Lim vs Lazaro

G.R. No. 185734 July 3, 2013

ALFREDO C. LIM, JR., PETITIONER,
vs.
SPOUSES TITO S. LAZARO AND CARMEN T. LAZARO, RESPONDENTS.

FACTS: Petitioner Lim Jr filed a complaint for a sum of money with a prayer for the issuance of a writ
of preliminary attachment against the respondent Sps Lazaro. The RTC granted the writ of
preliminary attachment application and upon the posting of the required bond issued the
corresponding writ on October 14, 2005. 3 parcels of land owned by the respondent spouses were
levied upon.

The parties later entered into a Compromise Agreement whereby Sps. Lazaro agreed to pay Lim, Jr.
the amount of P2,351,064.80 on an installment basis, following a schedule of payments covering the
period from September 2006 until October 2013. The RTC rendered a decision on the basis of the
compromise.

Sps. Lazaro then filed an Omnibus Motion, seeking to lift the writ of preliminary attachment
annotated on the subject TCTs.

In granting the Motion, the RTC ruled that a writ of preliminary attachment is a mere provisional or
ancillary remedy, resorted to by a litigant to protect and preserve certain rights and interests pending
final judgment. Considering that the case had already been considered closed and terminated by the
rendition of the decision based on the compromise agreement, the writ of preliminary attachment
should be lifted and quashed.

ISSUE: Whether or not the writ of preliminary attachment was properly lifted.

HELD: NO. By its nature, preliminary attachment, under Rule 57 of the Rules of Court (Rule 57), is
an ancillary remedy applied for not for its own sake but to enable the attaching party to realize upon
the relief sought and expected to be granted in the main or principal action; it is a measure auxiliary
or incidental to the main action. As such, it is available during its pendency which may be resorted to
by a litigant to preserve and protect certain rights and interests during the interim, awaiting the
ultimate effects of a final judgment in the case. In addition, attachment is also availed of in order to
acquire jurisdiction over the action by actual or constructive seizure of the property in those
instances where personal or substituted service of summons on the defendant cannot be effected.
In this relation, while the provisions of Rule 57 are silent on the length of time within which an
attachment lien shall continue to subsist after the rendition of a final judgment, jurisprudence dictates
that the said lien continues until the debt is paid, or the sale is had under execution issued on the
judgment or until the judgment is satisfied, or the attachment discharged or vacated in the same
manner provided by law.
Applying these principles, the Court finds that the discharge of the writ of preliminary attachment
against the properties of Sps. Lazaro was improper.
Records indicate that while the parties have entered into a compromise agreement which had
already been approved by the RTC in its January 5, 2007 Amended Decision, the obligations
thereunder have yet to be fully complied with – particularly, the payment of the total compromise
amount of P2,351,064.80. Hence, given that the foregoing debt remains unpaid, the attachment of
Sps. Lazaro’s properties should have continued to subsist.
In the earlier case of Chemphil Export & Import Corporation v. CA, the Court ruled that a writ of
attachment is not extinguished by the execution of a compromise agreement between the parties. In
that case the Court held thus:

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

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

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

Ligon vs RTC Branch 56 Makati City

G.R. No. 190028 February 26, 2014
LETICIA P. LIGON, Petitioner,
vs.
THE REGIONAL TRIAL COURT, BRANCH 56 AT MAKATI CITY AND ITS PRESIDING JUDGE,
JUDGE REYNALDO M. LAIGO, SHERIFF IV LUCITO V. ALEJO, ATTY. SILVERIO GARING, MR.
LEONARDO J. TING, AND MR. BENITO G. TECHICO, Respondents.
FACTS: Petitioner Ligon filed before the QC RTC a complaint for the collection of a sum of money
with prayer for the issuance of a writ of preliminary attachment against the Sps. Baladjay, a certain
Olivia Marasigan (Marasigan), Polished Arrow Holdings, Inc. (Polished Arrow), and its incorporators.
The complaint alleges among others that the spouses Baladjay enticed her to extend a short-term
loan secured by a PDC which bounced upon presentment, and that the subject property was
transferred to respondent Polished Arrow allegedly defendants’ dummy corporation to defraud
creditors. The application for the writ was granted so the subject property was levied upon by
annotating the writ on the dorsal portion of TCT No. 9273.
While the case was pending, a similar complaint for the sum of money damages, and cancellation of
title with prayer for issuance of a writ of preliminary attachment was lodged before the RTC Makati
by the Sps Vicente against the same respondents. During the proceedings therein, a writ of
preliminary attachment also against the subject property was issued and annotated on the dorsal
portion of TCT No. 9273.

