PRELIMINARY ATTACHMENT The rules on the issuance of a writ of attachment must be construed
strictly against the applicants. This stringency is required because the
D.P. LUB OIL MARKETING CENTER, INC., Petitioner, vs. RAUL NICOLAS,
SOCORRO VALERIE GUTIERREZ, and THE HONORABLE PONCIANO C.
INOPIQUEZ (In his official capacity as the Presiding Judge of Regional Trial
Court of Manila, Branch XIV), Respondents.
A complaint was lodged by the petitioner D.P. Lub Oil Marketing Center, Inc.,
against private respondents Raul Nicolas and Socorro Valerie Gutierrez for a
sum of money and damages
Complaint – contained prayer for the issuance of a writ of preliminary
attachment on the ground that the claim resulted from the non-
payment of the purchase price of fuel oil used for the 10 vessels of
the private respondents-defendants
- that pursuant to the provisions of the Code of Commerce, Article
584 in relation to Article 580 (subpar. 8), the said vessels may be
attached
- There was an averment that the private respondents were about
to dispose of the said vessels in fraud of their creditors including
the petitioner herein
May 4, 1986 - A writ of preliminary attachment was issued ex parte by a court
upon he posting of a bond by the petitioner in the amount of P220,000.00.
Armed with the writ, the Sheriff of Manila on June 18, 1986, boarded the
private respondents’ fishing vessel, "Star Vangeline," and placed it under
custodia legis.
The next day, an order was issued by the respondent judge lifting the
attachment upon the posting of a counterbond in the amount of
P220,000.00, upon motion of the private respondents without waiving or
abandoning their objections to the alleged grounds for the issuance of the
writ of attachment.
- Respondents then filed a "Motion to Withdraw Counter-bond and
to Dissolve Writ of Attachment
The Judge issued a 1st order which dissolved the writ of attachment and
allowed the private respondents’ withdrawal of their counterbond
Petitioner’s subsequent MR was also denied – Petitioner further advances
the argument that the case of Salas v. Adil is not applicable to the case at bar
ISSUE:
a) WON the provisions of Articles 580 and 584 of the Code of
Commerce being (sic) expressly repealed by the provisions of PD
214 so as to render the same abrogated and negated already?
 YES. we affirm the conclusion of the respondent judge that,
indeed, Articles 580 and 584 of the Code of Commerce had been
expressly repealed by the provisions of Presidential Decree (PD)
No. 214 thereby rendering the former abrogated and of no more
force and effect.
Art. 580 (par. 8) states: all judicial sales of vessels for the payment of
creditors, the said creditors shall have preference in the order stated:
The part of the price which has not been paid the last vendor, the
credits pending for the payment of materials and work in the
construction of the vessel, when it has not navigated, and those arising
from the repair and equipment of the vessel and from its provisioning
with victuals and fuel during its last voyage.
In order that the credits provided for in this subdivision may enjoy the
preference they must appear by contracts recorded in the registry of
vessels, or if they were contracted for the vessel while on a voyage and
said vessel has not returned to the port of her registry, they must be
made under the authority required for such cases and entered in the
certificate of registry of the said vessel.
Sec. 2 PD 214 which is the repealing clause, states that particularly the
provisions of Art. 580 & 584 of the Code of commerce have been
repealed.
B) WON the case of Salas v. Adil applicable in the instant case so as to
justify the Honorable Respondent Judge in ordering the withdrawal of
the bond
As to provisional rememies, such as attachment, respondent judge
acted in accordance with the existing laws and prevailing jurisprudence.
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. 16
The petitioner’s prayer for a preliminary attachment hinges’ on the
allegations in par. 16 of the complaint and par. 4 of the affidavit of
Daniel Pe which are couched in general terms devoid of particulars of
time, persons, and places to support such a serious assertion that
"defendants are disposing of their properties in fraud of the creditors."
There is thus the necessity of giving to the private respondents an
opportunity to ventilate their side in a hearing, in accordance with due
process, in order to determine the truthfulness of the allegations. But
no hearing was afforded to the private respondents the writ having
been issued ex parte. A writ of attachment can only be granted on
concrete and specific grounds and not on general averments merely
quoting the words of the rules. 19
The respondent judge merely corrected himself by issuing the
questioned orders, thereby making his actions conform with the
applicable laws and his findings of fact. Since the writ of attachment
was improperly granted, the respondent trial court’s orders discharging
it were compelling and justified to rectify the initial error. Hence, there
was no need at all inceptively for the private respondents to post a
counterbond.
PETITION IS DISMISSED.
Davao Light v. CA
Gr No. 93262 Dec 29, 1991
Facts:
Davao Light filed a complaint for sum of money against Queensland Hotel and
Teodorico Adarna. The complaint contained an ex parte application for a writ
of preliminary attachment. The Judge granted and issued the writ of
attachment and the sheriff served the summon against Queensland Hotel.
The respondents contend that the preliminary attachment should not have
been issued because the court has not yet acquired jurisdiction over the
person of the defendants.
Issue:
Whether the writ of preliminary attachment may issue ex parte against a
defendant before acquisition of jurisdiction of the latter’s person by service
of summons or his voluntary submission to the court’s authority?
Held:
No. The plaintiff may apply for and obtain a writ of preliminary attachment
upon fulfilment of the pertinent requisites laid down by law and that he may
do so at any time, either before or after service of summons on the
defendant.
The court declared that nothing in the RoC makes notice and hearing
indispensable and mandatory requisites for the issuance of the writ of
attachment, the only pre requisite is that the court be satisfied, upon
consideration of the affidavit of the applicant or of some other person who
personally knows the facts that a sufficient cause of actions exists, that the
case is one of those mentioned in sec 1 rule 57, that there is no other
sufficient security for the claim sought to be enforced by the action, and that
the amount due to the applicant, or the value of the property the possession
of which he is entitled to recover, is as much as the sum for which the order
of attachment is granted above all legal counterclaims. If the court be so
satisfied, the order of attachment shall be granted, and the writ shall issue
upon the applicant’s posting of bond executed to the adverse party in an
amount to be fixed by the judge not exceeding the plaintiff’s claim,
conditioned that the latter will pay all the costs which may be adjudged to
the adverse party and all damages which he may sustain by reason of the
attachment, if the court shall finally adjudge that the applicant was not
entitled thereto.
2 ways of discharging the attachment:
1. By posting of a counterbond;
2. By showing of its improper or irregular issuance.
With respect to other provisional remedies; preliminary injunction rule 58;
receivership rule 59; replevin or delivery of personal property rule 60; the
rule is the same they may also be issued ex parte.
TERESA CHAVES BIACO,Petitioner, vs. PHILIPPINE COUNTRYSIDE RURAL
BANK, Respondent.
FACTS:
Ernesto Biaco is the husband of petitioner Ma. Teresa Chaves Biaco. While
employed in the Philippine Countryside Rural Bank (PCRB) as branch
manager, Ernesto obtained several loans from the respondent bank.
As security for the payment of the said loans, Ernesto executed a real estate
mortgage in favor of the bank covering the parcel of land which the real
estate mortgages bore the signatures of the spouses Biaco.
When Ernesto failed to settle the above-mentioned loans on its due date,
respondent bank through counsel sent him a written demand,however,
proved futile.
Respondent bank filed a complaint for foreclosure of mortgage against the
spouses Ernesto and Teresa Biaco before the RTC of Misamis Oriental.
Summons was served to the spouses Biaco through Ernesto at his office
(Export and Industry Bank). The RTC ruled against them; a writ of execution
was served on the spouses.
Petitioner sought the annulment of the Regional Trial Court decision
contending, among others, that the trial court failed to acquire jurisdiction
because summons were served on her through her husband without any
explanation as to why personal service could not be made. The CA affirmed
RTC decision invoking that judicial foreclosure proceedings are actions quasi
in rem. As such, jurisdiction over the person of the defendant is not essential
as long as the court acquires jurisdiction over the res.
ISSUE: Whether or not the case should be dismissed for lack of jurisdiction
over the person of petitioner?
RULING:
No. The Court ruled that validly try and decide the case. In a proceeding in
rem or quasi in rem, jurisdiction over the person of the defendant is not a
prerequisite to confer jurisdiction on the court provided that the court
acquires jurisdiction over the res. Jurisdiction over the res is acquired either
(1) by the seizure of the property under legal process, whereby it is brought
into actual custody of the law; or (2) as a result of the institution of legal
proceedings, in which the power of the court is recognized and made
effective.
In this case, the judicial foreclosure proceeding instituted by respondent
PCRB undoubtedly vested the trial court with jurisdiction over the res. A
judicial foreclosure proceeding is an action quasi in rem. As such, jurisdiction
over the person of petitioner is not required, it being sufficient that the trial
court is vested with jurisdiction over the subject matter.
G.R. No. 125027 August 12, 2002
ANITA MANGILA, petitioner, vs. COURT OF APPEALS and LORETA GUINA,
respondents.
