of the purchase price. When Te presented the checks at maturity for encashment, said checks were returned dishonored
and stamped "ACCOUNT CLOSED".5 Te demanded6 payment from Spouses Yu but the latter did not heed her demands. Acting through her son and
attorney-in-fact, Charry Sy (Sy), Te filed with the Regional Trial Court (RTC), Branch 75, Valenzuela, Metro Manila, a Complaint,7 docketed as Civil Case
No. 4061-V-93, for Collection of Sum of Money and Damages with Prayer for Preliminary Attachment.

In support of her prayer for preliminary attachment, Te attached to her Complaint an Affidavit executed by Sy that Spouses Yu were guilty of fraud in
entering into the purchase agreement for they never intended to pay the contract price, and that, based on reliable information, they were about to move or
dispose of their properties to defraud their creditors.8

Upon Te’s posting of an attachment bond,9 the RTC issued an Order of Attachment/Levy10 dated March 29, 1993 on the basis of which Sheriff Constancio
Alimurung (Sheriff Alimurung) of RTC, Branch 19, Cebu City levied and attached Spouses Yu’s properties in Cebu City consisting of one parcel of land
(known as Lot No. 11)11 and four units of motor vehicle, specifically, a Toyota Ford Fierra, a jeep, a Canter delivery van, and a passenger bus.12

On April 21, 1993, Spouses Yu filed an Answer13 with counterclaim for damages arising from the wrongful attachment of their properties, specifically, actual
damages amounting to ₱1,500.00 per day; moral damages, ₱1,000,000.00; and exemplary damages, ₱50,000.00. They also sought payment of
₱120,000.00 as attorney’s fees and ₱80,000.00 as litigation expenses.14 On the same date, Spouses Yu filed an Urgent Motion to Dissolve Writ of
Preliminary Attachment.15 They also filed a Claim Against Surety Bond16 in which they demanded payment from Visayan Surety and Insurance Corporation
(Visayan Surety), the surety which issued the attachment bond, of the sum of ₱594,240.00, representing the damages they allegedly sustained as a
consequence of the wrongful attachment of their properties.

While the RTC did not resolve the Claim Against Surety Bond, it issued an Order17 dated May 3, 1993, discharging from attachment the Toyota Ford Fierra,
jeep, and Canter delivery van on humanitarian grounds, but maintaining custody of Lot No. 11 and the passenger bus. Spouses Yu filed a Motion for
Reconsideration18 which the RTC denied.19

Dissatisfied, they filed with the CA a Petition for Certiorari,20 docketed as CA-G.R. SP No. 31230, in which a Decision21 was rendered on September 14,
1993, lifting the RTC Order of 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 general averments. Neither
pleading states in particular how the fraud was committed or the badges of fraud purportedly committed by the petitioners to establish that the latter never
had an intention to pay the obligation; neither is there a statement of the particular acts committed to show that the petitioners are in fact disposing of their
properties to defraud creditors. x x x.

xxxx

Moreover, at the hearing on the motion to discharge the order of attachment x x x petitioners presented evidence showing that private respondent has
been extending multi-million peso credit facilities to the petitioners for the past seven years and that the latter have consistently settled their obligations.
This was not denied by private respondent. Neither does the private respondent contest the petitioners’ allegations that they have been recently robbed of
properties of substantial value, hence their inability to pay on time. By the respondent court’s own pronouncements, it appears that the order of attachment
was upheld because of the admitted financial reverses the petitioner is undergoing.

This is reversible error. Insolvency is not a ground for attachment especially when defendant has not been shown to have committed any act intended to
defraud its creditors x x x.

For lack of factual basis to justify its issuance, the writ of preliminary attachment issued by the respondent court was improvidently issued and should be
discharged.22

From said CA Decision, Te filed a Motion for Reconsideration but to no avail.23

Te filed with us a Petition for Review on Certiorari24 but we denied the same in a Resolution dated June 8, 1994 for having 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 Resolution was made on July 22, 1994.26 Thus, the finding
of the CA in its September 14, 1993 Decision in CA-G.R. SP No. 31230 on the wrongfulness of the attachment/levy of the properties of Spouses Yu
became conclusive and binding.

However, on July 20, 1994, the RTC, apparently not informed of the SC Decision, rendered a Decision, the dispositive portion of which reads:

WHEREFORE, premises considered, the Court finds that the plaintiff has established a valid civil cause of action against the defendants, and therefore,
renders this judgment in favor of the plaintiff and against the defendants, and hereby orders the following:

1) Defendants are hereby ordered or directed to pay the plaintiff the sum of ₱549,404.00, with interest from the date of the filing of this case (March
3, 1993);

2) The Court, for reasons aforestated, hereby denies the grant of damages to the plaintiff;

3) The Court hereby adjudicates a reasonable attorney’s fees and litigation expenses of ₱10,000.00 in favor of the plaintiff;

4) On the counterclaim, this Court declines to rule on this, considering that the question of the attachment which allegedly gave rise to the damages
incurred by the defendants is being determined by the Supreme Court.

SO ORDERED.27 (Emphasis ours)

Spouses Yu filed with the RTC a Motion for Reconsideration28 questioning the disposition of their counterclaim. They also filed a Manifestation29 informing
the RTC of our June 8, 1994 Resolution in G.R. No. 114700.

The RTC issued an Order dated August 9, 1994, which read:

xxxx

(2) With regard the counter claim filed by the defendants against the plaintiff for the alleged improvident issuance of this Court thru its former
Presiding Judge (Honorable Emilio Leachon, Jr.), the same has been ruled with definiteness by the Supreme Court that, indeed, the issuance by
the Court of the writ of preliminary attachment appears to have been improvidently done, but nowhere in the decision of the Supreme Court
and for that matter, the Court of Appeal’s decision which was in effect sustained by the High Court, contains any ruling or directive or
imposition, of any damages to be paid by the plaintiff to the defendants, in other words, both the High Court and the CA, merely declared the
previous issuance of the writ of attachment by this Court thru its former presiding judge to be improvidently issued, but it did not award any
damages of any kind to the defendants, hence, unless the High Court or the CA rules on this, this Court coud not grant any damages by virtue of
the improvident attachment made by this Court thru its former presiding judge, which was claimed by the defendants in their counter claim.

(3) This Court hereby reiterates in toto its Decision in this case dated July 20, 1994. 30 (Emphasis ours)

The RTC also issued an Order dated December 2, 1994,31 denying the Motion for Reconsideration of Spouses Yu.32

In the same December 2, 1994 Order, the RTC granted two motions filed by Te, a Motion to Correct and to Include Specific Amount for Interest and a
Motion for Execution Pending Appeal.33 The RTC also denied Spouses Yu’s Notice of Appeal34 from the July 20, 1994 Decision and August 9, 1994 Order
of the RTC.

From said December 2, 1994 RTC Order, Spouses Yu filed another Notice of Appeal 35 which the RTC also denied in an Order36 dated January 5, 1995.

Spouses Yu filed with the CA a Petition37 for Certiorari, Prohibition and Mandamus, docketed as CA-G.R. SP No. 36205, questioning the denial of their
Notices of Appeal; and seeking the modification of the July 20, 1994 Decision and the issuance of a Writ of Execution. The CA granted the Petition in a
Decision38 dated June 22, 1995.

Hence, Spouses Yu filed with the CA an appeal39 docketed as CA-G.R. CV No. 52246, questioning only that portion of the July 20, 1994 Decision where
the RTC declined to rule on their counterclaim for damages.40 However, Spouses Yu did not dispute the specific monetary awards granted to respondent
Te; and therefore, the same have become final and executory.

Although in the herein assailed Decision41 dated March 21, 2001, the CA affirmed in toto the RTC Decision, it nonetheless made a ruling on the
counterclaim of Spouses Yu by declaring that the latter had failed to adduce sufficient evidence of their entitlement to damages.

Spouses Yu filed a Motion for Reconsideration42 but the CA denied it in the herein assailed Resolution43 dated October 14, 2002.

Spouses Yu filed the present Petition raising the following issues:

 I. Whether or not the appellate court erred in not holding that the writ of attachment was procured in bad faith, after it was established by final
judgment that there was no true ground therefor.

II. Whether or not the appellate court erred in refusing to award actual, moral and exemplary damages after it was established by final judgment
that the writ of attachment was procured with no true ground for its issuance.44

There is one preliminary matter to set straight before we resolve the foregoing issues.

According to respondent Te,45 regardless of the evidence presented by Spouses Yu, their counterclaim was correctly dismissed for failure to comply with
the procedure laid down in Section 20 of Rule 57. Te contends that as Visayan Surety was not notified of the counterclaim, no judgment thereon could be
validly rendered.

Such argument is not only flawed, it is also specious.

As stated earlier, Spouses Yu filed a Claim Against Surety Bond on the same day they filed their Answer and Urgent Motion to Dissolve Writ of Preliminary
Attachment.46 Further, the records reveal that on June 18, 1993, Spouses Yu filed with the RTC a Motion to Give Notice to Surety.47 The RTC granted the
Motion in an Order48 dated June 23, 1993. Accordingly, Visayan Surety was notified of the pre-trial conference to apprise it of a pending claim against its
attachment bond. Visayan Surety received the notice on July 12, 1993 as shown by a registry return receipt attached to the records.49

Moreover, even if it were true that Visayan Surety was left in the proceedings a quo, such omission is not fatal to the cause of 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 claim for damages against the principal in the replevin
bond was heard, then as a matter of procedural due process the surety is entitled to be heard when the judgment for damages against the principal is
sought to be enforced against the surety’s replevin bond."51 This remedy is applicable for the procedures governing claims for damages

on an attachment bond and on a replevin bond are the same.52

We now proceed to resolve the issues jointly.

Spouses Yu contend that they are entitled to their counterclaim for damages as a matter of right in view of the finality of our June 8, 1994 Resolution in
G.R. No. 114700 which affirmed the finding of the CA in its September 14, 1993 Decision in CA-G.R. SP No. 31230 that respondent Te had wrongfully
caused the attachment of their properties. Citing Javellana v. D.O. Plaza Enterprises, Inc.,53 they argue that they should be awarded damages based solely
on the CA finding that the attachment was illegal for it already suggests that Te acted with malice when she applied for attachment. And even if we were to
assume that Te did not act with malice, still she should be held liable for the aggravation she inflicted when she applied for attachment even when she was
clearly not entitled to it.54

That is a rather limited understanding of Javellana. The counterclaim disputed therein was not for moral damages and therefore, there was no need to
prove malice. As early as in Lazatin v. Twaño,55 we laid down the rule that where there is wrongful attachment, the attachment defendant may recover
actual damages even without proof that the attachment plaintiff acted in bad faith in obtaining the attachment. However, if it is alleged and established that
the attachment was not merely wrongful but also malicious, the attachment defendant may recover moral damages and exemplary damages as
well. 56 Either way, the wrongfulness of the attachment does not warrant the automatic award of damages to the attachment defendant; the latter must first
discharge the burden of proving the nature and extent of the loss or injury incurred by reason of the wrongful attachment.57
In fine, the CA finding that the attachment of the properties of Spouses Yu was wrongful did not relieve Spouses Yu of the burden of proving the factual
basis of their counterclaim for damages.

To merit an award of actual damages arising from a wrongful attachment, the attachment defendant must prove, with the best evidence obtainable, the fact
of loss or injury suffered and the amount thereof.58 Such loss or injury must be of the kind which is not only capable of proof but must actually be proved
with a reasonable degree of certainty. As to its amount, the same must be measurable based on specific facts, and not on guesswork or speculation. 59 In
particular, if the claim for actual damages covers unrealized profits, the amount of unrealized profits must be estalished and supported by independent
evidence of the mean income of the business undertaking interrupted by the illegal seizure. 60

Spouses Yu insist that the evidence they presented met the foregoing standards. They point to the lists of their daily net income from the operation of said
passenger bus based on used ticket stubs61 issued to their passengers. They also cite unused ticket stubs as proof of income foregone when the bus was
wrongfully seized.62 They further cite the unrebutted testimony 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 daily income of ₱1,500.00.63

In ruling that Spouses Yu failed to adduce sufficient evidence to support their counterclaim for actual damages, the CA stated, thus:

In this case, the actual damages cannot be determined. Defendant-appellant Josefa Yu testified on supposed lost profits without clear and appreciable
explanation. Despite her submission of the used and unused ticket stubs, there was no evidence on the daily net income, the routes plied by the bus and
the average fares for each route. The submitted basis is too speculative and conjectural. No reports regarding the average actual profits and other
evidence of profitability necessary to prove the amount of actual damages were presented. Thus, the Court a quodid not err in not awarding damages in
favor of defendants-appellants.64

We usually defer to the expertise of the CA, especially when it concurs with the factual findings of the RTC.65Indeed, findings of fact may be passed upon
and reviewed by the Supreme Court in the following instances: (1) when the conclusion is a finding grounded entirely on speculations, surmises, or
conjectures; (2) when the inference made is manifestly mistaken, absurd, or impossible; (3) where there is a grave abuse of discretion in the appreciation
of facts; (4) when judgment is based on a misapprehension of facts; (5) when the lower court, in making its findings, went beyond the issues of the case
and such findings are contrary to the admissions of both appellant and appellee; (6) when the factual findings of the CA are contrary to those of the trial
court; (7) when the findings of fact are themselves conflicting; (8) when the findings of fact are conclusions made without a citation of specific evidence on
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 disputed by the respondents;
(10) when the findings of fact of the lower court are premised on the supposed absence of evidence and are contradicted by the evidence on
record.66 However, the present case does not fall under any of the exceptions. We are in full accord with the CA that Spouses Yu failed to prove their
counterclaim.

Spouses Yu’s claim for unrealized income of ₱1,500.00 per day was based on their computation of their average daily income for the year 1992. Said
computation in turn is based on the value of three ticket stubs sold over only five separate days in 1992.67 By no stretch of the imagination can we consider
ticket sales for five days sufficient evidence of the average daily income of the passenger bus, much less its mean income. Not even the unrebutted
testimony of Josefa Yu can add credence to such evidence for the testimony itself lacks corroboration.68

Besides, based on the August 29, 1994 Manifestation69 filed by Sheriff Alimurung, it would appear that long before the passenger bus was placed under
preliminary attachment in Civil Case No. 4061-V-93, the same had been previously attached by the Sheriff of Mandaue City in connection with another
case and that it was placed in the Cebu Bonded Warehousing Corporation, Cebu City. Thus, Spouses Yu cannot complain that they were unreasonably
deprived of the use of the passenger bus by reason of the subsequent wrongful attachment issued in Civil Case No. 4061-V-93. Nor can they also attribute
to the wrongful attachment their failure to earn income or profit from the operation of the passenger bus.
Moreover, petitioners did not present evidence as to the damages they suffered by reason of the wrongful attachment of Lot No. 11.

Nonetheless, we recognize that Spouses Yu suffered some form of pecuniary loss when their properties were wrongfully seized, although the amount
thereof cannot be definitively ascertained. Hence, an award of temperate or moderate damages in the amount of ₱50,000.00 is in order.70

As to moral and exemplary damages, to merit an award thereof, it must be shown that the wrongful attachment was obtained by the attachment plaintiff
with malice or bad faith, such as by appending a false affidavit to his application.71

Spouses Yu argue that malice attended the issuance of the attachment bond as shown by the fact that Te deliberately appended to her application for
preliminary attachment an Affidavit where Sy perjured himself by stating that they had no intention to pay their obligations even when he knew this to be
untrue given that they had always paid their obligations; and by accusing them of disposing of their properties to defraud their creditors even when he knew
this to be false, considering that the location of said properties was known to him.72

The testimony of petitioner Josefa Yu herself negates their claim for moral and exemplary damages. On cross-examination she testified, thus:

Q: Did you ever deposit any amount at that time to fund the check?

A: We requested that it be replaced and staggered into smaller amounts.

COURT: Did you fund it or not?

Atty. Ferrer: The three checks involved?

Atty. Florido: Already answered. She said that they were not able to fund it.

Atty. Ferrer: And as a matter of fact, you went to the bank to close your account?

A: We closed account with the bank because we transferred the account to another bank.

Q: How much money did you transfer from that bank to which the three checks were drawn to this new bank?

A: I don’t know how much was there but we transferred already to the Solid Bank.

Q: Who transferred?

A: My daughter, sir.73 (Emphasis ours)

Based on the foregoing testimony, it is not difficult to understand why Te concluded that Spouses Yu never intended to pay their obligation for they had
available funds in their bank but chose to transfer said funds instead of cover the checks they issued. Thus, we cannot attribute malice nor bad faith to Te
in applying for the attachment writ. We cannot hold her liable for moral and exemplary damages.
As a rule, attorney’s fees cannot be awarded when moral and exemplary damages are not granted, the exception however is when a party incurred
expenses to lift a wrongfully issued writ of attachment. 74 Without a doubt, Spouses Yu waged a protracted legal battle to fight off the illegal attachment of
1awphi1.net

their properties and pursue their claims for damages. It is only just and equitable that they be awarded reasonable attorney’s fees in the amount of
₱30,000.00.

In sum, we affirm the dismissal of the counterclaim of petitioners Spouses Yu for actual, moral, and exemplary damages. However, we grant them
temperate damages and attorney’s fees.

WHEREFORE, the petition is partly GRANTED. The March 21, 2001 Decision of the Court of Appeals is AFFIRMED with the MODIFICATION that
petitioners’ counterclaim is PARTLY GRANTED. Gregorio Yu and Josefa Yu are awarded ₱50,000.00 temperate damages and ₱30,000.00 attorney’s
fees.

No costs.

SO ORDERED.

G.R. No. 135830 September 30, 2005

JUAN DE DIOS CARLOS, Petitioners,

vs.
FELICIDAD SANDOVAL, also known as FELICIDAD S. VDA. DE CARLOS or FELICIDAD S. CARLOS or FELICIDAD SANDOVAL DE CARLOS, and
TEOFILO CARLOS II, Respondent.

x-------------------------------------------------------------------x

G.R. No. 136035

SIDDCOR (now MEGA PACIFIC) INSURANCE CORPORATION, Petitioners,

vs.
FELICIAD SANDOVAL VDA. DE CARLOS and TEOFILO CARLOS II, Respondent.

x------------------------------------------------------------------x

G.R. No. 137743

SIDDCOR (now MEGA PACIFIC) INSURANCE CORPORATION, Petitioners,

vs.
HON. COURT OF APPEALS (FORMER SPECIAL FOURTH DIVISION), HON. ALBERTO L. LERMA and/or the REGIONAL TRIAL COURT OF THE
CITY OF MUNTINLUPA, BRANCH 256, FELICIDAD SANDOVAL, also known as FELICIDAD S. VDA. DE CARLOS OR FELICIDAD S. CARLOS OR
FELICIDAD SANDOVAL CARLOS OR FELICIDAD SANDOVAL VDA. DE CARLOS and TEOFILO CARLOS II, Respondent.

DECISION
Tinga, J.:

These consolidated petitions emanated from a civil case filed by Juan de Dios Carlos ("Carlos") against respondents Felicidad Sandoval ("Sandoval") and
Teofilo Carlos II (Teofilo II) docketed with the Regional Trial Court (RTC) of Muntinlupa City as Civil Case No. 95-135.

In his Complaint before the RTC, Carlos asserted that he was the sole surviving compulsory heir of his parents, Felix B. Carlos and Felipa Elemia,1 who
had acquired during their marriage, six parcels of land (subject properties). His brother, Teofilo ("Teofilo"), died intestate in 1992. At the time of his death,
Teofilo was apparently married to Sandoval, and cohabiting with her and their child, respondent Teofilo II. Nonetheless, Carlos alleged in
his Complaint that Teofilo and Sandoval were not validly married as they had not obtained any marriage license.2Furthermore, Carlos also asserted that
Teofilo II could not be considered as Teofilo’s child. As a result, Carlos concluded that he was also the sole heir of his brother Teofilo, since the latter had
died without leaving any heirs.

Carlos also claimed that Teofilo, prior to their father Felix’s death in 1963, developed a scheme to save the elder Carlos’s estate from inheritance taxes.
Under the scheme, the properties of the father would be transferred to Teofilo who would, in turn, see to it that the shares of the legal heirs are protected
and delivered to them. Felix assented to the plan, and the subject properties were transferred in the name of Teofilo. After Teofilo’s death, Carlos entered
into certain agreements with Sandoval in connection with the subject properties. Carlos did so, believing that the latter was the lawful wife of his brother
Teofilo. Subsequently though, Carlos discovered that Sandoval and his brother were never validly married, as their marriage was contracted without a
marriage license.3

Carlos now sought to nullify these agreements with Sandoval for want of consideration, the premise for these contracts being non-existent. Thus, Carlos
prayed of the RTC to declare the alleged marriage between Teofilo and Sandoval void ab initio, provided that Teofilo died without issue, order that new
titles covering the subject properties be issued in the name of Carlos, and require Sandoval to restitute Carlos in the amount of ₱18,924,800.00.4

Carlos likewise prayed for the issuance of the provisional relief of preliminary attachment. The RTC issued an Orderdated 7 September 1995 granting the
prayer for preliminary attachment, and on 15 September 1995, a writ of preliminary attachment. Carlos posted a bond for ₱20,000,000.00 issued by herein
petitioner

SIDDCOR Insurance Corporation (SIDDCOR).5 Shortly thereafter, a Notice of Garnishment was served upon the Philippine National Bank (PNB) over the
deposit accounts maintained by respondents.

Respondents filed an Urgent Motion to Discharge the Writ of Attachment, which was opposed by Carlos. On 4 December 1995, the RTC rendered an order
denying the motion. This caused respondents to file a Petition for Certiorari with the Court of Appeals, seeking to set aside the RTC order granting the writ
of preliminary attachment denying the motion for the discharge of the writ. This case was docketed as CA-G.R. SP No. 39267.6

On 27 February 1996, the Court of Appeals Second Division promulgated its Decision in CA-G.R. SP No. 39267, wherein it granted the Petition for
Certiorari and ordered the discharge and dissolution of the Writ of Attachment and Notice of Garnishment.7 The Court of Appeals found that there was no
sufficient cause of action to warrant the preliminary attachment, since Carlos had merely alleged general averments in order to support his prayer.8 Carlos
elevated the said Decision to this Court by way of Petition for Review on Certiorari, which was docketed as G.R. No. L-125717. In a Resolution dated 21
October 1996, the Court denied Carlos’s Petition, and thus the Court of Appeals’ Decision ordering the dissolution of the Writ of Attachment and Notice of
Garnishment became final.
In the meantime, the hearing on Carlos’s Complaint ensued before the RTC. Respondents duly filed their Answerand thereafter filed a Motion for Summary
Judgment. Carlos opposed the motion and countered with his own Motion for Summary Judgment. On 8 April 1996, the RTC rendered a summary
judgment in favor of Carlos. Carlos’s victory was wholesale, with the RTC making the following pronouncements:

1. Declaring the marriage between defendant Felicidad Sandoval and Teofilo Carlos solemnized at Silang, Cavite, on May 14, 1962, evidenced by the
Marriage Contract submitted in this case, null and void ab initio for lack of the requisite marriage license;

2. Declaring that the defendant minor, Teofilo S. Carlos II, is not the natural, illegitimate, or legally adopted child of the late Teofilo E. Carlos;

3. Ordering defendant Sandoval to pay and restitute to plaintiff the sum of ₱18,924,800.00, together with the interest thereon at the legal rate from date of
filing of the instant complaint until fully paid;

4. Declaring plaintiff as the sole and exclusive owner of the parcel of land, less the portion adjudicated to the plaintiffs in Civil Case No. 11975, covered by
TCT No. 139061 of the Register of Deeds of Makati City, and ordering said Register of Deeds to cancel said title and to issue another title in the sole name
of plaintiff herein;

5. Declaring the Contract, Annex K of the Complaint, between plaintiff and defendant Sandoval null and void, and ordering the Register of Deeds of Makati
City to cancel TCT No. 139058 in the name of Teofilo Carlos, and to issue another title in the sole name of the plaintiff herein;

6. Declaring the Contract, Annex M of the Complaint, between plaintiff and defendant Sandoval null and void;

7. Ordering the cancellation of TCT No. 210877 in the names of defendant Sandoval and defendant minor Teofilo S. Carlos II and ordering the Register of
Deeds of Manila to issue another title in the exclusive name of plaintiff herein.

8. Ordering the cancellation of TCT No. 210878 in the names of defendant Sandoval and defendant minor Teofilo S. Carlos II and ordering the Register of
Deeds of Manila to issue another title in the sole name of plaintiff herein.9

Upon promulgation of the Summary Judgment, Carlos moved before the RTC for execution pending appeal. The RTC granted the motion for execution
pending appeal upon the filing of a bond.10 On 27 May 1996, the RTC issued a Writ of Execution.

Meanwhile, respondents filed a Motion for Reconsideration of the Summary Judgment, which was denied in an Order dated 20 May 1996. Respondents
then appealed the RTC Decision to the Court of Appeals, wherein such appeal was docketed as CA-G.R. CV No. 53229. The case was raffled to the
appellate courts’ Fourteenth Division for completion of records. Sandoval and Carlos also filed a Petition for Certiorari with Temporary Restraining
Orderdated 2 June 1996. This special civil action primarily attacked the allowance of execution pending appeal, and prayed for the annulment of
the Order granting execution pending appeal, and of the Writ of Execution

On 10 December 1996, in CA-G.R. CV No. 53229, respondents filed a Motion for Judgment On the Attachment Bond. They noted that the Court of
Appeals had already ruled that the Writ of Preliminary Attachment issued by the RTC was improperly granted and that its Decision, as affirmed by the
Supreme Court, had attained finality. Accordingly, they were entitled to damages under Section 20, Rule 57 of the then Rules of Civil Procedure, which
governed claims for damages on account of unlawful attachment. In support of their allegation of damages, they cite the Notice of Garnishment served on
PNB Malolos Branch, where Felicidad Carlos maintained
deposits amounting to ₱15,546,121.98.11 Also presented in support of the motion was a Notice of Delivery/Payment by the RTC Sheriff, directing the PNB
Malolos Branch to deliver the amounts previously garnished by virtue of the Writ of Execution dated 27 May 1996;12 a Manifestation filed by PNB dated 19
July 1996 in CA-G.R. SP No. 40819, stating that PNB had already delivered to the RTC Sheriff on 27 June 1996 the amount of ₱15,384,509.98 drawn
against the accounts of Carlos; and a Certification to the same effect issued by the PNB Malolos Branch. In an Addendum to Motion for Judgment on the
Attachment Bond, respondents additionally prayed for moral and exemplary damages.13

After various pleadings were duly filed by the parties, the Court of Appeals Special Fourth Division issued a Resolution dated 23 March 1998, certifying that
all the necessary pleadings have been filed, and that the case may already be referred to the Raffle Committee for assignment to a ponente for study and
report. The same Resolution likewise denied without elaboration a Motion to Dismiss on the ground of forum-shopping filed earlier by Carlos.14

On such denial, Carlos filed a Motion for Reconsideration. Respondents likewise filed a Motion for Partial Reconsideration dated 17 April 1998, arguing
that under the Revised Internal Rules of the Court of Appeals (RIRCA), the case may be re-raffled for assignment for study and report only after there is a
resolution that the case is deemed submitted for decision.15 They pointed out that re-raffle could not yet be effected, as there were still pending incidents,
particularly the motions for reconsideration of Carlos and themselves, as well as the Motion for Judgment on Attachment Bond.

On 26 June 1998, the Court of Appeals Former Special Fourth Division promulgated two resolutions.16 The first, in response to Carlos’s Motion for
Reconsideration, again denied Carlos’s Motion to Dismiss the Appeal and Motion for Suspension, but explained the reasons for such denial.

The second resolution is at the center of the present petitions. The assailed Resolution agreed with respondents that it was first necessary to resolve the
pending incidents before the case could be re-raffled for study and report. Accordingly, the Court of Appeals

proceeded to rule on these pending incidents. While the first resolution dwelt on the pending motions filed by Carlos, this Resolution tackled the other
matter left unresolved, the Motion for Judgment on Attachment Bond. The Court of Appeals found the claim for damages meritorious, citing the earlier
decisions ruling that Carlos was not entitled to the preliminary attachment. Invoking Section 20, Rule 57 of the Rules of Court, as well as
jurisprudence,17 the Court of Appeals ruled that it was not necessary for the determination of damages on the injunction bond to await the decision on
appeal.

The Court of Appeals then proceeded to determine to what damages respondents were entitled to. In ruling that the award of actual damages was
warranted, the court noted:

It is also not disputed that the PNB, on June 27, 1996, issued two manager’s checks: MC No. 938541 for ₱4,932,621.09 and MC 938542 for
₱10,451,888.89 payable to the order of "Luis C. Bucayon II, Sheriff IV, RTC, Branch 256, Muntinlupa", duly received by the latter in the total amount of
PESOS FIFTEEN MILLION THREE HUNDRED EIGHTY FOUR THOUSAND FIVE HUNDRED NINE & 98/100 (₱15,384,509.98), drawn against the
accounts of Ms. Felicidad Sandoval Vda. de Carlos which were earlier garnished for the satisfaction of the above-mentioned writ of attachment (Annex "E",
Motion for Judgment on the Attachment Bond, pp. 7-8)18

....

The contention of [Carlos] that the writ of attachment was not implemented falls flat on the face of the manifestation of PNB that the delivery of the
garnished ₱15,384,509.98 to him was effected through the sheriff.19
The Court of Appeals found that moral and exemplary damages were not warranted, there being no malice in pursuing the attachment. The appellate court
also found the claim of ₱2,000,000.00 for attorney’s fees as excessive, and reduced the sum by half. Correspondingly, the dispositive portion of the
assailed Resolution reads:

WHEREFORE, premises considered, judgment is hereby rendered against the attachment bond, ordering SIDDCOR INSURANCE CORPORATION and
plaintiff-appellee to pay defendants-appellants, jointly and severally, the sum of ₱15,384,509.98 and 12% interest per annum from June 27, 1996 when the
unlawful garnishment was effected until fully paid and ₱1,000,000.00 as attorney’s fees with 6% interest thereon from the trial court’s decision on April 8,
1986 until fully paid.

SO ORDERED.20

Both Carlos and SIDDCOR filed their respective motions for reconsideration of the Resolution. For their part, respondents filed a Motion for Immediate
Execution dated 7 August 1998 in regard to the Resolution of 26 June 1998 awarding them damages.