While the case is still pending in QC, the Makati RTC rendered a decision rescinding the transfer of
the subject property to Polished Arrow upon a finding that the same was made in fraud of creditors.
Consequently, the Makati City RTC directed the Register of Deeds of Muntinlupa City to: (a) cancel
TCT No. 9273 in the name of Polished Arrow; and (b) restore TCT No. 8502 “in its previous
condition” in the name of Rosario Baladjay. In the subsequent execution proceedings, the property
was sold at a public auction to respondent Ting.
The RTC Makati then ordered the RD under pain of contempt to issue a new certificate in favor of
Ting free from any liens and encumbrances.
Meanwhile the QC RTC ruled in favor of Ligon who sought its execution and discovered the earlier
attachment annotation in her favor has been deleted.

ISSUE: W/N the Makati RTC gravely abused its discretion when it ordered the deletion of Ligon’s
attachment lien
HELD: YES. Case law instructs that an attachment is a proceeding in rem, and, hence, is against
the particular property, enforceable against the whole world. Accordingly, the attaching creditor
acquires a specific lien on the attached property which nothing can subsequently destroy except the
very dissolution of the attachment or levy itself. Such a proceeding, in effect, means that the property
attached is an indebted thing and a virtual condemnation of it to pay the owner’s debt. The lien
continues until the debt is paid, or sale is had under execution issued on the judgment, or until the
judgment is satisfied, or the attachment discharged or vacated in some manner provided by law.
Thus, a prior registration40 of an attachment lien creates a preference, such that when an
attachment has been duly levied upon a property, a purchaser thereof subsequent to the attachment
takes the property subject to the said attachment.42 As provided under PD 1529, said registration
operates as a form of constructive notice to all.
Notwithstanding the subsequent cancellation of TCT No. 9273 due to the Makati City RTC’s
December 9, 2004 Decision rescinding the transfer of the subject property from Sps. Baladjay to
Polished Arrow upon a finding that the same was made in fraud of creditors, Ligon’s attachment lien
over the subject property continued to subsist since the attachment she had earlier secured binds
the property itself, and, hence, continues until the judgment debt of Sps. Baladjay to Ligon as
adjudged in the Quezon City Case is satisfied, or the attachment discharged or vacated in some
manner provided by law. The grave abuse of discretion of the Makati City RTC lies with its directive
to issue a new certificate of title in the name of Ting (i.e., TCT No. 19756),47 free from any liens and
encumbrances. This course of action clearly negates the efficacy of Ligon’s attachment lien and,
also, defies the legal characterization of attachment proceedings. It bears noting that Ligon’s claim,
secured by the aforesaid attachment, is against Sps. Baladjay whose ownership over the subject
property had been effectively restored in view of the RTC’s rescission of the property’s previous sale
to Polished Arrow.48Thus, Sps. Ligon’s attachment lien against Sps. Baladjay as well as their
successors-in-interest should have been preserved, and the annotation thereof carried over to any
subsequent certificate of title,49 the most recent of which as it appears on record is TCT No. 31001
in the name of Techico, without prejudice to the latter’s right to protect his own ownership interest
over the subject property.
A) belated service of summons on respondents cannot be deemed to have cured the fatal defect in
the enforcement of the writ. The trial court cannot enforce such a coercive process on respondents
without first obtaining jurisdiction over their person. The preliminary writ of attachment must be
served after or simultaneous with the service of summons on the defendant whether by personal
service, substituted service or by publication as warranted by the circumstances of the case.

Facts:
Siblings Torres (petitioners) each owned adjacent 20,000 square meters track of land in
Dasmariñas, Cavite. Nicanor Satsatin, through petitioners’ mother Agripina Aledia, was able to
convince the siblings to sell their property and authorize him via SPA, to negotiate for its sale.
Nicanor offered to sell the properties to Solar Resources, to which Solar allegedly agreed to buy the
three parcels of land plus the property of one Rustica Aledia for P35, 000,000. Petitioners claimed
that Solar has already paid the entire purchase price, however Nicanor only remitted P9, 000,000
out of the P28, 000,000 sum they are entitled to and that Nicanor had acquired a house and lot and
a car (which he registered in the names of his children). Despite the repeated verbal and written
demands, Nicanor failed to remit the balance prompting the petitioners to file a complaint for sum of
money against the family Satsatin.