FACTS: Private respondent filed a complaint for collection of sum of money
against herein petitioner. On August 1, 1988, the sheriff filed his Sheriff’s
Return showing that summons was not served on petitioner. A woman found
at petitioner’s house informed the sheriff that petitioner transferred her
residence to Sto. Niño, Guagua, Pampanga. The sheriff found out further that
petitioner had left the Philippines for Guam.
Thus, on September 13, 1988, construing petitioner’s departure from the
Philippines as done with intent to defraud her creditors, private respondent
filed a Motion for Preliminary Attachment. On September 26, 1988, the trial
court issued an Order of Preliminary Attachment6 against petitioner. The
following day, the trial court issued a Writ of Preliminary Attachment.
The trial court granted the request of its sheriff for assistance from their
counterparts in RTC, Pampanga. Thus, on October 28, 1988, Sheriff Alfredo
San Miguel of RTC Pampanga served on petitioner’s household help in San
Fernando, Pampanga, the Notice of Levy with the Order, Affidavit and Bond.
Petitioner filed a motion to discharge attachment claiming that the court had
not acquired jurisdiction over her person.
The trial court granted the Motion to Discharge Attachment on January 13,
1989 upon filing of petitioner’s counter-bond. The trial court, however, did
not rule on the question of jurisdiction and on the validity of the writ of
preliminary attachment.
Thereafter private respondent applied for an alias summons which was
granted by the court.
ISSUE: W/N the writ was validly implemented
RULING: there was no proper service of summons, order, and the writ of
attachment.
*Improper Issuance and Service of Writ of Attachment. In Davao Light &
Power Co., Inc. v. Court of Appeals, this Court clarified the actual time when
jurisdiction should be had:
“It goes without saying that whatever be the acts done by the Court prior to
the acquisition of jurisdiction over the person of defendant – issuance of
summons, order of attachment and writ of attachment – these do not and
cannot bind and affect the defendant until and unless jurisdiction over his
person is eventually obtained by the court, either by service on him of
summons or other coercive process or his voluntary submission to the court’s
authority. Hence, when the sheriff or other proper officer commences
implementation of the writ of attachment, it is essential that he serve on the
defendant not only a copy of the applicant’s affidavit and attachment bond,
and of the order of attachment, as explicitly required by Section 5 of Rule 57,
but also the summons addressed to said defendant as well as a copy of the
complaint xxx.”
Furthermore, we have held that the grant of the provisional remedy of
attachment involves three stages: first, the court issues the order granting the
application; second, the writ of attachment issues pursuant to the order
granting the writ; and third, the writ is implemented. For the initial two
stages, it is not necessary that jurisdiction over the person of the defendant
be first obtained. However, once the implementation of the writ commences,
the court must have acquired jurisdiction over the defendant for without
such jurisdiction, the court has no power and authority to act in any manner
against the defendant. Any order issuing from the Court will not bind the
defendant.
WEE vs. TANKIANSEE G.R. No. 171124, February 13, 2008
FACTS:
Petitioner Wee has money placements totaling to more than P210M with the
Wincorp, to which, respondent Tansiankee is a vice president and director.
Wincorp extended a loan equal to petitioner’s total money placement to a
corporation, Power Merge, with a subscribed capital of only P37.5M.
This credit facility originated from another loan of about P1.5B extended by
Wincorp to another corporation [Hottick Holdings]. When the latter defaulted
in its obligation, Wincorp instituted a case against it and its surety. Settlement
was, however, reached in which Hottick’s president, Virata, assumed the
obligation of the surety.
Under the scheme agreed upon by Wincorp and Hottick’s president,
petitioner’s money placements were transferred without his knowledge and
consent to the loan account of Power Merge through an agreement that
virtually freed the latter of any liability. Allegedly, through the false
representations of Wincorp and its officers and directors, petitioner was
enticed to roll over his placements so that Wincorp could loan the same to
Virata/Power Merge.
Finding that Virata purportedly used Power Merge as a conduit and connived
with Wincorp’s officers and directors to fraudulently obtain for his benefit
without any intention of paying the said placements, petitioner instituted suit
for damages with the RTC Manila. Respondent was impleaded in the
complaint as one of the defendants.
On the basis of the allegations in the complaint and the Affidavit of
petitioner, RTC ordered the issuance of a writ of preliminary attachment
against the properties not exempt from execution of all the defendants
subject to petitioner’s filing of a P50M-bond. The writ was consequently
issued.
Arguing that the writ was improperly issued and that the bond furnished was
grossly insufficient, respondent moved for the discharge of the attachment.
The other defendants likewise filed similar motions. RTC denied all the
motions. The defendants, including respondent filed their respective motions
for reconsideration but the trial court likewise denied the same.
Incidentally, while respondent opted not to question anymore the said
orders, his co-defendants, Virata and UEM-MARA Philippines Corporation
(UEM-MARA), assailed the same via certiorari under Rule 65 before the CA.
CA, however, denied it and the motion for reconsideration thereon.
In a petition for review on certiorari before SC, the latter denied the petition
and affirmed the CA rulings for Virata’s and UEM-MARA’s failure to
sufficiently show that the appellate court committed any reversible error.
Respondent filed before the trial court another Motion to Discharge
Attachment, re-pleading the grounds he raised in his first motion but raising
the following additional grounds: (1) that he was not present in Wincorp’s
board meetings approving the questionable transactions; and (2) that he
could not have connived with Wincorp and the other defendants because he
and Pearlbank Securities, Inc., in which he is a major stockholder, filed cases
against the company as they were also victimized by its fraudulent schemes.
Ruling that the grounds raised were already passed upon by it in the previous
orders affirmed by the CA and SC, and that the additional grounds were
respondent’s affirmative defenses that properly pertained to the merits of
the case, RTC denied the motion.
With the denial of his motion for reconsideration, respondent filed a
certiorari petition before the CA where the appellate court rendered the
assailed Decision reversing and setting aside the aforementioned orders of
the RTC and lifting the Writ of Preliminary Attachment to the extent that it
concerned respondent’s properties. Petitioner moved for the reconsideration
of the said ruling, but the CA denied the same. Hence, petitioner filed a
petiton for review on certiorari under Rule 45 before the SC.
ISSUE:
Whether the CA was correct in lifting the writ of preliminary attachment
against respondent based on additional ground that allegedly pertains
already to the merits of the main action, i.e., lack of factual circumstances of
fraud.
HELD:
YES. Section 1(d) of Rule 57 of the Rules of Court which pertinently reads:
Section 1. Grounds upon which attachment may issue.-At the
commencement of the action or at any time before entry of judgment, a
plaintiff or any proper party may have the property of the adverse party
attached as security for the aatisfaction of any judgment that may be
recovered in the following cases:
x x x x
(d) In an action against a party who has been guilty of a fraud in contracting
the debt or incurring the obligation upon which the action is brought, or in
the performance thereof.
For a writ to issue under this rule, the applicant must sufficiently show the
factual circumstances of the alleged fraud because fraudulent intent cannot
be inferred from the debtor’s mere non-payment of the debt or failure to
comply with his obligation. The applicant must then be able to demonstrate
that the debtor has intended to defraud the creditor.
In the instant case, petitioner’s Affidavit is bereft of any factual statement
that respondent committed a fraud. The affidavit narrated only the alleged
fraudulent transaction between Wincorp and Virata and/or Power Merge, by
which SC affirmed the writ of attachment issued against the latter.
As to the participation of respondent in the said transaction, the affidavit
merely states that respondent, an officer and director of Wincorp, connived
with the other defendants to defraud petitioner of his money placements. No
other factual averment or circumstance detailing how respondent committed
a fraud or how he connived with the other defendants to commit a fraud in
the transaction sued upon. In other words, petitioner has not shown any
specific act or deed to support the allegation that respondent is guilty of
fraud.
The affidavit, being the foundation of the writ, must contain such particulars
as to how the fraud imputed to respondent was committed for the court to
decide whether or not to issue the writ. Absent any statement of other
factual circumstances to show that respondent, at the time of contracting the
obligation, had a preconceived plan or intention not to pay, or without any
showing of how respondent committed the alleged fraud, the general
averment in the affidavit that respondent is an officer and director of
Wincorp who allegedly connived with the other defendants to commit a
fraud, is insufficient to support the issuance of a writ of preliminary
attachment.
In the application for the writ under the said ground, compelling is the need
to give a hint about what constituted the fraud and how it was perpetrated
because established is the rule that fraud is never presumed.
Verily, the mere fact that respondent is an officer and director of the
company does not necessarily give rise to the inference that he committed a
fraud or that he connived with the other defendants to commit a fraud.
While under certain circumstances, courts may treat a corporation as a mere
aggroupment of persons, to whom liability will directly attach, this is only
done when the wrongdoing has been clearly and convincingly established.
