RULE 57 PRELIMINARY ATTACHMENT

SECTION 2

G.R. No. 84034 December 22, 1988

ALBERTO SIEVERT, petitioner,

vs.
COURT OF APPEALS, HON. JUDGE ARTEMON D. LUNA and AURELIO
CAMPOSANO, respondents.

FELICIANO, J.:

On 18 May 1988 petitioner Alberto Sievert a citizen and resident of the Philippines received by mail
a Petition for Issuance of a Preliminary Attachment filed with the Regional Trial Court of Manila
Branch 32 in Civil Case No. 88-44346. Petitioner had not previously received any summons and any
copy of a complaint against him in Civil Case No. 88-44346.

On the day set for hearing of the Petition for a Preliminary Writ of Attachment, petitioner's counsel
went before the trial court and entered a special appearance for the limited purpose of objecting to
the jurisdiction of the court. He simultaneously filed a written objection to the jurisdiction of the trial
court to hear or act upon the Petition for Issuance of a Preliminary Writ of Attachment. In this written
objection, petitioner prayed for denial of that Petition for lack of jurisdiction over the person of the
petitioner (defendant therein) upon the ground that since no summons had been served upon him in
the main case, no jurisdiction over the person of the petitioner had been acquired by the trial court.

The trial court denied the petitioner's objection and issued in open court an order which, in relevant
part, read as follows:

Under Section 1, Rule 57, Rules of Court, it is clear that 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 the security for the satisfaction of any
judgment ..." This rule would overrule the contention that this Court has no
jurisdiction to act on the application, although if counsel for defendant so desire, she
is given five (5) days from today within which to submit her further position why the
writ should not be issued, upon the receipt of which or expiration of the period, the
pending incident shall be considered submitted for resolution. (Underscoring in the
original) 1

Thereupon, on the same day, petitioner filed a Petition for certiorari with the Court of Appeals. On 13
July 1988, the respondent appellate court rendered a decision, notable principally for its brevity,
dismissing the Petition. The relevant portion of the Court of Appeals' decision is quoted below:

The grounds raised in this petition state that the court a quo had not acquired
jurisdiction over defendant (now petitioner) since no summons had been served on
him, and that respondent Judge had committed a grave abuse of discretion in issuing
the questioned order without jurisdiction.

In short, the issue presented to us is whether respondent Judge may issue a writ of
preliminary attachment against petitioner before summons is served on the latter.
 We rule for respondent Judge.

Under Sec. 1, Rule 57, it is clear that, at the commencement of the action, a party
may have the property of the adverse party attached as security. The resolution of
this issue depends, therefore, on what is meant by "Commencement of the action."
Moran, citing American jurisprudence on this point, stated thus: "Commencement of
action. Action is commenced by filing of the complaint, even though summons is
not issued until a later date." (Comment on the Rules of Court, Vol. I, p. 150, 1979).
Thus,a writ of preliminary attachment may issue upon filing of the complaint even
before issuance of the summons.

WHEREFORE, for lack of merit, the petition is hereby denied and, accordingly,
dismissed. (Emphasis supplied) 2

The petitioner is now before this Court on a Petition for Review on Certiorari, assailing the above-
quoted decision of the Court of Appeals. The petitioner assigns two (2) errors:

1. The proceedings taken and the order issued on plaintiffs petition for attachment
prior to the service of summons on the defendant were contrary to law and
jurisprudence and violated the defendant's right to due process.

2. The Court of Appeals committed a grave abuse of discretion amounting to lack of

jurisdiction in ruling that a writ of preliminary attachment may issue upon filing of the
complaint even prior to issuance of the summons. 3

The two (2) assignments of error relate to the single issue which we perceive to be at stake here,
that is, whether a court which has not acquired jurisdiction over the person of the defendant in the
main case, may bind such defendant or his property by issuing a writ of preliminary attachment.

Both the trial court and the Court of Appeals held that the defendant may be bound by a writ of
preliminary attachment even before summons together with a copy of the complaint in the main case
has been validly served upon him.

We are unable to agree with the respondent courts.

There is no question that a writ of preliminary attachment may be applied for a plaintiff "at
the commencement of the action or at any time thereafter" in the cases enumerated in Section 1 of
Rule 57 of the Revised Rules of Court. The issue posed in this case, however, is not to be resolved
by determining when an action may be regarded as having been commenced, a point in time which,
in any case, is not necessarily fixed and Identical regardless of the specific purpose for which the
deter. nation is to be made. The critical time which must be Identified is, rather, when the trial court
acquires authority under law to act coercively against the defendant or his property in a proceeding
in attachment. We believe and so hold that critical time is the time of the vesting of jurisdiction in the
court over the person of the defendant in the main case.

Attachment is an ancillary remedy. It is not sought for its own sake but rather to enable the attaching party to realize
upon relief sought and expected to be granted in the main or principal action . 4 A court which has not acquired jurisdi
over the person of defendant, cannot bind that defendant whether in the main case or in any ancillary proceeding such as
attachment proceedings. The service of a petition for preliminary attachment without the prior or simultaneous service of
summons and a copy of the complaint in the main case and that is what happened in this case does not of course c
jurisdiction upon the issuing court over the person of the defendant.
Ordinarily, the prayer in a petition for a writ of preliminary attachment is embodied or incorporated in
the main complaint itself as one of the forms of relief sought in such complaint. Thus, valid service of
summons and a copy of the complaint will in such case vest jurisdiction in the court over the
defendant both for purposes of the main case and for purposes of the ancillary remedy of
attachment. In such case, notice of the main case is at the same time notice of the auxiliary
proceeding in attachment. Where, however, the petition for a writ of preliminary attachment is
embodied in a discrete pleading, such petition must be served either simultaneously with service of
summons and a copy of the main complaint, or after jurisdiction over the defendant has already
been acquired by such service of summons. Notice of the separate attachment petition is not notice
of the main action. Put a little differently, jurisdiction whether ratione personae or ratione materiae in
an attachment proceeding is ancillary to jurisdiction ratione personae or ratione materiae in the main
action against the defendant. If a court has no jurisdiction over the subject matter or over the person
of the defendant in the principal action, it simply has no jurisdiction to issue a writ of preliminary
attachment against the defendant or his property.

It is basic that the requirements of the Rules of Court for issuance of preliminary attachment must be
strictly and faithfully complied with in view of the nature of this provisional remedy. In Salas v.
Adil, 5 this Court described preliminary attachment as

a rigorous remedy which exposes the debtor to humiliation and annoyance, such
[that] it should not be abused as to cause unnecessary prejudice. It is, therefore; the
duty of the court, before issuing the writ, to ensure that all the requisites of the law
have been complied with; otherwise the judge acts in excess of his jurisdiction and
the writ so issued shall be null and void. (Emphasis supplied ) 6

The above words apply with greater force in respect of that most fundamental of requisites, the
jurisdiction of the court issuing attachment over the person of the defendant.

In the case at bar, the want of jurisdiction of the trial court to proceed in the main case against the
defendant is quite clear. It is not disputed that neither service of summons with a copy of the
complaint nor voluntary appearance of petitioner Sievert was had in this case. Yet, the trial court
proceeded to hear the petition for issuance of the writ. This is reversible error and must be corrected
on certiorari.

WHEREFORE, the Petition for Review on certiorari is GRANTED due course and the Order of the
trial court dated 20 May 1988 and the Decision of the Court of Appeals dated 13 July 1988 are
hereby SET ASIDE and ANNULLED. No pronouncement as to costs.

SO ORDERED.

G.R. No. 93262 December 29, 1991

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

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

NARVASA, J.:p

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

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

1. On May 2, 1989 Davao Light & Power Co., Inc. (hereafter, simply Davao Light) filed a verified
complaint for recovery of a sum of money and damages against Queensland Hotel, etc. and
Teodorico Adarna (docketed as Civil Case No. 19513-89). The complaint contained an ex
parte application for a writ of preliminary attachment.

2. On May 3, 1989 Judge Nartatez, to whose branch the case was assigned by raffle, issued an
Order granting theex parte application and fixing the attachment bond at P4,600,513.37.

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

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

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

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

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

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

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

The Appellate Tribunal declared that

. . . While it is true that a prayer for the issuance of a writ of preliminary attachment
may be included m the complaint, as is usually done, it is likewise true that the Court
does not acquire jurisdiction over the person of the defendant until he is duly
summoned or voluntarily appears, and adding the phrase that it be issued "ex parte"
does not confer said jurisdiction before actual summons had been made, nor retroact
jurisdiction upon summons being made. . . .
 It went on to say, citing Sievert v. Court of Appeals, 3 that "in a proceedings in attachment," the "critical time
which must be identified is . . . when the trial court acquires authority under law to act coercively against the defendant or his
property . . .;" and that "the critical time is the of the vesting of jurisdiction in the court over the person of the defendant in the main
case."

Reversal of this Decision of the Court of Appeals of May 4, 1990 is what Davao Light seeks in the
present appellate proceedings.

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

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

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

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

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

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

A preliminary attachment may be defined, paraphrasing the Rules of Court, as the provisional
remedy in virtue of which a plaintiff or other party may, at the commencement of the action or at any
time thereafter, have the property of the adverse party taken into the custody of the court as security
for the satisfaction of any judgment that may be recovered. 15 It is a remedy which is purely statutory in respect of
which the law requires a strict construction of the provisions granting it. 16 Withal no principle, statutory or jurisprudential, prohibits its
issuance by any court before acquisition of jurisdiction over the person of the defendant.

Rule 57 in fact speaks of the grant of the remedy "at the commencement of the action or at any time
thereafter." 17The phase, "at the commencement of the action," obviously refers to the date of the filing of the complaint which, as
above pointed out, is the date that marks "the commencement of the action;" 18 and the reference plainly is to a time before summons is
served on the defendant, or even before summons issues. What the rule is saying quite clearly is that after an action is properly commenced
 by the filing of the complaint and the payment of all requisite docket and other fees the plaintiff may apply for and obtain a writ of
preliminary attachment upon fulfillment of the pertinent requisites laid down by law, and that he may do so at any time, either before or after
service of summons on the defendant. And this indeed, has been the immemorial practice sanctioned by the courts: for the plaintiff or other
proper party to incorporate the application for attachment in the complaint or other appropriate pleading (counter-claim, cross-claim, third-
party claim) and for the Trial Court to issue the writ ex-parte at the commencement of the action if it finds the application otherwise sufficient
in form and substance.

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

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

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

That separate opinion stressed that there are two (2) ways of discharging an attachment: first, by the
posting of a counterbond; and second, by a showing of its improper or irregular issuance.

1.0. The submission of a counterbond is an efficacious mode of lifting an attachment already

enforced against property, or even of preventing its enforcement altogether.

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

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

1.2. But even before actual levy on property, seizure under attachment may be prevented also upon
counterbond. The defendant need not wait until his property is seized before seeking the discharge
of the attachment by a counterbond. This is made possible by Section 5 of Rule 57.
 Sec. 5. Manner of attaching property. The officer executing the order shall without
delay attach, to await judgment and execution in the action, all the properties of the
party against whom the order is issued in the province, not exempt from execution, or
so much thereof as may be sufficient to satisfy the applicant's demand, unless the
former makes a deposit with the clerk or judge of the court from which the order
issued, or gives a counter-bond executed to the applicant, in an amount sufficient to
satisfy such demand besides costs, or in an amount equal to the value of the
property which is about to be attached, to secure payment to the applicant of any
judgment which he may recover in the action. . . . (Emphasis supplied)

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

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

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

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

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

improper issuance:

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

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

. . . The dissolution of the preliminary attachment upon security given, or a showing

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

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

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

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

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

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

SO ORDERED.

G.R. No. 102448 August 5, 1992

RICARDO CUARTERO, petitioner,

vs.
COURT OF APPEALS, ROBERTO EVANGELISTA and FELICIA EVANGELISTA, respondents.

GUTIERREZ, JR., J.:

This is a petition for review on certiorari seeking to annul the decision of the Court of Appeals
promulgated on June 27, 1991 as well as the subsequent resolution dated October 22, 1991 denying
the motion for reconsideration in CA-G.R. SP No. 23199 entitled "Spouses Roberto and Felicia
Evangelista v. Honorable Cezar C. Peralejo, Presiding Judge Regional Trial Court of Quezon City,
Branch 98, and Ricardo Cuartero," which nullified the orders of the trial court dated August 24, 1990
and October 4, 1990 and cancelled the writ of preliminary attachment issued on September 19,
1990.

Following are the series of events giving rise to the present controversy.

On August 20, 1990, petitioner Ricardo Cuartero filed a complaint before the Regional Trial Court of
Quezon City against the private respondents, Evangelista spouses, for a sum of money plus
damages with a prayer for the issuance of a writ of preliminary attachment. The complaint was
docketed as Civil Case No. Q-90-6471.

On August 24, 1990, the lower court issued an order granting ex-parte the petitioner's prayer for the
issuance of a writ of preliminary attachment.

On September 19, 1990, the writ of preliminary attachment was issued pursuant to the trial court's
order dated August 24, 1990. On the same day, the summons for the spouses Evangelista was
likewise prepared.

The following day, that is, on September 20, 1990, a copy of the writ of preliminary attachment, the
order dated August 24, 1990, the summons and the complaint were all simultaneously served upon
the private respondents at their residence. Immediately thereafter, Deputy Sheriff Ernesto L. Sula
levied, attached and pulled out the properties in compliance with the court's directive to attach all the
properties of private respondents not exempt from execution, or so much thereof as may be
sufficient to satisfy the petitioner's principal claim in the amount of P2,171,794.91.
Subsequently, the spouses Evangelista filed motion to set aside the order dated August 24, 1990
and discharge the writ of preliminary attachment for having been irregularly and improperly issued.
On October 4, 1990, the lower court denied the motion for lack of merit.

Private respondents, then, filed a special civil action for certiorari with the Court of Appeals
questioning the orders of the lower court dated August 24, 1990 and October 4, 1990 with a prayer
for a restraining order or writ of preliminary injunction to enjoin the judge from taking further
proceedings below.

In a Resolution dated October 31, 1990, the Court of Appeals resolved not to grant the prayer for
restraining order or writ of preliminary injunction, there being no clear showing that the spouses
Evangelista were entitled thereto.