Petitioners filed an Ex Parte Motion for the Issuance of a Writ of Attachment, alleging among other
things, that respondent was about to depart the country and that they are willing to post a bond fixed
by court. After filing a Motion for Deputation of Sheriff, which the RTC granted, it issued a Writ of
Attachment (WOA) on November 15. On November 19, after serving a copy of the WOA upon the
Satsatins, the sheriff levied their real and personal properties. On November 21, the summons and
copy of complaint was served upon the respondents. Respondents filed their answer and a Motion to
Discharge Writ of Attachment, claiming, among others, that: the bond was issued before the issuance
of WOA, the WOA was issued before the summons was received. Respondents posted a counter-bond
for the lifting of WOA, which was denied along with MR. Aggrieved, they filed with CA a Petition for
Certiorari, Mandamus and Prohibition with Preliminary Injunction and TRO under Rule 65. CA
ruled in favor of respondents and denied petitioners’ MR hence the petition for review on certiorari
with the SC.

Issue:
W/N CA erred in finding that RTC was guilty of GADALEJ in the issuance and implementation of the
WOA

Held:
No. 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 that might be secured in the said action by the attaching creditor against the defendant.
In the case at bar, the CA correctly found that there was grave abuse of discretion amounting to lack
of or in excess of jurisdiction on the part of the trial court in approving the bond posted by
petitioners despite the fact that not all the requisites for its approval were complied with. In
accepting a surety bond, it is necessary that all the requisites for its approval are met; otherwise, the
bond should be rejected.

Moreover, in provisional remedies, particularly that of preliminary attachment, the distinction

between the issuance and the implementation of the writ of attachment is of utmost importance to
the validity of the writ. The distinction is indispensably necessary to determine when jurisdiction
over the person of the defendant should be acquired in order to validly implement the writ of
attachment upon his person.

In Cuartero v. Court of Appeals, this Court held that the grant of the provisional remedy of
attachment involves three stages: first, the court issues the order granting the application; second,
the writ of attachment issues pursuant to the order granting the writ; and third, the writ is
implemented. For the initial two stages, it is not necessary that jurisdiction over the person of the
defendant be first obtained. However, once the implementation of the writ commences, the court
must have acquired jurisdiction over the defendant, for without such jurisdiction, the court has no
power and authority to act in any manner against the defendant. Any order issuing from the Court
will not bind the defendant.
At the time the trial court issued the writ of attachment on November 15, 2002, it can validly to do so
since the motion for its issuance can be filed “at the commencement of the action or at any time
before entry of judgment.” However, at the time the writ was implemented, the trial court has not
acquired jurisdiction over the persons of the respondent since no summons was yet served upon
them. The proper officer should have previously or simultaneously with the implementation of the
writ of attachment, served a copy of the summons upon the respondents in order for the trial court to
have acquired jurisdiction upon them and for the writ to have binding effect. Consequently, even if
the writ of attachment was validly issued, it was improperly or irregularly enforced and, therefore,
cannot bind and affect the respondents.
Moreover, again assuming arguendo that the writ of attachment was validly issued, although the trial
court later acquired jurisdiction over the respondents by service of the summons upon them, such
belated service of summons on respondents cannot be deemed to have cured the fatal
defect in the enforcement of the writ. The trial court cannot enforce such a coercive
process on respondents without first obtaining jurisdiction over their person. The
preliminary writ of attachment must be served after or simultaneous with the service
of summons on the defendant whether by personal service, substituted service or by
publication as warranted by the circumstances of the case. The subsequent service of
summons does not confer a retroactive acquisition of jurisdiction
G.R. No. 125027 August 12, 2002
ANITA MANGILA, petitioner,
vs.
COURT OF APPEALS and LORETA GUINA, respondents.
FACTS: Private respondent filed a complaint for collection of sum of money against herein
petitioner. On August 1, 1988, the sheriff filed his Sheriff’s Return showing that summons was not
served on petitioner. A woman found at petitioner’s house informed the sheriff that petitioner
transferred her residence to Sto. Niño, Guagua, Pampanga. The sheriff found out further that
petitioner had left the Philippines for Guam.
Thus, on September 13, 1988, construing petitioner’s departure from the Philippines as done with
intent to defraud her creditors, private respondent filed a Motion for Preliminary Attachment. On
September 26, 1988, the trial court issued an Order of Preliminary Attachment6 against petitioner.
The following day, the trial court issued a Writ of Preliminary Attachment.

The trial court granted the request of its sheriff for assistance from their counterparts in RTC,
Pampanga. Thus, on October 28, 1988, Sheriff Alfredo San Miguel of RTC Pampanga served on
petitioner’s household help in San Fernando, Pampanga, the Notice of Levy with the Order, Affidavit
and Bond.