Considering that petitioner has not fully satisfied the legal obligation to show
the specific acts constitutive of the alleged fraud committed by respondent,
the trial court acted in excess of its jurisdiction when it issued the writ of
preliminary attachment against the properties of respondent.
The merits of the main action are not triable in a motion to discharge an
attachment otherwise an applicant for the dissolution could force a trial of
the merits of the case on his motion.
However, the principle finds no application here because petitioner has not
yet fulfilled the requirements set by the Rules of Court for the issuance of the
writ against the properties of respondent. The evil sought to be prevented by
the said ruling will not arise, because the propriety or impropriety of the
issuance of the writ in this case can be determined by simply reading the
complaint and the affidavit in support of the application.
CHINA BANKING CORPORATION - versus – ASIAN CONSTRUCTION and
DEVELOPMENT CORPORATION
FACTS:
China Bank granted respondent Asian Construction and
Development Corporation (ACDC) an Omnibus Credit Line in the amount of
P90, 000,000.00. Alleging that ACDC failed to comply with its obligations
under the Omnibus Credit Line, China Bank filed a Complaint for recovery of
sum of money and damages with prayer for the issuance of writ of
preliminary attachment before the Regional Trial Court (RTC) of Makati.
The RTC issued an Order granting China Banks prayer for writ of
preliminary attachment. Consequently, as shown in the Sheriff’s Report, the
writ of preliminary attachment was implemented levying personal properties
of ACDC, i.e., vans, dump trucks, cement mixers, cargo trucks, utility vehicles,
machinery, equipment and office machines and fixtures.
upon motion of China Bank, the RTC issued a Summary
Judgment[ in favor of China Bank. China Bank filed a Motion to Take Custody
of Attached Properties with Motion for Grant of Authority to Sell to the
Branch Sheriff[10] with the RTC, praying that it be allowed to take custody of
ACDCs properties for the purpose of selling them in an auction.
ACDC filed its Opposition to the June 15, 2000 Motion arguing
that there can be no sale of the latters attached properties in the absence of
a final and executory judgment against ACDC. According to the CA, selling the
attached properties prior to final judgment of the appealed case is premature
and contrary to the intent and purpose of preliminary attachment for the
following reasons: first, the records reveal that the attached properties
subject of the motion are not perishable in nature; and second, while the sale
of the attached properties may serve the interest of China Bank, it will not be
so for ACDC.
ISSUE:
WON the honorable COURT OF APPEALS rendered the questioned
resolutions in a manner not in accord with the provisions of section 11, rule
57 of the rules of civil procedure, as it shelved the demands of equity by
arbitrarily disallowing the sale of the attached properties.
RULING: Section 11, Rule 57 of the Rules of Court provides:
Sec. 11. When attached property may be sold after levy on attachment and
before entry of judgment.- Whenever it shall be made to appear to the court
in which the action is pending, upon hearing with notice to both parties, that
the property attached is perishable, or that the interests of all the parties to
the action will be subserved by the sale thereof, the court may order such
property to be sold at public auction in such manner as it may direct, and the
proceeds of such sale to be deposited in court to abide the judgment in the
action. (Emphasis supplied)
Thus, an attached property may be sold after levy on attachment and before
entry of judgment whenever it shall be made to appear to the court in which
the action is pending, upon hearing with notice to both parties, that the
attached property is perishable or that the interests of all the parties to the
action will be subserved by the sale of the attached property.
The issue hinges on the determination whether the vehicles, office machines
and fixtures are perishable property under Section 11, Rules 57 of the Rules
of Court, which is actually one of first impression. No local jurisprudence or
authoritative work has touched upon this matter. This being so, an
examination of foreign laws and jurisprudence, particularly those of
the United Stateswhere some of our laws and rules were patterned after, is in
order.
In Mossler Acceptance Co. v. Denmark, an order of the lower court in
directing the sale of attached properties, consisting of 20 automobiles and 2
airplanes, was reversed by the Supreme Court of Louisiana. In support of its
contention that automobiles are perishable, Mossler offered testimony to the
effect that automobile tires tend to dry-rot in storage, batteries to
deteriorate, crankcases to become damaged, paint and upholstery to fade,
that generally automobiles tend to depreciate while in storage. Rejecting
these arguments, the Supreme Court of Louisiana held that while there might
be a depreciation in the value of a car during storage, depending largely on
existing economic conditions, there would be no material deterioration of the
car itself or any of its appurtenances if the car was properly cared for, and
therefore it could not be said that automobiles were of a perishable nature
within the intendment of the statute, which could only be invoked when the
property attached and seized was of a perishable nature.
China Bank argues that if the CA allowed the attached properties to be sold,
whatever monetary value which the attached properties still have will be
realized and saved for both parties. China Bank further claims that should
ACDC prevail in the final judgment of the collection suit, ACDC can proceed
with the bond posted by China Bank. The Court finds said arguments to be
specious and misplaced.
Section 4, Rule 57 of the Rules of Court provides:
Section 4. Condition of applicants bond. - The party applying for the order
must thereafter give a bond executed to the adverse party in the amount
fixed by the court in its order granting the issuance of the writ, conditioned
that the latter will pay all the costs which may be adjudged to the adverse
party and all the damages which he may sustain by reason of the attachment,
if the court shall finally adjudge that the applicant was not entitled thereto.
It is clear from the foregoing provision that the bond posted by China Bank
answers only for the payment of all damages which ACDC may sustain if the
court shall finally adjudge that China Bank was not entitled to
attachment. The liability attaches if the plaintiff is not entitled to the
attachment because the requirements entitling him to the writ are wanting,
or if the plaintiff has no right to the attachment because the facts stated in
his affidavit, or some of them are untrue. Clearly, ACDC can only claim from
the bond for all the damages which it may sustain by reason of the
attachment and not because of the sale of the attached properties prior to
final judgment.
Sale of attached property before final judgment is an equitable remedy
provided for the convenience of the parties and preservation of the property.
To repeat, the Court finds that the issue of whether the sale of attached
properties is for the convenience of the parties and that the interests of all
the parties will be subserved by the said sale is a question of fact. Again, the
foregoing issue can only be resolved upon examination of the evidence
presented by both parties which the Court cannot do in a petition
for certiorari under Rule 65 of the Rules of Court.
SPOUSES YU vs NGO YET TE
Facts:
 Spouses Gregorio and Josefa Yu purchased from Ngo Yet Te bars of
detergent soap worth P594,240.00 and issued to the latter three
postdated checks as payment. However, upon presentment of the
checks at maturity, said checks were returned dishonored and
stamped “ACCOUNT CLOSED”. Respondent demanded payment
from petitioners, but they did not heed her demands.
Respondent, through her daughter, filed with RTC for Collection of
Sum of Money and Damages with Prayer for Preliminary
Attachment. She also attached to her complaint an affidavit
executed by Sy that petitioners 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.
 The RTC ordered for the properties of petitioners to be levied and
attached consisting of one parcel of land and four units of motor
vehicle. Petitioners filed an Answer with counterclaim, Urgent
Motion to Dissolve writ of Preliminary Attachment, and Claim
against Surety Bond. The RTC, then, discharged from attachment
the Toyota Ford Fierra, jeep, and delivery van on humanitarian
grounds. The CA later on lifted the RTC Order of Attachment on
the ground that the complaint and affidavit only contain general
averments and failed to states particularly how fraud was
committed by petitioners. The Motion for Reconsideration was
likewise denied. The SC also denied Te’s Petition for Review on
Certiorari for having been filed late and for failure to show that a
reversible error was committed by the CA.
 The RTC, however, apparently not informed of SCs decision, ruled
in favor of herein respondents. On their appeal with CA, Spouses
Yu questioned only that portion of the July 20, 1994 Decision
where the RTC declined to rule on their counterclaim for damages.
However, Spouses Yu did not dispute the specific monetary
awards granted to respondent Te; and therefore, the same have
become final and executory. The CA, while affirming RTCs decision
in toto, 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. Hence, this petition.
Issue: 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.

Ruling:
 NO.
 The SC also made mention on the contention of respondent Te
that 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. The Court said that
such argument was not only flawed as it is also specious. The
Visayan Surety, which issued the attachment bond, 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.
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, 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." This
remedy is applicable for the procedures governing claims for
damages on an attachment bond and on a replevin bond are the
same.
 Spouses Yu contended that they are entitled to their counterclaim
for damages as a matter of right after Te wrongfully caused the
attachment of the properties as it suggested that Te acted with
malice. The SC ruled that the counterclaim disputed therein was
not for moral damages and therefore, there was no need to prove
malice. In Lazatin v. Twaño, the Court 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. 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.
 The Court also held that petitioners are not relieved of the burden
of proving the 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. 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. In particular, if the claim for actual damages covers
unrealized profits, the amount of unrealized profits must be
established and supported by independent evidence of the mean
income of the business undertaking interrupted by the illegal
seizure.