On June 27, 1991, the Court of Appeals granted the petition for certiorari and rendered the
questioned decision. The motion for reconsideration filed by herein petitioner Cuartero was denied
for lack of merit in a resolution dated October 22, 1991. Hence, the present recourse to this Court.

The petitioner raises the following assignment of errors:

THE COURT OF APPEALS ERRED AND COMMITTED A GRAVE ABUSE OF

DISCRETION, AMOUNTING TO LACK OF JURISDICTION WHEN IT HELD THAT
THE REGIONAL TRIAL COURT DID NOT ACQUIRE JURISDICTION OVER
RESPONDENT SPOUSES.

II

THE COURT OF APPEALS ERRED AND ACTED WITH GRAVE ABUSE OF

DISCRETION WHEN IT HELD THAT THE REGIONAL TRIAL COURT COULD NOT
VALIDLY ISSUE THE SUBJECT WRIT OF PRELIMINARY ATTACHMENT WHICH
IS AN ANCILLARY REMEDY. (Rollo, p. 13)

The Court of Appeals' decision is grounded on its finding that the trial court did not acquire any
jurisdiction over the person of the defendants (private respondents herein). It declared that:

. . . the want of jurisdiction of the trial court to proceed in the main case as well as the
ancillary remedy of attachment is quite clear. It is not disputed that neither service of
summons with a copy of the complaint nor voluntary appearance of petitioners was
had in this case before the trial court issued the assailed order dated August 24,
1990, as well as the writ of preliminary attachment dated September 19, 1990. This
is reversible error and must be corrected on certiorari. (Rollo, p. 24)

The appellate tribunal relied on the case of Sievert v. Court of Appeals, 168 SCRA 692 (1988) in
arriving at the foregoing conclusion. It stated that:

Valid service of summons and a copy of the complaint vest jurisdiction in the court
over the defendant both for the purpose of the main case and for purposes of the
ancillary remedy of attachment and a court which has not acquired jurisdiction over
the person of defendant, cannot bind the defendant whether in the main case or in
 any ancillary proceeding such as attachment proceedings (Sievert v. Court of
Appeals, 168 SCRA 692). (Rollo, p. 24)

The private respondents, in their comment, adopted and reiterated the aforementioned ruling of the
Court of Appeals. They added that aside from the want of jurisdiction, no proper ground also existed
for the issuance of the writ of preliminary attachment. They stress that the fraud in contracting the
debt or incurring the obligation upon which the action is brought which comprises a ground for
attachment must have already been intended at the inception of the contract. According to them,
there was no intent to defraud the petitioner when the postdated checks were issued inasmuch as
the latter was aware that the same were not yet funded and that they were issued only for purposes
of creating an evidence to prove a pre-existing obligation.

Another point which the private respondents raised in their comment is the alleged violation of their
constitutionally guaranteed right to due process when the writ was issued without notice and
hearing.

In the later case of Davao Light and Power Co., Inc. v. Court of Appeals, G.R. No. 93262, November
29, 1991, we had occasion to deal with certain misconceptions which may have arisen from
our Sievert ruling. The question which was resolved in the Davao Light case is whether or not a writ
of preliminary attachment may issue ex-parte against a defendant before the court acquires
jurisdiction over the latter's person by service of summons or his voluntary submission to the court's
authority. The Court answered in the affirmative. This should have clarified the matter but apparently
another ruling is necessary.

A writ of preliminary attachment is defined as a provisional remedy issued upon order of the court
where an action is pending to be levied upon the property or properties of the defendant therein, the
same to be held thereafter by the sheriff as security for the satisfaction of whatever judgment might
be secured in said action by the attaching creditor against the defendant (Adlawan v. Tomol, 184
SCRA 31 [1990] citing Virata v. Aquino, 53 SCRA 30-31 [1973]).

Under section 3, Rule 57 of the Rules of Court, the only requisites for the issuance of the writ are the
affidavit and bond of the applicant. As has been expressly ruled in BF Homes, Inc. v. Court of
Appeals, 190 SCRA 262 (1990), citing Mindanao Savings and Loan Association, Inc. v. Court of
Appeals, 172 SCRA 480 (1989), no notice to the adverse party or hearing of the application is
required inasmuch as the time which the hearing will take could be enough to enable the defendant
to abscond or dispose of his property before a writ of attachment issues. In such a case, a hearing
would render nugatory the purpose of this provisional remedy. The ruling remains good law. There
is, thus, no merit in the private respondents' claim of violation of their constitutionally guaranteed
right to due process.

The writ of preliminary attachment can be applied for and granted at the commencement of the
action or at any time thereafter (Section 1, Rule 57, Rules of Court). In Davao Light and Power, Co.,
Inc. v. Court of Appeals, supra, the phrase "at the commencement of the action" is interpreted as
referring to the date of the filing of the complaint which is a time before summons is served on the
defendant or even before summons issues. The Court added that

. . . after an action is properly commenced by filing of the complaint and the

payment of all requisite docket and other fees the plaintiff may apply and obtain a
writ of preliminary attachment upon the fulfillment of the pertinent requisites laid
down by law, and that he may do so at any time, either before or after service of
summons on the defendant. And this, indeed, has been the immemorial practice
sanctioned by the courts: for the plaintiff or other proper party to incorporate the
 application for attachment in the complaint or other appropriate pleading (counter-
claim, cross-claim, third-party-claim) and for the Trial Court to issue the writ ex-
parte at the commencement of the action if it finds the application otherwise sufficient
in form and substance.

The Court also pointed out that:

. . . It is incorrect to theorize that after an action or proceeding has been commenced

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

It is clear from our pronouncements that a writ of preliminary attachment may issue even before
summons is served upon the defendant. However, we have likewise ruled that the writ cannot bind
and affect the defendant. However, we have likewise ruled that the writ cannot bind and affect the
defendant until jurisdiction over his person is eventually obtained. Therefore, it is required that when
the proper officer commences implementation of the writ of attachment, service of summons should
be simultaneously made.

It must be emphasized that the grant of the provisional remedy of attachment practically 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 should first be obtained.
However, once the implementation commences, it is required that 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.

In Sievert v. Court of Appeals, supra, cited by the Court of Appeals in its questioned decision, the
writ of attachment issued ex-parte was struck down because when the writ of attachment was being
implemented, no jurisdiction over the person of the defendant had as yet been obtained. The court
had failed to serve the summons to the defendant.

The circumstances in Sievert are different from those in the case at bar. When the writ of attachment
was served on the spouses Evangelista, the summons and copy of the complaint were also
simultaneously served.

It is appropriate to reiterate this Court's exposition in the Davao Light and Power case cited earlier,
to wit:

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

The question as to whether a proper ground existed for the issuance of the writ is a question of fact
the determination of which can only be had in appropriate proceedings conducted for the purpose
(Peroxide Philippines Corporation V. Court of Appeals, 199 SCRA 882 [1991]). It must be noted that
the spouses Evangelista's motion to discharge the writ of preliminary attachment was denied by the
lower court for lack of merit. There is no showing that there was an abuse of discretion on the part of
the lower court in denying the motion.

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

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

WHEREFORE, premises considered, the Court hereby GRANTS the petition. The challenged
decision of the Court of Appeals is REVERSED, and the order and writ of attachment issued by Hon.
Cezar C. Peralejo, Presiding Judge of Branch 98, Regional Trial Court of Quezon City against
spouses Evangelista are hereby REINSTATED. No pronouncement as to costs.

SO ORDERED.

G.R. No. L-46009 May 14, 1979

RICARDO T. SALAS and MARIA SALAS, petitioners,

vs.
HON. MIDPANTAO L. ADIL, as Judge of Branch II, Court of First Instance of Iloilo, ROSITA
BEDRO and BENITA YU, respondents.

ANTONIO, J.:

Certiorari to nullify the Order of Attachment of May 13, 1977, as well as the Writ of Attachment dated
May 16, 1977, issued by respondent Judge in Civil Case No. 10770 of the Court of First Instance of
Iloilo, entitled "Rosita Bedro and Benita Yu v. Spouses Ricardo T. Salas and Maria Salas, et al.

On September 10, 1976, respondents Rosita Bedro and Benita Yu filed the afore-mentioned civil
action with the Court of First Instance of Iloilo against herein petitioners Ricardo T. Salas and Maria
Salas, the Philippine Commercial & Industrial Bank, in its capacity as Administrator of the Testate
Estate of the deceased Charles Newton Hodges, and Avelina A. Magno, in her capacity as
Administratrix of the Testate Estate of the deceased Linnie Jane Hodge to annul the deed of sale of
Lot No. 5 executed by administrators of the Hodges Estate in favor of the Spouses Ricardo T. Salas
and Maria Salas and for damages. The action for annulment was predicated upon the averment that
Lot No. 5, being a subdivision road, is intend for public use and cannot be sold or disposed of by the
Hodges Estate. The claim for damages was based on the assertion that after defendant spouses
purchased Lots Nos. 2 and 3, they also purchased Lot No. 5 and thereafter "erected wooden posts,
laid and plastered at the door of the house on Lot No. 3, with braces of hardwood, lumber and
plywood nailed to the post", thereby preventing Rosita Bedro and Benita Yu from using the road on
the afore-mentioned lot, Lot No. 5, and that as a result of such obstruction, private respondents
Rosita Bedro and Benita Yu sustained actual damages in the amount of P114,000.00, plus the sum
of Pl,000.00 as damages daily from June 30, 1976 due to the stoppage in the construction of their
commercial buildings on Lot No. 3, and moral damages in the amount of P200,000.00.

In their answer to the complaint, the Salas spouses, after specifically denying the material
allegations in the complaint, stated that Lot No. 5 had been registered in the name of the C. N.
Hodges as their exclusive private property and was never subjected to any servitude or easement of
right of way in favor of any person; that any occupants of Lots Nos. 2 and 3 have direct access to
Bonifacio Drive, a National Highway, hence, Lot No. 5 is neither needed nor required for the egress
or ingress of the occupants thereof; and that private respondents, as a matter of fact, since 1964 had
excluded and separated completely their property (Lots Nos. 2 and 3) from Lot No. 5 by building a
concrete wall on the boundary thereon without providing any gate as entrance or exit towards Lot
No. 5; and that private respondents have no personality to question the validity of the deed of sale
over Lot No. 5 since they were not parties to the same and the sale was duly approved by the
probate court.

In a motion dated May 12, 1977, private respondents filed a Motion for Attachment, alleging, among
others, that the case was "for annulment of a deed of sale and recovery of damages" and that the
defendants have removed or disposed of their properties or are about to do so with intent to defraud
their creditors especially the plaintiffs in this case.

On May 13, 1977, respondent Judge issued ex-parte a Writ of Attachment "against the properties of
the defendants particularly Lots Nos. 1 and 4 of Psc-2157 less the building standing thereon upon
the plaintiffs filing a bond in the amount of P200,000.00 subject to the approval of this Court." After a
surety bond in the amount of P200,000.00, executed on May 11, 1977 by the Central Surety and
Insurance Company as surety was filed, the writ itself was issued by respondent Judge on May 16,
1977, directing the Sheriff to attach the properties above-mentioned. On May 17, 1977, the Deputy
Sheriff of Iloilo levied upon the aforesaid properties of petitioners.

Contending that respondent Judge gravely abused his discretion in issuing the said Writ of
Attachment, petitioners filed the present petition.

In certiorari proceedings, the cardinal rule is that the court must be given the opportunity to correct
itself, Thus, for the special civil action of certiorari to prosper, there must be no appeal nor any plain,
speedy and adequate remedy in the ordinary course of law. Petitioners, therefore, must exhaust all
available remedies in the lower court before filing a petition for certiorari, otherwise the petition shall
be held to be premature.

In the instant case, it appears that petitioners have adequate remedy under the law. They could
have filed an application with the court a quo for the discharge of the attachment for improper or
irregular issuance under section 13, Rule 57, of the Revised Rules of Court, which provides the
following

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 Salas
vs. Adil 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.

Considering that petitioners have not availed of this remedy, the instant petition is premature.

We deem it necessary, however, for the guidance of respondent Court and of the parties, to stress
herein the nature of attachment as an extraordinary provisional remedy.

A preliminary attachment is a rigorous remedy, which exposes the debtor to humiliation and
annoyance, such it should not be abused as to cause unnecessary prejudice. It is, therefore, the
duty of the court, before issuing the writ, to ensure that all the requisites of the law have been
complied with; otherwise the judge acts in excess of his jurisdiction and the so issued shall be null
and void . 1

In Carpio v. Macadaeg, 2 this Court said:

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

Respondent Judge in fact corrected himself. Acting on petitioner's motion to

discharge attachment and apparently believing the correctness of the grounds
alleged therein, he set aside the orders of attachment (Order of March 11, 1960,
Annex F)

But reversing himself again, he set aside his order of March 11, 1960 (Annex K,
dated March 29, 1960). This he did apparently on Abaya's contention that petitioner
was about to remove or dispose of his property in order to defraud his creditors, as
examples of which disposals he pointed to the alleged sale of the horses and of
petitioner's office furniture. ... These averments of fraudulent disposals were
controverted by petitioner who ... reiterated the defenses against preliminary
attachment which he had previously enumerated in his petition to discharge the two
orders of attachment. Thus the question of fraudulent disposal was put in issue; and
respondent Judge, before issuing the pre attachment anew, should have given the
parties opportunity to prove their respective claims or, at the very least should have
provided petitioner with the chance to show that he had not been disposing of his
property in fraud of creditors. (citing National Coconut Corporation v. Pecson L-4296,
Feb. 25, 1952, Villongco v. Panlilio, 6214, Nov. 20, 1953).

And in Garcia v. Reyes, 3 considering the allegation that the debtors were removing or disposing of
some of their properties with intent to defraud their creditors, 'this Court said that "(a)ll in all due process
would seem to require that both parties further ventilate their respective contentions in a hearing that
could indeed reveal the truth. Fairness would be served thereby, the demand of reason satisfied."
Considering the gravity of the allegation that herein petitioners have removed or disposed of their
properties or are about to do so with intent to defraud their creditors, and further considering that the
affidavit in support of the pre attachment merely states such ground in general terms, without
specific allegations of lances to show the reason why plaintiffs believe that defendants are disposing
of their properties in fraud of creditors, it was incumbent upon respondent Judge to give notice to
petitioners and to allow wherein evidence is them to present their position at a to be received.
Moreover, it appears from the records that private respondents are claiming unliquidated damages,
including moral damages, from petitioners. The authorities agree that the writ of attachment is not
available 'm a suit for damages where the amount claimed is contingent or unliquidated.