Petitioner filed a motion to discharge attachment claiming that the court had not acquired jurisdiction
over her person.
The trial court granted the Motion to Discharge Attachment on January 13, 1989 upon filing of
petitioner’s counter-bond. The trial court, however, did not rule on the question of jurisdiction and on
the validity of the writ of preliminary attachment.

Thereafter private respondent applied for an alias summons which was granted by the court.

ISSUE: W/N the writ was validly implemented

HELD: The grant of the provisional remedy of attachment involves three stages: first, the court
issues the order granting the application; second, the writ of attachment issues pursuant to the order
granting the writ; and third, the writ is implemented. For the initial two stages, it is not necessary that
jurisdiction over the person of the defendant be first obtained. However, once the implementation of
the writ commences, the court must have acquired jurisdiction over the defendant for without such
jurisdiction, the court has no power and authority to act in any manner against the defendant. Any
order issuing from the Court will not bind the defendant.23
In the instant case, the Writ of Preliminary Attachment was issued on September 27, 1988 and
implemented on October 28, 1988. However, the alias summons was served only on January 26,
1989 or almost three months after the implementation of the writ of attachment.

The trial court had the authority to issue the Writ of Attachment on September 27 since a motion for
its issuance can be filed “at the commencement of the action.” However, on the day the writ was
implemented, the trial court should have, previously or simultaneously with the implementation of the
writ, acquired jurisdiction over the petitioner. Yet, as was shown in the records of the case, the
summons was actually served on petitioner several months after the writ had been implemented.

Private respondent never showed that she effected substituted service on petitioner after her
personal service failed. Likewise, if it were true that private respondent could not ascertain the
whereabouts of petitioner after a diligent inquiry, still she had some other recourse under the Rules
of Civil Procedure.

In conclusion, we hold that the alias summons belatedly served on petitioner cannot be deemed to
have cured the fatal defect in the enforcement of the writ. The trial court cannot enforce such a
coercive process on petitioner without first obtaining jurisdiction over her person.

The preliminary writ of attachment must be served after or simultaneous with the service of
summons on the defendant whether by personal service, substituted service or by publication as
warranted by the circumstances of the case. The subsequent service of summons does not confer a
retroactive acquisition of jurisdiction over her person because the law does not allow for retroactivity
of a belated service.

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

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

The SC has uniformly held that:

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

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

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

To reiterate, there are only two ways of quashing a writ of attachment:

1. by filing a counterbond immediately; and

2. by moving to quash on the ground of improper and irregular issuance.
These grounds for the dissolution of an attachment are fixed in Rule 57 of the Rules of Court
and the power of the Court to dissolve an attachment is circumscribed by the grounds
specified therein. Petitioner's motion to lift attachment failed to demonstrate any infirmity or
defect in the issuance of the writ of attachment, neither did he file a counterbond.

Chuidian vs Sandiganbayan (Remedial Law)

Vicente CHUIDIAN V. SANDIGANBAYAN and the
Republic
G.R. No. 1339941 | JANUARY 19, 2001
(modes of quashal of the writ of attachment)
FACTS:
 In September 1980, Chuidian allegedly a
dummy of Ferdinand and Imelda Marcos, was
able to obtain, allegedly under false
pretenses, a loan guarantee from
Philguarantee Corp., the BOI and the
Central Bank, in favor of the Asian
Reliability Co. Inc. (ARCI). ARCI, 98% of
which was allegedly owned by Chuidian, was
granted a loan guarantee of US $25M for the
establishment of 5 inter-related projects
in the country.
However, Chuidian used the same in
investing in corporations operating in the
US. ARCI then defaulted in the payments of
the loan, compelling Philguarantee to
undertake payments for the
same. Philguarantee sued Chuidian before a
Californian court, charging him of
violating the terms of the loan, defaulting
in payments and misusing the proceeds for
his personal benefit. Chuidian claimed that
he himself was a victim of the systematic
plunder perpetrated by the Marcoses.
On November 1985, Philguarantee entered
into a compromise agreement with Chuidian
whereby Chuidian shall assign and surrender
title to all his companies in favor of the
Phil. Gov’t. In return, Philguarantee
shall absolve Chuidian from all civil and
criminal liability concerning the payments
Philguarantee had made on Chuidian’s
defaulted loans. It was further stipulated
that the Phil. government shall pay
Chuidian the amount of US $5.3M. Chuidian
received the 1st two installments of the
payment. The remaining balance of US $4.6M
was to be paid through an irrevocable
Letter of Credit (L/C) from which Chuidian
would draw US $100k monthly.