In the Resolution dated 10 October 1998,21 the Court of Appeals denied the motions for reconsideration and granted the Motion for Immediate Execution.
In granting the Motion for Immediate Execution, the Court of Appeals cited the reasons that the appeal to be undertaken from the 26 June
1998 Resolution was patently dilatory; that there were no material and substantial defenses against the motion for judgment on the attachment bond,
rendering the appeal pro-forma and dilatory; that Sandoval was of advanced age and might not enjoy the fruits of the judgment on the attachment bond;
and that immediate execution would end her suffering due to the arbitrary garnishment of her account pursuant to an improper attachment.22

In its Motion for Reconsideration, SIDDCOR explicitly assailed the allowance of the Motion for Immediate Execution.23 This was denied by the Court of
Appeals in a Resolution dated 22 December 1998.24

From these antecedents, the following petitions were filed before this Court:

G.R. No. 135830

This Appeal by Certiorari with Prayer for Temporary Restraining Order/Preliminary Injunction dated 26 October 1998 filed by Carlos assailed the two
resolutions of the Court of Appeals both dated 26 June 1998, as well as the Resolution of 10 October 1998, which denied Carlos’s motion for
reconsideration. Carlos argues that the Court of Appeals, through the Former Special Fourth Division, could not have resolved the Motion for Judgment on
the Attachment Bond since the case had not yet been re-raffled under the two-raffle system for study and report; that the Court of Appeals erred in
resolving the motion without conducting any hearing; that the Court of Appeals had no jurisdiction over the motion as the docketing fees had not yet been
filed; that the motion for judgment, which did not contain any certification against forum-shopping, was an application subject to the requirements of
certification against forum-shopping; that there was no supporting evidence to support the award of damages; and that the Court of Appeals committed
grave abuse of discretion in denying the Motion for Reconsideration without adverting to specific reasons mentioned for the denial of each issue.25

Carlos likewise ascribes grave abuse of discretion to the Court of Appeals in its other Resolution dated 26 June 1998 for its refusal to dismiss CA-G.R. CV
No. 53229 on the ground of forum-shopping, adding that the appellate court should have deferred resolution of the Motion for Judgment on the Attachment
Bond considering the prejudicial question raised in Carlos’s motion to dismiss the main case on the ground of forum-shopping.

G.R. No. 136035

This concerns a Petition for Review filed by SIDDCOR, likewise challenging the Resolution of 26 June 1998 of the Court of Appeals and the 10 October
1998 Resolution wherein Siddcor’s Motion for Reconsideration, among others, was denied. Siddcor argues therein that the Court of Appeals erred in ruling
on the motion for damages without awaiting judgment in the main case; granting that damages may be awarded, these should encompass only such
damages incurred during the pendency of the appeal; and that a hearing was necessary to prove the claim for damages and the appellate court erred in
granting the award for damages despite lack of hearing.

G.R. No. 137743

The third petition for adjudication, a Petition for Certiorari under Rule 65 with Prayer for Temporary Restraining Order or Preliminary Injunction, was also
filed by SIDDCOR. This petition, dated 8 March 1999, specifically assails the allowance by the Court of Appeals of the immediate execution of the award of
damages, made through the resolutions dated 10 October 1998 and 22 December 1998.

SIDDCOR hereunder argues that Section 2, Rule 39 of the Rules of Civil Procedure requires that execution of a judgment or final order pending appeal
may be made only on motion of the prevailing party and may be made "even before the expiration of the period to appeal."26 Respondents had argued in
their Motion for Immediate Executionthat the judgment sought to be executed (that on the attachment bond) was interlocutory and not appealable, yet cited
rulings on execution pending appeal under Section 2, Rule 39 in support of their position. SIDDCOR cites this inconsistency as proof of a change of theory
on the part of respondents which could not be done for the theories are incompatible. Such being the case, SIDDCOR argues, the Court of Appeals
gravely abused its discretion in granting immediate execution since respondents had filed its motion on the premise that the award on the judgment bond
was interlocutory and not appealable. SIDDCOR also claims that the judgment on the attachment bond is not interlocutory, citing Stronghold Insurance
Co., Inc. v. Court of Appeals27 wherein it was ruled that such indeed constitutes a final and appealable order.

SIDDCOR points out that no hearing was conducted on the Motion for Immediate Execution despite the requirement in Section 2, Rule 39 that
"discretionary execution may only issue upon good reasons to be stated in a special order after due hearing." SIDDCOR likewise notes that the motion
granting immediate execution was granted in the very same resolution which had denied the motion for reconsideration of the resolution sought to be
immediately executed. For SIDDCOR, such constituted a denial of procedural due process insofar as its statutory right to appeal was concerned, as the
resolution that it intended to appeal from was already the subject of immediate execution.

Finally, SIDDCOR contests the special reasons cited by the Court of Appeals in granting the Motion for Immediate Execution.

Facts Arising Subsequent to the Filing of Instant Petitions

On 7 May 1999, the Court of Appeals issued a Writ of Execution directing the enforcement of the judgment on the attachment bond.28 However, in
a Resolution dated 9 June 1999, this Court through the First Division issued a Temporary Restraining Order, enjoining the enforcement of the said Writ of
Execution.

On 15 October 2002, the Court of Appeals First Division rendered a Decision29 on the merits of CA-G.R. CV No. 53229, setting aside the Summary
Judgment and ordering the remand of the case for further proceedings.30 Both parties filed their respective motions for reconsideration.31 In addition, Carlos
filed a motion to inhibit the author of the assailed decision, Justice Rebecca de Guia-Salvador,32 who thereafter agreed to inhibit herself.33 Then on 7
August 2003, the Court of Appeals Former First Division issued a Resolution deferring action on the motions for reconsideration in light of the temporary
restraining order issued by this Court until the resolution of the present petitions.
The factual background may be complicated, but the court need only concern itself with the propriety of the judgment on the attachment bond and the
subsequent moves to secure immediate execution of such judgment. Should this Court be called upon to tackle the merits of the original action, Carlos’s
complaint, it shall be in the review of the final resolution of the Court of Appeals in CA-G.R. CV No. 53229.

Consolidation of Issues in

G.R. Nos. 135830 and 136035

The petitions in G.R. Nos. 135830 and 136035 are concerned with the award of damages on the attachment bond. They may be treated separately from
the petition in G.R. No. 137743, which relates to the immediate execution of the said award.

We consolidate the main issues in G.R. Nos. 135830 and 136035, as follows: (1) whether the assailed judgment on the attachment bond could have been
rendered, as it was, prior to the adjudication of the main case; (2) whether the Court of Appeals properly complied with the hearing requirement under
Section 20, Rule 57 prior to its judgment on the attachment bond; and (3) whether the Court of Appeals properly ascertained the amount of damages it
awarded in the judgment on the attachment bond.

Resolving these issues requires the determination of the proper scope and import of Section 20, Rule 57 of the 1997 Rules of Civil Procedure. The
provision governs the disposal of claims for damages on account of improper, irregular or excessive attachment.

SECTION 20. Claim for damages on account of improper, irregular or excessive attachment.—An application for damages on account of improper,
irregular or excessive attachment must be filed before the trial or before appeal is perfected or before the judgment becomes executory, with due notice to
the attaching obligee or his surety or sureties, setting forth the facts showing his right to damages and the amount thereof. Such damages may be
awarded only after proper hearing and shall be included in the judgment on the main case.

If the judgment of the appellate court be favorable to the party against whom the attachment was issued, he must claim damages sustained during the
pendency of the appeal by filing an application in the appellate court with notice to the party in whose favor the attachment was issued or his surety or
sureties, before the judgment of the appellate court becomes executory. The appellate court may allow the application to be heard and decided by the trial
court.

Nothing herein contained shall prevent the party against whom the attachment was issued from recovering in the same action the damages awarded to
him from any property of the attaching obligee not exempt from execution should the bond or deposit given by the latter be insufficient or fail to fully satisfy
the award. (Emphasis supplied.)

Section 20 essentially allows the application to be filed at any time before the judgment becomes executory. It should be filed in the same case that is the
main action, and cannot be instituted separately.34 It should be filed with the court having jurisdiction over the case at the time of the application.35 The
remedy provided by law is exclusive and by failing to file a motion for the determination of the damages on time and while the judgment is still under the
control of the court, the claimant loses his right to damages.36

There is no question in this case that the Motion for Judgment on the Attachment Bond filed by respondents on 10 December 1996 was properly filed since
it was filed with the Court of Appeals during the pendency of the appeal in the main case and also as an incident thereto. The core questions though lie in
the proper interpretation of the condition under Section 20, Rule 57 that reads: "Such damages may be awarded only after proper hearing and shall be
included in the judgment on the main case." Petitioners assert that there was no proper hearing on the application for damages and that the Court of
Appeals had wrongfully acted on the application in that it resolved it prior to the rendition of the main judgment.
"Such Damages May Be Awarded

Only After Proper Hearing…."

We first discuss whether the "proper hearing" requirement under Section 20, Rule 57 had been satisfied prior to the award by the Court of Appeals of
damages on the attachment bond.

Section 20 of Rule 57 requires that there be a "proper hearing" before the application for damages on the attachment bond may be granted. The hearing
requirement ties with the indispensable demand of procedural due process. Due notice to the adverse party and its surety setting forth the facts supporting
the applicant's right to damages and the amount thereof under the bond is essential. No judgment for damages may be entered and executed against the
surety without giving it an opportunity to be heard as to the reality or reasonableness of the damages resulting from the wrongful issuance of the writ.37

In Paramount Insurance v. Court of Appeals,38 the Court held that under the rule, it was neither mandatory nor fatal that there should be a separate hearing
in order that damages upon the bond can be claimed, ascertained and awarded.39 What is necessary only is for the attaching party and his surety or
sureties to be duly notified and given the opportunity to be heard.40

In this case, both Carlos and SIDDCOR were duly notified by the appellate court of the Motion for Judgment on the Attachment Bond and were required to
file their respective comments thereto.41 Carlos and SIDDCOR filed their respective comments in opposition to private

respondents’ motion.42 Clearly, all the relevant parties had been afforded the bare right to be heard on the matter.

Concededly, the facts of this case differ from that in Paramount, wherein the award of damages was predicated under Section 8, Rule 58, and the trial on
the merits included the claim for damages on the attachment bond. The Court did note therein that the counsel of the surety was present during the
hearings.43 In this case, unlike in Paramount, there were no open court hearings conducted by the Court of Appeals, and it is precisely this absence that
the petitioners assert as fatal.

Plainly, there is no express requirement under the rule that the hearing be done in open court, or that the parties be allowed to confront adverse witnesses
to the claim of damages on the bond. The proper scope of the hearing requirement was explained before Paramount in Peroxide Philippines Corp. v. Court
of Appeals,44 thus:

. . . [It] is undeniable that when the attachment is challenged for having been illegally or improperly issued, there must be a hearing with the burden of proof
to sustain the writ being on the attaching creditor. That hearing embraces not only the right to present evidence but also a reasonable opportunity to know
the claims of the opposing parties and meet them. The right to submit arguments implies that opportunity, otherwise the right would be a barren one. It
means a fair and open hearing.

From this pronouncement, we can discern that the "proper hearing" contemplated would not merely encompass the right of the parties to submit their
respective positions, but also to present evidence in support of their claims, and to rebut the submissions and evidence of the adverse party. This is
especially crucial considering that the necessary elements to be established in an application for damages are essentially factual: namely, the fact of
damage or injury, and the quantifiable amount of damages sustained. Such matters cannot be established on the mere say-so of the applicant, but require
evidentiary support. At the same time, there was no equivocal statement from the Court in Peroxide that the hearing required under the rule should be a
full-blown hearing on the merits
In this case, we rule that the demands of a "proper hearing" were satisfied as of the time the Court of Appeals rendered its assailed judgment on the
attachment bond. The circumstances in this case that we consider particularly telling are the settled premises that the judicial finding on the wrongfulness
of the attachment was then already conclusive and beyond review, and that the amount of actual damages sustained was likewise indubitable as it indeed
could be found in the official case record in CA-G.R. CV No. 53229. As a result, petitioners would have been precluded from either raising the defenses
that the preliminary attachment was valid or disputing the amount of actual damages sustained by reason of the garnishment. The only matter of
controversy that could be litigable through the traditional hearing would be the matter of moral and exemplary damages, but the Court of Appeals
appropriately chose not to award such damages.

Moreover, petitioners were afforded the opportunity to counter the arguments extended by the respondents. They fully availed of that right by submitting
their respective comments/oppositions. In fine, the due process guarantee has been satisfied in this case.

It should be noted that this case poses a situation different from what is normally contemplated under Section 20, Rule 57—wherein the very wrongfulness
of the attachment remains one of the issues in contention in the main case. In such a case, there would be a greater demand for a more extensive hearing
on the application of damages. The modality of hearing should remain within the discretion of the court having jurisdiction to hear the application for
damages. The only demand, concordant to due process, would be the satisfaction of the right to be heard, to present evidence, and to rebut the evidence
and arguments of the opposing party.

Some disquisition is necessary on whether or not, as petitioners submit, a full-blown hearing in open court is compulsory under Section 20, Rule 57. To
impose this as a mandatory requirement would ultimately prove too onerous to our judicial system. Perhaps such a demand would be less burdensome on
the regional trial courts, which, as a matter of routine, receive testimonial or documentary evidence offered de novo, and to formulate conclusions on the
admissibility and credibility of the same.

However, a different situation applies if it is the Court of Appeals or the Supreme Court before which the application for damages is filed. Both these courts,
which are capacitated to receive and act on such actions, are generally not triers of facts, and do not, in the course of daily routine, conduct hearings. It is
partly for such reason that Section 20, Rule 57 authorizes these appellate courts to refer the application for damages to the trial court for hearing and
decision. The trial courts are functionally attuned to ascertain and evaluate at the first instance the necessary factual premises that would establish the
right to damages. Still, reference of the application for damages to the trial court is discretionary on the part of the appellate courts. The latter, despite their
traditional appellate jurisdiction and review function, are still empowered under Section 20 to rule on the application for damages, notwithstanding the
factual dimension such question presents.

To impose as mandatory on the Court of Appeals or the Supreme Court to hear the application for damages through full-blown hearings in open court is
supremely unwise and beyond the demands of Section 20, Rule 57. The effect would be unduly disruptive on the daily workflow of appellate courts such as
the Court of Appeals and the Supreme Court, which rarely conduct open court hearings. Neither could the Court see what is so markedly special about an
application for damages, fact-oriented as it may be, that would require it to be heard by the appellate courts in open court when no such mandatory rule
applies to other judicial matters for resolution that are also factual in nature.

For example, the review of death penalty convictions by the Court of Appeals and the Supreme Court necessitates a thorough evaluation of the evidence
presented, notwithstanding the prior factual appreciation made by the trial court.45 Notwithstanding the factual nature of the questions involved, there is no
rule requiring the Court of Appeals or the Supreme Court to call death penalty cases for hearing or oral argument. If no such mandatory rule for hearing is
imposed on the appellate courts when the supreme penalty of death is involved, why then should an exceptional rule be imposed in the case for the
relatively insignificant application for damages on the attachment bond?
If open court hearings are ever resorted to by appellate courts, such result from the exercise of discretion rather than by imposition by statute or procedural
rule. Indeed, there is no existing statute, procedural rule, or jurisprudential fiat that makes it mandatory on the Court of Appeals or the Supreme Court to
conduct an open-court hearing on any matter for resolution. There is nothing demonstrably urgent with an application for damages under Section 20, Rule
57 that would necessitate this Court to adopt an unprecedented rule mandating itself or the Court of Appeals to conduct full-blown open court hearings on
a particular type of action.

This pronouncement does not contradict our ruling in Hanil Development v. IAC,46 which Carlos interprets as requiring the Court of Appeals to conduct a
proper hearing on an application for damages on the attachment bond. Hanil concerned the refusal by the Intermediate Appellate Court (now Court of
Appeals) to take cognizance of the application for damages on the attachment bond, such refusal being reversed by the Court, which ruled that the
Intermediate Appellate Court (IAC) had jurisdiction to accept and rule on such application. While the Court therein recognized that the IAC was empowered
to try cases and conduct hearings, or otherwise perform acts necessary to resolve factual issues in cases,47 it did not require the appellate court to conduct
a hearing in open court, but merely to reinstate the application for damages.

Admittedly, the dispositive portion of Hanil required the Court of Appeals to conduct hearings on the application for damages,48 but nowhere in the decision
was a general rule laid down mandating the appellate court to conduct such hearings in open court. The ascertainment of the need to conduct full-blown
hearings is best left to the discretion of the appellate court which chooses to hear the application. At the same time, the Court cautions the appellate courts
to carefully exercise their discretion in determining the need for open-court hearings on the application for damages on the attachment bond. The Court
does not sanction the indolent award of damages on the attachment bond by the appellate court without affording the adverse party and the bonding
company concerned the opportunity to present their sides and adduce evidence in their behalf, or on the basis of unsubstantiated evidence.

"…And Shall be Included in the

Judgment on the Main Case"

Section 20, Rule 57 does state that the award of damages shall be included in the judgment on the main case, and seemingly indicates that it should not
be rendered prior to the adjudication of the main case.

The rule, which guarantees a right to damages incurred by reason of wrongful attachment, has long been recognized in this jurisdiction.49 Under Section
20, Rule 57 of the 1964 Rules of Court, it was provided that there must be first a judgment on the action in favor of the party against whom attachment was
issued before damages can be claimed by such party.50 The Court however subsequently clarified that under the rule, "recovery for damages may be had
by the party thus prejudiced by the wrongful attachment, even if the judgment be adverse to him."51

The language used in the 1997 revision of the Rules of Civil Procedure leaves no doubt that there is no longer need for a favorable judgment in favor of the
party against whom attachment was issued in order that damages may be awarded. It is indubitable that even a party who loses the action in main but is
able to establish a right to damages by reason of improper, irregular, or excessive attachment may be entitled to damages. This bolsters the notion that the
claim for damages arising from such wrongful attachment may arise and be decided separately from the merits of the main action. As noted by the Court
in Philippine Charter Insurance Corp. v. Court of Appeals:52

The surety does not, to be sure, become liable on its bond simply because judgment is subsequently rendered against the party who obtained the
preliminary attachment. The surety becomes liable only when and if "the court shall finally adjudge that the applicant was not entitled to the
attachment." This is so regardless of the nature and character of the judgment on the merits of the principal claims, counterclaims or cross-
claims, etc. asserted by the parties against each other. Indeed, since an applicant's cause of action may be entirely different from the ground
relied upon by him for a preliminary attachment, it may well be that although the evidence warrants judgment in favor of said applicant, the
proofs may nevertheless also establish that said applicant's proferred ground for attachment was inexistent or specious and hence, the writ
should not have issued at all; i.e., he was not entitled thereto in the first place. In that event, the final verdict should logically award to the applicant the
relief sought in his basic pleading, but at the same time sentence him—usually on the basis of a counterclaim—to pay damages caused to his adversary by
the wrongful attachment. [Emphasis supplied.]

Moreover, a separate rule—Section 8, Rule 58— covers instances when it is the trial court that awards damages upon the bond for preliminary injunction
of the adverse party. Tellingly, it requires that the amount of damages to be awarded be claimed, ascertained, and awarded under the same procedure
prescribed in Section 20 of Rule 57.

In this case, we are confronted with a situation wherein the determination that the attachment was wrongful did not come from the trial court, or any court
having jurisdiction over the main action. It was rendered by the Court of Appeals in the exercise of its certiorari jurisdiction in the original action reviewing
the propriety of the issuance of theWrit of Preliminary Attachment against the private respondents. Said ruling attained finality when it was affirmed by this
Court.

The courts are thus bound to respect the conclusiveness of this final judgment, deeming as it does the allowance by the RTC of preliminary attachment as
improper. This conclusion is no longer subject to review, even by the court called upon to resolve the application for damages on the attachment bond. The
only matter left for adjudication is the proper amount of damages.

Nevertheless, Section 20, Rule 57 explicitly provides that the award for damages be included in the judgment on the main case. This point was apparently
not lost on the Court of Appeals when it rendered its Resolution dated 23 March 1998, certifying that the case may now be referred to the Raffle Committee
for assignment to a ponente. The appellate court stated therein: "The Resolution of defendants-appellants’ motion for judgment on the attachment may be
incorporated in the decision by the ponente for study and report,"53 and such observation is in conformity with Section 20.

However, this reasoning was assailed by respondents, who argued that the motion for judgment on the attachment bond was a pending incident that
should be decided before the case can be re-raffled to a ponente for decision. Respondents may be generally correct on the point that a case can only be
deemed submitted for decision only after all pending incidents are resolved. Yet since Section 20, Rule 57 provides that their application for damages on
the attachment bond "shall be included in the judgment on the main case," it is clear that the award for damages need not be resolved before the case is
submitted for decision, but should instead be resolved and included in the judgment on the main case, or the decision on the Appeal by Certiorari filed by
the respondents.

Thus, the action of the Court of Appeals in resolving the application for damages even before the main judgment was issued does not conform to Section
20, Rule 57. However, the special particular circumstances of this case lead us to rule that such error is not mortal to the award of damages.

As noted earlier, the award of damages was made after a proper hearing had occurred wherein all the concerned parties had been given the opportunity to
present their arguments and evidence in support and in rebuttal of the application for damages. The premature award of damages does not negate the fact
that the parties were accorded due process, and indeed availed of their right to be heard.

Moreover, we are compelled to appreciate the particular circumstance in this case that the right of private respondents to acquire relief through the award
of damages on account of the wrongful preliminary attachment has been conclusively affirmed by the highest court of the land. This differs from the normal
situation under Section 20, Rule 57 wherein the court having jurisdiction over the main action is still required to ascertain whether the applicant actually has
a right to damages. To mandatorily require that the award of damages be included in the judgment in the main case makes all the sense if the right to
damages would be ascertained at the same time the main judgment is made. However, when the said right is already made viable by reason of a final
judgment which is no longer subject to review, there should be no unnecessary impediments to its immediate implementation.
And finally, any ruling on our part voiding the award of damages solely for the reason that it was not included in the judgment on the main case, and
remanding the motion to the Court of Appeals for proper adjudication together with the main case may exhibit fealty to the letter of the procedural rule, but
not its avowed aims of promoting a just and speedy disposition of every action and proceeding. After all, if we were to compel the Court of Appeals to
decide again on the application for damages and incorporate its ruling in the judgment on the main action, the appellate court will be examining exactly the
same evidence and applying exactly the same rules as it already did when it issued the assailed resolution awarding damages on the bond. This would be
unnecessarily redundant especially considering that the Supreme Court had already affirmed that there was wrongful attachment in this case.

There is also the fact that remanding the question of damages, singly for the purpose of adhering to the letter of the procedural rule, would further prolong
the resolution of the main case, which has been with the Court of Appeals for more than nine years now.54 Our Rules of Court precisely requires liberal
construction of the procedural rules to promote the objective of securing a just, speedy and inexpensive disposition of every action and proceeding.55 With
this precept, all the more justification is supplied for allowing the award for damages despite its apparent prematurity, if it is in all other respects proper.

The same reasons apply in resolving the question of whether the Court of Appeals could have decided the Motion for Judgment on the Attachment
Bond considering that the case had not yet been re-raffled under the two-raffle system for study and report. Under Section 5, Rule 3 of the RIRCA, a case
filed with the Court of Appeals undergoes two raffles for assignment to a particular Justice. The first raffle is made for completion of records.56Afterwards,
"all raffled appealed cases, the records of which have been completed and submitted for decision, shall be re-raffled for assignment to a Justice for study
and report."57

The fact that Section 20, Rule 57 provides that the award of damages on the attachment bond "shall be included in the judgment on the main case"
necessarily implies that it is to be made only after the case has been re-raffled for study and report, and concurrently decided with the judgment of
the ponente in the main case. Again, the Court of Appeals failed to consider Section 20, Rule 57 when it acted upon the application even before the
second raffle was made.

Had Section 20, Rule 57 been faithfully complied with, a different Justice of the Court of Appeals would have penned the ruling on the application for
damages, in accordance with the RIRCA. Yet this circumstance does not outweigh the other considerations earlier mentioned that would warrant a liberal
interpretation of the procedural rules in favor of respondents. The parties had adduced all their arguments and evidence before the Court of Appeals, and
indeed, these were appreciated on first instance by Justice Demetria, who eventually penned the assailed resolutions. There was already a final
determination that the attachment was wrongful. And any delay brought about by requiring that it be the ponencia, determined after the second raffle, who
decides the application for damages may bear pro forma adherence to the letter of the rule, but would only cause the delay of the resolution of this long-
pending case. Procedural rules are designed, and must therefore be so interpreted as, to give effect to lawful and valid claims and not to frustrate them.58

Even SIDDCOR acknowledges that there are recognized instances where the award of damages or judgment on the attachment bond may not be included
in the decision on the main case, such as if the main case was dismissed for lack of jurisdiction and no claim for damages could have been presented in
the main case.59

Scope of Damages

Properly Awardable

Next, we examine the particular award of damages made in this case, consisting of ₱15,384,509.98, plus interest, as well as ₱1,000,000.00 as attorney’s
fees. There seems to be no dispute that the former amount constituted the amount drawn against the account of Sandoval by reason of the writ of
execution issued by the trial court on 27 May 1996. This fact was confirmed by the PNB, in its Manifestation dated 19 July 1996, confirming the
garnishment.
Respondents’ burden in proving damages in this case was considerably lessened by the fact that there was already a final judgment, no longer subject to
review, that the preliminary attachment allowed by the trial court was indeed wrongful. Hence, all that was necessary to be proved was the amount of
damage actually sustained by respondents by reason of the wrongful attachment. It is unquestioned that by virtue of the writ of preliminary attachment,
a Notice of Garnishment was served upon the PNB over deposit accounts maintained by respondents. Said Notice of Garnishment placed under the
control of the RTC all the accounts maintained by respondents, and prevented the transfer or disposition of these accounts.60 Then the subsequent Writ of
Execution dated 27 May 1996 ordered the delivery to Carlos of these accounts earlier subjected to garnishment.61

Clearly, the amount of actual pecuniary loss sustained by respondents has been well established. The Manifestationsubmitted by the PNB further affirmed
the actual amount seized by Carlos, an amount which could not have been acquired had it not been for the writ of preliminary attachment which was
wrongfully issued.

Carlos lamely argues in his petition that there was no concrete or supporting evidence to justify the amount of actual damages, a claim that is belied by the
official case records. The more substantive argument is presented by SIDDCOR, which submits that any damages that may be awarded to respondents
can include only those that were incurred, if any, during the pendency of the appeal. But this contention is belied by Section 4, Rule 57 of the 1997 Rules of
Civil Procedure, which provides that the bond issued for preliminary attachment is conditioned that the applicant "will pay all the costs which may be
adjudged to the adverse party and all damages which he may sustain by reason of the attachment, if the court shall finally adjudge that the
applicant was not entitled thereto."62

The case Paramount Insurance Corp. v. Court of Appeals63 is instructive. It discusses the scope of the bond executed by upon an application for
preliminary injunction,64 which similarly covers "all damages which [may be] sustain[ed] by reason of the injunction or temporary restraining order if the
court should finally decide that the applicant was not entitled thereto."65 The surety in that case claimed that it could be liable "only to the amount of
damages accruing from the time the injunction bond was issued until the termination of the case, and not from the time the suit was commenced."66 In
rebutting this claim, the Court ruled:

. . . . Rule 58, Section 4(b), provides that a bond is executed in favor of the party enjoined to answer for all damages which he may sustain by reason of the
injunction. This Court already had occasion to rule on this matter in Mendoza v. Cruz, where it held that "(t)he injunction bond is intended as a security for
damages in case it is finally decided that the injunction ought not to have been granted. It is designed to cover all damages which the party enjoined
can possibly suffer. Its principal purpose is to protect the enjoined party against loss or damage by reason of an injunction." No distinction was
made as to when the damages should have been incurred.67

Our ruling in Philippine Charter Insurance Corp. v. Court of Appeals, relied upon by the Court of Appeals, squarely applies to this case:

Under the circumstances, too, there can be no gainsaying the surety’s full awareness of its undertakings under its bond: that, as the law puts it: "the
plaintiff will pay all costs which may be adjudged to the defendant(s), and all damages which may be sustained by reason of the attachment, if the same
shall finally be adjudged to have been wrongful and without cause," and that those damages plainly comprehended not only those sustained during the trial
of the action but also those during the pendency of the appeal. This is the law, and this is how the surety's liability should be understood. The surety's
liability may be enforced whether the application for damages for wrongful attachment be submitted in the original proceedings before the Trial Court, or on
appeal, so long as the judgment has not become executory. The surety's liability is not and cannot be limited to the damages caused by the
improper attachment only during the pendency of the appeal. That would be absurd. The plain and patent intendment of the law is that the
surety shall answer for all damages that the party may suffer as a result of the illicit attachment, for all the time that the attachment was in force;
from levy to dissolution. . . .
The fact that the second paragraph of the rule speaks only of "damages sustained during the pendency of the appeal" is of no moment; it
obviously proceeds from the assumption in the first paragraph that the award for the damages suffered during the pendency of the case in the
trial court was in fact "included in the final judgment" (or applied for therein before the appeal was perfected or the judgment became executory);
hence, it states that the damages additionally suffered thereafter, i.e., during the pendency of the appeal, should be claimed before the judgment of the
appellate tribunal becomes executory. It however bears repeating that where. as in the case at bar, the judgment of the Trial Court has expressly or
impliedly sustained the attachment and thus has given rise to no occasion to speak of, much less, file an application for damages for wrongful
attachment, and it is only in the decision of the Court of Appeals that the attachment is declared wrongful and that the applicant "was not
entitled thereto," the rule is, as it should be, that it is entirely proper at this time for the application for damages for such wrongful attachment to
be filed—i.e., for all the damages sustained thereby, during all the time that it was in force, not only during the pendency of the appeal. . . .68

The rule is thus well-settled that the bond issued upon an application for preliminary attachment answers for all damages, incurred at whatever stage,
which are sustained by reason of the attachment. The award of actual damages by the Court of Appeals is thus proper in amount. However, we disagree
that the rate of legal interest be counted from the date of the "unlawful garnishment," or on 27 June 1996. Properly, interest should start to accrue only from
the moment it had been finally determined that the attachment was unlawful, since it is on that basis that the right to damages comes to existence. In this
case, legal interest commences from the date the Court of Appeals decision in CA-G.R. SP No. 39267 became final, by reason of its affirmation by this
Court.