We think, however, that a rule sufficient for the determination of this case has been
suggested and acted upon, and that the remedy does not exist where unliquidated
damages were demanded. ... InWarwick v. Chase, 23 Md 161, it is said: 'It is
necessary that the standard for ascertaining the amount of damages claimed should
not only appear, but that it should be fixed and certain, and in no degree dependent
on facts either speculative or Uncertain ... The general rule is, that unliquidated
damages, ... cannot be recovered by attachment, unless the contract affords a
certain measure or standard for ascertaining the amount of the damages ... 4

Further.

The statute authorizing the issuance of the writ of garnishment and that relating to
the issuance of the writ of attachment ... have not been construed as authorizing the
writs to be issued when the plaintiff's suit is technically an action for debt. Neither of
the writs may be issued when the suit is for damages for tort, but they may be issued
when the plaintiff's claim arises out of contract either express or implied, and the
demand is liquidated, that is, the amount of the claim is not contingent, is capable of
being definitely ascertained by the usual means of evidence, and does not rest in the
discretion of the jury. 5

WHEREFORE, the instant petition is hereby DENIED, in order to enable petitioners to move before
respondent Court for the discharge of the attachment on the ground of its improper and irregular
issuance, pursuant to section 13, Rule 57, of the Revised Rules of Court, and for the aforesaid Court
to act thereon in accordance with the foregoing.

G.R. No. 40054 September 14, 1933

LA GRANJA, INC., petitioner,

vs.
FELIX SAMSON, Judge of First Instance of Cagayan, CHUA BIAN, CHUA YU LEE and CHUA
KI, respondents.

VILLA-REAL, J.:

In this original petition for mandamus filed by the corporate entity, La Granja, Inc., against Felix
Samson, as Judge of the Court of First Instance of Cagayan, Chua Bian, Chua Yu Lee and Chua Ki,
the petitioner herein, for the reasons stated in its petition, prays that a writ of mandamus be issued
against the respondent Judge compelling him to issue a writ of attachment against the properties of
the other respondents herein, who are defendants in civil case No. 1888 of the Court of First
Instance of Cagayan. The pertinent facts necessary for the solution of the questions raised in the
present case are as follows:
On July 5, 1932, the petitioner herein, La Granja, Inc., filed a complaint in the Court of First Instance
of Cagayan, against Chua Bian, Chua Yu Lee and Chua Ki, for the recovery of the sum of P2,418.18
with interest thereon at the rate of 12 per cent per annum, which case was docketed as civil case
No. 1888. The plaintiff at the same time, also prayed for the issuance of an order of attachment
against the aforementioned defendants' property and accompanied said complaint with an affidavit
of the manager of the aforesaid petitioner, La Granja, Inc., wherein it was alleged among other
essential things, that the said defendants have disposed or are disposing of their properties in favor
of the Asiatic Petroleum Co., with intent to defraud their creditors. The respondent judge, wishing to
ascertain or convince himself of the truth of the alleged disposal, required the petitioner herein to
present evidence to substantiate its allegation, before granting its petition. Inasmuch as the
petitioner refused to comply with the court's requirement, alleging as its ground that was not obliged
to do so, the respondent judge dismissed said petition for an order of attachment.

The only question to decide in the present case is whether or not the mere filing of an affidavit
executed in due form is sufficient to compel a judge to issue an order of attachment.

Section 426 of the Code of Civil procedure provides the following:

SEC. 426. Granting order of attachment. A judge or justice of the peace shall grant an
order of attachment when it is made to appear to the judge or justice of the peace by the
affidavit of the plaintiff, or of some other person who knows the facts, that a sufficient cause
of action exists, and that the case is one of those mentioned in section four hundred and
twenty-four, and that there is no other sufficient security for the claim sought to be enforced
by the action, and that the amount due to the plaintiff above all legal set-offs or counterclaims
is as much as the sum for which the order is granted.

It will be seen that the legal provision just cited orders the granting of a writ of attachment when it
has been made to appear by affidavit that the facts mentioned by law as sufficient to warrant the
issuance thereof, exist. Although the law requires nothing more than the affidavit as a means of
establishing the existence of such facts, nevertheless, such affidavit must be sufficient to convince
the court of their existence, the court being justified in rejecting the affidavit if it does not serve this
purpose and in denying the petition for an order of attachment. The affidavit filed by the petitioner, La
Granja, Inc., must not have satisfied the respondent judge inasmuch as he desired to ascertain or
convince himself of the truth of the facts alleged therein by requiring evidence to substantiate them.
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.

Hence, the respondent judge, in requiring the presentation of evidence to establish the truth of the
allegation of the affidavit that the defendants had disposed or were disposing of their property to
defraud their creditors, has done nothing more than exercise his sound discretion in determining the
sufficiency of the affidavit.

In view of the foregoing considerations, we are of the opinion and so hold that the mere filing of an
affidavit executed in due form is not sufficient to compel a judge to issue an order of attachment, but
it is necessary that by such affidavit it be made to appear to the court that there exists sufficient
cause for the issuance thereof, the determination of such sufficiency being discretionary on the part
of the court.

Wherefore, the petition for a writ of mandamus is hereby denied and the same is dismissed, with
costs against the petitioner. So ordered.
SECTION 3

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

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

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

CONCEPCION, JR., J.:

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

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

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

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

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

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

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

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

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

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

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

(a) In an action for the recovery of money or damages on a cause of action arising
from contract, express or implied, against a party who is about to depart from the
Philippines with intent to defraud his creditor;

(b) In an action for money or property embezzled or fraudulently misapplied or

converted to his own use by a public officer, or an officer of a corporation, or an
attorney, factor, broker, agent, or clerk, in the course of his employment as such, or
by any other person in a fiduciary capacity, or for a willful violation of duty;

(c) In an action to recover the possession of personal property unjustly detained,

when the property, or any part thereof, has been concealed, removed, or disposed of
to prevent its being found or taken by the applicant or an officer;

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

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

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

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

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

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

In his Amended Complaint, Pinzon alleged the following:

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

There being no showing, much less an allegation, that the defendants are about to depart from the
Philippines with intent to defraud their creditor, or that they are non-resident aliens, the attachment of
their properties is not justified.
Second, the affidavit submitted by Pinzon does not comply with the Rules. Under the Rules, an
affidavit for attachment must state that (a) sufficient cause of action exists, (b) the case is one of
those mentioned in Section I (a) of Rule 57; (c) there is no other sufficient security 'or the claim
sought to be enforced by the action, and (d) the amount due to the applicant for attachment or the
value of the property the possession of which he is entitled to recover, is as much as the sum for
which the order is granted above all legal counterclaims. Section 3, Rule 57 of the Revised Rules of
Court reads. as follows:

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

In his affidavit, Pinzon stated the following:

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

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

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

namely:

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

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

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

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

4. I am executing this Affidavit to attest to the truthfulness of the foregoing and in

compliance with the provisions of Rule 57 of the Revised Rules of Court. 13
While Pinzon may have stated in his affidavit that a sufficient cause of action exists against the
defendant Kenneth O. Glass, he did not state therein that "the case is one of those mentioned in
Section 1 hereof; that there is no other sufficient security for the claim sought to be enforced by the
action; and that the amount due to the applicant is as much as the sum for which the order granted
above all legal counter-claims." It has been held that the failure to allege in the affidavit the requisites
prescribed for the issuance of a writ of preliminary attachment, renders the writ of preliminary
attachment issued against the property of the defendant fatally defective, and the judge issuing it is
deemed to have acted in excess of his jurisdiction. 14

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

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

The filing of the counter-bond will serve the purpose of preserving the defendant's property and at
the same time give the plaintiff security for any judgment that may be obtained against the
defendant. 15

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

SO ORDERED.

G.R. No. L-45720 December 29, 1937

VENTURA GUZMAN, petitioner,
vs.
ALFREDO CATOLICO and SIMEON RAMOS, Judge of First Instance of Isabela, respondents.

VILLA-REAL, J.:

This is a petition filed by Ventura Guzman, praying this court, after proper proceedings, to render
judgment declaring illegal and void and setting aside the writ of preliminary attachment issued by the
respondent judge, Honorable Simeon Ramos, as judge of the Court of First Instance of Isabela, and
ordering the dissolution thereof.

The pertinent facts necessary for the resolution of the legal question raised in the present case are
as follows:

On March 8, 1937, the respondent Alfredo Catolico brought an action against the herein petitioner
Ventura Guzman in the Court of First Instance of Isabela, for the recovery from the latter of the
amount of his fees for services rendered by him as attorney, praying, at the same time, for the
issuance of a writ of preliminary attachment against all of the properties adjudicated to said petitioner
in special proceedings No. 179 of said court. As grounds for the issuance of said writ of preliminary
attachment, he alleged: "That the herein defendant is trying to sell and dispose of the properties
adjudicated to him, with intention to defraud his creditors, particularly the herein plaintiff, thereby
rendering illusory the judgment that may be rendered against him, inasmuch as he has no other
properties outside the same to answer for the fees the court may fix in favor of the plaintiff, this case
being one of those mentioned by the Code of Civil Procedure warranting the issuance of a writ of
preliminary attachment" (paragraph 8 of the complaint there appears the following affidavits: "I,
Alfredo Catolico, of age, married and resident of Tuguegarao, Cagayan, after being duly sworn,
declare: That I am the same plaintiff in this case; that I have prepared and read the same (complaint)
and that all the allegations thereof are certain and true, to the best of knowledge and belief."

In view of the said complaint and affidavit, the respondent judge, on March 10, 1937, issued an order
granting the petition and ordering the issuance of a writ of preliminary attachment, after the filing of
the corresponding bond by the plaintiff.

On April 15, 1937, said defendant Ventura Guzman filed a motion for the cancellation of said writ of
preliminary attachment on the ground that it had been improperly, irregularly and illegally issued,
there being no allegation, either in the complaint or in the affidavit solemnizing it, that there is no
other sufficient security for the claim sought to be enforced by the action; that the amount due to the
plaintiff, above the legal set-off and counterclaim, is as much as the sum of which the preliminary
attachment has been granted, and that the affidavit of the plaintiff is base in mere information and
belief.

Said motion was denied by the respondent judge in an order of July 10, 1937.

The only question to be decided in this case is whether or not the requisites prescribed by law for the
issuance of a writ of preliminary attachment have been complied with.

Section 426 of the Code of the Civil Procedure provides that "A judge or justice of the peace shall
grant an order of attachment when it is made to appear to the judge or justice of the peace by the
affidavit of the plaintiff, or of some other person who knows the facts, that a sufficient cause of action
exists, and that the case is one of those mentioned in section four hundred and twenty-four, and that
there is no other sufficient security for the claim sought to be enforced by the action, and that the
amount due to the plaintiff above all legal set-offs or counterclaims is as much as the sum for which
the order is granted."

The petitioner, in attacking the legality and validity of the writ of preliminary attachment, which is the
subject matter of this petition, relies on the alleged lack of an allegation in the complaint or in the
affidavit to the effect "that there is no sufficient security for the claim sought to be enforced by the
action and that the amount alleged to be due to the plaintiff above all legal set-offs and
counterclaims is as much as the sum for which the writ has been granted", and on the fact that the
affidavit is based on mere information and belief of the plaintiff.

With respect to the last requisites just stated above, the affidavit is not defective because in it the
therein plaintiff and herein respondent Alfredo Catolico states "that all the allegations thereof are
certain and true, to the best of my knowledge and belief", and not that they are so according to his
information and belief.

As to the other two requisites, there is no allegation, either in the complaint or in affidavit solemnizing
it, to the effect that there is no other sufficient security for the claim which the plaintiff seeks to
enforce by his action, and that the amount due him from the defendant, above all legal set-offs and
counterclaims, is as much as the sum for which the writ of preliminary attachment has been granted.
Now then, does the omission of these two requisites constitute a defect preventing a judge of the
Court of First Instance from issuing a writ of preliminary attachment? lawphil.net

Attachment is a juridical institution which has for its purpose to secure the outcome of the trial, that
is, the satisfaction of the pecuniary obligation really contracted by a person or believed to have been
contracted by him, either by virtue of a civil obligation emanating from contract or law, or by virtue of
some crime or misdemeanor that he might have committed, and the writ issued, granting it, is
executed by attaching and safely keeping all the movable property of the defendant, or so much
thereof as may be sufficient to satisfy the plaintiff's demands (sec. 428, Act No. 190), or by filing a
copy of said writ with the register of deeds for the province in which the real property is situated,
whether standing upon the records in the name of the defendant or not appearing at all upon the
record, which constitutes a limitation of ownership or the right to enjoy or dispose of a thing without
further limitations than those established by law (art. 348, Civil Code), since the owner of the
property attached cannot dispose of the same free of all liens and encumbrances. The law
authorizing the issuance of a writ of preliminary attachment should, therefore, be construed strictly in
favor of the judge should require that all the requisites prescribed by law be complied with, without
which a judge acquires no jurisdiction to issue the writ. If he does so in spite of noncompliance with
said requisites, he acts in excess of his jurisdiction and with the writ so issued by him will be null and
void.

The jurisdiction of attachment proceedings being a special one, it cannot be legitimately

exercised unless the attaching creditor pursues substantially the essential requirements of
the statute, and the court can act only under the special power limited by the statute and
according to the forms of procedures it prescribes. . . . (6 C. J., 88, paragraph 121.)

Where the statutes requires the affidavit to show that defendant is indebted to plaintiff in an
amount specified, or that the latter is entitled to recover such an amount, over and above all
legal payments, set-offs, or counterclaims, compliance with this requirement is essential to
confer jurisdiction to issue the writ. (6 C. J., 132,
paragraph 201.)

An affidavit is fatally defective where it fails to comply, at least substantially, with a statutory
requirement that is shall state that the indebtedness for which the action is brought has not
 been secured by any mortgage or lien upon real or personal property, or any pledge of
personal property, or, if so secured, that the security has become valueless. . . . (6 C. J.,
146, paragraph 231.)

For the foregoing consideration, this court is of the opinion and so holds that failure to allege in a
complaint or in the affidavit solemnizing it, or in a separate one, the requisites prescribed by section
426 of the Code of Civil Procedure for the issuance of a writ of preliminary attachment that there is
no other sufficient security for the claim sought to be enforced by the action, and that the amount
due to the plaintiff above all legal set-offs or counterclaims is as much as the sum for which the order
is sought, renders a writ of preliminary attachments issued against the property of a defendant fatally
defective, and the judge issuing it acts in excess of his jurisdiction.