With the advent of the Aquino

administration, the newly-established PCGG
exerted earnest efforts to search and
recover properties and assets suspected as
having been illegally acquired by the
Marcoses, their relatives and
cronies.Chuidian was among those whose
assets were sequestered by the PCGG. The
PNB was directed to place the letters of
credit under its custody, in behalf of the
PCGG.
 In the meantime, Philguarantee filed a
motion before the Superior Court of
California, seeking to vacate the
stipulated judgment containing the
settlement between Philguarantee and
Chuidian on the grounds that: (a)
Philguarantee was compelled by the Marcos
administration to agree to the terms of the
settlement; (b) Chuidian blackmailed Marcos
into pursuing the settlement agreement by
threatening to expose the fact that the
Marcoses made investments in Chuidian’s
American enterprises; and (c) the Aquino
administration had ordered Philguarantee
not to make further payments on the L/C to
Chuidian. However, the Californian court
concluded that Philguarantee was not able
to sufficiently show that the settlement
should be set aside. On appeal, the CA of
the State of California affirmed the
judgment of the Superior Court denying
Philguarantee’s motion.
Chuidian filed before the California
Central District Court, an action against
PNB seeking to compel the latter to pay the
proceeds of the L/C. Philguarantee
intervened in said action, raising the same
issues and arguments it had earlier raised
in the action before the Santa Clara
Superior Court, alleging that PNB was
excused from making payments on the L/C
since the settlement was void due to
illegality, duress and fraud.
The Federal Court rendered judgment
ruling: (1) in favor of PNB excusing the
said bank from making payment on the L/C;
and (2) in Chuidian’s favor by denying
intervenor Philguarantee’s action to set
aside the settlement agreement.

Meanwhile a Deed of Transfer was executed

between then Sec. of Finance and then PNB
President Edgardo Espiritu, to facilitate
the rehabilitation of PNB. Thus, the gov’t
assumed all liabilities of PNB including
the L/C listed in favor of Chuidian in the
amount of US $4.4M

On July 1987, the gov’t filed before the

Sandiganbayan a civil case against the
Marcos spouses, several gov’t officials,
and a number of individuals known to be
cronies of the Marcoses, including
 Chuidian, seeking the reconveyance,
accounting and restitution of all forms of
wealth allegedly procured illegally by the
defendants.
While the case was pending, the Republic
filed a motion for issuance of a writ of
attachment over the L/C in the name of
Chuidian, citing as grounds therefor the
following:
(1) Chuidian embezzled or fraudulently
misapplied the funds of ARCI acting in a
fiduciary capacity, justifying issuance of
the writ under Section 1(b), Rule 57 of the
Rules of Court;
(2) The writ is justified under Section 1(d)
of the same rule as Chuidian is guilty of
fraud in contracting the debt or incurring
the obligation upon which the action was
brought, or that he concealed or disposed
of the property that is the subject of the
action;
(3) Chuidian has removed or disposed of his
property with the intent of defrauding the
plaintiff as justified under Section 1(c)
of Rule 57; and
(4) Chuidian is residing out of the country
or one on whom summons may be served by
publication, which justifies the writ of
attachment prayed for under Section 1(e) of
the same rule.
The Republic also averred that should the
action brought by Chuidian before the U.S.
District Court of California to compel
payment of the L/C prosper, inspite of the
sequestration of the said L/C, Chuidian can
ask the said foreign court to compel the
PNB Los Angeles branch to pay the proceeds
of the L/C. Eventually, Philguarantee will
be made to shoulder the expense resulting
in further damage to the government. Thus,
there was an urgent need for the writ of
attachment to place the L/C under the
custody of the Sandiganbayan so the same
may be preserved as security for the
satisfaction of judgment in the case before
said court.

Chuidian opposed the motion for issuance

of the writ of attachment, contending that:
(1) The plaintiff’s affidavit appended to
the motion was in form and substance
fatally defective;
(2) Section 1(b) of Rule 57 does not apply
since there was no fiduciary relationship
between the plaintiff and Chuidian;
(3) While Chuidian does not admit fraud on
his part, if ever there was breach of
contract, such fraud must be present at the
time the contract is entered into;
(4) Chuidian has not removed or disposed of
his property in the absence of any intent
to defraud plaintiff;
(5) Chuidian’s absence from the country does
not necessarily make him a non-resident;
and
(6) Service of summons by publication cannot
be used to justify the issuance of the writ
since Chuidian had already submitted to the
jurisdiction of the Court by way of a
motion to lift the freeze order filed
through his counsel.