The award of attorney’s fees in the amount of ₱1,000,000.00 is also questioned before this Court, considering that the Court of Appeals did not award
moral or exemplary damages. The general rule may be that an award of attorney’s fees should be deleted where the award of moral and exemplary
damages are eliminated.69 Nonetheless, attorney’s fees may be awarded under the Civil Code where the court deems it just and equitable that attorney’s
fees and expenses of litigation should be recovered,70 even if moral and exemplary damages are unavailing.71

Particularly, the Court has recognized as just and equitable that attorney's fees be awarded when a party is compelled to incur expenses to lift a wrongfully
issued writ of attachment.72 The amount of money garnished, and the length of time respondents have been deprived from use of their money by reason of
the wrongful attachment, all militate towards a finding that attorney’s fees are just and equitable under the circumstances. However, we deem the amount
of ₱1,000,000.00 as excessive, and modify the award of attorney’s fees to ₱500,000.00 which represents merely approximately three percent of the actual
damages suffered by and awarded to respondents. We also delete the imposition of legal interest made by the Court of Appeals on the awarded attorney’s
fees.

Other Issues Raised in G.R. No. 135830

The issues raised in G.R. No. 136035 have been dispensed with, and the remaining issues in G.R. No. 135830 are relatively minor. There is no need to
dwell at length on them.

Carlos insists that respondents were liable to have paid docket fees upon filing of their Motion for Judgment on Attachment Bond, on the theory that they
claimed therein for the first time the alleged damages resulting from the dissolved attachment. The said motion is characterized as an initiatory proceeding
because it is claimed therein for the first time, the damages arising from the attachment. In the same vein, Carlos argues that the absence of a certification
against forum-shopping attached to the motion renders the said motion as fatal. Again, it is pointed out that initiatory pleadings must contain the said
certification against forum-shopping.

Our ruling in Santo Tomas University Hospital v. Surla73 is instructive. It was argued therein that the requirement of the certification against forum-shopping,
as contained in Administrative Circular No. 04-94,74 covered compulsory counterclaims. The Court ruled otherwise:
It bears stressing, once again, that the real office of Administrative Circular No. 04-94, made effective on 01 April 1994, is to curb the malpractice
commonly referred to also as forum-shopping. . . . The language of the circular distinctly suggests that it is primarily intended to cover an initiatory pleading
or an incipient application of a party asserting a claim for relief.

It should not be too difficult, the foregoing rationale of the circular aptly taken, to sustain the view that the circular in question has not, in fact,
been contemplated to include a kind of claim which, by its very nature as being auxiliary to the proceeding in the suit and as deriving its
substantive and jurisdictional support therefrom, can only be appropriately pleaded in the answer and not remain outstanding for independent
resolution except by the court where the main case pends. Prescinding from the foregoing, the proviso in the second paragraph of Section 5, Rule 8,
of the 1997 Rules of Civil Procedure, i.e., that the violation of the anti-forum shopping rule "shall not be curable by mere amendment . . . but shall be cause
for the dismissal of the case without prejudice," being predicated on the applicability of the need for a certification against forum shopping, obviously does
not include a claim which cannot be independently set up.75 (Emphasis supplied.)

It is clear that under Section 20, Rule 57, the application for damages on the attachment bond cannot be independently set up, but must be filed in the
main case, before the judgment therein becomes final and executory. Santo Tomas squarely applies in determining that no certification against forum-
shopping was required in the Motion for Judgment on the Attachment Bond. The same reasoning also sustains a ruling that neither legal fees were
required for the filing of the said motion. Section 1, Rule 141 of the Rules of Court provides that legal fees are prescribed upon the filing of the pleading or
other application which initiates an action or proceeding.76 Since the said application for judgment on the attachment bond cannot be considered as an
initiatory pleading, as it cannot be independently set up from the main action, it is not likewise chargeable with legal fees.

As to the issue relating to the other Resolution dated 26 June 1998 denying the motion to dismiss appeal on the ground of forum-shopping, we find
Carlos’s arguments as unmeritorious. Forum-shopping allegedly existed because petitioners had filed two cases before the Court of Appeals, CA-G.R. CV
No. 53229, and the Petition for Certiorariwith Temporary Restraining Order dated 2 June 1996 attacking the allowance of execution pending appeal.
Evidently, the two causes of action in these two petitions are different, CA-G.R. CV No. 53229 being an appeal from the Summary Judgment rendered by
the RTC, and the second petition assailing the subsequent allowance by the RTC of execution pending appeal. There is no identity between these two
causes of action that would warrant a finding of forum-shopping.

Issues Raised in G.R. No. 137743

To recount, respondents, having obtained a favorable decision on their Motion for Judgment on the Attachment Bond, filed a Motion for Immediate
Execution of the award of damages. This was granted by the Court of Appeals in its Resolution dated 16 October 1998, said resolution now specifically
assailed by SIDDCOR in G.R. No. 137743.

In their Motion for Immediate Execution, respondents’ theory in seeking the immediate execution of the award of damages was that said award was not
subject to appeal, the ruling thereupon being an interlocutory order.77 This position was not adopted by the Court of Appeals in its 16 October
1998 Resolution, which was otherwise favorably disposed to respondents. Instead, the Court of Appeals predicated the immediate execution on the
following grounds: (1) that the judicial finding that the writ of preliminary attachment was wrongful was already final and beyond review; (2) there were no
material and substantial defenses against the motion for the issuance of the judgment bond; (3) Sandoval was elderly and sickly, without means of
livelihood and may not be able to enjoy the fruits of the judgment on the attachment bond; (4) that immediate execution would end her suffering caused by
the arbitrary garnishment of her PNB account.

There is no doubt that a judgment on the attachment bond is a final and appealable order. As stated earlier, it is, under normal course, included in the main
judgment, which in turn is final and appealable. Respondents admit that they had erred in earlier characterizing the said judgment as an interlocutory order.
Still, SIDDCOR argues that such earlier error is fatal, and that the Court of Appeals abused its discretion in ruling on the motion on a theory different from
that urged on by respondents.

By no means could respondents be deemed as estopped from changing their legal theory, since the rule on estoppel applies to questions of fact and not
questions of law.78 Moreover, courts are empowered to decide cases even if the parties raise legal rationales other than that which would actually apply in
the case. The basis of whether respondents are entitled to immediate execution arises from law, particularly Section 2(a), Rule 39 of the Rules of Court,
and not solely on whatever allegations may be raised by the movant.

Thus, we find no grave abuse of discretion on the part of the Court of Appeals, even though it allowed execution pending appeal on a legal basis different
from that originally adduced by respondents. After all, the reasoning ultimately employed by the appellate court is correct, and it hardly would be judicious
to require the lower court to adhere to the movant’s erroneous ratiocination and preclude the proper application of the law.

We need not review in length the justification of the Court of Appeals in allowing execution pending appeal. The standard set under Section 2(a), Rule 39
merely requires "good reasons," a "special order," and "due hearing." Due hearing would not require a hearing in open court, but simply the right to be
heard, which SIDDCOR availed of when it filed its opposition to the motion for immediate execution. The Resolution dated 16 October 1998 satisfies the
"special order" requirement, and it does enumerate at length the "good reasons" for allowing execution pending appeal. As to the appreciation of "good
reasons," we simply note that the advanced age alone of Sandoval would have sufficiently justified execution pending appeal, pursuant to the well-settled
jurisprudential rule.79 The wrongfulness of the attachment, and the length of time respondents have been deprived of their money by reason of the wrongful
attachment further justifies execution pending appeal under these circumstances.

WHEREFORE, the petitions are DISMISSED. The Temporary Restraining Order issued in the Resolution dated 9 June 1999 is hereby LIFTED. The
assailed Resolution of the Court of Appeals Special Fourth Division dated 26 June 1998 is AFFIRMED with the MODIFICATIONS that the legal interest on
the award of actual damages should commence from the date of the finality of the Decision of the Court of Appeals in CA G.R. SP No. 39267 and that the
award of attorney’s fees is in the amount of ₱500,000. Costs against petitioners.

SO ORDERED.

G.R. No. 185734 July 3, 2013

ALFREDO C. LIM, JR., PETITIONER,

vs.
SPOUSES TITO S. LAZARO AND CARMEN T. LAZARO, RESPONDENTS.

RESOLUTION

PERLAS-BERNABE, J.:

Assailed in this petition for review on certiorari1 are the July 10, 2008 Decision2 and December 18, 2008 Resolution3 of the Court of Appeals (CA) in CA-
G.R. SP No. 100270, affirming the March 29, 2007 Order4 of the Regional Trial Court of Quezon City, Branch 223 (RTC), which lifted the writ of preliminary
attachment issued in favor of petitioner Alfredo C. Lim, Jr. (Lim, Jr.).

The Facts
On August 22, 2005, Lim, Jr. filed a complaint5 for sum of money with prayer for the issuance of a writ of preliminary attachment before the RTC, seeking
to recover from respondents-spouses Tito S. Lazaro and Carmen T. Lazaro (Sps. Lazaro) the sum of ₱2,160,000.00, which represented the amounts
stated in several dishonored checks issued by the latter to the former, as well as interests, attorney’s fees, and costs. The RTC granted the writ of
preliminary attachment application6 and upon the posting of the required ₱2,160,000.00 bond,7 issued the corresponding writ on October 14, 2005.8 In this
accord, three (3) parcels of land situated in Bulacan, covered by Transfer Certificates of Title (TCT) Nos. T-64940, T-64939, and T-86369 (subject TCTs),
registered in the names of Sps. Lazaro, were levied upon.9

In their Answer with Counterclaim,10 Sps. Lazaro averred, among others, that Lim, Jr. had no cause of action against them since: (a) Colim Merchandise
(Colim), and not Lim, Jr., was the payee of the fifteen (15) Metrobank checks; and (b) the PNB and Real Bank checks were not drawn by them, but by
Virgilio Arcinas and Elizabeth Ramos, respectively. While they admit their indebtedness to Colim, Sps. Lazaro alleged that the same had already been
substantially reduced on account of previous payments which were apparently misapplied. In this regard, they sought for an accounting and reconciliation
of records to determine the actual amount due. They likewise argued that no fraud should be imputed against them as the aforesaid checks issued to
Colim were merely intended as a form of collateral.11 Hinged on the same grounds, Sps. Lazaro equally opposed the issuance of a writ of preliminary
attachment.12

Nonetheless, on September 22, 2006, the parties entered into a Compromise Agreement13 whereby Sps. Lazaro agreed to pay Lim, Jr. the amount of
₱2,351,064.80 on an installment basis, following a schedule of payments covering the period from September 2006 until October 2013, under the following
terms, among others: (a) that should the financial condition of Sps. Lazaro improve, the monthly installments shall be increased in order to hasten the full
payment of the entire obligation;14 and (b) that Sps. Lazaro’s failure to pay any installment due or the dishonor of any of the postdated checks delivered in
payment thereof shall make the whole obligation immediately due and demandable.

The aforesaid compromise agreement was approved by the RTC in its October 31, 2006 Decision15 and January 5, 2007 Amended Decision.16

Subsequently, Sps. Lazaro filed an Omnibus Motion,17 seeking to lift the writ of preliminary attachment annotated on the subject TCTs, which the RTC
granted on March 29, 2007.18 It 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 and terminated by the rendition
of the January 5, 2007 Amended Decision on the basis of the September 22, 2006 compromise agreement, the writ of preliminary attachment should be
lifted and quashed. Consequently, it ordered the Registry of Deeds of Bulacan to cancel the writ’s annotation on the subject TCTs.

Lim, Jr. filed a motion for reconsideration19 which was, however, denied on July 26, 2007,20 prompting him to file a petition for certiorari21 before the CA.

The CA Ruling

On July 10, 2008, the CA rendered the assailed decision,22 finding no grave abuse of discretion on the RTC’s part. It observed that a writ of preliminary
attachment may only be issued at the commencement of the action or at any time before entry of judgment. Thus, since the principal cause of action had
already been declared closed and terminated by the RTC, the provisional or ancillary remedy of preliminary attachment would have no leg to stand on,
necessitating its discharge.23

Aggrieved, Lim, Jr. moved for reconsideration24 which was likewise denied by the CA in its December 18, 2008 Resolution.25

Hence, the instant petition.

The Issue Before the Court

The sole issue in this case is whether or not the writ of preliminary attachment was properly lifted.

The Court’s Ruling

The petition is meritorious.

By its nature, preliminary attachment, under Rule 57 of the Rules of Court (Rule 57), is an ancillary remedy applied for not for its own sake but to enable
the attaching party to realize upon the relief sought and expected to be granted in the main or principal action; it is a measure auxiliary or incidental to the
main action. As such, it is available during its pendency which may be resorted to by a litigant to preserve and protect certain rights and interests during the
interim, awaiting the ultimate effects of a final judgment in the case.26 In addition, attachment is also availed of in order to acquire jurisdiction over the
action by actual or constructive seizure of the property in those instances where personal or substituted service of summons on the defendant cannot be
effected.27

In this relation, while the provisions of Rule 57 are silent on the length of time within which an attachment lien shall continue to subsist after the rendition of
a final judgment, jurisprudence dictates that the said lien continues until the debt is paid, or the sale is had under execution issued on the judgment or until
the judgment is satisfied, or the attachment discharged or vacated in the same manner provided by law.28

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

Records indicate that while the parties have entered into a compromise agreement which had already been approved by the RTC in its January 5, 2007
Amended Decision, the obligations thereunder have yet to be fully complied with – particularly, the payment of the total compromise amount of
₱2,351,064.80. Hence, given that the foregoing debt remains unpaid, the attachment of Sps. Lazaro’s properties should have continued to subsist.

In Chemphil Export & Import Corporation v. CA,29 the Court pronounced that a writ of attachment is not extinguished by the execution of a compromise
agreement between the parties, viz:

Did the compromise agreement between Antonio Garcia and the consortium discharge the latter’s attachment lien over the disputed shares?

CEIC argues that a writ of attachment is a mere auxiliary remedy which, upon the dismissal of the case, dies a natural death. Thus, when the consortium
entered into a compromise agreement, which resulted in the termination of their case, the disputed shares were released from garnishment.

We disagree. To subscribe to CEIC’s contentions would be to totally disregard the concept and purpose of a preliminary attachment.

xxxx

The case at bench admits of peculiar character in the sense that it involves a compromise agreement. Nonetheless, x x x. The parties to the compromise
agreement should not be deprived of the protection provided by an attachment lien especially in an instance where one reneges on his obligations under
the agreement, as in the case at bench, where Antonio Garcia failed to hold up his own end of the deal, so to speak.

xxxx
If we were to rule otherwise, we would in effect create a back door by which a debtor can easily escape his creditors. Consequently, we would be faced
with an anomalous situation where a debtor, in order to buy time to dispose of his properties, would enter into a compromise agreement he has no
intention of honoring in the first place. The purpose of the provisional remedy of attachment would thus be lost. It would become, in analogy, a declawed
and toothless tiger. (Emphasis and underscoring supplied; citations omitted)

In fine, the Court holds that the writ of preliminary attachment subject of this case should be restored and its annotation revived in the subject TCTs, re-
vesting unto Lim, Jr. his preferential lien over the properties covered by the same as it were before the cancellation of the said writ. Lest it be
misunderstood, the lien or security obtained by an attachment even before judgment, is in the nature of a vested interest which affords specific security for
the satisfaction of the debt put in suit.30 Verily, the lifting of the attachment lien would be tantamount to an abdication of Lim, Jr.’s rights over Sps. Lazaro’s
properties which the Court, absent any justifiable ground therefor, cannot allow.

WHEREFORE, the petition is GRANTED. The July 10, 2008 Decision and the December 18, 2008 Resolution of the Court of Appeals in CA-G.R. SP No.
100270 are REVERSED and SET ASIDE, and the March 29, 2007 Order of the Regional Trial Court of Quezon City, Branch 223 is NULLIFIED.
Accordingly, the trial court is directed to RESTORE the attachment lien over Transfer Certificates of Title Nos. T-64940, T-64939, and T-86369, in favor of
petitioner Alfredo C. Lim, Jr.

SO ORDERED.

G.R. No. 171750 January 25, 2012

UNITED PULP AND PAPER CO., INC., Petitioner,

vs.
ACROPOLIS CENTRAL GUARANTY CORPORATION, Respondent.

DECISION

MENDOZA, J.:

This is a petition for review under Rule 45 praying for the annulment of the November 17, 2005 Decision1 and the March 2, 2006 Resolution2 of the Court of
Appeals (CA) in CA-G.R. SP No. 89135 entitled Acropolis Central Guaranty Corporation (formerly known as the Philippine Pryce Assurance Corp.) v. Hon.
Oscar B. Pimentel, as Presiding Judge, RTC of Makati City, Branch 148 (RTC), and United Pulp and Paper Co., Inc.

The Facts

On May 14, 2002, United Pulp and Paper Co., Inc. (UPPC) filed a civil case for collection of the amount of ₱42,844,353.14 against Unibox Packaging
Corporation (Unibox) and Vicente Ortega (Ortega) before the Regional Trial Court of Makati, Branch 148 (RTC).3 UPPC also prayed for a Writ of
Preliminary Attachment against the properties of Unibox and Ortega for the reason that the latter were on the verge of insolvency and were transferring
assets in fraud of creditors.4 On August 29, 2002, the RTC issued the Writ of Attachment5 after UPPC posted a bond in the same amount of its claim. By
virtue of the said writ, several properties and assets of Unibox and Ortega were attached.6

On October 10, 2002, Unibox and Ortega filed their Motion for the Discharge of Attachment,7 praying that they be allowed to file a counter-bond in the
amount of ₱42,844,353.14 and that the writ of preliminary attachment be discharged after the filing of such bond. Although this was opposed by UPPC, the
RTC, in its Order dated October 25, 2002, granted the said motion for the discharge of the writ of attachment subject to the condition that Unibox and
Ortega file a counter-bond.8 Thus, on November 21, 2002, respondent Acropolis Central Guaranty Corporation (Acropolis) issued the Defendant’s Bond for
Dissolution of Attachment9 in the amount of ₱42,844,353.14 in favor of Unibox.

Not satisfied with the counter-bond issued by Acropolis, UPPC filed its Manifestation and Motion to Discharge the Counter-Bond10 dated November 27,
2002, claiming that Acropolis was among those insurance companies whose licenses were set to be cancelled due to their failure to put up the minimum
amount of capitalization required by law. For that reason, UPPC prayed for the discharge of the counter-bond and the reinstatement of the attachment. In
its December 10, 2002 Order,11 the RTC denied UPPC’s Motion to Discharge Counter-Bond and, instead, approved and admitted the counter-bond posted
by Acropolis. Accordingly, it ordered the sheriff to cause the lifting of the attachment on the properties of Unibox and Ortega.

On September 29, 2003, Unibox, Ortega and UPPC executed a compromise agreement,12 wherein Unibox and Ortega acknowledged their obligation to
UPPC in the amount of ₱35,089,544.00 as of August 31, 2003, inclusive of the principal and the accrued interest, and bound themselves to pay the said
amount in accordance with a schedule of payments agreed upon by the parties. Consequently, the RTC promulgated its Judgment13 dated October 2, 2003
approving the compromise agreement.

For failure of Unibox and Ortega to pay the required amounts for the months of May and June 2004 despite demand by UPPC, the latter filed its Motion for
Execution14 to satisfy the remaining unpaid balance. In the July 30, 2004 Order,15 the RTC acted favorably on the said motion and, on August 4, 2004, it
issued the requested Writ of Execution.16

The sheriff then proceeded to enforce the Writ of Execution. It was discovered, however, that Unibox had already ceased its business operation and all of
its assets had been foreclosed by its creditor bank. Moreover, the responses of the selected banks which were served with notices of garnishment
indicated that Unibox and Ortega no longer had funds available for garnishment. The sheriff also proceeded to the residence of Ortega to serve the writ but
he was denied entry to the premises. Despite his efforts, the sheriff reported in his November 4, 2008 Partial Return17 that there was no satisfaction of the
remaining unpaid balance by Unibox and Ortega.

On the basis of the said return, UPPC filed its Motion to Order Surety to Pay Amount of Counter-Bond18 directed at Acropolis. On November 30, 2004, the
RTC issued its Order19 granting the motion and ordering Acropolis to comply with the terms of its counter-bond and pay UPPC the unpaid balance of the
judgment in the amount of ₱27,048,568.78 with interest of 12% per annum from default.

Thereafter, on December 13, 2004, Acropolis filed its Manifestation and Very Urgent Motion for Reconsideration,20arguing that it could not be made to pay
the amount of the counter-bond because it did not receive a demand for payment from UPPC. Furthermore, it reasoned that its obligation had been
discharged by virtue of the novation of its obligation pursuant to the compromise agreement executed by UPPC, Unibox and Ortega. The motion, which
was set for hearing on December 17, 2004, was received by the RTC and UPPC only on December 20, 2004.21 In the Order dated February 22, 2005, the
RTC denied the motion for reconsideration for lack of merit and for having been filed three days after the date set for the hearing on the said motion.22

Aggrieved, Acropolis filed a petition for certiorari before the CA with a prayer for the issuance of a Temporary Restraining Order and Writ of Preliminary
Injunction.23 On November 17, 2005, the CA rendered its Decision24granting the petition, reversing the February 22, 2005 Order of the RTC, and absolving
and relieving Acropolis of its liability to honor and pay the amount of its counter-attachment bond. In arriving at said disposition, the CA stated that, firstly,
Acropolis was able to comply with the three-day notice rule because the motion it filed was sent by registered mail on December 13, 2004, four days prior
to the hearing set for December 17, 2004;25 secondly, UPPC failed to comply with the following requirements for recovery of a judgment creditor from the
surety on the counter-bond in accordance with Section 17, Rule 57 of the Rules of Court, to wit: (1) demand made by creditor on the surety, (2) notice to
surety and (3) summary hearing as to his liability for the judgment under the counter-bond;26and, thirdly, the failure of UPPC to include Acropolis in the
compromise agreement was fatal to its case.27
UPPC then filed a motion for reconsideration but it was denied by the CA in its Resolution dated March 1, 2006.28

Hence, this petition.

The Issues

For the allowance of its petition, UPPC raises the following

GROUNDS

I.

The Court of Appeals erred in not holding respondent liable on its counter-attachment bond which it posted before the trial court inasmuch as:

A. The requisites for recovering upon the respondent-surety were clearly complied with by petitioner and the trial court, inasmuch as prior demand and
notice in writing was made upon respondent, by personal service, of petitioner’s motion to order respondent surety to pay the amount of its counter-
attachment bond, and a hearing thereon was held for the purpose of determining the liability of the respondent-surety.

B. The terms of respondent’s counter-attachment bond are clear, and unequivocally provide that respondent as surety shall jointly and solidarily bind itself
with defendants to secure and pay any judgment that petitioner may recover in the action. Hence, such being the terms of the bond, in accordance with fair
insurance practices, respondent cannot, and should not be allowed to, evade its liability to pay on its counter-attachment bond posted by it before the trial
court.

II.

The Court of Appeals erred in holding that the trial court gravely abused its discretion in denying respondent’s manifestation and motion for reconsideration
considering that the said motion failed to comply with the three (3)-day notice rule under Section 4, Rule 15 of the Rules of Court, and that it had lacked
substantial merit to warrant a reversal of the trial court’s previous order.29

Simply put, the issues to be dealt with in this case are as follows:

(1) Whether UPPC failed to make the required demand and notice upon Acropolis; and

(2) Whether the execution of the compromise agreement between UPPC and Unibox and Ortega was tantamount to a novation which had the effect of
releasing Acropolis from its obligation under the counter-attachment bond.

The Court’s Ruling

UPPC complied with the twin requirements of notice and demand

On the recovery upon the counter-bond, the Court finds merit in the arguments of the petitioner.
UPPC argues that it complied with the requirement of demanding payment from Acropolis by notifying it, in writing and by personal service, of the hearing
held on UPPC’s Motion to Order Respondent-Surety to Pay the Bond.30Moreover, it points out that the terms of the counter-attachment bond are clear in
that Acropolis, as surety, shall jointly and solidarily bind itself with Unibox and Ortega to secure the payment of any judgment that UPPC may recover in the
action.31

Section 17, Rule 57 of the Rules of Court sets forth the procedure for the recovery from a surety on a counter-bond:

Sec. 17. Recovery upon the counter-bond. – When the judgment has become executory, the surety or sureties on any counter-bond given pursuant to the
provisions of this Rule to secure the payment of the judgment shall become charged on such counter-bond and bound to pay the judgment obligee upon
demand the amount due under the judgment, which amount may be recovered from such surety or sureties after notice and summary hearing on the same
action.

From a reading of the abovequoted provision, it is evident that a surety on a counter-bond given to secure the payment of a judgment becomes liable for
the payment of the amount due upon: (1) demand made upon the surety; and (2) notice and summary hearing on the same action. After a careful scrutiny
of the records of the case, the Court is of the view that UPPC indeed complied with these twin requirements.

This Court has consistently held that the filing of a complaint constitutes a judicial demand.32 Accordingly, the filing by UPPC of the Motion to Order Surety
to Pay Amount of Counter-Bond was already a demand upon Acropolis, as surety, for the payment of the amount due, pursuant to the terms of the bond. In
said bond, Acropolis bound itself in the sum of ₱ 42,844,353.14 to secure the payment of any judgment that UPPC might recover against Unibox and
Ortega.33

Furthermore, an examination of the records reveals that the motion was filed by UPPC on November 11, 2004 and was set for hearing on November 19,
2004.34 Acropolis was duly notified of the hearing and it was personally served a copy of the motion on November 11, 2004,35 contrary to its claim that it did
not receive a copy of the motion.

On November 19, 2004, the case was reset for hearing on November 30, 2004. The minutes of the hearing on both dates show that only the counsel for
UPPC was present. Thus, Acropolis was given the opportunity to defend itself. That it chose to ignore its day in court is no longer the fault of the RTC and
of UPPC. It cannot now invoke the alleged lack of notice and hearing when, undeniably, both requirements were met by UPPC.

No novation despite compromise agreement; Acropolis still liable under the terms of the counter-bond

UPPC argues that the undertaking of Acropolis is to secure any judgment rendered by the RTC in its favor. It points out that because of the posting of the
counter-bond by Acropolis and the dissolution of the writ of preliminary attachment against Unibox and Ortega, UPPC lost its security against the latter two
who had gone bankrupt.36 It cites the cases of Guerrero v. Court of Appeals37 and Martinez v. Cavives38 to support its position that the execution of a
compromise agreement between the parties and the subsequent rendition of a judgment based on the said compromise agreement does not release the
surety from its obligation nor does it novate the obligation.39

Acropolis, on the other hand, contends that it was not a party to the compromise agreement. Neither was it aware of the execution of such an agreement
which contains an acknowledgment of liability on the part of Unibox and Ortega that was prejudicial to it as the surety. Accordingly, it cannot be bound by
the judgment issued based on the said agreement.40 Acropolis also questions the applicability of Guerrero and draws attention to the fact that in said case,
the compromise agreement specifically stipulated that the surety shall continue to be liable, unlike in the case at bench where the compromise agreement
made no mention of its obligation to UPPC.41
On this issue, the Court finds for UPPC also.

The terms of the Bond for Dissolution of Attachment issued by Unibox and Acropolis in favor of UPPC are clear and leave no room for ambiguity:

WHEREAS, the Honorable Court in the above-entitled case issued on _____ an Order dissolving / lifting partially the writ of attachment levied upon the
defendant/s personal property, upon the filing of a counterbond by the defendants in the sun of PESOS FORTY TWO MILLION EIGHT HUNDRED FORTY
FOUR THOUSAND THREE HUNDRED FIFTY THREE AND 14/100 ONLY (P 42,844,353.14) Philippine Currency.

NOW, THEREFORE, we UNIBOX PACKAGING CORP. as Principal and PHILIPPINE PRYCE ASSURANCE CORP., a corporation duly organized and
existing under and by virtue of the laws of the Philippines, as Surety, in consideration of the dissolution of said attachment, hereby jointly and
severally bind ourselves in the sum of FORTY TWO MILLION EIGHT HUNDRED FORTY FOUR THOUSAND THREE HUNDRED FIFTY THREE AND
14/100 ONLY (P 42,844,353.14) Philippine Currency, in favor of the plaintiff to secure the payment of any judgment that the plaintiff may recover
against the defendants in this action.42 [Emphasis and underscoring supplied]

Based on the foregoing, Acropolis voluntarily bound itself with Unibox to be solidarily liable to answer for ANY judgment which UPPC may recover from
Unibox in its civil case for collection. Its counter-bond was issued in consideration of the dissolution of the writ of attachment on the properties of Unibox
and Ortega. The counter-bond then replaced the properties to ensure recovery by UPPC from Unibox and Ortega. It would be the height of injustice to
allow Acropolis to evade its obligation to UPPC, especially after the latter has already secured a favorable judgment.

This issue is not novel. In the case of Luzon Steel Corporation v. Sia,43 Luzon Steel Corporation sued Metal Manufacturing of the Philippines and Jose Sia
for breach of contract and damages. A writ of preliminary attachment was issued against the properties of the defendants therein but the attachment was
lifted upon the filing of a counter-bond issued by Sia, as principal, and Times Surety & Insurance Co., as surety. Later, the plaintiff and the defendants
entered into a compromise agreement whereby Sia agreed to settle the plaintiff’s claim. The lower court rendered a judgment in accordance with the terms
of the compromise. Because the defendants failed to comply with the same, the plaintiff obtained a writ of execution against Sia and the surety on the
counter-bond. The surety moved to quash the writ of execution on the ground that it was not a party to the compromise and that the writ was issued without
giving the surety notice and hearing. Thus, the court set aside the writ of execution and cancelled the counter-bond. On appeal, this Court, speaking
through the learned Justice J.B.L. Reyes, discussed the nature of the liability of a surety on a counter-bond:

Main issues posed are (1) whether the judgment upon the compromise discharged the surety from its obligation under its attachment counterbond and (2)
whether the writ of execution could be issued against the surety without previous exhaustion of the debtor's properties.