Wherefore, the writ of certiorari applied for is granted, and the writ of preliminary attachment issued
by the respondent judge in civil case No. 1460 of the Court of First Instance of Isabela, wherein the
herein respondent Alfredo Catolico is plaintiff and the herein petitioner Ventura Guzman is
defendant, is declared null and void, with costs to respondent Alfredo Catolico. So ordered.

G.R. No. 55272 April 10, 1989

JARDINE-MANILA FINANCE, INC., petitioner,

vs.
COURT OF APPEALS, IMPACT CORPORATION, RICARDO DE LEON and EDUARDO DE
LEON, respondents.

FERNAN, C.J.:

This is a petition for review on certiorari seeking to reverse and set aside: (a) the August 29, 1980
decision of the Court of Appeals 1 in Special Proceedings CA-G.R. No. SP-09972-R entitled "Impact Corporation, et al. v. Hon.
Buenaventura Guerrero, etc., et al." annulling the order and the writ of attachment issued by the Court of First Instance of Rizal in Civil Case
No. 34617 entitled "Jardine-Manila Finance, Inc. v. Impact Corporation, et al." 2 and (b) the Resolution dated October 7, 1980 denying herein
petitioners motion for reconsideration. 3

On September 28, 1979, petitioner Jardine-Manila Finance, Inc. (JARDINE) filed a complaint in the
then Court of First Instance (CFI) of Rizal, docketed as Civil Case No. 34617, against private
respondents Impact Corporation (IMPACT), Ricardo de Leon and Eduardo de Leon, to collect
various sums of money allegedly due from therein defendant IMPACT under a credit accomodation
by way of a discounting line agreement. 4 Herein private respondents Ricardo de Leon and Eduardo de Leon were included
as defendants by virtue of their undertaking covered by a Surety Agreement under which they bound themselves jointly and severally with
defendant IMPACT to pay herein petitioner all of IMPACT's obligations under the aforesaid agreement. 5

It was alleged that in April and May 1979, IMPACT assigned its receivables to JARDINE on the
condition that IMPACT was to collect them on their due dates from their issuers and remit the
collected amounts to JARDINE and/or repurchase the assigned receivables; 6 but despite the fact that
IMPACT had collected the amounts due on said receivables, it failed or refused to turn over the amounts so collected to JARDINE.

JARDINE thus demanded payment of P 1,000,212.64, the total amount due under said various
deeds of assignment, plus interest of P 16,614.64 as of September 6, 1979 and 25 % of the
aforesaid amount as attorney's fees, exemplary damages and other expenses of litigation.

Likewise contained in said complaint is petitioner's application for a writ of preliminary attachment
against private respondents. The allegations in support of said petition for a writ of preliminary
attachment are quoted in full:
 Special Allegations for Preliminary Attachment

A. The foregoing allegations are hereby repleaded and made integral

parts hereof.

B. The defendant corporation at the time of the execution of the

aforesaid deeds of assignment had reservation not to remit to plaintiff
the proceeds of the receivables assigned to plaintiff as confirmed by
their refusal to remit the same to plaintiff although the issuers of the
receivables assigned to plaintiff had already paid to defendant
corporation their obligations on said receivables to the latter.

C. Defendants Ricardo de Leon and Eduardo de Leon who are

likewise officers of defendant corporation in order to elicit plaintiffs
approval to enter into said deeds of assignment with defendant
corporation, executed the aforesaid surety agreement (Annex L),
likewise, with reservation in their minds not to honor their obligations
under the same as what they actually did when they refused to pay
the obligations of defendant corporation to plaintiff pursuant to the
provisions of said surety agreement. (Annex L)

D. Defendant corporation, Ricardo de Leon and Eduardo de Leon

have no visible other sufficient security for the claim sought to be
enforced by this action of plaintiff other than their real and personal
properties which are located in Metro Manila and in the province of
Rizal, Province of Nueva Ecija or elsewhere. (Emphasis supplied)

E. Plaintiffs action against defendant corporation is based upon

documents and therefrom a sufficient cause of action exists.

F. Plaintiff is willing to post a bond in an amount to be fixed by the

Honorable Court, not exceeding plaintiffs claim which will be
conditioned to the effect that plaintiff will pay all the costs which may
be adjudged to the adverse party and all damages which they may
sustain by reason of attachment, if the Honorable Court should finally
adjudge that the applicant plaintiff is not entitled thereto.7

On the basis of the foregoing allegations, the lower court granted JARDINE's petition for the
issuance of a writ of preliminary attachment on October 16, 1979. 8

On October 19, 1979, therein defendants filed a motion to set aside the writ of preliminary
attachment. They also submitted to the court a quo a memorandum in support of their motion to
dissolve the attachment contending that the grounds alleged by the plaintiff in its application for a
writ of attachment are not among the grounds specified under Section 1 of Rule 57; that the
defendants have other sufficient security; that there was no affidavit of merit to support the
application for attachment as required by Section 3 of Rule 57 and that the verification of the
complaint was defective as it did not state that the amount due to the plaintiff above all legal set-ups
or counterclaims is as much as the sum for which the order is sought. 9

JARDINE opposed the motion arguing that the mental reservation of defendants at the time of the
execution of the deeds of assignment constituted fraud; that such fraud was further confirmed by the
fact that defendants actually failed to remit the proceeds of the collection of receivables assigned by
them; that defendants failed to disclose to the plaintiff the fact that they had already collected the
receivables assigned by them; that the amounts collected by defendant corporation were received
by defendants in trust for plaintiff and defendant corporation appropriated for itself said collection. 10

On November 7, 1979, the trial court denied defendant's motion to annul the writ of preliminary
attachment. Thereupon, defendant Impact Corporation went to the appellate court on a petition for
certiorari seeking to annul said writ. 11

The findings of the Court of Appeals are as follows:

To our mind there is no question that the allegations of the complaint proper which
were repleaded and made integral part of the application for preliminary attachment
(paragraph A) made out a case of conversion or misappropriation of property held in
trust which is the subject of the complaint for the allegations stated that IMPACT had
assigned to JARDINE certain receivables with the understanding that it was to collect
the same from the issuers of said receivables and deliver the amounts collected to
JARDINE, but in spite of the fact that IMPACT had actually collected said amounts, it
failed to turn over said receivables to JARDINE. There was, therefore, in the
allegations of said complaint true conversion of the amounts received by defendant
in trust for plaintiff. Defendants in their motion to discharge the attachment and the
memorandum filed by them in support of said motion had in effect, admitted the
conversion of the amounts collected by defendant IMPACT, but justified the use of
said amounts to meet its operational expenses to prevent a complete shutdown of its
operations.

While we find that the grounds alleged by plaintiff, the herein private respondent, to
support its application for preliminary attachment are among those enumerated in
Section 1 of Rule 57 as grounds upon which an attachment may be issued, we are
constrained nonetheless to rule against the regularity or legality of the attachment
issued by respondent Court because there was no allegation made by plaintiff in its
application for the issuance of a writ of attachment to the effect 'that there is no
sufficient security for the claim sought to be enforced, by the action, and the amount
due to the applicant or the value of the property on the basis of which is entitled to
recover, is as much as the sum for which the order is granted above all legal
counterclaims, a requirement for the granting of an order of attachment under
Section 3 of Rule 57. 12

Thus, on August 29, 1980, the Court of Appeals annulled the assailed writ of attachment for having
been issued improperly and irregularly, the dispositive portion of which reads:

IN VIEW OF THE FOREGOING, the petition to annul the order and the writ of
attachment issued by respondent Court is hereby GRANTED and judgment is
rendered declaring said order and writ of attachment null and void for having been
issued improperly and regularly. The restraining order issued by this Court on
November 9, 1979 restraining respondents from enforcing the writ of attachment
issued by respondent Judge on October 16, 1979 is hereby made PERMANENT.
With costs against private respondents. 13

Hence this recourse.

Reduced to bare essentials, the records show that in the exercise of its discretion, the lower court
found justification in the issuance of the attachment. On the other hand, the Court of Appeals while
in accord with the lower court that a sufficient cause of action exists for petitioner and that the
ground for its application for attachment is one of those mentioned in Section 1, Rule 57 of the Rules
of Court, found the issuance of the attachment irregular or illegal in the absence of the following
allegations in the application for attachment: (1) that "there is no sufficient security for the claim
sought to be enforced by the action; and (2) that the amount due to the applicant or the value of the
property on the basis of which he is entitled to recover, is as much as the sum for which the order is
granted above all legal counterclaims."

Ultimately, the issue therefore, is whether or not non-compliance with the formal requirements
invalidate the writ of attachment.

On both counts, petitioner admits not having used the exact words of the Rules in making the
requisite allegations, but nonetheless it alleged that it presented ultimate and specific facts, first-in
showing that there is indeed no other sufficient security for the claim sought to be enforced as shown
in paragraph D of the Complaint earlier quoted; and second-while it did not specifically state that the
sum due is above all legal counterclaims, such conclusion of fact is no longer necessary in the face
of actual proof in the answer which did not carry any counterclaim. In fine, petitioner stresses that
mere forms must not be given more weight than substance. 14

In excusing the deficiencies of its application for a writ of preliminary attachment, petitioner relies
heavily on the case of De Borja v. Platon, 15 where this Court sustained the writ of attachment issued by the lower court in
favor of the defendants based on the counterclaim of the latter despite the lack of allegations in the affidavit attached to the petition for the
issuance of the writ of attachment that the amount due the counterclaim was as much as the sum for which the order is granted above all
legal counterclaims.

It will be noted however, that the trial court found that the counterclaim of the defendants exceeded
the claims of the plaintiff. Thus, this Court held that "as the trial court had before it the evidence
adduced by both sides, the petition for a writ of preliminary attachment having been filed four years
after the trial court had begun, we presume that the lower court having in mind such evidence,
ordered the attachment accordingly." 16

In sharp contrast, in the case at bar, where the records undeniably reveal that: (1) the complaint was
filed on September 28, 1979; 17 (2) the writ of preliminary attachment was issued on October 16, 1979; 18 (3) the motion to
annul preliminary attachment dated October 19, 1979 was filed on the same day; 19 (4) the answer of defendant IMPACT dated October 30,
1979 20 was received by the RTC Pasig only on November 5, 1979, 21 it is evident that the questioned writ was issued ex parte; and at a
time when the Court a quo had yet no basis for concluding that the amount due to petitioner is as much as the sum for which the order is
granted above all legal counterclaims.

It is therefore, readily apparent that the conclusions in the De Borja case cannot be applied to the
case at bar. In fact even petitioner's plea for liberality as it vigorously invokes the doctrine on said
case which refused "to sanction that formalism and that technicality which are discountenanced by
the modern laws of procedure" is an obvious misreading of the ruling of this Court which states:

On the first point, we believe a writ of preliminary attachment may be issued in favor
of a defendant who sets up a counterclaim. For the purpose of the protection
afforded by such attachment, it is immaterial whether the defendants Borja and wife
simply presented a counterclaim or brought a separate civil action against Jose de
Borja, plaintiff in the previous case and petitioner herein. To lay down a subtle
distinction would be to sanction that formalism and that technicality which are
discountenanced by the modern laws of procedure for the sake of speedy and
substantial justice. . . . 22

as a liberal approach to the required allegations in the application for a writ of preliminary attachment
when what this Court actually allowed was the presentation of a counterclaim by the defendant
instead of a separate civil action in compliance with one of the basic requirements for the issuance
of said writ.

The authority to issue an attachment, like the jurisdiction of the court over such proceedings rests on
express statutory provisions and unless there is authority in the statute, there is no power to issue
the writ, and such authority as the statute confers must be strictly construed.23 In fact, "(E)ven where liberal
construction is the rule, the statute or the right to attachment thereby granted may not be extended by judicial interpretation beyond the
meaning conveyed by the words of the statute." 24 Petitioner's application for a writ of preliminary attachment must therefore be scrutinized
and assessed by the requisites and conditions specifically prescribed by law for the issuance of such writ.

Section 3, Rule 57 of the Revised Rules of Court governs the issuance of a writ of attachment, to wit:

Sec. 3. Affidavit and bond required.-An order of attachment shall be granted only
when it is made to appear by the affidavit of the applicant or 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 stringent conditions for the issuance of the writ have been echoed in all subsequent cases, even
as late as K.O. Glass Construction Co. Inc. vs. Valenzuela, 25 wherein the writ of preliminary attachment issued was
annulled and set aside on the findings that while the plaintiff "may have stated in his affidavit that a sufficient cause of action exists against
the defendant Kenneth O. Glass, he did not state therein that the case is one of those mentioned in Section 1 hereof; that there is no other
sufficient security for the claim sought to be enforced by the action; and that the amount due to the applicant is as much as the sum for which
the order is granted above all legal counterclaims."

More specifically, it has been held that the failure to allege in the affidavit the requisites prescribed
for the issuance of the writ of preliminary attachment, renders the writ of preliminary attachment
issued against the property of the defendant fatally defective, and the judge issuing it is deemed to
have acted in excess of his jurisdiction. 26 In fact, in such cases, the defect cannot even be cured by amendment. 27

Since the attachment is a harsh and rigorous remedy which exposes the debtor to humiliation and
annoyance, the rule authorizing its issuance must be strictly construed in favor of defendant. It is the
duty of the court before issuing the writ to ensure that all the requisites of the law have been
complied with. 28 Otherwise, a judge acquires no jurisdiction to issue the writ.

The general rule is that the affidavit is the foundation of the writ, and if none be filed or one be filed
which wholly fails to set out some facts required by law to be stated therein, there is no jurisdiction
and the proceedings are null and void. Thus, while not unmindful of the fact that the property seized
under the writ and brought into court is what the court finally exercises jurisdiction over, the court
cannot subscribe to the proposition that the steps pointed out by statutes to obtain such writ are
inconsequential, and in no sense jurisdictional. 29

Considering that petitioner's application for the subject writ of preliminary attachment did not fully
comply with the requisites prescribed by law, said writ is, as it is hereby declared null and void and of
no effect whatsoever.

This conclusion renders a discussion of petitioner's other argument unnecessary.