On July 1993, the Sandiganbayan ordered

the issuance of a writ of attachment
against the L/C as security for the
satisfaction of judgment. The Sandiganbayan
ruled:
1) Although there was no separate was
attached to the motion, the motion itself
contained all the requisites of an
affidavit, and the verification thereof is
deemed a substantial compliance of Rule 57,
Section 3.
2) Fiduciary relationship exists between
Chuidian and ARCI but not with the
Republic. Hence, the Republic cannot invoke
Sec. 1(b) of Rule 57.
3) There was a prima facie case of fraud
committed by Chuidian, justifying the
issuance of the writ of attachment.
4) The Sandiganbayan also adopted the
Republic’s position that since it was
compelled to pay, through Philguarantee,
the bank loans taken out by Chuidian, the
proceeds of which were fraudulently
diverted, it is entitled to the issuance of
the writ of attachment to protect its
rights as creditor.
 5) Chuidian’s absence from the country
was considered by the Sandiganbayan to be
the most compelling ground for the issuance
of the writ.

Almost four (4) years after the issuance

of the order of attachment, Chuidian filed
a motion to lift the attachment based on
the following grounds:
1) He had returned to the Philippines,
and considering that his absence was the
most compelling ground for the issuance of
the writ, the latter should be lifted.
2) There was no evidence at all of
initial fraud or subsequent concealment
except for the affidavit submitted by the
PCGG Chairman whose statement is hearsay
since he was not a witness to the litigated
incidents, was never presented as a witness
by the Republic and thus was not subject to
cross-examination.
3) He denies that he ever disposed of his
assets to defraud the Republic, and there
is nothing in the records that support the
Sandiganbayan’s erroneous conclusion on the
matter.
 4) He was never a defendant in any other
pending criminal action.
5) He was not guilty of fraud in
contracting the debt or incurring the
obligation. L/C was not a product of
fraudulent transactions but the result of
court-approved settlement.
6) Should the attachment be allowed to
continue, he will be deprived of his
property without due process. The L/C was
payment to Chuidian in exchange for the
assets he turned over to the
Republic. Said assets had already been
sold by the Republic and cannot be returned
to Chuidian should the government succeed
in depriving him of the proceeds of the
L/C.
7) Finally, throughout the 4 years that
the preliminary attachment had been in
effect, the gov’t had not set the case for
hearing. The case itself should be
dismissed for laches owing to the
Republic’s failure to prosecute its action
for an unreasonable length of
time. Accordingly, the preliminary
attachment, being only a temporary or
ancillary remedy, must be lifted and the
PNB ordered to immediately pay the proceeds
of the L/C to Chuidian.
The Republic opposed e motion and
contended that allowing the foreign
judgment as a basis for the lifting of the
attachment would essentially amount to an
abdication of the jurisdiction of the
Sandiganbayan to hear and decide the ill
gotten wealth cases lodged before it in
deference to the judgment of foreign
courts.
The Sandganbayan denied petitioner’s
motion and also the latter’s subsequent MR.

ISSUE:
WON the writ of preliminary attachment
should be lifted as a result of
petitioner’s return to the country and his
averments that there was no fraud in
incurring the obligation

HELD: No
*Preliminary attachment issued upon a
ground which is at the same time the
applicant’s cause of action. When the
preliminary attachment is issued upon a
ground which is at the same time the
applicant’s cause of action, the defendant
is not allowed to file a motion to dissolve
the attachment under Section 13 of Rule 57
by offering to show the falsity of the
factual averments in the plaintiff’s
application and affidavits on which the
writ was based – and consequently that the
writ based thereon had been improperly or
irregularly issued – the reason being that
the hearing on such a motion for
dissolution of the writ would be tantamount
to a trial of the merits of the action. In
other words, the merits of the action would
be ventilated at a mere hearing of a
motion, instead of at the regular trial.

The merits of the action in which a writ of

preliminary attachment has been issued are
not triable on a motion for dissolution of
the attachment; otherwise an applicant for
the lifting of the writ could force a trial
of the merits of the case on a mere motion.
There are only two ways of quashing a writ
of attachment: (a) by filing a counterbound
immediately; or (b) by moving to quash on
the ground of improper and irregular
issuance. These grounds for the dissolution
of an attachment are fixed in Rule 57 of
the Rules of Court and the power of the
Court to dissolve an attachment is
circumscribed by the grounds specified
therein. Petitioner’s motion to lift
attachment failed to demonstrate any
infirmity or defect in the issuance of the
writ of attachment; neither did he file a
counterbond.