Both questions can be solved by bearing in mind that we are dealing with a counterbond filed to discharge a levy on attachment. Rule 57, section 12,
specifies that an attachment may be discharged upon the making of a cash deposit or filing a counterbond "in an amount equal to the value of the property
attached as determined by the judge"; that upon the filing of the counterbond "the property attached ... shall be delivered to the party making the deposit or
giving the counterbond, or the person appearing on his behalf, the deposit or counterbond aforesaid standing in place of the property so released."

The italicized expressions constitute the key to the entire problem. Whether the judgment be rendered after trial on the merits or upon compromise, such
judgment undoubtedly may be made effective upon the property released; and since the counterbond merely stands in the place of such property, there is
no reason why the judgment should not be made effective against the counterbond regardless of the manner how the judgment was obtained.

xxx
As declared by us in Mercado v. Macapayag, 69 Phil. 403, 405-406, in passing upon the liability of counter sureties in replevin who bound themselves to
answer solidarily for the obligations of the defendants to the plaintiffs in a fixed amount of ₱ 912.04, to secure payment of the amount that said plaintiff be
adjudged to recover from the defendants,

the liability of the sureties was fixed and conditioned on the finality of the judgment rendered regardless of whether the decision was based on the consent
of the parties or on the merits. A judgment entered on a stipulation is nonetheless a judgment of the court because consented to by the parties.44

[Emphases and underscoring supplied]

The argument of Acropolis that its obligation under the counter-bond was novated by the compromise agreement is, thus, untenable. In order for novation
to extinguish its obligation, Acropolis must be able to show that there is an incompatibility between the compromise agreement and the terms of the
counter-bond, as required by Article 1292 of the Civil Code, which provides that:

Art. 1292. In order that an obligation may be extinguished by another which substitute the same, it is imperative that it be so declared in unequivocal terms,
or that the old and the new obligations be on every point incompatible with each other. (1204)

Nothing in the compromise agreement indicates, or even hints at, releasing Acropolis from its obligation to pay UPPC after the latter has obtained a
favorable judgment. Clearly, there is no incompatibility between the compromise agreement and the counter-bond. Neither can novation be presumed in
this case. As explained in Duñgo v. Lopena:45

Novation by presumption has never been favored. To be sustained, it need be established that the old and new contracts are incompatible in all points, or
that the will to novate appears by express agreement of the parties or in acts of similar import.46

All things considered, Acropolis, as surety under the terms of the counter-bond it issued, should be held liable for the payment of the unpaid balance due to
UPPC.

Three-day notice rule, not a hard and fast rule

Although this issue has been obviated by our disposition of the two main issues, the Court would like to point out that the three-day notice requirement is
not a hard and fast rule and substantial compliance is allowed.

Pertinently, Section 4, Rule 15 of the Rules of Court reads:

Sec. 4. Hearing of motion. – Except for motions which the court may act upon without prejudicing the rights of the adverse party, every written motion shall
be set for hearing by the applicant.

Every written motion required to be heard and the notice of the hearing thereof shall be served in such a manner as to insure its receipt by the other
party at least three (3) days before the date of hearing, unless the court for good cause sets the hearing on shorter notice. [Emphasis supplied] 1âwphi1

The law is clear that it intends for the other party to receive a copy of the written motion at least three days before the date set for its hearing. The purpose
of the three (3)-day notice requirement, which was established not for the benefit of the movant but rather for the adverse party, is to avoid surprises upon
the latter and to grant it sufficient time to study the motion and to enable it to meet the arguments interposed therein.47 In Preysler, Jr. v. Manila Southcoast
Development Corporation,48 the Court restated the ruling that "the date of the hearing should be at least three days after receipt of the notice of hearing by
the other parties."

It is not, however, a hard and fast rule. Where a party has been given the opportunity to be heard, the time to study the motion and oppose it, there is
compliance with the rule. This was the ruling in the case of Jehan Shipping Corporation v. National Food Authority,49 where it was written:

Purpose Behind the

Notice Requirement

This Court has indeed held time and time again that, under Sections 4 and 5 of Rule 15 of the Rules of Court, mandatory is the notice requirement in a
motion, which is rendered defective by failure to comply with the requirement. As a rule, a motion without a notice of hearing is considered pro forma and
does not affect the reglementary period for the appeal or the filing of the requisite pleading.

As an integral component of procedural due process, the three-day notice required by the Rules is not intended for the benefit of the movant. Rather, the
requirement is for the purpose of avoiding surprises that may be sprung upon the adverse party, who must be given time to study and meet the arguments
in the motion before a resolution by the court. Principles of natural justice demand that the right of a party should not be affected without giving it an
opportunity to be heard.

The test is the presence of the opportunity to be heard, as well as to have time to study the motion and meaningfully oppose or controvert the
grounds upon which it is based. Considering the circumstances of the present case, we believe that the requirements of procedural due process were
substantially complied with, and that the compliance justified a departure from a literal application of the rule on notice of hearing.50 [Emphasis supplied]

In the case at bench, the RTC gave UPPC sufficient time to file its comment on the motion. On January 14, 2005, UPPC filed its Opposition to the motion,
discussing the issues raised by Acropolis in its motion. Thus, UPPC’s right to due process was not violated because it was afforded the chance to argue its
position.

WHEREFORE, the petition is GRANTED. The November 17, 2005 Decision and the March 1, 2006 Resolution of the Court of Appeals, in CA-G.R. SP No.
89135, are hereby REVERSED and SET ASIDE. The November 30, 2004 Order of the Regional Trial Court, Branch 148, Makati City, ordering Acropolis to
comply with the terms of its counter-bond and pay UPPC the unpaid balance of the judgment in the amount of ₱27,048,568.78 with interest of 12% per
annum from default is REINSTATED.

G.R. No. 183018 August 3, 2011

ADVENT CAPITAL AND FINANCE CORPORATION, Petitioner,

vs.
ROLAND YOUNG, Respondent.

DECISION

CARPIO, J.:

The Case
This petition for review1 assails the 28 December 2007 Decision2 and 15 May 2008 Resolution3 of the Court of Appeals in CA-G.R. SP No. 96266. The
Court of Appeals set aside the 24 March 2006 and 5 July 2006 Orders4 of the Regional Trial Court of Makati City, Branch 147, and directed petitioner
Advent Capital and Finance Corporation to return the seized vehicle to respondent Roland Young. The Court of Appeals denied the motion for
reconsideration.

The Antecedents

The present controversy stemmed from a replevin suit instituted by petitioner Advent Capital and Finance Corporation (Advent) against respondent Roland
Young (Young) to recover the possession of a 1996 Mercedes Benz E230 with plate number UMN-168, which is registered in Advent’s name.5

Prior to the replevin case, or on 16 July 2001, Advent filed for corporate rehabilitation with the Regional Trial Court of Makati City, Branch 142
(rehabilitation court).6

On 27 August 2001, the rehabilitation court issued an Order (stay order) which states that "the enforcement of all claims whether for money or otherwise,
and whether such enforcement is by court action or otherwise, against the petitioner (Advent), its guarantors and sureties not solidarily liable with it, is
stayed."7

On 5 November 2001, Young filed his Comment to the Petition for Rehabilitation, claiming, among others, several employee benefits allegedly due him as
Advent’s former president and chief executive officer.

On 6 November 2002, the rehabilitation court approved the rehabilitation plan submitted by Advent. Included in the inventory of Advent’s assets was the
subject car which remained in Young’s possession at the time.

Young’s obstinate refusal to return the subject car, after repeated demands, prompted Advent to file the replevin case on 8 July 2003. The complaint,
docketed as Civil Case No. 03-776, was raffled to the Regional Trial Court of Makati City, Branch 147 (trial court).

After Advent’s posting of ₱3,000,000 replevin bond, which was double the value of the subject car at the time, through Stronghold Insurance Company,
Incorporated (Stronghold), the trial court issued a Writ of Seizure8 directing the Sheriff to seize the subject car from Young. Upon receipt of the Writ of
Seizure, Young turned over the car to Advent,9 which delivered the same to the rehabilitation receiver.10

Thereafter, Young filed an Answer alleging that as a former employee of Advent, he had the option to purchase the subject car at book value pursuant to
the company car plan and to offset the value of the car with the proceeds of his retirement pay and stock option plan. Young sought the (1) execution of a
deed of sale over the subject car; and (2) determination and payment of the net amount due him as retirement benefits under the stock option plan.

Advent filed a Reply with a motion to dismiss Young’s counterclaim, alleging that the counterclaim did not arise from or has no logical relationship with the
issue of ownership of the subject car.

After issues have been joined, the parties entered into pre-trial on 2 April 2004, which resulted in the issuance of a pre-trial order of even date reciting the
facts and the issues to be resolved during the trial.

On 28 April 2005, the trial court issued an Order dismissing the replevin case without prejudice for Advent’s failure to prosecute. In the same order, the trial
court dismissed Young’s counterclaim against Advent for lack of jurisdiction. The order pertinently reads:
It appears that as of July 28, 2003, subject motor vehicle has been turned over to the plaintiff, thru its authorized representative, and adknowledged by the
parties’ respective counsels in separate Manifestations filed. To date, no action had been taken by the plaintiff in the further prosecution of this case.
Accordingly, this case is ordered dismissed without prejudice on the ground of failure to prosecute.

Anent plaintiff’s Motion to Dismiss defendant Young’s counterclaim for benefits under the retirement and stock purchase plan, the Court rules as follows:
The only issue in this case is who is entitled to the possession of the subject motor vehicle. This issue may have a connection, but not a necessary
connection with defendant’s rights under the retirement plan and stock purchase plan as to be considered a compulsory counterclaim.

xxx

Notably, defendant’s claim is basically one for benefits under and by virtue of his employment with the plaintiff, and the subject vehicle is merely an incident
in that claim. Said claim is properly ventilated, as it is resolvable by, the Rehabilitation Court which has jurisdiction and has acquired jurisdiction, to the
exclusion of this Court. Accordingly, plaintiff’s Motion To Dismiss defendant Young’s counterclaim is granted.11

On 10 June 2005, Young filed a motion for partial reconsideration of the dismissal order with respect to his counterclaim.

On 8 July 2005, Young filed an omnibus motion, praying that Advent return the subject car and pay him ₱1.2 million in damages "(f)or the improper and
irregular seizure" of the subject car, to be charged against the replevin bond posted by Advent through Stronghold.

On 24 March 2006, the trial court issued an Order denying Young’s motion for partial reconsideration, viz:

In the instant case, defendant, in his counterclaim anchored her [sic] right of possession to the subject vehicle on his alleged right to purchase the same
under the company car plan. However, considering that the Court has already declared that it no longer has jurisdiction to try defendant’s counterclaim as it
is now part of the rehabilitation proceedings before the corporate court concerned, the assertions in the Motion for Reconsiderations (sic) will no longer
stand.

On the other hand, the plaintiff did not file a Motion for Reconsideration of the same Order, dismissing the complaint for failure to prosecute, within the
reglementary period. Hence, the same has attained finality.

Defendant alleged that the dismissal of the case resulted in the dissolution of the writ. Nonetheless, the Court deems it proper to suspend the resolution of
the return of the subject vehicle. In this case, the subject vehicle was turned over to plaintiff by virtue of a writ of replevin validly issued, the latter having
sufficiently shown that it is the absolute/registered owner thereof. This was not denied by the defendant. Plaintiff’s ownership includes its right of
possession. The case has been dismissed without a decision on the merits having been rendered. Thus, to order the return of the vehicle to one who is yet
to prove his right of possession would not be proper.

Accordingly, the Motion for Partial Reconsideration is denied.12

On 8 June 2006, Young filed a motion to resolve his omnibus motion.

In an Order dated 5 July 2006, the trial court denied the motion to resolve, to wit:
In the instant case, the Court suspended the resolution of the return of the vehicle to defendant Roland Young. It should be noted that the writ of replevin
was validly issued in favor of the plaintiff and that it has sufficiently established ownership over the subject vehicle which includes its right to possess. On
the other hand, the case (Olympia International vs. Court of Appeals) cited by defendant finds no application to this case, inasmuch as in the former the
Court has not rendered judgment affirming plaintiff’s (Olympia) right of possession on the property seized. Moreover, the Court, in the Order dated April 28,
2005, has already denied defendant’s counterclaim upon which he based his right of possession on the ground of lack of jurisdiction. Accordingly, the
Court reiterates its previous ruling that to order the return of the subject vehicle to defendant Young, who is yet to prove his right of possession before the
Rehabilitation Court would not be proper.

WHEREFORE, there being no new and substantial arguments raised, the Motion to Resolve is denied.13

Young filed a petition for certiorari and mandamus with the Court of Appeals seeking to annul the trial court’s Orders of 24 March 2006 and 5 July 2006.

The Court of Appeals’ Ruling

In his petition before the Court of Appeals, Young argued mainly that the trial court committed grave abuse of discretion amounting to lack or excess of
jurisdiction in (1) not directing the return of the subject vehicle to him; (2) refusing to hold a hearing to determine the damages to be recovered against the
replevin bond; and (3) dismissing his counterclaim.

The Court of Appeals ruled in favor of Young and annulled the assailed rulings of the trial court. The Court of Appeals held:

It is noteworthy that the case was dismissed by the court a quo for failure of Advent to prosecute the same. Upon dismissal of the case, the writ of seizure
issued as an incident of the main action (for replevin) became functus officio and should have been recalled or lifted. Since there was no adjudication on
the merits of the case, the issue of who between Advent and petitioner has the better right to possess the subject car was not determined. As such, the
parties should be restored to their status immediately before the institution of the case.

The Supreme Court’s ruling in Olympia International, Inc. vs. Court of Appeals (supra) squarely applies to the present controversy, to wit:

"Indeed, logic and equity demand that the writ of replevin be cancelled. Being provisional and ancillary in character, its existence and efficacy depended on
the outcome of the case. The case having been dismissed, so must the writ’s existence and efficacy be dissolved. To let the writ stand even after the
dismissal of the case would be adjudging Olympia as the prevailing party, when precisely, no decision on the merits had been rendered. The case having
been dismissed, it is as if no case was filed at all and the parties must revert to their status before the litigation."

Indeed, as an eminent commentator on Remedial Law expounds:

"The plaintiff who obtains possession of the personal property by a writ of replevin does not acquire absolute title thereto, nor does the defendant acquire
such title by rebonding the property, as they only hold the property subject to the final judgment in the action." (I Regalado, Remedial Law Compendium,
Eighth Revised Edition, p. 686)

Reversion of the parties to the status quo ante is the consequence ex proprio vigore of the dismissal of the case. Thus, in Laureano vs. Court
of Appeals (324 SCRA 414), it was held:
"(A)lthough the commencement of a civil action stops the running of the statute of prescription or limitations, its dismissal or voluntary abandonment by
plaintiff leaves the parties in exactly the same position as though no action had been commenced at all."

By the same token, return of the subject car to petitioner pending rehabilitation of Advent does not constitute enforcement of claims against it, much more
adjudication on the merits of petitioner’s counterclaim. In other words, an order for such return is not a violation of the stay order, which was issued by the
rehabilitation court on August 27, 2001. x x x

Corollarily, petitioner’s claim against the replevin bond has no connection at all with the rehabilitation proceedings. The claim is not against the insolvent
debtor (Advent) but against bondsman, Stronghold. Such claim is expressly authorized by Sec. 10, Rule 60, in relation to Sec. 20, Rule 57, id., x x x14

The dispositive portion of the Court of Appeals’ decision reads:

WHEREFORE, premises considered, the instant petition is PARTLY GRANTED. The orders of the Regional Trial Court dated March 24, 2006 and July 5,
2006 are ANNULLED and SET ASIDE in so far as they suspended resolution of petitioner’s motion for, and/or disallowed, the return of the subject car to
petitioner. Accordingly, respondent Advent Capital and Finance Corporation is directed to return the subject car to petitioner.

The Regional Trial Court of Makati City (Branch 147) is directed to conduct a hearing on, and determine, petitioner’s claim for damages against the
replevin bond posted by Stronghold Insurance Co.

SO ORDERED.15

Advent filed a motion for reconsideration, which was denied by the Court of Appeals in a Resolution dated 15 May 2008.

The Issue

The main issue in this case is whether the Court of Appeals committed reversible error in (1) directing the return of the seized car to Young; and (2)
ordering the trial court to set a hearing for the determination of damages against the replevin bond.

The Court’s Ruling

The petition is partially meritorious.

On returning the seized vehicle to Young

We agree with the Court of Appeals in directing the trial court to return the seized car to Young since this is the necessary consequence of the dismissal of
the replevin case for failure to prosecute without prejudice. Upon the dismissal of the replevin case for failure to prosecute, the writ of seizure, which is
merely ancillary in nature, became functus officio and should have been lifted. There was no adjudication on the merits, which means that there was no
determination of the issue who has the better right to possess the subject car. Advent cannot therefore retain possession of the subject car considering that
it was not adjudged as the prevailing party entitled to the remedy of replevin.

Contrary to Advent’s view, Olympia International Inc. v. Court of Appeals16 applies to this case. The dismissal of the replevin case for failure to prosecute
results in the restoration of the parties’ status prior to litigation, as if no complaint was filed at all. To let the writ of seizure stand after the dismissal of the
complaint would be adjudging Advent as the prevailing party, when precisely no decision on the merits had been rendered. Accordingly, the parties must
be reverted to their status quo ante. Since Young possessed the subject car before the filing of the replevin case, the same must be returned to him, as if
no complaint was filed at all.

Advent’s contention that returning the subject car to Young would constitute a violation of the stay order issued by the rehabilitation court is untenable. As
the Court of Appeals correctly concluded, returning the seized vehicle to Young is not an enforcement of a claim against Advent which must be suspended
by virtue of the stay order issued by the rehabilitation court pursuant to Section 6 of the Interim Rules on Corporate Rehabilitation (Interim Rules).17The
issue in the replevin case is who has better right to possession of the car, and it was Advent that claimed a better right in filing the replevin case against
Young. In defense, Young claimed a better right to possession of the car arising from Advent’s car plan to its executives, which he asserts entitles him to
offset the value of the car against the proceeds of his retirement pay and stock option plan.

Young cannot collect a money "claim" against Advent within the contemplation of the Interim Rules. The term "claim" has been construed to refer to debts
or demands of a pecuniary nature, or the assertion to have money paid by the company under rehabilitation to its creditors.18 In the replevin case, Young
cannot demand that Advent pay him money because such payment, even if valid, has been "stayed" by order of the rehabilitation court. However, in the
replevin case, Young can raise Advent’s car plan, coupled with his retirement pay and stock option plan, as giving him a better right to possession of the
car. To repeat, Young is entitled to recover the subject car as a necessary consequence of the dismissal of the replevin case for failure to prosecute
without prejudice.

On the damages against the replevin bond

Section 10, Rule 60 of the Rules of Court19 governs claims for damages on account of improper or irregular seizure in replevin cases. It provides that in
replevin cases, as in receivership and injunction cases, the damages to be awarded upon the bond "shall be claimed, ascertained, and granted" in
accordance with Section 20 of Rule 57 which reads:

Sec. 20. Claim for damages on account of improper, irregular or excessive attachment. - An application for damages on account of improper, irregular or
excessive attachment must be filed before the trial or before appeal is perfected or before the judgment becomes executory, with due notice to the
attaching obligee or his surety or sureties, setting forth the facts showing his right to damages and the amount thereof. Such damages may be awarded
only after proper hearing and shall be included in the judgment on the main case. e

If the judgment of the appellate court be favorable to the party against whom the attachment was issued, he must claim damages sustained during the
pendency of the appeal by filing an application in the appellate court with notice to the party in whose favor the attachment was issued or his surety or
sureties, before the judgment of the appellate court becomes executory. The appellate court may allow the application to be heard and decided by the trial
court.

Nothing herein contained shall prevent the party against whom the attachment was issued from recovering in the same action the damages awarded to
him from any property of the attaching obligee not exempt from execution should the bond or deposit given by the latter be insufficient or fail to fully satisfy
the award.

The above provision essentially allows the application to be filed at any time before the judgment becomes executory.20 It should be filed in the same case
that is the main action,21 and with the court having jurisdiction over the case at the time of the application.22

In this case, there was no application for damages against Stronghold resulting from the issuance of the writ of seizure before the finality of the dismissal of
the complaint for failure to prosecute. It appears that Young filed his omnibus motion claiming damages against Stronghold after the dismissal order issued
by the trial court on 28 April 2005 had attained finality. While Young filed a motion for partial reconsideration on 10 June 2005, it only concerned the
dismissal of his counterclaim, without any claim for damages against the replevin bond. It was only on 8 July 2005 that Young filed an omnibus motion
seeking damages against the replevin bond, after the dismissal order had already become final for Advent’s non-appeal of such order. In fact, in his
omnibus motion, Young stressed the finality of the dismissal order.23 Thus, Young is barred from claiming damages against the replevin bond.

In Jao v. Royal Financing Corporation,24 the Court held that defendant therein was precluded from claiming damages against the surety bond since
defendant failed to file the application for damages before the termination of the case, thus:

The dismissal of the case filed by the plaintiffs-appellees on July 11, 1959, had become final and executory before the defendant-appellee corporation filed
its motion for judgment on the bond on September 7, 1959. In the order of the trial court, dismissing the complaint, there appears no pronouncement
whatsoever against the surety bond. The appellee-corporation failed to file its proper application for damages prior to the termination of the case against it.
It is barred to do so now. The prevailing party, if such would be the proper term for the appellee-corporation, having failed to file its application for damages
against the bond prior to the entry of final judgment, the bondsman-appellant is relieved of further liability thereunder.

Since Young is time-barred from claiming damages against the replevin bond, the dismissal order having attained finality after the application for damages,
the Court of Appeals erred in ordering the trial court to set a hearing for the determination of damages against the replevin bond.

WHEREFORE, the Court GRANTS the petition IN PART. The Court SETS ASIDE the portion in the assailed decision of the Court of Appeals in CA-G.R.
SP No. 96266 ordering the trial court to set a hearing for the determination of damages against the replevin bond.

SO ORDERED.

G.R. No. 139941 January 19, 2001

VICENTE B. CHUIDIAN, petitioner,

vs.
SANDIGANBAYAN (Fifth Division) and the REPUBLIC OF THE PHILIPPINES, respondents.

YNARES-SANTIAGO, J.:

The instant petition arises from transactions that were entered into by the government in the penultimate days of the Marcos administration. Petitioner
Vicente B. Chuidian was alleged to be a dummy or nominee of Ferdinand and Imelda Marcos in several companies said to have been illegally acquired by
the Marcos spouses. As a favored business associate of the Marcoses, Chuidian allegedly used false pretenses to induce the officers of the Philippine
Export and Foreign Loan Guarantee Corporation (PHILGUARANTEE), the Board of Investments (BOI) and the Central Bank, to facilitate the procurement
and issuance of a loan guarantee in favor of the Asian Reliability Company, Incorporated (ARCI) sometime in September 1980. ARCI, 98% of which was
allegedly owned by Chuidian, was granted a loan guarantee of Twenty-Five Million U.S. Dollars (US$25,000,000.00). 1âwphi1.nêt

While ARCI represented to Philguarantee that the loan proceeds would be used to establish five inter-related projects in the Philippines, Chuidian reneged
on the approved business plan and instead invested the proceeds of the loan in corporations operating in the United States, more particularly Dynetics,
Incorporated and Interlek, Incorporated. Although ARCI had received the proceeds of the loan guaranteed by Philguarantee, the former defaulted in the
payments thereof, compelling Philguarantee to undertake payments for the same. Consequently, in June 1985, Philguarantee sued Chuidian before the
Santa Clara County Superior Court,1 charging that in violation of the terms of the loan, Chuidian not only defaulted in payment, but also misused the funds
by investing them in Silicon Valley corporations and using them for his personal benefit.
For his part, Chuidian claimed that he himself was a victim of the systematic plunder perpetrated by the Marcoses as he was the true owner of these
companies, and that he had in fact instituted an action before the Federal Courts of the United States to recover the companies which the Marcoses had
illegally wrested from him.2

On November 27, 1985, or three (3) months before the successful people's revolt that toppled the Marcos dictatorship, Philguarantee entered into a
compromise agreement with Chuidian whereby petitioner Chuidian shall assign and surrender title to all his companies in favor of the Philippine
government. In return, Philguarantee shall absolve Chuidian from all civil and criminal liability, and in so doing, desist from pursuing any suit against
Chuidian concerning the payments Philguarantee had made on Chuidian's defaulted loans.

It was further stipulated that instead of Chuidian reimbursing the payments made by Philguarantee arising from Chuidian's default, the Philippine
government shall pay Chuidian the amount of Five Million Three Hundred Thousand Dollars (US$5,300,000.00). Initial payment of Five Hundred Thousand
Dollars (US$500,000.00) was actually received by Chuidian, as well as succeeding payment of Two Hundred Thousand Dollars (US$200,000.00). The
remaining balance of Four Million Six Hundred Thousand Dollars (US$4,600,000.00) was to be paid through an irrevocable Letter of Credit (L/C) from
which Chuidian would draw One Hundred Thousand Dollars (US$100,000.00) monthly.3 Accordingly, on December 12, 1985, L/C No. SSD-005-85 was
issued for the said amount by the Philippine National Bank (PNB). Subsequently, Chuidian was able to make two (2) monthly drawings from said L/C at the
Los Angeles branch of the PNB.4

With the advent of the Aquino administration, the newly-established Presidential Commission on Good Government (PCGG) exerted earnest efforts to
search and recover money, gold, properties, stocks and other assets suspected as having been illegally acquired by the Marcoses, their relatives and
cronies.

Petitioner Chuidian was among those whose assets were sequestered by the PCGG. On May 30, 1986, the PCGG issued a Sequestration Order5 directing
the PNB to place under its custody, for and in behalf of the PCGG, the irrevocable L/C (No. SSD-005-85). Although Chuidian was then residing in the
United States, his name was placed in the Department of Foreign Affairs' Hold Order list.6

In the meantime, Philguarantee filed a motion before the Superior Court of Santa Clara County of California in Civil Case Nos. 575867 and 577697 seeking
to vacate the stipulated judgment containing the settlement between Philguarantee and Chuidian on the grounds that: (a) Philguarantee was compelled by
the Marcos administration to agree to the terms of the settlement which was highly unfavorable to Philguarantee and grossly disadvantageous to the
government; (b) Chuidian blackmailed Marcos into pursuing and concluding the settlement agreement by threatening to expose the fact that the Marcoses
made investments in Chuidian's American enterprises; and (c) the Aquino administration had ordered Philguarantee not to make further payments on the
L/C to Chuidian. After considering the factual matters before it, the said court concluded that Philguarantee "had not carried its burden of showing that the
settlement between the parties should be set aside."7 On appeal, the Sixth Appellate District of the Court of Appeal of the State of California affirmed the
judgment of the Superior Court of Sta. Clara County denying Philguarantee's motion to vacate the stipulated judgment based on the settlement
agreement.8

After payment on the L/C was frozen by the PCGG, Chuidian filed before the United States District Court, Central District of California, an action against
PNB seeking, among others, to compel PNB to pay the proceeds of the L/C. PNB countered that it cannot be held liable for a breach of contract under
principles of illegality, international comity and act of state, and thus it is excused from payment of the L/C. Philguarantee intervened in said action, raising
the same issues and arguments it had earlier raised in the action before the Santa Clara Superior Court, alleging that PNB was excused from making
payments on the L/C since the settlement was void due to illegality, duress and fraud.9

The Federal Court rendered judgment ruling: (1) in favor of PNB excusing the said bank from making payment on the L/C; and (2) in Chuidian's favor by
denying intervenor Philguarantee's action to set aside the settlement agreement.10
Meanwhile, on February 27, 1987, a Deed of Transfer11 was executed between then Secretary of Finance Jaime V. Ongpin and then PNB President
Edgardo B. Espiritu, to facilitate the rehabilitation of PNB, among others, as part of the government's economic recovery program. The said Deed of
Transfer provided for the transfer to the government of certain assets of PNB in exchange for which the government would assume certain liabilities of
PNB.12 Among those liabilities which the government assumed were unused commercial L/C's and Deferred L/C's, including SSD-005-85 listed under
Dynetics, Incorporated in favor of Chuidian in the amount of Four Million Four Hundred Thousand Dollars (US$4,400,000.00).13

On July 30, 1987, the government filed before the Sandiganbayan Civil Case No. 0027 against the Marcos spouses, several government officials who
served under the Marcos administration, and a number of individuals known to be cronies of the Marcoses, including Chuidian. The complaint sought the
reconveyance, reversion, accounting and restitution of all forms of wealth allegedly procured illegally and stashed away by the defendants.

In particular, the complaint charged that Chuidian, by himself and/or in conspiracy with the Marcos spouses, engaged in "devices, schemes and
stratagems" by: (1) forming corporations for the purpose of hiding and avoiding discovery of illegally obtained assets; (2) pillaging the coffers of
government financial institutions such as the Philguarantee; and (3) executing the court settlement between Philguarantee and Chuidian which was grossly
disadvantageous to the government and the Filipino people.

In fine, the PCGG averred that the above-stated acts of Chuidian committed in unlawful concert with the other defendants constituted "gross abuse of
official position of authority, flagrant breach of public trust and fiduciary obligations, brazen abuse of right and power, unjust enrichment, violation of the
Constitution and laws" of the land.14

While the case was pending, on March 17, 1993, the Republic of the Philippines filed a motion for issuance of a writ of attachment15 over the L/C, citing as
grounds therefor the following:

(1) Chuidian embezzled or fraudulently misapplied the funds of ARCI acting in a fiduciary capacity, justifying issuance of the writ under Section
1(b), Rule 57 of the Rules of Court;

(2) The writ is justified under Section 1(d) of the same rule as Chuidian is guilty of fraud in contracting the debt or incurring the obligation upon
which the action was brought, or that he concealed or disposed of the property that is the subject of the action;

(3) Chuidian has removed or disposed of his property with the intent of defrauding the plaintiff as justified under Section 1(c) of Rule 57; and

(4) Chuidian is residing out of the country or one on whom summons may be served by publication, which justifies the writ of attachment prayed for
under Section 1(e) of the same rule.

The Republic also averred that should the action brought by Chuidian before the U.S. District Court of California to compel payment of the L/C prosper,
inspite of the sequestration of the said L/C, Chuidian can ask the said foreign court to compel the PNB Los Angeles branch to pay the proceeds of the L/C.
Eventually, Philguarantee will be made to shoulder the expense resulting in further damage to the government. Thus, there was an urgent need for the writ
of attachment to place the L/C under the custody of the Sandiganbayan so the same may be preserved as security for the satisfaction of judgment in the
case before said court.