 The SC also affirmed CAs finding that spouses Yu failed to prove
their counterclaim of actual damages by relying mainly on
submission of used and unused ticket stubs and ticket sales for
five (5) days. 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. 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.
 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. The SC did not grant
moral and exemplary damages. 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.
 Petitioners were, however, awarded temperate or moderate
damages of P50,000 for pecuniary loss when their properties were
wrongfully seized.
K.O. GLASS CONSTRUCTION CO., INC., Petitioner, vs. THE HONORABLE
MANUEL VALENZUELA, Judge of the Court of First Instance of Rizal, and
ANTONIO D. PINZON, Respondents.
THE CASE IS A PETITION FOR CERTIORARI TO ANNUL OR SET ASIDE THE WRIT
OF PRELIMINARY ATTACHMENT ISSUED BY THE RESPONDENT JUDGE
FACTS OF THE CASE:
 On October 6, 1977, an action was instituted in the Court of First
Instance of Rizal by Antonio D. Pinzon to recover from Kenneth O.
Glass the sum of P37,190.00, alleged to be the agreed rentals of
his truck, as well as the value of spare parts which have not been
returned to him upon termination of the lease.
 In his verified complaint, the plaintiff asked for an attachment
against the property of the defendant consisting of collectibles
and payables with the Philippine Geothermal, Inc., on the grounds
that :
 the defendant is a foreigner;
 that he has sufficient cause of action
against the said defendant;
 and that there is no sufficient security for
his claim against the defendant in the event
a judgment is rendered in his favor.
 Defendant Kenneth O. Glass moved to quash the writ of
attachment on the grounds that:
 there is no cause of action against him since
the transactions or claims of the plaintiff
were entered into by and between the
plaintiff and the K.O. Glass Construction Co.,
Inc., a corporation duly organized and
existing under Philippine laws;
 that there is no ground for the issuance of
the writ of preliminary attachment as
defendant Kenneth O. Glass never intended
to leave the Philippines, and even if he
does, plaintiff can not be prejudiced thereby
because his claims are against a corporation
which has sufficient funds and property to
satisfy his claim; and
 that the money being garnished belongs to
the K.O. Glass Corporation Co., Inc. and not
to defendant Kenneth O. Glass.
 Judge denied the motion and ordered the Philippine
Geothermal, Inc. to deliver and deposit with the Clerk of Court
the amount of P37,190.00 immediately upon receipt of the order
which amount shall remain so deposited to await the judgment to
be rendered in the case.
 On January 26, 1978, the defendants therein filed a
supplementary motion to discharge and/or dissolve the writ of
preliminary attachment upon the ground that the affidavit filed in
support of the motion for preliminary attachment was not
sufficient or wanting in law for the reason that:
 (1) the affidavit did not state that the
amount of plaintiff's claim was above all
legal set-offs or counterclaims, as required
by Sec. 3, Rule 57 of the Revised Rules of
Court;
 (2) the affidavit did not state that there is no
other sufficient security for the claim sought
to be recovered by the action as also
required by said Sec. 3; and
  (3) the affidavit did not specify any of the
grounds enumerated in Sec. 1 of Rule 57,
ISSUE:
 WON the issuance of the writ of preliminary
attachment proper
HELD: NO
 The respondent Judge gravely abused his discretion in
issuing the writ of preliminary attachment and in not
ordering the release of the money which had been
deposited with the Clerk of Court
 There being no showing, much less an allegation, that
the defendants are about to depart from the
Philippines with intent to defraud their creditor, or that
they are non-resident aliens, the attachment of their
properties is not justified.
 Affidavit of plaintiff failed to allege the requisites
prescribed for the issuance of a writ of preliminary
attachment, which renders the writ of preliminary
attachment issued against the property of the
defendant fatally defective,
 and the judge issuing it is deemed to have acted in
excess of his jurisdiction
Sec. 1. Grounds upon which attachment may issue. -A plaintiff or any proper
party may, at the commencement of the action or at any time thereafter,
have the property of the adverse party attached as security for the
satisfaction of any judgment that may be recovered in the following cases:
(a) In an action for the recovery of money or damages on a cause of action
arising from contract, express or implied, against a party who is about to
depart from the Philippines with intent to defraud his creditor;
Requirements for issuance of writ of preliminary attachment:
1. Affidavit of the applicant, or some other person who personally knows the
facts, showing that:
a. sufficient cause of action exists
b. the case is one of those mentioned in Section 1, Rule 57
c. there is no other sufficient security for the claim sought to be
enforced by the action, and that the amount due the
applicant, or the value of the property the possession of which he is
entitled to recover, is as much as the sum
for which the order is granted above all legal
counterclaims.
2. Bond
FBDC vs. YLLAS LENDING CORP
FACTS: FORT BONIFACIO DEVELOPMENT CORP. ( FBDC) executed a lease
contract in favor of Tirreno, Inc. over a unit at 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.
Due to Tirreno’s alleged failure to settle its outstanding obligations, 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.
In 2002, Yllas Lending Corporation caused the sheriff of the trial court to
serve an alias writ of seizure against FBDC. FBDC found out that in 2001,
respondents filed a complaint for Foreclosure of Chattel Mortgage with
Replevin, against Tirreno, et al. In their complaint, Yllas alleged that they lent
a sum of money to Tirreno et al and in 2000 executed a Deed of Chattel
Mortgage in favor of Yllas as security for the loan. The Chattel Mortgage
covered properties of the Tirreno’s restaurant and bar.
On the same day, FBDC served on the sheriff an affidavit of title and third
party claim.
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 delivered the seized properties to Yllas.
FBDC questioned the propriety of the seizure and delivery of the properties
to respondents without an indemnity bond before the trial court, which
decided against FBDC. It stated that:
1. Section 22 of the lease contract between FBDC and Tirreno is void under
Article 2088 of the Civil Code.
2. FBDC should have filed a separate complaint against respondents instead
of filing a motion to intervene. (The trial court quoted Bayer Phils. v. Agana )
FBDC filed a MR, which was denied. Hence this petition to review pure
questions of law.
ISSUE:
WON the trial court is should have required respondents to file an indemnity
bond for FBDC’s protection
YES. 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.
PRELIMINARY INJUNCTION
FELIPE SY DUNGOG, petitioner, vs. COURT OF APPEALS, JUAN A.
GATO, in his official capacity as RTC Sheriff, Lapu-Lapu City and
CARLOS GOTHONG LINES, INC., respondents.
FACTS: Carlos Gothong Lines filed a complaint for specific performance
against the spouses Dungog (parents of herein petitioner) to enforce the
contract of sale of the parcel of land owned by various individuals. Gothong
Lines faulted the spouses Dungog for non-delivery of some parcels of land,
which resulted to an overpayment in the amount paid. The spouses Dungog,
however, contended that it was Gothong Lines which breached the contract
by stopping payment on the last four checks intended as the last installments
for the land. The spouses Dungog opposed Gothong Lines' application for a
writ of preliminary injunction on the ground that Gothong Lines violated the
terms of the contract and the other contemporaneous agreements between
them. However, the trial court granted the prayer for injunction, enjoining
the spouses Dungog from cancelling the contract to sell. Thereafter, a writ of
preliminary injunction was issued. Petitioner assailed the order and the writ
in a special civil action forcertiorari before the Court of Appeals. The
appellate court dismissed outright the petition, as well as denied the motion
for reconsideration. Thus, he filed the instant petition questioning the
propriety of the writ of preliminary injunction issued by the trial court.
RULING: In denying the petition, the Supreme Court ruled that petitioner
committed a procedural blunder in filing a special civil action forcertiorari to
assail the order and the writ. The petition was not a party to the civil case
and, therefore, could not assail the writ of preliminary injunction through a
petition for certiorari before the Court of Appeals. The appellate court was
correct in saying that the petitioner does not possess the requisite standing
to file such suit.
Preliminary injunction is an order granted at any stage of an action, prior to
the judgment or final order, requiring a party, court, agency or person to
perform or to refrain from performing a particular act or acts. A preliminary
injunction, as the term itself suggests, is merely temporary, subject to the
final disposition of the principal action. Its purpose is to preserve the status
quo of the matter subject of the action to protect the rights of the plaintiff
during the pendency of the suit. Otherwise, if no preliminary injunction is
issued, the defendant may, before final judgment, do the act which the
plaintiff is seeking the court to restrain. This will make ineffectual the final
judgment that the court may afterwards render in granting relief to the
plaintiff. The issuance of a writ of preliminary injunction rests entirely within
the discretion of the court and is generally not interfered with except in cases
of manifest abuse. The assessment and evaluation of evidence in the
issuance of the writ of preliminary injunction involve findings of facts
ordinarily left to the trial court for its conclusive determination.