WHEREFORE, the decision of the Court of Appeals dated August 29, 1980 is hereby AFFIRMED.
Costs against petitioner.
SO ORDERED.

G.R. No. L-61754 August 17, 1989

ROBERTO TING, and DOLORES TING, petitioners,

vs.
HON. AUGUSTO E. VILLARIN, FELICIANO GERVACIO, FERDINAND J. GUERRERO, and
CONSOLIDATED BANK & TRUST COMPANY, respondents.

SARMIENTO, J.:

On September 17, 1981, private respondent Consolidated Bank and Trust Company (hereinafter
"Consolidated Bank") filed a complaint 1 for a sum of money with prayer for a writ of preliminary
attachment against Perlon Textile Mills and its directors.

Roberto Ting, a director, was impleaded with his wife Dolores Lim Ting. The complaint recites that
the wife was impleaded as a party defendant in order to bind their conjugal partnership of gains
which allegedly benefitted from the transactions subject of the complaint. The, spouses Ting are the
present petitioners.

Consolidated Bank actually sued on two (2) causes of action. The first was targeted at recovering on
several promissory notes the amount of P2,972,955.51, allegedly obtained for the defendant
corporation by its duly authorized officers Lu Cheng Peng, Teng See, and Roberto Ting. These
officers allegedly signed the promissory notes in their personal and official capacities thereby binding
themselves jointly and severally to Consolidated Bank for the payment of the promissory notes.

The second cause of action dwells on several violations of trust receipt agreements which the
defendant corporation executed in favor of Consolidated Bank. The defendant corporation's faithful
compliance with the trust receipt agreements appears to have been secured by the continuing
guaranty of defendants Liu Suy Lin Angelo Leonar, and Lu Cheng Peng.

In support of the application for preliminary attachment, Consolidated Bank averred the ground of
"fraud in contracting an obligation" thus

16. Defendants are guilty of fraud in contracting their obligations more specifically
illustrated by their violation of the trust receipt agreement which is a ground defined
under Sec. 1, Rule 57 of the Rules of Court for the issuance of a writ of preliminary
attachment. 2

On September 23, 1981, acting on the application for a writ of attachment by Consolidated Bank, the
respondent judge issued the orders under question, to wit:

xxx xxx xxx

We, therefore, command you [Deputy Sheriffs Feliciano Gervacio and Ferdinand J.
Guerrero] that you attach the estate, real and personal, of the said defendants Perlon
Textile Mills, Inc., Lu Cheng Peng and Spouse; Teng See @ Teng Tik Hua and
Spouse; Spouses Roberto Ting and Dolores Lim Ting; Angelo Leonor and Spouse,
Liu Suy Lin and Spouse, and Yap Chi and Spouse, within your province to the value
of said demands, and costs of suit, and that you keep safely the same according to
the Rules of Court, unless the defendant gives security to pay such judgment as
 may be recovered in this action in the manner provided for by the Rules of Court; and
that you return immediately this order after executing the same with a full statement
of your proceedings and a complete inventory of the properties attached. 3

On March 3, 1982, acting on the petitioners' Motion to Quash Attachment, the respondent judge
issued a second order, to wit:

xxx xxx xxx

Acting on defendants Roberto and Dolores Ting's motion to quasi attachment and
plaintiffs' opposition thereto, it appearing from plaintiffs' allegations that the alleged
fraud was effected through the collective action of the defendants, the court finds the
motion to be without sufficient merit. 4

xxx xxx xxx

On July 19, 1982, acting on the petitioners' motion for reconsideration, the respondent judge issued
the last disputed order the dispositive portion of which states:

xxx xxx xxx

WHEREFORE, under the circumstances, and finding no sufficient justification for the
reconsideration of the order of March 3, 1982, the motion for reconsideration is
hereby DENIED. 5

xxx xxx xxx

The petitioners came to this Court via a petition for certiorari. They are questioning the writ of
preliminary attachment principally on the ground that the application therefor hinges on "fraud in
contracting" the trust receipt agreements under the second cause of action.

On the other hand, the petitioners are impleaded in the complaint merely under the first cause of
action. Moreover, the petitioners challenge the writ of preliminary attachment issued because, in
effect, it pierced the veil of corporate fiction. The petitioners explain that the corporation alone should
be held liable for the violation of the trust receipt agreements.

Finally, the petitioners ask that the writ of preliminary attachment be struck down by this Court
because it authorized an attachment over the petitioners' conjugal partnership property.

We agree with the petitioners.

The complaint did not provide for a sufficient basis for the issuance of a writ of preliminary
attachment. It is not enough for the complaint to ritualistic ally cite, as here, that the defendants are
"guilty of fraud in contracting an obligation." An order of attachment cannot be issued on a general
averment, such as one ceremoniously quoting from a pertinent rule. 6 The need for a recitation of
factual circumstances that support the application becomes more compelling here considering that the
ground relied upon is "fraud in contracting an obligation." The complaint utterly failed to even give a hint
about what constituted the fraud and how it was perpetrated. Fraud cannot be presumed. 7
The respondent judge thus failed in this duty to ensure that, before issuing the writ of preliminary
attachment, all the requisites of the law have been complied with. He acted in excess of his
jurisdiction and the writ he so issued is thus null and void. 8

What is more, the respondent judge plainly ignored that, as correctly pointed out by the petitioners,
the application for preliminary attachment rests on "fraud in contracting" the trust receipt
agreements. The complaint itself, save for the unwarranted sweeping reference to "defendants,"
alleged that only Consolidated Bank, as principals, and Liu Suy Lin Angelo Leonar, and Lu Cheng
Peng, as guarantors, were privy to the trust receipt agreements under the second cause of action.
Petitioner Roberto Ting's involvement is limited only to the promissory notes under the first cause of
action. The complaint thus relevantly alleges

FIRST CAUSE OF ACTION

7. On March 15, 1979, defendant corporation, through its duly authorized officers Lu
Cheng Peng, Tang See and Roberto Ting obtained from plaintiff loan
accommodations in the amount of P2,972,955.51 and as evidence thereof, the
aforementioned defendants in their personal and official capacities executed
promissory notes undertaking therein jointly and severally with the corporation to pay
plaintiff the above-mentioned amount with interest ....

SECOND CAUSE OF ACTION

8. On different occasions in 1978-1979, defendants applied to plaintiff for the opening

of numerous letters of credit to finance its purchase of goods from various suppliers.

xxx xxx xxx

ALLEGATIONS COMMON TO ALL CAUSES OF ACTION

12. In order to secure the credit accommodations obtained and all those that the
defendant Perlon Textile Mills, Inc. may thereafter obtain from plaintiff, defendants
Liu Suy Lin Angelo Leonar and Lu Cheng Peng executed a continuing guaranty ... . 9

The sweeping nature of the attachment order probably stemmed from the respondent judge's failure
to detect that the two (2) causes of action had been misproperly joined. Joinder of causes of action
is, among others, subject to the rules on joinder of parties. 10 And the rule on joinder of parties is
enunciated in Sec. 6, Rule 3, Revised Rules of Court, thus

Sec. 6. Permissive joinder of parties. All persons ... against whom any right to
relief in respect to or arising out of the same transaction or series transactions is
alleged to exist, whether jointly, severally, or in the alternative, may, except as
otherwise provided in these rules ... be joined as defendants in one complaint, where
any question of law or fact common to all such ... defendants may arise in the action
... .

Here, the two causes of action arose from different transactions. There was no "series of
transactions" to speak of. But above all, the complaint can conceivably affect adversely petitioner
Roberto Ting under the first cause of action only but not in the second cause of action. 11
That the attachment ordered by the respondent judge called for the sheriffs to "attach the estate, real
and personal of ... Spouses Roberto Ting and Dolores Lim Ting" (Order of September 23, 1981)
likewise gives cause for this Court to strike it down for being null and void. The attached property of
the spouses Ting are conjugal, the same cannot be validly brought under the painful process of
attachment because:

(a) First, the wife Dolores was impleaded merely because of the fact that she is the
spouse of Roberto;

(b) Second, the conjugal partnership cannot possibly be benefitted (again, here,
Consolidated Bank's allegation that the act of the husband redounded to the benefit
of the conjugal partnership is mere "book form" when the husband binds himself, as
guarantor, because this act does not conserve or augment conjugal funds but
instead threatens to dissipate them 12 by unnecessary and unwarranted risks to the
partnership's financial stability. When the husband assumes the obligation of a guarantor,
the presumption that he acts, as administrator, for the benefit of the conjugal partnership,
is lost.

WHEREFORE, the petition is hereby GRANTED. The questioned Orders, dated September 23,
1981, March 3, 1982, and July 19,1982, of the respondent judge, and the levy on attachment made
by the deputy sheriffs against the parcel of land covered by TCT No. T-7232 and registered in the
names of the petitioners, are declared NULL AND VOID.

Costs against the private respondent.

SO ORDERED.

G.R. No. 38284 September 17, 1933

GUILLERMO A. CU UNJIENG and MARIANO CU UNJIENG, petitioners,

vs.
LEONARD S. GODDARD, acting as Judge of First Instance of Manila, and HONGKONG &
SHANGHAI BANKING CORPORATION, respondents.

HULL, J.:

Original action for certiorari praying that a writ of attachment levied against the properties of the
petitioners and defendants in a civil action in the Court of First Instance of Manila, brought by
respondent Hongkong & Shanghai Banking Corporation, be declared null and void.

In that civil action it was alleged in substance that the defendants, the petitioners in this proceeding,
entered into a fraudulent conspiracy or combination with one Fernandez, by which the conspirators
would hypothecate and pledge forged securities of various kinds with the various banking institutions
and other commercial firms of the City of Manila, and pursuant to said fraudulent conspiracy,
secured credit with the bank, and the plaintiff was defrauded by the defendants and Fernandez in
the sum of P1,411,312.80. Simultaneously with the filing of the complaint, plaintiffs asked for a writ
of attachment, which was granted.

The affidavit filed at the time reads:

AFFIDAVIT
 B.C.M. Johnston, of legal age and resident of the City of Manila, being duly sworn, states:

That he is the Manager of the Hongkong and Shanghai Banking Corporation, the plaintiff in
the above-entitled cause, and that he knows that there exists a cause of action in favor of
said plaintiff and against the defendants, as appears in the complaint on file in this case,
reference to which is hereby made as an integral part of this affidavit;

That the complaint is one for the recovery of money on a cause of action arising from a
fraud; and

That, as set out in the complaint, the defendants in said cause have been guilty of fraud in
contracting the debt in incurring the obligation upon which this action is brought.

(Sgd.) B.C.M. JOHNSTON

About one week thereafter, on October 20, 1931, petitioners herein filed a motion to discharge the
attachment on the ground that it had been improperly and irregularly issued, which motion contains
eight paragraphs.

Paragraph (4) alleges that the affidavit was defective in that it fails to state that there is no other
sufficient security for the claim sought to be enforced by the action and that the amount due the
plaintiff involves as much as the sum for which the order of attachment was granted, while
paragraph (5) alleges that the affidavit for attachment fails to estate that the allegations contained in
the unverified complaint to which it refers are true and that likewise the affidavit fails to estate that
affiant knows the facts.

Shortly after the hearing to discharge the attachment had begun, plaintiff asked leave to file an
amended affidavit in support of its petition for a writ of attachment.

After oral and written arguments, the respondent judge on November 25, 1931, entered an order
admitting the amended affidavit of attachment. The amended affidavit consists of three pages and is
admitted to be in full compliance with the provisions of section 426 of the Code of Civil Procedure,
which sets out what must be shown to the court before a writ of attachment shall issue.

Further proceedings were had in the trial court, and on March 4 and April 11, 1932, it entered an
order refusing on the showing so far made to dissolve the attachment. On October 4, 1932, these
proceedings were instituted, based on the two propositions (1) that an affidavit of attachment cannot
be amended and (2) that if a cause of action arisesex delicto, it is not within the terms of our
attachment statutes.

Respondents claim that petitioners had not exhausted their rights in the trial court and that if the
petitioner regarded the order of April 11 as a final order, petitioners are guilty of laches by waiting
until October before filing a complaint.

Without considering the minor questions raised by respondents, we believe it is for the best interests
of all concerned to dispose of the case on the points raised by petitioners.

As to whether amendments should be admitted, respondents rely upon section 110 of the Code of
Civil Procedure, which reads:
 SEC. 110. Amendments in General. The court shall, in furtherance of justice, and on such
terms, if any, as may be proper, allow a party to amend any pleading or proceeding and at
any stage of the action, in either the Court of first Instance or the Supreme Court, by adding
or striking out the name of any party, either plaintiff or defendant, or by correcting a mistake
in the name of a party, or a mistaken or inadequate allegation or description in any other
respect, so that the actual merits of the controversy may speedily be determined, without
regard to technicalities, and in the most expeditious and inexpensive manner. The court may
also, upon like terms, allow an answer or other pleading to be made after the time limited by
the rules of the court for filing the same. Orders of the court upon the matters provided in this
section shall be made upon motion filed in this court, and after notice to the adverse party,
and an opportunity to be heard." and claim it should read in connection with section 2 of the
same Code:

SEC. 2. Construction of Code. The provisions of this Code and the proceedings under it,
shall be liberally construed, in order to promote its object and assist the parties in obtaining
speedy justice.

This court has held in the case of Central Capiz vs. Salas (43 Phil., 930), that section 2 applies to
applications for writs of attachment and that the affidavit may be read in connection with the
complaint.

In the original affidavit, affiant did not swear on information and relief but expressly on knowledge. It
is also clear from the affidavit that the ground on which the attachment was sought to be secured, is
paragraph 4 of section 412 of the Code of Civil Procedure. It is defective in (a) that there is no
allegation, either in the affidavit or the complaint, that there was no other sufficient security for the
claim sought to be enforced by the action and (b) that the amount due to the plaintiff above all legal
set-offs or counterclaims is as much as the sum for which the order is granted. The claim of
petitioners that the original affidavit is defective is virtually admitted by respondents by their having
filed a amended affidavit and by their insistence upon their right to amend.