Chuidian opposed the motion for issuance of the writ of attachment, contending that:

(1) The plaintiff's affidavit appended to the motion was in form and substance fatally defective;
 (2) Section 1(b) of Rule 57 does not apply since there was no fiduciary relationship between the plaintiff and Chuidian;

(3) While Chuidian does not admit fraud on his part, if ever there was breach of contract, such fraud must be present at the time the contract is
entered into;

(4) Chuidian has not removed or disposed of his property in the absence of any intent to defraud plaintiff;

(5) Chuidian's absence from the country does not necessarily make him a non-resident; and

(6) Service of summons by publication cannot be used to justify the issuance of the writ since Chuidian had already submitted to the jurisdiction of
the Court by way of a motion to lift the freeze order filed through his counsel.

On July 14, 1993, the Sandiganbayan issued a Resolution ordering the issuance of a writ of attachment against L/C No. SSD-005-85 as security for the
satisfaction of judgment.16 The Sandiganbayan's ruling was based on its disquisition of the five points of contention raised by the parties. On the first issue,
the Sandiganbayan found that although no separate affidavit was attached to the motion, the motion itself contained all the requisites of an affidavit, and
the verification thereof is deemed a substantial compliance of Rule 57, Section 3 of the Rules of Court.

Anent the second contention, the Sandiganbayan ruled that there was no fiduciary relationship existing between Chuidian and the Republic, but only
between Chuidian and ARCI. Since the Republic is not privy to the fiduciary relationship between Chuidian and ARCI, it cannot invoke Section 1(b) of Rule
57.

On the third issue of fraud on the part of Chuidian in contracting the loan, or in concealing or disposing of the subject property, the Sandiganbayan held
that there was a prima facie case of fraud committed by Chuidian, justifying the issuance of the writ of attachment. The Sandiganbayan also adopted the
Republic's position that since it was compelled to pay, through Philguarantee, the bank loans taken out by Chuidian, the proceeds of which were
fraudulently diverted, it is entitled to the issuance of the writ of attachment to protect its rights as creditor.

Assuming that there is truth to the government's allegation that Chuidian has removed or disposed of his property with the intent to defraud, the
Sandiganbayan held that the writ of attachment is warranted, applying Section 1(e) of Rule 57. Besides, the Rules provide for sufficient security should the
owner of the property attached suffer damage or prejudice caused by the attachment.17

Chuidian's absence from the country was considered by the Sandiganbayan to be "the most potent insofar as the relief being sought is
concerned."18 Taking judicial notice of the admitted fact that Chuidian was residing outside of the country, the Sandiganbayan observed that:

"x x x no explanation whatsoever was given by him as to his absence from the country, or as to his homecoming plans in the future. It may be added,
moreover, that he has no definite or clearcut plan to return to the country at this juncture – given the manner by which he has submitted himself to the
jurisdiction of the court."19

Thus, the Sandiganbayan ruled that even if Chuidian is one who ordinarily resides in the Philippines, but is temporarily living outside, he is still subject to
the provisional remedy of attachment.

Accordingly, an order of attachment20 was issued by the Sandiganbayan on July 19, 1993, ordering the Sandiganbayan Sheriff to attach PNB L/C No. SSD-
005-85 for safekeeping pursuant to the Rules of Court as security for the satisfaction of judgment in Sandiganbayan Civil Case No. 0027.
On August 11, 1997, or almost four (4) years after the issuance of the order of attachment, Chuidian filed a motion to lift the attachment based on the
following grounds:

First, he had returned to the Philippines; hence, the Sandiganbayan's "most potent ground" for the issuance of the writ of preliminary attachment no longer
existed. Since his absence in the past was the very foundation of the Sandiganbayan's writ of preliminary attachment, his presence in the country warrants
the immediate lifting thereof.

Second, there was no evidence at all of initial fraud or subsequent concealment except for the affidavit submitted by the PCGG Chairman citing mere
"belief and information" and "not on knowledge of the facts." Moreover, this statement is hearsay since the PCGG Chairman was not a witness to the
litigated incidents, was never presented as a witness by the Republic and thus was not subject to cross-examination.

Third, Chuidian denies that he ever disposed of his assets to defraud the Republic, and there is nothing in the records that support the Sandiganbayan's
erroneous conclusion on the matter. Fourth, Chuidian belied the allegation that he was also a defendant in "other related criminal action," for in fact, he had
"never been a defendant in any prosecution of any sort in the Philippines."21 Moreover, he could not have personally appeared in any other action because
he had been deprived of his right to a travel document by the government.

Fifth, the preliminary attachment was, in the first place, unwarranted because he was not "guilty of fraud in contracting the debt or incurring the obligation".
In fact, the L/C was not a product of fraudulent transactions, but was the result of a US Court-approved settlement. Although he was accused of employing
blackmail tactics to procure the settlement, the California Supreme Court ruled otherwise. And in relation thereto, he cites as a sixth ground the fact that all
these allegations of fraud and wrongdoing had already been dealt with in actions before the State and Federal Courts of California. While it cannot
technically be considered as forum shopping, it is nevertheless a "form of suit multiplicity over the same issues, parties and subject matter." 22 These
foreign judgments constitute res judicata which warrant the dismissal of the case itself.

Chuidian further contends that should the attachment be allowed to continue, he will be deprived of his property without due process. The L/C was
payment to Chuidian in exchange for the assets he turned over to the Republic pursuant to the terms of the settlement in Case No. 575867. Said assets,
however, had already been sold by the Republic and cannot be returned to Chuidian should the government succeed in depriving him of the proceeds of
the L/C. Since said assets were disposed of without his or the Sandiganbayan's consent, it is the Republic who is fraudulently disposing of assets.

Finally, Chuidian stressed that throughout the four (4) years that the preliminary attachment had been in effect, the government had not set the case for
hearing. Under Rule 17, Section 3, the case itself should be dismissed for laches owing to the Republic's failure to prosecute its action for an unreasonable
length of time. Accordingly, the preliminary attachment, being only a temporary or ancillary remedy, must be lifted and the PNB ordered to immediately pay
the proceeds of the L/C to Chuidian.

Subsequently, on August 20, 1997, Chuidian filed a motion to require the Republic to deposit the L/C in an interest bearing account.23 Annex "D"; Rollo, pp.
77-79.23 He pointed out to the Sandiganbayan that the face amount of the L/C had, since its attachment, become fully demandable and payable. However,
since the amount is just lying dormant in the PNB, without earning any interest, he proposed that it would be to the benefit of all if the Sandiganbayan
requires PNB to deposit the full amount to a Sandiganbayan trust account at any bank in order to earn interest while awaiting judgment of the action.

The Republic opposed Chuidian's motion to lift attachment, alleging that Chuidian's absence was not the only ground for the attachment and, therefore, his
belated appearance before the Sandiganbayan is not a sufficient reason to lift the attachment. Moreover, allowing the foreign judgment as a basis for the
lifting of the attachment would essentially amount to an abdication of the jurisdiction of the Sandiganbayan to hear and decide the ill gotten wealth cases
lodged before it in deference to the judgment of foreign courts.
In a Resolution promulgated on November 13, 1998, the Sandiganbayan denied Chuidian's motion to lift attachment.24

On the same day, the Sandiganbayan issued another Resolution denying Chuidian's motion to require deposit of the attached L/C in an interest bearing
account.25

In a motion seeking a reconsideration of the first resolution, Chuidian assailed the Sandiganbayan's finding that the issues raised in his motion to lift
attachment had already been dealt with in the earlier resolution dated July 14, 1993 granting the application for the writ of preliminary attachment based on
the following grounds:

First, Chuidian was out of the country in 1993, but is now presently residing in the country.

Second, the Sandiganbayan could not have known then that his absence was due to the non-renewal of his passport at the instance of the PCGG. Neither
was it revealed that the Republic had already disposed of Chuidian's assets ceded to the Republic in exchange for the L/C. The foreign judgment was not
an issue then because at that time, said judgment had not yet been issued and much less final. Furthermore, the authority of the PCGG Commissioner to
subscribe as a knowledgeable witness relative to the issuance of the writ of preliminary attachment was raised for the first time in the motion to lift the
attachment. Finally, the issue of laches could not have been raised then because it was the Republic's subsequent neglect or failure to prosecute despite
the passing of the years that gave rise to laches.26

Chuidian also moved for a reconsideration of the Sandiganbayan resolution denying the motion to require deposit of the L/C into an interest bearing
account. He argued that contrary to the Sandiganbayan's pronouncement, allowing the deposit would not amount to a virtual recognition of his right over
the L/C, for he is not asking for payment but simply requesting that it be deposited in an account under the control of the Sandiganbayan. He further
stressed that the Sandiganbayan abdicated its bounden duty to rule on an issue when it found "that his motion will render nugatory the purpose of
sequestration and freeze orders over the L/C." Considering that his assets had already been sold by the Republic, he claimed that the Sandiganbayan's
refusal to exercise its fiduciary duty over attached assets will cause him irreparable injury. Lastly, the Sandiganbayan's position that Chuidian was not the
owner but a mere payee-beneficiary of the L/C issued in his favor negates overwhelming jurisprudence on the Negotiable Instruments Law, while at the
same time obliterating his rights of ownership under the Civil Code.27

On July 13, 1999, the Sandiganbayan gave due course to Chuidian's plea for the attached L/C to be deposited in an interest-bearing account, on the
ground that it will redound to the benefit of both parties.

The Sandiganbayan declared the national government as the principal obligor of the L/C even though the liability remained in the books of the PNB for
accounting and monitoring purposes.

The Sandiganbayan, however, denied Chuidian's motion for reconsideration of the denial of his motion to lift attachment, agreeing in full with the
government's apriorisms that:

x x x (1) it is a matter of record that the Court granted the application for writ of attachment upon grounds other than defendant's absence in the Philippine
territory. In its Resolution dated July 14, 1993, the Court found a prima facie case of fraud committed by defendant Chuidian, and that defendant has
recovered or disposed of his property with the intent of defrauding plaintiff; (2) Chuidian's belated presence in the Philippines cannot be invoked to secure
the lifting of attachment. The rule is specific that it applies to a party who is about to depart from the Philippines with intent to defraud his creditors.
Chuidian's stay in the country is uncertain and he may leave at will because he holds a foreign passport; and (3) Chuidian's other ground, sufficiency of
former PCGG Chairman Gunigundo's verification of the complaint, has been met fairly and squarely in the Resolution of July 14, 1993.28
Hence, the instant petition for certiorari contending that the respondent Sandiganbayan committed grave abuse of discretion amounting to lack or excess
of jurisdiction when it ruled that:

1) Most of the issues raised in the motion to lift attachment had been substantially addressed in the previous resolutions dated July 14, 1993 and
August 26, 1998, while the rest were of no imperative relevance as to affect the Sandiganbayan's disposition; and

2) PNB was relieved of the obligation to pay on its own L/C by virtue of Presidential Proclamation No. 50.

The Rules of Court specifically provide for the remedies of a defendant whose property or asset has been attached. As has been consistently ruled by this
Court, the determination of the existence of grounds to discharge a writ of attachment rests in the sound discretion of the lower courts.29

The question in this case is: What can the herein petitioner do to quash the attachment of the L/C? There are two courses of action available to the
petitioner:

First. To file a counterbond in accordance with Rule 57, Section 12, which provides:

SEC. 12. Discharge of attachment upon giving counterbond. – At anytime after an order of attachment has been granted, the party whose property has
been attached, or the person appearing on his behalf, may, upon reasonable notice to the applicant, apply to the judge who granted the order, or to the
judge of the court in which the action is pending, for an order discharging the attachment wholly or in part on the security given. The judge shall, after
hearing, order the discharge of the attachment if a cash deposit is made, or a counterbond executed to the attaching creditor is filed, on behalf of the
adverse party, with the clerk or judge of the court where the application is made, in an amount equal to the value of the property attached as determined by
the judge, to secure the payment of any judgment that the attaching creditor may recover in the action. Upon the filing of such counter-bond, copy thereof
shall forthwith be served on the attaching creditor or his lawyer. Upon the discharge of an attachment in accordance with the provisions of this section the
property attached, or the proceeds of any sale thereof, shall be delivered to the party making the deposit or giving the counter-bond, or the person
appearing on his behalf, the deposit or counter-bond aforesaid standing in place of the property so released. Should such counterbond for any reason be
found to be, or become, insufficient, and the party furnishing the same fail to file an additional counter-bond, the attaching creditor may apply for a new
order of attachment.1âw phi1.nêt

or

Second. To quash the attachment on the ground that it was irregularly or improvidently issued, as provided for in Section 13 of the same Rule:

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

It would appear that petitioner chose the latter because the grounds he raised assail the propriety of the issuance of the writ of attachment. By his own
admission, however, he repeatedly acknowledged that his justifications to warrant the lifting of the attachment are facts or events that came to light or took
place after the writ of attachment had already been implemented.
More particularly, petitioner emphasized that four (4) years after the writ was issued, he had returned to the Philippines. Yet while he noted that he would
have returned earlier but for the cancellation of his passport by the PCGG, he was not barred from returning to the Philippines. Then he informed the
Sandiganbayan that while the case against him was pending, but after the attachment had already been executed, the government lost two (2) cases for
fraud lodged against him before the U.S. Courts, thus invoking res judicata. Next, he also pointed out that the government is estopped from pursuing the
case against him for failing to prosecute for the number of years that it had been pending litigation.

It is clear that these grounds have nothing to do with the issuance of the writ of attachment. Much less do they attack the issuance of the writ at that time
as improper or irregular. And yet, the rule contemplates that the defect must be in the very issuance of the attachment writ. For instance, the attachment
may be discharged under Section 13 of Rule 57 when it is proven that the allegations of the complaint were deceptively framed,30 or when the complaint
fails to state a cause of action.31 Supervening events which may or may not justify the discharge of the writ are not within the purview of this particular rule.

In the instant case, there is no showing that the issuance of the writ of attachment was attended by impropriety or irregularity. Apart from seeking a
reconsideration of the resolution granting the application for the writ, petitioner no longer questioned the writ itself. For four (4) long years he kept silent and
did not exercise any of the remedies available to a defendant whose property or asset has been attached. It is rather too late in the day for petitioner to
question the propriety of the issuance of the writ.

Petitioner also makes capital of the two foreign judgments which he claims warrant the application of the principle of res judicata. The first judgment, in
Civil Case Nos. 575867 and 577697 brought by Philguarantee before the Santa Clara Country Superior Court, denied Philguarantee's prayer to set aside
the stipulated judgment wherein Philguarantee and Chuidian agreed on the subject attached L/C. On March 14, 1990, the Court of Appeal of the State of
California affirmed the Superior Court's judgment. The said judgment became the subject of a petition for review by the California Supreme Court. There is
no showing, however, of any final judgment by the California Supreme Court. The records, including petitioner's pleadings, are bereft of any evidence to
show that there is a final foreign judgment which the Philippine courts must defer to. Hence, res judicata finds no application in this instance because it is a
requisite that the former judgment or order must be final.32

Second, petitioner cites the judgment of the United States District Court in Civil Case 86-2255 RSWL brought by petitioner Chuidian against PNB to
compel the latter to pay the L/C. The said Court's judgment, while it ruled in favor of petitioner on the matter of Philguarantee's action-in-intervention to set
aside the settlement agreement, also ruled in favor of PNB, to wit:

Under Executive Order No. 1, the PCGG is vested by the Philippine President with the power to enforce its directives and orders by contempt proceedings.
Under Executive Order No. 2, the PCGG is empowered to freeze any, and all assets, funds and property illegally acquired by former President Marcos or
his close friends and business associates.

On March 11, 1986, PNB/Manila received an order from the PCGG ordering PNB to freeze any further drawings on the L/C. The freeze order has
remained in effect and was followed by a sequestration order issued by the PCGG. Subsequently, Chuidian's Philippine counsel filed a series of challenges
to the freeze and sequestration orders, which challenges were unsuccessful as the orders were found valid by the Philippine Supreme Court. The freeze
and sequestration orders are presently in effect. Thus, under the PCGG order and Executive Orders Nos. 1 and 2, performance by PNB would be illegal
under Philippine Law. Therefore PNB is excused from performance of the L/C agreement as long as the freeze and sequestration orders remain in effect.
(Underscoring ours)

xxx xxx xxx

Chuidian argues that the fact that the L/C was issued pursuant to a settlement in California, that the negotiations for which occurred in California, and that
two of the payments were made at PNB/LA, compels the conclusion that the act of prohibiting payment of the L/C occurred in Los Angeles. However, the
majority of the evidence and Tchacoshand Sabbatino compel the opposite conclusion. The L/C was issued in Manila, such was done at the request of a
Philippine government instrumentality for the benefit of a Philippine citizen, the L/C was to be performed in the Philippines, all significant events relating to
the issuance and implementation of the L/C occurred in the Philippines, the L/C agreement provided that the L/C was to be construed according to laws of
the Philippines, and the Philippine government certainly has an interest in preventing the L/C from being remitted in that it would be the release of funds
that are potentially illgotten gains. Accordingly, the Court finds that the PCGG orders are acts of state that must be respected by this Court, and thus PNB
is excused from making payment on the L/C as long as the freeze and sequestration orders remain in effect.33 (Underscoring ours)

Petitioner's own evidence strengthens the government's position that the L/C is under the jurisdiction of the Philippine government and that the U.S. Courts
recognize the authority of the Republic to sequester and freeze said L/C. Hence, the foreign judgments relied upon by petitioner do not constitute a bar to
the Republic's action to recover whatever alleged ill-gotten wealth petitioner may have acquired.

Petitioner may argue, albeit belatedly, that he also raised the issue that there was no evidence of fraud on record other than the affidavit of PCGG
Chairman Gunigundo. This issue of fraud, however, touches on the very merits of the main case which accuses petitioner of committing fraudulent acts in
his dealings with the government. Moreover, this alleged fraud was one of the grounds for the application of the writ, and the Sandiganbayan granted said
application after it found a prima facie case of fraud committed by petitioner.

In fine, fraud was not only one of the grounds for the issuance of the preliminary attachment, it was at the same time the government's cause of action in
the main case.

We have uniformly held that:

x x x when the preliminary attachment is issued upon a ground which is at the same time the applicant's cause of action; e.g., "an action for money or
property embezzled or fraudulently misapplied or converted to his own use by a public officer, or an officer of a corporation, or an attorney, factor, broker,
agent, or clerk, in the course of his employment as such, or by any other person in a fiduciary capacity, or for a willful violation of duty," or "an action
against a party who has been guilty of fraud in contracting the debt or incurring the obligation upon which the action is brought," the defendant is not
allowed to file a motion to dissolve the attachment under Section 13 of Rule 57 by offering to show the falsity of the factual averments in the plaintiff's
application and affidavits on which the writ was based – and consequently that the writ based thereon had been improperly or irregularly issued – the
reason being that the hearing on such a motion for dissolution of the writ would be tantamount to a trial of the merits of the action. In other words, the
merits of the action would be ventilated at a mere hearing of a motion, instead of at the regular trial.34 (Underscoring ours)

Thus, this Court has time and again ruled that the merits of the action in which a writ of preliminary attachment has been issued are not triable on a motion
for dissolution of the attachment, otherwise an applicant for the lifting of the writ could force a trial of the merits of the case on a mere motion.35

It is not the Republic's fault that the litigation has been protracted. There is as yet no evidence of fraud on the part of petitioner. Petitioner is only one of the
twenty-three (23) defendants in the main action. As such, the litigation would take longer than most cases. Petitioner cannot invoke this delay in the
proceedings as an excuse for not seeking the proper recourse in having the writ of attachment lifted in due time. If ever laches set in, it was petitioner, not
the government, who failed to take action within a reasonable time period. Challenging the issuance of the writ of attachment four (4) years after its
implementation showed petitioner's apparent indifference towards the proceedings before the Sandiganbayan.

In sum, petitioner has failed to convince this Court that the Sandiganbayan gravely abused its discretion in a whimsical, capricious and arbitrary manner.
There are no compelling reasons to warrant the immediate lifting of the attachment even as the main case is still pending. On the other hand, allowing the
discharge of the attachment at this stage of the proceedings would put in jeopardy the right of the attaching party to realize upon the relief sought and
expected to be granted in the main or principal action. It would have the effect of prejudging the main case.
The attachment is a mere provisional remedy to ensure the safety and preservation of the thing attached until the plaintiff can, by appropriate proceedings,
obtain a judgment and have such property applied to its satisfaction.36 To discharge the attachment at this stage of the proceedings would render inutile
any favorable judgment should the government prevail in the principal action against petitioner. Thus, the Sandiganbayan, in issuing the questioned
resolutions, which are interlocutory in nature, committed no grave abuse of discretion amounting to lack or excess of jurisdiction. As long as the
Sandiganbayan acted within its jurisdiction, any alleged errors committed in the exercise of its jurisdiction will amount to nothing more than errors of
judgment which are reviewable by timely appeal and not by special civil action of certiorari.37

Moreover, we have held that when the writ of attachment is issued upon a ground which is at the same time the applicant's cause of action, the only other
way the writ can be lifted or dissolved is by a counterbond, in accordance with Section 12 of the same rule.38 This recourse, however, was not availed of by
petitioner, as noted by the Solicitor General in his comment.39

To reiterate, there are only two ways of quashing a writ of attachment: (a) by filing a counterbond immediately; or (b) by moving to quash on the ground of
improper and irregular issuance.40 These grounds for the dissolution of an attachment are fixed in Rule 57 of the Rules of Court and the power of the Court
to dissolve an attachment is circumscribed by the grounds specified therein.41 Petitioner's motion to lift attachment failed to demonstrate any infirmity or
defect in the issuance of the writ of attachment; neither did he file a counterbond.

Finally, we come to the matter of depositing the Letter of Credit in an interest-bearing account. We agree with the Sandiganbayan that any interest that the
proceeds of the L/C may earn while the case is being litigated would redound to the benefit of whichever party will prevail, the Philippine government
included. Thus, we affirm the Sandiganbayan's ruling that the proceeds of the L/C should be deposited in an interest bearing account with the Land Bank of
the Philippines for the account of the Sandiganbayan in escrow until ordered released by the said Court.

We find no legal reason, however, to release the PNB from any liability thereunder. The Deed of Transfer, whereby certain liabilities of PNB were
transferred to the national government, cannot affect the said L/C since there was no valid substitution of debtor. Article 1293 of the New Civil Code
provides:

Novation which consists in substituting a new debtor in the place of the original one, may be made without the knowledge or against the will of the latter,
but not without the consent of the creditor. Payment by the new debtor gives him the rights mentioned in Articles 1236 and 1237.

Accordingly, any substitution of debtor must be with the consent of the creditor, whose consent thereto cannot just be presumed. Even though Presidential
Proclamation No. 50 can be considered an "insuperable cause", it does not necessarily make the contracts and obligations affected thereby exceptions to
the above-quoted law, such that the substitution of debtor can be validly made even without the consent of the creditor. Presidential Proclamation No. 50
was not intended to set aside laws that govern the very lifeblood of the nation's commerce and economy. In fact, the Deed of Transfer that was executed
between PNB and the government pursuant to the said Presidential Proclamation specifically stated that it shall be deemed effective only upon compliance
with several conditions, one of which requires that:

(b) the BANK shall have secured such governmental and creditors' approvals as may be necessary to establish the consummation, legality and
enforceability of the transactions contemplated hereby."

The validity of this Deed of Transfer is not disputed. Thus, PNB is estopped from denying its liability thereunder considering that neither the PNB nor the
government bothered to secure petitioner's consent to the substitution of debtors. We are not unmindful that any effort to secure petitioner's consent at that
time would, in effect, be deemed an admission that the L/C is valid and binding. Even the Sandiganbayan found that: 36 Sta. Ines Melale Forest Products
Corp. v. Macaraig, Jr., 299 SCRA 491, 515 (1998).
x x x Movant has basis in pointing out that inasmuch as the L/C was issued in his favor, he is presumed to be the lawful payee-beneficiary of the L/C until
such time that the plaintiff successfully proves that said L/C is ill-gotten and he has no right over the same.42

In Republic v. Sandiganbayan,43 we held that the provisional remedies, such as freeze orders and sequestration, were not "meant to deprive the owner or
possessor of his title or any right to the property sequestered, frozen or taken over and vest it in the sequestering agency, the Government or other
person."

Thus, until such time that the government is able to successfully prove that petitioner has no right to claim the proceeds of the L/C, he is deemed to be the
lawful payee-beneficiary of said L/C, for which any substitution of debtor requires his consent. The Sandiganbayan thus erred in relieving PNB of its liability
as the original debtor.

WHEREFORE, in view of all the foregoing, the petition is DISMISSED. The Resolutions of the Sandiganbayan dated November 6, 1998 and July 2, 1999
are AFFIRMED. The PNB is DIRECTED to remit to the Sandiganbayan the proceeds of Letter of Credit No. SFD-005-85 in the amount of U.S. $4.4 million
within fifteen (15) days from notice hereof, the same to be placed under special time deposit with the Land Bank of the Philippines, for the account of
Sandiganbayan in escrow for the person or persons, natural or juridical, who shall eventually be adjudged lawfully entitled thereto, the same to earn
interest at the current legal bank rates. The principal and its interest shall remain in said account until ordered released by the Court in accordance with
law.1âw phi 1.nêt

No costs.

SO ORDERED.

G.R. No. 193572

TSUNEISHI HEAVY INDUSTRIES (CEBU), INC., Petitioner

vs
MIS MARITIME CORPORATION, Respondent

DECISION

JARDELEZA, J.:

This is a petition for review on certiorari1 under Rule 45 of the Rules of Court filed by petitioner Tsuneishi Heavy Industries (Cebu), Inc. (Tsuneishi)
challenging the Decision2 of the Court of Appeals (CA) in CAG.R. CEB-SP No. 03956 dated October 7, 2009 and its Resolution3 dated August 26, 2010.
The CA Decision reversed three Orders of Branch 7 of the Regional Trial Court (RTC), Cebu City dated April 15, 2008, July 7, 2008, and December 11,
2008, respectively.4 The Resolution denied Tsuneishi's motion for reconsideration.

Respondent MIS Maritime Corporation (MIS) contracted Tsuneishi to dry dock and repair its vessel M/T MIS-1 through an Agreement dated March 22,
2006.5 On March 23, 2006, the vessel dry docked in Tsuneishi's shipyard. Tsuneishi rendered the required services. However, about a month later and
while the vessel was still dry docked, Tsuneishi conducted an engine test on M/T MIS-1. The vessel's engine emitted smoke. The parties eventually
discovered that this was caused by a burnt crank journal. The crankpin also showed hairline cracks due to defective lubrication or deterioration, Tsuneishi
insists that the damage was not its fault while MIS insists on the contrary. Nevertheless, as an act of good will, Tsuneishi paid for the vessel's new engine
crankshaft, crankpin, and main bearings.6

Tsuneishi billed MIS the amount of US$318,571.50 for payment of its repair and dry docking services. MIS refused to pay this amount. Instead, it
demanded that Tsuneishi pay US$471,462.60 as payment for the income that the vessel lost in the six months that it was not operational and dry docked
at Tsuneishi's shipyard. It also asked that its claim be set off against the amount billed by Tsuneishi. MIS further insisted that after the set off, Tsuneishi still
had the obligation to pay it the amount of US$152,891.10.7 Tsuneishi rejected MIS' demands. It delivered the vessel to MIS in September 2006.8 On
November 6, 2006, MIS signed an Agreement for Final Price.9 However, despite repeated demands, MIS refused to pay Tsuneishi the amount billed under
their contract.

Tsuneishi claims that MIS also caused M/T White Cattleya, a vessel owned by Cattleya Shipping Panama S.A. (Cattleya Shipping), to stop its payment for
the services Tsuneishi rendered for the repair and dry docking of the vessel.10

MIS argued that it lost revenues because of the engine damage in its vessel. This damage occurred while the vessel was dry docked and being serviced at
Tsuneishi's yard. MIS insisted that since this arose out of Tsuneishi's negligence, it should pay for MIS' lost income. Tsuneishi offered to pay 50% of the
amount demanded but MIS refused any partial payment.11

On April 10, 2008, Tsuneishi filed a complaint12 against MIS before the RTC. This complaint stated that it is invoking the admiralty jurisdiction of the RTC to
enforce a maritime lien under Section 21 of the Ship Mortgage Decree of 197813 (Ship Mortgage Decree). It also alleged as a cause of action MIS'
unjustified refusal to pay the amount it owes Tsuneishi under their contract. The complaint included a prayer for the issuance of arrest order/writ of
preliminary attachment. To support this prayer, the complaint alleged that Section 21 of the Ship Mortgage Decree as well as Rule 57 of the Rules of Court
on attachment authorize the issuance of an order of arrest of vessel and/or writ of preliminary attachment.14

In particular, Tsuneishi argued that Section 21 of the Ship Mortgage Decree provides for a maritime lien in favor of any person who furnishes repair or
provides use of a dry dock for a vessel. Section 21 states that this may be enforced through an action in rem. Further, Tsuneishi and MIS' contract granted
Tsuneishi the right to take possession, control and custody of the vessel in case of default of payment. Paragraph 9 of this contract further states that
Tsuneishi may dispose of the vessel and apply the proceeds to the unpaid repair bill.15

Finally, Tsuneishi's complaint alleges that there are sufficient grounds for the issuance of a writ of preliminary attachment. In particular, it claims that MIS is
guilty of fraud in the performance of its obligation. The complaint states:

40. X X X Under the factual milieu, it is wrongful for defendant MIS Maritime to take undue advantage of an unfortunate occurrence by withholding payment
of what is justly due to plaintiff under law and contract. Defendant MIS Maritime knew or ought to have known that its claim for lost revenues was
unliquidated and could not be set-off or legally compensated against the dry-docking and repair bill which was liquidated and already fixed and
acknowledged by the parties.