Under Section 3, Rule 58 of the 1997 Rules on Civil Procedure, a preliminary
injunction is proper when the plaintiff appears entitled to the relief
demanded in the complaint. The trial court found that Gothong Lines had
already paid P51,248,348.26 out of the total consideration of
P65,520,475.00. Gothong Lines also consigned with the court an additional
P4,048,950.00 leaving a balance of P10,223,176.74. The trial court likewise
found that 78% of the properties were already in the possession of Gothong
Lines. Moreover, the status quo, which is the last actual peaceable
uncontested status that preceded the controversy, was that Gothong Lines
had access to the lots subject of the Contract through the entrance gate in
Lot 1031-F. That is why Gothong Lines commenced construction of its pier
and the development of the roads within the parcels of land covered by the
Contract. The issuance of the Writ would no doubt preserve the
status quo between the Spouses Dungog and Gothong Lines that existed prior
to the filing of the case. We agree with the trial court that the
status quo should be maintained until the issue on the parties' respective
rights and obligations under the Contract is determined after the trial.
MICHELLE I. PINEDA vs. COURT OF APPEALS (Former Ninth Division) and the
DEPARTMENT OF EDUCATION, represented by Assistant Secretary CAMILO
MIGUEL M. MONTESA
Facts:
On May 14, 2004, Pineda entered into a Memorandum of
Agreement with Lakandula High School represented by its principal, Dr. Alice
B. Blas , for a five-year lease of the school canteen with a monthly rental
of P20,000.00 and an additional P4,000.00 monthly for the schools feeding
program as well as medicines for the school clinic.
On August 5, 2004, the faculty and personnel of LHS sent a letter
to the Division School Superintendent, Dr. Ma. Luisa Quiones , questioning
the validity of the May-MOA. Dr. Blas sent a letter-reply on September 17,
2004 and an exchange of correspondence followed. Meanwhile, on August
14, 2004, Pineda and Dr. Blas executed another MOA (August-MOA)
superseding the May-MOA. This time, the August-MOA followed the standard
form under Department Order No. 95, Series of 1998 or the Revised
Implementing Guidelines for the Turnover of School Canteens to Teachers
Cooperatives.
On February 11, 2005, respondent DepEd, through
Undersecretary Jose Luis Martin C. Gascon, declared the August-MOA null
and void ab initio and ordered it cancelled. Pineda was also ordered to cease
and desist from further managing and operating the canteen. DepEd made
clear that the management and operation of the canteen should revert to the
Home Economics Department of the School. This prompted Pineda to file a
petition for certiorari with prayer for temporary restraining order and/or writ
of preliminary injunction before the RTC.
On March 14, 2005, the RTC ordered the issuance of a Writ of
Preliminary Mandatory Injunction enjoining the enforcement of Usec.
Gascons decision. DepEd, represented by Usec. Gascon, Dr. Quiones and Ms.
Olympiada Camilo, who succeeded Dr. Blas as School Principal, sought the
dismissal of Pinedas petition before the RTC on the ground that the latter
failed to state a cause of action. On June 7, 2005, the trial court denied its
motion. For said reason, DepEd, this time represented by Assistant Secretary
Camilo Miguel M. Montesa, filed a petition for certiorari before the CA
seeking to set aside the March 14, 2005 and June 7, 2005 orders of the RTC.
The CA affirmed the June 7, 2005 order of the RTC denying DepEds
motion to dismiss but reversed its March 14, 2005 order granting the
issuance of the Writ of Preliminary Mandatory Injunction.
Issue:
Whether or not the preliminary mandatory injunction was valid.
Held:
No. The very writ of preliminary injunction set aside by the CA
could no longer lie for the acts sought to be enjoined had already been
accomplished or consummated. The DepEd already prohibited Pineda from
operating the school canteen. As correctly ruled by the CA in its questioned
decision, since Pineda had ceased the operation of the school canteen since
2005, the RTCs preliminary writ should be set aside as there was nothing
more to enjoin. The Court agrees with the CA when it explained: A
preliminary injunction is a provisional remedy that a party may resort to in
order to preserve and protect certain rights and interests during the
pendency of an action. Its sole objective is to preserve the status quo until
the merits of the case can be heard fully. Status quo is defined as the last
actual, peaceful, and uncontested status that precedes the actual
controversy, that which is existing at the time of the filing of the case.
Indubitably, the trial court must not make use of its injunctive relief to alter
such status.
In this case, the status quo ante litem or the state of affairs
existing at the time of the filing of the case was that Pineda was already
prohibited from operating the school canteen. For said reason, the trial court
cannot make use of its injunctive power to change said status.
Estares Spouses vs CA
Facts:
 The spouses Estares secured a loan of P800k from Prominent Lending &
Credit Corporation (PLCC) in 1998. To secure the loan, they mortgaged a
parcel of land. They however only received P637k as testified by
Rosenda Estares in court.
 Now, the spouses are questioning the validity of the loan as they
alleged that they agreed to an 18% per annum interest rate but PLCC is
now charging them 3.5% interest rate per month. In the interim, they
prayed for a temporary restraining order (TRO) and/or writ of
preliminary injunction to enjoin PLCC from taking possession of the
mortgaged property and proceeding with the extrajudicial sale
 PLCC argued that the spouses were properly apprised of the terms of
the loan including the rate of interest, penalties and other charges.
 At the hearing, the Estares spouses insist that they firmly established
their right to injunctive relief. They claim that the promissory note,
credit application, disbursement voucher, disclosure statement and real
estate mortgage are falsified; the promissory note is not reflective of
the true amount of the loan, as well as the term, interest and charges
thereon; the P126,362.28 represent additional charges, not as part of
the loan, that were not agreed upon prior to or before the
 consummation of the loan; and the amount of the loan and rate of
interest stated in the falsified promissory note are fictitious or
simulated.
 RTC Decision: denied the Estares spouses’ application for a writ of
preliminary injunction, holding that the latter failed to establish the
facts necessary for an injunction to issue.
 The Estares spouses filed a petition for certiorari and prohibition in the
Court of Appeals. The action on the Estares spouses’ application for a
TRO and writ of preliminary injunction was deferred and held in
abeyance until after receipt of the comment. With no restraining order
enjoining him, Sheriff Magat conducted an auction sale.
 CA Decision: Affirmed RTC. That RTC did not abuse its discretion in
denying preliminary injunction.
 Hence, this appeal to the SC.
Issue: WON the writ of preliminary injunction should be granted
Held: NO.
Injunction is a preservative remedy for the protection of substantive rights or
interests. It is not a cause of action in itself but merely a provisional remedy,
an adjunct to a main suit. The controlling reason for the existence of the
judicial power to issue the writ is that the court may thereby prevent a
threatened or continuous irremediable injury to some of the parties before
their claims can be thoroughly investigated and advisedly adjudicated. It is to
be resorted to only when there is a pressing necessity to avoid injurious
consequences which cannot be remedied under any standard of
compensation. The application of the writ rests upon an alleged existence of
an emergency or of a special reason for such an order before the case can be
regularly heard, and the essential conditions for granting such temporary
injunctive relief are that the complaint alleges facts which appear to be
sufficient to constitute a cause of action for injunction and that on the entire
showing from both sides, it appears, in view of all the circumstances, that the
injunction is reasonably necessary to protect the legal rights of plaintiff
pending the litigation.
The Estares spouses had the burden in the trial court to establish the
following requirements for them to be entitled to injunctive relief: (a) the
existence of their right to be protected; and (b) that the acts against which
the injunction is to be directed are violative of such right. To be entitled to an
injunctive writ, the petitioner must show, inter alia, the existence of a clear
and unmistakable right and an urgent and paramount necessity for the writ
to prevent serious damage. Thus, an injunctive remedy may only be resorted
to when there is a pressing necessity to avoid injurious consequences which
cannot be remedied under any standard compensation.
In the present case, the Estares spouses failed to establish their right to
injunctive relief. They do not deny that they are indebted to PLCC but only
question the amount thereof. Their property is by their own choice
encumbered by a real estate mortgage. Upon the non-payment of the loan,
which was secured by the mortgage, the mortgaged property is properly
subject to a foreclosure sale.
It must be stressed that the assessment and evaluation of evidence in the
issuance of the writ of preliminary injunction involve findings of facts
ordinarily left to the trial court for its conclusive determination. As such, a
trial court’s decision to grant or to deny injunctive relief will not be set aside
on appeal unless the court abused its discretion.
AGOO RICEMILL CORP vs. LBP
FACTS: From October 1993 to October 1995, the ARMC obtained from the
LBP a Term Loan for P2M and two Short-Term Loan Lines (STLL’s) amounting
to a total of P15M. These loans were secured by real and chattel mortgage
over the ARMC’s four commercial lots, including their improvements and its
rice mill machineries and generator. Demands were made by the LBP, and
ARMC was still unable to pay. ARMC requested the LBP to restructure its
STLL’s. In default of payment, LBP filed an application for the extrajudicial
foreclosure of ARMC’s mortgaged properties. Consequently, the ARMC, thru
its president, filed with the RTC a complaint for Injunction with application for
a Writ of Preliminary Injunction and TRO. A 72hrs TRO was issued directing
the ex-officio Provincial Sheriff of La Union to cease and desist from
proceeding with the foreclosure sale. TRO was extended for 17days and on
March 18, 1999 RTC issued a Writ of Prelim Injunction. In a decision dated
August 5, 2004, the RTC found no merit in the ARMC’s complaint for
injunction. Auction sale of the mortgaged properties was set. ARMC filed
with the CA application for the issuance of Writ of Prelim Injunction and TRO
to enjoin the foreclosure sale but the same was denied by the CA. Motion for
reconsideration was file and the same was also denied. Hence, this petition
for review on certiorari.