Our section 110 of the Code of Civil Procedure is based on section 473 of the California Code of
Civil Procedure and is a general statute authorizing, in the discretion of the court, any amendment, in
the further interest of justice, of pleadings or procedure at any stage of the action. Proceedings in the
Court of First Instance to discharge the attachment were taken under section 441 of the Code of
Civil Procedure, which reads:

SEC. 441. Discharge of Attachment on Motion. The defendant may also at any time either
before or after the release of the attachment property, or before any attachment shall have
been actually levied, upon reasonable notice to the plaintiff, apply to the judge or justice of
the peace who granted the order of attachment, 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
defendant, but not otherwise, the plaintiff may oppose the same by affidavits or other
evidence in addition to those on which the attachment was made.

If upon such application it satisfactorily appears that the writ of attachment was improperly or
irregularly issued, it must be discharged.

The corresponding sections of the California Code, namely section 556, 557, and 558, read:

SEC. 556. When a motion to discharge attachment may be made, and upon what grounds.
The defendant may also at any time, either before or after the release of the attached
 property, or before any attachment shall have been actually levied, apply, on motion, upon
reasonable notice to the plaintiff, to the court in which the action is brought, or to a judge
thereof, that the writ of attachment be discharged on the ground that the same was
improperly or irregularly issued.

SEC. 557. When motion made on affidavit, it may be opposed by affidavit. If the motion be
made upon affidavits on the part of the defendant, but not otherwise, the plaintiff may oppose
the same by affidavits or other evidence, in addition to those on which the attachment was
made.

SEC. 558. When writ must be discharged. If upon such application it satisfactorily appears
that the writ of attachment was improperly or irregularly issued it must be discharged;
provided that such attachment shall not be discharged if at or before the hearing of such
application, the writ of attachment, or the affidavit, or undertaking upon which such
attachment was based shall be amended and made to conform to the provisions of this
chapter.

In a long line of decisions from Castle Bros., Wolf & Sons vs. Go-Juno (7 Phil., 144), where it was
said:

Inasmuch as this section 95 is taken bodily from the California Code of Procedure, we feel
justified in following the decisions of the Supreme Court of California in the interpretation of
the same.

to Pando vs. Kette and Sellner (54 Phil., 683), where this court uses the following language:

The provision of our Code of Civil Procedure having been adopted from section 692 of the
California Code, it must be understood that our law was promulgated with the construction
placed upon it by the State of California." Where a provision of the Code of Civil Procedure
has been adopted bodily from one of the States of the Union, we have followed the rule that
it was undoubtedly the intention of the Legislature to promulgate the law with the
construction that had already been placed upon it.

At the time sections 110 and 114 were adopted, the similar provisions of the California Code had
already been construed by the Supreme Court of California. In Winters vs. Pearson (72 Cal., 553),
that court used the following language:

On a motion to discharge a writ of attachment, on the ground that it was improperly or

irregularly issued, the affidavit on which the writ was issued is not amendable. This, in our
opinion, is in accordance with section 558 of the Code of Civil Procedure, which provides
that the writ was improperly or irregularly issued, it must be discharged.

To allow the affidavit to be made good by amendment, and upon such action refused to
discharge the writ, would, in our judgment, violate the requirements of the section just above
cited.

In Tibbet vs. Tom Sue (122 Cal., 206), the court followed Winters vs. Pearson, saying:

Respondent asks the privilege of amending the undertaking, if it be held defective by this
court. From such relief he invokes section 473 of the Code of Civil Procedure, wherein
amendments are allowed to pleadings or proceedings in furtherance of justice. In speaking
 as to an application to discharge a writ of attachment, the Code says: "If upon such
application it satisfactorily appears that the writ of attachment was improperly or irregularly
issued, it must be discharged." (Code Civ. Proc., sec. 558.) This section is specific and
expressly directed to the subject of attachments. It must be held to control and limit the
general provisions of the aforesaid section 473. The lawmaking body has declared what shall
be the action of the court under the circumstances here presented, and such action demands
that the writ should be discharged. It is said inWinters vs. Pearson (72 Cal., 553), that the
affidavit on attachment is not amendable. The undertaking upon attachment stands upon the
same ground.

The facts that California in 1909 changed the law by permitting amendments of a defective affidavit
for attachment under certain specified circumstances, does not affect this case, as our Legislature
has allowed the law to stand unchanged.

It therefore allows that where the affidavit for attachment is fatally defective, the attachment must be
held to have been improperly or irregularly issued and must be discharged, and such fatal defect
cannot be cured by amendment. The writ of attachment in this case should therefore have been
discharged.

In view of the above views, the second ground for the discharge of the writ of attachment presented
by petitioners herein, is reserved for discussion in another case.

The writ of certiorari herein prayed for must be granted. So ordered.

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

IMPERIAL, J.:

Petitioners brought this certiorari proceeding to annul the writ of attachment issued by the Court of
First Instance of Manila on October 14, 1931, as well as the orders of November 25, 1931, March 4
and April 11, 1932, granting the admission of an amended affidavit and denying the motion to
dissolve the attachment, respectively.

It is the purpose of this opinion to show: (a) That the averments of the complaint, which were made
integral part of the affidavit supporting the petition for the issuance of the writ of attachment, meet
substantially the requirements of the statute on attachment; (b) that the affidavit on which the petition
for attachment was based is sufficient and has substantially complied with the grounds required by
section 426 of the Code of Civil Procedure, and (c) that the respondent judge did not act in excess of
his jurisdiction when issued the writ of attachment and denied the motion for dissolution.

The complaint filed in the civil action in which the writ of attachment was issued contains, among
others, the following allegations:

III

That during the years 1930 and 1931, the said defendants entered into a fraudulent
conspiracy or combination with one Rafael Fernandez, who has been adjudicated an
involuntary insolvent by the Court of First Instance of Manila, and for that reason is not made
a defendant in this action, pursuant to which fraudulent conspiracy and combination, it was
agreed that the said Fernandez, or the said Fernandez, or the said defendant Guillermo A.
Cu Unjieng, or the said Mariano Cu Unjieng should hypothecate and pledge forged share
certificates, forged warehouse receipts, and forged securities of other kinds, in large
amounts, with various banking institutions and other commercial firms of the City of Manila,
with a view to a division of the proceeds among the said fraudulent conspirators.

IV

That pursuant to said fraudulent combination and conspiracy the said Guillermo A. Cu
Unjieng employed a forger to forge the signatures of the proper officers on a large number of
warehouse receipts and share certificates of the Pampanga Sugar Development Company,
Inc., a corporation organized under the laws of the Philippine Islands, and operating a large
sugar central in the Province of Pampanga, Philippine Islands, after the said Rafael
Fernandez, pursuant to said fraudulent combination and conspiracy, had caused a large
number of said share certificates and warehouse receipts to be printed in blank, for the
purpose of having them so forged.

That pursuant to said fraudulent combination and conspiracy, the said defendants, Guillermo
and Mariano Cu Unjieng and the said Rafael Fernandez pledged and hypothecated said
forged share certificates and said forged warehouse receipts in large amounts with various
banking institutions and commercial firms of the City of Manila, using the proceeds in some
cases for the purpose of taking up the forged certificates and warehouse receipts so pledged
and hypothecated in other cases, so as to continue the scheme for the longest in other time,
and in other cases, dividing among themselves the proceeds of the loans obtained on the
security of said forged share certificates and forged warehouse receipts so fraudulently
pledged and hypothecated.

VI

That pursuant to said fraudulent conspiracy and combination, the said Rafael Fernandez, at
various dates, on and after June 16th, 1931, pledged and hypothecated various forged
warehouse receipts and promissory notes to the plaintiff herein, as security for loans in
account current granted said Fernandez by the plaintiff in reliance therein, on which there
was a total debit balance due of P1,411,312.80, on the date of the adjudication of Fernandez
as an insolvent, that is, on the 1st day of August, 1931, together with interest at 9 per cent
per annum on P1,010,886.96 thereof from the 1st day of July, 1931, and interest on the
balance at the rate of 9 per cent per annum from July 8, 1931.

VII

That of the amounts so obtained by the said Fernandez from this plaintiff by the fraudulent
pledging and hypothecation of said forged warehouse receipts and promissory notes,
pursuant to said fraudulent combination and conspiracy, as hereinbefore alleged, said
Fernandez, pursuant to said combination and conspiracy, paid directly to the defendant
herein, Guilermo A. Cu Unjieng, sums aggregating P325,000; to the defendant herein,
Mariano Cu Unjieng, the sum of P10,000; caused other large amounts to be paid said
defendants indirectly through other banking institutions in the City of Manila; and utilized the
balance in covering overdrafts and loans obtained in his name with other banking institutions
in the City of Manila, on the security of forged share certificates, warehouse receipts and
other forged securities the proceeds of which were divided between him and the defendants
herein pursuant to said fraudulent combination and conspiracy.
 VIII

That as a result of said fraudulent conspiracy and combination, between the defendants
herein and the said insolvent, Rafael Fernandez, and the pledging and hypothecation by said
Fernandez of said forged warehouse receipts and promissory notes with the plaintiff herein,
the said plaintiff has been defrauded by the defendants herein and by the said Fernandez in
the sum of P1,411,312.80, with interest on P1,010,886.96 thereof at the rate of 9 per cent
per annum from July 1, 1931, and with interest on the balance thereof at the rate of 9 per
cent per annum from July 8, 1931.

The affidavit above referred to read as follows:

AFFIDAVIT

B.C.M. Johnston, of legal age and a resident of the City of Manila, being duly sworn states:

That he is the Manager of the Hongkong & Shanghai Banking Corporation, the plaintiff in the
above entitled cause, and that he knows that there exists a cause of action in favor of the
said plaintiff and against the defendant, as appears in the complaint on file in this case,
reference to which is hereby made as an integral part of this affidavit.

That the complaint is one for the recovery of money on a cause of action arising from a
fraud: and

That as set out in the complaint, the defendant in said cause has been guilty of fraud in
contracting the debt and in incurring the obligation upon this action is brought.

(Sgd.) B.C.M. JOHNSTON

Subscribed and sworn to before me this 11th day of July, 1931, affiant exhibiting to me his
cedula certificate No. F-14401, issued at Manila, P.I., January 19, 1931.

Doc. No. 420 (Sgd.) "DOMINGO A. GUEVARA

Page 71 Notary Public
Book III Until December 31, 1932

Section 426 of Act No. 190 provides:

SEC. 426. Granting order of attachment. A judge or justice of the peace shall grant an
order of attachment when it is made to appear to the judge or justice of the peace by the
affidavit of the plaintiff, or of some other person who knows the facts, that a sufficient cause
of action exists, and that the case is one of those mentioned in section four hundred and
twenty-four, and that there is no other sufficient security for the claim sought to be enforced
by the action, and that the amount due to the plaintiff above all legal set-offs or counterclaims
is as much as the sum for which the order is granted.

From a perusal of said section it is obvious that the law does not require conclusive evidence to
establish the requisites necessary in order a justice or judge may issue a writ of attachment; all what
the law requires is the presentation of prima facie evidence which shows the existence of said
grounds. This is the reason why it calls for affidavit in lieu of other material and competent evidence.

As alleged in the affidavit affiant made a part of his statement all material and necessary averments
contained in the complaint undoubtedly for the purpose of making a complete narration of the facts
and at the same time to avoid superfluous repetition. In substance, it was alleged in the complaint
that the defendants in the civil action were guilty of fraud at the time they incurred in the obligations
set forth and that Rafael Fernandez secured from the plaintiff the amount of over P1,000,000, which
is the subject matter of the action, thru conspiracy and collusion with the defendants-petitioners,
having delivered said Fernandez warehouse receipts and shares certificates which were forged and
valueless.

It is argued that the original affidavit was fatally defective because it failed to recite: (1) That the
plaintiff in the action has no other sufficient security for the claims sought to be enforced, and (2) that
the amount due it above all legal set-offs or counterclaims is as much as the sum for which the order
is prayed for. While it may be conceded that the original affidavit as well as the complaint are lacking
of such specific averments, still from the above quoted allegations the facts can be reasonably
inferred, If the action was brought by plaintiff to recover the amount of over P1,000,000 which it lost
in the manner above described and if it is especially alleged that the security given by the
defendants became valueless because they were all forged it is hard to conceived how one could
not deduce the inference that no other security has been given the plaintiff with the exception of
those especifically alleged in the complaint. The same inference was undoubtedly gathered by the
respondent judge when he granted the attachment upon said original affidavit and as far as I am
concerned I believed he did not exceed in the exercise of the jurisdiction conferred upon him by the
law. As to the other ground, the same thing could be said.

In deciding this case I believe technicalities of law should be overlooked in order to attain the ends of
justice. If the main action fails the petitioners, as defendants, will get compensation for any damages
or injury they may have suffered upon the bond given by plaintiff-respondent, while should the action
prosper and the attachment is already quashed plaintiff would not get anything so much so as there
are other creditors who are claiming big amounts from the same defendants.

Based on the foregoing reasons I dissent from the majority's decision and I am of the opinion that
the liberal construction of the statute on attachment should have been applied in this particular
instance and the petition denied.

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 hisComplaint 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 Teofilos 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 Felixs death in 1963, developed a scheme to
save the elder Carloss 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 Teofilos 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 P18,924,800.00.4

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 P20,000,000.00 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 Carloss Petition, and thus the Court of
AppealsDecision ordering the dissolution of the Writ of Attachment and Notice of Garnishment
became final.

In the meantime, the hearing on Carloss 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. Carloss 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 P18,924,800.00, 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 anOrder 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 P15,546,121.98.11 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 theWrit 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 P15,384,509.98 drawn against the accounts of Carlos;
and a Certification to the same effect issued by the PNB Malolos Branch. In anAddendum 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 aResolution 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 Resolutionlikewise 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 Carloss Motion for Reconsideration, again denied
Carloss 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 managers checks: MC No.
938541 forP4,932,621.09 and MC 938542 for P10,451,888.89 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 (P15,384,509.98), 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 P15,384,509.98 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 P2,000,000.00 for
attorneys 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 P15,384,509.98 and 12% interest per annum from June
27, 1996 when the unlawful garnishment was effected until fully paid and P1,000,000.00 as
attorneys fees with 6% interest thereon from the trial courts 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 theResolution of 10 October 1998, which denied Carloss 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 Carloss 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 Siddcors 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 aTemporary 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,
Carloss 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 inParamount, 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 57wherein 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 himusually on the basis of a counterclaimto pay
damages caused to his adversary by the wrongful attachment. [Emphasis supplied.]