41. Defendant CATTLEYA SHIPPING's actions and actuations in performing its obligation were clearly fraudulent because, firstly, it had no business
getting involved as far as the M/T MIS-1 incident was concerned; secondly, no incident of any sort occurred when its vessel M/T WHITE CATTLEYA was
dry docked and repaired. It had no claim against the plaintiff. Yet, it (defendant Cattleya Shipping) allowed itself to be used by defendant MIS Maritime
when it willfully and unlawfully stopped paying plaintiff, and conspired to make good defendant MIS Maritime's threat to "withhold payment of any and all
billings that you (plaintiff) may have against our fleet of vessels which include those registered under Cattleya Shipping Panama S.A. (MT White Cattleya) x
x x.16
Tsuneishi also filed the Affidavit17 of its employee Lionel T. Bitera (Bitera Affidavit), in accordance with the requirement for the issuance of a writ of
preliminary attachment under Rule 57 of the Rules of Court. The Bitera Affidavit stated that Tsuneishi performed dry docking and repair services for M/T
MIS-1 and M/T White Cattleya. It also alleged that after Tsuneishi performed all the services required, MIS and Cattleya refused to pay their obligation.
According to the Bitera Affidavit, this refusal to pay constitutes fraud because:

d. The breach of the obligation was willful. In the case of M/T MIS-1 no single installment payment was made despite the fact that the vessel was accepted
fully dry docked and with a brand new engine crankshaft installed by the yard free of charge to the Owner. MIS Maritime Corporation was blaming the yard
for the damage sustained by the engine crank shaft on 25 April 2006 when the engine was started in preparation for sea trial. When the incident happened
the dry docking had already been completed and the vessel was already in anchorage position for sea trial under the management and supervisory control
of the Master and engineers of the vessel. Besides, the incident was not due to the fault of the yard. It was eventually traced to dirty lube oil or defective
main engine lubricating oil which was the lookout and responsibility of the vessel's engineers.

xxxx

e. The action taken by MIS Maritime Corporation in setting off its drydocking obligation against their claim for alleged lost revenues was unilaterally done,
and without legal and factual basis for while, on one hand, the drydocking bill was for a fixed and agreed amount, the claim of MIS Maritime for lost
revenues, on the other hand, was not liquidated as it was for a gross amount. X X X

f. Cattleya Shipping for its part had nothing to do with the dry docking of M/T MIS-1. There was no incident whatsoever during the dry docking of its vessel
M/T WHITE CATTLEYA. In fact, after this vessel was satisfactorily dry docked and delivered to its Owner (Cattleya Shipping) the latter started paying the
monthly installments without any complaint whatsoever. X X X18

The RTC issued a writ of preliminary attachment in an Order19 dated April 15, 2008 (First Order) without hearing. Consequently, MIS' condominium units
located in the financial district of Makati, cash deposits with various banks, charter hire receivables from Shell amounting to ₱26.6 Million and MT MIS-1
were attached.20

MIS filed a motion to discharge the attachment.21 The RTC denied this motion in an Order22 dated July 7, 2008 (Second Order). MIS filed a motion for
reconsideration which the RTC also denied in an Order23 dated December 11, 2008 (Third Order).

MIS then filed a special civil action for certiorari24 before the CA assailing the three Orders. MIS argued that the RTC acted with grave abuse of discretion
when it ordered the issuance of a preliminary writ of attachment and denied MIS’ motion to discharge and motion for reconsideration.

The CA ruled in favor of MIS. It reversed the three assailed Orders after finding that the RTC acted with grave abuse of discretion in issuing the writ of
preliminary attachment.25

According to the CA, the Bitera Affidavit lacked the required allegation that MIS has no sufficient security for Tsuneishi's claim. In fact, the CA held that the
evidence on record shows that MIS has sufficient properties to cover the claim. It also relied on jurisprudence stating that when an affidavit does not
contain the allegations required under the rules for the issuance of a writ of attachment and the court nevertheless issues the writ, the RTC is deemed to
have acted with grave abuse of discretion. Consequently, the writ of preliminary attachment is fatally defective.26 The CA further highlighted that a writ of
preliminary attachment is a harsh and rigorous remedy. Thus, the rules must be strictly construed. Courts have the duty to ensure that all the requisites are
complied with.27
The CA also found that the RTC ordered the issuance of the writ of preliminary attachment despite Tsuneishi's failure to prove the presence of fraud. It
held that the bare and unsubstantiated allegation in the Bitera Affidavit that MIS willfully refused to pay its obligation is not sufficient to establish prima
facie fraud. The CA emphasized that a debtor's mere inability to pay is not fraud. Moreover, Tsuneishi's allegations of fraud were general. Thus, they failed
to comply with the requirement in the Rules of Court that in averments of fraud, the circumstances constituting it must be alleged with particularity. The CA
added that while notice and hearing are not required for the issuance of a writ of preliminary attachment, it may become necessary in instances where the
applicant makes grave accusations based on grounds alleged in general terms. The CA also found that Tsuneishi failed to comply with the requirement
that the affidavit must state that MIS has no other sufficient security to cover the amount of its obligation.28

The CA disposed of the case, thus:

WHEREFORE, the petition is GRANTED. The three (3) Orders dated April 15, 2008, July 7, 2008 and December 11, 2008, respectively, of the Regional
Trial Court, Branch 7, Cebu City, in Civil Case No. CEB-34250, are ANNULLED and SET ASIDE.29 (Emphasis in the original, citations omitted.)

Tsuneishi filed this petition for review on certiorari under Rule 45 of the Rules of Court challenging the CA's ruling. Tsuneishi pleads that this case involves
a novel question of law. It argues that while Section 21 of the Ship Mortgage Decree grants it a maritime lien, the law itself, unfortunately, does not provide
for the procedure for its enforcement. It posits that to give meaning to this maritime lien, this Court must rule that the procedure for its enforcement is Rule
57 of the Rules of Court on the issuance of the writ of preliminary attachment. Thus, it proposes that aside from the identified grounds for the issuance of a
writ of preliminary attachment in the Rules of Court, the maritime character of this action should be considered as another basis to issue the writ.30

To support its application for the issuance of a writ of preliminary attachment, Tsuneishi also invokes a provision in its contract with MIS which states that:

In case of default, either in payment or in violation of the warranties stated in Section 11. by the Owner, the Owner hereby appoints the Contractor as its
duly authorized attorney in fact with full power and authority to take possession, control, and custody of the said Subject Vessel and / or any of the Subject
Vessel's accessories and equipment, or other assets of the Owner, without resorting to court action, and that the Owner hereby empowers the Contractor
to take custody of the same until the obligation of the Owner to the Contractor is fully paid and settled to the satisfaction of the Contractor. x x
x31(Underscoring omitted.)

It insists that the writ of preliminary attachment must be issued so as to give effect to this provision in the contract.

Tsuneishi also disputes the CA's finding that it failed to show fraud in MIS' performance of its obligation. It opines that MIS' failure to comply with its
obligation does not arise from a mere inability to pay. If that were the case, then the CA would be correct in saying that MIS committed no fraud. However,
MIS' breach of its obligation in this case amounts to a gross unwillingness to pay amounting to fraud.32

Tsuneishi adds that the CA erred in holding that the RTC acted with grave abuse of discretion when it failed to conduct a hearing prior to the issuance of
the writ of preliminary attachment. It insisted that the Rules of Court, as well as jurisprudence, does not require a hearing prior to issuance.33

Finally, Tsuneishi disagrees with the ruling of the CA that it did not comply with the requirements under the rules because the Bitera Affidavit did not state
that MIS has no other sufficient security. This was already stated in Tsuneishi's complaint filed before the RTC. Thus, the rules should be applied liberally
in favor of rendering justice.34

In its comment,35 MIS challenges Tsuneishi's argument that its petition raises a novel question of law. According to MIS, the issue in this case is simple. A
reading of Tsuneishi's complaint shows that it prayed for the issuance of a writ of preliminary attachment under Rule 57 of the Rules of Court or arrest of
vessel to enforce its maritime lien under the Ship Mortgage Decree.36 Thus, Tsuneishi knew from the start that a remedy exists for the enforcement of its
maritime lien-through an arrest of vessel under the Ship Mortgage Decree. However, the RTC itself characterized the complaint as a collection of sum of
money with prayer for the issuance of a writ of preliminary attachment. Thus, what it issued was a writ of preliminary attachment. Unfortunately for
Tsuneishi, the CA reversed the RTC because it found that the element of fraud was not duly established. Thus, there was no ground for the issuance of a
writ of preliminary attachment. 37

MIS insists that Tsuneishi is raising this alleged novel question of law for the first time before this Court in an attempt to skirt the issue that it failed to
sufficiently establish that MIS acted with fraud in the performance of its obligation. MIS contends that fraud cannot be inferred from a debtor's mere inability
to pay. There is no distinction between inability and a refusal to pay where the refusal is based on its claim that Tsuneishi damaged its vessel. According to
MIS, its vessel arrived at Tsuneishi's shipyard on its own power. Its engine incurred damage while it was under Tsuneishi's custody. Thus, Tsuneishi is
presumed negligent.38

MIS further highlights that Tsuneishi completed the dry docking in April 2006. It was during this time that the damage in the vessel's engine was
discovered. The vessel was turned over to MIS only in September 2006. Thus, it had lost a significant amount of revenue during the period that it was off-
hire. Because of this, it demanded payment from Tsuneishi which the latter rejected.39

Hence, MIS argues that this is not a situation where, after Tsuneishi rendered services, MIS simply absconded. MIS has the right to demand for the
1âw phi 1

indemnification of its lost revenue due to Tsuneishi's negligence.40

MIS further adds that the CA correctly held that there was no statement in the Bitera Affidavit that MIS had no adequate security to cover the amount being
demanded by Tsuneishi. Tsuneishi cannot validly argue that this allegation is found in its complaint and that this should be deemed compliance with the
requirement under Rule 57.41

Further, in its motion to discharge the preliminary attachment, MIS presented proof that it has the financial capacity to pay any liability arising from
Tsuneishi's claims. In fact, there was an excessive levy of MIS' properties. This is proof in itself that MIS has adequate security to cover Tsuneishi's claims.
Finally, MIS agrees with the CA that the RTC should have conducted a hearing. While it is true that a hearing is not required by the Rules of Court,
jurisprudence provides that a hearing is necessary where the allegations in the complaint and the affidavit are mere general averments. Further, where a
motion to discharge directly contests the allegation in the complaint and affidavit, the applicant has the burden of proving its claims of fraud.42

There are two central questions presented for the Court to resolve, namely: (1) whether a maritime lien under Section 21 of the Ship Mortgage Decree may
be enforced through a writ of preliminary attachment under Rule 57 of the Rules of Court; and (2) whether the CA correctly ruled that Tsuneishi failed to
comply with the requirements for the issuance of a writ of preliminary injunction.

We deny the petition.

We begin by classifying the legal concepts of lien, maritime lien and the provisional remedy of preliminary attachment.

Alien is a "legal claim or charge on property, either real or personal, as a collateral or security for the payment of some debt or obligation.43 It attaches to a
property by operation of law and once attached, it follows the property until it is discharged. What it does is to give the party in whose favor the lien exists
the right to have a debt satisfied out of a particular thing. It is a legal claim or charge on the property which functions as a collateral or security for the
payment of the obligation.44
Section 21 of the Ship Mortgage Decree establishes a lien. It states:

Sec. 21. Maritime Lien for Necessaries; Persons entitled to such Lien. - Any person furnishing repairs, supplies, towage, use of dry dock or marine railway,
or other necessaries to any vessel, whether foreign or domestic, upon the order of the owner of such vessel, or of a person authorized by the owner, shall
have a maritime lien on the vessel, which may be enforced by suit in rem, and it shall be necessary to allege or prove that credit was given to the vessel.

In practical terms, this means that the holder of the lien has the right to bring an action to seek the sale of the vessel and the application of the proceeds of
this sale to the outstanding obligation. Through this lien, a person who furnishes repair, supplies, towage, use of dry dock or marine railway, or other
necessaries to any vessel, in accordance with the requirements under Section 21, is able to obtain security for the payment of the obligation to him.

A party who has a lien in his or her favor has a remedy in law to hold the property liable for the payment of the obligation. A lienholder has the remedy of
filing an action in court for the enforcement of the lien. In such action, a lienholder must establish that the obligation and the corresponding lien exist before
he or she can demand that the property subject to the lien be sold for the payment of the obligation. Thus, a lien functions as a form of security for an
obligation.

Liens, as in the case of a maritime lien, arise in accordance with the provision of particular laws providing for their creation, such as the Ship Mortgage
Decree which clearly states that certain persons who provide services or materials can possess a lien over a vessel. The Rules of Court also provide for a
provisional remedy which effectively operates as a lien. This is found in Rule 57 which governs the procedure for the issuance of a writ of preliminary
attachment.

A writ of preliminary attachment is a provisional remedy issued by a court where an action is pending. In simple terms, a writ of preliminary attachment
allows the levy of a property which shall then be held by the sheriff. This property will stand as security for the satisfaction of the judgment that the court
may render in favor of the attaching party. In Republic v. Mega Pacific eSolutions (Republic),45 we explained that the purpose of a writ of preliminary
attachment is twofold:

First, it seizes upon property of an alleged debtor in advance of final judgment and holds it subject to appropriation, thereby preventing the loss or
dissipation of the property through fraud or other means. Second, it subjects the property of the debtor to the payment of a creditor's claim, in those cases
in which personal service upon the debtor cannot be obtained. This remedy is meant to secure a contingent lien on the defendant's property until
the plaintiff can, by appropriate proceedings, obtain a judgment and have the property applied to its satisfaction, or to make some provision for
unsecured debts in cases in which the means of satisfaction thereof are liable to be removed beyond the jurisdiction, or improperly disposed of
or concealed, or otherwise placed beyond the reach of creditors.46 (Citations omitted, emphasis supplied. Italics in the original.)

As we said, a writ of preliminary attachment effectively functions as a lien. This is crucial to resolving Tsuneishi's alleged novel question of law in this case.
Tsuneishi is correct that the Ship Mortgage Decree does not provide for the specific procedure through which a maritime lien can be enforced. Its error is in
insisting that a maritime lien can only be operationalized by granting a writ of preliminary attachment under Rule 57 of the Rules of Court. Tsuneishi argues
that the existence of a maritime lien should be considered as another ground for the issuance of a writ of preliminary attachment under the Rules of Court.

Tsuneishi's argument is rooted on a faulty understanding of a lien and a writ of preliminary attachment. As we said, a maritime lien exists in accordance
with the provision of the Ship Mortgage Decree. It is enforced by filing a proceeding in court. When a maritime lien exists, this means that the party in
whose favor the lien was established may ask the court to enforce it by ordering the sale of the subject property and using the proceeds to settle the
obligation.
On the other hand, a writ of preliminary attachment is issued precisely to create a lien. When a party moves for its issuance, the party is effectively asking
the court to attach a property and hold it liable for any judgment that the court may render in his or her favor. This is similar to what a lien does. It functions
as a security for the payment of an obligation. In Quasha Asperilla Ancheta Valmonte Peña & Marcos v. Juan,47 we held:

An attachment proceeding is for the purpose of creating a lien on the property to serve as security for the payment of the creditors' claim. Hence, where a
lien already exists, as in this case a maritime lien, the same is already equivalent to an attachment. X X X48

To be clear, we repeat that when a lien already exists, this is already equivalent to an attachment. This is where Tsuneishi's argument fails.

Clearly, because it claims a maritime lien in accordance with the Ship Mortgage Decree, all Tsuneishi had to do is to file a proper action in court for its
enforcement. The issuance of a writ of preliminary attachment on the pretext that it is the only means to enforce a maritime lien is superfluous. The reason
that the Ship Mortgage Decree does not provide for a detailed procedure for the enforcement of a maritime lien is because it is not necessary. Section 21
already provides for the simple procedure-file an action in rem before the court.

To our mind, this alleged novel question of law is a mere device to remedy the error committed by Tsuneishi in the proceedings before the trial court
regarding the issuance of a writ of preliminary attachment. We note that the attachment before the trial court extended to other properties other than the
lien itself, such as bank accounts and real property. Clearly, what was prayed for in the proceedings below was not an attachment for the enforcement of a
maritime lien but an attachment, plain and simple.

II

Tsuneishi's underlying difficulty is whether it succeeded in proving that it complied with the requirements for the issuance of a writ of preliminary
attachment. This is the only true question before us. In particular, we must determine whether the Bitera Affidavit stated that MIS lacked sufficient
properties to cover the obligation and whether MIS acted with fraud in refusing to pay.

At the onset, we note that these questions dwell on whether there was sufficient evidence to prove that Tsuneishi complied with the requirements for the
issuance of a writ of preliminary attachment. Sufficiency of evidence is a question of fact which this Court cannot review in a Rule 45 petition. We are not a
trier of fact.

Nevertheless, we have examined the record before us and we agree with the factual findings of the CA.

The record clearly shows that the Bitera Affidavit does not state that MIS has no other sufficient security for the claim sought to be enforced. This is a
requirement under Section 3, Rule 57 of the Rules of Court. We cannot agree with Tsuneishi's insistence that this allegation need not be stated in the
affidavit since it was already found in the complaint. The rules are clear and unequivocal. There is no basis for Tsuneishi's position. Nor is it entitled to the
liberal application of the rules. Not only has Tsuneishi failed to justify its omission to include this allegation, the facts also do not warrant the setting aside of
technical rules. Further, rules governing the issuance of a writ of preliminary attachment are strictly construed.

We also agree with the CA's factual finding that MIS did not act with fraud in refusing to pay the obligation. We emphasize that when fraud is invoked as a
1âw phi 1

ground for the issuance of a writ of preliminary attachment under Rule 57 of the Rules of Court, there must be evidence clearly showing the factual
circumstances of the alleged fraud.49Fraud cannot be presumed from a party's mere failure to comply with his or her obligation. Moreover, the Rules of
Court require that in all averments of fraud, the circumstances constituting it must be stated with particularity.50
In Republic, we defined fraud as:

[A]s the voluntary execution of a wrongful act or a wilful omission, while knowing and intending the effects that naturally and necessarily arise from that act
or omission. In its general sense, fraud is deemed to comprise anything calculated to deceive -- including all acts and omission and concealment involving
a breach of legal or equitable duty, trust, or confidence justly reposed ---- resulting in damage to or in undue advantage over another. Fraud is also
described as embracing all multifarious means that human ingenuity can device, and is resorted to for the purpose of securing an advantage over another
by false suggestions or by suppression of truth; and it includes all surprise, trick, cunning, dissembling, and any other unfair way by which another is
cheated.51 (Citations omitted.)

By way of example, in Metro, Inc. v. Lara's Gifts and Decors, Inc.,52 we ruled that the factual circumstances surrounding the parties' transaction clearly
showed fraud. In this case, the petitioners entered into an agreement with respondents where the respondents agreed that they will endorse their purchase
orders from their foreign buyers to the petitioners in order to help the latter's export business. The petitioners initially promised that they will transact only
with the respondents and never directly contact respondents' foreign buyers. To convince respondents that they should trust the petitioners, petitioners
even initially remitted shares to the respondents in accordance with their agreement. However, as soon as there was a noticeable increase in the volume
of purchase orders from respondents' foreign buyers, petitioners abandoned their contractual obligation to respondents and directly transacted with
respondents' foreign buyers. We found in this case that the respondents' allegation (that the petitioners undertook to sell exclusively through respondents
but then transacted directly with respondents' foreign buyer) is sufficient allegation of fraud to support the issuance of a writ of preliminary attachment.53

In contrast, in PCL Industries Manufacturing Corporation v. Court of Appeals,54 we found no fraud that would warrant the issuance of a writ of preliminary
attachment. In that case, petitioner purchased printing ink materials from the private respondent. However, petitioner found that the materials delivered
were defective and thus refused to pay its obligation under the sales contract. Private respondent insisted that petitioner's refusal to pay after the materials
were delivered to it amounted to fraud. We disagreed. We emphasized our repeated and consistent ruling that the mere fact of failure to pay after the
obligation to do so has become due and despite several demands is not enough to warrant the issuance of a writ of preliminary attachment.55

An examination of the Bitera Affidavit reveals that it failed to allege the existence of fraud with sufficient specificity. The affidavit merely states that MIS
refused to pay its obligation because it demanded a set off between its obligation to Tsuneishi and Tsuneishi's liability for MIS' losses caused by the delay
in the turn-over of the vessel. The affidavit insists that this demand for set off was not legally possible. Clearly, there is nothing in the affidavit that even
approximates any act of fraud which MIS committed in the performance of its obligation. MIS' position was clear: Tsuneishi caused the damage in the
vessel's engine which delayed its trip and should thus be liable for its losses. There is no showing that MIS performed any act to deceive or defraud
Tsuneishi.

In Watercraft Venture Corporation v. Wolfe,56 we ruled that an affidavit which does not contain concrete and specific grounds showing fraud is inadequate
to sustain the issuance of the writ of preliminary attachment.57

Moreover, the record tells a different story.

The record shows that Tsuneishi released the vessel in September 2006. MIS signed the Agreement of the Final Price only in November 2006. Thus,
Tsuneishi's claim that MIS'act of signing the document and making it believe that MIS will pay the amount stated is the fraudulent act which induced it to
release the vessel cannot stand. Tsuneishi agreed to release the vessel even before MIS signed the document. It was thus not the act which induced
Tsuneishi to turn over the vessel.

Further, Tsuneishi is well aware of MIS' claims. It appears from the record, and as admitted by MIS in its pleadings, that the reason for its refusal to pay is
its claim that its obligation should be set off against Tsuneishi's liability for the losses that MIS incurred for the unwarranted delay in the turn-over of the
vessel. MIS insists that Tsuneishi is liable for the damage on the vessel. This is not an act of fraud. It is not an intentional act or a willful omission
calculated to deceive and injure Tsuneishi. MIS is asserting a claim which it believes it has the right to do so under the law. Whether MIS' position is legally
tenable is a different matter. It is an issue fit for the court to decide. Notably, MIS filed this as a counterclaim in the case pending before the RTC.58 Whether
MIS is legally correct should be threshed out there.

Even assuming that MIS is wrong in refusing to pay Tsuneishi, this is nevertheless not the fraud contemplated in Section 1(d), Rule 57 of the Rules of
Court. Civil law grants Tsuneishi various remedies in the event that the trial court rules in its favor such as the payment of the obligation, damages and
legal interest. The issuance of a writ of preliminary attachment is not one of those remedies.

There is a reason why a writ of preliminary attachment is available only in specific cases enumerated under Section 1 of Rule 57. As it entails interfering
with property prior to a determination of actual liability, it is issued with great caution and only when warranted by the circumstances. As we said in Ng Wee
v. Tankiansee,59 the rules on the issuance of the writ of preliminary attachment as a provisional remedy are strictly construed against the applicant because
it exposes the debtor to humiliation and annoyance.60

Moreover, we highlight that this petition for review on certiorari arose out of a Decision of the CA in a Rule 65 petition. In cases like this, this Court's duty is
only to ascertain whether the CA was correct in ruling that the RTC acted with grave abuse of discretion amounting to lack or excess of jurisdiction.

Jurisprudence has consistently held that a court that issues a writ of preliminary attachment when the requisites are not present acts in excess of its
jurisdiction.61 In Philippine Bank of Communications v. Court of Appeals,62 we highlighted:

Time and again, we have held that the rules on the issuance of a writ of attachment must be construed strictly against the applicants. This stringency is
required because the remedy of attachment is harsh, extraordinary and summary in nature. If all the requisites for the granting of the writ are not present,
then the court which issues it acts in excess of its jurisdiction.63 (Citation omitted.)

In accordance with consistent jurisprudence, we must thus affirm the ruling of the CA that the RTC, in issuing a writ of preliminary attachment when the
requisites under the Rules of Court were clearly not present, acted with grave abuse of discretion.

WHEREFORE, in view of the foregoing, the petition is DENIED. The Decision of the Court of Appeals dated October 7, 2009 and its Resolution dated
August 26, 2010 are AFFIRMED.

SO ORDERED.

G.R. No. 218232

RAMON "BONG" B. REVILLA, JR., Petitioner

vs.
SANDIGANBAYAN (FIRST DIVISION) and PEOPLE OF THE PHILIPPINES, Respondents

x-----------------------x

G.R. No. 218235

RICHARD A. CAMBE, Petitioner
vs.
SANDIGANBAYAN (FIRST DIVISION), PEOPLE OF THE PHILIPPINES, and OFFICE OF THE OMBUDSMAN, Respondents

x-----------------------x

G.R. No. 218266

JANET LIM NAPOLES, Petitioner

vs.
SANDIGANBAYAN (FIRST DIVISION), CONCHITA CARPIO MORALES, IN HER CAPACITY AS OMBUDSMAN, and PEOPLE OF THE
PHILIPPINES, Respondents

x-----------------------x

G.R. No. 218903

PEOPLE OF THE PHILIPPINES, Petitioner

vs.
SANDIGANBAYAN (FIRST DIVISION), RAMON "BONG" B. REVILLA, JR., and RICHARD A. CAMBE,Respondents

x-----------------------x

G.R. No. 219162

RAMON "BONG" B. REVILLA, JR., Petitioner

vs.
SANDIGANBAYAN (FIRST DIVISION) and PEOPLE OF THE PHILIPPINES, Respondents

DECISION

CARPIO, J.:

The Case

The petitions for certiorari 1 in G.R. Nos. 218232, 218235, and 218266, filed by petitioners Ramon "Bong" B. Revilla, Jr. (Revilla), Richard A. Cambe
(Cambe), and Janet Lim Napoles (Napoles), respectively, assail the Resolution2dated 1 December 2014 of the Sandiganbayan denying them bail and the
Resolution3 dated 26 March 2015 denying their motion for reconsideration in Criminal Case No. SB-14-CRM-0240.

In G.R. No. 218903, the Office of the Ombudsman assails the Resolution4 dated 4 September 2014 of the Sandiganbayan denying the prosecution's
motion to transfer the place of detention of Revilla and Cambe, and the Resolution5 dated 20 May 2015 denying the motion for reconsideration. In G.R. No.
219162, Revilla assails the Resolution6 dated 5 February 2015 of the Sandiganbayan granting the prosecution's motion for the issuance of a writ of
preliminary attachment and the Resolution7 dated 28 May 2015 denying his motion for reconsideration.

The Facts

The cases before us stemmed from the Information dated 5 June 2014 filed by the Office of the Ombudsman in the Sandiganbayan charging petitioners
Revilla, Cambe, and Napoles, among others, with the crime of Plunder, defined and penalized under Section 2 of Republic Act No. (RA) 7080, as
amended. The Amended Information8 reads:

In 2006 to 2010, or thereabout, in the Philippines, and within this Honorable Court's jurisdiction, above-named accused RAMON "BONG" BAUTISTA
REVILLA, JR., then a Philippine Senator and RICHARD ABDON CAMBE, then DIRECTOR III at the Office of Senator Revilla, Jr., both public officers,
committing the offense in relation to their respective offices, conspiring with one another and with JANET LIM NAPOLES, RONALD JOHN B. LIM, and
JOHN RAYMUND S. DE ASIS, did then and there willfully, unlawfully, and criminally amass, accumulate and/or acquire ill-gotten wealth amounting to at
least TWO HUNDRED TWENTY FOUR MILLION FIVE HUNDRED TWELVE THOUSAND FIVE HUNDRED PESOS (Php224,512,500.00), through a
combination or series of overt criminal acts, as follows:

a) by repeatedly receiving from NAPOLES and/or her representatives LIM, DEASIS, and others, kickbacks or commissions under the
following circumstances: before, during and/or after the project identification, NAPOLES gave, and REVILLA, JR. and/or CAMBE received,
a percentage of the cost of a project to be funded from REVILLA, JR. 's Priority Development Assistance Fund (PDAF), in consideration of
REVILLA, JR. 's endorsement, directly or through CAMBE, to the appropriate government agencies, of NAPOLES' non-government
organizations which became the recipients and/or target implementors of REVILLA, JR. 's PDAF projects, which duly-funded projects
turned out to be ghosts or fictitious, thus enabling NAPOLES to misappropriate the PDAF proceeds for her personal gain;

b) by taking undue advantage, on several occasions, of their official positions, authority, relationships, connections, and influence to
unjustly enrich themselves at the expense and to the damage and prejudice, of the Filipino people and the Republic of the Philippines.

CONTRARY TO LAW.9

Upon arraignment, Napoles and Cambe pleaded not guilty to the charge against them, while petitioner Revilla refused to enter any plea; thus, the
Sandiganbayan entered a plea of not guilty in his behalf pursuant to Section 1 (c), Rule 116 of the Rules of Court. 10

In a Resolution11 dated 19 June 2014, the Sandiganbayan issued warrants of arrest against Revilla, Cambe, and Napoles. On the same day, Revilla
voluntarily surrendered to the Philippine National Police (PNP) and filed a Motion to Elect Detention Facilities Ad Cautelam 12 praying for his detention at the
PNP Custodial Center in Camp Crame. On 20 June 2014, Cambe also voluntarily surrendered to the Sandiganbayan and filed an Urgent Motion to Commit
Accused to Criminal Investigation and Detection Group (CIDG)13 pending trial of the case.

In two separate Resolutions14 both dated 20 June 2014, the Sandiganbayan ordered the turn over of Revilla and Cambe to the PNPCIDG, Camp Crame,
Quezon City for detention at its PNP Custodial Center Barracks.

G.R. Nos. 218232, 218235 and 218266

Revilla filed a Petition for Bail Ad Cautelam dated 20 June 2014; Cambe filed an Application for Bail15 dated 23 June 2014; and Napoles filed a Joint
Petition for Bail dated 25 June 2014, together with co-accused Ronald John Lim (Lim) and John Raymund De Asis (De Asis). 16

Thereafter, the Sandiganbayan conducted the bail hearings for Revilla, Cambe, and Napoles.

During the bail hearings, the prosecution presented nine witnesses, namely: Commission on Audit (COA) Assistant Commissioner in the Special Services
Sector Susan P. Garcia; Department of Budget and Management (DBM) Directors Carmencita N. Delantar and Lorenzo C. Drapete; the whistleblowers
Benhur K. Luy (Luy), Merlina P. Sufias (Sufias), Marina C. Sula (Sula), and Mary Arlene Joyce B. Baltazar (Baltazar); National Bureau of Investigation
(NBI) Special Investigator III Joey I. Narciso (Narciso); and Anti-Money Laundering Council (AMLC) Bank Officer II Atty. Leigh Vhon Santos (Santos).