ISSUE: WON ARMC is entitled to an injunctive remedy.
RULING: "Injunction is a judicial writ, process or proceeding whereby a party
is ordered to do or refrain from doing a certain act. It may be the main action
or merely a provisional remedy for and as an incident in the main action." For
an injunction to issue, the following essential requisites must be present: (1)
there must be a right in esse or the existence of a right to be protected; and
(2) the act against which the injunction is directed to constitute a violation of
such right.
The ARMC filed a complaint for injunction against the LBP on the ground that
the latter’s then impending foreclosure of its mortgaged properties was in
violation of its contractual and property rights, particularly the right of the
ARMC to have its outstanding loan restructured by the LBP. The ARMC
alleged that the LBP acted in bad faith and in wanton disregard of its
commitment to restructure the former’s loans when it hastily filed for
extrajudicial foreclosure while negotiations for the loan restructuring were
still ongoing.
The existence of the ARMC’s claimed right to the loan restructuring, however,
was not clearly established by the ARMC. A party seeking to avail of an
injunctive relief must prove that he or she possesses a right in esse or one
that is actual or existing. Such right must be clear and unmistakable, and not
contingent, abstract or future rights, or one that may never arise.
In the present case, both the RTC and the CA found that no agreement was
forged between the ARMC and the LBP on the restructuring of the ARMC’s
loans at the time the LBP filed an application to extra-judicially foreclose the
ARMC’s mortgaged properties; the proposed loan restructuring was not
approved by the LBP because the ARMC failed to offer an additional collateral
sufficient enough to cover its outstanding loan with the bank. Thus, the
ARMC, then, had no actual right to protect or to enforce against the LBP. It
failed to satisfy the first requisite,i.e., the existence of a clear and
unmistakable right for the issuance of an injunction.
AUSTRALIAN PROFESSIONAL REALTY, INC., JESUS GARCIA, and LYDIA
MARCIANO, Petitioners, vs. MUNICIPALITY OF PADRE GARCIA BATANGAS
PROVINCE, Respondent.
Facts: Fire razed to the ground the old public market of respondent
Municipality of Padre Garcia, Batangas. The municipal government, invited
petitioner Australian Professional Realty, Inc. (APRI) to rebuild the public
market and construct a shopping center. A Memorandum of Agreement
(MOA)2 was executed between petitioner APRI and respondent, represented
by Mayor Gutierrez.
Victor Reyes was elected as municipal mayor of respondent. Respondent,
through Mayor Reyes, initiated a Complaint for Declaration of Nullity of
Memorandum of Agreement with Damages before the Regional Trial Court
(RTC) of Rosario, Batangas.
The RTC issued an Order declaring petitioners in default and allowing
respondent to present evidence ex parte. The RTC ruled that the
Memorandum of Agreement is hereby declared null and void for being
contrary to law and public policy and the structures found within the
unfinished PADRE GARCIA SHOPPING CENTER are hereby declared forfeited in
favor of the Municipality of Padre Garcia.
After learning of the adverse judgment, petitioners filed a Petition for Relief
from Judgment. This Petition was denied by the RTC. Petitioners later filed
before the CA a Petition for Certiorari and Prohibition. Also, petitioners filed
before the CA a Motion for the Issuance of Status Quo Order and Motion for
Issuance of Temporary Restraining Order and/or Writ of Preliminary
Injunction. The CA issued a Resolution denying the said motion.
Issue: Whether the CA committed grave abuse of discretion in denying
petitioners’ Motion for the Issuance of Status Quo Order and Motion for
Issuance of Temporary Restraining Order and/or Writ of Preliminary
Injunction (Motion for Injunction).
Ruling: NO. The CA did not commit grave abuse of discretion. Essential to
granting the injunctive relief is the existence of an urgent necessity for the
writ in order to prevent serious damage. A TRO issues only if the matter is of
such extreme urgency that grave injustice and irreparable injury would arise
unless it is issued immediately. Thus, to be entitled to the injunctive writ,
petitioners must show that (1) there exists a clear and unmistakable right to
be protected; (2) this right is directly threatened by an act sought to be
enjoined; (3) the invasion of the right is material and substantial; and (4)
there is an urgent and paramount necessity for the writ to prevent serious
and irreparable damage.
In this case, no grave abuse of discretion can be imputed to the CA. This is so
because APRI has no clear legal right. A perusal of the Motion for Injunction
and its accompanying Affidavit filed before the CA shows that petitioners rely
on their alleged right to the full and faithful execution of the MOA.
However, their rights under the MOA have already been declared inferior or
inexistent in relation to respondent in the RTC case, under a judgment that
has become final and executory. 23 At the very least, their rights under the
MOA are precisely disputed by respondent. Hence, there can be no "clear
and unmistakable" right in favor of petitioners to warrant the issuance of a
writ of injunction. Where the complainant’s right or title is doubtful or
disputed, injunction is not proper.2
GEORGE S. H. SY, doing business under the name and style of OPM
INTERNATIONAL CORPORATION,Petitioner, vs. AUTOBUS TRANSPORT
SYSTEMS INC., Respondent.
Facts: Petitioner George S.H. Sy is doing business under the name and style of
OPM International Corporation (OPM), which is engaged in the sale and
installation of bus air conditioning units. Petitioner entered into a verbal
agreement with respondent Autobus Transport Systems, Inc., 5 a public utility
bus company plying the northern Luzon routes from Manila. 6 Under their
agreement, respondent would purchase Konvecta air conditioning units from
petitioner and petitioner would finance respondent’s acquisition of twenty-
two (22) units of bus engine and chassis from Commercial Motors
Corporation (CMC). The parties agreed that respondent would amortize the
payments for the Konvecta air conditioning units and the bus units
separately;8 that petitioner would settle respondent’s account with CMC. As
security, respondent would execute Chattel Mortgages over the buses in
favor of CMC.10 Once petitioner has fully paid the amortizations to CMC,
respondent would execute new Chattel Mortgages over the buses, this time,
in favor of petitioner. 11 In the meantime, respondent would deliver to
petitioner titles to five properties in Caloocan City.
Petitioner, however, defaulted in paying the amortizations to CMC, forcing
the latter to demand payment from respondent. 15 Consequently, respondent
was compelled to pay some of the obligations directly to CMC.
Respondent filed a complaint for Specific Performance 21 against petitioner.
Respondent filed a Motion for the Issuance of a Writ of Preliminary
Mandatory Injunction,40praying for the issuance of a Writ of Preliminary
Mandatory Injunction commanding petitioner to return to respondent the
five titles.
The RTC issued an Order 42 granting respondent’s Motion. The RTC ordered
petitioner to return the five titles to respondent since he failed to comply
with the agreement he made with respondent, i.e. to finance respondent’s
obligations with CMC.
The CA denied the petition for Certiorari.
Issue: Whether the RTC committed grave abuse of discretion amounting to
lack or in excess of jurisdiction in issuing a writ of preliminary mandatory
injunction commanding petitioner to return to respondent
Ruling: The RTC did not commit grave abuse of discretion. A preliminary
injunction may be issued at any time before judgment or final order. 69 It may
be a prohibitory injunction, which requires a party to refrain from doing a
particular act, or a mandatory injunction, which commands a party to
perform a positive act to correct a wrong in the past. 70 A writ of preliminary
mandatory injunction, however, is more cautiously regarded because it
commands the performance of an act.71 Accordingly, it must be issued only
upon a clear showing that the following requisites are established: (1) the
applicant has a clear and unmistakable right that must be protected; (2) there
is a material and substantial invasion of such right; and (3) there is an urgent
need for the writ to prevent irreparable injury to the applicant. 7
We find that the RTC had sufficient bases to issue the writ of preliminary
mandatory injunction as all the requisites for the issuance of such writ were
established. We agree with the RTC that respondent has a right to recover
the five titles because petitioner failed to comply with his obligation to
respondent. It bears stressing that respondent was compelled to directly pay
CMC to avoid the foreclosure of the chattel mortgages, which respondent
executed in favor of CMC. Considering that respondent has paid most, if not
all, of its obligations to CMC, there is no reason for petitioner to hold on to
the titles.