Moreover, a separate ruleSection 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 P15,384,509.98,
plus interest, as well as P1,000,000.00 as attorneys 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 suretys 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 filedi.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 attorneys fees in the amount of P1,000,000.00 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 attorneys fees should be deleted where the award of moral and exemplary
damages are eliminated.69 Nonetheless, attorneys fees may be awarded under the Civil Code where
the court deems it just and equitable that attorneys 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 attorneys fees are just and
equitable under the circumstances. However, we deem the amount of P1,000,000.00 as excessive,
and modify the award of attorneys fees to P500,000.00 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 attorneys 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 Carloss 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 movants 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 attorneys fees
is in the amount of P500,000. Costs against petitioners.

SO ORDERED.

SPOUSES JULIETA SALGADO and JOSE SALGADO, Petitioners, v. HON. COURT OF APPEALS and
PHILIPPINE COMMERCIAL & INDUSTRIAL BANK, Respondents.

Reyes & Reyes Law Office, for Petitioners.

San Juan Africa, Gonzales & San Agustin Law Office for Private Respondent.

SYLLABUS

1. REMEDIAL LAW; PROVISIONAL REMEDIES; ATTACHMENT; PURPOSE. The chief purpose of the remedy
of attachment is to secure a contingent lien on defendants property until plaintiff can, by appropriate
proceedings, obtain a judgment and have such property applied to its satisfaction, or to make some
provision for unsecured debts in cases where the means of satisfaction thereof are liable to be removed
beyond the jurisdiction, or improperly disposed of or concealed, or otherwise placed beyond the reach of
creditors (7 C.J.S. 190).

2. ID.; ID.; ID.; REQUISITES FOR ISSUANCE SHALL NOT ISSUE WHERE DEBTS SUFFICIENTLY SECURED;
REASON. The grounds upon which attachment may issue are set forth in Section 1, Rule 57 of the Rules
of Court. But quite apart from the grounds stated therein, it is further provided in Section 3 of Rule 57 that
"an 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 the facts, that . . . there is no other sufficient security for the
claim sought to be enforced by the action." The reason for the rule prohibiting attachment where
indebtedness was already secured is to prevent the secured creditors from attaching additional property and
thus tying up more of the debtors property than was necessary to secure the indebtedness (Blankenship v.
Myers, 54 P. 2d 314, 316; 97 Idaho 356 [1975]). Thus, to sustain an order of attachment, "it is incumbent
upon plaintiff to establish either of these two facts, to wit: (a) that the obligation had not been secured
originally, or (b) that, if secured at its beginning, the security later became valueless." (Giandini v. Ramirez,
54 Pacific Reporter [2d] 91-92).
3. ID.; ID.; ID.; DISCHARGE THEREOF, WHEN PROPER. Section 13, Rule 57 of the Rules of Court
authorizes the discharge of an attachment where the same had been improperly or irregularly issued. In
National Coconut Corporation v. Hon. Potenciano Pecson, 90 Phil. 809, this Court ruled that when the facts
or some of them, stated in the plaintiffs affidavit, are shown by the defendant to be untrue, the writ of
attachment may be considered as improperly or irregularly issued.

4. ID.; ID.; ID.; ISSUANCE THEREOF STRICTLY CONSTRUED IN FAVOR OF DEFENDANT. Since
attachment is a harsh and rigorous remedy which exposes the debtor to humiliation and annoyance, the rule
authorizing its issuance must be strictly construed in favor of the defendant. It should not be abused as to
cause unnecessary prejudice. It is the duty of the court before issuing the writ to ensure that all the
requisites of the law has been complied with (Guzman v. Catolico, 65 Phil. 257; Salas v. Adil, 90 SCRA 125).

AQUINO, J., dissenting: chanro b1es vi rtua l 1aw lib ra ry

1. REMEDIAL LAW; PROVISIONAL REMEDY; ATTACHMENT; MAY ISSUE EVEN IF DEBT IS SECURED; CASE AT
BAR. A writ of attachment may be validly issued although the debt sued upon is secured by mortgages
where such mortgages covered not only the debt sued upon but also the debtors other obligations; where
the debtors failed to assign to the creditor bank their sugar proceeds which they had given as security for
their loan; and where the writ is supported by a sufficient bond.

DECISION

ESCOLIN, J.:

This is a petition for review filed by the spouses Jose Salgado and Julieta Salgado to set aside the resolution
of the then Court of Appeals in CA-G.R. No. SP-09407-R, dated September 18, 1980, which authorized the
issuance of a writ of attachment against the property of said petitioners.

The pertinent facts that gave rise to this petition are as follows: On May 8, 1978, the Philippine Commercial
and Industrial Bank, hereinafter referred to as the Bank, filed an action against petitioners, docketed as Civil
Case No. 29392 of the then Court of First Instance of Rizal, to recover on a promissory note in the amount
of P1,510,905.96, inclusive of interest and other bank charges. In its verified complaint, the Bank further
prayed for the issuance of a writ of attachment. As grounds therefor it alleged that petitioners had
fraudulently misappropriated and/or converted to their own personal use and benefit the sugar proceeds
given as security for the payment of the indebtedness; that petitioners are guilty of fraud in contracting
their obligation and have concealed, removed or disposed of the properties mortgaged or assigned to the
plaintiff, or are concealing, removing or disposing or about to do so, with intent to defraud their creditor;
that the obligation sought to be enforced is genuine and, therefore, a sufficient cause of action exists; and
that there is no sufficient security for the claim sought to be enforced by the action. Attached to the
complaint was the affidavit of Mrs. Helen Osias, Senior Branch Credit Division Manager of the Bank, wherein
she stated, among others, "that there is no sufficient security for the claim sought to be enforced by this
action."
cralaw virtua1aw lib rary

On May 9, 1978, the trial court issued an order granting the Banks prayer for preliminary attachment upon
a bond in the sum of P1,510,905.96. Upon the filing of said bond, the Deputy Provincial Sheriff levied upon
several parcels of land of petitioners situated in the province of Negros Occidental.

On September 15, 1978, petitioners Salgado moved to quash the writ of attachment on the ground that
respondent Bank made fraudulent misrepresentation in securing the writ by deleting the words "R E M" or
"Real Estate Mortgage" from the xerox copy of the promissory note attached to the complaint, thereby
"making it appear that the note was unsecured when in truth and in fact it was fully secured by a series of
valid and existing real estate mortgages duly registered and annotated in the titles of the affected real
properties in favor of the plaintiff Bank." In the same motion, petitioners stressed the lack of factual basis of
the Banks claim as to their alleged fraudulent misappropriation or conversion of the sugar proceeds given as
security for their obligation.
After due hearing, the trial court issued an order dated January 31, 1979 granting petitioners motion and
lifting the writ of attachment previously issued.

Upon denial of its motion for reconsideration the Bank went to the Court of Appeals on a petition
forcertiorari to annul the order of the trial court lifting the writ of attachment.
cralawnad

On November 29, 1979, the respondent Court of Appeals, finding that the order of the trial court was not
arbitrarily issued, dismissed the petition for lack of merit.

However, on motion of the Bank, the respondent Court reconsidered its decision of November 29, 1979 and
issued the questioned resolution dated September 18, 1980, which authorized the issuance of a writ of
attachment.

Hence, the present recourse.

We find the petition impressed with merit, The chief purpose of the remedy of attachment is to secure a
contingent lien on defendants property until plaintiff can, by appropriate proceedings, obtain a judgment
and have such property applied to its satisfaction, or to make some provision for unsecured debts in cases
where the means of satisfaction thereof are liable to be removed beyond the jurisdiction, or improperly
disposed of or concealed, or otherwise placed beyond the reach of creditors. 1

The grounds upon which attachment may issue are set forth in Section 1, Rule 57 of the Rules of Court. But
quite apart from the grounds stated therein, it is further provided in Section 3 of Rule 57 that "an 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 the facts, that . . . there is no other sufficient security for the claim sought to
be enforced by the action." cralaw virt ua 1aw libra ry

The reason for the rule prohibiting attachment where indebtedness was already secured is to prevent the
secured creditors from attaching additional property and thus tying up more of the debtors property than
was necessary to secure the indebtedness. 2 Thus, to sustain an order of attachment, "it is incumbent upon
plaintiff to establish either of these two facts, to wit: (a) that the obligation had not been secured originally,
or (b) that, if secured at its beginning, the security later became valueless." 3

In the instant case, the allegation in the affidavit of the Banks Credit Division Manager, Mrs. Helen Osias, to
the effect that "there is no sufficient security for the claim sought to be enforced by this action" has been
shown to be false. It is undisputed that the note sued upon "is fully secured by a series of valid and existing
real estate mortgages duly registered and annotated in the titles of the affected real property in favor of the
plaintiff Bank."
cralaw virtua1aw l ibra ry

Section 13, Rule 57 of the Rules of Court authorizes the discharge of an attachment where the same had
been improperly or irregularly issued. In National Coconut Corporation v. Hon. Potenciano Pecson, 4 this
Court ruled that when the facts or some of them, stated in the plaintiffs affidavit, are shown by the
defendant to be untrue, the writ of attachment may be considered as improperly or irregularly issued.

Since attachment is a harsh and rigorous remedy which exposes the debtor to humiliation and annoyance,
the rule authorizing its issuance must be strictly construed in favor of the defendant. It should not be
abused as to cause unnecessary prejudice. It is the duty of the court before issuing the writ to ensure that
all the requisites of the law has been complied with. 5

Accordingly, the resolution of the respondent Court of Appeals, now the Intermediate Appellate Court, dated
September 18, 1980, is hereby set aside. No costs.

SO ORDERED.

G.R. No. 175587 September 21, 2007

PHILIPPINE COMMERCIAL INTERNATIONAL BANK, Petitioner,

vs.
JOSEPH ANTHONY M. ALEJANDRO, Respondent.
 DECISION

YNARES-SANTIAGO, J.:

This petition for review assails the May 31, 2006 Decision1 of the Court of Appeals in CA-G.R. CV
No. 78200 affirming the August 30, 2000 Decision2 of the Regional Trial Court of Makati, which
granted respondent Joseph Anthony M. Alejandros claim for damages arising from petitioner
Philippine Commercial International Banks (PCIB) invalid garnishment of respondents deposits.

On October 23, 1997, petitioner filed against respondent a complaint3 for sum of money with prayer
for the issuance of a writ of preliminary attachment. Said complaint alleged that on September 10,
1997, respondent, a resident of Hong Kong, executed in favor of petitioner a promissory note
obligating himself to pay P249,828,588.90 plus interest. In view of the fluctuations in the foreign
exchange rates which resulted in the insufficiency of the deposits assigned by respondent as
security for the loan, petitioner requested the latter to put up additional security for the loan.
Respondent, however, sought a reconsideration of said request pointing out petitioners alleged
mishandling of his account due to its failure to carry out his instruction to close his account as early
as April 1997, when the prevailing rate of exchange of the US Dollar to Japanese yen was
US$1.00:JPY127.50.4 It appears that the amount of P249,828,588.90 was the consolidated amount
of a series of yen loans granted by petitioner to respondent during the months of February and April
1997.5

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

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

Subsequently, respondent filed a motion to quash9 the writ contending that the withdrawal of his
unassigned deposits was not fraudulent as it was approved by petitioner. He also alleged that
petitioner knew that he maintains a permanent residence at Calle Victoria, Ciudad Regina, Batasan
Hills, Quezon City, and an office address in Makati City at the Law Firm Romulo Mabanta
Buenaventura Sayoc & De los Angeles, 10 where he is a partner. In both addresses, petitioner
regularly communicated with him through its representatives. Respondent added that he is the
managing partner of the Hong Kong branch of said Law Firm; that his stay in Hong Kong is only
temporary; and that he frequently travels back to the Philippines.

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

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

SO ORDERED.11

With the denial12 of petitioners motion for reconsideration, it elevated the case to the Court of
Appeals (CA-G.R. SP No. 50748) via a petition for certiorari. On May 10, 1999, the petition was
dismissed for failure to prove that the trial court abused its discretion in issuing the aforesaid
order.13 Petitioner filed a motion for reconsideration but was denied on October 28, 1999.14 On
petition with this Court, the case was dismissed for late filing in a minute resolution (G.R. No.
140605) dated January 19, 2000.15 Petitioner filed a motion for reconsideration but was
likewise denied with finality on March 6, 2000.16

Meanwhile, on May 20, 1998, respondent filed a claim for damages in the amount of P25 Million17 on
the attachment bond (posted by Prudential Guarantee & Assurance, Inc., under JCL(4) No. 01081,
Bond No. HO-46764-97) on account of the wrongful garnishment of his deposits. He presented
evidence showing that hisP150,000.00 RCBC check payable to his counsel as attorneys fees, was
dishonored by reason of the garnishment of his deposits. He also testified that he is a graduate of
the Ateneo de Manila University in 1982 with a double degree of Economics and Management
Engineering and of the University of the Philippines in 1987 with the degree of Bachelor of Laws.
Respondent likewise presented witnesses to prove that he is a well known lawyer in the business
community both in the Philippines and in Hong Kong.18 For its part, the lone witness presented by
petitioner was Nepomuceno who claimed that she acted in good faith in alleging that respondent is a
resident of Hong Kong.19

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

WHEREFORE, premises above considered, and defendant having duly established his claim in the
amount ofP25,000,000.00, judgment is hereby rendered ordering Prudential Guarantee &
[Assurance] Co., which is solidarily liable with plaintiff to pay defendant the full amount of bond under
Prudential Guarantee & Assurance, Inc. JCL(4) No. 01081, [Bond No. HO-46764-97], dated 24
October 1997 in the amount of P18,798,734.69. And, considering that the amount of the bond is
insufficient to fully satisfy the award for damages, plaintiff is hereby ordered to pay defendant the
amount of P6,201,265.31.

SO ORDERED.20

The trial court denied petitioners motion for reconsideration on October 24, 2000.21

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

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

SO ORDERED.22

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

Hence, the instant petition.

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

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

We rule in the affirmative.

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

Petitioners contentions are without merit.

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

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

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

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

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

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

Apropos the Application for Judgment on the Attachment Bond, Escobar claims in its petition that the
award of attorneys fees and injunction bond premium in favor of Hanil is [contrary] to law and
jurisprudence. It contends that no malice or bad faith may be imputed to it in procuring the writ.