The Sandiganbayan summarized the prosecution's evidence as follows:

From 2007 to 2009, accused Revilla was allocated and utilized [Priority Development Assistance Fund (PDAF)] in the total amount of ₱517,000,000.00,
covered by twelve (12) [Special Allotment Release Orders (SAROs)], for livelihood and agricultural projects. He named the [Technology Livelihood
Resource Center (TLRC), National Agri-Business Corporation (NABCOR), and National Livelihood Development Corporation (NLDC)] to be the
[implementing agencies (IAs)], and endorsed five (5) of Napoles' [non-governmental organization (NGOs)], i.e., [Agri & Economic Program for Farmers
Foundation, Inc. (AEPFFI), Philippine Social Development Foundation, Inc. (PSDFI), Masaganang Ani Para sa Magsasaka Foundation, Inc. (MAMFI),
Social Development Program for Farmers Foundation, Inc. (SDPFFI), and Agricultura Para Sa Magbubukid Foundation, Inc. (APMFI),] as project partners.
Of the 12 SAROs, Luy identified six (6) SAROs in his Summary of Rebates, showing how he came up with the supposed ₱224,512,500.00
rebates/commissions/kickbacks mentioned in the Information. The six (6) SAROs with their corresponding amounts, beneficiary NGOs, IAs, and the
amount of commissions received by Revilla, through Cambe, mentioned in Luy's Summary are shown in the table below:

TABLE A

Amount Rebates Received Date

SARO IA NGO
(Php) (Php) Received

1. ROCS- 25 million TLRC AEPFFI 7.5 million March 27,

07-05486 2007
2. ROCS- 65 million NABCOR MAMFI/ 10 million June 24,
08-05254 SDPFFI 17,250,000.00 2008
July 3, 2008
3. ROCS- 15 million NABCOR MAMFI 7,750,000.00 July 23, 2008
08-05660
4. D-08- 40 million TLRC SDPFFI 17 million Dec. 5, 2008
9558
5. ROCS- 40 million TLRC SDPFFI 2 million Dec. 12,
08-09789 18 million 2008
Dec. 15,
2008
 6. G-09- 80 million NLDC AEPFFI 9 million Oct. 6, 2009
07065 and 9 million Oct. 6, 2009
APMFI 2 million Oct. 6, 2009
12 million Oct. 22, 2009
8 million Oct. 22, 2009
TOTAL Php 265 Php119,500,000.00
million

Other commissions without corresponding SARO numbers lifted from Luy's Summary are shown hereunder.

TABLE B

Rebates Received
Date Received IA/Particulars
(Php)

April 6, 2006 PDAF-DA 2006 5 million

June 6, 2006 DA-2006 5 million

April 12, 2007 DA-50 M 9.5 million

April 19, 2007 PDAF-DA 50 M and TLRC 50 3 million
M 2007

August 2, 2007 2 million

August 10, 2007 3 million

October 16, 2007 PDAF 82 M 5 million

October 25, 2007 PDAF 82 M 2 million
November 15, 2007 PDAF DA and TLRC 82 M 5 million
2007 project
November 23, 2007 PDAF 82 M project 3.5 million

December 21, 2007 PDAF 82 M project 10 million

December 26, 2007 PDAF 82 M project 10.5 million
May 9, 2008 PDAF 80 M 5 million
 October 24, 2008 PDAF 50 M 3 million
March 17, 2010 28,512,500.00

TOTAL Php 105,012,500.00

Total Rebates Received Table A + Table B Php224,512,500.00

Accused Revilla's commissions represented 50% of the project cost, 25% percent of which was released by accused Napoles upon showing that the DBM
already received accused Revilla's endorsement letter with project listings. The other 25% was released upon issuance of the SARO. On the other hand,
accused Cambe's share was 5% of the project cost.

But there were instances that, prior to the issuance of the SARO and preempting its release, accused Revilla advanced money from accused Napoles.
There were also times that his share was given to him in tranches until the full amount was paid. Thus, there appear entries in Luy's Summary of Rebates
without corresponding SARO numbers, and in amounts less than 25% or 50% of the amount of the SARO. Accused Cambe got his commission either
together with that of accused Revilla or separately. To acknowledge receipt of the rebates for himself or that for accused Revilla, accused Napoles' office
had accused Cambe sign JLN vouchers which, however, were already shredded upon the instruction of accused Napoles.

Upon release of the SARO, documents like letters signed by accused Revilla indorsing accused Napoles' NGO, MOAs signed by accused Cambe, project
proposal, and foundation profile, were submitted to the IA.

Subsequently, the IA, after deducting a 3% management fee, released a check in the name of the NGO endorsed by accused Revilla. Accused Napoles
had either the president of the payee NGO or anybody from his trusted employees receive the check. Accused Napoles' representative signed the IA
voucher and, in return, issued a receipt to the IA in the name of the foundation.

The check was then deposited to the account of the payee foundation. After it was cleared, accused Napoles had her trusted employees withdraw the
proceeds of the check. The money was brought to accused Napoles, usually to her office at 2502 Discovery Center, and was disposed of at her will or
upon her instruction. Part of the proceeds was used to pay the commissions of accused Revilla and Cambe. Some were kept at the office vault or was
brought to her condo unit at l8D Pacific Plaza. Accused Napoles' share was pegged at 32% and 40%, depending on the IA, and she used it to buy dollars
and to acquire properties in the Philippines and abroad. She also made deposits in a foreign account to support her daughter Jean and accused Napoles'
brother Reynald Lim in the US.

To make it appear that there were implementations of the projects for which accused Revilla's PDAFs were intended, the NGOs submitted liquidation
documents such as official receipts, delivery receipts, accomplishment reports, which were all fake, and lists of beneficiaries which were just fabricated
having only signed by Napoles' employees, children, household helpers, drivers, and security guards. The receipts were issued by bogus suppliers which
were likewise owned or controlled by accused Napoles. 17

On the other hand, the defense presented Atty. Desiderio A. Pagui (Pagui), a lawyer and retired document examiner of the NBI, as expert witness. In his
Report No. 09-10-2013, attached to his Judicial Affidavit dated 12 November 2014 and adopted as his direct testimony, Pagui stated that upon comparison
of Revilla's purported signatures on the photocopies of the PDAF documents and the standard documents bearing Revilla's authentic signature, the
purported signatures are not authentic and affixed by Revilla. Pagui examined the originals and photocopies of the PDAF documents in open court using a
magnifying glass, and he maintained that the purported signatures are not authentic and affixed by Revilla. Pagui likewise testified that he also examined
the photocopies of documents with signatures of Cambe and his findings were embodied in Report No. 10-11- 2013.

On cross-examination, Pagui testified that during his stint as document examiner in the NBI, it would take them an average of one or two days to examine
a signature, their findings would be reviewed by the majority of the examiners present in the Questioned Document Division of the NBI, and it was the
NBI's policy not to examine photocopies of documents as safety precaution. He, however, believed that an examination of the photocopies can now be
made since there are already clear copies. He confirmed that it took him three months after the submission of the specimen signature and questioned
signature to finish his Report, while it took him only a few minutes to make a conclusion that the photocopies are faithful reproduction of the original. Pagui
was paid a professional fee of ₱200,000.00 for examining the signatures of Revilla and Cambe.

Cambe dispensed with the presentation of his witness, Fabian S. Fabian, supervisor of the Records Section of the Philippine Airlines after the parties
stipulated on the authenticity and due execution of the Certification he issued and the Passenger Manifest for Flight Nos. PR 102 and PR 103. Napoles
likewise dispensed with the testimony of Joel M. de Guzman, representative of the Bureau of Immigration, after the parties stipulated on the authenticity
and due execution of her immigration records. Both Cambe and Napoles adopted the direct examination of Pagui.

The Sandiganbayan thereafter admitted all the documentary exhibits of Revilla, Cambe, and Napoles except for Exhibits 273 to 277 of Revilla for lack of
sponsorship. Revilla made a tender of excluded exhibits and rested his case. Cambe and Napoles also rested their case relative to their application for
bail.

In a Resolution dated 1 December 2014, 18 the Sandiganbayan denied the separate applications for bail filed by Revilla, Cambe, and Napoles. The
Sandiganbayan held that the prosecution duly established with strong evidence that Revilla, Cambe, and Napoles, in conspiracy with one another,
committed the crime of plunder defined and penalized under RA 7080; thus, they are not entitled to the constitutional right to bail.

In a Resolution dated 26 March 2015, 19 the Sandiganbayan denied for lack of merit: (a) Napoles' Motion for Reconsideration dated 17 December 2014; (b)
Revilla's Omnibus Motion: (1) for Reconsideration, and (2) To Adduce Additional Evidence dated 17 December 2014; and (c) Cambe's: (1) Motion for
Reconsideration dated 15 December 2014, and (2) Motion to Adduce Additional Evidence and Request for Subpoena embodied in his Reply dated 28
January 2015.

Thus, Revilla, Cambe, and Napoles filed their separate petitions for certiorari assailing the Resolutions of the Sandiganbayan before this Court. The
petition filed by Revilla is docketed as G.R. No. 218232, the petition filed by Cambe is docketed as G.R. No. 218235, and the petition filed by Napoles is
docketed as G.R. No. 218266.

On 21 December 2016, Revilla filed a Motion to Withdraw20 the Petition for Certiorari he filed before this Court alleging that "[c]onsidering, however, that the
presentation of prosecution evidence in the Plunder Case below will already commence on 12 January 2017, and that trial will be conducted every
Thursday thereafter, petitioner will avail of the remedies available to him in said proceedings once the insufficiency of the evidence against him is
established. "21

G.R. No. 218903

Meanwhile, on 14 July 2014, the Office of the Ombudsman, through the Office of the Special Prosecutor, filed a Motion to Transfer the Place of Detention
of Accused22 Revilla, Cambe, and Napoles to the Bureau of Jail Management and Penology (BJMP) facility in Camp Bagong Diwa or other similar facilities
of the BJMP. The motion states that the PNP Custodial Center is not a detention facility within the supervision of BJMP under RA 6975 and their continued
detention in a non-BJMP facility affords them special treatment. In a Manifestation dated 4 August 2014, the prosecution alleged that the Sandiganbayan
ordered the detention of Napoles in the BJMP facility in Camp Bagong Diwa; thus, as for Napoles, the motion of the prosecution became moot.

In his Opposition23 dated 26 July 2014, Revilla alleged that his detention in the PNP Custodial Center is in accord with the Rules and upon a valid resolution
of the Sandiganbayan. On 6 August 2014, Cambe also filed his Opposition24 to the Motion to Transfer the place of his detention.

In a Resolution25 dated 4 September 2014, the Sandiganbayan denied the motion for failure to advance justifiable grounds for Revilla and Cambe's
transfer. The Sandiganbayan held that detention in facilities other than a jail is sanctioned in our jurisdiction and there is no law mandating that detention
prisoners shall only be detained in a jail supervised by the BJMP. The Sandiganbayan also found that it was not shown that Revilla and Cambe were
granted benefits above the standards set for other detention prisoners.

The prosecution moved for reconsideration of the Sandiganbayan Resolution, while Revilla and Cambe filed their separate Opposition to the motion for
reconsideration.

In a Manifestation (Re: Unauthorized Movement of Accused Revilla on 14 February 2015) with Motion (For the Issuance of an Order Directing the
Concerned PNP Officials to Explain)26 dated 27 February 2015, the prosecution alleged that Revilla was allowed to attend the birthday celebration of Juan
Ponce Enrile in the PNP General Hospital under the guise of a medical emergency on 14 February 2015, bolstering its argument that Revilla's detention in
the PNP Custodial Center is improper.

In his Comment27 to the Manifestation, PDDG Leonardo A. Espina alleged that he directed the CIDG to investigate the incident, and he approved the
recommendations of the CIDG to file an administrative case for Grave Misconduct and violation of PNPHSS 2012 Manual of Operations, and criminal case
against PSUPT Eulogio Lovello R. Fabro (Fabro), PSINSP Celina D. Tapaoan (Tapaoan), and PO2 Jaydie Pelagio upon finding that Fabro and Tapaoan
connived to facilitate the visit of Revilla to Enrile and tried to cover it up by requesting the attending physician PCINSP Duds Raymond Santos to change
his statement.

In a Resolution28 dated 20 May 2015, the Sandiganbayan denied the motion for reconsideration of the prosecution for lack of merit. The Sandiganbayan did
not consider as sufficient reason the reported unauthorized visit of Revilla to the hospital room of Enrile to justify his transfer to Camp Bagong Diwa, since
the concerned PNP officials have already been admonished for failure to comply with the Sandiganbayan's Order.

Thus, the Office of the Ombudsman, through the Office of the Special Prosecutor, filed a petition for certiorari before us assailing the Sandiganbayan
Resolutions dated 4 September 2014 and 20 May 2015. This petition is docketed as G.R. No. 218903.

G.R. No. 219162

On 27 October 2014, the Office of the Ombudsman, through the Office of the Special Prosecutor, filed an Ex Parte Motion for Issuance of Writ of
Preliminary Attachment/Garnishment29 against the monies and properties of Revilla to serve as security for the satisfaction of the amount of
₱224,512,500.00 alleged as ill-gotten wealth, in the event that a judgment is rendered against him for plunder. The motion states that there is an imminent
need for the issuance of the ex parte writ to prevent the disappearance of Revilla's monies and properties found to be prima facie unlawfully acquired,
considering that the AMLC reported that many investment and bank accounts of Revilla were "terminated immediately before and after the PDAF scandal
circulated in [the] media,"30 and Revilla himself publicly confirmed that he closed several bank accounts when the PDAF scam was exposed. The details of
the monies and properties sought to be attached were attached as Annex "B-Motion" in the prosecution's motion.
On 14 November 2014, Revilla filed an Opposition31 to the prosecution's motion, arguing that the factual basis for the issuance of the writ is yet to be
proven, and that the issuance of the writ would unduly preempt the proceedings in his bail application.

On 28 January 2015, the prosecution filed an Urgent Motion to Resolve Ex Parte Motion for Issuance of Writ of Preliminary Attachment/
Gamishment,32 alleging that the safeguarding of Revilla's properties has become even more necessary after the Sandiganbayan denied Revilla's bail
application and ruled that there is strong evidence of his guilt.

In a Resolution33 dated 5 February 2015, the Sandiganbayan granted the prosecution's motion upon finding of its sufficiency both in form and substance.
The Sandiganbayan held that the issuance of a writ of preliminary attachment is properly anchored on Sections 1 and 2 of Rule 57, and Sections 1 and 2
(b) and (c) of Rule 127 of the Rules of Court. Thus, the Sandiganbayan issued a Writ of Attachment directed to the Acting Chief, Sheriff and Security
Services of the Sandiganbayan. On 10 July 2015, the Sandiganbayan granted the prosecution's amendatory motion and issued an Alias Writ of Preliminary
Attachment, which included the properties under the known aliases or other names of Revilla and his spouse, Lani Mercado. 34

Revilla filed a motion for reconsideration, which the Sandiganbayan denied in a Resolution35 dated 28 May 2015. The Sandiganbayan held that the writ of
preliminary attachment is not the penalty of forfeiture envisioned under Section 2 of RA 7080, contrary to Revilla's argument. The Sandiganbayan further
elucidated that the issuance of the writ is an ancillary remedy which can be availed of during the pendency of the criminal case of plunder, and it is not
necessary to await the final resolution of the bail petition before it can be issued.

Thus, Revilla filed a petition for certiorari before us assailing the Sandiganbayan Resolutions dated 5 February 2015 and 28 May 2015. This petition is
docketed as G.R. No. 219162.

In a Resolution36 dated 4 August 2015, the Court En Banc resolved to consolidate G.R. No. 219162 (Ramon "Bong" Revilla, Jr. v. Sandiganbayan [First
Division]) and People of the Philippines); G.R. No. 218232 (Ramon "Bong" Revilla, Jr. v. Sandiganbayan [First Division] and People of the
Philippines);G.R. No. 218235 (Richard A. Cambe v. Sandiganbayan [First Division], People of the Philippines, and Office of the Ombudsman); G.R. No.
218266 (Janet Lim Napoles v. Sandiganbayan [First Division], Hon. Conchita Carpio Morales, in her capacity as Ombudsman, and People of the
Philippines); and G.R. No. 218903 (People of the Philippines v. Sandiganbayan [First Division}, Ramon "Bong" Bautista Revilla, Jr. and Richard A.
Cambe ).

In a Resolution37 dated 21 February 2017, the Court En Banc resolved to note the compliance dated 10 February 2017 filed by the counsel of Revilla
informing the Court that Revilla's Motion to Withdraw dated 14 December 2016 pertains only to the petition in G.R. No. 218232.

The Issues

In G.R. No. 218232, Revilla raises the following issue for resolution:

The Sandiganbayan committed grave abuse of discretion amounting to lack or excess of jurisdiction in denying petitioner's application for admission to bail
despite the fact that the evidence on record do not show a clear and strong evidence of his guilt [for] the crime of plunder. 38

In G.R. No. 218235, Cambe argues that the Sandiganbayan committed grave abuse of discretion amounting to lack or excess of jurisdiction in issuing the
assailed resolutions:
A. The denial of petitioner's application for bail was based on Criminal Procedure 1900 (General Order No. 58), which requires a much lower quantum of
proof to deny bail (i.e., proof of guilt is evident or presumption of guilt is strong), and not on Section 13, Article III of the 1987 Philippine Constitution, which
requires proof that "evidence of guilt is strong."

B. The denial of petitioner's motion for reconsideration was based on the concept of "totality of evidence" which is applicable in Writ of Amparo cases only.

C. Even assuming that "proof evident," "presumption great," or proof that "the presumption of guilt is strong" are the tests to determine whether petitioner
may be granted or denied bail, the assailed resolutions were based on mere presumptions and inferences. 39

In G.R. No. 218266, Napoles alleged that the Sandiganbayan committed grave abuse of discretion in ruling:

A. that the prosecution was able to prove with strong evidence that [Revilla] and [Cambe] conspired with [Napoles], in amassing, accumulating, and
acquiring ill-gotten wealth. Thus, their petition for bail should be denied.

B. that the hard disk, disbursement ledger and the summary of rebates are reliable and with integrity.

C. [that] the testimonies of the witnesses and the documents they [submitted are credible].

D. [that] x x x that the evidence of the prosecution prove[s] plunder.40

In G.R. No. 218903, the Office of the Ombudsman, through the Office of the Special Prosecutor, alleged that the Sandiganbayan committed grave abuse
of discretion amounting to lack and/or excess of jurisdiction:

A. when it substituted its own judgment and refused to apply the clear mandate of [RA 6975]. 1âw phi 1

B. when it denied the transfer of private respondents to a BJMP-operated facility despite the absence of cogent reasons to justify their detention in a facility
other than that prescribed by law.

C. when it refused to recognize that the continued detention of private respondents at Camp Crame affords them special treatment and subjects them to
different rules and procedures.41

In G.R. No. 219162, Revilla alleged that the Sandiganbayan committed grave abuse of discretion amounting to lack or excess of jurisdiction in granting the
State's Ex-Parte Motion for the issuance of a writ of preliminary attachment considering that:

A. the issuance of the assailed writ is erroneous and premature. The plunder law does not allow the issuance of a writ of preliminary attachment, as it
amounts to a prejudgment and violates petitioner's constitutional rights to presumption of innocence and due process; and

B. there is neither legal nor factual basis for the issuance of the writ of preliminary attachment or garnishment. 42

The Ruling of the Court

G.R. Nos. 218232, 218235, and 218266

At the outset, we note that Revilla withdrew his petition before the Court assailing the Resolution of the Sandiganbayan denying him bail. In withdrawing his
petition, he stated "[he] will avail of the remedies available to him in [the plunder case before the Sandiganbayan] once the insufficiency of the evidence
against him is established."43 Accordingly, we no longer find it necessary to rule upon the issues raised by Revilla in his petition in G.R. No. 218232.

Now, we proceed to determine whether or not the Sandiganbayan committed grave abuse of discretion amounting to lack or excess of jurisdiction in
denying bail to Cambe and Napoles, who are charged with the crime of plunder, after finding strong evidence of their guilt.

Judicial discretion, by its very nature, involves the exercise of the judge's individual opinion and the law has wisely provided that its exercise be guided by
well-known rules which, while allowing the judge rational latitude for the operation of his own individual views, prevent them from getting out of
control. 44 We have held that discretion is guided by: first, the applicable provisions of the Constitution and the statutes; second, by the rules which this
Court may promulgate; and third, by those principles of equity and justice that are deemed to be part of the laws of the land.45 The discretion of the court,
once exercised, cannot be reviewed by certiorari nor controlled by mandamus save in instances where such discretion has been so exercised in an
arbitrary or capricious manner. 46

Section 13, Article III of the 1987 Constitution provides that:

All persons, except those charged with offenses punishable by reclusion perpetua when evidence of guilt is strong, shall, before conviction, be bailable
by sufficient sureties, or be released on recognizance as may be provided by law. The right to bail shall not be impaired even when the privilege of the writ
of habeas corpus is suspended. Excessive bail shall not be required. (Emphasis supplied)

Rule 114 of the Rules of Court emphasizes that offenses punishable by death, reclusion perpetua or life imprisonment are non-bailable when the evidence
of guilt is strong:

Sec. 7. Capital offense or an offense punishable by reclusion perpetua or life imprisonment, not bailable. - No person charged with a capital offense, or an
offense punishable by reclusion perpetua or life imprisonment, shall be admitted to bail when evidence of guilt is strong, regardless of the stage of the
criminal prosecution. (Emphasis supplied)

The grant or denial of bail in an offense punishable by reclusion perpetua, such as plunder, hinges on the issue of whether or not the evidence of guilt of
the accused is strong. This requires the conduct of bail hearings where the prosecution has the burden of showing that the evidence of guilt is
strong,47 subject to the right of the defense to cross-examine witnesses and introduce evidence in its own rebuttal. 48 The court is to conduct only a
summary hearing, or such brief and speedy method of receiving and considering the evidence of guilt as is practicable and consistent with the purpose of
the hearing which is merely to determine the weight of evidence for purposes of bail.49

The order granting or refusing bail which shall thereafter be issued must contain a summary of the evidence for the prosecution. 50 The summary of the
evidence shows that the evidence presented during the prior hearing is formally recognized as having been presented and most importantly,
considered.51 The summary of the evidence is the basis for the judge's exercising his judicial discretion. 52 Only after weighing the pieces of evidence as
contained in the summary will the judge formulate his own conclusion as to whether the evidence of guilt against the accused is strong based on his
discretion. 53 Thus, judicial discretion is not unbridled but must be supported by a finding of the facts relied upon to form an opinion on the issue before the
court. 54 It must be exercised regularly, legally and within the confines of procedural due process, that is, after evaluation of the evidence submitted by the
prosecution. 55 Any order issued in the absence thereof is not a product of sound judicial discretion but of whim, caprice, and outright arbitrariness. 56

In the present case, we find that the Sandiganbayan did not abuse its discretion amounting to lack or excess of jurisdiction when it denied bail to Cambe
and Napoles, upon a finding of strong evidence that they committed the crime of plunder in conspiracy with one another.
Plunder, defined and penalized under Section 257 of RA 7080, as amended, has the following elements: (a) that the offender is a public officer, who acts by
himself or in connivance with members of his family, relatives by affinity or consanguinity, business associates, subordinates or other persons; (b) that he
amasses, accumulates or acquires ill-gotten wealth through a combination or series of overt or criminal acts described in Section l(d)58 hereof; and (c) that
the aggregate amount or total value of the ill-gotten wealth amassed, accumulated or acquired is at least Fifty Million Pesos (₱50,000,000.00).

In finding that there is strong evidence that petitioners Revilla, Cambe, and Napoles committed the crime of plunder, the Sandiganbayan held that:

THE FIRST ELEMENT. Accused Revilla and Cambe were public officers at the time material to this case, accused Revilla being a member of the Senate
of the Philippines, and accused Cambe being Revilla's Chief of Staff/Political Officer/Director III as appearing on the face of the documents on record.
Accused Napoles is a private individual charged in conspiracy with accused Revilla and Carnbe. As provided in Section 2 of RA 7080, "[a]ny person who
participated with the said public officer in the commission of an offense contributing to the crime of plunder shall likewise be punished for such offense."

THE SECOND ELEMENT. x x x.

xxxx

The separate and individual acts of accused Revilla, Cambe and Napoles convincingly appear to have facilitated the amassing, accumulation, and
acquisition of ill-gotten wealth by accused Revilla. It is immaterial whether or not the prosecution has presented evidence that accused Cambe and
Napoles by themselves have likewise amassed, accumulated, or acquired ill-gotten wealth in the amount of at least P50 Million each. It is sufficient that the
prosecution has established that accused Revilla and accused Cambe have conspired with one another, and with accused Napoles in the accumulation or
acquisition of ill-gotten wealth of at least ₱50 million.

The Court is persuaded that the prosecution has presented compelling evidence that accused Revilla amassed, accumulated or acquired ill-gotten wealth
by repeatedly receiving from accused Napoles or her representatives or agents, money, through accused Cambe, and in those several occasions, accused
Revilla and/or Cambe made use of his or their official position, authority, connections, and influence. This was established by the testimonies of the
witnesses and the documents they testified to which, at this stage of the proceedings, [have] remained unrebutted, and thus, given full faith and
credence by the Court.

From 2006 to 2009, accused Revilla was earmarked PDAF from the national budget. He had no physical and direct possession of the fund. However, as
the fund was allocated to his office, he alone could trigger its release, after accomplishment of the necessary documentary requirements. All he had to do,
and which he actually did, was to request its release from then President Gloria Macapagal-Arroyo (PGMA) or from the DBM accompanied by a list of
projects and endorsement naming a certain implementing agency on the DBM's menu as project implementor. Finding everything to be in order, the DBM
processed accused Revilla's request, approved it, and eventually released the SARO. Accused Revilla was informed of this release. After the SARO, the
DBM issued the NCA to cover the cash requirements of the IA authorized under the SARO. The DBM issued "Notice of Cash Allocation Issued ("NCAI) to
the Bureau of Treasury. In tranches, the IA issued checks to the NGOs. The "NGOs were paid in full of the project cost upon submission of liquidation
reports with supporting documents, such as delivery receipts, purchase orders and list of beneficiaries, with corresponding signatures.

xxxx

It is well to note that accused Revilla's endorsement consisted of two phases. The first phase consisted of letters addressed to PGMA or the DBM
requesting for the release of the PDAF, with attached list of priority projects. Itemized in the list were the location, name and amount of the project as well
as the IA he desired to implement the project. The second phase consisted of letters to the IAs subsequent to the issuance of the SARO, this time,
endorsing "Napoles' "NGOs to the IAs as the latter's project partners.
The endorsement letters and other documents submitted to the IAs show that accused Revilla's participation did not just stop at initiating the release of his
PDAF, but extended to the implementation stage of his identified projects. He sent communications to the IAs appointing and authorizing accused Cambe
to monitor, follow up, or assist in the implementation of the projects, and "to sign in his behalf all other documents needed to smooth the process." Accused
Cam be, for accused Revilla, conformed to the project activities and project profiles prepared by the "NGOs. He likewise signed on the tripartite MOAs with
the representatives of the IA and the "NGO concerned. Also, accused Cambe, by himself or for accused Revilla, signed liquidation documents such as
accomplishment/terminal reports, reports of disbursement (fund utilization), inspection and acceptance reports.

xxxx

Accused Revilla could not have possibly drawn money from his PDAF allocation directly to himself. He had to do it through channels or conduits to
camouflage the flow with a semblance of legitimacy. Here lies the indispensable participation of accused "Napoles. Like accused Revilla, accused
"Napoles stayed at the background, using other people as her tentacles to fulfill her part of the conspiracy. Although accused Napoles' signature does not
appear in any of these documents, evidence abounds to support that she was the brains behind the vital link of the conspiracy. Luy, Sufi.as, Sula and
Baltazar, who once worked for accused "Napoles, consistently declared that they moved and acted upon the instruction of "Napoles, from the creation of
fake "NGOs to the diversion of the proceeds of the PDAF. Accused "Napoles engineered the creation of the "NGOs through which the proceeds of
accused Revilla's PDAF were funneled.

Evidence discloses that the "NGOs were illicitly established for some dishonest purpose. Their presidents and incorporators either have working or
personal relations to accused Napoles, or unknown to her, or fictitious. The addresses of the NGOs were either the location of her property or that of her
employees whom she made presidents, or otherwise inexistent. The lists of beneficiaries were bogus, and this was confirmed by the COA during its own
investigation where it was found that either there were no projects implemented or there were no such names of beneficiaries that existed.

Accused Napoles' connection to and control of the NGOs are made evident by the bank transactions of the NGOs. Records of bank transactions
of these NGOs reveal, as testified to by witness Santos from the AMLC, that the accounts of these NGOs with the Landbank and Metro bank
were only temporary repository of funds and that the withdrawal from the accounts of the NGOs had to be confirmed first with accused Napoles
nothwithstanding that the accounts were not under her name. It is well to note that the bank accounts of these NGOs were opened by the
named presidents using JLN Corp. identification cards. These circumstances are consistent to the testimonies of accused Luy, Sula, Suiias and
Baltazar that as soon as the check of the PDAF proceeds were encashed, accused Napoles directed them or any of her trusted employees to
withdraw the same. At this stage, the Court sees no basis to doubt the strong evidence against accused Napoles.

Accused Revilla managed to remain incognito in reaping benefits from the illegal scheme with the help and cooperation of accused Cambe. Concededly,
there are no direct proofs that accused Revilla received commissions/rebates out of the proceeds of his PDAF routed to accused Napoles, but the
circumstances persuasively attest that accused Revilla on several occasions, received money from the illegitimate deals involving his PDAF, through
accused Cambe. Also, accused Cambe profited from the same transactions so far computed at ₱13,935,000.00.