In addition, There is no Deed of Mortgage over the properties covered by the
said titles. The only document on record is the acknowledgement receipt
dated March 18, 1997 signed by the [petitioner] x x x but other than the
acknowledgment of the receipt of the titles, there is nothing else to show the
terms and conditions under which [petitioner] is to possess the same. At
best, therefore, the [petitioner] is merely a depository of the said titles. He
cannot foreclose, dispose of, assign or otherwise deal with the same. Thus,
the damages that he may suffer if the land titles are returned to the
[respondent] is practically inexistent compared to the damages which
[respondent] and the owners of the land titles have suffered due to the
continuous possession of the [petitioner] of the said titles, as they cannot
exercise their proprietary rights to the properties covered by the titles.
RECEIVERSHIP
COMMODITIES STORAGE & ICE PLANT CORPORATION vs. COURT OF
APPEALS
FACTS:
Petitioner spouses Victor and Johannah Trinidad obtained a loan
of P31,000,000.00 from respondent Far East Bank & Trust Company to
finance the purchase of the Sta. Maria Ice Plant & Cold Storage in Sta. Maria,
Bulacan. The loan was secured by a mortgage over the ice plant and the land
on which the ice plant stands. Petitioner spouses failed to pay their loan. The
bank extrajudicially foreclosed the mortgage and the ice plant was sold by
public bidding. Respondent bank was the highest bidder. It registered the
certificate of sale and later took possession of the property.
Petitioner spouses filed Civil Case No. 956-M-93 against
respondent bank before the Regional Trial Court, Malolos, Bulacan for
reformation of the loan agreement, annulment of the foreclosure sale and
damages. The trial court dismissed the complaint for petitioners' failure to
pay the docket fees. The dismissal was without prejudice to refiling of the
complaint.
On October 28, 1994, petitioners filed Civil Case No. 94-72076
against respondent bank before the Regional Trial Court, Branch 9, Manila for
damages, accounting and fixing of redemption period. As a provisional
remedy, petitioners filed on November 16, 1994 an "Urgent Petition for
Receivership." Petitioners thus prayed for the appointment of a receiver to
save the ice plant, conduct its affairs and safeguard its records during the
pendency of the case. Instead of an answer, respondent bank filed on
November 25, 1994 a "Motion to Dismiss and Opposition to Plaintiff's
Petition for Receivership." It alleged that the complaint states no cause of
action and that venue had been improperly laid. It also alleged that
petitioners failed to pay the proper docket fees and violated the rule on
forum-shopping.
In an order dated December 13, 1994, the trial court granted the
petition for receivership and appointed petitioners' nominee, Ricardo
Pesquera, as receiver. Respondent bank assailed this order before the Court
of Appeals on a petition for certiorari. On January 11, 1996, the Court of
Appeals annulled the order for receivership and dismissed petitioners'
complaint for improper venue and lack of cause of action.
ISSUE: WON Receivership is proper.
RULING:
Section 1 of Rule 59 of the Revised Rules of Court provides that:
"Sec. 1. When and by whom receiver appointed.-- One or more receivers of
the property, real or personal, which is the subject of the action, may be
appointed by the judge of the Court of First Instance in which the action is
pending, or by a Justice of the Court of Appeals or of the Supreme Court, in
the following cases:
(a) When the corporation has been dissolved, or is insolvent, or is in
imminent danger of insolvency, or has forfeited its corporate rights;
(b) When it appears from the complaint or answer, and such other proof as
the judge may require, that the party applying for the appointment of
receiver has an interest in the property or fund which is the subject of the
action, and that such property or fund is in danger of being lost, removed or
materially injured unless a receiver be appointed to guard and preserve it;
(c) When it appears in an action by the mortgagee for the foreclosure of a
mortgage that the property is in danger of being wasted or materially injured,
and that its value is probably insufficient to discharge the mortgage debt, or
that the parties have so stipulated in the contract of mortgage;
(d) After judgment, to preserve the property during the pendency of the
appeal, or to dispose of it according to the judgment, or to aid execution
when the execution has been returned unsatisfied or the judgment debtor
refuses to apply his property in satisfaction of the judgment, or otherwise
carry the judgment into effect;
(e) Whenever in other cases it appears that the appointment of a receiver is
the most convenient and feasible means of preserving, administering, or
disposing of the property in litigation."
A receiver of real or personal property, which is the subject of the action, may
be appointed by the court when it appears from the pleadings or such other
proof as the judge may require, that the party applying for such appointment
has (1) an actual interest in it; and (2) that (a) such property is in danger of
being lost, removed or materially injured; or (b) whenever it appears to be
the most convenient and feasible means of preserving or administering the
property in litigation.[9]
A receiver is a person appointed by the court in behalf of all the parties to the
action for the purpose of preserving and conserving the property in litigation
and prevent its possible destruction or dissipation, if it were left in the
possession of any of the parties.[10] The appointment of a receiver is not a
matter of absolute right. It depends upon the sound discretion of the court
and is based on facts and circumstances of each particular case.
Petitioners claim that the appointment of a receiver is justified under Section
1 (b) of Rule 59. They argue that the ice plant which is the subject of the
action was in danger of being lost, removed and materially injured because of
the following "imminent perils":
"6.1 Danger to the lives, health and peace of mind of the inhabitants living
near the Sta. Maria Ice Plant;
6.2 Drastic action or sanctions that could be brought against the plaintiff by
affected third persons, including workers who have claims against the plaintiff
but could not be paid due to the numbing manner by which the defendant
took the Sta. Maria Ice Plant;
6.3 The rapid reduction of the Ice Plant into a scrap heap because of evident
incompetence, neglect and vandalism."
A petition for receivership under Section 1 (b) of Rule 59 requires that the
property or fund which is the subject of the action must be in danger of loss,
removal or material injury which necessitates protection or preservation. The
guiding principle is the prevention of imminent danger to the property. If an
action by its nature, does not require such protection or preservation, said
remedy cannot be applied for and granted.
In the instant case, we do not find the necessity for the appointment of a
receiver. Petitioners have not sufficiently shown that the Sta. Maria Ice Plant
is in danger of disappearing or being wasted and reduced to a "scrap heap."
Neither have they proven that the property has been materially injured
which necessitates its protection and preservation.[15] In fact, at the hearing
on respondent bank's motion to dismiss, respondent bank, through counsel,
manifested in open court that the leak in the ice plant had already been
remedied and that no other leakages had been reported since.[16] This
statement has not been disputed by petitioners.
At the time the trial court issued the order for receivership of the property,
the problem had been remedied and there was no imminent danger of
another leakage. Whatever danger there was to the community and the
environment had already been contained.
The "drastic sanctions" that may be brought against petitioners due to their
inability to pay their employees and creditors as a result of "the numbing
manner by which [respondent bank] took the ice plant" does not concern the
ice plant itself. These claims are the personal liabilities of petitioners
themselves. They do not constitute "material injury" to the ice plant.
Moreover, the receiver appointed by the court appears to be a representative
of petitioners. Respondent bank alleges that it was not aware that petitioners
nominated one Mr. Pesquera as receiver. The general rule is that neither
party to a litigation should be appointed as receiver without the consent of
the other because a receiver should be a person indifferent to the parties and
should be impartial and disinterested. The receiver is not the representative
of any of the parties but of all of them to the end that their interests may be
equally protected with the least possible inconvenience and expense.
The power to appoint a receiver must be exercised with extreme caution.
There must be a clear showing of necessity therefor in order to save the
plaintiff from grave and irremediable loss or damage. It is only when the
circumstances so demand, either because there is imminent danger that the
property sought to be placed in the hands of a receiver be lost or because
they run the risk of being impaired, endeavouring to avoid that the injury
thereby caused be greater than the one sought to be avoided.
PACIFIC MERCHANDISING CORPORATION, plaintiff-appellee, vs.
CONSOLACION INSURANCE & SURETY CO., INC., defendant-appellee,
CONSOLACION INSURANCE & SURETY CO., INC., third party plaintiff-
appellee, vs GREGORIO V. PAJARILLO, third party defendant-appellant.
Facts: An action for collection of sum of money was filed by Pacific
Merchandising Corporation (plaintiff-appellee) against Consolacion Insurance
& Surety Co., Inc., (defendant- appellee) who in turn filed a third-party
complaint against Gregorio V. Pajarillo (third-party defendant-appellant).
The TC rendered judgment in favor of the plaintiff and against the defendant,
ordering the latter to pay the former and condemning third defendant to pay
third-party plaintiff for whatever sums or amounts the latter paid the plaintiff
on account of this judgment.
The third-party defendant Gregorio V. Pajarillo appealed said decision. The
parties, through their respective counsel, submitted the following Stipulation
of Facts:
1. A Writ of Execution was issued by the LC in the case Pacific Merchandising
Corporation vs. Leo Enterprises, Inc.,;
2. That by virtue of the aforesaid Writ of Execution, the Sheriff of Manila
levied and attached the following:
A. Second Hand AUTOMATICKET Machine;and
B. Cinema Projectors
Said items were advertised for sale.