Phil-Air Conditioning Center vs RCJ Lines and Rolando

Abadilla, Jr.
G.R. No. 193821, November 23, 2015

Phil-Air Conditioning Center (Phil-Air) filed this petition for review on certiorari

On various dates between March 5, 1990, and August 29, 1990, petitioner Phil-Air sold to respondent
RCJ Lines four Carrier Paris 240 air conditioning units for buses (units). The units included compressors,
condensers, evaporators, switches, wiring, circuit boards, brackets, and fittings.

Phil-Air allegedly performed regular maintenance checks on the units pursuant to the one-year warranty
on parts and labor. RCJ Lines issued three post-dated checks in favor of Phil-Air to partly cover the
unpaid balance.
All the post-dated checks were dishonored when Phil-Air subsequently presented them for payment.
Check No. 479759 was returned because it was drawn against insufficient funds, while Check Nos.
479760 and 479761 were returned because payments were stopped.

Before presenting the third check for payment, Phil-Air sent a demand letter to Rolando Abadilla, Sr.
asking him to fund the post-dated checks. In view of the failure of RCJ Lines to pay the balance despite
demand, Phil-Air filed on April 1, 1998 the complaint for sum of money with prayer for the issuance of a
writ of preliminary attachment.

In its answer with compulsory counterclaim, RCJ Lines admitted that it purchased the units in the total
amount of P1,240,000.00 and that it had only paid P400,000.00. It refused to pay the balance because
Phil-Air allegedly breached its warranty.

RCJ Lines averred that the units did not sufficiently cool the buses despite repeated repairs. Phil-Air
purportedly represented that the units were in accord with RCJ Lines’ cooling requirements as shown in
Phil-Air’s price quotation. The price quotation provided that full payment should be made upon the units’
complete installation. Complete installation, according to RCJ Lines, is equivalent to being in operational
condition.

RCJ Lines claimed that it was also entitled to be reimbursed for costs and damages occasioned by the
enforcement of the writ of attachment.

Issues:

(1) Whether the claim of Phil-Air was barred by laches;

(2) Whether Phil-Air should reimburse RCJ Lines for the counterbond premium and its alleged unrealized
profits;

(3) Whether RCJ Lines proved its alleged unrealized profits arising from the enforcement of the
preliminary writ of attachment.

Held:

1. Phil-Air’s claim is not barred by laches. In general, there is no room to apply the concept of laches
when the law provides the period within which to enforce a claim or file an action in court. Phil-Air’s
complaint for sum of money is based on a written contract of sale. The ten-year prescriptive period under
Article 1144 of the Civil Code thus applies.
In the present case, both parties admit the existence and validity of the contract of sale. They recognize
that the price quotation dated August 4, 1989, contained the terms and conditions of the sale contract.
They also agree that the price and description of the units were indicated on the sales invoice.

Laches is defined as the failure or neglect for an unreasonable and unexplained length of time, to do that
which by exercising due diligence, could or should have been done earlier; it is negligence or omission to
assert a right within a reasonable time, warranting a presumption that the party entitled to assert it either
has abandoned it or declined to assert it.

While the CA correctly held that prescription and estoppel by laches are two different concepts, it failed to
appreciate the marked distinctions between the two concepts.

The court resolves whether the claimant asserted its claim within a reasonable time and whether its
failure to do so warrants the presumption that it either has abandoned it or declined to assert it. The court
determines the claimant’s intent to assert its claim based on its past actions or lack of action. After all,
what is invoked in instances where a party raises laches as a defense is the equity jurisdiction of the
court.

On the other hand, if the law gives the period within which to enforce a claim or file an action in court, the
court confirms whether the claim is asserted or the action is filed in court within the prescriptive period.
The court determines the claimant’s intent to assert its claim by simply measuring the time elapsed from
the proper reckoning point (e.g., the date of the written contract) to the filing of the action or assertion of
the claim.

In sum, where the law provides the period within which to assert a claim or file an action in court, the
assertion of the claim or the filing of the action in court at any time within the prescriptive period
is generally deemed reasonable, and thus, does not call for the application of laches. As we held in one
case, unless reasons of inequitable proportions are adduced, any imputed delay within the
prescriptive period is not delay in law that would bar relief.

Not all the elements of laches are present. To repeat, Phil-Air filed the complaint with the RTC on April 1,
1998. The time elapsed from August 4, 1989 (the date of the price quotation, which is the earliest
possible reckoning point), is eight years and eight months, well within the ten-year prescriptive period.
There was simply no delay (second element of laches) where Phil-Air can be said to have negligently
slept on its rights. there is no basis for laches as the facts of the present case do not give rise to an
inequitable situation that calls for the application of equity and the principle of laches.
2. Phil-Air is not directly liable for the counter-bond premium and RCJ Lines’ alleged unrealized
profits.