There are solid reasons to infer that accused Cambe acted on behalf of accused Revilla and with the latter's imprimatur, and that accused
Revilla effectively clothed accused Cambe with full authority. Consider these: (1) accused Cambe worked for Revilla in the Senate; (2) accused
Revilla designated accused Cambe to follow up, supervise and act on his behalf for the implementation of the projects, and to sign necessary
documents; (3) accused Cambe, representing accused Revilla or Revilla's office, signed the MOAs and other documents used to support the
issuance of the checks from the IA to accused Napoles' NGOs to supposedly finance the projects out of accused Revilla's PDAF. Accused
Cambe likewise signed liquidation documents such as accomplishment reports; (4) Luy, Suñas, and Sula forthrightly and positively identified
Cambe to have received from them or from accused Napoles the commissions/rebates of accused Revilla; (5) the said witnesses likewise
candidly testified that accused Cambe also personally got his own commission either from them or from accused Napoles; (6) Luy had recorded
the commissions/rebates per his testimony, and as shown by his disbursement ledgers and Summary of Rebates. These points may rest
heavily on the credibility of the witnesses. But, as discussed, the Court, in the meantime, saw no cogent justification to invalidate their
testimonies.

xxxx

THE THIRD ELEMENT. Of the Php224,512,500.00 alleged in the Information to have been plundered by accused Revilla and/or Cambe, theprosecution
has so far strongly proven the amount of ₱103,000,000.00 broken down below. This is the total amount received by accused Cambe for Revilla, to which
Luy, Sula and Suñas have testified to their personal knowledge. In other words, Luy, Sula or Suñas either directly handed the money to accused Cambe,
or they saw accused Napoles, or any one of them, give the money to accused Cambe. Thus:

Date Amount
April 6, 2006 Php 5,000,000.00
June 6, 2006 5,000,000.00

March 27, 2007 7,500,000.00

April 12, 2007 9,500,000.00

April 19, 2007 3,000,000.00

August 10, 2007 3,000,000.00

2008 10,000,000.00

5,000,000.00

October 6, 2009 9,000,000.00

October 6, 2009 9,000,000.00

October 6, 2009 2,000.000.00

October 22, 2009 12,000,000.00
October 22, 2009 8,000,000.00

March 2010 15,000,000.00

Total Php103,000,000.0059

(Emphasis supplied)
Thus, the Sandiganbayan exercised its judicial discretion within the bounds of the Constitution, law, rules, and jurisprudence after appreciating and
evaluating the evidence submitted by the parties.

During the bail hearings, both parties were afforded opportunities to offer their evidence. The prosecution presented nine witnesses and documentary
evidence to prove the strong evidence of guilt of the accused. The defense likewise introduced evidence in its own rebuttal and cross-examined the
witnesses presented by the prosecution. Only after both parties rested their case that the Sandiganbayan issued its Resolution, which contains the
summary of the prosecution's evidence. The summary of the prosecution's evidence shows the basis for the Sandiganbayan's discretion to deny bail to
Cambe and Napoles.

In finding strong evidence of guilt against Cambe, the Sandiganbayan considered the PDAF documents and the whistleblowers' testimonies in finding that
Cambe received, for Revilla, the total amount of ₱103,000,000.00, in return for Revilla's endorsement of the NGOs of Napoles as the recipients of Revilla's
PDAF. It gave weight to Luy's summary of rebates and disbursement ledgers containing Cambe's receipt ofmoney, which Luy obtained from his hard drive.
The Sandiganbayan likewise admitted Narciso as expert witness, who attested to the integrity of Luy's hard drive and the files in it.

In finding strong evidence of guilt against Napoles, the Sandiganbayan considered the AMLC Report, as attested by witness Santos, stating that Napoles
controlled the NGOs, which were the recipients of Revilla's PDAF. The Sandiganbayan found that the circumstances stated in the AMLC Report,
particularly that the bank accounts of these NGOs were opened by the named presidents using JLN Corp. IDs, these accounts are temporary repository of
funds, and the withdrawal from these accounts had to be confirmed first with Napoles, are consistent with the whistleblowers' testimonies that they were
named presidents of Napoles' NGOs and they withdrew large amounts of cash from the NGOs' bank accounts upon instruction of Napoles. The
Sandiganbayan also took note of the COA report, as confirmed by the testimony of Garcia, that Revilla's PDAF projects failed to comply with the law,
Napoles' NGOs were fake, no projects were implemented and the suppliers selected to supply the NGOs were questionable.

Accordingly, there is no basis for the allegation of Cambe that the Sandiganbayan Resolutions were based on mere presumptions and inferences. On the
other hand, the Sandiganbayan considered the entire record of evidence in finding strong evidence of guilt.

For purposes of bail, we held in People v. Cabral60 that: "[b ]y judicial discretion, the law mandates the determination of whether proof is evident or the
presumption of guilt is strong. 'Proof evident' or 'Evident proof' in this connection has been held to mean clear, stron2 evidence which leads a well-
guarded dispassionate judgment to the conclusion that the offense has been committed as charged, that accused is the guilty agent, and that
he will probably be punished capitally if the law is administered. 'Presumption great' exists when the circumstances testified to are such that
the inference of guilt naturally to be drawn therefrom is strong, clear, and convincing to an unbiased judgment and excludes all reasonable
probability of any other conclusion."61The weight of evidence necessary for bail purposes is not proof beyond reasonable doubt, but strong evidence of
guilt, or "proof evident," or "presumption great." A finding of "proof evident" or "presumption great" is not inconsistent with the determination of strong
evidence of guilt, contrary to Cambe's argument.

Cambe further alleged that the Sandiganbayan gravely abused its discretion in relying on the concept of totality of evidence, which only applies in writ of
amparo cases. To support this argument, Cambe's previous counsel cited Razon, Jr. v. Tagitis. 62

We specifically held in Razon that the: "unique situations that call for the issuance of the writ [of amparo ], as well as the considerations and measures
necessary to address these situations, may not at all be the same as the standard measures and procedures in ordinary court actions and
proceedings."63 Thus, the case of Razon should not have been applied in this case. On the other hand, as we held in People v. Cabral: "[e]ven though there
is a reasonable doubt as to the guilt of accused, if on an examination of the entire record the presumption is great that accused is guilty of a capital
offense, bail should be refused." 64 Accordingly, an examination of the entire record - totality of evidence - is necessary to determine whether there
is strong evidence of guilt, for purposes of granting or denying bail to the accused.
In their separate petitions before us, Cambe and Napoles attempt to individually refute each evidence presented by the prosecution. In his petition, Cam be
alleges that there was even no evidence that: (1) he is a public officer; and (2) he and Napoles also amassed, accumulated or acquired ill-gotten wealth of
at least ₱50,000,000.00. Napoles, on the other hand, argues that there was no direct evidence that Revilla amassed illgotten wealth. In addition, Napoles
argues that: (1) the whistleblowers' testimonies lack credibility and are hearsay because of their admission that they never saw Revilla talk with Napoles
about their alleged agreement; (2) the AMLC report is multiple hearsay; and (3) the hard disk, disbursement ledger, and summary of rebates are not
reliable because Narciso is not an expert witness, and the entries in the disbursement ledger are hearsay. In short, Cambe and Napoles question the
conclusions of the Sandiganbayan insofar as its appreciation of the facts is concerned.

Generally, the factual findings of the Sandiganbayan are binding upon the Court. 65 However, this general rule is subject to some exceptions, among them:
(1) when the conclusion is a finding grounded entirely on speculation, surmise and conjectures; (2) the inference made is manifestly mistaken; (3) there is
a grave abuse of discretion; ( 4) the judgment is based on misapprehension of facts; (5) said findings of facts are conclusions without citation of specific
evidence on which they are based; and (6) the findings of fact of the Sandiganbayan are premised on the absence of evidence on record.66

We will not set aside the factual findings of the Sandiganbayan, absent any showing that the Sandiganbayan exercised its discretion out of whim, caprice,
and outright arbitrariness amounting to grave abuse of discretion.

In any event, Cambe is estopped from claiming that he is not a public officer. Cambe himself admitted in his Application for Bail that "while accused
Cambe is a public officer, he did not act by himself or in connivance with members of his family x x x."67 Furthermore, such is a factual finding of the
Sandiganbayan, which is binding before us.

Also, there is no need to prove that Cambe and Napoles likewise amassed, accumulated or acquired ill-gotten wealth of at least ₱50,000,000.00 or that
Revilla talked with Napoles about their alleged agreement. The charge against them is conspiracy to commit plunder.

In Estrada v. Sandiganbayan, 68 we held that "the gravamen of the conspiracy charge, therefore, is not that each accused agreed to receive protection
money from illegal gambling, that each misappropriated a portion of the tobacco excise tax, that each accused ordered the GSIS and SSS to purchase
shares of Belle Corporation and receive commissions from such sale, nor that each unjustly enriched himself from commissions, gifts and
kickbacks; rather, it is that each of them, by their individual acts, agreed to participate, directly or indirectly, in the amassing, accumulation and
acquisition of ill-gotten wealth of and/or for [petitioner Estrada]."69 Also, proof of the agreement need not rest on direct evidence, as the
agreement itself may be inferred from the conduct of the parties disclosing a common understanding among them with respect to the commission of the
offense. 70 It is not necessary to show that two or more persons met together and entered into an explicit agreement setting out the details of an
unlawful scheme or the details by which an illegal objective is to be carried out.71Thus, in Guy v. People of the Philippines,72 we held that conspiracy was
properly appreciated by the Sandiganbayan because even though there was no direct proof that petitioners agreed to cause injury to the government and
give unwarranted benefits to a certain corporation, their individual acts when taken together as a whole showed that they were acting in concert and
cooperating to achieve the same unlawful objective. The conspiracy to commit plunder need not even be proved beyond reasonable doubt, but only for
purposes of determining whether bail shall be granted.

Moreover, in giving credence to the testimonies of the prosecution witnesses, we held that the trial court's - the Sandiganbayan's - assessment of the
credibility of a witness is entitled to great weight, sometimes even with finality. 73 This Court will not interfere with that assessment, absent any indication
that the lower court has overlooked some material facts or gravely abused its discretion. 74 Minor and insignificant inconsistencies in the testimony tend to
bolster, rather than weaken, the credibility of witnesses,for they show that the testimony is not contrived or rehearsed. 75 Moreover, the testimony of a
witness must be considered in its entirety and not merely in its truncated parts. 76 Similarly, we held that "the credibility of the expert witness and the
evaluation of his testimony is left to the discretion of the trial court whose ruling thereupon is not reviewable in the absence of an abuse of that discretion.
"77
As for the weight given by the Sandiganbayan to whistleblowers' testimonies, expert's testimony, AMLC report, the hard disk, disbursement ledger and
summary of rebates, we emphasize that for purposes of bail, the court does not try the merits or enter into any inquiry as to the weight that ought
to be given to the evidence against the accused, nor will it speculate on the outcome of the trial or on what further evidence may be offered
therein.78The course of inquiry may be left to the discretion of the court which may confine itself to receiving such evidence as has reference to
substantial matters, avoiding unnecessary thoroughness in the examination and cross-examination.79

Grave abuse of discretion implies a capricious and whimsical exercise of judgment tantamount to lack or excess of jurisdiction. 80 The abuse of discretion
must be so patent and gross as to amount to an evasion of a positive duty or a virtual refusal to perform a duty enjoined by law, or to act at all in
contemplation of law as where the power is exercised in an arbitrary and despotic manner by reason of passion or hostility. 81

We find that the Sandiganbayan was far from abusive of its discretion. On the contrary, its findings were based on the evidence extant in the records. In its
appreciation and evaluation of the evidence against Cambe and Napoles, the Sandiganbayan did not commit grave abuse of discretion in finding that the
prosecution established strong evidence of their guilt.

G.R. No. 218903

We find that the Sandiganbayan did not commit grave abuse of discretion amounting to lack and/or excess of jurisdiction when it denied the prosecution's
motion to transfer the detention of Revilla and Cambe from the PNP Custodial Center to a BJMP-operated facility.

The Rules of Court provide that an arrest is the taking of a person into custody in order that he may be bound to answer for the commission of
anoffense. 82 An arrest is made by an actual restraint of a person to be arrested, or by his submission to the custody of the person making the
arrest. 83 Section 24 of RA 6975, or An Act Establishing The Philippine National Police Under A Reorganized Department of the Interior and Local
Government, and for Other Purposes, provides that: "The Philippine National Police (PNP) shall have the following powers and functions: x x x (e) Detain
an arrested person for a period not beyond what is prescribed by law, informing the person so detained of all his rights under the Constitution; x x x." The
Revised PNP Police Operational Procedures Manual provides that: "any person arrested due to the commission of a crime/s can be detained/admitted in
the PNP Detention/Custodial Center."84 As defined in the Revised PNP Police Operational Procedures Manual, 85 a detention/Custodial Center is an
institution secured by the PNP Units concerned for the purpose of providing short term custody of [a] detention prisoner thereby affording his safety and
preventing escape while awaiting the court's disposition of the case or his transfer to the appropriate penal institution.

In the present case, both Revilla and Cambe voluntarily surrendered to the Sandiganbayan upon the issuance of the warrants of arrest against them, albeit
with motion to elect the detention facilities in the PNP Custodial Center. Upon their voluntary surrender, they are deemed arrested and taken into custody.
The Sandiganbayan thereafter allowed both Revilla and Cambe to be detained in the PNP Custodial Center barracks. Under the Rules of Court, the court,
such as the Sandiganbayan in the present case, shall exercise supervision over all persons in custody for the purpose of eliminating unnecessary
detention. 86

When by law jurisdiction is conferred on a court, all auxiliary writs, processes and other means necessary to carry it into effect may be employed by such
court; and if the procedure to be followed in the exercise of such jurisdiction is not specifically pointed out by law or by these rules, any suitable process or
mode of proceeding may be adopted which appears comfortable to the spirit of the said law or rules. 87 Accordingly, the Sandiganbayan acted within its
jurisdiction and did not abuse its discretion in ordering the commitment of Revilla and Cambe in the PNP Custodial Center.

Clearly, Section 24 of RA 6975 vests authority in the PNP to detain arrested persons such as Revilla and Cambe, and the Revised PNP Police Operational
Procedures Manual includes the PNP Detention/CustodialCenter as an institution where any person arrested due to the commission of a crime/s can be
detained/admitted.
The prosecution, however, anchors its motion to transfer the detention of Revilla and Cambe on Section 3, Rule 113 of the Rules of Court and Section 63
of RA 6975. Section 3, Rule 113 of the Rules of Court provides that: "It shall be the duty of the officer executing the warrant to arrest the accused and to
deliver him to the nearest police station or jail without unnecessary delay." On the other hand, Section 63 of RA 6975 provides:

SECTION 63. Establishment of District, City or Municipal Jail. - There shall be established and maintained in every district, city and municipality a secured,
clean, adequately equipped and sanitary jail for the custody and safekeeping of city and municipal prisoners, any fugitive from justice, or person detained
awaiting investigation or trial and/or transfer to the national penitentiary, and/or violent mentally ill person who endangers himself or the safety of others,
duly certified as such by the proper medical or health officer, pending the transfer to a medical institution.

The municipal or city jail service shall preferably be headed by a graduate of a four (4) year course in psychology, psychiatry, sociology, nursing, social
work or criminology who shall assist in the immediate rehabilitation of individuals or detention of prisoners. Great care must be exercised so that the human
rights of [these] prisoners are respected and protected, and their spiritual and physical well-being are properly and promptly attended to.

However, both Section 3 of Rule 113 and Section 63 of RA 6975 are inapplicable in the present case. It must be noted that Revilla and Cambe voluntarily
surrendered to the Sandiganbayan, and there is no opportunity for the arresting officer to execute the warrants of arrest against them. Moreover, the said
rule merely refers to the duty of the arresting officer to deliver the arrested person to the nearest police station or jail. The rule did not state about the duty
"to detain" the arrested person to the nearest police station or jail. There is nothing in the rule referring to the place of detention of the arrested person.

In the same manner, there is nothing in Section 63 of RA 697 5 which expressly mandates and limits the place of detention in BJMP-controlled facilities.
On the other hand, it merely provides that: "there shall be established and maintained in every district, city and municipality a secured, clean, adequately
equipped and sanitary jail x x x." When the language of the law is clear and explicit, there is no room for interpretation, only application.

Section 61 of the same law states that the BJMP shall exercise supervision and control over all city and municipal jails, while the provincial jails shall be
supervised and controlled by the provincial government within its jurisdiction. 88 Evidently, a provincial jail is a place of detention not within the supervision
and control of the BJMP. From the law itself, there are places of detention for the accused, which are not within the control and supervision of the BJMP.

Thus, to argue, as the prosecution did, that Revilla and Cambe's detention in the PNP Custodial Center afforded them special treatment because it is not a
jail supervised by the BJMP would be similar to saying that detention of an accused in a provincial jail supervised by the provincial government would
afford such accused special treatment.

Aside from its bare statements, the prosecution did not advance compelling reasons to justify the transfer of detention of Revilla and Cambe. The
prosecution likewise failed to substantiate its allegation of special treatment towards Revilla. As the Sandiganbayan properly held:

The prosecution failed to advance compelling and reasonable grounds to justify the transfer of accused Revilla and Cambe from the PNP Custodial Center,
Camp Crame, to a BJMP controlled jail. Since their detention at the PNP Custodial Center on June 20, 2014, the conditions of their confinement have not
been altered by circumstances that would frustrate the very purpose of their detention. Both accused have submitted themselves to the Court when
required. No concrete incidents have been cited by the prosecution to establish that their continued detention in Camp Crame is no longer viable, and that
the better part of discretion is to transfer them to a BJMP controlled jail. The prosecution does not articulate what is in a BJMP facility that the PNP
Custodial Center lacks, or vice versa, which will make a difference in the administration of justice.

Before the Court is simply a general proposition that the accused should be confined in a BJMP controlled detention facility based on some rules, which
the Court have previously discussed to be unacceptable, backed up by an unsubstantiated generic declaration that the PNP Custodial Center affords them
special treatment not extended to all other detention prisoners under BJMP control. To the prosecution, this is a violation of the constitutional right to equal
protection of the other detention prisoners, like Atty. Reyes, who is now detained in a BJMP facility.

But, the Court is not convinced. To agree with the prosecution on the matter of special treatment is to accept a general notion that the public officers in a
BJMP facility are more circumspect in the handling of detention prisoners than in a non-BJMP facility, like the PNP Custodial Center. Verily, the "special
treatment," e.g., wedding anniversary celebration of Senator Jinggoy Estrada claimed by the prosecution, does not go with the place. It has even nothing to
do with accused Revilla and Cambe. "Special treatment" is a judgment call by the people concerned in the place. For no matter which detention place will
accused Revilla and Cambe be confined if the people controlling that place would extend themprivileges not usually given to other detention prisoners,
there would always be that dreaded "special treatment." Thus, special treatment can be addressed by ensuring that the people around the accused in their
present detention facility will deter from giving them exceptional benefits, through a firm implementation of policies and measures, and the imposition of
sanctions for non-compliance. The "special treatment" cannot be remedied by transferring the accused to another detention facility. The transfer must be
reasonably justified.

The Court solicitously agrees that it is the fact of detention and not the place of detention that is important. x x x. 89

In its Resolution dated 20 May 2015, the Sandiganbayan stated that it so took into account, considering the circumstances of the accused, the security
conditions of the place, and its proximity to the court. 90 With these factors, the Sandiganbayan viewed that the PNP Custodial Center would be able to
secure the accused and ensure their attendance at trial, at a reasonable cost to the government. Absent any showing of grave abuse of discretion, the
factual findings of the Sandiganbayan are binding upon the Court. We affirm the order of the Sandiganbayan directing the PNP-CIDG "to keep the accused
in its custody at the aforesaid barracks (PNP Custodial Center Barracks) and not allow the accused to be moved, removed, or relocated until further orders
from the court."91

G.R. No. 219162

We find that the Sandiganbayan did not commit grave abuse of discretion amounting to lack or excess of jurisdiction in ordering the issuance of the writ of
preliminary attachment against Revilla's monies and properties.

Presidential Decree No. 1606, as amended by RA 10660, provides that the Sandiganbayan has jurisdiction to jointly determine in the same proceeding the
criminal action and the corresponding civil action for the recovery of civil liability, considering that the filing of the criminal action before the Sandiganbayan
is deemed to necessarily carry with it the filing of the civil action. 92 The same law provides that the Rules of Courtpromulgated by the Supreme Court shall
apply to all cases and proceedings filed with the Sandiganbayan. 93 The Rules of Court state that the provisional remedies in civil actions, insofar as they
are applicable, may be availed of in connection with the civil action deemed instituted with the criminal action. 94

The grounds for the issuance of the writ of preliminary attachment have been provided in Rule 57 and Rule 127 of the Rules of Court. Rule 127 states that
the provisional remedy of attachment on the property of the accused may be availed of to serve as security for the satisfaction of any judgment that may be
recovered from the accused when the criminal action is based on a claim for money or property embezzled or fraudulently misapplied or converted
to the use of the accused who is a public officer, in the course of his employment as such, or when the accused has concealed, removed or
disposed of his property or is about to do so.95 Similarly, Rule 57 provides that attachment may issue: "x x x (b) in an action for money or property
embezzled or fraudulently misapplied or converted to his own use by a public officer x x x; (c) in an action to recover the possession of property
unjustly or fraudulently taken, detained or converted, when the property, or any part thereof, has been concealed, removed, or disposed of to
prevent its being found or taken by the applicant or an authorized person; x x x."96
It is indispensable for the writ of preliminary attachment to issue that there exists a prima facie factual foundation for the attachment of properties, and an
adequate and fair opportunity to contest it and endeavor to cause its negation or nullification.97 Considering the harsh and rigorous nature of a writ of
preliminary attachment, the court must ensure that all the requisites of the law have been complied with; otherwise, the court which issues it acts in excess
of its jurisdiction. 98

Thus, for the ex-parte issuance of a writ of preliminary attachment to be valid, an affidavit of merit and an applicant's bond must be filed with the court in
which the action is pending.99 For the affidavit of merit, Section 3 ofthe same rule states that: "[a]n order of attachment shall be granted only when it is
made to appear by the affidavit of the applicant or some other person who personally knows of the facts that a sufficient cause of action exists, that the
case is one of those mentioned in Section 1 hereof, that there is no sufficient security for the claim sought to be enforced by the action, and that the
amount due to applicant or the value of the property the possession of which he is entitled to recover is as much as the sum for which the order is granted
above all legal counterclaims." The mere filing of an affidavit reciting the facts required by Section 3, however, is not enough to compel the judge to grant
the writ of preliminary attachment. 100 Whether or not the affidavit sufficiently established facts therein stated is a question to be determined by the court in
the exercise of its discretion. 101 The sufficiency or insufficiency of an affidavit depends upon the amount of credit given it by the judge, and its acceptance
or rejection, upon his sound discretion. 102 On the requirement of a bond, when the State is the applicant, the filing of the attachment bond is excused. 103

We find that the Sandiganbayan acted within its jurisdiction since all the requisites for the issuance of a writ of preliminary attachment have been complied
with.

Revilla, while still a public officer, is charged with plunder, committed by amassing, accumulating, and acquiring ill-gotten wealth, through a combination or
series of overt or criminal acts, as follows:

1) Through misappropriation, conversion, misuse, or malversation of public funds or raids on the public treasury;

2) By receiving, directly or indirectly, any commission, gift, share, percentage, kickbacks or any other form of pecuniary benefit from any person and/or
entity in connection with any government contract or project or by reason of the office or position of the public officer concerned;.

3) By the illegal or fraudulent conveyance or disposition of assets belonging to the National Government or any of its subdivisions, agencies or
instrumentalities or government-owned or -controlled corporations and their subsidiaries;

4) By obtaining, receiving or accepting directly or indirectly any shares of stock, equity or any other form of interest or participation including promise of
future employment in any business enterprise or undertaking;

5) By establishing agricultural, industrial or commercial monopolies or other combinations and/or implementation of decrees and orders intended to benefit
particular persons or special interests; or

6) By taking undue advantage of official position, authority, relationship, connection or influence to unjustly enrich himself or themselves at the expense
and to the damage and prejudice of the Filipino people and the Republic of the Philippines. 104 (Emphasis supplied)

Clearly, the crime of plunder is based on a claim for public funds or property misappropriated, converted, misused, or malversed by the accused who is a
public officer, in the course of his employment as such. The filing of the criminal action for plunder, which is within the jurisdiction of the
Sandiganbayan, 105 is deemed to necessarily carry with it the filing of the civil action. Accordingly, the writ of preliminary attachment is an available
provisional remedy in the criminal action for plunder.
In its Motion, the prosecution alleged that: "[Revilla] converted for his own use or caused to be converted for the use by unauthorized persons the sum of
Php515,740,000.00 worth of public funds sourced from his PDAF through 'ghost' projects." 106 In Cambe v. Office of the Ombudsman, 107 we agreed with the
Ombudsman's finding of probable cause against Revilla and held that for purposes of arriving at a finding of probable cause, "only facts sufficient to
support a prima facie case against the [accused] are required, not absolute certainty." Thus, we held that the prosecution's evidence established a prima
facie case for plunder against Revilla:

Taking together all of the above-stated pieces of evidence, the COA and FIO reports tend to prima facie establish that irregularities had indeed
attended the disbursement of Sen. Revilla's PDAF and that he had a hand in such anomalous releases, being the head of Office which
unquestionably exercised operational control thereof. As the Ombudsman correctly observed, "[t]he PDAF was allocated to him by virtue of his
position as a Senator, and therefore he exercise[ d] control in the selection of his priority projects and programs. He indorsed [Napoles'] NGOs in
consideration for the remittance of kickbacks and commissions from Napoles. Compounded by the fact that the PDAF-funded projects turned out to be
'ghost projects', and that the rest of the PDAF allocation went into the pockets of Napoles and her cohorts, [there is probable cause to show that] Revilla
thus unjustly enriched himself at the expense and to the damage and prejudice of the Filipino people and the Republic of the Philippines." Hence, he
should stand trial for violation of Section 3(e) of RA 3019. For the same reasons, it is apparent that ill-gotten wealth in the amount of at least
₱50,000,000.00 (i.e.,₱224,512,500.00) were amassed, accumulated or acquired through a combination or series of overt acts stated in Section 1 of the
Plunder Law. Therefore, Sen. Revilla should likewise stand trial for Plunder. 108 (Emphasis supplied)

Thus, contrary to Revilla's insinuations, there exists a prima facie factual foundation for the attachment of his monies and properties.

Furthermore, in its Resolution dated 1 December 2014 denying bail to Revilla, the Sandiganbayan held that the prosecution duly established with strong
evidence that Revilla, Cambe, and Napoles, in conspiracy with one another, committed the crime of plunder. The finding of strong evidence forpurposes of
bail is a greater quantum of proof required than prima facie factual foundation for the attachment of properties. Thus, the Sandiganbayan properly
exercised its discretion in issuing the writ of preliminary attachment upon appreciating and evaluating the evidence against Revilla.

Moreover, the Affidavit of Merit attached to the Motion and executed by graft investigators of Revilla's PDAF likewise established that (1) a sufficient cause
of action exists for the issuance of a writ of preliminary attachment; (2) the case is one of those mentioned in Sections 57 and 127 of the Rules of Court,
and (3) that Revilla has no visible sufficient security in the event that judgment is rendered against him. The sufficiency of the affidavit depends upon the
amount of credit given by the Sandiganbayan, and its acceptance, upon its sound discretion. We refuse to interfere in its exercise of discretion, absent any
showing that the Sandiganbayan gravely abused its discretion.

Even assuming that plunder is not based on a claim for public funds or property misappropriated, converted, misused or malversed by the public officer,
the prosecution nevertheless alleged that Revilla has concealed, removed, or disposed of his property, or is about to do so, which is another ground for the
issuance of the writ of preliminary attachment. The AMLC report, attached to the Motion, states that many investment and bank accounts of Revilla were
"terminated immediately before and after the PDAF scandal circulated in [the] media," and Revilla himself publicly confirmed that he closed several bank
accounts when the PDAF scam was exposed. Revilla failed to rebut these allegations with any evidence.

Considering that the requirements for its issuance have been complied with, the issuance of the writ of preliminary attachment by the Sandiganbayan is in
order.1âw phi 1

Contrary to Revilla's allegation, a writ of preliminary attachment may issue even without a hearing. Section 2, Rule 57 of the Rules of Court states that:
"[a]n order of attachment may be issued either ex parte or upon motion with notice and hearing by the court in which the action is pending, or by the Court
of Appeals or the Supreme Court, and must require the sheriff of the court to attach so much of the property in the Philippines of the party against whom it
is issued, not exempt from execution, as may be sufficient to satisfy the applicant's demand, unless such party makes deposit or gives a bond as
hereinafter provided in an amount equal to that fixed in the order, which may be the amount sufficient to satisfy the applicant's demand or the value of the
property to be attached as stated by the applicant, exclusive of costs. x x x."

In Davao Light & Power Co., Inc. v. Court of Appeals,109 this Court ruled that "a hearing on a motion or application for preliminary attachment is not
generally necessary unless otherwise directed by the trial court in its discretion." 110In the same case, the Court declared that "[n]othing in the Rules of Court
makes notice and hearing indispensable and mandatory requisites for the issuance of a writ of attachment." 111 Moreover, there is an obvious need to avoid
alerting suspected possessors of "ill-gotten" wealth and thereby cause that disappearance or loss of property precisely sought to be prevented. 112 In any
case, Revilla was given an adequate and fair opportunity to contest its issuance.

Also, contrary to Revilla's allegation, there is no need for a final judgment of ill-gotten wealth, and a preliminary attachment is entirely different from the
penalty of forfeiture imposed upon the final judgment of conviction under Section 2 of RA 7080. By its nature, a preliminary attachment is an ancillary
remedy applied for not for its own sake but to enable the attaching party to realize upon the relief sought and expected to be granted in the main or
principal action; it is a measure auxiliary or incidental to the main action. 113 As such, it is available during the pendency of the action which may be
resorted to by a litigant to preserve and protect certain rights and interests during the interim, awaiting the ultimate effects of a final judgment in the
case. 114 The remedy of attachment is provisional and temporary, designed for particular exigencies, attended by no character of permanency or finality,
and always subject to the control of the issuing court. 115

On the other hand, Section 2 of RA 7080 requires that upon conviction, the court shall declare any and all ill-gotten wealth and their interests and other
incomes and assets including the properties and shares of stock derived from the deposit or investment thereof forfeited in favor of the State. The State
may avail of the provisional remedy of attachment to secure the preservation of these unexplained wealth and income, in the event that a judgment of
conviction and forfeiture is rendered. The filing of an application for the issuance of a writ of preliminary attachment is a necessary incident in forfeiture
cases. 116 It is needed to protect the interest of the government and to prevent the removal, concealment, and disposition of properties in the hands of
unscrupulous public officers. 117 Otherwise, even if the government subsequently wins the case, it will be left holding an empty bag.118

This Decision does not touch upon the guilt or innocence of any of the petitioners.

WHEREFORE, we DISMISS the petitions for lack of merit and AFFIRM the assailed Resolutions of the Sandiganbayan.

SO ORDERED.