3. That Atty. Greg V. Pajarillo was appointed as Receiver in the case of
Gregorio V. Pajarillo vs. Leo Enterprises, Inc.;
4. That the sale at public auction of the aforementioned items was postponed
and was later cancelled due to the representation of Atty. Greg V. Pajarillo as
Receiver of Paris Theatre operated by Leo Enterprises, Inc.
5. That the third-party defendant Pajarillo approached Consolacion Insurance
(third-party plaintiff) and applied for a surety bond in the amount of
P5,000.00 to be rated in favor of the abovenamed plaintiff in order to
guarantee to said plaintiff the payment of obligations in its favor by the Leo
Enterprises, Inc.;
6. That the bond applied for was in fact executed in favor of the pIaintiff with
third-party defendant Pajarillo as principal and Consolacion Insurance (third-
party plaintiff) as surety in the context of the allegations of the preceding
paragraph and a copy of the said bond is attached a ANNEX 'A' to the third
party complaint;
7. That to protect third party plaintiff against damage and injury, the third
party defendant Pajarillo executed in favor of the former an INDEMNITY
AGREEMENT,
8. That the plaintiff received from Greg V. Pajarillo the sum of P2,000.00
leaving a balance of P2,562.88 still unpaid aside from interest at the rate of
1% per month and atto lnen s f cluiaient to 25% of tht amount due as
provided for in said undertaking (ANNEX 'C' to tlie complaint);
9. That on July 1, 1963, a decision was rendered tne court of First Instance of
Manila in Civil case No. 50201, copy of' which is attached its ANNEX 'A' to
Answer to Third Party Complaint, by virtue of which Greg V. Pajarillo, as said
Received stololcl making payments to plaintiff;
10. That the said decision in Civl Case No. 50201 dated July 1, 1963 was
appealed lix defendant Leo Enterprises, Inc. to the court of Appeals and that
the records kere eleattd to the aid ApiIiat court on August 27, 1963;
11. That on October 9, 1963, plaintiff's counsel demanded from the said
principal, Greg V. Paiarillo, the payment of the installments corresponding to
the months of May, June, July, August and September, 1963, which remain
unpaid in spite of said demand, copy of said letter being, attached as ANNEX
'E' to the complaint;
12. That the defendant was duly notified of the demand made on the
principal, Greg V. Pajarillo and in spite of said notice the defendant has failed
and refused to pay the unpaid obligation;
13. That on December 19, 1963, plaintiff's counsel demanded from the
defendant the payment of the unpaid obligation of the principal, Greg V.
Pajarillo but refused and failed to pay the same in spite of said demand;
14. That when reminded by third-party plaintiff regarding his obligations in
favor of the plaintiff, the third-party defendant, Greg V. Pajarillo replied that
he no longer was bound to pay because he had ceased to be the receiver of
Paris Theatre operated by Leo Enterprises, Inc. by virtue of the decision of the
Court in Civil Case No. 50201 cited above, and for this reason, third- party
plaintiff refused to pay the demand of the plaintiff 2
On the basis of the foregoing Stipulation of Facts, Said court affirmed the LC’s
decision.
The trial court predicated its judgment on the following considerations:
(1) Since the unpaid claim represents the cost of certain materials used in the
construction of the Paris Theatre, the possession of which reverted to
Gregorio V. Pajarillo as owner of said property by virtue of the judgment in
Civil Case No. 50201, "it is only simple justice that Pajarillo should pay for the
said claim. otherwise he would be enriching himself by having the said
building without paying plaintiff for the cost of certain materials that went
into its construction";
"under Section 7 of Rule 61 of the former Rules of Court, one of the powers
of a receiver i8 to pay outstanding debts, and since the said plaintiff's claim
has been outstanding since August 27, 1962, if not before, Pajarillo should
have paid the same long before the alleged termination of the receivership
on July 1, 1963";
(2) the procedure outlined in Section 8 of the Rule, namely, that whenever
the court "shall determine that the necessity for a receiver no longer exists, it
shall, after due notice to all interested parties and hearing, settle the
accounts of the receiver, direct the delivery of the funds and other property
in his hands to the persons adjudged entitled to receive them, and order the
discharge of the receiver from further duty as such," has not been followed;
and
(4) when Gregorio V. Pajarillo undertook to pay the amount owed to plaintiff
(Annex "C") and executed the surety bond (Annex "D") in favor of plaintiff, he
4 6 stepped into the shoes" of the dr Leo Enterprises, Inc., .4 and the
properties of the said debtor having all subsequently passed on to Pajarillo,
there is no reason, legal or otherwise, for relieving defendants of their said
undertaking."
The court a quo likewise declared that (1) "the receivership was not
terminated by virtue of the appeal interposed by Leo Enterprises, Inc., one of
the defendants in Civil Case No. 50201, because a decision which is appealed
cannot be the subject of execution";
(2) "granting arguendo that the decision is final and executory, the said
decision cannot bind nor can it be enforced against the plaintiff in the present
case because it is not a party in Civil Case No. 50201"; and
(3) "when Atty. Pajarillo assumed the obligation of Leo Enterprises, Inc., as a
Receiver, there was a subrogation of the party liable and, therefore, the
plaintiff cannot enforce the judgment in Civil Case No. 49691 against Leo
Enterprises, Inc."
From the foregoing judgment, third-party defendant Gregorio V. Pajarillo
appealed to the CA. The aforesaid Appellate Court, in turn certified the same
to this Court on the ground that there is no question of fact involved, but only
one of law.
Issue: Whether or not third party defendant-appellant Gregorio V. Pajarillo is
liable to plaintiff for the unpaid amount claimed.
Upon the resolution of this issue will in turn depend the liability of
defendant-third-party plaintiff Consolacion Insurance & surety Co., Inc. under
the Surety Bond, on the basis of which it was ordered by the court a quo to
pay the amount involved to plaintiff-appellee.
A receiver is not an agent or representative of any party to the action. He is
an officer of the court exercising his functions in the interest of neither
plaintiff nor defendant, but for the common benefit of all the parties in
interest. He performs his duties "subject to the control of the Court," and
every question involved in the receivership may be determined by the court
taking cognizance of the receivership proceedings.
Thus, "a receiver, strictly speaking, has no right or power to make any
contract binding the property or fund in his custody or to pay out funds in his
hands without the authority or approval of the court as explained by Justice
Moran, speaking for The custody of the receiver is the custody of the court.
His acts and possession are the acts and possession of the court, and his
contracts and liabilities are, in contemplation of law,
the contracts and liabilities of the court. As a necessary consequence,
receiver is subject to the control and supervision of the court at every step in
his management of the property or funds placed in his hands. He cannot
operate independently of the court, and cannot enter into any contract
without its approval.
In the case at bar, appellant Pajarillo does not dispute the fact that he never
secured the court's approval of either the agreement of March 11, 1963, with
Pacific Merchandising Corporation or of his Indemnity Agreement with the
Consolacion Insurance & Surety Co., Inc. on March 14, 1963, in consideration
of the performance bond submitted by the latter to Pacific Merchandising
Corporation to guarantee the payment of the obligation. As the person to
whom the possession of the theater and its equipment was awarded by the
court in Civil Case No. 50201, it was certainly to his personal profit and
advantage that the sale at public auction of the equipment of the theater was
prevented by his execution of the aforesaid agreement and submission of the
aforementioned bond.
In order to bind the property or fund in his hands as receiver, he should have
applied for and obtained from the court authority to enter into the aforesaid
contract. Unauthorized contracts of a receiver do not bind the court in charge
of receivership. They are the receiver's own contracts and are not recognized
by the courts as contracts of the receivership.Consequently, the aforesaid
agreement and undertaking entered into by appellant Pajarillo not having
been approved or authorized by the receivership court should, therefore, be
considered as his personal undertaking or obligation. Certainly, if such
agreements were known by the receivership court, it would not have
terminated the receivership without due notice to the judgment creditor as
required by Section 8 of Rule 59 of the Rules of Court. This must be assumed
because of the legal presumption that official duty has been regularly
performed.

Indeed, if it were true that he entered into the agreement and undertaking as
a receiver, he should have, as such receiver, submitted to the court an
account of the status of the properties in his hands including the outstanding
obligations of the receivership. Had he done so, it is reasonable to assume
that the judgment creditor would have opposed the termination of the
receivership, unless its claim was paid. Having failed to perform his duty, to
the prejudice of the creditor, appellant should not be permitted to take
advantage of his own wrong. The judgment creditor having been induced to
enter into the aforesaid agreement by appellant Pajarillo it was the duty of
the latter to comply with his end of the bargain.

He not only failed to perform his undertaking, but now attempts to evade
completely his liability. Under such circumstances, appellant is not entitled to
equitable relief. No ground for equitable relief can be found in a case where a
party has not only failed to perform the conditions upon which he alone
obtained the execution of the contract, but where it is clear that he never, at
any time, intended to perform them.