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

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

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

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

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

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

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

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

(b) In an action for money or property embezzled or fraudulently misapplied or converted to

his own use by a public officer, or an officer of a corporation or an attorney, factor, broker,
agent, or clerk, in the course of his employment as such, or by any other person in a
fiduciary capacity, or for a willful violation of duty;

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

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

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

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

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

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

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

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

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

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

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

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

A man temporarily absent from this country leaves a definite place of residence, a dwelling where he
lives, a local base, so to speak, to which any inquiry about him may be directed and where he is
bound to return. Where one temporarily absents himself, he leaves his affairs in the hands of one
who may be reasonably expected to act in his place and stead; to do all that is necessary to protect
his interests; and to communicate with him from time to time any incident of importance that may
affect him or his business or his affairs. It is usual for such a man to leave at his home or with his
business associates information as to where he may be contacted in the event a question that
affects him crops up.
Thus, in actions in personam against residents temporarily out of the Philippines, the court need not
always attach the defendants property in order to have authority to try the case. Where the plaintiff
seeks to attach the defendants property and to resort to the concomitant service of summons by
publication, the same must be with prior leave, precisely because, if the sole purpose of the
attachment is for the court to acquire jurisdiction, the latter must determine whether from the
allegations in the complaint, substituted service (to persons of suitable discretion at the defendants
residence or to a competent person in charge of his office or regular place of business) will suffice,
or whether there is a need to attach the property of the defendant and resort to service of summons
by publication in order for the court to acquire jurisdiction over the case and to comply with the
requirements of due process.

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

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

In light of the foregoing, the Court of Appeals properly sustained the finding of the trial court that
petitioner is liable for damages for the wrongful issuance of a writ of attachment against respondent.

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

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

In this case, the award of nominal damages is proper considering that the right of respondent to use
his money has been violated by its garnishment. The amount of nominal damages must, however,
be reduced from P2 million toP50,000.00 considering the short period of 2 months during which the
writ was in effect as well as the lack of evidence as to the amount garnished. 1w phi 1
Likewise, the award of attorneys fees is proper when a party is compelled to incur expenses to lift a
wrongfully issued writ of attachment. The basis of the award thereof is also the amount of money
garnished, and the length of time respondents have been deprived of the use of their money by
reason of the wrongful attachment.39 It may also be based upon (1) the amount and the character of
the services rendered; (2) the labor, time and trouble involved; (3) the nature and importance of the
litigation and business in which the services were rendered; (4) the responsibility imposed; (5) the
amount of money and the value of the property affected by the controversy or involved in the
employment; (6) the skill and the experience called for in the performance of the services; (7) the
professional character and the social standing of the attorney; (8) the results secured, it being a
recognized rule that an attorney may properly charge a much larger fee when it is contingent than
when it is not.40

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

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

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

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

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

No pronouncement as to costs.

SO ORDERED.
G.R. No. 167741 July 12, 2007

REPUBLIC OF THE PHILIPPINES, Petitioner,

vs.
MAJ. GEN. CARLOS FLORES GARCIA, CLARITA DEPAKAKIBO GARCIA, IAN CARL
DEPAKAKIBO GARCIA, JUAN PAULO DEPAKAKIBO GARCIA, TIMOTHY DEPAKAKIBO
GARCIA and THE SANDIGANBAYAN (FOURTH DIVISION), Respondents.

DECISION

CORONA, J.:

This petition for certiorari1 assails the January 14, 2005 and March 2, 2005 resolutions2 of the Fourth
Division of the Sandiganbayan in Civil Case No. 0193 entitled Republic of the Philippines v. Maj.
Gen. Carlos Flores Garcia, Clarita Depakakibo Garcia, Ian Carl Depakakibo Garcia, Juan Paulo
Depakakibo Garcia and Timothy Mark Depakakibo Garcia.

Civil Case No. 0193 was a petition for forfeiture of unlawfully acquired properties, with a verified
urgent ex-parte application for the issuance of a writ of preliminary attachment, filed by the Republic
of the Philippines against Maj. Gen. Carlos F. Garcia, his wife3 and children4 in the Sandiganbayan
on October 27, 2004. In praying for the issuance of a writ of preliminary attachment, the Republic
maintained that, as a sovereign political entity, it was exempt from filing the required attachment
bond.

On October 29, 2004, the Sandiganbayan issued a resolution ordering the issuance of a writ of
preliminary attachment against the properties of the Garcias upon the filing by the Republic of a P1
million attachment bond.5On November 2, 2004, the Republic posted the required attachment bond
to avoid any delay in the issuance of the writ as well as to promptly protect and secure its claim.

On December 7, 2004, the Republic filed a motion for partial reconsideration of the October 29, 2004
resolution claiming that it was exempt from filing an attachment bond and praying for the release
thereof.

In a resolution dated January 14, 2005, the Sandiganbayan ruled that there was nothing in the Rules
of Court that exempted the Republic from filing an attachment bond. It reexamined Tolentino v.
Carlos6 which was invoked by the Republic to justify its claimed exemption. That case was decided
under the old Code of Civil Procedure enacted more than a century ago.

The Sandiganbayan denied the Republics motion. Reconsideration was also denied in a resolution
dated March 2, 2005.

As already stated, these two resolutions (January 14, 2005 and March 2, 2005) are the subject of
the present petition.

Did the Sandiganbayan commit grave abuse of discretion when it rejected the Republics claim of
exemption from the filing of an attachment bond? Yes.

Sections 3 and 4, Rule 57 of the Rules of Court provide:

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

Sec. 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 damages which he may sustain by reason of the attachment, if the court shall
finally adjudge that the applicant was not entitled thereto. (emphasis supplied)

Under these provisions, before a writ of attachment may issue, a bond must first be filed to answer
for all costs which may be adjudged to the adverse party and for the damages he may sustain by
reason of the attachment. However, this rule does not cover the State. In Tolentino,7 this Court
declared that the State as represented by the government is exempt from filing an attachment bond
on the theory that it is always solvent.

2. Section 427 of the Code of Civil Procedure provides that before the issuance of a writ of
attachment, the applicant therefor or any person in his name, should file a bond in favor of the
defendant for an amount not less than P400 nor more than the amount of the claim, answerable for
damages in case it is shown that the attachment was obtained illegally or without sufficient
cause; but in the case at bar the one who applied for and obtained the attachment is the
Commonwealth of the Philippines, as plaintiff, and under the theory that the State is always
solvent it was not bound to post the required bond and the respondent judge did not exceed his
jurisdiction in exempting it from such requirement. x x x8 (emphasis supplied)

In other words, the issuance of a writ of preliminary attachment is conditioned on the filing of a bond
unless the applicant is the State. Where the State is the applicant, the filing of the attachment bond
is excused.9

The attachment bond is contingent on and answerable for all costs which may be adjudged to the
adverse party and all damages which he may sustain by reason of the attachment should the court
finally rule that the applicant is not entitled to the writ of attachment. Thus, it is a security for the
payment of the costs and damages to which the adverse party may be entitled in case there is a
subsequent finding that the applicant is not entitled to the writ. The Republic of the Philippines need
not give this security as it is presumed to be always solvent and able to meet its obligations.

The Sandiganbayan thus erred when it disregarded the foregoing presumption and instead ruled that
the Republic should file an attachment bond. The error was not simply an error of judgment but
grave abuse of discretion.

There is grave abuse of discretion when an act is done contrary to the Constitution, the law or
jurisprudence.10Here, the Sandiganbayans January 14, 2005 resolution was clearly contrary
to Tolentino.

Worse, the Sandiganbayan transgressed the Constitution and arrogated upon itself a power that it
did not by law possess. All courts must take their bearings from the decisions and rulings of this
Court. Tolentino has not been superseded or reversed. Thus, it is existing jurisprudence and
continues to form an important part of our legal system.11 Surprisingly, the Sandiganbayan declared
that Tolentino "need(ed) to be carefully reexamined in the light of the changes that the rule on
attachment ha(d) undergone through the years."12 According to the court a quo:

[Tolentino] was decided by the Supreme Court employing the old Code of Civil Procedure (Act No.
190) which was enacted by the Philippine Commission on August 7, 1901 or more than a century
ago.

That was then, this is now. The provisions of the old Code of Civil Procedure governing attachment
have been substantially modified in the subsequent Rules of Court. In fact, Rule 57 of the present
1997 Rules of Civil Procedure is an expanded modification of the provisions of the old Code of Civil
Procedure governing attachment. Unlike the old Code of Civil Procedure, the present 1997 Rules of
Civil Procedure is noticeably explicit in its requirement that the party applying for an order of
attachment should file a bond.

On this, Article VIII, Section 4(3) of the Constitution provides:

(3) Cases or matters heard by a division shall be decided or resolved with the concurrence of
majority of the Members who actually took part in the deliberations on the issues in the case and
voted thereon, and in no case without the concurrence of at least three of such Members. When the
required number is not obtained, the case shall be decided en banc; Provided, that no doctrine or
principle of law laid down by the court in a decision rendered en banc or in division may be
modified or reversed except by the court sitting en banc. (emphasis supplied)

The Constitution mandates that only this Court sitting en banc may modify or reverse a doctrine or
principle of law laid down by the Court in a decision rendered en banc or in division. Any court, the
Sandiganbayan included, which renders a decision in violation of this constitutional precept exceeds
its jurisdiction.

Therefore, the Sandiganbayan could not have validly "reexamined," much less reversed, Tolentino.
By doing something it could not validly do, the Sandiganbayan acted ultra vires and committed grave
abuse of discretion.

The fact was, the revisions of the Rules of Court on attachment, particularly those pertaining to the
filing of an attachment bond, did not quash Tolentino.

Tolentino applied Sec. 247 of Act No. 190 which provided:

Sec. 247. Obligation for damages in case of attachment. Before the order is made, the party
applying for it, or some person on his behalf, must execute to the defendant an obligation in an
amount to be fixed by the judge, or justice of the peace, and with sufficient surety to be
approved by him, which obligation shall be for a sum not less than two hundred dollars, and not
exceeding the amount claimed by the plaintiff, that the plaintiff will pay all the costs which may be
adjudged to the defendant, and all damages which he may sustain by reason of the attachment, if
the same shall finally be adjudged to have been wrongful or without sufficient cause. (emphasis
supplied)

Contrary to the pronouncement of the Sandiganbayan, Section 247 of Act No. 190 explicitly required
the execution of an attachment bond before a writ of preliminary attachment could be issued.

The relevant provisions of Act No. 190 on attachment were later substantially adopted as Sections
313 and 4, Rule 59 of the 1940 Rules of Court.
Sec. 3. Order issued only when affidavit and bond filed. An order of attachment shall be granted
only when it is made to appear by the affidavit of the plaintiff, or of some other person who
personally knows the facts, that the case is one of those mentioned in section 1 hereof, that there is
no other sufficient security for the claim sought to be enforced by the action, and that the amount
due to the plaintiff, or the value of the property which he is entitled to recover possession of, is as
much as the sum for which the order is granted above all legal counterclaims; which affidavit,
and the bond required by the next succeeding section, must be duly filed with the clerk or
judge of the court before the order issues. (emphasis supplied)

Sec. 4. Bond required from plaintiff. The party applying for the order must give a bond executed to
the defendant in an amount to be fixed by the judge, not exceeding the plaintiffs claim, that the
plaintiff will pay all the costs which may be adjudged to the defendant and all damages which he
may sustain by reason of the attachment, if the court shall finally adjudge that the plaintiff was not
entitled thereto.

And with the promulgation of the 1964 Rules of Court, the rules on attachment were renumbered as
Rule 57, remaining substantially the same:

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

Sec. 4. Condition of applicants bond. The party applying for the order must thereafter give a bond
executed to the adverse party in an amount to be fixed by the judge, not exceeding the applicants
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.

Clearly, the filing of an attachment bond before the issuance of a writ of preliminary attachment was
expressly required under the relevant provisions of both the 1940 and 1964 Rules of Court.

Commentaries on Sections 3 and 4 of the 1964 Rules of Court uniformly cited Tolentino. They stated
that the government is exempt from filing an attachment bond14 and that the State need not file an
attachment bond.15

Where the Republic of the Philippines as a party to an action asks for a writ of attachment against
the properties of a defendant, it need not furnish a bond. This is so because the State is presumed
to be solvent.16

When plaintiff is the Republic of the Philippines, it need not file a bond when it applies for a
preliminary attachment. This is on the premise that the State is solvent.17

And then again, we note the significant fact that Sections 3 and 4, Rule 57 of the 1964 Rules of
Court were substantially incorporated as Sections 3 and 4, Rule 57 of the present (1997) Rules of
Court.18 There is thus no reason why the Republic should be made to file an attachment bond. 1avv phi 1
In fact, in Spouses Badillo v. Hon. Tayag,19 a fairly recent case, this Court declared that, when the
State litigates, it is not required to put up a bond for damages or even an appeal bond because it is
presumed to be solvent. In other words, the State is not required to file a bond because it is capable
of paying its obligations.20

The pronouncement in Spouses Badillo applies in this case even if Spouses Badillo involved the
filing of a supersedeas bond. The pronouncement that the State "is not required to put up a bond for
damages or even an appeal bond" is general enough to encompass attachment bonds. Moreover,
the purpose of an attachment bond (to answer for all costs and damages which the adverse party
may sustain by reason of the attachment if the court finally rules that the applicant is not entitled to
the writ) and a supersedeas bond (to answer for damages to the winning party in case the appeal is
found frivolous) is essentially the same.1awphil.zw+

In filing forfeiture cases against erring public officials and employees, the Office of the Ombudsman
performs the States sovereign functions of enforcing laws, guarding and protecting the integrity of
the public service and addressing the problem of corruption in the bureaucracy.

The filing of an application for the issuance of a writ of preliminary attachment is a necessary
incident in forfeiture cases. It is needed to protect the interest of the government and to prevent the
removal, concealment and disposition of properties in the hands of unscrupulous public officers.
Otherwise, even if the government subsequently wins the case, it will be left holding an empty bag.

Accordingly, the petition is hereby GRANTED. The January 14, 2005 and March 2, 2005 resolutions
of the Sandiganbayan are REVERSED and SET ASIDE. The Republic of the Philippines is declared
exempt from the payment or filing of an attachment bond for the issuance of a writ of preliminary
attachment issued in Civil Case No. 0193. The Sandiganbayan is hereby ordered to release
the P1,000,000 bond posted by the Republic of the Philippines to the Office of the Ombudsman.

SO ORDERED.