A writ of preliminary attachment is a provisional remedy issued by the court where an action is pending to
be levied upon the property or properties of the defendant. The property is held by the sheriff as security
for the satisfaction of whatever judgment that might be secured by the attaching party against the
defendant.

The grant of the writ is conditioned not only on the finding of the court that there exists a valid ground for
its issuance. The Rules also require the applicant to post a bond.

Section 4 of Rule 57 of the Rules of Civil Procedure (Rules) provides that “the party applying for the order
must…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 that may be adjudged to the
adverse party and all damages that he may sustain by reason of the attachment, if the court shall
finally adjudge that the applicant was not entitled thereto.”

The enforcement of the writ notwithstanding, the party whose property is attached is afforded relief to
have the attachment lifted. There are various modes of discharging an attachment under Rule 57, viz.:

(1) by depositing cash or posting a counter-bond under Section 12;

(2) by proving that the attachment bond was improperly or irregularly issued or enforced, or that the bond
is insufficient under Section 13;

(3) by showing that the attachment is excessive under Section 13; and (4) by claiming that the property is
exempt from execution under Section 2.

RCJ Lines availed of the first mode by posting a counter-bond.

Under the first mode, the court will order the discharge of the attachment after (1) the movant makes a
cash deposit or posts a counterbond and (2) the court hears the motion to discharge the attachment with
due notice to the adverse party.

The amount of the cash deposit or counter-bond must be equal to that fixed by the court in the order of
attachment, exclusive of costs. The cash deposit or counter-bond shall secure the payment of any
judgment that the attaching party may recover in the action.
The discharge under Section 12 takes effect upon posting of a counter-bond or depositing cash, and after
hearing to determine the sufficiency of the cash deposit or counter-bond. On the other hand, the
discharge under Section 13 takes effect only upon showing that the plaintiff’s attachment bond was
improperly or irregularly issued, or that the bond is insufficient. The discharge of the attachment under
Section 13 must be made only after hearing.

As discussed above, it is patent that under the Rules, the attachment bond answers for all damages
incurred by the party against whom the attachment was issued. Thus, Phil-Air cannot be held directly
liable for the costs adjudged to and the damages sustained by RCJ Lines because of the attachment.
Section 4 of Rule 57 positively lays down the rule that the attachment bond 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.”

The RTC, instead of declaring Phil-Air liable for the alleged unrealized profits and counter-bond premium,
should have ordered the execution of the judgment award on the attachment bond. To impose direct
liability to Phil-Air would defeat the purpose of the attachment bond, which was not dissolved despite the
lifting of the writ of preliminary attachment.

The order to refund the counter-bond premium is likewise erroneous. The premium payment may be
deemed a cost incurred by RCJ Lines to lift the attachment. Such cost may be charged against the
attachment bond.

3. RCJ Lines failed to prove its alleged unrealized profits.

In Spouses Yu v. Ngo Yet Te, we held that if the claim for actual damages covers unrealized profits, the
amount of unrealized profits must be established and supported by independent evidence of the mean
income of the business undertaking interrupted by the illegal seizure.

We explained in Spouses Yu that to merit an award of actual damages arising from a wrongful
attachment, the attachment defendant must prove, with the best evidence obtainable, the fact of loss or
injury suffered and the amount thereof. Such loss or injury must be of the kind which is not only capable
of proof but must actually be proved with a reasonable degree of certainty. As to its amount, the same
must be measurable based on specific facts, and not on guesswork or speculation.

Similarly, the evidence adduced by RCJ Lines to show actual damages fell short of the required proof. Its
average daily income cannot be derived from the summary of daily cash collections from only two
separate occasions, i.e., August 22-23 and September 2-3, 2000. The data submitted is too meager and
insignificant to conclude that the buses were indeed earning an average daily income of P12,000.00.
More significant, the person who prepared the unsigned summary of daily cash collections was not
presented before the RTC to verify and explain how she arrived at the computation. The dispatchers who
prepared the collection reports were likewise not presented; some of the reports were also unsigned.
While the summary was approved by Rolando Abadilla, Jr., in his testimony on the alleged unrealized
profits was uncorroborated and self-serving.

Nonetheless, we recognize that RCJ Lines suffered some form of pecuniary loss when two of its buses
were wrongfully seized, although the amount cannot be determined with certainty.

We note that in its prayer for the issuance of the writ of preliminary attachment, Phil-Air alleged that RCJ
Lines was guilty of fraud in entering into the sale transaction. A perusal of the record, however, would
show that Phil-Air failed to prove this bare assertion. This justifies an award of temperate or moderate
damages in the amount of Php 50,000.00.